Transcript Financial Services

SBC Vertical Markets
Retail Banking Overview
2005 Update
Banking Industry Session
Outline
Section 1: The Banking Vertical
Section 2: Defining the Banking Opportunity
Section 3: Positioning with the Banking Customer
Section 4: Success Stories
Appendix: Additional Resources
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The Banking Vertical
Financial Markets
Financial Services Vertical
Cap Markets
Banking
Stock trading
Options and commodities
Investment banking
Real Estate
Other
Traditional Banks
Savings Institutions
Credit Unions
Credit Cards
Funds/trusts
Central bank/currency
Insurance
Commercial and retail banking—largest opportunity for noninsurance financial services – about 55% of vertical revenue.
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Overall Market Size – Financial Services
Expected CAGR (2003 – 2010): 2.17%
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IT Spending: World-wide Upside
Healthcare
7.9%
% Growth
2005/2004
Govt
7.7%
Comms
Retail 6.7%
6.6%
Services
Utilities 5.7%
5.7%
Banking vertical is
a subset of
Financial Services
Financial
Services
6.0%
Manufacturing
5.4%
Average
Growth
Relative Size of IT Spending, 2005
Source: Worldwide IT Spending 2004–2008 Update by Vertical Markets, IDC #32668
Largest Spend + Average Growth = Significant
Opportunity
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Overall Financial Market - Projected IT
and Telecom Spending
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Defining the Opportunity
Telecom Expenditures: Banks
Expected CAGR (2003 – 2010): 3.58%
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Telecom Services Breakout: Banks
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Opportunity Segmentation
Segmentation of Banks
Strong/Moderate
Opportunity
19%
28%
10%
Entry/Established
Expansion
Maint/Maint Expansion
Geo Challenged/Unavail
43%
> 70% in Region
Total SBC Share of Segment: $720 Million
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Top 10 Banks in Vertical IT and Telecom
Spend
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Section 3:
Positioning the Customer
Challenges & Drivers
Challenges
Drivers
Business Continuity,
Compliance & Risk
Management
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Sarbanes-Oxley Act (SOX)
Check-21
Gramm Leach Bliley Act (GLBA)
The Patriot Act
Basel II
Increasing and Changing Regulations
Transforming the Branch and
Enabling the Front Office:
Improved Service, New Revenue
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Increased competition
Expanded portfolio
Most expensive channel
Need for incremental revenue
Front-line execution of relationship-based
strategies
Enhance the Customer
Experience
Cost Control & Operational
Efficiency
Source: Nortel
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Integration of delivery channels
Continuity
of Government
and
Demand for Consistent
customer
experience
Differentiation
through customer service
Disaster
Recovery
Relationship-based strategies
• Multiple networks, duplicate resources and
complexity resulting from M&A activity
• Site to site collaboration
• Continuity of Government and
• Customer demand for varied points of access
Disaster Recovery
• Resource shifting to meet changing customer
needs
Regulatory Issues—Impacting Banks
The Patriot Act
Requires financial services companies to improve capabilities to
identify customers & flag suspicious transactions (anti-moneylaundering and anti-terrorism programs now required)
Requires integrating back end systems & upgrading
storage and hardware infrastructure
The SOX Act
Sarbanes Oxley Act—public company disclosure on
effectiveness of internal controls on financial reporting
Requires a framework for internal control, rules,
processes & audit trail
Check 21
The GLBA Act
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The law facilitates check truncation by advancing the use of a
new negotiable instrument referred to as a substitute check.
The law enables wide spread creation and use of substitute as
a routine practice, not simply for damage or destroyed checks.
The Gramm Leach Bliley Act—requires that financial institutions
protect consumers’ personal information.
Requires distribution of privacy notices
Requires networking apps that enable a consolidated view
of customers across multiple divisions. Increases
competition by broadening allowable offerings.
The Role of the Branch has
Evolved…
Branch Strategies
Critical Success Factors
Branch as Wealth Center
Branch as Sales Office
Branch as Service Center
Branch as Marketplace
Source: IBM
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Advisory Skills,
Excellence in
Customer
Experience
•
Sales Skills,
Incentives,
Product Knowledge
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Scale, Flexibility,
Efficiency
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Alliance Skills,
Open Strategy,
Control Points,
Destination
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Characteristics
Customer empowerment
• Virtual agency
• Specific value propositions
‘Best of breed’ manufacturer
of products, services
• Advantage based on scale,
process excellence
Physical and virtual fulfillment
• Supply chain management
• Infrastructure management
Price discovery
• Intermediation
• Risk management
Bank Branches are Looking to…
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Provide new customer productivity tools on every branch phone
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Simplify management of moves, adds, and changes
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Manage all centralized customer calls and give every employee
in each branch a complete view of every customer’s account
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Ensure that the most appropriate sales or service employee
answers calls from the most appropriate customer
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Enhance corporate communications by allowing employees to
receive company information in a timely manner
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Give senior executives more visibility by allowing them to
talk to all branch employees live, every day in a TV format
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Have real-time branch surveillance for productivity
management and law enforcement support in hold-up
situations
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Distribute media for advertising, training or cross-selling
promotions to all branches without increasing bandwidth
charges
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Push real-time information to tellers and agents, keeping them
abreast of current information, via XML applications.
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Customer Experience: The Things
Network Allows You to Do …
Eliminates redundant costs –voice/video/data
Employee productivity tools
Flexible/responsive operations
Network Security integrated
with Regulatory Compliance
Centrally Managed:
* Video Surveillance
* HVAC
* Security
ATMs & Kiosks
Contact Center Integration
Intelligent call routing
Virtual Contact Center
Video Conferencing
Centrally managed &
Locally delivered:
* E-Learning
* Digital Marketing
* Corp. Comm.
Employee mobility within branch
Branch Concierge
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Cost Control: Solving Problems w/
Technology
Business Issues Addressed by Technology
80%
60%
73%
67%
58%
37%
40%
48%
40%
42%
37%
49%
40%
34%
21%
20%
Medium
2/05
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Large
Regulation
Compliance
Collaboration
Between
Sites
Increasing
Process
Efficiencies
Lowering
Admin Costs
Improving
Customer
Service
Maintaining
Competitive
Advantage
0%
Telecom Trends Address Financial
Critical Success Factors
Benefits
Business Continuity
Robust networking
Redundant networking w/ backup datacenters
Complete security practices with
Implemented solutions
Robust networking
Reliability
Uptime of networks is increased due to consistent
best practice architectural approach to network design.
Interoperability
Multiple solutions work together based on one common
architectural approach
Customer Experience and Service
IP Telephony
Web and voice based conferencing services
VPNs for Branch and WAN connectivity
Extensive web based services
Cost Control – Operational Efficiency
Converged single network
State of art wireless solutions
full branch connectivity and flexibility
Image, storage and hosting
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Security – Managed Solutions provides
24x7x365 security response ability
router, firewall, anti-virus, and IDS rule & setup documentation
Anti-virus auditing report
Network security monitoring raw data logs
Security threat monitoring log
Redundant networking with backup datacenters
Availability of mission critical applications customer info
Complete security practices and policies with
implemented solutions
How Much Does an Outage Cost?
Survey by Standish & Tower Group
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Applications
Downtime
($/minute
)
ERP (order
entry)
$13,000
Supply chain
mgmt.
$11,000
E-commerce
$10,000
Internet
Banking
$7,000
Customer
Service center
$3,700
Electronic funds
transfer
$3,500
Messaging
$1,000
Telecom Trends Address Financial
Critical Success Factors
Benefits
Business Continuity
Robust networking
Redundant networking w/ backup datacenters
Complete security practices with
Implemented solutions
IP Telephony
• Centralize and integrate contact center applications
• Leverage agent resources over multiple sites
• CTI—allowing agents to see who’s calling before picking up call
• Merge voice over with e-commerce websites
• Transfer calls between branches and virtual contact centers
• Conference calling services for employees and customers
Customer Experience and Service
IP Telephony
Mobility
VPNs for Branch and WAN connectivity
and extensive web based services
Mobility
• Intelligent call routing—allowing access to voice & data via
phone, laptop, PDA or any device anywhere
• Wireless LAN phones connect to wireless access points
throughout branch
VPN
• Connectivity between branches
Cost Control – Operational Efficiency
Converged single network
State of Art Wireless solutions
Full branch connectivity and flexibility
Image, storage, and hosting
• e–learning
• Broadcast messages of products & promotions
• Leverage all resources of the branches to give smaller stores the
same look and feel of larger stores
• IP enabled ATM and Kiosk provide information on product and
services, i.e. loan approval
• Expand web based banking services
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Telecom Trends Address Financial
Critical Success Factors
Benefits
Business Continuity
Robust networking
Redundant networking w/ backup datacenters
Complete security practices w/
Implemented solutions
Customer Experience and Service
IP Telephony
Web and voice based conferencing services
VPNs for Branch and WAN connectivity
Extensive web based services
Cost Control – Operational Efficiency
Converged single network
State of Art Wireless solutions
Full branch connectivity and flexibility
Image, storage and hosting
Converged single network—Efficient
More efficient than running two separate networks
Merged voice & data
Use one network to satisfy multiple compliance
issues
Reduces maintenance costs by standardizing
infrastructure
Route calls to contact centers during peak hours
State of Art Wireless Solutions
Productivity gains with mobile wireless solutions
Wireless concierge
Hotspots
Full branch connectivity and flexibility—Speed
Allows rapid deployment of new applications
Enabling change without re-engineering the network
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The Sage study found that while cost savings was cited as an IPT deployment driver by 75% of those surveyed,
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Productivity savings was cited by more than 60%.
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The productivity benefits were felt by both IT & non-IT workers.
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66% of the respondents said they perceive IPT deployment gave them a competitive advantage.
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Key Trends Summary
• M&A activity continues to drive consolidation and
competition, leading to a more global market, and the
development of multi-service financial “superstores”
• Online services are changing the marketplace
• Customer service and customization are important
competitive factors
• Focus on security and information privacy has
sharpened as awareness of identity theft grows
• Automation, self-service, and other IT-based services
are being used to off-set staff reductions
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General Growth Opportunities
• Customer service and differentiation are driving
growth in call center services, managed
services, and routing services
• Internet banking is driving bandwidth, security
and content services
• Online processes are driving opportunities in
image, storage, and hosting services
• Regulatory and security needs are driving
security services, redundant networks and
business continuity services.
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Starting Questions
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Do your customers have anytime access to account
information and services? Do you offer electronic
statements and electronic bill presentment and payment
(EBPP)?
Are you losing customers to competitors who offer
enhanced services over the phone and Web?
Can your existing systems and network support your current
product go-to-market needs?
Can your customers access their information through
multiple channels of communications, i.e. phone, Web, at
the branch?
How effectively are you using the customer data being
collected online, on the phone and at the branch? How are
you doing as compared to your competitors?
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Starting Questions (cont.)
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Do you know who your most profitable customers are?
Are you effectively cross-selling products to those
customers who are most likely to buy them?
Do your employees have to access multiple legacy systems
to process account transactions?
Do your data systems provide a comprehensive view of
your customers on a single screen?
Does your staff have the tools they need to stay up to date
on new products?
Are you facing rising costs for site-to-site communications,
sales force management, and training functions?
Are you facing increasing competition due to mergers and
acquisition?
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Appendix:
Additional Resources
Basic Needs and Opportunities –
Telecom Services
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Basic Needs and Opportunities –
Consulting Services
Frost and Sullivan – March 2004
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Basic Needs and Opportunity –
Software
SBC Solutions are lead Callisma or System Integration Partners
Frost and Sullivan – March 2004
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Basic Needs and Opportunity Hardware
Frost and Sullivan – March 2004
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Key Challenges
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Sarbanes-Oxley legislation and need for business transparency forces
financial services firms to be as open as possible with their records,
transactions, and business dealings
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Graham-Leach-Bliley (GLB) legislation continues to push financial services
firms to become financial “superstores”, encouraging significant crosssegment expansion
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Business continuity/disaster recovery needs have taken on increased
importance for financial service market follilng 9/11 attacks, forcing financial
services firms to ensure that data is as accessible as possible at all times
•
Mutual funds scandals regarding “market-timing transactions” are leading to
new regulations and promoting greater integrity of financial services
practices.
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Likelihood of increased merger & acquisition activity to achieve greater scale
affects potential buying patterns for IT/telecom services
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Online banking opportunities that enhance customer experience continue to
be refined and improved, requiring investment in time and money from
financial services companies
•
“Check 21” legislation forces financial services institutions to explore “check
electronification” requirements
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Securities & Exchange Commission
(SEC)
Electronic message storage
• Commission Guidance to Broker-Dealers on the Use of Electronic Storage
Media under the Electronic Signatures in Global and National Commerce Act
of 2000 with Respect to Rule 17a-4(f)
http://www.sec.gov/rules/interp/34-44238.htm
• SEC Compliance and Storage Management
http://www.storageadmin.com/Articles/Print.cfm?ArticleID=26084
• SIA Objects to SEC Rule for E-Mail Storage
http://www.securitiesindustry.com/midweek.cfm?article=741
• CIO: Mandate from SEC Regulators: Save Your Electronic Documents
http://www.cio.com/archive/031503/tl_washington.html
• CIO: SEC Rule Creates Opportunity for CIOs on Corporate Boards
http://www.cio.com/archive/021503/tl_washington.html
• Securities Industry: Instant Messaging Standards: Keeping It ‘Simple’
http://www.securitiesindustry.com/midweek.cfm?article=764
• Banktech: Do Not Delete!
http://www.banktech.com/story/news/BNK20030214S0002
• New York Times: New Demand Seen for Data Storage
http://nytimes.com/2003/04/21/technology/21NECO.html
• No E-Mail Relief in New Books-and-Records Rules
http://www.securitiesindustry.com/midweek.cfm?article=794
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Securities & Exchange Commission
(SEC)
Business continuity planning
• Interagency Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial
System
http://www.sec.gov/news/studies/34-47638.htm
• Comments on Proposed Rule: Draft Interagency White Paper on Sound Practices to
Strengthen the Resilience of the U. S. Financial System
http://www.sec.gov/rules/concept/s73202.shtml
• Feds Prep Disaster Recovery Regs
http://www.byteandswitch.com/document.asp?doc_id=22508&print=true
• Feds Set DR Regulations
http://www.byteandswitch.com/document.asp?doc_id=31105&print=true
• Securities Industy: Industry Still Worried About BCP Distance Regs
http://www.securitiesindustry.com/midweek.cfm?article=769
• Wall Street & Technology: Not Quite Right
http://www.wallstreetandtech.com/story/inDepth/WST20021212S0006
• Wall Street & Technology: Is Regulation Right Around the Corner?
http://www.wallstreetandtech.com/story/mag/WST20011210S0014
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