PowerPoint Presentation

IFC DIGILAB FINANCE

BRINGINGDIGITAL INNOVATION TO THE FINANCIAL SECTOR IN LATIN AMERICAAND THE CARIBBEAN

April 2021

NURIA ALIÑO EXPERT IN INNOVATION, STRATEGY AND OPEN BANKING

Nuria Aliño is a senior specialist in Digital Financial Services at the IFC (World Bank) responsible for Alliances and Innovation in the Group of Financial Institutions.

• She has been a member of the Boards of Directors, the Board of Advisors and Committees for investment in funds.

She leads digital transformation and open banking projects for financial institutions.

• She is currently supporting Fintechs to scale their Business models and with their expansión plans.

Likewise, she focuses on promoting alliances between financial institutions and Fintech or Tech companies that allow them to accelerate their digital strategy. She actively advises on Open Banking strategies that facilitate integration with digital ecosystems. She also leads investments, both debt and equity in Fintechs.

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SUPPORTING DIGITAL TRANSFORMATION: WHY

Tier II Banks & MFIs

Back to 2017…

Larger FIs around the globe

Reduction in Cost-to- Income Ratio

• Digital transformation perceived as something related and managed by technology

Improvement in operating income

VS.

Increase in profits

• Isolated tech initiatives that were not aligned to business strategy

Increase in new customer acquisition

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IFC LISTENED TO ITS CLIENTS … AND BUILT ITS VALUE PROPOSITION FOR THEM

THE NEED

VALUE PROPOSITION

WHAT

An accelerator program that supports financial institutions to develop their digital transformation strategies and roadmap

ACCELERATE YOUR DIGITAL TRANSFORMATION STRATEGY

Financial institutions need to accelerate their digital transformation

FINANCIAL INSTITUTIONS

Program that supports financial institutions to develop their open API strategy , and platform to experiment innovative solutions for relevant use cases with third party providers.

Financial institutions need to be ready for the API economy

ACCELERATE YOUR OPEN BANKING ON STRATEGY

Regulators & supervision bodies need to support and understand that it is an ecosystem effort

ACCELERATE YOUR DIGITAL TRANSFORMATION STRATEGY

Digital Transformation acceleration program for financial sector regulators and supervisory bodies

REGULATORS

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Financial institutions need to accelerate their digital transformation

An accelerator program for financial institutions to improve and consolidate their digital transformation strategy and roadmap to see tangible and sustainable over time outcomes.

AN INNOVATIONOF

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HOW

Our Digital Transformation Methodology start with the Digital House :

1

Vision

Our ambition and North Star…

Customer Experience Vision

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.Our customer-centric approach …

Digital transformation drivers

3

… key types of strategic initiatives to direct Digital Transformation…

Initiatives

Initiatives

Initiatives

4 Capabilities 4

…that require critical digital skills

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BUILD YOUR DIGITAL VISION

The Vision is formulated as a combination on 2 factors :

Digital Ambition Describes how deep the

1

1

2

organization wants to transform its business model and incorporate new models

2

Focus of the change Describes if the core change will be addressing with major effort an internal transformation, operations (processes, systems, talent, etc) or the the experience, the front-end (omnichannel, personalized, without frictions, etc.)

Today

2

Source: DigiLab Finance

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CUSTOMER EXPERIENCE VISION

IMPLEMENTACIÓN

Discovery (Empathy)

Describe (Define)

Co-Create (Idea)

Scale (Validate)

Sustain (Optimize)

DEPLOY THE DREAM

CHANGE THE STORY

TELL THE STORY

MEET THE PROTAGONIST

EVOLVE THE IDEA

TOOLS

Interviews & observation

Customer journey

Pilot

Blueprint

Prototype

Source: DigiLab Finance

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DRIVERS

A successful digital transformation depends on making the connection with the business strategy through the definition of the digital transformation drivers

Increase Customer satisfaction

Increase Market share

Driver

Increase Efficiency

35%

25%

40%

Weighing

• Redesign and automate the

• Design and deploy a service design area . • Collaboration with fintech to develop a PFM tool.

• Digital marketing strategy to sell through Instagram • Expand our digital

recovery process .

• Adopt a

microservices architecture. • Introduce DevOps methodology

portfolio to a virtual prepaid card for the youth segment .

Initiatives of the digital roadmap

Digital transformation drivers (Illustrative)

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CAPABILITIES CHANGES IN THE OPERATING MODEL

FOCUS ON

GOVERNANCE

Get the buy-in of the Board of Directors

PROCESSES

First the customer experience then the processes. Work on redesign and automation

CULTURE

Mindset & Business Agility. Build MVP, iterate and test with the market

Big challenge

TECHNOLOGY

Decoupling and microservices Architecture. The importance of a data-centric organization

New roles and skills are requiered. The organization has to develop it internally or bring it from the outside

TALENT

INNOVATION

Develop the innovation capability: Incremental Innovation and Disruptive Innovation (New business models)

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WHAT WE HAVE LEARNED MOVING TO IMPLEMENTATION PHASE

Implement Digital Strategy

Develop Digital Strategy & Roadmap

Strategic oversight

Digital Transformation Office

Digital Culture & Business Agility

Data-driven strategy

Credit Process optimization

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RESULTS FROM THE 5 COHORTS

The Net Promoter Score (NPS) measures the participants willingness to recommend the program

19 financial institutions Participated

Results after participating in DigiLab

Have a digital strategy and route map of its digital transformation approved by its board of directors. Initiated the implementation of their digital roadmaps. Launched a digital product or developed a department for leading digital transformation . Launched a their own digital-only business and/or challengers .

Average recommendation index

91%

Net Promoter Score (NPS)

Other Results

• They began initiatives with allies they met during the DigiLab • They trained the rest of the C-Level • They have deployed business agility programs to scale-up the agile mindset beyond IT. • They are working on the design of their digital culture

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WHAT WE HAVE LEARNED CAPABILITIES: INNOVATION MODELS

ACQUIRE

PARTNERSHIPS

DEVELOP IN HOUSE

INVEST

EXPLORE

Potentially disruptive in the business model

We identified a NEED: open APIs to scale collaboration

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Financial institutions need to be ready for the API economy

THERE IS A NEED TO BUILD AWARENESS ON OPEN BANKING

Open Banking

Open APIs Strategy

Allows the bank to integrate into ecosystems

Trend by which Banks open their infrastructure to third parties

▪ Scope: Business model, market and customer needs

▪ Regulatory Scope

▪ Low monetization potential

▪ High monetization potential

▪ APIs become a commodity

▪ APIs are enablers of new business models

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IFC DIGILAB SANDBOX

Program that supports financial institutions to develop their open APIs strategy ,

Module 1 Module 2

and platform to experiment innovative solutions for relevant use cases with third party providers.

Currently piloting in Colombia

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Digital transformation is an ecosystemeffort that alsoneeds the support of financial sector regulatory/supervisionbodies

DIGILAB REGULATORS

Digital Transformation Acceleration program for

regulatory/supervisory bodies of the financial sector that supports them on the development of their own digital transformation roadmap aligned to the digital goals of their country .

REGULATORS

POWERED BY

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CONCLUSIONS

• Develop your Digital Vision to align all your initiatives and projects • Apply the customer centric thinking to analyze and understand the life cycle of your customers • Develop the tools to transform your organization into one that is agile and digital • Analyze the customer-centric operational model for necessary capacities to enable digital transformation • Identify how to enable digitalization of banking processes and modernize the IT systems to succeed with digital transformation • Recognize the ways new digital technologies impact the banking industry. • Become data driven • Generated initiatives, define your road map

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IFC DIGILAB FINANCE

BRINGINGDIGITAL INNOVATION TO THE FINANCIAL SECTOR IN LATIN AMERICAAND THE CARIBBEAN

April 2021