Slide 1: UBS conference: Integrated financial services
UBS conference Integrated financial services
Slide 2: Integrated financial services
2 Integrated financial services Matching demand (assets) and supply (liabilities) Right to compete • Group model • Asset management • Insurance Conclusion
Slide 3: Existing models: banks vs insurers vs asset managers
3 Existing models: banks vs insurers vs asset managers SEGREGATED PLATFORMS SUPPLY OF MONEY INSURANCE BANKING Short/long-term Deposits insurance INVESTMENT PRODUCTS LENDING PRODUCTS DEMAND FOR MONEY
Slide 4: Existing models: banks vs insurers vs asset managers
4 Existing models: banks vs insurers vs asset managers SEGREGATED PLATFORMS BANCASSURANCE MODEL Partnership or one owns the other SUPPLY OF MONEY INSURANCE BANKING INSURANCE BANK COMPANY Short/long-term Deposits insurance Insurance company uses bank’s sales channel INVESTMENT PRODUCTS LENDING PRODUC
Slide 5: Integrated platforms required for customer-centric approach
5 Integrated platforms required for customer-centric approach INTEGRATED PLATFORMS SUPPLY OF MONEY INSURANCE BANKING ASSET MANAGEMENT SHADOW BANKING LIABILITIES ASSETS VAF MORTGAGES CORPORATE/CIB UNSECURED AUM DEMAND FOR MONEY
Slide 6: Requires sophisticated asset and liability matching
6 Requires sophisticated asset and liability matching SUPPLY OF MONEY LIABILITIES SHADOW BANKING INSURANCE BANKING ASSET MANAGEMENT Optimise matching of assets CLEARING and liabilities through treasury, HOUSE ALM and structuring capabilities VAF MORTGAGES CORPORATE/CIB UNSECURED AUM ASSETS DEMAND FO
Slide 7: Clearing house allows us to capture more of the value chain
7 Clearing house allows us to capture more of the value chain Reduce funding costs through better matching 1 of assets and liabilities CLEARING Create better value propositions 2 HOUSE to capture full customer value chain 3 Originate on most efficient platform
Slide 8: Integrated financial services
8 Integrated financial services Matching demand (assets) and supply (liabilities) Right to compete • Group model • Asset management • Insurance Conclusion
Slide 9: FirstRand already a large player on both demand and supply sides
9 FirstRand already a large player on both demand and supply sides SUPPLY OF MONEY LIABILITIES SHADOW BANKING INSURANCE BANKING ASSET MANAGEMENT Ashburton RMB GTSY FNB WesBank FNB RMB GTSY GTSY Investments Ashburton WesBank FNB RMB WesBank FNB Investments VAF MORTGAGES CORPORATE/CIB UNSECURED AUM AS
Slide 10: Clearing house
10 Enabled by platform- and franchise-neutral business model Distribution channels Clearing house Customer bases Licences Banking Short-term insurance Life insurance Asset management Systems, data, operating platforms MADE AVAILABLE TO ALL
Slide 11: Supports a customer-centric approach
11 Supports a customer-centric approach • Single view of the customer • Identifying and meeting needs • Provide appropriate customer solutions and access Customer • Transparency and single point of accountability * Underwriting management agencies
Slide 12: Integrated financial services
12 Integrated financial services Matching demand (assets) and supply (liabilities) Right to compete • Group model • Asset management • Insurance Conclusion
Slide 13: Asset management strategy leverages innovative utilisation of existing building blocks
13 Asset management strategy leverages innovative utilisation of existing building blocks • Origination and structuring franchises supply attractive assets previously not available in fund format • Customer base • Distribution • Balance sheet and liquidity • Optimisation of asset liability matching
Slide 14: What drives growth in AUM?
14 What drives growth in AUM? TRUST/TIME Prerequisites INVESTMENT PERFORMANCE MARKET DYNAMICS TIED DISTRIBUTION
Slide 15: What drives growth in AUM?
15 What drives growth in AUM? • Regulatory changes TRUST/TIME • Search for alternative sources of return • Liability-driven investing INVESTMENT • All of the above have driven demand for alternative PERFORMANCE asset classes • RMB origination capabilities (credit, private equity, MARKET DYNAMICS inf
Slide 16: What drives growth in AUM?
16 What drives growth in AUM? TRUST/TIME INVESTMENT PERFORMANCE • Ability to distribute is key • Tied distribution forces provide distinct advantage • FNB channels MARKET DYNAMICS • Digital • Face-to-face TIED DISTRIBUTION
Slide 17: WIM business has now been integrated into FNB
17 WIM business has now been integrated into FNB • Distribution • Building own solutions for customers • Capture flows currently going to third parties • Protecting customer franchise • Cost-effective for FNB and client • Positions the group for new retail distribution review (RDR) regulations
Slide 18: Traction in AUM reflects success
18 Traction in AUM reflects success R billion • FNB distribution channels 250 • Alternatives – R52 billion AUM 200 • Credit funds • Structured notes (GMFS) 150 • LDI • Westport (African real estate) 100 • Private equity, renewables 103 50 88 • Traditional – R51billion AUM 60 72 • Fixed income 0 • Eq
Slide 19: Integrated financial services
19 Integrated financial services Matching demand (assets) and supply (liabilities) Right to compete • Group model • Asset management • Insurance Conclusion
Slide 20: Our right to compete in the insurance space
20 Our right to compete in the insurance space Group customers are buying insurance products Through FNB Insurance Debit orders to brokers – third party product providers products Sell own products to our customers Use data analytics to offer product to customer when required Offer better products a
Slide 21: Significant opportunity in our own customer base
21 Significant opportunity in our own customer base Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 FNB share of ST premium flow Debit orders to short-term insurers Short-term insurance: the real opportunity is in comprehensive (underwr
Slide 22: How do we capture the opportunity in this space?
22 How do we capture the opportunity in this space? ORGANIC BUY PARTNER
Slide 23: Good traction in FNB insurance – increased penetration of customer base
23 Good traction in FNB insurance –increased penetration of customer base utilising all channels Penetration Sales channels Value creation In-force annualised premium on Embedded value – life products standalone life products Channel % of sales R million R million Branch 75 4 000 250 3 500 Call cent
Slide 24: Integrated financial services
24 Integrated financial services Matching demand (assets) and supply (liabilities) Right to compete • Group model • Asset management • Insurance Conclusion
Slide 25: Conclusion
25 Conclusion • We have the building blocks: • Customer base • Distribution channels • Product manufacturing capabilities/skills • Data analytics • Platforms • Sizeable profit pools • Group’s current revenue contribution from these activities is small • Presents opportunity for growth and diversific
Slide 26: www.firstrand.co.za
www. firstrand.co.za FIRSTRAND