Frontiers in Finance Issue 61

Frontiers
in Finance
Issue #61
Reshaping financial services
On the cover
Harinder Takhar, Paytm Labs, page 6
Featured interviews
Voices on 2030, page 13
Ranjana Clark, MUFG, page 22
Harit Talwar, Goldman Sachs, page 35
October 2019
home.kpmg/frontiersinfinance
Foreword
Letter from
the editors
Big changes; big opportunities
Chairman’s message
If change is the only constant, then transformation is the only option. And so it is for Cover story
Financial Services executives around the world. Massive changes — in business Paytm: Solving
models and operating strategies, in regulatory environments and customer problems to create
expectations, and in technologies and competitive advantages — are sweeping across opportunity
the marketplace. Banks, asset managers and insurers are all looking to seize the
opportunities.
This edition of Frontiers in Finance explores some of the great challenges now facing
Financial Services executives as they strive to balance their short-term objectives
against their longer-term transformation imperatives. As organizations move to Creating efficiencies
re-evaluate, re-imagine and re-define their business models and operating strategies,
this edition offers some insights to help executives create and execute sustainable
transformation in an ever-changing world.
Jim Suglia
The articles in this edition are concentrated around three main drivers of change:
KPMG in the US the desire for efficiency; the shift to digital; and the evolving regulatory environment.
Yet the lessons being shared by the banking, asset management and insurance leaders
interviewed for our articles are broadly applicable, regardless of the change pressures Digital models take hold
your organization is facing.
Some of our articles — such as our cover story with Paytm Lab’s CEO or our interviews
with MUFG’s Head of Global Transaction Banking and with the Head of Global
Consumer Business at Goldman Sachs — offer deep insights into the pace and scope
of the change that is now underway across the industry. Others, such as our articles
on the changing nature of M&A, the introduction of IFRS 17 and the drive for improved Compliance-driven
operational excellence, take a focused view of the new strategies at play within key transformation
Ton Reijns
KPMG in the Netherlands areas of the financial services organization.
What this edition of Frontiers in Finance clearly shows is that the leaders are not
waiting for clarity on what exactly the future may hold; they are taking bold steps and
making radical changes to their businesses to find and create their own opportunities
for transformation and growth. This edition provides practical ideas on how they are
doing it.
On behalf of KPMG’s global network of financial services professionals, we would like
to thank all of the executives and business leaders who took the time to share their
thoughts, experiences and insights with us.
Maria Trinci
On secondment with If you would like to learn more about the issues raised in this edition of Frontiers in Finance,
KPMG in the UK or to discuss your own unique transformation opportunities, we encourage you to contact
your local KPMG member firm or any of the authors noted in this publication.
© 2019 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services
and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Contents Chairman’s message
Cover story
Paytm: Solving problems to
create opportunity
4
6
10 22 40 Cover story
Paytm: Solving
problems to create
opportunity
Creating efficiencies
Compliance-driven
Creating efficiencies Digital models take hold transformation
10 What ails European banks? 22 Agility with discipline: 40 Next-generation banking Digital models take hold
Exploring the challenges facing the Transforming MUFG’s technology and tax implications
European banking sector, and ways Transaction Banking business As operating models change, tax
in which to transform. Ranjana Clark shares her views on teams in traditional banks must
digital disruption in banking and four broaden their horizons.
14 Capturing the benefits of pillars for success.
simplification 46 AI offers the smartest solution
Compliance-driven
Simplification as a vehicle to a faster, 26 Connect to compete: Delivering for transition to RFRs
leaner, more agile business. the next-gen target operating LIBOR transition presents the transformation
model opportunity to transform a manual
18 Accelerating transformation: What will the next-gen target and error-prone process. Are you
Beyond signing the deal operating model look like? ready?
A new way to look at, and achieve
value from, M&A and deals. 30 Does banking’s future outweigh 50 Tax, transfer pricing and
its past? transformation: What Asset
New business models will halt the Managers may be forgetting
13
Voices on 2030 band-aid approach to legacy systems Tax-savvy asset managers
The Future of Financial as banks look to new architecture undertake five key activities
Services that is digital to the core. to ensure they aren’t missing
Video interviews with opportunities or creating new risks.
leading and start-up financial 35 Spotlight: Goldman Sachs
institutions on the future of the breaking new ground with Marcus 54 When opportunity comes calling:
industry — interconnected, A discussion with Harit Talwar, Using the deferral of IFRS 17 wisely
collaborative, frictionless. Head of Global Consumer Business, Five critical commercial and
Goldman Sachs, on starting a operational opportunities for
digital bank. insurers from the delay to IFRS 17.
36 Flexibility for growth:

Operational excellence in an
era of digital disruption
What will it take to achieve
operational excellence in today’s
insurance industry?
© 2019 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services
Finding the fortitude Chairman’s message
to transform Cover story

Paytm: Solving
problems to create
opportunity
F
inancial service executives know they need to get serious about
transformation if they want their organizations to survive. Now
they just need the organizational fortitude to make it happen. Creating efficiencies
James P. Liddy
Global Chairman, Financial Services
KPMG International
Partner, KPMG in the US
Digital models take hold
As an industry, we have spent years Start with a healthy appetite In part, this reinvigorated commitment
talking about the need for radical to transformation is being driven by
Compliance-driven
The reality is that, until today, few transformation
transformation. Yet, notwithstanding a executives have seemed willing to risk concerns around competition. Executives
handful of truly innovative leaders, the their careers on a wholesale organizational are starting to realize that the more
reality is that little has actually changed transformation. Yet my conversations innovative brands are starting to look and
in the way most financial services with banking, insurance and asset act quite unlike a traditional bank. They
firms operate. management leaders around the world also understand their customers no longer
suggest that the mood is starting to shift. want the same types of financial services
Sure, over the past decade, many key
Executives and organizations are starting they did just a few years ago. And that is
processes have been digitized and
to find the intestinal fortitude to do what leading many financial services executives
automated; some exciting new channels
they know they must. to reconsider where they want to position
and innovative tools have been added;
themselves in the go-forward economy.
new business models and operating Consider this: In KPMG International’s
models have also been adopted. recent global survey of financial services While most executives recognize that
CEOs,1 22 percent of respondents transformation is now an absolute
What we have not yet seen, however,
admitted they were primarily driven imperative, my discussions with them
is widespread appetite — or, more
by short-term growth pressures. But suggest that many are worried they
importantly, competition — around
47 percent said they were more motivated may not have the people, processes or
full-scale transformation programs.
by much longer-term objectives such as organizational agility to be able to do what
Instead, we have seen smaller-scale
upholding the values of customers, making is necessary to compete. They want to
efforts and initiatives, largely aimed at
an environmental and socioeconomic progress, but they are concerned they may
achieving cost cutting and efficiency
impact or innovating the business model. not have the right foundations for success.
objectives.
Global CEO Outlook 2019, KPMG International

1
4 | Frontiers in Finance © 2019 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services
Add the right ingredients Customer focus: Perhaps not

My view of the banking, insurance and surprisingly, around two-thirds of
asset management industries suggests financial services CEOs agreed they
there are five key areas where financial will need to significantly improve their
services executives will need to focus understanding of customers going
on if they hope to have the organizational forward. The problem is that today’s Chairman’s message
capabilities, capacity and fortitude customers lack filial loyalty to historical
required for sustainable change. institutions. They want what they want,
when they want it, and they don’t really
Talent: One of my greatest concerns care who they get it from. That makes it
is whether today’s financial services extraordinarily difficult to retain customer
workforce has the skills and capabilities loyalty and deliver on customer needs Cover story
required to be successful as the workforce on a consistent basis. The leading Paytm: Solving
of tomorrow. Financial services firms are brands are applying a wide range of problems to create
full of people with really good production technologies, partnerships and models opportunity
capabilities; what they often lack are to improve their understanding of their
innovative thinkers at the operational level. customers. And they are communicating
The leading firms are reorienting their with their customers in ways that
workforces to focus on recruiting and enhance convenience, build loyalty and
developing employees who are data- inspire trust.
driven, analytically inclined, attuned to the Creating efficiencies
technological change in the marketplace Efficiency: Building a new organization
and keenly aware of the shifting needs of on top of inefficient foundations is not
their customers. the key to successful transformation,
particularly in a time of increased market
Culture: Financial services firms will need volatility and uncertainty. While many
to start delivering the types of products banks are currently focused on cutting
and services their customers require. And out costs and improving bottom-line
CEOs recognize they will need to foster a Digital models take hold
financial performance, the leading
much more innovative and entrepreneurial brands are those that are using the
culture in order to achieve that. In fact, in opportunity to improve organizational
our survey of financial services CEOs,2 agility, encourage flexibility and enhance
84 percent said it was critical to ensure overall resilience. They view large-scale
their employees feel empowered to transformation as a way to reduce the
innovate without worrying about the day-to-day managerial burden of the Compliance-driven
negative consequences; just 56 percent organization so that decision-makers and transformation
believe their organization has a culture employees can focus on creating value.
where failing in pursuit of innovation is
tolerated. Cleary, more must be done to I’ll have what they’re having
create an innovative culture. As this edition of Frontiers in Finance
clearly illustrates, the path to
Contributor
Security: In today’s financial services
industry, providing a safe and secure transformation need not be fraught
environment is often seen as table-stakes with risk. Indeed, this publication is
by customers. But that does not make it filled with stories of banks, insurers
any less of a priority. It is no longer good and asset management organizations
enough to manage cyber events when that are taking transformation head-on
they occur. Cybersecurity needs to be a and finding ways to turn their risks into
opportunities for competitive advantage. James P. Liddy
core competency within the organization — KPMG in the US
one that customers can trust. Our survey What differentiates the leaders in E: jliddy@kpmg.com
of financial services CEOs indicates that this publication from the rest of the Jim is the Global Chairman, Financial
almost seven in 10 organizations see Services, KPMG International. He
industry? In my opinion, it’s that they
information security as a strategic function also leads KPMG in the US’ Financial
had the intestinal fortitude to take the Services practice. Prior to assuming his
and a potential source of competitive first step on the road to fundamental current roles, Jim served as Americas
advantage. transformation. Leader, Global Financial Services.
2
Cover story
Paytm: Solving Chairman’s message
problems to create Cover story

Paytm: Solving
problems to create
opportunity
opportunity
P
aytm has revolutionized India’s payment environment,
and at the same time is creating massive opportunities
for banks, insurers and asset managers. Digital models take hold
Harinder Takhar, Paytm Labs Inc.
Compliance-driven
transformation
Cover story
If you own a smartphone and spend any available to them. Less than 2 percent of
time at all in India, there’s a good chance the population had a credit account. Cash
you have the Paytm app on your home and cheques were the norm.
screen. Most people living in India do:
They use it for everything from buying
Harinder and Vijay Shekhar Sharma
(Paytm’s founder) realized this was a
Users of Paytm’s
groceries and paying school tuition fees
through to selecting insurance products
problem they could help solve. In 2014, app have access Chairman’s message
and getting loans.
the company introduced the Paytm
Wallet. “Allowing customers to store to a stunning
Adoption rates have been amazing —
even by today’s standards. The company
money in their virtual wallet meant that
Indian consumers could now make
array of goods
was founded less than a decade ago.
Yet, today, more than 7 million merchants
transactions using digital money,” noted
Harinder. “It was a game changer.”
and services. Cover story
across India use its QR code-based At last count, Paytm: Solving
problems to create
mobile payment system. The app has
been downloaded more than 100 million
A super-app in the making
Over the next few years, Paytm
the platform opportunity
times; the number of registered users
has jumped from just 11 million in 2014 to
added dozens of new use cases for its
technology. Paytm’s mobile payment
boasted more
more than 420 million today. Revenues
soared to US$480 million in 2018.
platform was, for a time, the only than 15 million
payment method accepted by Uber in
India. It partnered with a wide range merchants Creating efficiencies
Finding the source of the pain
Paytm’s core business has always
of transport, utility and entertainment
companies to create digital payment
across more than
revolved around payments. But the
company sees itself more as a ‘problem
systems. And it launched an
e-marketplace where customers can
200 different
solver’ than a bank or a tech firm. find almost any item or service available categories of
“Our approach is to identify the pain
points for customers and then solve
in India, often at a discounted rate.
“Our typical customer comes to us
service. Digital models take hold
them really, really well — better than because of a needs-based reason —
anybody else can,” said Harinder they need to take a bus or pay a bill — but
Takhar, former CEO of Paytm in India over time, they start to discover that we
and current CEO of Paytm Labs Inc. in can actually help them solve a much
Toronto, Canada. wider range of needs, from paying their
kids’ tuition fees through to finding a
The first pain point the company solved Compliance-driven
great deal on an item they really need,”
for India’s consumers was around transformation
added Harinder.
pre-paid mobile top-ups: Paytm allowed
customers to top their accounts up Users of Paytm’s app have access to a
instantly on their phones rather than stunning array of goods and services.
going to a store, buying a top-up card and At last count, the platform boasted more
struggling with an extraordinarily long than 15 million merchants across more
password. That allowed it to build brand than 200 different categories of service.
awareness and a loyal customer base.
Many of those categories involve
Fixing the system what is traditionally seen as financial
services. For example, Paytm offers
The company’s next objective was customers the ability to insure a wide
much more ambitious — to make India’s range of purchases — including bus
payment system more inclusive, more trips and movie reservations. It has a
efficient and more reliable. It was an ‘fractionalized asset ownership’ product
audacious goal. that allows customers to pay as little
When the company was founded, the as 1 rupee for a fraction of a stock or
vast majority of India’s population had asset. Its Paytm Gold Savings provides
no access to formal banking services at customers with a long-term savings
all. Those that did have bank accounts vehicle.
often struggled to use the instruments
Cover story
Creating markets
While it may seem as if Paytm is taking
on the traditional banking system, it is
not. In fact, as Harinder is quick to note,
Paytm is providing a pivotal intersect
... Paytm’s goal is not just to sell
between India’s population and the
established banking order.
products to users. It’s also to Chairman’s message
“We see Paytm as a way to bring half

help users achieve their own
a billion unbanked Indian consumers
into the formal banking system,” noted
goals. That often means helping
Harinder. “People who work in the them establish themselves in the Cover story
informal economy or in rural areas have
pretty much the same financial services mainstream economy. Paytm: Solving
problems to create
needs as everyone else. But they are
often left out of the system because they opportunity
are not on anyone’s radar.”
Indeed, given its rapid rate of growth
and adoption in India, the app is quickly
becoming the top distribution channel for
financial services in the country. Through Creating efficiencies
the merchant store, users can access
a wide range of traditional financial
products, from home and life insurance
policies through to investment assets
and products.
“We help our users discover the Digital models take hold
products and services they need,”
added Harinder. “The traditional banks
and insurers love the fact that we have
access to people they simply could not
reach before.”
Driving customer acquisition Compliance-driven

Yet Paytm’s goal is not just to sell transformation
products to users. It’s also to help
users achieve their own goals. That
often means helping them establish
themselves in the mainstream economy.
In a cash economy, small businesses
and merchants are often overlooked
by the traditional banks due to a lack of
reliable records and credit history. Paytm
helps to solve that pain point by using its
technology to create a robust and reliable
view of its business users — their
cash flows, their customers, their daily
balance sheet status and so on. And they
use that view to help the business
establish their credit-worthiness.
Cover story
“More often than not, we’ll then help founder was featured in Time’s 100 Most
that merchant find a bank that wants Influential People (2017)2 and Harvard
to work with them based on the data Business Review did a case study about
we have collected,” added Harinder. Paytm titled, Paytm: Building a Payments
“We are helping banks acquire new, Network (2017).3
credit-worthy business and personal
China-based Alibaba Group and Japan- Chairman’s message
customers that simply didn’t exist in
based SoftBank have both made
the mainstream economy before the
significant investments into Paytm over
digitization of payments.”
the past 10 years. So, too, have Western
Out of India investors such as Sapphire Ventures
and Berkshire Hathaway. As of the start
So what is Harinder — Paytm’s first Cover story
of last year, the company was valued at Contributors Cover story
CEO and long-time friend of founder more than US$10 billion. Paytm: Solving
Vijay Shekhar Sharma — doing at Paytm
Solving problems to
problems to create
Labs in Canada? Solving more pain “Investors like that we solve problems. create opportunity
opportunity
points, of course. And, since we do it better than anyone
else, our customers keep coming back,”
The company has been looking for noted Harinder. “We still have significant
opportunities to use its technology room to grow in our home markets and a
to address payment opportunities world of amazing opportunities overseas.” Harinder Takhar
outside of India. Last year, the company CEO — Paytm Labs Inc. Creating efficiencies
partnered with Japan’s Softbank and Harinder is the CEO of Paytm Labs
Ready to partner Inc., the Toronto-based research and
Yahoo! Japan to launch a new digital
From his vantage point, Harinder is development division of Paytm. In
payment system in Japan.
confident that the current state of his previous role, Harinder led Paytm
“When we launched PayPay in Japan, about disruption in financial services will as its first CEO in India when Paytm
87 percent of personal retail transactions continue for the foreseeable future. launched in 2011. At Paytm Labs
Inc., he is responsible for two key
were happening with cash,” said Harinder.
“Consumers clearly expect the way they objectives: building Paytm’s machine
“Japan is such a large economy with learning and big data technologies Digital models take hold
discover and use financial services to
significant consumer spending. The and growing Paytm’s presence in
fundamentally change,” he noted. “We
opportunity to apply our technology to help North America.
can’t expect things to continue to happen
solve that problem was obvious.”
in the same old ways. As an industry, we
Paytm also sees significant opportunity need to keep up with expectations.”
in Canada where the organization has
Harinder sees Paytm as the technology
already developed a consumer app and is Compliance-driven
geek that understands what customers
now investing into its merchant-acquiring transformation
really want and need. And they are able
capabilities to create more value for
to move faster than most traditional Amarjeet Singh
customers. The Lab in Canada is also
financial services organizations to deliver KPMG in India
where Paytm develops and tests many
on those expectations. The opportunities E: amarjeetsingh@kpmg.com
of its investments into new technologies. Amarjeet is a Senior International Tax
for partnerships are immense.
and Regulatory Partner with KPMG
Capital and commendations flow “We look forward to working with India specializing in the area of internet
Paytm’s ability to solve problems with all sorts of banks, lenders, insurance commerce and start-ups in the Fintech
technology has made it a darling of companies and asset management firms space. He is a qualified Chartered
to bring these new technologies and Accountant and has advised a number
technology investors and pundits. The of Corporates in relation to inbound
company has won the FT Future of customer interfaces to market,” added and outbound investments from India.
Fintech Award and Forbes’ Outstanding Harinder. Expect to find the Paytm logo He is also the Lead account partner for
Startup of the Year Award.1 Paytm’s on your smartphone soon. Paytm in India.
1
https://paytm.com/about-us/
2
https://blog.paytm.com/vijay-shekhar-sharma-named-to-the-2017-time-100-list-of-most-influential-people-in-the-
world-1d4f5cffe696
3
https://www.hbs.edu/faculty/Pages/item.aspx?num=52175
What ails Chairman’s message
European banks?
Francisco Uria, KPMG in Spain
Cover story
Paytm: Solving
problems to create
opportunity
M
aking generalizations about European banks — as about
North American or Asian banks, for that matter — is
always rather unfair. Each region, each entity, each
business model faces wildly diverse circumstances, such as the
degree of progress made along the path of digital transformation,
the regional setting or the range of products and services on offer. Digital models take hold
Compliance-driven
transformation
Nevertheless, there are aspects common analysts and institutional investors about traditionally buoyed up the profits of
to most banks that indicate that European any improvement in the short term, given financial institutions. Nor will achieving
banks are having a very difficult time of it. that the lack of economic growth can slow revenue growth be easy. In all likelihood,
down the rate of growth of credit demand. only by slashing costs, reducing the
Objectively, most European banks
number of branches and making staff
are experiencing problems of lack of Sure enough, the global economic context
cuts will institutions be able to make a
profitability, the origin of which is the and, particularly, trade tensions between Chairman’s message
positive contribution to profit and loss.
subject of discussion. the US and China, on the one hand, and
This scenario has dealt a considerable
between the US and Europe, on the
On the one hand, banks and the blow to aggregate stock market
other, are affecting European economic
associations that represent them claim that capitalizations as was seen when the
growth and slowing it down, as both
the source of the problem is essentially closing bell rang at the end of 2018.
the European Commission and the ECB
the European Central Bank’s (ECB) Cover story
have previously stated. Obviously, other Regulation has not helped. In recent
policy of lax money and negative interest
political factors such as Brexit and the months, the individual levels of MREL Paytm: Solving
rates that, as we recently learned, are problems to create
uncertainty it has created have also played (minimum requirement for own funds
set to continue for some time due to the opportunity
a part in the lacklustre performance of and eligible liabilities), which represent a
weakness of the eurozone economy. ECB
the economy compared to that reported sizeable burden for small and medium-
spokespersons at the highest level have
some months ago. sized entities that are less accustomed to
repeatedly contested this claim, arguing
raising finance on capital markets, have
that the real source lies in an excess of Against this backdrop, the general
gradually come to light.
installed capacity and the attendant need outlook for the European financial sector
for countries that have not yet undertaken is one in which the beneficial effects of On 2 July 2019, the European Banking Creating efficiencies
restructuring and streamling processes, to digital transformation on efficiency are Authority quantified the aggregate impact
do so — and soon. still nowhere to be seen. New players of the new Basel III capital adequacy
(singularly, the Big Techs) are moving requirements, which mainly affect the
Combined with this perceived lack of
in, affecting areas of business that have larger banks, at Euros 135.1 billion.
profitability comes the pessimism of
Faced with new competitors, heightened regulations and greater capital adequacy requirements, European
banks would do well to respond with a combination of the following strategies:
Compliance-driven
transformation
1 Diversification of revenues, reinforcing positions in asset management, insurance and private banking.
2 Efficiency improvements through the implementation of effective strategies aimed at cost cutting and
streamlining of operations.
3 Monetization of technological investments such that the ‘digital dividend’ derived from the
transformation that has already taken place can materialize.
4 Use of market opportunities to shed non-performing asset portfolios (NPLs), in order to comply with
the repeated requests of the regulator and the supervisory bodies, and entry into agreements with
industrial partners with a view to developing specific business segments (consumer credit, loans to
SMEs, asset management, depositary services and custody, payments, etc.) in anticipation of the arrival
of new competitors.
In the new environment, with old and new On the other hand, regulatory
competitors threatening the profitable fragmentation clearly persists in such
areas of the bank, and with legacy systems delicate areas as consumer protection,
that require much more than a simple deposit insurance, the insolvency
patchwork update, the investments regime, etc. This fragmentation means
traditional banks need to do are massive. that banks do not have complete Chairman’s message
But it would be a mistake to think that the freedom of movement, even within the
change is only related to technology. eurozone.
On the contrary, it is not just, or mainly, It is discouraging to think that it has not
about taking advantage of what been possible to make progress in the
technology can offer. It is a question of creation of a European deposit insurance
Cover story
undertaking an integral transformation of scheme (EDIS), despite the time that has
the business model of the entities and to elapsed since the political agreement
Paytm: Solving
rethink their strategy. The key question to was reached to build a banking union in problems to create
respond is how the banks will create and the eurozone. opportunity
monetize value for their clients and the
Furthermore, this fragmentation, in the
society as a whole in the future.
case of a cross-border merger, prevents
This is also a critical point for many European synergies from being captured as they
banks: how to position themselves in the are in a purely domestic context, so any
marketplace. They should carefully select potential efficiency gains are greatly Creating efficiencies
their target markets, business and clients attenuated by the limited expectation of
and also decide if they can make this work an increase in turnover. Risks of every
alone or if they need some partnership and type are inherent to the integration
with whom. process in which cultural, linguistic and
other factors also come into play. One
Aside from these strategic decisions, there
might well ask, why such insistence in
is also the issue of consolidation. Naturally,
this regard by the ECB? Digital models take hold
in the above context, an increase in size
can be a means (though not the only one) For all of the above reasons, and
to achieving efficiency gains and boosting notwithstanding the view that integration
profitability. One should be aware that such processes between credit institutions
gains usually occur after a certain period, from different countries can be
and that initially, at a time when the sector beneficial, the most prevalent view is
is experiencing difficulties, the profit and that both in markets where financial Compliance-driven
loss statement (P&L) may be adversely sector restructuring and consolidation
transformation
affected. On the other hand, these are are still pending, and in markets where
mergers that would make sense from an sizeable mergers have already occurred
industry perspective and that, given the but where other transactions may still
characteristics and position of the entities, be in the offing, the most typical form of
would bring about the creation of solvent, consolidation will continue to be, at least Contributor
competitive institutions. for some time, consolidation among
domestic entities.
Consolidation also raises the question of
whether it should be cross-border within In conclusion, the European financial
Europe or whether domestic integration sector continues to struggle in a
should prevail. highly complex scenario where
limited profitability, a new wave of
Although the ECB, among other
regulation and difficulty in gathering Francisco Uria Fernández
legitimate voices, has promoted cross- KPMG in Spain
profits through efficiency gains from
border mergers, there are several reasons E: furia@kpmg.es
technological investments (digital
why, with exceptions, these have not Paco is a Senior Partner with KPMG in
transformation) in the short or medium
materialized for banks in the eurozone for Spain and the EMA Head of Financial
term, create a situation in which the only Services, Banking & Capital Markets.
some years, even within the scope of the
strategy within reach appears to be cost A qualified lawyer, he holds a Doctorate
Single Supervisory Mechanism. The main
cutting. There are not many elements of Law (Banking Regulation) from the
reasons for this are limited expectation
that would lead us to believe that the Complutense University of Madrid.
of drumming up business and modest Paco has also authored a number of
situation is going to improve in the near
profitability, as well as the uncertainties publications mainly related to financial
future.
that a merger always brings with it. regulation.
Voices on 2030
The Future of Financial Services
Cover story
The digital disruption of financial services is well underway, from the explosion of fintechs to the opening up of financial services. But
Paytm: Solving
what will the industry look like when the dust has settled? KPMG spoke to prominent figures from fintech to big banks, insurers and problems to create
asset managers to software providers and social enterprise — who shared their vision for the future of financial services. opportunity
kpmg.com/voices2030
“In 2030, the whole survival game is: “Speed and adaptability is the new
are you in the right ecosystems?” competitive battleground.” Creating efficiencies
Piia-Noora Kauppi Claire Calmejane

Managing Director, Risk Product Owner,
Finance Finland Lloyds Banking Group
“In 2030, the question will be how “Be ready for an open ecosystem.” Digital models take hold
much does the financial sector
contribute to sustainable development.”
Sopnendu Mohanty
Sasja Beslik Chief FinTech Officer,
Sustainable Finance Expert Monetary Authority of Singapore
Compliance-driven
transformation
“With open insurance you will have “Finance will become more
the ability to connect services and accessible and frictionless.”
fetch data to make really interesting Nick Middleton
services for the end customers.” Executive Director,
Kristin Linmark UBS Wealth Management,
CIO, SPP Head of UBS SmartWealth UK
“Our platform is going to allow “Insurance will be more predictive

us to do more intelligent risk in 2030.”
management.” Blair Turnbull
Managing Director,
Ning Tang Digital & Retail
Founder and CEO, CreditEase UK and International, Aviva
“All these ecosystems will be totally “Data analytics will form the core of
frictionless for a customer.” your financial crime unit by 2030.”
Sébastien Marotte Colin Bell

Europe, Middle East and Africa leader, Group Head of Financial Crime Risk,
Google Cloud HSBC
Capturing the Chairman’s message
benefits of Cover story

Paytm: Solving
problems to create
simplification
opportunity
Hessel Verbeek, KPMG Australia

Ian Smith, KPMG in the UK
F
inancial services
executives know they
need to simplify their
organizations to support Compliance-driven
sustainable growth and to transformation
adapt to secure a successful
tomorrow. But are they
approaching simplification in
the right way to thrive in the
longer term?
Everybody knows that most financial However, dig into the investment case
services organizations, apart from the behind many of these initiatives and —
most recent disruptors, are far too interestingly — most are founded on
complex. There is a huge amount of
legacy that is impairing the ability to
return and efficiency metrics such
as Net Present Value (NPV), Internal We are seeing
adapt and meet the rapidly evolving
needs, requirements and expectations of
Rate of Return, and cost and head
count reductions. Of course, these are
some banks Chairman’s message
customers. Customers want convenience,
efficiency, information, education and
important metrics: Shareholders expect
returns and competitors are differentiating
and insurers
seamless, frictionless experience across on cost and efficiency, but these should replace key
multiple channels at a time that suits
them. They expect rapid deployment of
not be the only drivers.
elements of Cover story
new tools and innovations, which are not
just relevant, but also engaging. They are
Go beyond efficiency
Cost efficiency is far from the only benefit
their core Paytm: Solving
problems to create
looking for transparency and trust. that can be accrued from simplification. systems and opportunity
Simply put, they want their banking,
insurance and investment transactions to
Simplifying what you do today doesn’t
necessarily set you up for future success consolidate
be simple. And most of today’s financial
services organizations are anything but
if the market is changing rapidly and
business models are being disrupted.
their ancillary
simple. Simplification also has to support
changing what you do tomorrow.
systems in Creating efficiencies
Nothing simple about it A simplified architecture can also support
an effort to
It’s not for lack of trying. Most financial
services firms are now executing on
innovation, for example, developing,
testing and launching new propositions
rationalize
dozens — sometimes hundreds — of and getting to market faster and cheaper. their IT estate,
different initiatives that, ultimately, should
simplify the business. Some of these
For example, a simplified core banking
system would allow firms to make modernize their Digital models take hold
efforts represent unprecedented change
agendas, with all of the associated bear
upgrades and integrate new technologies
in a fraction of the current time. Entering
capabilities,
traps. KPMG member firms are seeing
some banks and insurers replace key
into new alliances and partnerships will
be more feasible and viable for a simpler
reduce costs
elements of their core systems and business. and, at the
consolidate their ancillary systems in
an effort to rationalize their IT estate,
It should also support scalability, reduce
future cost, increase the speed of change
same time, Compliance-driven
modernize their capabilities, reduce
costs and, at the same time, provide
and provide improved risk management provide the transformation
the capabilities to adapt and evolve their
business models to secure future growth.
and resilience. Straightening out the
spaghetti bowl of systems and processes capabilities
Others are working on more focused
also creates better visibility which, in turn,
should allow financial services firms to
to adapt and
pain points and complexities. Some
are rethinking the fundamentals of their
get much closer to customers, improve
operational resilience and control over
evolve their
products and their wider portfolio of performance, and better understand business
products. Others are examining their
current financial, business and operating
and anticipate risks. Simplified control
environments and processes should models to
models, and outsourcing arrangements.
Many are working on simplifying specific
help organizations adapt quickly to future
regulatory changes.
secure future
client and risk pain points like KYC, claims
and remediation.
Perhaps most importantly, simplification growth.
of the business allows decision-makers to
Simplification is as much about creating focus their scarce capital on investments
and applying the capabilities to support that actually matter to the business and
improved customer experiences, its customers. Just imagine the clarity of
innovative propositions, speed and mind that would come from overseeing
automation, scalability and increased a vastly simplified financial services
visibility as it is about cost efficiencies. operation. IT budgets would be focused,
Five steps to simplification

01
Clarify the financial Chairman’s message
organization’s
strategic focus (such
as purpose, role, client
focus, experience
requirements, value,
ease, innovation) and Cover story
make clear choices Paytm: Solving
around competitive problems to create
positioning. This will
02
Choose a direction for the business architecture opportunity
drive strategic choices (such as the assembly of customer journeys,
around the organization’s distribution and operations). Many financial institutions
architecture and are organized along product and channel lines, giving
operating model. rise to silos, which need to be broken down.
Typical considerations for business architecture include: Creating efficiencies
— customer journeys, segments and product needs
— sales and service approach (e.g. by channel vs.
integrated) and incentivization (e.g. profit or cost
centre)
03
Determine which — multi-brand management and fulfillment
activities are — high level systems architecture
strategic and provide a Digital models take hold
competitive advantage, — operations and technology, including centralized
given the organization’s services between divisions.
agreed focus in the
first step. This will
drive choices around
which activities should
04
Assess the simplification options for the Compliance-driven
be retained in-house organization’s activities in line with its strategic
and which could be transformation
focus, its business architecture and the (strategic)
outsourced. nature of its activities. Four main options should be
considered for each activity:
— CoE creation: Leverage current capabilities with
potential for high performance. This is likely to be
the adoption of a current Centre of Excellence
(CoE) for the wider organization (e.g. migrating
Develop the all secured and unsecured consumer credit
simplification road assessments to the state-of-the-art mortgage
05
map, taking into account credit assessment platform).
various dependencies.
— Transformation: Transform existing assets/
The road map will be
capabilities that are not restricted by legacy issues
bespoke for every
(e.g. HR management supported by a newly
organization, given
implemented cloud-based ERP system).
their vast differences
in starting position, — Development for replacement: Build a new
strategic activities and unconstrained capability to take over activities with
simplification options. In too many legacy issues to be transformed (e.g.
order for the change to be full replacement of firmwide data and analytics
delivered, the following functions by a central hub).
must be aligned across — Third-party solutions (including partnering/
the business — clear outsourcing): Consider third-party solutions
roles and responsibilities for non-strategic activities that are not high
and sponsorship to drive performing. Decisions should be based on
and ensure ruthless reduction of complexity, organizational rigidity or
execution. risk, rather than on productivity alone.
innovation investments would be highly tape and glue. Nobody really knows for
targeted, and waste and duplication sure what the unintended consequences
would be eliminated. Every investment are when ancillary systems are shut
dollar would count towards the long-term down. The challenges and risks of major
health of the organization. transformations are significant.
Making the case Take it from the top

Financial services executives are well Simplification should never be the Contributors
aware of the benefits of taking a broader primary objective in and of itself. When
view on the case for change, beyond cost. simplification is the only objective,
They know that improved capabilities, investments in improvements and
agility, risk management and investment innovation will get penalized. But that only Cover story
prioritization is inherently valuable to the reinforces the status quo. Paytm: Solving
organization over the long term. But they problems to create
While assessing and quantifying the non-
often aren’t sure how to quantify them opportunity
cost benefits can be challenging, it is not Hessel Verbeek
and reflect them in the investment case.
impossible. We help banks, insurers and KPMG Australia
That is not surprising. What value do asset managers do it all the time. It does E: hverbeek@kpmg.com.au
you put on getting an as-yet-undefined need a strategic mind-set and a more Hessel leads KPMG’s bank strategy
practice in Australia. With more than
product to an as-yet-undefined market in holistic assessment of the broader and
20 years’ experience in strategy
an as-yet-undefined space of time? How longer-term benefits that simplification consulting, Hessel helps organizations Creating efficiencies
do you quantify the value of decision- can deliver, including support for future make the necessary but difficult choices
making clarity in financial terms? What growth. Where the NPV isn’t adding up required to remain competitive in
does a happy and satisfied customer look but the full benefits are obvious — this is today’s rapidly changing industry. He
like on a balance sheet? These are not worth the effort. believes that the sector needs to focus
simple calculations to make. on simplification of its strategies and
Instead, financial services organizations operations in order to best serve its
The problem is that the ‘harder’ benefits need to see simplification as the vehicle customers and other stakeholders.
of the investment case — the cost and to get to a faster, leaner, more agile and Digital models take hold
risk considerations — are very clear. more customer-centric future, supporting
Simplification often requires organizations new business models to deliver long-
to break the status quo. Sometimes that term, sustainable and profitable growth.
may mean investing into new systems, That will be the only way to thrive in
tools or capabilities. It may require new tomorrow’s uncertain environment.
financial, business and operating models Ian Smith
We believe that the best way to Compliance-driven
and ways of working. Investments will KPMG in the UK
make sure that simplification is given E: ian.smith@kpmg.co.uk transformation
be high and no amount of head count
heavy weighting is by ensuring that Ian is a financial services strategy
reduction will balance the equation in the
simplification is an inherent enabler to Partner based in London. He specializes
short term.
the core strategy; embedded and driven in helping banks, insurers and asset
Somewhat counter-intuitively, many from the top down and shared across all managers understand how markets
executives are also worried about the divisions, functions and markets. With are evolving and identify future winning
business and operating models to
risk of removing the complexity. They clarity of objectives underpinned by a
secure sustainable growth. Ian has
recognize that some of their current strategic decision to simplify, the question worked extensively with many leading
systems, processes and models are stuck of how to quantify all the simplification financial services organizations on these
together with the IT equivalent of duct benefits becomes less sensitive. complex and critical issues.
Accelerating Chairman’s message
transformation:
Beyond signing the deal
Cover story
Paytm: Solving
problems to create
opportunity
Ram Menon, KPMG in the US
Giuseppe Latorre, KPMG in Italy
F
inancial services firms are
looking to inorganic growth Digital models take hold
opportunities to accelerate
transformation. And that puts M&A
and corporate development teams on
the front line of the transformation
strategy. Are they ready? Compliance-driven
transformation
As the pace of disruption picks up speed Taking a new view on value

and traditional sources of value start The problem, in our experience, is
to shift and dissolve, many financial that far too many banks, insurers and
services executives recognize that ‘more
of the same’ is no longer a sustainable
asset managers continue to approach
transformative deals and partnerships as
...46 percent
strategy in the long run. Transformative
changes must be made. They must be
if they are no different from the deals they
have done in the past.
of financial Chairman’s message
made quickly, and they must be executed
strategically. The reality is that they need to be
services CEOs
The most prudent also understand that
approached differently. The vast majority
of deals historically were focused on
said they now
the type of transformative change they
require to compete in today’s rapidly
achieving scale. In those situations, see inorganic Cover story
evolving industry can’t be achieved
‘value’ was measurable from a short-term
perspective in terms of synergies growth Paytm: Solving
problems to create
through organic growth strategies alone.
That has led many financial services
achieved and market share gains.
But when making deals for strategic
strategies as opportunity
CEOs to look outside their organization transformation purposes, ‘value’ is
typically perceived from a longer-term
the fastest
for new sources of inspiration to achieving
their transformation objectives. In fact, in perspective, and thus becomes much way to
a recent global survey of financial services
CEOs conducted by KPMG International,1
more difficult to define and measure.
The first step, therefore, is for financial
transform Creating efficiencies
46 percent said they now see inorganic
growth strategies as the fastest way to
services CEOs and their M&A and their business
transform their business and operating
Corporate Development teams to
clearly define future ambition and and operating
model. design executable strategies that align
with and enable the organization’s
models,
The sprinters have left the blocks
Many have already started focusing
transformative goals. according Digital models take hold
on executing the type of acquisitions, Defining future ambition to KPMG
divestitures, alliances and partnerships
that they hope will enable them to achieve
Everything should link back to value.
Understanding the ‘true’ potential value
International’s
their transformation objectives. Our view
of the market suggests that the insurance
of an acquisition or partnership can give
CEOs more confidence going into a deal
CEO Outlook
industry — generally speaking — has
been relatively more active in this regard;
and help ensure that their M&A and survey. Compliance-driven
Corporate Development teams achieve
many of the larger banks are only just the value that was expected at the outset.
transformation
starting to catch up (particularly around
the payments part of the business). More than simply working with the
business leaders to define and understand
Yet KPMG professionals’ conversations their future ambition, the key to success
with financial services executives suggest is in using that information to reorient the
that many of those at the forefront are way the dealmakers think about everything
increasingly finding themselves struggling from deal origination and valuation through
to convert their desire for transformative to structuring and integration. It’s about
deals into actual results and value. Several making sure there is strategic alignment
deals and partnership agreements are being between the business leaders and the
contemplated or have been signed. But, for transformative deals being pursued.
the most part, not much has changed from
a transformation perspective. Frustration The pitfalls of making deals without this
levels are rising, as post-deal transformation critical first step are myriad and far too
remains a challenge. common. We have seen financial services
firms snap up unique fintech companies
Our view suggests that banks and only to squash their uniqueness with
insurers could be doing more to ensure bureaucratic controls and force-fit
their transformative deals actually enable cultures. Others have invested early into
the desired transformation, and deal innovative technologies and then failed
execution is geared towards maximizing to appropriately integrate and scale the
and accelerating synergy capture and innovation across the enterprise.
value creation.
1
The truth is that even the most the transformation of the organization
tough-minded business leaders can ‘fall in towards ‘acting as one’.
love’ with a potential acquisition target and
In our experience, post-deal business
misjudge its present worth, potential value
and long-term suitability as a strategic
transformation and integration initiatives
require well-informed decision-making
... when
acquisition.
processes with respect to the strategic making deals Chairman’s message
Those that get this first step right,
however, are the ones that make sure
choices to be made for the combined
organization. Identifying integration for strategic
the ‘front end’ of the dealmaking funnel
is pointed in the right direction to achieve
options for the prioritized operating model
choices (varying the degree of integration
transformation
the organization’s strategic transformation
objectives. They are targeting investments
and the sequence of integration) is critical
for maximizing and accelerating synergy
purposes, Cover story
they already know they can integrate into capture and value creation. ‘value’ is Paytm: Solving
problems to create
their business. And they are buying assets
they are confident can scale and adapt as
Clearly, each deal and partnership
opportunity will be different;
typically opportunity
the organization grows.
understanding and responding to the perceived
Designing executable strategies nuances of each situation will be key. It
is therefore important to have the ability from a
Sourcing the right strategic deal and
partnership opportunity is one thing.
to track — and the agility to ‘course
correct’ — any deviation to the proposed
longer-term Creating efficiencies
The ability to strategically integrate them
in a way that enables the organization to
value creation plan and attainment of the
defined future ambition.
perspective,
transform and deliver the value expected
is another thing entirely. But here, too, Ultimately, the point is that more work
and thus
CEOs and their M&A and Corporate needs to be done at the front-end and
at the back-end of the deal to ensure
becomes much
Development teams have a critical role
to play. More often than not, deals are that the deal and/or partnership enables more difficult Digital models take hold
signed and then ‘tossed over the wall’
for the business leaders and functional
the desired transformation and value is
achieved. If transformation is the ultimate to define and
executives to deal with. goal, the days of simply ‘doing deals’ and
‘tossing over the wall’ are over.
measure.
KPMG member firms’ work with
leading financial services institutions Ready for what’s coming
suggests that not enough time is spent
Financial services institutions are Compliance-driven
working with business leaders and other
expecting their M&A and Corporate transformation
internal stakeholders to plan ahead for
Development teams to help them deliver
the integration prior to signing the deal.
on their transformation objectives.
Successful integration of deals that
are done for strategic transformation Those who are quick to adapt their
purposes require strong leadership, dealmaking and partnership strategies to
robust governance and relentless reflect the transformation objectives of
orchestration across the enterprise — the organization — from deal identification
addressing critical people, process, through to post-deal integration — will
systems and (perhaps most importantly) not only be better placed to achieve the
cultural issues. transformative value they expect, they
will also be better placed to pivot as the
Clarifying the degree of integration
markets shift.
and level of effort required to maintain
focus on value realization, problem Those serious about delivering
resolution and value creation is typically transformative outcomes, therefore, may
underestimated. Addressing cultural want to start by talking to their dealmakers
issues in both the acquiring company and on how to enable organizational
the acquired company will help accelerate transformation.
Successful integration of deals that

are done for strategic purposes Chairman’s message
require strong leadership, robust

governance and relentless
orchestration across the Cover story
enterprise — addressing critical Paytm: Solving
problems to create
people, process, systems and (perhaps opportunity
most importantly) cultural issues.
Contributors

Ram Menon
KPMG in the US
E: rammenon@kpmg.com
Ram leads the Insurance Deal Advisory
practice KPMG in the US and KPMG
International. He has led many domestic
and cross-border mergers, acquisition
and divestiture projects, providing deal Compliance-driven
and strategy-related advisory services. transformation
Giuseppe Latorre
KPMG in Italy
E: glatorre@kpmg.it
Giuseppe heads the Global Financial
Services Deal Advisory practice for
KPMG International. He has extensive
experience leading large scale M&A
operational projects, including tender
offer on listed entities, company
valuations, bonds and equities issues
for various Insurance companies, and
in drafting strategic business plans for
medium-term financial institutions.
Agility with Chairman’s message
discipline:
Transforming MUFG’s
Cover story
Paytm: Solving
problems to create
opportunity
Transaction Banking business

Ranjana Clark, Head of Global Transaction Banking, MUFG

Chris Hadorn, Head of Global Payments, KPMG International
E
veryone talks about the need for
transformation on the consumer
side of the banking business,
but what about the strategies that
underpin global trade and finance: How
is Transaction Banking changing to keep Compliance-driven
transformation
up with evolving customer needs and
increasing competition?
Ranjana Clark has no doubt that processing of payments, or maybe

transaction banking is at the front end it means more automated and cost-
of a period of massive disruption. As a effective cross-border transfers. You
former executive at PayPal and Western
Union, she has spent the past few
really need to start with an understanding
of your customers’ needs.” Right now,
decades orchestrating and managing
market disruption in the payments space. Focused transformation
markets around Chairman’s message
Today, she is Head of Global Transaction For Ranjana and her Transaction Banking the world are
Banking and Head of Transaction
Banking Americas at MUFG (one of the
Americas team at MUFG, the approach
to transformation is centered on four moving towards
world’s five largest banks by assets),
and Ranjana recognizes that she is, once
main pillars.
‘open’ architecture Cover story
again, staring at the onset of managing a
The first is to create a front end that is
intuitive and easy to use. As Ranjana models. We need Paytm: Solving
problems to create
large platform that is ready for change. notes, consumers now expect their
banking services to be as easy to
to make sure that opportunity
Ripe for disruption
“Generally speaking, payments and
use as Amazon or Facebook. Those
expectations are bleeding into the world
our transformation
transactions can represent pain points for of Corporate Payments. initiatives are
clients, and that creates a lot of room for
technology-led disruption,” she noted.
The second pillar is around open data
and open banking. “Right now, markets
moving us towards Creating efficiencies
“Particularly in developing markets —
but also here in the US — using money
around the world are moving towards an open banking
isn’t easy. Moving money across borders
is also particularly difficult. The whole
‘open’ architecture models. We need
to make sure that our transformation environment.
initiatives are moving us towards an open
area is ripe for disruption.”
banking environment which, in turn, will
The size of the prize is also luring in a open opportunities for us to serve clients
range of new players. From VC investors in new and secure ways.” Digital models take hold
to fintech upstarts and tech giants
Similarly, Ranjana’s team is continuously
(Facebook’s new Libra currency being the
exploring how emerging technologies
most obvious), there is a massive amount
(such as machine learning, artificial
of capital pouring into new payments and
intelligence, and natural language
transaction technologies and companies.
processing) might help the organization
The field of competition is getting larger.
achieve its transformation goals faster, Compliance-driven
Customer-led more efficiently and more effectively. transformation
“AI may be hugely overhyped in the
Like most banking executives, Ranjana market, but it is still the trend that has the
recognizes that it is the client that is at longest legs and most value to deliver to
the center of today’s digital disruption. the banking sector,” she noted.
Customers — even Corporate Treasurers
and CFOs — are starting to demand The final pillar — or maybe more
more efficient and accessible services. precisely, foundation — is a flexible and
And that is influencing the transformation agile core banking system. Like most
road map within Transaction Banking, banks, MUFG is actively working to
globally. modernize its core banking systems and
infrastructure. Banks want to deliver
“Whether you are talking to consumers efficiency and offer the most current
or the Head of Treasury, everyone has capabilities, all while maintaining safety.
the same basic needs,” she noted. “Our focus there is to move into the
“They want to save time, save money cloud while ensuring the highest levels of
and stay secure. For corporate clients, security,” Ranjana said.
that may mean better straight-through
Sharing ideas and technologies Ranjana’s team takes a much more agile
Obviously, Transaction Banking is not approach to transformation. Starting with
transforming in a vacuum. All across the a specific customer pain point or need
MUFG lines of business, transformation in mind, the team rapidly prototypes and
iterates a range of solutions and ideas that Contributors
teams and business leaders are working
are then moved back into the business to
together to move the group’s strategy Chairman’s message
forward. Teams are focused on creating either shelve or scale.
a consistent digital channel and a liquidity “We’ve tried to take some of the core
solution for clients who are looking to principles of technology investing,
do business globally, across multiple and then executed them with an
platforms and in different currencies. agile approach in order to take them
Ranjana Clark Cover story
“We are running a large technology and mainstream across our business. We Ranjana is the Head of Global
recognize that some of the ideas won’t Paytm: Solving
digital transformation program within Transaction Banking, Head of
work and that some won’t warrant Transaction Banking Americas, and Bay
problems to create
MUFG in the Americas, and a lot of the
work we are doing there will influence additional investment. But the point is to Area President. Before joining MUFG, opportunity
find that out quickly and make the right Ranjana served as Chief Customer and
and support the objectives we have
decisions. We need to make sure we are Marketing Officer at PayPal, and as
within Transaction Banking. We are Global Head of Strategy and President
continuously looking for opportunities moving fast,” she added.
of Global Business Payments at
to leverage our experiences from other Western Union.
parts of the business,” Ranjana noted. An evolving journey
Ranjana recognizes that her group’s
In order to help encourage the rapid transformation journey is just getting
sharing of ideas, insights and best started. And no matter how fast her
practices across the enterprise, the team moves, the market will continue to
group has also created a network of evolve and customer expectations will
digital champions. “The focus of that continue to change.
network is to encourage the rapid cross- Chris Hadorn
“We need to remember that money KPMG in the US Digital models take hold
fertilization of ideas so that they can
E: chrishadorn@kpmg.com
be disseminated back into the regions is, increasingly, becoming a digital
Chris has over 20 years of financial
without having to reconstruct all the asset. Where there are pain points services experience in the banking,
skills, capabilities and development that and opportunity in the digital world, regulatory and consulting industries.
have already happened.” disruption is sure to follow,” she Leading KPMG’s Global Payments
noted. “Payments is a great use case team, Chris collaborates and partners
Agility at the frontline for technology. It’s no surprise it’s at with clients to support their payments
the center of today’s digital banking transformation needs, including Compliance-driven
To ensure that the team is either real-time payments and cross-border
delivering on new ideas or shelving them, transformation.” transformation
interoperability.
Hear from Ranjana on her views on the Future of Payments in 2030.
The view from the CEO’s office

Financial services CEOs know they need to do things differently to win in today’s economy ...
72% 67%
say growth relies on believe that,
their ability to without agility, Cover story
challenge and disrupt they would be Paytm: Solving
any business norm. facing bankruptcy. problems to create
opportunity
… And they are taking big steps to transform their enterprises.
45% 56%
plan to upskill more say they have
than half of their entire begun using AI.
workforce.
But are they truly ready for a customer-centric, disruptive environment?
64% 62% Compliance-driven

admit they need to
transformation
say they need
significantly improve to improve their
their understanding innovation processes
of customers. and execution.
To be resilient, organizations need to be comfortable disrupting their business models. They need to be agile.
In this issue of Frontiers in Finance, we offer ideas and insights from leading financial organizations and KPMG subject
matter experts on how to re-evaluate, re-imagine and re-define their business models and operating strategies for long-term
sustainable growth. To learn more, contact your local KPMG office.
About the survey Banking, n = 132

KPMG International surveyed 345 financial services CEOs
across 11 jurisdictions in order to understand the challenges Insurance, n = 132
and opportunities they face and their vision for the business
of tomorrow. The sample sizes were as follows: Asset management, n = 81
Connect to compete:
Delivering the next-gen target operating model
Cover story
Paytm: Solving
Isabel Zisselsberger, KPMG China problems to create
Darren Pigg, KPMG China opportunity
Bill Packman, KPMG in the UK
Y
ou are investing considerable time Creating efficiencies
and effort into transforming your
organization. But are you confident
that you are transforming towards the
right target operating model?
Compliance-driven
transformation
Across all geographies and sectors — around those needs and expectations.
asset management, insurance and It isn’t easy. And there will be significant
banking — transformation programs and challenges along the road.
initiatives are underway. In fact, we aren’t
aware of a single firm that isn’t currently Focus on the customer Above almost
in the midst of a ‘transformation’
program of some sort.
The first big challenge is in understanding
what the customer of the future will
everything else, Chairman’s message
Yet, in our recent survey of financial services want. What role will financial services customers are
CEOs,1 a full 70 percent feel the lead time
to achieve significant progress on their
firms play in the life of the consumer?
How will consumers interact with looking for
transformation programs overwhelming.
Moreover, working with executives around
brands, humans and machines? What
will they expect from the experience? simple, efficient Cover story
the world, few know what, exactly, they What will they value from their banks,
asset managers and insurers?
and effective Paytm: Solving
problems to create
are transforming towards; their vision for
the ‘next-generation’ target operating The next challenge is to translate that
services. The opportunity
model is unclear. And that has left many
organizations focusing on piecemeal
vision into a new target operating
model. And the key here is to focus on
more simplified
modernization programs. simplification. Above almost everything the processes
The future is connected
else, customers are looking for simple,
efficient and effective services. The that support those Creating efficiencies
The future is very clear. Our view of the
market suggests that it is dominated by
more simplified the processes that
support those services, the better.
services, the
‘connected enterprises’ — organizations
that are able to integrate a pure customer
Once again, that means connecting the better.
enterprise: connecting processes from
focus into their day-to-day operations;
the front office through the middle and
those where silos have been broken
back office; connecting the customer
down to connect the entire customer
journey from the front office to the back
vision with the operating model and Digital models take hold
business models; connecting the
office; organizations that are deeply
traditional business with new and
entwined into dynamic ecosystems
innovative capabilities; and connecting
and partnerships; those that forsake
with customers in ways that drive value
traditional models and roles to radically
for all stakeholders.
rethink the value they provide to their
customers. These are the characteristics Compliance-driven
The road to the connected
of the ‘next-gen’ financial services firm.
enterprise transformation
If you’re not convinced, just look around At KPMG, our network of professionals
at the changes already underway has worked with many of the most
across the financial services industry. (and some of the least) connected
In Asset Management, lines are already financial services firms in the world. Our
being blurred between manufacturers, experience has led us to identify eight
distributors and advisors. Insurers are fundamental capabilities that are key
using technology and customer data to creating a more connected financial
to move from protection to prevention services enterprise. These include
which, in turn, is creating new models things like product, pricing and customer
and inspiring new relationships. Most strategy; technology architecture
banks have now achieved a single view and enablement; and organizational
of their customers and are using their alignment and people capabilities.
data to delight their customers with more
than just competitive rates. Improved capabilities around
partnerships, alliances and vendors —
What these organizations are doing is in particular — will be key. Indeed, if a
putting the customer at the center of connected target operating model is
their next-gen operating model, taking the destination to be reached, then
the time to understand what their third-party collaboration is the vehicle
customers will want in the future and and customer data is the fuel.
then redesigning their organizations
1
In a connected next-gen operating model, The eight capabilities of KPMG Connected Enterprise
financial services firms will need to rely on
the technical and operational capabilities
of countless other partners in the value
chain — from cloud service providers and Insight-driven Innovative Experience-
outsourced process specialists through strategies and products and centricity by Chairman’s message
to fintech/insurtech start-ups and even
actions services design
competitors. Balancing the need for
control and oversight against the desire for Harness data, Develop compelling Design seamless,
simplification will be an ongoing challenge. advanced analytics customer value intentional
and actionable propositions on experiences
At the same time, the ability to leverage insights with a real- price, products and for customers, Cover story
technology and data analytics to time understanding services to engage employees and
effectively and efficiently deliver
Paytm: Solving
of the customer the most attractive partners, supporting problems to create
cross-channel experiences, provide and the business, customers and drive the customer value
employees with enabling tools and act opportunity
to shape integrated profitable growth. propositions and
on forward-looking data-enabled insights business decisions. delivering business
will be key to achieving the next-gen objectives.
target operating model for financial
services. More often than not, that will
require firms to adopt an enterprise-wide Seamless Responsive Creating efficiencies
connected and controlled intelligent
interactions operations and
2x
automation strategy that underpins the
next-generation operating model across and commerce supply chain
all functions.
Interact and transact Operate the business
Financial services executives will need with customers and with efficiency and
to remember that, while partnerships prospects across agility to fulfill the
may be the vehicle and data the fuel, marketing, sales and customer promise Digital models take hold
it’s still people that are driving the service and achieve in a consistent and
impact
transformation. This means that financial measurable results. profitable way.
services organizations will need to
rethink their current capability sets, talent
management approaches, incentive
programs and skill development. Being
able to proactively identify and fill talent Compliance-driven
gaps (either by hiring, developing or transformation
partnering) will be critical to ensuring the Aligned and Digitally Integrated
operating model remains agile, customer- empowered enabled partner and
centric and effective. workforce technology alliance
Get connected or get left behind Build a customer- architecture ecosystem
In today’s financial services environment, centric organization Create intelligent Engage, integrate and
organizations need to transform if they and culture that and agile services, manage third parties
hope to survive. But first they need to inspires people technologies and to increase speed
have a clear understanding of what they to deliver on the platforms, enabling to market, reduce
are transforming towards and how they customer promise the customer agenda costs, mitigate risk
plan to get there. and drive up business with solutions that and close capability
performance. are secure, scalable gaps to deliver the
Our experience and research suggest
and cost-effective. customer promise.
that the future will be dominated by the
most connected and customer-centric
enterprises. If that doesn’t sound like
your next-gen target operating model,
you may want to stop and reconsider
your transformation program.
Contributors
In a connected next-gen operating

model, financial services firms will Chairman’s message
need to rely on the technical and Isabel Zisselsberger
operational capabilities of countless KPMG China

E: isabel.zisselsberger@kpmg.com
other partners in the value chain. Isabel is the Head of Customer,

Operations and Finance Consulting in Cover story
Hong Kong (SAR) for KPMG. Isabel Paytm: Solving
helps financial institutions transform
their target operating model and problems to create
implement intelligent automation opportunity
strategies.
Darren Pigg
KPMG China
Darren leads the KPMG China,
Insurance, Customer and Analytics
practice. His experience lies in human-
centered design, behavioral economics Digital models take hold
and customer data analytics for large
scale transformation projects.
Compliance-driven
transformation
Bill Packman
KPMG in the UK
E: bill.packman@kpmg.co.uk
Bill leads KPMG in the UK’s Wealth
and Asset Management Consulting
practice, focusing mainly on helping
independently owned Wealth
Managers and the Wealth divisions of
established banks.
Does banking’s Chairman’s message
future outweigh Cover story

Paytm: Solving
problems to create
its past?
opportunity
Ian Pollari, KPMG Australia

Anton Ruddenklau, KPMG in the UK
O
n the surface, at least, it’s a
conundrum. How do banks
face profound industry changes
driven by rapidly evolving customer
expectations, emerging technology and Compliance-driven
new digital challengers when millions of transformation
dollars are invested in inflexible, though
robust, legacy systems that served
them in the past but are not fit for future
needs? Given the dominant market share
of incumbent banks and the relatively
small inroads made by digital challengers,
how quickly do traditional banks need do
move? Should changes be piecemeal,
transformational or totally greenfield?
To companies in the banking industry, What will the banking industry look like
the story is a familiar one. Customers in 2030? Business models, just like the
with connectivity at their fingertips industry as a whole, will be transformed
are demanding cheaper, faster and
better banking experiences. A plethora
by technology. New models will emerge
in the years ahead putting a halt to the One thing is
of challenger banks and new market
entrants are emerging to meet these
band-aid approach to legacy systems.
Banks will look to new architecture that is
clear: Traditional Chairman’s message
demands — armed with innovative
technologies and unencumbered by
digital to the core, and more will choose to
build and migrate to new systems.
banks cannot
the legacy infrastructure that restricts afford to apply
Under pressure: Digital banks
traditional financial institutions. Yet,
traditional banks still have the lion’s share making inroads patchwork Cover story
of the business, enviably strong brands,
large customer bases and high visibility.
Challenger banks — such as Starling
Bank, Atom Bank and Tandem — have
upgrades to Paytm: Solving
problems to create
In the face of this, many banks are existed in the UK for a number of years. their legacy opportunity
investing heavily to drive innovation,
enhance agility and become more
Fidor and N26 were the first of the
European digital banks. The model is systems. Nor can
customer-centric. For the majority,
these investments comprise patchwork
now emerging in other parts of the
world. Indeed, there are approximately
they assume that
upgrades to legacy systems and 100 challenger banks worldwide,
including:
system upgrades, Creating efficiencies
incremental change. Organizations are
reluctant, indeed, to walk completely —— SolarisBank and N26 in Germany
even bold and
from these systems owing to substantial
investments in them, concerns for —— MyBank, WeBank and Kakao in Asia ambitious ones,
reliability, and the simple fact that these
systems have been so central to past
—— Nubank in Brazil will translate to
successes. Other financial institutions —— Chime in the US a sustainable Digital models take hold
are taking different paths to reposition
themselves.
—— 86400, Volt and Xinja in Australia. competitive
One thing is clear: Traditional banks
In March 2019, the Hong Kong Monetary
Authority announced that banking licenses
advantage over
cannot afford to apply patchwork
upgrades to their legacy systems. Nor
had been granted to no less than three
digital banks in the territory. These entities
the long term.
can they assume that system upgrades,
are expected to go live later this year.1
even bold and ambitious ones, will Compliance-driven
translate to a sustainable competitive Though still dwarfed by their traditional transformation
advantage over the long-term. While counterparts, digital banks are growing
the pace of technology change in fast, leveraging their adaptability,
financial services has been more gradual customer-focus and ability to make
than in other industries, in part due to data-driven decisions. While they
regulatory restrictions on new market might not, as yet, have customer bases
entrants in many jurisdictions, the ability to rival traditional players, they are
of companies to rapidly adapt will only starting to make inroads. Traditional
become more critical over time. The financial institutions should not overlook
degree of industry change is such that the growth potential of new digital
banks need to think more radically about challengers who could, over time, win a
what they want to become and how share of market segments, in particular
they want to get there if they expect the growing cohort of millennials.
to thrive.
https://www.hkma.gov.hk/eng/key-information/press-releases/2019/20190327-3.shtml
1
Approaches include:
Legacy system upgrades

A number of
traditional banks Chairman’s message
Upgrading digital user interfaces
have purchased
digital banks as
Orchestration layers to a way to make Cover story
integrate old with new
rapid changes. Paytm: Solving
problems to create
opportunity
Purchasing an existing digital bank
Establishing a digital bank Creating efficiencies
Responding to a new reality Purchasing a digital bank

Over the past 5 years, many financial A number of traditional banks have Digital models take hold
institutions have invested millions purchased digital banks as a way to
in innovation programs focused on make rapid changes. Canada-based
enhancing their technological capabilities, Scotiabank acquired digital bank ING
as well as trying to become more agile. Direct (Canada) back in 2012.2 This trend
The approaches they’ve taken to make has become much more pronounced in
these changes have varied based on their recent times. For example, Nordic bank,
existing strengths, business strategy and Nordea reported in March 2019 that it Compliance-driven
identified gaps. had acquired Gjensidige Bank3 and the transformation
Royal Bank of Scotland (RBS) recently
Legacy system updates purchased a 25 percent equity stake
Numerous traditional banks, as noted, in digital start-up Loot.4 RBS made the
have invested heavily in updating their investment through its digital bank, Bó,
legacy technology in order to remain which is currently under development.
competitive. These investments include Purchasing an existing digital bank gives the
upgrading credit systems in order to incumbent the flexibility to change or retain
approve loans more swiftly, making the purchased brand name. They can also
systems compatible with application either migrate existing customers over or
programming interfaces (APIs) and grow the offering’s existing customer base
open banking regimes, or finding ways organically and through cross-promotion.
to integrate more robust data analytics. Banks that elect to migrate customers,
While good, these incremental changes however, run the risk of incurring significant
are unlikely to give traditional institutions expenses as a result of a need to write off
the competitive edge they need to stave aging legacy systems more quickly than
off new competitors. they might have otherwise.
2
https://www.cbc.ca/news/business/scotiabank-to-buy-ing-bank-of-canada-for-3-1b-1.1160516
3
https://www.nordea.com/en/press-and-news/news-and-press-releases/press-releases/2019/03-01-09h52-
nordea-completes-acquisition-of-gjensidige-bank.html
4
https://www.finextra.com/newsarticle/33169/new-rbs-digital-bank-invests-in-loot
Establishing a digital bank Starting a bank can provide a successful or inorganic, it must be partnered with
A number of traditional banks have defense against new challengers with a willingness to entirely rethink their
established their own digital banks. As improved services and open capabilities. strategy and business processes in order
mentioned above, RBS, in addition to The new, more competitive business for their transformation to be successful.
investing in an existing digital bank (Loot), model provides for lower costs, greater This means objectively considering the
agility and greater modularity. New use of mobile apps, the cloud, customer
is developing retail bank Bó and just last Chairman’s message
year launched Mettle,5 a digital bank technology stacks put incumbents on accessibility, the use of big data — and
targeting small and medium enterprises a level playing field with upstarts and defining how any decisions will contribute
(SMEs). Other well-known examples customers can be readily migrated over. to the organization’s overarching
range from Marcus (Goldman Sachs) in business strategy.
Digital banks are also often referred to as
the US to Pepper (Leumi Bank) in Israel. ‘lifeboat’ banks. Should the digital bank To be successful long term, a major
Cover story
Establishing a digital bank provides prove operationally resilient, traditional cultural shift is required, one in which
banks will consider migrating their legacy employees at all levels come to Paytm: Solving
legacy banks with similar flexibility
customer books to the new entity. This appreciate and even value a company’s problems to create
in regards to branding and building a
customer base. The time and investment helps replace legacy infrastructure with transformation. While many financial opportunity
required, however, to develop a new new technology, and helps solve the institutions know they need to change,
business model and build the brand agility and customer experience issues few recognize the magnitude of change
can be exorbitant. Significant resources that banks struggle with. required or the degree of internal
are needed to erect the five pillars of resistance they might face to change.
any digital bank: senior management, The elephant in the room: To manage this resistance, change
licensing, funding, technology, and Change isn’t all about technology management needs to be an up-front,
customers. To deal with this, some If banks are to successfully face the ongoing and persistent component of any
banks are turning to digital banks for challenges posed by new digital bank transformation initiative. Additionally,
assistance. RBS, for example, have competitors and changing customer any associated communications program
partnered with Starling Bank for help expectations, they need to think beyond should be aimed at attracting converts,
with their digital foray.6 technology. Whatever path of change even evangelists, to the effort right from
a bank undertakes, whether organic the get-go.
Defining a digital banking strategy starts with a clear business model
Innovation
Compliance-driven
transformation
Risk
What are your key What markets and clients do What approach will you take? appetite
objectives/ambitions? you want to target? Prioritize and act on best
Identify objectives and What demographic(s)? approaches based on your
determine path forward with the What type: e.g. portfolio and ambitions.
right strategy to get there. direct-to-consumer, marketplace,
banking as a service?
Reinvention through Personas Build

new company Channels Invest/acquire
Attract segment/cohort Propositions and brands Partner
Gather deposits/extend credit
Extend virtual footprint
Source: KPMG International 2019
https://www.bankingtech.com/2018/11/rbs-tests-its-sme-digital-entity-mettle/
5
https://www.finextra.com/newsarticle/32581/starling-to-help-rbs-develop-digital-bank
6
Forging a path forward: Questions be sufficient to give you the flexibility Contributors
to ask to compete in the future?
There is no one path to success for financial —— If not, how might brand new
institutions that want to increase their technology stacks be built at the bank?
competitiveness and better respond to the —— What are your time constraints and
needs of their stakeholders or the dynamic how long will different options take? Chairman’s message
changes expected to continue to reshape —— What systems, structures or partners
the financial services industry in the years Ian Pollari
can you leverage as part of your KPMG Australia
ahead. Companies need to determine their transformation? E: ipollari@kpmg.com.au
path based on a strong understanding of
Ian leads Banking for KPMG Australia
where they are today and what they want Acting today to thrive tomorrow and is Global Fintech Co-lead. He has Cover story
to become in the future. Banks that recognize the profound shift over 16 years’ experience in financial
services and works with local and
Paytm: Solving
As a starting point, companies should required and act now to transform their
organizations to keep pace will emerge international banks, payment providers problems to create
consider a number of pivotal questions
more competitive and successful and fintechs in strategy development, opportunity
that can help them define what they need market entry and digital innovation.
to do. These questions include: than ever. It is our belief that although
patchwork upgrades may seem like
—— How will you create and monetize enough to stem the tide in the short
value in the future? term, companies willing to make more
—— What changes are required to bridge radical changes will be better positioned Creating efficiencies
the gap between where you are today to lead the financial services industry in
and where you want to be? the years ahead. Those that adopt new
business models and build and migrate Anton Ruddenklau
—— What is the cost-benefit associated KPMG in the UK
with making necessary upgrades? to new technology stacks will be best E: anton.ruddenklau@kpmg.co.uk
prepared for digital competitors. Anton is Head of Digital and Innovation
—— Will modifications to legacy systems
for Financial Services at KPMG in
the UK and Global Co-lead for KPMG
Fintech. He specializes in business, Digital models take hold
corporate and institutional banking, and
has extensive experience working with
large global companies in consumer and
technology.
Compliance-driven
transformation
Goldman Sachs breaking Chairman’s message
new ground with Marcus

Harit Talwar, Head of Global Consumer Business, Goldman Sachs
Cover story
Paytm: Solving
M
arcus by Goldman Sachs (‘Marcus’) bills itself as a 150-year-old start-up. Contributor problems to create
The paradox aptly captures key reasons for the digital business’ success —
the brand, balance sheet and risk management DNA of a well-established
opportunity
financial institution with the agility of a start-up unhampered by legacy
infrastructure, business practices and technology.
That combination, leaders believe, gives Marcus a distinct structural advantage, and the
evidence suggests they’re right. In just 3 years, the business has grown to approximately
US$55 billion in deposits and US$5 billion in loans.1 Marcus is projected to cross US$1 billion Harit Talwar Creating efficiencies
in revenue in 2020. Further, the business — Goldman Sachs’ first-ever foray into consumer Head of Global Consumer
banking — believes it has an opportunity to disrupt the sector in the same way Amazon did to Business, Goldman Sachs
retail and Apple did to music. Harit joined Goldman Sachs
in 2015 as a Partner and is
There is more to Marcus’ success, however, than a melding of the old and new. Based on currently the Head of Global
rigorous financial modeling and analysis, Goldman Sachs has invested over US$1 billion in Consumer Business. He is
Marcus’ development, knowing that it would be a long-term investment play with significant also a member of the firmwide Digital models take hold
potential for growth.1 Client and Business Standards
Moreover, Harit Talwar explains, the business maintains a laser focus on customer-centricity Committee and the America’s
and has from the beginning. Since its origination, Marcus has spoken to over 100,000 Diversity Committee.
consumers to understand their pain points and concerns around personal banking and
finance. Ask any team involved with Marcus what they do and they’ll answer with a customer
focus in mind: enabling customer onboarding, improving the customer servicing experience
Compliance-driven
or helping with the customer password journey.
transformation
It’s not just talk. Engineering, design, data analytics and a culture of cross-functional
collaboration are important, but how they enable the customer journey is what matters. The
future of consumer banking, Harit believes, is in truly making life easier for customers. That
means delivering on a promise of value, ease, transparency in customer interactions — and
then making that promise repeatable. These efforts appear to be paying off. Last March, J.D.
Power released its 2019 Personal Loan Satisfaction Study and Marcus by Goldman Sachs
was named number one in personal loan customer satisfaction.2
Linked directly with this focus on the customer experience is Marcus, dedication to clarity
of purpose – who the customer is, what their concerns are, and a determination not just to
say but to prove that customer problems and concerns matter. Marcus has authentically
embraced customer-centricity, and not simply using it as branding spin, because it translates
to competitive advantage and shareholder value. “Innovation works when you use
technology to actually help customers,” Harit says. “The real secret sauce in fintech is when
you use your technology, data and balance sheet capabilities to help customers empower
themselves and meet their own needs. That is what innovation is all about.”3
Marcus, with its singular focus on customers, is proving a game-changer. Armed with
technology, a strong balance sheet and a clear vision, this young digital start-up is swiftly
becoming a powerhouse. In an era of disruption, Marcus by Goldman Sachs is paving a road
of possibility for traditional banks.
1
As of the firm’s Q3 2019 quarterly earnings call
2
Marcus by Goldman Sachs received the highest score in the J.D. Power 2019 U.S. Personal Loan Satisfaction
Study of customers’ satisfaction with the personal loan experience. Visit jdpower.com/awards
3
Quotation extracted and lightly adapted from video interview with Harit on YouTube
Flexibility for growth:

Operational excellence in an
era of digital disruption Cover story

Paytm: Solving
problems to create
opportunity
Michael Adler, KPMG in the US
Scott Shapiro, KPMG in the US
I
n today’s rapidly changing
and increasingly competitive
market, insurers are looking
for every opportunity to improve
their operational efficiency. Yet
most insurance executives admit Digital models take hold
they are already falling far behind
on their targets. What will it take
to achieve operational excellence
in today’s insurance industry?
Compliance-driven
transformation
Ask any insurance executive about their The respondents were also rather clear
operational efficiency efforts and you about why they were falling behind. Many
are sure to hear a long list of plans and complained about a lack of clarity on their
ideas. In fact, according to a survey of
insurance executives conducted by
key objectives and an inability to agree on
strategic decisions at the enterprise level. Any technology
KPMG International and ACORD,1 a
global insurance industry standards-
Some noted a scarcity of qualified solution that Chairman’s message
setting body, 94 percent of insurance
executives say they are currently
resources, particularly those that combine
new technologies with insurance can deliver a
working on initiatives to improve
fundamentals. Most raised some sort of
concern about the state of their legacy
better customer
operational efficiency.
infrastructure and processes. experience at a Cover story
Missing the mark
The problem is that more than half —
Integrate to accelerate lower cost (with Paytm: Solving
problems to create
54 percent — of those executives are also
The greatest barrier to insurers achieving
their operational efficiency goals comes
the appropriate opportunity
quick to admit that they have started to fall
behind their targets.
down to a lack of integration. quality and
In our KPMG International report on
In fact, our survey shows that — even after
years of investments into new platforms
controls) will be
operational excellence in the Insurance
sector, we found that the risk to
and infrastructure — most insurers have
managed to achieve only a ‘limited’ level
key in delivering Creating efficiencies
the enterprise of delaying action is
increasing and ultimately a threat to the
of integration between their technology longer-term
company’s relevance in the competitive
marketplace.
platform functions such as underwriting,
distribution and product operations — key operational
Conversations with insurance executives
focus areas for operational efficiency efforts.
efficiency.
Interestingly, HR and Finance tended to
suggest that many are worried that
report the lowest levels of integration.
their lack of progress is already hurting Digital models take hold
Even areas where one would expect to
their business; they feel their costs
see existing high levels of integration —
are becoming less competitive, their
such as claims and policy servicing —
operational agility is lagging customer
were often ranked as being poorly
expectations and their ability to grow is
integrated by insurance executives.
being constrained.
Compliance-driven
transformation
Where are you in your operational efficiency journey?
Above Behind
target target
55%
4%
6%
Not
started
34%
On target
Source: Operational Excellence in Insurance, KPMG International and ACORD, 2019
1
Operational Excellence in Insurance, KPMG International and ACORD
The lack of integration across an insurer How did your organization pursue operational efficiencies in the
can result in incremental and redundant past 12 to 24 months, and how does it plan to pursue them in the next
processes, technology and data — 12 to 24 months? (Percent respondents)
increasing costs and impacting an
insurer’s ability to serve customers and
engage with agents. Previous 12–24 months
Plucking lower hanging fruit
Unhappy with the current level and pace
of progress, many insurance leaders 58% 20% 22%
are starting to shift the approach of
their operational efficiency programs to Cover story
prioritize faster wins and more tactical Paytm: Solving
automation. Next 12–24 months problems to create
Indeed, our survey suggests that opportunity
insurance leaders plan to reduce the
amount of focus they place on the more
48% 33% 19%
foundational components — things
like process standardization and legacy
system fixes — to instead prioritize Creating efficiencies
investments into Intelligent Automation
(IA) and alternative sourcing. Process Intelligent Other/None
standardization and automation
In many ways, this is good news. Any
legacy system fix and alternative
technology solution that can deliver
sourcing
a better customer experience at a
lower cost (with the appropriate quality Source: Operational Excellence in Insurance, KPMG International and ACORD, 2019
and controls) will be key in delivering Digital models take hold
longer-term operational efficiency.
But they must be supported by ongoing The framework focuses attention onto six key levers of operational
efforts to standardize processes and excellence:
modernize legacy systems. Yes, it’s
harder, takes longer and is less exciting 1 Data: the ability to find, capture and process massive volumes of
external and internal data.
to fix legacy systems. But that’s the Compliance-driven
only way to convert quick wins into transformation
enterprise-wide operational value.
2 Automation: knowing where and how automation will help
reduce friction, improve control and drive efficiency.
A framework for success
Our view is that insurers need to approach
their operational efficiency efforts with an 3 Talent: access to a future-ready workforce that is flexible and
fully equipped to evolve into different roles.
emphasis on maximizing value rather than
minimizing costs; operational efficiency
programs should focus primarily on
the creation of a leaner, more flexible 4 Infrastructure: the presence of agile technology infrastructure
that contributes to a scalable and flexible operating model.
organization with cost reduction seen as
the consequence of action rather than the
goal of the action. 5 Analytics: applying advanced analytics and machine learning
to disparate data sets to uncover new insights that inform
Our member firms’ collective experience
working with leading insurers across virtually
decision-making.
every sector, geography and size has
enabled us to develop a robust framework
that can help insurers get their operational
6 Process: eliminating inefficiencies by streamlining,
standardizing, automating and eliminating tasks.
efficiency efforts back on track.
More decisions ahead requirements and efficiency. Through

discovery and ideation, organizations are
Achieving competitive levels of then able to identify important business
operational efficiency isn’t easy. Years patterns and co-create valuable solutions
of product and geographic expansion, and growth opportunities. From there, we
M&A, regulatory mandates and other quickly move through to prototyping and
factors have created layers of operational Chairman’s message
prioritization. Then it’s all about scaling up,
systems — many of which are either sustaining and evolving the best and most
homegrown or heavily customized. Contributors
valuable ideas.
Integrating these core systems into other,
newer platforms remains a challenge. Insurers may be falling behind on their
operational efficiency targets. But today’s
Many insurers also seem to be Cover story
technologies — things like big data, AI
struggling to know where to start. Not and machine learning — offer insurers Paytm: Solving
surprising: Today’s insurers face a wide a massive opportunity to not just drive problems to create
range of strategies and options for out costs, but also achieve competitive Michael Adler opportunity
improving operational efficiency — from advantage by delivering richer customer, KPMG in the US
traditional cost take-out initiatives to agent and employee experiences. E: michaeladler@kpmg.com
emerging technology-based solutions A Principal with KPMG in the US,
like automation, cloud computing and Those insurers that have not yet achieved Michael works closely with leading
sourcing. Prioritizing these options and the benefits they are seeking from their insurance companies to drive
aligning them against your long-term operational efficiency journey may want transformation, adopting digital, Creating efficiencies
to review their road map to ensure they data, analytics, technology and best
road map and current capabilities can
operational practices.
be difficult. are taking a long-term and strategic view
that leverages all potential enablers that
Start with the road map can help them reach their goals.
That is why we often help insurance Achieving operational excellence in an era
clients take a more structured approach of digital disruption isn’t easy. But it can be
to delivering on their operational massively rewarding — for insurers, their Digital models take hold
excellence journey — one that not employees, their customers and their Scott Shapiro
only gets them to the optimal state, shareholders. KPMG in the US
but then pushes further to encourage E: sashapiro@kpmg.com
improvements to be self-sustaining. For a more detailed analysis of our Scott is a Principal and the insurance
findings, visit kpmg.com/insurance and leader for KPMG in the US’ Risk
It starts with articulating a vision for download our report — Operational Consulting practice specializing in
the organization that balances costs excellence in Insurance. operational improvement, data & Compliance-driven
against customer expectations, digital analytics, and transformation. transformation
Compliance-driven transformation
Next-generation Chairman’s message
banking technology Cover story

Paytm: Solving
problems to create
and tax implications

opportunity
Robin Walduck, KPMG in the UK

Richard Iferenta, KPMG in the UK
Burcin Nee, KPMG in the US
I
n our article, The future of tax: The impact on
new business models,1 we described how the
business models in banking, insurance and asset Compliance-driven
Compliance-driven
management are changing, and set out some of transformation
transformation
the headline tax issues arising from this change.
This article delves further into the detail of the
models in banking and some of the challenges that
organizations will need to deal with.
Frontiers in Finance: Risk proofing the future, KPMG International, March 2019
1
The capital markets’ IT landscape has the design of a new digital banking
changed dramatically in recent years platform or the integration of
due to a combination of next-generation aggregated services into the existing
technology and the transformation of IT
operating models. Some of the models
infrastructure of the bank. This will
potentially give rise to opportunities These new
we see in banking include: to make use of different countries’
incentive regimes, such as research
models present Chairman’s message
—— Next-generation IT operations:
Traditionally, technology ownership
and development credits, or
preferential rates for patented items
a number of
was in-house, with IT operations
covering data centers, operating
or innovation-based activities. conundrums for
systems and vendor software
solutions. This model has been
—— Digital services taxes: This tax departments Cover story
reinvented, and the role of IT has
is currently a contentious area,
particularly with France and the UK as they grapple Paytm: Solving
problems to create
fundamentally changed as a result. having introduced digital services
taxes (DSTs) in a targeted manner,
with how tax opportunity
—— As service providers: The tier 1
banks are able to invest in technology
and whether other countries will
retaliate with reciprocal policy
authorities will
at levels that cannot be matched
by smaller players. They are now
changes. While it is not expected that deal with the
looking at how they can monetize
this investment, offering services to
the current DSTs will have a material
impact on these new businesses, as taxation of the Creating efficiencies
the rest of the market.
other countries introduce their own
unilateral measures in relation to
changes in the
—— Aggregated service model digital business models (for example,
Spain, Austria and Italy are currently
way banks are
delivery: New entrants often focus
on just a slice of business operations, considering the possibility), the new operating.
competing with traditional banks measures need to be monitored,
that offer an end-to-end business to ensure these models are not
solution. Traditional banks are inadvertently caught by proposals
therefore looking at alliances to build that do not have effective carve-outs
scale and capability. for financial services.
—— Full-scale digital retail banking: —— Location of taxable profits: Digital

Banks are exploring how they take business models in general are
digital retail banking to the next level, under significant scrutiny from tax Compliance-driven
Compliance-driven
heavily focused on the customer, authorities around the world, given transformation
the considerable complexity that transformation
building highly customized models
and driving demand for ‘client-for-life’ these can bring on a cross-border
ecosystems to support with major basis, particularly when there may
life events. be no physical presence involved.
Tax authorities are also starting
These new models present a number to introduce anti-tax avoidance
of conundrums for tax departments as rules (such as the UK’s Diverted
they grapple with how tax authorities Profits Tax) that focus on whether
will deal with the taxation of the changes companies are artificially stripping
in the way banks are operating. profits out of a particular country,
although it would be reasonable to
A focus on corporate tax expect that commercial operations of
As operating models change, tax the nature set out above should not
departments in traditional banks may need be caught by these rules.
to broaden their horizons to consider a
number of different areas as follows:
—— Incentive regimes: Many of these
new models require organizations
to innovate to stay relevant, be it in
A focus on transfer pricing

Any change in operating models will usually
lead to consideration of the transfer pricing
issues related to the change. Some of the
key issues to be considered are as follows:
It is critical, when building a
—— A possible new value chain: It is new digital business model to Chairman’s message
critical, when building a new digital
business model, to understand
understand the value creation
the value creation in the new
business and how it is similar/
in the new business and how it
different compared to the traditional is similar/different compared to the Cover story
business. For example, it will be key
to understand the role of technology traditional business. Paytm: Solving
problems to create
and brand intangibles, as well as
data, synergies and network effects opportunity
and whether they are market
differentiators creating significant
value. These concepts may be
familiar territory for technology
companies, but perhaps less so in Creating efficiencies
financial services where the value
chain typically centers around
capital and people functions. Digital
business models may therefore
require a fresh look at value creation,
the value chain, and associated
transfer pricing for many financial
services institutions.
—— BEPS: The OECD’s Base Erosion and

Profit Shifting project has demanded
a careful look and focus on DEMPE
(development, enhancement,
maintenance, protection and Compliance-driven
Compliance-driven
exploitation) functions, as well as transformation
the control of risk functions. This is
transformation
particularly important where a new
business model contains a high
degree of use of non-routine valuable
intellectual property.
—— Fintech driving revenue: Where

new financial technology is a key
driver of revenue generation and
increased profits, the transfer
pricing policies used may need to
be modified to incorporate a reward
for the contribution of technology;
such as when residual profit split or
revenue/profit sharing approaches
are employed. Depending on the
fact pattern, one may also need to
consider pricing based on royalties for
the use of intellectual property.
A focus on indirect tax of contracts and the economic reality Contributors

Similar to transfer pricing, whenever may result in services that should
operating models change, there needs be treated as part of a single exempt
to be a focus on indirect taxes, and supply becoming taxable. Typical
the implications on cash flows in the examples of areas to focus on would
business, particularly where these be project management work, IT Chairman’s message
transcend borders. Some of the key build, onboarding customers and
issues that need to be considered with variations to original contracts. Robin Walduck
digital business models are as follows: KPMG in the UK
—— Engaging with the tax authorities: E: robin.walduck@kpmg.co.uk
—— VAT liability of transactions: Where the structuring is complex or As the Global Head of Banking and
Transformation of business the VAT consequences are unclear, Capital Markets Tax, Robin has over Cover story
it is often best to engage with the 20 years of experience advising some
models invariably results in new
of the largest financial institutions
Paytm: Solving
transactions being undertaken, tax authorities up-front to avoid an
globally. Robin has deep knowledge problems to create
such as outsourcing the IT build unanticipated and perhaps costly VAT
challenge at a later stage. The key to
of international tax and treasury tax opportunity
or indeed outsourcing the banking matters, together with considerable
operations to bank utilities providing success in this regard is a good and experience in executing cross-border
highly sophisticated banking clear explanation of the commercial financing and M&A transactions.
platforms. The critical question model to the tax authorities and not
from a VAT perspective will always only an explanation of what reliefs
be to determine the liability of are available. It is, of course, equally Creating efficiencies
such outsourced services. Clearly, important to anticipate the objections
there is benefit in such services and counterarguments that may be
being exempt given that banks raised by the tax authorities.
(especially retail banks) have very Richard Iferenta
low recovery VAT rates. The eligibility Reflections KPMG in the UK
for exemption will be driven largely These new business models are evolving E: Richard.Iferenta@kpmg.co.uk
by the terms of the contracts and Richard heads up the Financial
and evolving fast. There will be new
Services Indirect Tax practice with Digital models take hold
the economic reality. Structuring the areas of technical knowledge that tax KPMG in the UK. A partner for more
contracts in such a way to maximize departments will need to engage on, and than 15 years, Richard specializes in,
exemption is often well worthwhile. a thorough understanding of the business inter alia, structuring of transactions,
models that are being implemented is cross-border transactions, disputes
—— Single vs. multiple supply: There is key to getting to the right answer from with the tax authorities and supporting
the age-old issue of determining the a tax perspective. The challenge of a financial institutions with implementing
extent to which a bundle of services cutting-edge technology. Compliance-driven
tax department in any large financial Compliance-driven
being provided should be treated as transformation
services organization is to ensure they are transformation
part of a single supply or as separate sufficiently connected with the business
supplies. This is critical in outsourcing to remain ahead of the developments, so
contracts where there is scope for that tax considerations can be factored in
VAT exemption as poor structuring early as the business is set up.
Burcin Nee
KPMG in the US
E: bnee@kpmg.com
Burcin leads KPMG’s global transfer
pricing practice and is a Principal with
KPMG in the US. She is an economist
by training. Since joining KPMG in 2000,
Burcin assists her clients with transfer
pricing documentation, restructuring,
controversy, and advance pricing
agreements (APAs).
Evolving tax departments in financial services

At a glance insights for Financial Services tax leaders
Structure Chairman’s message
Most Chief Tax Officers (CTOs) or Tax Leaders report to:

Central tax
departments most
often fall within the: 54% Finance function
46% Chief Financial 19% Head of Finance Cover story
Officer (CFO) (other than CFO) Paytm: Solving
problems to create
Only 37% of tax departments in FS use a shared service Over half of tax departments in FS are responsible for opportunity
center (SSC), of which 80% have increased utilization. global reporting, while a high proportion are
responsible for domestic reporting, compared to
global cross industry averages (i.e. 61% global
reporting and 74% domestic reporting):
70% 50% 50% 40% 35%
Accountancy/ Subledgers Tax return
general ledger preparation
Indirect
taxes
Fiscal
declaration
57% Global reporting 87% Domestic reporting
processes
Responsible tax Wish list Digital models take hold
Most tax departments have a code of conduct to Tax technology and additional personnel topped the
frame their risk tolerance and tax decisions. list for tax leaders when asked where they would
invest if they had an additional budget.
76% 24% Compliance-driven

TAX
Tax Additional
Compliance-driven
transformation
technology 53% 19% personnel transformation
Have a Don’t have a
documented documented
tax code of tax code of
conduct conduct 15% 8% 4%
Public disclosures of tax information: Process Training and Outsourcing

optimization education
48% 33% 20%
Tax leaders ranked the following process
improvement priorities as important or very important
over the next 5 years:
83% 74%
Process Consulting with
Somewhat, we standardization business of
No, don’t disclose Yes, we do this disclose some operarting unit
already limited tax info as
part of our CSR
72% 72%
Tightly Formalizing risk
50% of the companies who don’t currently disclose, connecting management
plan to do so in the future. provision and
compliance
process
Technology Department performance
Performance is often measured by the impact the tax

of respondents of respondents department has on the business across a range of
plan to increase plan to increase metrics, with these 5 most often topping the list of
their use of their investment importance:
74% enterprise, 66% in tax specific Chairman’s message
finance IT technologies
systems for tax
purposes
87% Tax risks are managed appropriately
(versus 87% cross-industries)
Business units are satisfied with tax services

87% provided (versus 68% cross-industries)
Cover story
Paytm: Solving
of respondents problems to create
of respondents Accuracy of returns and avoidance of penalties
are planning to
invest in
are planning to 85% (versus 75% cross-industries) opportunity
invest in use
compliance
31% 40% of off-the-shelf
Tax compliance deadlines are met on schedule
software provision
systems
83% (versus 76% cross-industries)
82% Tax risks are consistent with corporate
risk profile (versus 74% cross-industries)
Business Impact
Most tax departments have oversight from a board Today, tax departments are often consulted on the
member (or board-level individual) as tax continues to overall business strategy for the organization. 61% of
rise in importance on the board agenda. respondents have seen an increase in involvement in
the last 2 years.
75%
Yes, board
Compliance-driven
Compliance-driven
transformation
transformation
member has
tax oversight
25%
No, board
7% 26% 48% 20%
member doesn't Not very/not at all involved Somewhat involved
have oversight
Well involved Completely involved
of tax
Most companies have a tax strategy or overarching tax governance policy document that covers tax risks.
76% 60% 31%

of respondents have review it review it on an
a documented tax annually ad hoc basis
strategy
Assessing today and preparing for the future
KPMG International conducts an ongoing survey of tax leaders around the world, which considers ranges of responsibilities,
department composition, budget structures and other data points to help tax leaders assess their departments today, and
consider how to evolve them for the future.
The KPMG Global Tax Department Benchmarking Survey is an ongoing initiative that is establishing a meaningful
benchmark of data for tax leaders around the world. To respond to the survey, please email tax@kpmg.com
AI offers the Chairman’s message
smartest solution Cover story

Paytm: Solving
problems to create
opportunity
for transition Creating efficiencies
to RFRs
James Lewis, KPMG in the UK
Compliance-driven
Christopher Dias, KPMG in the US
Compliance-driven
transformation
transformation
Traci Gusher, KPMG in the US
F
inancial services organizations, industry
working groups and regulators around
the globe are working against the clock to
successfully replace long-established London
Interbank Offered Rates (LIBORs) with
alternative risk-free rates (RFRs).
LIBOR’s decommission will significantly the current LIBOR challenge as a ‘once-in-a-

affect — and pose risks to — a diverse array lifetime’ opportunity — a catalyst to making
of business functions being conducted by major advances towards innovative digital
today’s global financial institutions. More
than US$370 trillion worth of contracts are
solutions that will transform their front-to-
back infrastructure and processes. ... automation
said to be tied to LIBOR and other soon-to-
be extinct benchmarks such as EURIBOR While many firms are taking a ‘wait-and- is being seen Chairman’s message
and TIBOR. RFRs have been designed to
overcome the pitfalls of these rates — from
see’ approach pending greater transparency
from regulators, the good news is that a as the obvious
minimizing reliance on expert judgment and growing number of smart sector players
have begun moving strategically toward
practical solution,
ensuring a better reflection of the risk-free
rate to avoiding past rate-related scandals. artificial intelligence (AI) solutions as the promising huge Cover story
LIBORs currently support a vast range of
clock ticks down to the transition deadline.
time and cost Paytm: Solving
problems to create
financial products and valuations across
multiple jurisdictions — from loans,
These organizations are structuring LIBOR
transition plans that encompass enterprise- savings thanks to opportunity
mortgages and leases to securitizations,
derivatives and more. Global regulators
wide governance, contract identification,
strategic planning, and the inventory of a level of speed
have made it clear the current construct systems, infrastructure and functions that
require change. We believe that the use of
and accuracy that
underpinning LIBOR is unsustainable and
a threat to global financial stability. The cognitive technologies — including natural manual processes Creating efficiencies
simply cannot
Financial Conduct Authority has gone language processing, machine learning
so far as to no longer compel banks to and other AI capabilities — will be critical to
submit estimates for LIBOR. This shift in
attitude towards the prodigious rate has
success.
hope to match.
By automating repetitive, rule-driven
effectively created a deadline of the end of
processes combined with AI-enabled
2021 to implement an alternative. Finance
contract management and workflow,
sector players are finding it challenging
to navigate an uncertain environment
financial firms can quickly unlock an Digital models take hold
accurate and reliable solution to the transition
and the transition’s potential impact on
challenge. Audit trails associated with this
their products, infrastructure, services,
process, meanwhile, will provide the starting
customers — and reputation.
point to help any organizations facing future
Larger firms, in particular, face the claims of misconduct and manipulation.
overwhelming challenge of scrutinizing Compliance-driven
hundreds of thousands — if not millions —
Beyond making the leap to RFRs Compliance-driven
successfully, businesses turning to AI will transformation
of contracts to identify LIBOR-based transformation
simultaneously position themselves to
references, and problematic legal language,
unlock abilities to streamline documentation
and develop a solution on time. And beyond
making it more consistent, allowing
how well banks make the transition,
for quicker changes (amendments)
how effectively they communicate
and ensuring that documentation and
those changes to the market is deemed
information systems are truly aligned. This
critical. Ultimately, we believe financial
will present opportunities to be competitive,
organizations should be looking at this
significantly reduce costs, enable higher
challenge through four lenses: strategy,
accuracy, faster deployment, improved
legal requirements, operational readiness
compliance and risk management. The
and client communication.
LIBOR transition presents the opportunity
to deliver new functionality transforming a
Letting AI do the ‘heavy lifting’ largely manual and error-prone process. In
Given the sheer enormity of the problem, addition, AI opens up opportunities to better
automation is being seen as the obvious process and analyze data, which in turn can
practical solution, promising huge time translate into competitive advantages.
and cost savings thanks to a level of speed
and accuracy that manual processes The smart solution to an urgent
simply cannot hope to match. Ultimately, challenge
the LIBOR transition opens the door to
a fundamental rethink on the use of data At KPMG we’ve brought together two
and machine-learning techniques to market-leading assets to automate contract
better provide products and services to analysis and remediation — solving the
customers. We are advising clients to view immediate LIBOR challenge while also
creating opportunities for significant future
business benefits through transformational capabilities that could prompt the creation
digital technology. of new products or services for finance
sector clients.
—— Ignite, KPMG’s global AI platform,
enables KPMG professionals’ to Smart, forward-looking banks are already Automation
help businesses rapidly process
and interpret massive volumes of
recognizing this broader reality and avoiding
the temptation to let their LIBOR transition as a solution Chairman’s message
contracts and unstructured data using
machine learning and natural language
unfold in isolation. Some are realizing, for
example, the connection between the
to the LIBOR
processing. AI dramatically expands
the spectrum of human cognition and
LIBOR challenge and the Fundamental
Review of the Trading Book (FRTB) —
challenge, as
capabilities. Businesses can then realize essentially a new market-risk rulebook noted, promises Cover story
the promise of AI to solve the LIBOR
challenge — providing insights on what
developed by the Basel Committee on
Banking Supervision to be applied to banks’ ongoing Paytm: Solving
problems to create
tools to innovate with while offering
outcome-driven approaches on how
wholesale trading activities. Banks are
looking hard at the crossroads they now
business opportunity
to strategically implement sustainable
processes built on AI insights. Ignite is
face and whether the time is right to do
something fundamentally different in this
benefits and
designed to work as an ecosystem that area and far beyond. advantages
combines best-in-class components,
people and technologies. Time is running out that go beyond Creating efficiencies
—— Appian is a low-code, application- Experience tells us that we are not seeing
what we would consider an appropriate
identifying
development platform that accelerates
the creation of high-impact business sense of urgency in the global financial contracts and
applications. It is a fast path from idea to
application, enabling document sharing,
services sector despite the formidable task
ahead and its tight timeline. UK financial needed
customizable business rules, real- regulators recently noted their surprise over
the “very different states of readiness for
changes. Digital models take hold
time reporting and powerful process
management. Low-coding is making dealing with the transition and associated
it easier for companies to develop risks demonstrated by plans submitted.”
apps that work across a wide range of They also urged against firms taking a
devices. “wait‑and-see” approach.
KPMG’s proprietary Ignite platform is But sector players are not entirely to blame
Compliance-driven
already being used by some organizations for being slow off the mark on this complex Compliance-driven
journey. As noted, they unfortunately also transformation
to reliably and rapidly extract information and transformation
answer specific queries relevant to LIBOR- face a troubling reality amid the number
based contracts, thereby revealing the of dependencies associated with the
correct path for a successful RFR-transition transition, the need of clarifying guidance
journey. The Ignite solution also generates, from standard setters and the potential
for customer review and approval, an intervention from both regulators and
amended contract based on the AI-based legislative bodies to pave over some
transition path chosen. seemingly insurmountable hurdles.
Automation as a solution to the LIBOR Until banks and financial businesses

challenge, as noted, promises ongoing know more regarding the fundamental
business benefits and advantages that go ‘building blocks’ that will be instrumental
beyond identifying contracts and needed to their success, we may see a continued
changes. Going forward, digital capabilities reluctance to accelerate investment in
unlocked by a smart LIBOR solution will solutions. But firms cannot simply sit
enable financial institutions to access idle pending more action from industry
applicability of AI in key areas such as risk bodies and other key players. There is no
management, compliance, operational time to lose and tapping into AI will give
resilience and more. Being more data- organizations the fastest and most reliable
enabled, for example, will create additional solution to today’s — and tomorrow’s —
business challenges.
Contributors
Case study
James Lewis
KPMG in the UK
E: james.lewis@kpmg.co.uk
James is a Director of Risk in
Banking giants turn to AI would have taken humans hours upon KPMG in the UK and leads Cover story
hours to complete. Beyond the remarkable KPMG’s EMEA Regulatory Insight
Several leading organizations in the
time savings, the automated LIBOR Centre. James has led a number of
Paytm: Solving
global financial services sector are problems to create
solution boasted an accuracy rate of up to global IBOR benchmark engagements
discovering — with KPMG professionals’
98 percent — versus about 85 percent for as the industry has been developing opportunity
insights and guidance — the immense towards the new Risk Free Rates.
manual processes.
impact that a strategic, AI-enabled
transition to LIBOR can have on their We recently completed another successful
efficiency and competitive edge. Tasks transition for a global banking giant that
that would typically take up untold hours needed to identify, analyze and convert
— if not days — of human productivity are to machine-readable format thousands Creating efficiencies
being reduced to seconds thanks to AI’s of loan contracts — each up to several
remarkable capabilities. hundred pages long. The bank had Christopher Dias
previously done similar proof-of-concept KPMG in the US
One major global bank recently turned
work with about 20 other consulting firms, E: cjdias@kpmg.com
to a KPMG member firm and our Ignite
technology vendors and AI boutique shops Christopher has over 30 years of
AI platform to assess more than 25,000 international experience in financial
and was pleased to note that Ignite proved
contracts representing billions of dollars markets as a risk practitioner and
to be the only comprehensive solution that Digital models take hold
in exposure — a formidable task that strategic advisor. He has helped several
fully met its needs.
would have required an estimated 15,000 financial institutions successfully
hours of manual work equivalent to four As many financial firms are discovering, prepare and adapt to changing
paralegals or lawyers working full time for the transition is too complicated to regulations and market challenges
and has represented client interests
about 22 months. be tackled merely with software
to global regulators, communicated
tools, given the complexity of strategy to senior management, and
Much of the key information was typically Compliance-driven
working with unstructured data and presented complex issues to company
buried across a huge array of PDFs and Compliance-driven
converting countless complicated text boards. transformation
simple text documents that would have
documents to a machine-readable format. transformation
been almost humanly impossible to track
We’ve kept Ignite in a much more open
down manually in advance of the 2021
format that we believe make it unique
RFR-transition deadline. We were able
in the market — letting us achieve very
to successfully identify and extract all
high results across a range of use cases.
relevant contract details in a fraction of
Beyond LIBOR, our approach seeks
the time for a fraction of the cost, creating
to provide crucial new capabilities and Traci Gusher
a comprehensive new database that
advantages for future success thanks KPMG in the US
will enable the banking giant’s LIBOR
to the digital transformation being E: tgusher@kpmg.com
transition. Automation typically completed A leader in KPMG’s Center of
implemented as we convert key text
within seconds a huge array of contract Excellence for Data & Analytics, Traci
documents to machine-readable forms.
identification and analysis tasks that each is responsible for the D&A Strategic
Transformation and Lighthouse
Artificial Intelligence teams. She is an
experienced executive with 17 years’
To learn more about KPMG’s AI-enabled contract management and experience in systems implementation,
workflow platform, watch our short video. advanced analytics, big data
technologies, AI and D&A strategy.
Tax, transfer pricing Chairman’s message
and transformation:
What Asset Managers may be forgetting
Cover story
Paytm: Solving
problems to create
opportunity
Anthony Brown, KPMG in Canada
Sherif Assef, KPMG in the US
Dr. Manuel Imhof, KPMG in Germany
A
sset managers are making good Digital models take hold
progress transforming their
organizations. But few seem to have
thought about the tax and transfer pricing
implications of their actions. Opportunities
(and risks) could be missed. Compliance-driven
Compliance-driven
transformation
transformation
You are a decision-maker at a transparency. New technologies and

respected Asset Management firm. tools are being implemented to enable
You have recognized that the market is that shift.
evolving — you have watched the rise
of passive and alternative investment Whereas, in the past, technology played a It’s not just
strategies, dealt with a range of new
regulatory developments, managed
supporting role in the asset management
model, today it is starting to assume asset managers; Chairman’s message
growing cost pressures, and are adapting
to the significant competition from
a much more central position, often
actively effecting investment decisions national tax
Fintechs and online distribution channels. and executing trades. And that requires
Asset Managers to rethink the role that
authorities
If you are like most Asset Managers, technology plays in their value chain. are looking to Cover story
you probably have a plan. And you are
probably making good progress towards Asset managers with new robo-advisory transform their Paytm: Solving
problems to create
reinventing your operating models and
processes to prepare your organization
or Artificial Intelligence (AI) tools, for
example, may need to offer management models as well, opportunity
for the future. But have you thought about
the tax implications of your transformation
fees significantly lower than those charged
on traditional products. What will that and they are
plan? Should you? mean for profitability? How will value be
allocated to the technology asset versus
moving quickly to
The rules are changing the ‘people’ functions performed? How implement their Creating efficiencies
agendas.
will a reduced management fee structure
Many of the changes that Asset complicate existing revenue splits across
Managers are currently making to their the value chain?
business and operating models will
have a direct impact on their tax and Taking another look
transfer pricing positions. On the heels
of the OECD’s Base Erosion and Profit Some of the more tax-savvy Asset
Shifting (BEPS) work, we have seen Managers have started to recognize that Digital models take hold
unprecedented changes to transfer their transfer pricing policies may be out
pricing rules around the world. It’s not of date. As a result, they are undertaking a
just the scope of the changes that is number of aligned strategies to make sure
creating challenges, it’s also the pace. they are not missing any opportunities or
For example, ongoing reconsideration creating any new risks.
of transfer pricing models by the OECD Compliance-driven
What are they doing? KPMG member Compliance-driven
may mean that changes to operating transformation
firms’ experience points to five main transformation
models will create reportable income in
areas of activity.
unexpected jurisdictions.
They are aligning their tax and
It’s not just Asset Managers; national 1 transfer pricing function with
tax authorities are looking to transform
the business. The leaders are
their models as well, and they are
ensuring that tax and transfer pricing has a
moving quickly to implement their
seat at the table when new products are
agendas. This includes a growing range
being introduced. And they are
of unilateral measures being adopted in
encouraging their tax and transfer pricing
certain jurisdictions. The passage of the
professionals to speak up when they see
US tax reform bill, for example, forced
risks or opportunities related to either new
many asset managers to quickly rethink
products or the wider operational
things like the volume and nature of
transformation that is underway.
intercompany payments, the location of
value-creating functions and assets, the They are assessing their value
direction of related-party interest flows, 2 drivers. Asset managers need to
and a range of other factors. have a clear understanding of the
value drivers that underpin their new
Role of technology operating models. That will allow them to
Many Asset Managers are changing the properly assess how changes in, say, the
very fundamentals of their operating and sales function might impact online
business models in an effort to improve distribution, or how the use of AI might
efficiency, enhance agility and increase influence the way fees are distributed.
They are taking a closer look at

3 the regulatory and tax
changes. Given the range of
changes now underway across
jurisdictions, Asset Managers will need to Some of the more tax-savvy asset
spend some time prioritizing them. Which
will have the greatest impact? Can the managers have started to recognize Chairman’s message
impact be modeled with related scenario
analysis? What options are available for that their transfer pricing policies
mitigation? What is the timeline for
change? And what will it cost? Answering
may be out of date.
these questions up front will allow for Cover story
faster decision-making and more focused Paytm: Solving
investment. problems to create
They are augmenting their skill opportunity
4 sets and capabilities. Most
Asset Managers run a fairly lean
tax and transfer pricing function. And so
they recognize they might lack the skills,
experience and insight needed to Creating efficiencies
anticipate and respond to recent changes
in tax and transfer pricing rules. The
leaders are fostering closer relationships
with advisors that can keep them
informed and moving in the right direction
to actively deal with changes as they
arise.
They are applying technology
5 to support their transfer
pricing decisions. No matter the
transfer pricing policy, manual execution
of the relevant intercompany payments
can be a burdensome and, ultimately, Compliance-driven
Compliance-driven
risky undertaking, particularly as the transformation
volume of those payments grows. The transformation
leaders are automating these processes,
in combination with robust policy-setting
and governance regimes, to optimize
efficiency and minimize compliance risks.
Don’t wait another day

While many leading Asset Managers have
been carefully reviewing and developing
strategies to address their changing tax
and transfer pricing realities, experience
suggests that perhaps not all Asset
Managers are proactive.
This is no time for a ‘wait and see’

approach. Those that ignore the changes
may likely find themselves facing missed
opportunities, much bigger risks, and
potential transfer pricing exposures in
the future. The time to optimize tax and
transfer pricing strategies is now.
Contributors
Anthony Brown
KPMG in Canada
E: adbrown@kpmg.ca
Anthony is a Partner in KPMG’s Global
Transfer Pricing Services practice Cover story
in Toronto. Anthony specializes in
the financial services industry and
Paytm: Solving
on financial transactions across all problems to create
industries. opportunity
Sherif Assef
KPMG in the US
E: sassef@kpmg.com
Sherif is a Principal in KPMG’s
Washington National Tax Practice.
Sherif has over 20 years of transfer
pricing and extensive experience
advising clients on a variety of transfer Digital models take hold
pricing matters.
Compliance-driven
Compliance-driven
transformation
transformation
Dr. Manuel Imhof
KPMG in Germany
E: mimhof@kpmg.com
Manuel is a Partner in KPMG in
Germany. He has more than 11 years
of international tax law and transfer
pricing issues and focuses with clients
in the financial services industry.
Compliance-driven transformation Compliance driven transformation
When Chairman’s message
opportunity Cover story

Paytm: Solving
problems to create
comes
opportunity
calling: Digital models take hold
Using the deferral of

Compliance-driven
IFRS 17 wisely Compliance-driven
transformation
transformation
Mary Trussell, KPMG International

Ferdia Byrne, KPMG International
Brid Meaney, KPMG China
T
he original timeline for IFRS 17, with
an effective date of 1 January 2021,
presented a significant implementation
challenge for many insurers and, as KPMG
International’s global benchmarking study
In It to Win It showed, many were facing a
struggle against the clock.
The additional year brings not only

more time — but an opportunity to 4 Develop an improved understanding
of the drivers of your future results
better understand results and optimize and potential sources of volatility,
performance on an IFRS 17 basis. The
extra time also brings the prospect of
reflecting the mix of your products and
which IFRS 17 models and approaches It’s crucial that
delivering greater value from finance,
by developing a road map to a better
they fit within. Understand how future
product changes and product mix could
insurers don’t Chairman’s message
financial reporting capability and, as a
minimum, containing future costs.
impact your results. take their foot off
But the change also brings challenges. 5 Use the time to make more deeply
researched policy choices to identify
the gas, thinking
Some insurers would have liked a longer the best outcomes for your business to that they will pick Cover story
deferral and the additional year to enable
entities to adapt to further changes to
depict your growth strategy and reflect your
markets, products and distribution strategy. up the pace later... Paytm: Solving
problems to create
the standard, albeit aimed at reducing its
complexity. So it’s crucial that insurers KPMG professionals interviewed a that multiplies risks opportunity
don’t take their foot off the gas, thinking
that they will pick up the pace later: that
number of analysts and synthesized their
views on IFRS 17 in our survey Can you
and costs.
multiplies risks and cost. see clearly now? 1 Many are hungry for
greater dialog with insurers on their plans
Instead, the opportunity now presents for the upcoming changes.
itself to be more ambitious in those areas
where you can derive greater value from On the operational side, in simple
change and to better understand results terms, the end-game must be ‘Better,
in the new world. Cheaper, Faster’.
Where can you drive more value?

Better, by offering more
On the commercial side, there are a Digital models take hold
business-useful insights.
number of areas you can focus on to help
maximize the opportunity presented by
the deferral of IFRS 17. Cheaper, because that’s
an imperative for every
1 Present your business plan on an
IFRS 17 basis; carry out what-if
organization.
scenarios to really understand the Faster, to get relevant Compliance-driven

Compliance-driven
implications to your results. information to management transformation
transformation
quickly to steer the business.
2 Analyze transition options and
methodology choices, and re-price
short-term, onerous contracts, to show
There are a number of things you could
the business in the best light. Develop
be doing to maximize the opportunity
a better appreciation of how you then
presented by the deferral of IFRS 17.
tell your story to the market: How will
your IFRS 17 results appear compared to While the additional year may not give
your IFRS 4 results and how you’ve been you the time to fundamentally transform
communicating these externally? your end-to-end processes, why not use
the time to really understand your current
3 Understand how you will revise KPIs
and performance metrics to reflect
state, enhance wherever possible and
develop a road map to overhaul the
IFRS 17. Will contractual service margin
remainder, rather than just adjusting
(CSM) generation tell your growth story,
processes in a tactical way for IFRS 17?
or will you continue to use existing
Spending the time to understand your
metrics like Embedded Value (EV) and
data architecture, i.e. your data flows and
Value New Business (VNB)?
1
https://home.kpmg/xx/en/home/insights/2018/12/can-you-see-clearly-now-fs.html
interfaces throughout your end-to-end

processes, can help you understand
what can be done to simplify, standardize
and automate.
Use the extra time to better align your

data between your actuarial models and Chairman’s message
accounting systems. Variances between
actual results (from the accountants)
and expected results (from the actuarial
models) can have a direct impact on
reported results. Enhance and transform Cover story
your analysis of change process as Paytm: Solving
IFRS 17 moves this process from a control
to a fundamental part of the income
problems to create
statement. This requires a step change in opportunity
the capability required.
A number of companies have still not

even chosen the provider for their CSM
solution. The deferral allows companies
to get their CSM engine working to a
satisfactory level and integrated into
their architecture, i.e. getting data from
actuarial cash flow models through to
posting results to accounting systems and
general ledger to support dry runs.
Spend time assessing how to enhance While the additional year may not Digital models take hold
the chart of accounts to provide the
necessary analysis, control and reporting
give you the time to fundamentally
outputs across reporting metrics, transform your end-to-end processes,
including tax. Typically, deficiencies in
the chart of account manifest in end-user why not use the time to really
spreadsheets, and so understanding
the design is an opportunity to simplify, understand your current state, Compliance-driven
Compliance-driven
transformation
standardize and automate analysis, control
and reporting outputs.
enhance wherever possible and transformation
Understand the critical path through your

develop a road map to overhaul
end-to-end reporting close process, and
how much you can take off-cycle to give
the remainder.
you some time to properly understand the
results, especially in the early years.
Understand how your business

planning, forecasting and management
information (MI) processes will change
in an IFRS 17 world, taking into account
the key components of the new income
statement and how they will react in
different scenarios: the CSM release,
the Risk Adjustment release and the
investment result. IFRS 17 is based on
expected values of these components,
so for the in-force book, this will come
down to understanding and anticipating
variances against these expected values.
Integration of accountants and The new world is much more integrated Contributors
actuaries and less siloed. Change has already
begun. Professional qualifications don’t
IFRS 17 is driving greater integration
limit or define people as they used to.
of accountants and actuaries into the
Finance teams are now starting to include
Finance function and greater integration
data scientists and data visualization
of actuarial reserving and pricing into Chairman’s message
specialists and actuaries as well as
general insurance companies.
accountants. Modern finance teams, in Mary Trussell
In the Life market in the UK, the Finance insurance as elsewhere, need to blend KPMG International
function has combined actuaries and skills in multidisciplinary teams. E: maryhelentrussell@kpmg.com
accountants, but in the US, Canada, Asia Mary is KPMG’s Global Insurance
The demands of IFRS 17 will further drive
and elsewhere, actuaries typically sit Accounting & Regulatory Change Cover story
this trend: Take advantage of it to make Leader and Global IFRS Insurance
in a separate function (or sub-function Paytm: Solving
your finance team fit for the future. Use Co-deputy Leader. With over 30 years’
within Finance) reporting to the chief problems to create
the change now to grow your talent of the experience, Mary brings deep
actuary. With IFRS 17 and the greater
future. experience covering the entire range of opportunity
use of projections of future cash flows, insurance markets, from life and health
explaining results will require closer An opportunity not to be passed up and personal lines to specialty risks and
collaboration between accountants reinsurance, across Asia Pacific, Europe
Success requires preparation, and North America. Mary advises
and actuaries than they’ve ever
determination and opportunity — and the clients on successfully navigating
worked before.
deferral of IFRS 17 grows the size of that change to enhance their finance Creating efficiencies
That collaboration is needed before opportunity. CFOs and their teams can capability and business performance.
IFRS 17 goes live in order to design and use the changes that IFRS 17 requires to
build these changes — and while that’s enhance their finance capability.
underway, why not use that closeness of
While there may not be the time to
working to get accountants and actuaries
transform the function if you haven’t
working better together on current
headed down that path already, at least
reporting — IFRS 4, EV, capital?
seize the opportunity to understand your Digital models take hold
Ferdia Byrne
The same is true in general insurance, current state, map out the journey to
KPMG International
where it is critical to form an ever closer become the finance function of the future E: ferdia.byrne@kpmg.co.uk
feedback control cycle, including business and use IFRS 17 to get as far along that Ferdia is the Global leader for Actuarial
planning, pricing, claims management, road as possible. at KPMG and is a member of the global
reserving and capital to ensure emerging Insurance leadership team. With over
The extension of the implementation 20 years’ experience, Ferdia specializes
information is quickly identified and acted
timeline provides the window of in life insurance and has worked Compliance-driven
upon. Both actuaries and accountants Compliance-driven
opportunity to do much more than many with various European multinational transformation
need to shift their focus to providing
had accepted might be the case. insurers. His areas of expertise include transformation
insight rather than crunching data, and financial reporting, risk management
investment in automation to support the Seize the opportunity, because who and M&A. He has broad experience in
new basis of reporting is a key catalyst of knows when it will come again? various European insurance markets.
that shift.
Brid Meaney
KPMG China
E: brid.meaney@kpmg.com
Brid moved to Hong Kong in July 2018
from KPMG in the UK where she was
Head of Insurance. An actuary with over
25 years’ experience in the life assurance
industry, her deep expertise in finance
and actuarial transformation is matched
by personal experience of leading
finance functions through change.
Publications
KPMG member firms provide a wide-ranging offering of studies, analysis
and insights on the financial services industry. For more information, Chairman’s message
please go to kpmg.com/financialservices
Pulse of Fintech H1 2019 Asset Management: It’s decision time

The Pulse of Fintech analyzes the latest The Asset Management industry is facing Cover story
global trends in venture capital, M&A and complex challenges, but vast opportunities
PE investment activity in the fintech sector. await and asset managers have big Paytm: Solving
In this edition, we also include trends and decisions to make. KPMG can help you problems to create
insights around wealthtech, proptech, adapt and make the bold choices that will opportunity
insurtech, regtech, cyber security, and lead you into the future. We can make better
more. decisions together. It’s decision time.
The future is open: Reshaping the banking Operational excellence in insurance Creating efficiencies
experience KPMG and ACORD launched a survey report
Banks today face profound industry on operational efficiencies to understand
challenges, even so, we believe the future where insurance companies are on their
is open with opportunities. This 10-part transformational journey and where they are
article series cover a range of topics related heading. A majority are falling behind and a
to technology innovation and disruption, lack of process standardization and strategic
providing practical insight into how banking vision is the primary obstacle to future
executives can leverage the trends for transformation efforts.
sustainable competitive advantage. Digital models take hold
Global Asset Management CEO Global Banking CEO Outlook 2019 (video)
Outlook 2019 Banks are facing an uncertain future and
While they are confident about their their CEOs are addressing this by redefining
immediate business prospects despite a resilience and focusing on agility in the
fragile global economy, CEOs of the world’s ongoing pursuit of growth. KPMG surveyed
major asset management firms are alert over 100 Banking CEOs across the largest Compliance-driven
to the need to adapt their business to work economies to get their perspectives transformation
reflect customer values and expectations, on how they are preparing their business for
environmental risks and transformational change and building resilience.
technological change.
Global Insurance CEO Outlook 2019 Global Banking M&A Trends 2019
Insurance CEOs are faced with a stark This 2019 edition of the Banking Trends
Being agile choice. In the face of unparalleled report provides a snapshot of 10 trends and
to build environmental, economic and technological opportunities affecting the banking M&A
resilience change, they are looking to grow their environment around the world. We analyze
Insurance insights from
businesses by creating the organizational 7 key geographies and 3 high impact sectors,
KPMG’s 2019 Global CEO Outlook
agility to disrupt existing business models including China, ASPAC, US, Western
and challenge long-held market orthodoxies. Europe, Eastern Europe, Africa, LATAM,
KPMG International
home.kpmg/insurance
non-performing loans (NPLs), Fintech and
Private Equity.
Global Banking Fraud Survey Mind the Gap: Women in Financial

This report looks at how banks and other Services Leadership
financial institutions are identifying, assessing Mind the Gap is a blog series that features
and addressing new fraud risks. It also interviews with Laura Hay, Global Head of
provides a view into what investment is being Insurance, and women executives from
made in technology and the right people the financial services industry around the
with the necessary skills and governance to world. Laura and her guests discuss their
identify, prevent and detect fraud. career progression, professional failures
and successes as well as a variety of other
topics.
Missed an issue
of Frontiers in Finance? Chairman’s message
Cover story
Paytm: Solving
problems to create
Frontiers Frontiers opportunity
in Finance in Finance
Issue #59
Issue #60
Workforce shaping
Risk proofing the future
On the cover
Shenaz Khan, Westpac, page 8
On the cover
Andrea Pozzi, Grupo Santander, page 6 Featured interviews
Aileen Tan, AIA Singapore, page 28
Featured interviews
Katie Casey, Charles Schwab, page 40
Julian Johns, Trunomi, page 51
Sam White and Will McDonald, Aviva, page 50
Karina Whalley, AXA Global Parametrics, page 59
kpmg.com/frontiersinfinance kpmg.com/frontiersinfinance

Back issues are available to download from home.kpmg/frontiersinfinance
Frontiers in Finance is a forward-looking collection of market insights, thought-
provoking perspectives and sector-specific issues that impact key decision-
makers of financial services organizations around the world. All articles are
written by industry-leading and experienced professionals from across our Global
154 Compliance-driven
Financial Services practice. member firms and
34,000
KPMG’s Global Financial Services practice has more than 34,000 partners and
transformation
professionals across our global network of 154 member firms, providing audit, tax
and advisory services to the retail banking, corporate and investment banking,
investment management, and insurance sectors. Each one of our professionals global financial
brings ideas, innovation and experience from across this vast network, to the services
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We welcome the opportunity to discuss how KPMG member firms can help you
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Contacts
James P. Liddy Simon Gleave Francisco Uría Fernández

Global Chairman Joint Regional Coordinating Partner Coordinating Partner
Financial Services Financial Services Financial Services
KPMG International ASPAC region EMEA region
Partner KPMG China KPMG in Spain
KPMG in the US T: +86 10 8508 7007 T: +34 6797 98839
T: +1 212 909 5583 E: simon.gleave@kpmg.com E: furia@kpmg.es
E: jliddy@kpmg.com
Laura Hay Andrew Weir Judd Caplain

Global Head of Insurance Global Head of Asset Management Global Head of
KPMG International KPMG International Banking and Capital Markets
Partner Partner KPMG International
KPMG in the US KPMG China Partner
T: +1 212 872 3383 T: +852 2826 7243 KPMG in the US
E: ljhay@kpmg.com E: andrew.weir@kpmg.com T: +1 212 872 6802
E: jcaplain@kpmg.com
home.kpmg/socialmedia
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Publication date: October 2019

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Frontiers

Reshaping financial services

36 Flexibility for growth:

Finding the fortitude Chairman’s message

to transform Cover story

Global CEO Outlook 2019, KPMG International

Add the right ingredients Customer focus: Perhaps not

Paytm: Solving Chairman’s message

problems to create Cover story

Harinder Takhar, Paytm Labs Inc.

“We see Paytm as a way to bring half

Driving customer acquisition Compliance-driven

What ails Chairman’s message

Digital models take hold

Piia-Noora Kauppi Claire Calmejane

“Our platform is going to allow “Insurance will be more predictive

Sébastien Marotte Colin Bell

Capturing the Chairman’s message

benefits of Cover story

Hessel Verbeek, KPMG Australia

Five steps to simplification

Making the case Take it from the top

Accelerating Chairman’s message

As the pace of disruption picks up speed Taking a new view on value

Successful integration of deals that

require strong leadership, robust

Digital models take hold

Agility with Chairman’s message

Transaction Banking business

Ranjana Clark, Head of Global Transaction Banking, MUFG

Ranjana Clark has no doubt that processing of payments, or maybe

Hear from Ranjana on her views on the Future of Payments in 2030.

The view from the CEO’s office

… And they are taking big steps to transform their enterprises.

Digital models take hold

But are they truly ready for a customer-centric, disruptive environment?

64% 62% Compliance-driven

About the survey Banking, n = 132

Digital models take hold

In a connected next-gen operating

need to rely on the technical and Isabel Zisselsberger

operational capabilities of countless KPMG China

other partners in the value chain. Isabel is the Head of Customer,

Does banking’s Chairman’s message

future outweigh Cover story

Ian Pollari, KPMG Australia

Digital models take hold

Legacy system upgrades

Purchasing an existing digital bank

Establishing a digital bank Creating efficiencies

Responding to a new reality Purchasing a digital bank

Defining a digital banking strategy starts with a clear business model

Reinvention through Personas Build

Source: KPMG International 2019

new ground with Marcus

Flexibility for growth:

era of digital disruption Cover story

Source: Operational Excellence in Insurance, KPMG International and ACORD, 2019

More decisions ahead requirements and efficiency. Through

Next-generation Chairman’s message

banking technology Cover story

and tax implications

Robin Walduck, KPMG in the UK

36 Flexibility for growth:

Ranjana Clark, Head of Global Transaction Banking, MUFG