Session i speech arshad-rab_wfdfi2016

Arshad Rab | European Organisation for Sustainable Development

Innovating Banking & Finance for a Sustainable Future

THE AGE OF BIG BANG DIS RUPTION

Innovating Banking & Finance

Why

Leading with Responsibility

What next?

For a Sustainable

Future

Innovating Banking & Finance

Why


What Next?

For a Sustainable

Future

THE WHY OF INNOVATION

4

3

2

1


Banking &

Finance

Natural Resources & Environmental Disruption

Disruptive Trends

Society

4

3

1Non-Bank Digital Entrants & Technological

Disruptions

3


„"Banking is essential, banks are not."

- Bill Gates

"Are banks an endangered species?"

- Ralf Hammers, CEO of ING Group

The Emergence of Non-Traditional Competitors

Non-Bank Digital Entrants & Technological Disruptions1


2010 2011 2012 2013 2014 20150

2

4

6

8

10

12

14

16

18

20

1.8 2.1 2.4

4

12

19

Billions US$

Source: Citi & CB Insights | Citi GPS: Global Perspectives & Solutions | March 2016

Total Investments from 2010 to

2015: 41.3 Billion

US$


Source: CB Insights | The Pulse of Fintech Report, Q2 2016


SMB Tools

Consumer BankingPayments

&Transfers

Banking Infrastructure

Security

Retail Investments

Lending & Financing

Research & Data


Digital Currency3%

Equity Crowd Funding2%

Institutional Tools3%

Lending46%

Money Transfer3%

Payment23%

Savings & Wealth10%

Insurance10%

Source: Citi & CB Insights | Citi GPS: Global Perspectives & Solutions | March 2016

Investments by Business Area


Payments

&Transfers

Nonbank digital entrants

MESSENGER

Fintechs Tech Giants


Lending

&

Financing



Lending

&

Financing


Low Overhead

High Returns

Low Cost

Fast

Consumer & Business Project Financing

DISRUPTION IN THE DOMINANT MARKET POSITION OF BANKS & DFIs



Disruption?

40

40

15

Standard & Poor's Moody's Fitch

Credit Rating &

Credit Scoring

Non-Bank Digital Entrants & Technological Disruptions1

SPEED

10 terabits per second

Measuring Time

Nanosecond (one billionth of a second) & femto-seconds (one millionth of a billionth of a second)Age of trillion bits (terabit) per second communications

Industry 1.0 Industry 2.0 Industry 3.0 Industry 4.0

THE 4TH INDUSTRIAL REVOLUTION

Water/ Steam Electric Computing

AutomationInternet of

Things(IoT)

Digitization of the manufacturing sector (Smart Factories)


Non-bank Digital Entrants & Technological Disruptions1

Industry 1.0 Industry 2.0 Industry 3.0 Industry 4.0

Water/ Steam Electric Computing

AutomationInternet of

Things(IoT)

Digitization of the manufacturing sector (Smart Factories)

Mechanical Production

Mass Production

Electronics in Production

Cyber-Physical Systems

Inter-connecting physical & virtual world


UNEP – TEEB OFFICEThe Economics of Ecosystems

& Biodiversity

Ecosystem Fossil Fuels Minerals

"Mineral and fossil fuel data based on known

reserves currently economical to extract,

assuming fixed percentage increase in

usage per year."

OIL = 37 YEARS

COAL = 42 YEARS

GAS = 35 years

TANTALUM = 45 YEARS

AGRICULTURAL LAND= 69 YEARS

2. Natural Resources & Environmental Disruption


2. Natural Resources

Years

0 10 20 30 40 50 60 70 80

Phosphorus Tantalum TitaniumCopper Indium Antimony

4 years left

8 years left

13 years left

28 years left

40 years left

2016 2026 2036 2046 2056 2066 2076 2086 2096

Drugs, Batteries

Touchscreens, Solar Panels

Medals, Jewellery

Aircraft

Mobile phones

Fertilizers 72 years left

"Mineral and fossil fuel data based on

known reserves currently

economical to extract, assuming fixed percentage increase in usage

per year.„Source: UN TEEB

(UNEP – TEEB OFFICE

The Economics of Ecosystems

& Biodiversity)


2. Natural Resources

Years

0 5 10 15 20 25 30 35 40

Coal Oil Gas

2016 2026 2036 2046 2056 2066 2076 2086 2096

31 years left

33 years left

38 years left

"Mineral and fossil fuel data based on

known reserves currently

economical to extract, assuming fixed percentage increase in usage

per year.„Source: UN TEEB

(UNEP – TEEB OFFICE

The Economics of Ecosystems

& Biodiversity)



NATURAL RESOURCES DESIGN CONSUMPTION WASTE LANDFILL

TAKE – MAKE – WASTE ECONOMY


3. Natural ResourcesNatural

Resources

Manufacturing

UseRe-Use

Recycle

Design



ExtractionTransportationProductionPackaging & TransportactionConsumptionWasteRe-use/ Recycle

Emissions

Emissions

EmissionsEmission

s

Emissions

Emissions


3. Natural Resources &

Environmental Disruption


World savings is more than US$ 20 trillion Global Luxury Market:

US $ 1.2 trillion in 2015* Annual Growth: 14.8 %* Annual Advertising

Expenditure exceeds US$ 0.5 trillion

Loss of Bio Diversity

Where is the Money?

Re-thinking Priorities

Prioritizing Projects Embedding Sustainability

into Decision-Making

Role of Banks & DFIs

Financing for Sustainability

Climate Change Air, Water and Soil

Pollution Deforestation Loss of Bio Diversity To name but a few…

Environmental Challenges

Need commitment & financial resources

Natural Resources & Environmental Disruption2

* Deloitte │ Global Fashion & Luxury market │ Private Equity and investors survey 2016

Natural Resources & Environmental Disruption2

“If all the insects were to disappear from the earth, within 50 years all life on earth would end.

If all human beings disappeared from the earth, within 50 years all forms of life would flourish.”

- Jonas Salk


Society3

Society

End of traditional jobs and hierarchy

Era of Startups/ New Entrants

Age of Entrepreneurship

SpeedFlexibilityReliabilitySecurity

Customization

Expectations Any time

Anywhere

Any device


Demographics

Aging PopulationMillennials

Centennials


Disruptive Trends4

ECONOMY

Concentration of Wealth & Power“Always-On” Economy

62 Individuals =


Disruptive Trends4

62 Individuals =

2010 2011 2012 2013 2014 20150

50

100

150

200

250

300

350

400

450

388

177 159

92 80 62

Concentration of Wealth

Billionaires taking over the worldLinear (Billionaires taking over the world)

Source: Oxfam Report | An Economy For the 1%: How privilege and power in the economy drive extreme inequality and how this can be stopped


Disruptive Trends

62 Individuals =

Source: Oxfam Report | An Economy For the 1%: How privilege and power in the economy drive extreme inequality and how this can be stopped

Politics & Governance

4


L E A

D E

R S

H I P

• Concerned about customer loyalty

• Impact of global economy on their business

• New Entrants Disrupting Business Models

• Next 3 years will be more critical for their industry than the previous 50

• The differing wants/needs of Millennials will change their business

65%72%86%86%88%


2016 Global CEO Outlook │ KPMG International


Driven by Purpose + ConvictionP



Adaptability

A


AdaptabilityA

Embracing change and disruption

Embracing Sustainability Challenge

Ecosystem

Society

Economy


Adaptability

Innovation


AI


Innovating the Organisational Structure, Business Model…

InnovationIFrom 20th Century

ModelTo 21st Century

Model


InnovationI KARLSRUHEBUSINESS

INNOVATIONPROGRAM

SOLUTIONS FOR SUSTAINABILITY

Financing Innovation for Sustainability


Adaptability

Innovation

Inspiration

Driven by Purpose + Conviction

I

P

AI

InspirationA

Inspiring shareholders and the team (PURPOSE)

Inspiring to embrace change

Inspiring the society at large



Adaptability

Innovation

Inspiration

Driven by Purpose + Conviction

I

P

AI

SFSustainable Future for All

Session i speech arshad-rab_wfdfi2016

Economy & Finance

Transcript of Session i speech arshad-rab_wfdfi2016