Κωστής Χλουβεράκης, 2nd Hellenic Innovation Forum

Κωστής Χλουβεράκης, 2nd Hellenic Innovation Forum

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  -1- Innovation in today'sBank: Challenges, Trends and Prospects Kostis Chlouverakis, Group Chief Digital Officer @ Eurobank Innovation Forum, Athens, June 19 2018
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  One reason analyticsremains a hot topic is that the amount and variety of data available has skyrocketed, constantly creating new analytic challenges. But even more importantly, analytics has become an essential part of digital transformation and therefore innovation. Mobile first requires a new approach to planning, UX design, and development that puts handheld devices at the forefront of both strategy and implementation. The digital landscape has changed, and companies have realized that consumers are now accessing more content on their mobile devices than anywhere else. MAP:MobileFirst–AnalyticsFirst–PeopleFirst “When you’re trying to design and implement a new way of working, you really need a feedback loop. And that feedback needs to come from all the people involved, and not just what senior management thinks is the right thing to do. This helps to foster a culture of innovation.” Eddie Copeland, Director of Government Innovation, Nesta
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  ➢79% increase inPOS machines ➢84% increase of debit and credit card transactions and transfers (+ 24%) ➢47% increase in the value of direct debits for fixed payments ➢29 % increase in the value of internet and mobile banking transactions http://greece.greekreporter.com/2017/06/27/how-two-years-of-capital-controls-hurt-greek-trade/ Significantriseofelectronictransactionsin3years ofcapitalcontrols…….
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  91% 88% 86% 85% 83% 79% 71% 64% 64% 62% 59% 54%53% 53% 52% 51% 49% 49% 49% 46% 45% 43% 39% 38% 35% 35% 29% 29% 28% 19% 9% 5% 4% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Shareofindividuals Onlinebankingpenetrationis19%comparedto49% inEU(average)
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  76,5% internet penetration amongGreek population 92% Social media usage among ages 18-29 95% of transactions are still performed in Cash 85% Social Media usage from mobile devices 2mileBanking users are estimated across Banks 90%penetration among 13-54 at urban places 3/5 of Greeks have a Smarthpone 0.5 mil mobile banking users 45%of Greeks go online via mobile Yet…….Greeceisonline!
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  DIGITAL TRANSFORMATION “It’s no longerthe big beating the small, but the fast beating the slow.” Eric Pearson, CIO, International Hotel Group (IHG)
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  ThepaceofDTwillaccelerateinthenext5yearsandis progressingin3mainphasesthatdriveinnovation • Internet ofThings • 100% penetration of smartphones/tablets • Cloud explosion • AI / Machine Learning • Younger people start entering the banking ecosystem • Mobile net use increase • Digital culture is spreading across different industries • Branches activity decreasing, but… • …they get larger and more digital • Mobile traffic gets #1 • IT agility • Reduced tech cost • Reduced OpEx & CapEx • Faster response times to customer needs • New uses experiences • Innovative products • Data connectivity • Innovation • New growth • AI and ML applications
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  How should a“digitized” innovative retail bank look like 8 Todo • Mobile payments • Product innovation • Digital marketing, ads • Customer-centric services • Cost savings • New customers acquisition • Retain high-worth customers • Financial reporting • Digital signature • Time to Market OutcomeTodoOutcomeTodoOutcome Innovation Asset Utilization Sustainability Todo • Voice in IoT • AI chat bots • E-authorization • Cross/upsell • Increase of NPS • Reduce churn • New customers acquisition OutcomeTodoOutcomeTodoOutcome Customer Experience Employee Productivity Internal Efficiencies • Increase market share • Increase customer experience • Improve product development • Compliance • Internal efficiencies • Cost Reduction • Mobile banking • Personalized incentives • Increase staffing efficiencies • Reduce dependency on local branches • Digital signature • Reduce time to market • Compliance • Cost Reduction Digitalvalue(fromhighesttolowest)
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  Priorities for abanktoget digital: Innovation opportunities • Cost reduction and increasing sales (cross-selling, up-selling, acquisition). • Customer focus: optimizing the customer experience and enhancing customer service in a consistent way: from cross-channel and multichannel to omnichannel. • Single customer view & segmentation: connecting systems and processes to achieve the above with an increasing role for digital channels and (connected) CRM. • Developing new offerings, products and services that are adapted to the evolving customer reality, competitive landscape and area of activities. • Branch consolidation (and innovation), among others for cost reduction purposes, but also to introduce new – cost- effective and customer-adapted – ways to digitize specific processes and tasks (with experiments to see what works). • Analytics (AI & ML) and ways to combine all interactions, information and – predominantly unstructured – data to optimize customer service and touchpoints, while having dashboards. • Identify silos that are omnipresent in all business functions and processes, and find ways to build cases that enable improved efficiency horizontally. • The use of digital marketing and customer service strategies to acquire, retain and service customers, adapting to the digital consumer but also promoting digital services to reduce costs, both in services and marketing spend.
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  Innovation @ state-of-the-artUS largest banks What’s new?Priority AI Chat bots Natural Language Processing Predictive analytics AI Chat bots / virtual assistants Fraud Vision for AI adoption Bank • Invested in technology and recently introduced a Contract Intelligence (COiN) platform designed to “analyze legal documents and extract important data points and clauses.” • The Emerging Opportunities Engine, uses automated analysis to help “identify clients best positioned for follow- on equity offerings.” • Wells Fargo announced the establishment of a new Artificial Intelligence Enterprise Solutions team in February • In April, the company began piloting an AI-driven chatbot through the Facebook Messenger platform. This virtual assistant communicates with users to provide account information and helps customers reset their passwords. • Launched AI technology with the debut of an intelligent virtual assistant named Erica • erica is a chatbot leveraging “predictive analytics and cognitive messaging” to provide financial guidance to the company’s over 45 million customers • Citibank has recently established a succession of innovative partnerships with cutting edge tech companies to expand and improve its services • Particular attention has been given to ecommerce and cybersecurity • Announced the creation of a new managerial position in connection with U.S. Bank’s Innovation Group: Artificial Intelligence Innovation Leader. • Potential application of AI for helping bank associates answer infrequent questions more quickly for it’s customers IT upgrades for AI adoption AI bots • The company’s infrastructure upgrades will help them leverage data and implement artificial intelligence and machine learning • The company’s initial focus has been on the consolidation of its data centers and a major shift to an “internal cloud environment.” • They are banking on “bots,” specifically robotic process automation (RPA), to improve the efficiency of its operations and to reduce costs JPMorgan Chase Wells Fargo Bank of America CitiBank U.S. Bank PNC Bank of NY Mellon Corp. “Incorporating artificial intelligence into our mobile banking offering will help customers manage their simple banking needs more efficiently and consistently, which then allows our specialists in our financial centers to spend more time with customers to understand their more complex needs and help them improve their financial lives” Thong Nguyen, president of Retail Banking, Bank of America
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  Value DriverBusiness ObjectiveKey Business Benefits Warranty Analytics Customer Support Analytics Acquisition Analytics Customer Retention Analytics Next Best Action Product Portfolio Optimization Marketing Mix Optimization Digital Channel Optimization Advanced Social Analytics Pricing Analytics Human Capital Analytics Financial Analytics Fraud Analytics Analytics Solution Omni-channel Analytics Social Monitoring & Listening B2CValueTree Voice of the Customer Analytics Product Design Analytics Adv. Content & Placement Analytics Advertising ROI Multi-Channel Attribution Gross margins 1.5 – 2.0% Opportunity win rate 2-4% Renewal rate Sales lift/close rate Revenue increase 1.5 – 2.0% Sales lift Marketing spend ROI 5 – 10% Revenue increase NPS , Satisfaction Multiple KPIs 15-20% Engagement scores 500 bp Warranty costs 10 – 30 % Cost of service calls 10-15% Grow Revenues Optimize Cost and Cash Business Value Improve Customer Acquisition & Retention Increase Profit Per Customer Improve Sales Effectiveness Reduce After-Market/ After-Sales Costs Reduce service ops costs Drive new customer acquisition Grow customer wallet share Improve customer retention Improve Asset Utilization Optimize Resource Management Improve talent perform & engagement Better management of finance Improve demand generation ROI Minimize variance on warranty costs Improve product revenue & profitability Grow Customer Satisfaction Improve customer experience Optimize advertising revenue Improve costs/privacy/security/risk Cost of service calls 10-15% Marketing Mix Optimization Marketing spend 5 – 10% Improve Sales Effectiveness Keep sales the same by minimizing investments
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  Cloud Big Data Analytics RoboticProcess Automation APIs Blockchain Machine Learning Tosummarize,innovationintomorrow’sBankshould mainlyfocuson:
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  For the futureBank: a customer-centric AI innovation strategy should be followed: Insights generation • “You should renew your subscription…” • “This is your last x-months spend-allocation pie chart (groceries, gas, subscriptions, rent etc” and “here is what you should do” Useability Useability is very important: How easy is it to perform a function. For example, in an app for your savings you have to put income, name, etc. But you have already given that info. Should that be a core focus? Centralized profiles is an opportunity (this is a major problem in the US with banks) Social media • Gather insights such as complaints, praises, suggestions for improvement and if possible to collect automatically this data on a monthly basis and try to connect it with internal usage data. • Produce extremely detailed tailored promotions and insights on the individual level. Nevertheless, social media scraping could lead to an “Engagement Index” similar to the Net Promoter Score. Chat bots/virtual helpers • This is the holy-grail in state-of-the-art banks that would increase significantly employee performance and efficiency and also customer satisfaction e-authorization • A new “product” that just started lately at Morgan Stanley for VERY EASILY and quickly authorizing transactions from a customer standpoint Voice-first • By 2020, 50% of all searches will be voice searches. Amazon’s Alexa, Google Assistant, Apple’s Siri, and Microsoft’s Cortana are becoming an increasing part of how consumers manage their lives, and the competition is becoming more intense as forward-thinking banking organizations start to introduce voice-first solutions. The advanced data capabilities of voice AI can enhance customer insights with each interaction
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  Challenges
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  Barriers to Innovation:Infusing the culture with a risk-taking attitude is extremely challenging Budget / Vision • Lack of strategy • No leadership buy-in • No money • “wrong” budget allocation Not acting on signals • Slow reactions • Non-expertise to understand customer needs or competition Culture • Risk averse • Not able to show shorter- term results • Quick wins are the foundation for innovation • Too busy to test new things • Unwillingness to share ideas/data/results • Too busy on urgent issues Politics • Company politics can hinder innovation • People/teams conflicts Impact on Innovation Leadership support is the number one enabler of innovation success. The second most important enabler is the “ability to test, learn and iterate, and NOT afraid to fail.”
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  More-inclusiveoperatingmodels,suchasopeninnovation, designthinking,andco-creationwithpartners,customers,and suppliers,arenowallembracedaheadoftraditionalR&D “As our vehiclesbecome smart products, we’ll start to see more of that real-time customer engagement, where we can really mash up what’s happening in the vehicle in real time with big data” - Rachel Nguyen, executive director of Nissan Future Lab Senior Director Buyer Customer engagement The embracing of open innovation and design thinking helps break down walls and brings together people from across the company’s various areas of expertise, spanning business strategy to technology. Open Innovation & Design Thinking “I’ll take amazing talent and a mediocre idea any day over an amazing idea and mediocre talent, because innovation is more about the who than the what.” - Bonny Simi, President, JetBlue Technology Ventures The human factor Design Thinking Open Innovation Ways to Innovate Collaborative Traditional R&D
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  In anyfirm, digitalinnovation is driven within silos toaddress localized problems • Multiple data sources and 100s of data marts with no standardization • Inability to track customers through the value chain and poor tracking across platforms and services No Single Source of Truth • Third-party data are not leveraged that could produce valuable insights • Lack of transparency as several departments collect data about end users but do not share Lack of Customer-related Data • Failure to draw out insights from data to address strategic objectives and larger goals and as a result achieve targeted business outcomes Data-Centric Perspective on Implementing Analytics • Clear ownership of problems does not extend beyond silos • Segmented approach to Analytics for large integrated business problems disregards the bigger picture Small Portions of Large Integrated Problems Limited Standardization • Key metrics and data elements lack standard definitions and criteria
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  Questions? [email protected]