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Web Banking Outlook Capital Markets Day London April Peter Johansson by jadakiss

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									Web-Banking Outlook


   Capital Markets Day
  London 9th April 2001
    Peter Johansson
               Facts and Forecasts about the Internet

     • 62% of investors use the Internet for banking services (Wall Street
          Journal)

     • 80% of bank customers using the Web regard their WebBanking
          experience better than traditional banking services (Frederick
          Schneiders Research)

     • Over 80% of all banks plan to sell insurances via the WebBank in
          2002 (Nextra Interactive)

     • 400 million consumers are estimated to be web-customers by 2001
          compared to 100 million in 1999 (Forrester Research )

Source: Deloitte consulting
               Sampo e&m Financial Services
Today
• Sampo is one of the Scandinavian leaders in providing e&m banking services to
    its customers. Its internet customer penetration rate is among the world’s highest
    compared to other full-service banks.
•   Whereas e&m distribution has so far primarily centered on traditional banking
    services such as payments and retail equity brokerage, the expected growth
    areas are wealth management and mutual funds for private banking customers.
Future Potential
• Sampo has teamed up with major technology providers in the further develop-
    ment of its electronic and mobile banking operations.
•   Sampo insurance and banking clients together with Mandatum’s private banking
    clients creates a sufficient customer base to provide cost efficient support for a
    technology-based asset gathering strategy
•   Developing e&m-banking into a sophisticated, life-cycle event driven financial
    services portal
•   Avoiding costly distribution through branch networks in favour of state-of the art
    financial services portal, thereby creating a competitive advantage with regards to
    cost as well as service
Keys to Sampo Banking and Insurance Web Services
                     Total Number of Retail Clients
 600,000

             Sampo has one of world’s highest e-
 500,000     banking penetration                                                      480,000
             ➘ e-banking penetration 43%                                  450,000
             ➘ e-banking/insurance penetration 22%
 400,000                                                    385,000
                                                  326,000
 300,000                                272,000

 200,000                      190,000

                    127,000
 100,000
           63,000

      0

            1/97     6/98     12/98      6/99     12/99       6/00       12/00 *)         3/01
                                                            *) incl. Mandatum’s 13,000 customers
        Sales of New Keys to Sampo Web Services

                   1999                             2000
Branches (incl            Call Center                         CC/Web
                                        Branches
 post offices)               24%                               32%
                                          68%
     76%




   ➥ 135,000 new keys in 1999 (+72%)    ➥ 110,000 new keys in 2000 (+ 34%)
                                         (+ 13,000 Mandatum customers)
 Customer contacts by channel in Sampo in 2000
         Insurance Customers                      Banking Customers
           Total 2.0 mill. contacts               Total 27.5 mill. contacts (excl. ATMs)
100 %                                     100 %
                               Internet
                               &eMail
                                                                          WebBank
80 %                                      80 %
                               Sampo
                               branches
60 %                                      60 %

                                                                          Post
40 %                                      40 %
                                                                          Offices
                               Phone
                               calls
                                                                          Branches
20 %                                      20 %

                                                                          TeleBank
 0%                                        0%

        Internet 0.7%                             WebBank 41%
                                                  (March 2001: 55%)
     Sampo WebBank Customer Visits
     Million                                Based on 2000Q1/2001Q1
18                                          34% growth

16     CAGR 1997-2000: 47%                                           15.0
14

12                 June-December 2000 via
                   WAP Bank 60.000
                                                   10.8
10                 customer visits

 8
                                   6.4
 6

 4                 3.3
           2.3
 2

 0
         1997     1998           1999              2000              2001E
 Corporates with sampo.fi agreement
          Non-life Internet Clients

2,500
                      1,758           1,907
2,000
1,500
1,000
        411
 500
   0
        1999           2000           2001 Febr
    Customer Contacts in Banking
                                 Authenticated
100 %
        An average of 2,3 million customer contacts per month

90 %
                                                           34   31   32   31   31
80 %                                             42   38
                       47                   43
        53   52   51        49    50   49
70 %

60 %                                                            16   14   15   14
                                                           15
                                                      14                            Branches
50 %                                        14   13
                                                                                    Telebank
                       14   14         14
             14   14              14                                                WebBank
40 %    14

30 %
                                                           51   53   54   54   55
                                                 45   48
20 %                   39                   43
        33   35   35        37    36   37
10 %

 0%
        1    2    3    4    5     6    7    8    9    10   11   12   1    2    3
        2000                                                         2001
                        Number of Branches 1992-2001*)
          1200

                                                          Private Banking
                                                          Combined: Bank+Insurance
          1000                                            Combined Service Points
                                                          Insurance Branches
                                                          Bank Service Points
                                                          Bank Branches
           800
                                                          Post Offices


           600




           400




           200




             0
                     1996     1997   1998   1999   2000    2001/1   2001/3/   2001/12



*) 1st of January each year
                                          Sampo e&m Functionality
 Accounts & Payments & Loans                     Investments                                   Insurance services
                           Internet   Wireless                          Internet   Wireless                        Internet       Wireless
Account Balances             Yes        Yes      Portfolio information       Yes      Yes     With-profit insurance      Yes         Yes
Transaction details          Yes        Yes      Watchlist                   No       No      Life Insurance             Yes         No
                                                 Asset allocation tools      Yes      No      Unit-linked                Yes**       Yes
Bill Payments                Yes        Yes
                                                 Market info (prices, news   Yes      Yes     View policy & coverage     Yes**       No
Foreign payment              Yes        No
                                                 Market event alerts         No       No
Payee list                   Yes        No
Transfer                     Yes        Yes      Stock trading               Yes      Yes
                             Yes        No       On-line Stock trading       Yes      Yes     Customer Service
Recurring Payment
Pending payments             Yes        Yes      Fund information            Yes      Yes                              Internet   Wireless
Bill presentment             Yes        No       Fund trading                Yes      Yes
                                                 Bond information            Yes      Yes     Password change            Yes         Yes
Credit card transactions     Yes        Yes
                                                 Bond trading                Yes      No      Address change             Yes         No
Loan balances                Yes        Yes
                                                 IPO services                Yes      Yes     Account naming             Yes         No
Loan transactions            Yes        Yes                                                   Questions&Answers          Yes         No
Online loan                  No         No
                      Sampo Web Banking and Age
                                                                                                                In Internet Banking, the
                                                                                                                most active and financially
                                                                                                                most interesting customer
                                                           30 %                                                 age brackets are over
                                                                                                                represented
                                                           25 %
                                 Share of all age groups
                                                           20 %


                                                           15 %


                                                           10 %
 Age group 25 - 54 years
                  Share of (%)
 Whole population           44                             5%
 Sampo customers            48
 WebBank customers          76
                                                           0%
                                                                                                                                            Age
                                                                  -18   18 - 24   25 - 34   35 - 44   45 - 54    55 - 64   65 - 74   75 +


                                                            Sampo WebBank Customers                   All Sampo Bank Customers
                                                            Whole Population
November 2000
                              Web- and WAP-Banking
                                              Customer Loyalty

                                                                   100%
  The majority of Web- and WAP-
  Banking customers belong to
  Privilege Customers*)                                            80%




                                              Share of Customers
                                                                   60%



                                                                   40%



                                                                   20%



                                                                    0%
                                                                           WAPBank           WebBank          All Sampo
                                                                           Customers         Customers        Customers
*) Privilege customers = Minimum balance of
$12,000 (75.000 FIM) in deposits, loans or                                Privilege    Other active   Other
investment products
                 Sampo Retail Equity Trading
                            Share (%) of different channels
      Sampo-Mandatum is one of the leaders in online brokerage in Finland
      %
100
                                                            10   10   7      7   9
                        15    16   17        16   12   16                        4
 90                21                   18                            5      6
              28                                            6    6
                              8              6    7
 80                     10         8    8              7
      45
                   11
 70
              17
 60                                                                                   Branches
                                                                                      TeleBank
 50
                                                                                      WebBank
                                                            84   84   88   87    87
 40                           76             78   81   76
      38                75         75   74
                   68
 30           56
 20

 10   17
 0
          1   2    3    4     5    6    7    8    9    10   11   12   1      2   3

          2000                                                        2001
                             Sampo Mutual Funds
                      Share (%) of transactions in different channels
      %
100

 90
 80
                            59                  57   59        54   55        54
 70                              64   64   60             61             60
                 71    69
 60       78                                                                        Branches
                                                                                    TeleBank
 50
                                                                                    WebBank
 40                                                            15   14        16
                            16                  16
                                           16        16   15             14
 30                              14   12
                       11
 20              14
          16                                    28             30   31        30
                            25   22   24   24        25   24             26
 10                    21
                 15
          6
  0
          1      2     3    4    5    6    7    8    9    10   11   12   1      2
          2000                                                           2001
          Household Cash Withdrawal Behaviour in
                      Sampo Bank
100%
                                                                                     Money transfers to
                                                                                     electronic purse
90%
                                                                                     Cash withdrawals in shops
80%

70%

60%

50%
                                                                                     ATM withdrawals
40%

30%

20%

10%

 0%                                                                                  Cash withdrawals in
                                                                                     branches
       1991   1992   1993   1994   1995   1996   1997   1998   1999   2000   2001E
   Household Payment Behaviour in Sampo Bank
100%
                                                                                     Branch


                                                                                     Self service
80%
                                                                                     (Web, CC,ATM)


                                                                                     Direct debiting
60%
                                                                                     Payment envelopes (Mail)
                                                                                     Credit cards


40%



                                                                                     Debit cards
20%




 0%
       1991   1992   1993   1994   1995   1996   1997   1998   1999   2000   2001E
Cost Efficiency: Unit Costs of Payments
                         Transactions 2000
         EUR
  2.50
           2.28

  2.00


                     1.47
  1.50

                                                  Including development costs
  1.00                           0.84


  0.50                                   0.30         0.30
                                                                  0.17
                                                                                0.05
  0.00
          Branch   CC/Personal   Mail   WebBank        ATM     CC/Automatic    Direct
                     Service                                       (IVR)      Debiting
                   Private Banking and the Internet
  “An Internet presence is now a ”de                                  Why HNWIs Like the Internet
  minimis” requirement since clients demand
  more flexibility in terms of contact points with      Cheaper
  their private bank. Internet offers new                                       10 %
                                                         cost
  opportunities, mainly with respect to the
  acquisition of new clients among the “mass
  affluent” and the realization over time of         Diversity of
                                                                                            20 %
  embedded operating cost savings                    information

  HNWIs increasingly want to participate in their
  own wealth management. The industry has            Quantity of                                   26 %
  termed this trend the switch form “passive” to     information
  “active”.

  HNWIs demand more flexibility in terms of                Ease                                          31 %
  contact points with their private bank.

  Private banks are concerned with a high
  degree of personalization to maintain                   Speed                                                          45 %
  consistency in terms of service quality.”

Moody’s Investor Service, “Rapidly-Evolving dynamics            0%         10 %        20 %       30 %        40 %        50 %
of Today’s Private Banking Industry”, March 2001               Source: World Wealth Report 1999, Merill Lynch and Gemini Consulting
                                   Customer Pyramid
           Institutional




                                                            Investment                      About 350.000 potential
                                                              Banking
                                                                                            “mass affluent” clients in
                                                              Capital                       Finland and 2 million in the
                                                              Markets                       Nordic region
                                                      Large corporate banking
           HNW




                                                            Private banking
                                                                                                      The emerging
                                                  Wealth management (advice based)
                                                                                                      eFS sweet spot?
                                                  Wealth management - self managed

                                                Retail asset management (fund products)


                                       Brokerage (execution -led)
           Retail




                                           Retail banking                       Insurance



                           RETAIL SME banking     Consumer Banking       L&P                 P&C
                           BANKING                           Bancassurance                    INSURANCE

                                                             Volume
Source: Datamonitor
             Appendix


Kristal Wealth Management
    Concept Prototype
   ”Future Potential Services in mBanking”
                           Kristal Prototype
• Sampo has teamed up with Nokia and Accenture to prototype a wireless
  personal wealth management application for the new Nokia 9210
  Communicator.
• The purpose behind this collaboration is to research the possibilities
  offered by intelligent mobile terminals’ to access real-time information.
  But the real priority is providing the capability for the end-user to act on
  that information - do transactions which are then executed in real-time
  back-end systems.
                                Kristal functionality
• Kristal concept prototype is specially designed for the mobile environment
   by Bringing the bank to customer’s pocket:
    •   The Watch List is an intelligent agent that can be set to continuously monitor financial
        information such as stock prices and account transactions. The customer can configure it
        using specific criteria (e.g. stock price),and when these criteria are met, an alert is
        immediately sent to the customer's Nokia 9210 Communicator for transaction capability.
    •   Wealth Manager, a service that can be used to access up-to-date personal wealth
        information (such as account and portfolio details) when the customer needs it. The user
        can view, in colour, graphical reports of their account information and categorize account
        transactions
    •   In the Asset Allocator Investor can personalise a balanced investment strategy and
        investment plan. Information like intended initial investment, yearly additional
        contribution, investment horizon and risk tolerance can be used to create the investor's
        profile. The service will use the profile to find an optimal mix of assts and intelligently
        predicts the growth of wealth. Investor can fine-tune his plan interactively to see the
        effects on asset allocation and project wealth instantaneously. Finally, the service will
        recommend a mutual fund portfolio that will best satisfy his investment needs.
            Benefits to Sampo and Its Customers
• Application is highly personalized for Customer’s own use, and he can
  effectively use other Communicator functionality to increase the personal
  value added in addition to the provided personal financial assistant
• A user friendly, convenient, graphical mobile banking application for
  customers providing availability of up-to-date personal wealth anywhere
  and anytime
• Kristal Wireless Personal Wealth Management prototype initially targets
  high net worth individuals’ differentiated financial needs:
    •   Real-time access to information
    •   Fast order execution
    •   Mobile access
    •   Inexpensive operational costs
    •   Continuous connection
    •   Aggregation of information
    •   Planning and simulation tools
              Information to Transaction Process
   • Wireless Personal Wealth Management prototype improves customer
       relationships by providing enhanced services to customer:




                                  Receive stock alert




                                                            Confirm transaction conveniently
Personalised Watchlist

                                       Customers




        View personal wealth reports
                                                   Receive account updates
Asset Allocator
                                   Kristal Architecture
                                       Prototype environment

 • Client-server model of operation
       • local application written in Java or C++ running on the client device
       • server application written in Java running on a remote server
       • client and server communicate over mobile and data networks
         using SMS messaging and/or standard HTTP


                                                    Mobile & data
                                                     networks

                                       Networks and messaging
                                       •  using mobile, public telephone and data networks
                                       •  message based communication
Client                                 •  based on SMS and/or online connectivity
•   Nokia 9210 Communicator                                                           Server
•   EPOC R6 Crystal operating system                                                  •   Windows NT4/2000
•   Local Java/C++ application and data storage                                       •   Bea Weblogic Server
                                                                                      •   Accenture SMS Server
                                                                                      •   database server (TBD)
Appendix

								
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