Capital Markets Day
Marika Lulay (CEO)
Stuttgart, 29th June 2017
GFT Roadmap 2020
2GFT GROUP 29/06/2017
Our vision
World-class financial services specialist in technology & innovation
3GFT GROUP 29/06/2017
MARKET ANALYSIS
4GFT GROUP
Banking and Securities IT Spending
29/06/2017
Source: Gartner, 2017 Total Banking and Securities IT Spending by Segment, Worldwide, (Billions of U.S. Dollars)
84.8 86.1 88.2 90.1 92.1 94.0
168.5 176.4 185.0 194.2 204.2 214.9
68.370.7
75.881.2
86.993.2
29.527.6
27.528.2
28.528,4
96.9 95.896.3
96.796.9
97.028.1 28.1
29.029.4
29.730.1
2015 2016 2017 2018 2019 2020
Data Center Systems
Telecom Services
Devices
Software
IT Services
Internal Services
CAGR
2015-2020
1.4%
0.0%
-0.8%
6.4%
5.0%
2.1%
3.2% Total
5GFT GROUP
Future structural change in banking
29/06/2017
Pro
du
ct
layer
Product
specialists
Customer interface
Brand, marketing
Quality, assurance &
product selection
Customer
View
Mayor retail banks
Digital-only banks
Global technology
players, e.g. Apple,
Amazon
Scaled banks
Specialised providers,
such as Fintechs,
insurance companies
Activities Players Developments
The Invisible
Bank
e.g. O2 Banking
Pla
tform
layer
e.g. Smart ContractsPro
cess
layer
Manufacture products
Product platform service
Combining non-banking
and banking products
Banking as a platform
Facilitate payments
Identity, risk and security
management
Regulation & taxation
Scaled banks
New banks, e.g. Fidor
Major outsourcers
Fintechs, e.g. Paypal
6GFT GROUP
Continuous challenges for our clients
Disruption & Acceleration
FinTechs and Tech companies
occupy parts of the value chain
The challenges of our clients Trend development in 2017 and beyond Prospect
Estimations predict that cumulative investments in
FinTech could exceed $150bn within the next 3-5
years globally
Some studies imply that banks are aiming for 11%
return on equity and 35-50% of cost-income ratio
Across Europe, Retail Banks have digitalised only
20-40% of their processes
Internet of Things requires Banking as a
Service
Operational Excellence
Pressure to reduce the costs of
processes and maintaining
IT systems due to falling margins
Sources: Bloomberg - 2017, Rise of the digital bank – McKinsey – 2017, Fintech survey - PWC - 2017
29/06/2017
PSD2, MFID2, IFSR9 (2018); Basel3 (2019)
“Will work to reduce overlapping bank
regulation” (Steven Mnuchin)
Regulatory change“the new Normal”
7GFT GROUP
Regulatory change: the new Normal
Bank Strukt. Reform
2014 2016 2018
EMIR
CRD IV
BRRD
MMSR Regulation
MAD II / MAR
MiFID II
SM&CR
Money Market Funds
STSS (Securitisation)
AMLD IV / WTR
PSD II
IFSR 9
FRTB
Basel III
2015 2017 2019
BRRD
IFRS 9
Prohibition
on proprietary
trading
AMLD IV
HMT
MiFID II
Level 3
MiFID II
FRTB
PSD2
Small
regulation
Large
regulation
Milestone
Proposal
stage
Consultation
stage
Implementation
stage
MAD II
MMSR
reporting
starts
BSR provision for
separation of
trading activities
Cat 1
clearing
obligation
starts
EMIR
updated
reporting
MMSRSM&CR
Bail-in tool
applies
BCBS 261 BCBS 279
BCBS 266
BCBS 270
BCBS
270
BCBS
283
BCBS
238
BCBS
255
MAR emission
allowance and OTF
provisions apply
UCITS V
CRDIV net stable
funding
ratio will apply
AIFMD
UCITS
V
Review on app
and scope of
AIFMD
Bank Strukt. Reform
Review on app
and scope of
AIFMD
EU / UK Bench. Ref.
Benchmark
Regulation
Expected to
Apply
CRS
Data Protection Rev
SFTR
29/06/2017
8GFT GROUP
Digital evolution
ex
pe
rime
nt
Firm
of the
future
Licence
to
operate
imp
lem
en
t
DevO
ps
ag
ile
Disruption &
Acceleration
Operational
Excellence
Design led solutions, customer
journeys (chat bots)
Distributed ledger technologies
Data analytics insights and data
lineage (cognitive analysis)
Big Data in the cloud
Native cloud services
Control & ops digitalisation
(Robotic and cognitive automation)
Core platform optimisation, decommissioning
Repatriation, nearshoring
Data engineering
App simplification
IT automation
Reengineer for cloud
Front end usability, omnichannel
Utility connectivity
Cloud migration
Re-platforming, app. development
Clo
ud
Open API’s
29/06/2017
9GFT GROUP
Financial services CEOs and CIOs
expect digital revenue to more than
double in most regions
In North America they expect digital
revenue to nearly quadruple by 2021
They expect their digital initiatives to
force more business through cheaper,
more efficient online channels
Digital revenue opportunities for banks
29/06/2017
Source: Gartner October 2016
9
20 201716
3431
28
36
55
49
43
0
10
20
30
40
50
60
North America Latin America EMEA Asia Pacific
Expectations for digital revenue growth
2016
2018
2021
(average percentage of revenues)
10GFT GROUP
Two growth opportunities - Finance meets industry
29/06/2017
Digitized production sector
(Industry 4.0)Digitized financial sector
IoT
„Embedded Finance“ Supply Chain Finance
11GFT GROUP
Supply Chain Finance
1. Contract
2. Order for the opening of the letter
of credit
3. Letter of credit is opened and sent
to the advising bank
4. Notification to the beneficiary
5. Delivery of goods to the seller
(shipping) incl. tracking
6. Filing of "documents" by the seller
on the blockchain
7. Examination of the documents
and, if necessary, payment to the
advising bank
8. Credit to the seller
9. Account of the buyer is charged
Buyer
Principal
Seller
Beneficiary
Issuing Bank
Opening Bank
Notifying Bank
Confirming Bank
9 8
1
5
6
4
2
3
29/06/2017
7
12GFT GROUP
„Embedded Finance“
Step 1 Step 1 + n Manufacturer
Credit after sale
Supply chain
or production
chain
Bank
29/06/2017
Production events trigger direct exchange of
banking transactions
Machine 2 Machine 4
Machine 3Machine 1 I NB A
CB I
Credit after sale
13GFT GROUP 29/06/2017
OUR STRATEGY
HOW WILL WE WIN?WHERE WILL WE PLAY?
14GFT GROUP
Rank 18
Where to play?
29/06/2017
Top 15
ACCELERATE EXPAND DELIVERY FOCUS
High-end services through our global delivery model
ACCENTUATE
Source: Gartner 2016 (Ranks)
Capital Markets
Retail Banking
Insurance
Private Wealth Mgmt
Rank 56
Top 40
Rank 20
Top 15
Rank 21
Top 15
Rank 7
Top 10
Rank 9
Top 10
Rank 20
Top 20
Rank 22
Top 15
Country
Rank today
Goal
15GFT GROUP
Business service providers in the global FS sector for consulting, implementation and IT outsourcing
IBM, Accenture, NTT Data, Tata Consultancy Services,
Deloitte, Cognizant, PwC, Fiserv, Capgemini, Fujitsu, HPE,
Infosys, KPMG International
Hitachi, McKinsey & Co., Nomura
Research, Atos, Wipro, Fiducia & GAD IT,
HCL Technologies
CGI, Computershare, NEC, AT&T, CSC,
BT Group, Mizuho Information &
Research Institute, IT Holdings, Amazon,
FIS, Oracle
Sapient,, Sopra Steria, Unisys, GFT TechnologiesCenturyLink, Luxoft, Syntel, Evry, Nihon Unisys, NTT Communications,
Swisscom AG, Xerox, Telefonica, Dell, NS Solutions, SAP, LG, CNS,
Protiviti, SCSK, EPAM, T-Systems, Stefanini, EMC, Tech Mahindra,
Itochu Techno-Solutions, Oki Electric Industry, Genpact, Teradata, Fuji
Xerox, Aon, Capita, Sykes Enterprises, NetApp, Teleperformance, First
Data, HCL Infosystems, Transcosmos, Concentrix, […]
Source: Gartner Market Insight: A Banking Industry Primer, 2016
Market share
2016
Revenue Ø Growth rate
2015/16
39%> $2bn 6.0%
8%> $1bn 6.6%
7%> $500m 4.5%
46%< $500m 1.4%
Market volume
2016
Market growth
2015/16
$122 billion*
5.6%
Market growth
forecast p.a.
5.2%
GFT growth
2015/16
14%
GFT organic
growth forecast
11%
29/06/2017
16GFT GROUP
Competitive arena perceived by GFT
Boutiques
Captives
+10.1%
Brand / relationship competition Price competition
Challengers to come
-1.6%
+2.7%
+13.2%+14.2%
+11.5%
+9.7% +35.9%
+%3.7
+15% +55.7% +10.5%
+20.7%
*inlcuding: Consulting, Implementation, IT Outsourcing
GFT perception of competition CAGR in
GFT markets
2013-2016*
(Gartner)
In all GFT markets
In 2/3 of GFT markets
In 1/3 of GFT markets
29/06/2017
17GFT GROUP 29/06/2017
OUR STRATEGY
HOW WILL WE WIN?WHERE WILL WE PLAY?
18GFT GROUP
How will we win in the chosen markets?
29/06/2017
TRANSIENT ADVANTAGE
Commitment to delivery (onshore, nearshore, mixedshore)
Big enough to deliver – small enough to care
FS-savvy & Tech-heavy
Sustainability as opposed to short-term focus
WHAT MAKES US DIFFERENT?
19GFT GROUP
SWOT Analysis
Good cost-quality ratio
through our global
delivery
Fast decision-making
processes
High reputation and
trust with our clients
Financial sector savvy
and technology
knowledge
Focus on innovation
and technology trends
International presence
Fluctuation in new
delivery hubs
Not benefiting enough
of our international
presence in balancing
utilization, staffing and
scaling people
Size of our North
American footprint
Costly growth
Customer concentration
risk
Support our clients with
Digitalisation and
Operational Excellence
Size of untapped
markets (e.g. Retail
Banking in UK & US)
Structural change in the
banking industry with
new players
New technologies (e.g.
Cloud, Blockchain, AI)
to be applied in the
markets
Talent acquisition
Uncertain economical
and political situation in
some GFT markets
(e.g. Brexit)
Ongoing trend to rebuilt
captives within financial
institutions
Industrialization of
Banking (incl. Fintechs)
Business Consulting
margins under pressure
Strengths Weaknesses Opportunities ThreatsS W O T
29/06/2017
20GFT GROUP
Strategic programmes
Operational
Excellence
Employer
Branding
Applied
Innovation
International
Expansion
Global
practices
Knowledge
Management
Rollout new internal
platforms to increase
efficiency
Globally deploy Lab
network (virtual or “real”)
Develop Retail Banking
market in UK & North America
Establish global
performance model,
global recruiting
Push AI, Blockchain,
cloud-based offerings into
the market
Group-wide marketing and
client management (CRM)
29/06/2017
21GFT GROUP
Global practices
Mexico
UK
Spain
Italy
Switzerland
Cloud Computing
USA
Banking as a platform
Private Wealth
Management
Insurance
Blockchain
API Governance
Germany
Supply Chain
Finance
29/06/2017
Brazil
Robo Advisory
22GFT GROUP
M&A Strategy
29/06/2017
Provide access to new clients
Pro
fita
ble
Cultural fit
M&A driver M&A target criteria – key framework
Strengthen/complement GFT’s expertise
Focus on Financial Services
US, Continental Europe, LatAM
Catalyst for growth
Accelerate GFT’s Roadmap for 800 €m in 2020
Accentuate GFT’s DNA
Global IT services provider for Financial Services clients
Net debt two times EBITDA
23GFT GROUP 29/06/2017
374
423450
2015 2016 2017
+13%+6%
Revenue EBITDA EBT
44.6
46.7
48.5
2015 2016 2017
+5%
32.533.1
35.0
2015 2016 2017
+2%
Revenue
2020
EB
ITD
A m
arg
in 1
2%
800
+4% +6%
Mid term target 2020 (in €m)
CAGR 2015-2020: 10% organic growth p.a. brings us to € 620m
Growth via acquisition is contributing €180m by 2020
EBITDA Margin of organic business by 2020 at 13%, diluted by acquisition to 12% on €800m
24GFT GROUP 29/06/2017
Our vision
World-class financial services specialist in technology & innovation