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