Jon Allaway, CTO, Temasek

1. Banking Asia –
A Technological Revolution
Jon Allaway, CTO Temasek
7 March 2019

2. Financial Services Asia – Market Size & Growth
2
Consumer
Wealth
Industries
and trade
Investment in
infrastructure needs
Total
population
4.2B
GDP
$28.2T
2017 – 22E CAGR: 6.8%
Banking sector
revenues
$1.4T
2017 – 22E CAGR: 7.5%
1. Asia ex-Japan Source: IMF as of Oct 2018, BCG banking pools, Digital in 2018 report by
Hootsuite, BCG, UNCTAD, KPMG and other reports
Mobile connections
as % of population
102%
8% y-o-y growth
Personal
wealth1
$36.5T
~$66T by 2022
$600B
for 2018 – 2022E
Internet
penetration
48%
5% y-o-y growth
% of world's
wealth held1
18%
Trade
flows
$0.9T
2017-22E CAGR: 15%
FY17: 4.5BFY17: 2.1B

3. Customer expectations are changing,
necessitating new approaches by the banks
3Source: BCG Research
~40%
prefer digital
channels over
RM
1.8x of
Europe/USA
RM-led models
not sufficient
~80%
expect 24*7
Access
Mobile self-service
seen as necessity
Mobile as the most
crucial servicing channel
~90%
want
personalised
research
Little appetite for mass
marketing, Segment of One
Need data and
advanced analytics

4. What is on the C-suite agenda in Banking?
4
Leverage data as rocket fuel to
drive business growth
Invest in enablement as core
competencies:
 Talent and Culture
 Technology
 Performance Management
Improve quality of assets
Defend against security
vulnerabilities such as data
breaches
Build an ecosystem of partners
Enhancing internal capabilities
Harvest market growth across
banking segments
Remain relevant to changing
customer expectations
Enhanced infrastructure and
monitoring for compliance and
regulatory purposes
Responding to external forces
On CEO agenda but lower priority
than growth and enablement

5. Retail Banking: Rapid move to customer journeys
instead of product-based selling
Strategic imperatives
Seamless digital
experience
E2E service
model
Ecosystems of
merchants
Secure and
trusted
Key features of customer journeys
Digital is key as ~40%1 of Asian Wealth
clients prefer digital to direct contact
Enabling technologies
Cloud
Mobile
Social
media
AI-powered
Big Data
STP
Blockchain?
1. CapGemini, RBC Wealth Management and Scorpio Partnership Global HNW Insights Survey 5
Relevant customer journeys in retail
My
Wealth
My
Education
My
Home
My
Leisure
My
Family
My
Health
My
Travel
My
Style
Depo
sits
Credit
Cards
Investments
Insurance
Pay
ments
Loans
Bank
Categories of
retail
customers
Micro
Finance
Mass
Market
Private
Client
Wealth
Banks moving from product-centric
to customer-centric strategies

6. SME Banking: Sizeable opportunity for lenders
who can deliver exceptional customer journeys
Emerging customer journeys in SME Strategic imperatives
Key features of customer journeys
Using data to improve risk assessment can
potentially reduce unmet funding gap for
SMEs of ~$450b1
Enabling technologies
1. ADB survey; estimated by taking total trade finance funding gap of $1,500B * 75% attributed to SMEs and midcap firms
* 40% attributed to Asia-Pacific
Our
customers
Our
staff
Our
cash
flow
Our
facili
ties
Our
stock
Our
profit
Our
brand
Our
sup
liers
Depo
sits
Credit
cards
Invest
ments
Insurance
Pay
ments
Loans
Supply
chain
Bank
6
Seamless digital
experience
AND
Relationship
manager
Data & advisory
service model
Secure and
trusted
Banks moving from product-centric
to customer-centric strategies
Cloud
Mobile
Social
media
AI-powered
Big Data
STP
Blockchain?

7. Institutional / Corporate Banking:
Six areas with varying potential for Blockchain
7Source: BCG research
LimitedMediumHigh
Potential for Blockchain today
Supply chain finance
• Enable real time exchange
of supply chain events and
documents
Trade finance
• Link financial documents
to allow review and
approval in real time
Large scale project finance &
syndicated lending
• Book of records held by each
investor can be replaced by a
distributed ledger with smart
contracts
• Automate loan management
Blockchain
use case
examples
1 2 3
Treasury services
• Few existing use cases
Corporate portal
services – self service
• Tech layer with UI / UX,
few areas for Blockchain
implementation
Cash management
• Allow documents such as invoices
to be shared across departments
• Reduce invoice disputes due
to miscommunications
Blockchain
use case
examples
4 5 6

8. Two ways Blockchain can insert itself
into banking in Asia
8
Enable value by connecting
industries & making new markets
• Bundling product/service providers
to bank the SME market
• Patient experience—Connecting
healthcare & insurance
• Securitization exchange of
physical assets
Be part of the industry fabric/glue
where there is volume
• Know Your
Customer
• Eco-system loyalty
Programs
• Payments
• Trade finance
• Payments &
Invoicing
• Supply chain
finance
• Clearing and
settlement
Potentialusecases

9. Several challenges holding companies back
from fully adopting Blockchain
Technical
challenges
Regulatory
challenges
Market
challenges
No industry standards and
diverging underlying
architectures
Concerns over technology
performance and security
New requirements needed
from legacy IT
Lack of uniformity in adoption
Technical challenges
Unestablished governing
entities and regulations
International regulators may
not be uniform in policy
Regulatory challenges
Difficult to reach agreements
on ownership/governance and
pricing models across the
consortium(s)
Endless talk of “Collaboration”
but limited action and
commitments by players
Need for sufficient
participation to ensure
commercial success
Costly to update existing IT
Market challenges
9

10. Guidance
for
BlockChain
providers
Get to PoCs quickly so that it becomes tangible fast
Qualify the drivers of value and commitments early
Secure an “Anchor Tenant” with sufficient scale
and presence
Focus development efforts on high-impact projects
and avoid running large number of small scale pilots
Give priority to “National Agendas” which are likely
to become policy in the near future
10

11. Q & A
11

12. Thank You
12

13. Wholesale banking
institution looking to grow
outside home market
• ~10x smaller than
competitors
• Need to shift product
mix towards Cash,
Trade, Markets
• Wants to differentiate
and diversify sector mix
Fully automated solutions
using large scale machine
learning supported by smart
go-to-market strategy
• Natural Language
Processing to perform
large scale fuzzy matching
• Network and Graph
analytics to identify hot
leads and their connectivity
with existing clients
• Single source of truth
curating information from
over 30 different sources
$120M+ in incremental
revenue
1,500+ hours of man-
hours saved
Example: Lead generation for wholesale bank
using data to deliver $120M+ incremental revenue
13
Context Approach Result

14. Payment delays affecting
71% of Polish companies
Factoring not in
widespread use due to
paper-based process
Tax/VAT payments made
without settlement
Use of Blockchain to
create open ledger of
anonymous companies
and associated liabilities
Records chains of actions
related to particular
invoice
Automated payments
consistent with invoice
due date
Access to working capital
financing
Improved credibility
among partners allowing
closer collaboration in
new areas
[Example] Invoice 2.0 – Open ledger
of national invoices for Polish companies
14
Context Approach Result

15. [Example] Private Blockchain
to store KYC / AML data records
15
KYC is a tenuous process
with multiple steps
Large amount of
paperwork
Lack of transparency
regarding use of the
personal data has led to
inefficiencies in collating
public data
Blockchain can be used to
record KYC/customer
transaction history to
create a fully transparent,
accessible database
Secure and rapid ID
authentication
No warehousing of
sensitive data at third-
party repositories
Information immediately
available to all
accountable functions
across geographies
Context Approach Result