The Future of Banking - CCG Catalyst Consulting Group€¦ · CCG Catalyst is a banking consulting firm and the trusted strategic advisor to banking organizations throughout the Americas

© 2015 CCG Catalyst Consulting Group

The Future of BankingBeing boring no longer an option

For CSI Customer Conference 2015, Nashville TN

© 2015 CCG Catalyst Consulting Group 2


Disruptions like never before


Outdated models get replacedOut with the old In with the new

Example of transformationIn smart home systems

Move to connected the thing learns the needs, negotiates and recalibrates at will

Move to free markets

Move to integrated

Move to optimize

Move to programmable

Move to two-way

Started out web enablement of household equipment

Banking apps moving towards a similar path

Source: Nest



Consolidation

Margin

Less diverse revenue stream

Waning market share in consumer, real estate, commercial + industrial lending markets

Legacy systems

Cost of customer acquisition –customer’s switching costs

Customers demand for more self service – they want it now!Crowdsourcing

Threat of new entrants like Google, Apple and PayPal, traditional retailers like Wal-Mart, and new firms like Moven and Venmo.

Competition outside of traditional banking are new forms of exchange like peer-to-peer payments and crypto-currencies, such as Bitcoin.

Competitor rivalry within the bank

industry

Disruptive forces in banking


THE PAYMENT PROCESSING ECOSYSTEMAcquirers/Processors Issuers

Gateways ISOs/MSPs

Card Networks

CONSUMER TECHNOLOGY

Remittances

P2P Payments

Carrier Billing

Mobile Wallets

Phone-Only


9

Transaction Level: accurate, convenient, flexible, rewarding

Integrated Level: Enhances experience by linking together payment and related products and experiences.

Life experience Level: Everything ties together and provides guidance to individual that incorporates everything.

Historical

Coming now and growing

A few years out, but coming quickly.

Dee

per

Co

nn

ecti

on

Expected: connection to life

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Insights

13© 2015 CCG Catalyst Consulting Group 13


We are at the beginning of a major transformation to the financial services industry.


Transitional factors

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Internal External

Strategic Development

Planning

Segmentation

Specialization

Capital

Consolidation [M&A]

Adoption by people/businesses

Adoption by central banks

Demographics in youth and seniors

Creation of aggressive 3rd competition

Technology innovation

People accustomed to gettingwhat they want

Tran

sfo

rmat

ion


Changing perspectives

BUSINESSES

Want help to grow and increase revenue

See world markets

See technology as a way to get closer to more customers

CONSUMERS WANT

Life experience

Integration and automation

Anticipatory help

To make better, more informed decisions

Transactions to be in real time

Scheduling and tasks

What do they need?



Do you really know the lives of your customers? Do you have the data?


Transformation only happens if the bank takes action.

Banks are transforming from financial servicers of transactions to financial optimizers of life experience.

It’s happening already.

There’s no one answer. It’s more about asking the right questions than having the right answers.

18

CCG Catalyst is a banking consulting firm and the trusted strategic advisor to banking organizations throughout

the Americas. We understand the needs of our clients. We solve problems that are brought about by the

disruptions and changes in the financial industry, technology, and the economy. We strategically think about

our clients’ business, partner with them, to make them successful; but more so we form a relationship, go

beyond the trends, imagine the future, and stimulate thoughts.

CCG Catalyst is headquartered in Phoenix, AZ, with consulting office across the US.



Supplemental InformationExamples of strategies that are working

For CSI Customer Conference 2015, Nashville TN© 2015 CCG Catalyst Consulting Group 20


Banks with strategies that are working

21

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2006 2007 2008 2009 2010 2011 2012 2013 2014

ROA Before and AfterThree Strategies that worked

Bank with strategy that worked

22

Strategy: Specialize in high net worth individuals.

Structure: Three separate but integrated Trust, Wealth Mgmt, and a Private Bank.

Specialize in Family wealth and education.

Financial: Fewer but higher-paid staff and lower occupancy. Low losses, low margin, only

slightly above average non interest income, and high liquidity.

Online presence: Website more of a content site. Weekly economic and market forecasts. Weekly family wealth education seminars. No

Facebook.

Other comments: Philanthropy as a competence to train others with wealth.

Bank 1Size: $509 Million




23

Strategy: Industrial bank, captive home improvement loans under a retail energy company.

Structure: Only do home improvement loans, funneled through contractors, funded by primarily

brokered CD’s.

Financial: Very high interest income and high credit losses, netting way above average margin 8.19% with 1% of Assets credit loss and no fee income. Risky lack

of liquidity. Efficiency in delivery.

Online presence: Facebook reads like newsletter to home improvement contractors. Advertising to a

large extent happens through indirect.

Other Comments: A number of negative comments on Facebook from consumers. Risk in indirect

lending.

Bank 2Size: $1.07 Billion



24

Strategy: Dominate a small area with traditional banking. Mortgage Center, Heritage Club

Structure: Three branches, one in larger city. Market share leader in two smaller ones,

growing in large.

Financial: Mostly from margin with above average loan rates and below average deposit

rates. Below average salary, above average number of people.

Online presence: No Facebook. No content. No press releases. No mobile banking. Online banking requires in-person or U.S. Mail.

Other Comments: The old school, heads down, own the local market still lives.

Bank 3 Size: $284 Million



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Strategy: Commercial Lender, Specialty in Construction – expanded C&I and CRE.

Structure: Five branches, large metropolitan market area. Market leader in their markets,

adding a branch, overall growing.

Financial: Great margin due to the specialization above average loan rates and higher average

deposit rates due to growth requirement.

Online presence: Focused to their market and niche. Referrals from other banks.

Other Comments: Progressive bank, long history (over 150 years) well-capitalized, cherry picked

loan portfolio.

Bank 4 Size: $1.7 Billion

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The Future of Banking - CCG Catalyst Consulting Group€¦ · CCG Catalyst is a banking consulting firm and the trusted strategic advisor to banking organizations throughout the Americas