Firstrand Limited · JSE:FSR
Firstrand — UBS Financial Services Conference 2019
17 slides from Firstrand's conference presentation, Oct 15, 2019
Slide 1: Disruption in financial services – don’t forget the customer
Disruption in financial services – don’t forget the customer Mary Vilakazi, FirstRand COO 15 October 2019
Slide 2: Group strategic framework – broadening financial services requires disruptive strategies
2 Group strategic framework – broadening financial services requires disruptive strategies Increase diversification – activity and geography Protect and grow Broaden financial Portfolio approach Grow a more valuable banking businesses services offering to the rest of Africa UK business SOUTH AFRICA
Slide 3: Successful disruption will benefit the customer
3 Successful disruption will benefit the customer “A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.” ~ Clayton M. Christensen, 1995
Slide 4: Some business models have already been disrupted
4 Some business models have already been disrupted Assets under management by licence 100% 3% 5% 9% 11% 13% 14% 90% Lower cost, transparent, best efforts 17% 17% 80% 18% 17% 18% 19% 9% 70% 9% 12% 13% 60% 14% 13% 50% 35% 30% 24% 20% Platform too expensive 20% 18% • Regulatory cost 40% • Distribution
Slide 5: Traditional insurance value chain is vulnerable
5 Traditional insurance value chain is vulnerable RESPONSES REQUIRED Disruptive forces: • Reduce channel costs Regulatory • Reduce platform costs Market • Better client outcomes Economic • Better, more efficient risk selection Customer • Balance sheet – better financial resource (asset/liability) ma
Slide 6: Owning the value chain key to disruption…
6 Owning the value chain key to disruption… Product ALM/FRM and Customer Distribution Licences manufacturing/ risk management base channels underwriting capabilities Enhances processes and minimises leakage
Slide 7: … so is business model and a customer-centric strategy
7 … so is business model and a customer-centric strategy Vehicle finance Insurance DEMAND FOR MONEY SUPPLY OF MONEY Mortgages Banking (liabilities) (assets) Corporate loans Asset management Unsecured loans Other Other • Use data analytics to understand customer needs and create products that meet th
Slide 8: Deliver superior customer outcomes efficiently
8 Deliver superior customer outcomes efficiently • Contextual understanding and insight Meet customer needs • Don’t over-insure/over-sell • Deliver bespoke/tailored solutions • Simple, easy to use, understand and access Customer experience • Not difficult or expensive to change or cancel Efficient b
Slide 9: Traditional bancassurance is not integrated and value chain fragmented
9 Traditional bancassurance is not integrated and value chain fragmented Partnership or one owns the other Bank Insurer INSURANCE BANK COMPANY Insurance company uses bank’s sales channel PRODUCT PUSH Insurance Bank’s sales company’s channels sales channels
Slide 10: Does FirstRand have the right to compete in insurance?
10 Does FirstRand have the right to compete in insurance? Group customers are buying insurance products FNB Life/ Through FNB • Licences From other MotoVantage Insurance Brokers – • Comprehensive product range in life insurance product providers VAPS products third-party products • Building out
Slide 11: Existing capabilities and integrated model allow for disruptive strategy
11 Existing capabilities and integrated model allow for disruptive strategy Group customers are buying insurance products FNB Life/MotoVantage Through FNB Insurance From other VAPS products Brokers – third-party products product providers Aim is to sell own short-term and life products to group’s cu
Slide 12: Also benefits the shareholder
12 Also benefits the shareholder Group customers are buying insurance products FNB Life/MotoVantage Through FNB Insurance From other VAPS products Brokers – third-party products product providers Every customer switched is more valuable to Aim is to sell own short-term and life products to group’s c
Slide 13: FNB’s insurance innovation initiatives…
13 FNB’s insurance innovation initiatives… STRAIGHT- PREDICTIVE 01 PRE APPROVED 02 UNDERWRITING 03 THROUGH CLAIMS 04 DYNAMIC POLICIES PROCESSING Pre-approved >1 000 Utilise all information on • Automation of processes – Policies that exactly match customers for life insurance customers to make bette
Slide 14: …contribute to good customer experiences and outcomes
14 …contribute to good customer experiences and outcomes SAsci CUSTOMER SATISFACTION INDEPENDENT BENCHMARK* SAsci CUSTOMER SATISFACTION INDEX • Number 4 in life by sum insured 86 84 83.7 • Number 3 in life by APE 82 81.1 • Number 2 in life by number of policies 79.6 79.2 80 78.3 77.7 78.2 • Number 1
Slide 15: FNB Life is already a meaningful player and valuable insurance business
15 FNB Life is already a meaningful player and valuable insurance business Annual premium equivalent (APE) New business APE Embedded value IN-FORCE APE ON LIFE PRODUCTS NEW BUSINESS APE ON LIFE PRODUCTS GROSS EMBEDDED VALUE* – ALL LIFE PRODUCTS R million R million R million 5 000 2 500 7 000 6 000 4
Slide 16: Despite traction, the opportunity remains significant
16 Despite traction, the opportunity remains significant Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 Oct 18 Nov 18 Dec 18 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 FNB share of insurance premium flow Flows to other insurers Approximately R38 billion per annum in flows to ot
Slide 17: Strategy will further diversify NIR, protect return profile and customer franchise
17 Strategy will further diversify NIR, protect return profile and customer franchise • Customer base • Growth opportunities • Insurance (life and short-term) • Brands and distribution channels • Investment management and savings • Data analytics and platforms industry ripe for further disruption ac