Innovation in Banking Presentation to Vlerick School David Dab, Chief Innovation Officer Ghent November 26, 2015
Agenda 1 Innovation in General 2 Implications for Banks 3 ING s approach 4 Some conclusions 2
1 Innovation in General 2 Implications for Banks 3 ING s approach 4 Some conclusions 3
Faster and more disruptive innovation everywhere Multiple Revolutions at the same time Source: Web searches 4
Multiple Gutenberg revolutions in parallel (zero marginal cost situation) Doubling (or halving) times in years) Who wins? Dynamic RAM "Half Pitch" 5,4 Microprocessor clock speed 2,7 Transistors in Intel microprocessors 2,0 Processor performance in MIPS 1,8 Average transistor price 1,6 Dynamic RAM bit per USD 1,5 Microprocessor cost per transistor cycle Total bits shipped 1,1 1,1 IBM Deep Blue Samsung Galaxy S5 Source: http://fr.slideshare.net/serge111/singularity-presentation-ray-kurzweil-at-google http://www.phonearena.com/news/a-modern-smartphone-or-a-vintage-supercomputer-which-is-more-powerful_id57149 5
Explosion of innovation faciliated by open access and infinite combinations Open source software Open education Chrome vs. chromium Open source hardware Open data RepRap General-purpose 3D printer with the ability to make copies of most of its own structural parts Source: Google image search; wikipedia 6
Acceleration expected to continue Fuelled by technology and zero marginal cost of digital 7
There is a also dark side to Innovation Mounting pressure A world of mounting performance pressure everywhere Difficult to get to the next level of performance, ever-raising target Ever-growing uncertainty, for businesses and individuals alike Difficult change challenge Organizations have a strong immune system to reject what is new and different Highly political environment: Innovation defines what is new John Hagel III Deep societal impact Massive redefinition of jobs, old jobs not necessarily being replaced Many people left on the side 8
Significant impact on jobs NEWS Reports Suggest Nearly Half of U.S. Jobs are vulnerable to Computerization Oxford researchers say that 45 percent of America s occupations will be automated within the next 20 years Source: MIT Technology Review, September 12, 2013; THE FUTURE OF EMPLOYMENT: HOW SUSCEPTIBLE ARE JOBS TO COMPUTERISATION? Carl Benedikt Frey and Michael A. Osborne; September 17, 2013 9
1 Innovation in General 2 Implications for Banks 3 ING s approach 4 Some conclusions 10
Banking will most likely go through deep changes Determined attackers Massive investments in FinTech Paradigm shift technologies To me, it s all about unbundling the banks. There are regulatory arbitrage opportunities every step of the way. If the regulators are going to regulate banks, then you ll have nonbank entities that spring up to do the things that banks can t do. Bank regulation tends to backfire, and of late that means consumer lending is getting unbundled. - Marc Andreessen* The global investment in financial technology ventures has more than tripled during the last 5 years from under USD 930 million to more than USD 2.97 billion, according to Accenture Bitcoin may or may not survive as a crypto currency, but many agree that its core new technology (called blockchain) will have far reaching consequences *Investor in Source: Web searches 11
Large number of FinTech companies already want to get part of the cake, including by serving banks directly *Source: Accenture 12
FinTech efforts moving progressively to larger corporates and more B2B applications Significant activity in payment and lending / retail but gradually moving also to large corporations 13
The Imperative for Banks 1) Support Corporate Clients facing the Innovation Challenge 2) Embrace clients new way of practices, behaviours, expectations driven by Innovation Must Innovate! 3) Innovate as a bank 14
1 Innovation in General 2 Implications for Banks 3 ING s approach 4 Some conclusions 15
Building a strong environment to foster innovation Incubation Acceleration Growth stage Successive phases of business development ING supporting innovation in the country Partnership with Flanders s digital research and entrepreneurial hub Investments in innovative projects in the chemical and life sciences industries Easier access to finance for innovative companies in BE (with EIB) Unique e-financing tool for entrepreneurs, independents, SME s ING driving its innovation agenda ING nurturing innovation s future Large internal competition of innovation ideas open to entire ING Group Learning programs for young people to participate in Innovation First FinTech focused accelerator in Belgium, launched with prominent partners Participation into FinTech focused Venture Capital fund Member of fully open FinTech ecosystem We re a partner at every life cycle 16
FinTech Village - Still a few days to apply! Oct. 14, 2015 Application Dec. 6, 2015 Selection Jan. 31, 2016 APPLY NOW March, 2016 Program June, 20016 Proof-of-concept 17
1 Innovation in General 2 Implications for Banks 3 ING s approach 4 Some conclusions 18
Some conclusions and perspectives Not just innovation as usual Deep impact for everyone, individuals, businesses, public authorities Banks will be affected like anybody else Fintech creates challenges as well as opportunities Collaborative models will be prevalent 19
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