High-level feedback from April FSI Away-Day

The following is a high-level summary of the comments entered into Think Tank by participants at the meeting.
It is not a record of all the comments made and some comments have been summarised or aggregated into common themes.
The notation in red italics post a comment is RV’s response where he felt it was required……..clearly, though, we need to work through the comments in detail in preparation for the next session.
Slide 7 showing the FSI client landscape is the current (May 2012) updated slide post any changes made based on the session
There were a large number of bold plays and none of the ideas have been discarded and these will be revisited
Watch this space re smaller follow-up sessions and the next Away Day which is planned for post June.

Africa’s financial services industry could make up around 20% of the continent's collective GDP within the next decade…
…compared to 10% today…
…much of the new growth will come from retail banking
Insurance premium income for Africa based on GDP growth is estimated to grow to $105.35bn by 2015
(4.3% insurance penetration, still below the minimum 6% rate expected from the insurance sector)
African banks have grown rapidly in the past few years
# of banks that have a tier 1 capital of over $1bn
10
2007
90% growth
19
2010
Lenders on the continent with capital strength of $500m or more
Less than 10% of the insurable population in Africa are insured
620m mobile phone subscriptions
84m internet-enabled mobiles
69% of mobile phones will have internet access by 2014
50% Nigeria
The banking industry in 16 key African countries could boost its financial assets by
248% to
$1.37 trillion by
2020
Africa combined has
230m financially excluded households
Percentage of mobile only internet users:
70% Egypt
57% South Africa
55% Ghana
54% Kenya
13
2007
31
2010
139% growth
Of The
Banker’s top 1,000 banks globally in 2011
30 were African

Security - Fraud & Cyber
•
Banking clients were collectively robbed of R180 million in 2010
•
Malware responsible for
95% of cyber attacks
Lack of data integration, accuracy & insight effectiveness
• In an EIU survey 53% of senior executives that use data effectively said their organisations achieve higher financial performance than peers
Fragmented legacy systems that are not ready for “Big Data”
• SA’s mobile data traffic to grow 49-fold between 2011-
2016
•
SA Webpage views grew
164% between 2011-2012
Talent, organisational structure & design pressure
• Lion of Africa has implemented E-learning
• ABSA is restructuring and cutting down staff
• Pressure on executive remuneration
Constant need to grow shareholder returns & be innovative
• Nedbank Capital is targeting double digit growth
•
Sanlam is eyeing acquisitions in the UK and Africa
Pressures on financial services providers
New operating models, products, services & pricing pressure
•
FNB app
•
Capitec, Standard Bank, FNB having a fee war
Regulatory, risk & cost pressures
• TCF / CPA
•
Basel III
•
SAM / Solvency II
• IFRS 9
•
IFRS 4
•
AML
Customer experience, fairness & disintermediation pressures
• Africa is the 2 nd largest mobile market in the world
•
TCF and public pressure
•
Google, Facebook, Telcos moving into payments
• 22Seven apps emerging

FSI today
One specialised skill
“As we have always done it”
Conservative and neutral
Undifferentiated Audit
“Just” the auditor or “just” the consultant
Focused on the present
“Hero” partner, operating in silos
Change apprehensive
Fragmented information/view
Slow to market
FSI tomorrow
Hybrid skills
Business unusual, pioneering
Bold and opinionated
Value adding, engaging Audit experiences
Strategic business advisor
Future focused, digitally savvy, networked
“Hunt in packs” - multidisciplinary/team strength
Nuke nostalgia
Always one step ahead, anticipatory
Be fast, be first

Louis
Geeringh
C&I Leader Banking
Roger Verster
FSI Country
Leader
Insurance
Investment
Management
Assurance:
Kevin Black
Consulting:
Dirk Kotze
Assurance:
Yuresh Maharaj
Consulting:
Being recruited
To be discussed

PIC
Sihlalo Jordan
Michael van Wyk
Riaan Eksteen
Nina Le Riche Roger Verster
?
Ashleigh Theophanides
Craig Turnbull
Mark Harrison
Yuresh Maharaj
Dirk Kotze
Karthi Pillay
Won
Andy Rayner
Andy Rayner
Acquire
Bertie Loots
Dirk Kotze
Dirk Kotze
Jaco vd Merwe
Sihlalo Jordan
Sonwabo Mateyisi
Dee Botha
Gert de Beer Sonwabo Mateyisi Riaan Eksteen
Riaan Eksteen
Grow
Wendy Smith
Werner Nieuwoudt
OCEO Dinesh Munu
Roger Verster
Thomas Jankovich
Carl vd Riet Carl vd Riet
Advisory
Sihlalo Jordan
Sonwabo Mateyisi
Mike van Wyk
PIC
Sihlalo Jordan/
Sonwabo Mateyisi
Kevin Black
Haroon Loonat
Dinesh Munu
Danie
Crowther
Anushuya Gounden
Patrick Kleb
Geoff Fortuin
Arend vd Berg
Roger Verster
Yuresh Maharaj
Brian Escott
Won
Darren Ship
Sihlalo Jordan
Kevin Black
Wiebe Klaassen
Sihlalo Jordan
Lito Nunes
Diana Jorge
Danie Crowther
& Financial Services
Wiebe Klaassen
Trevor Brown (BIDVEST)
Kevin Black
Ulrike vd Horst
Ronel van Graan
Yuresh Maharaj
Yuresh
Maharaj
Kumeshnee
Singh
Jaco du Plessis
Breakthrough-win
Key target
Pan-African client
Assurance
Paul Stedall

• Need for speed - to get our views and solutions to the market first
• This is good news as it provides lots of opportunities
• We need to invest in IP and training/recruit experienced FSI skills/recruit SME skills
• This will require is to leverage better off our global network and thinking
• There must be a focus on developing “bold plays”
•
Deliver more solutions as opposed to products
•
The trends say nothing about the mainstream market with no access to technology?
(SA’s population has almost total access to cellphones which is the main technology required)
• We must make the audit delivery more value adding
•
Do we need to redefine our FSI brand? ( Hopefully that is what FS3.0 will do )
•
Need to relook at our structure and skill sets
•
Need to identify the future clients/ market disruptors and start working with them
• We must work with our existing banks/insurers to help them clearly define what they are doing to reposition over next 5-10 years
•
FSI skills across the firm need to work more closely together
– need fewer silos . Need to better understand what our colleagues do.
• We all need to keep up to date on trends and developments
• Need to work with our colleagues in BRICS (emerging markets)
•
We must formulate good, client specific game plans
•
We need to engage more with the C-Suite
– what do they want?
•
Our independence constraints are too limiting. Our competitors seem to take a different view and have it easier
•
We should structure the firm along industry lines rather than service offerings
• Integrate the firm across Africa/pick key African countries for dedicated expansion
• These are macro trends – what are the SA/Africa specific ones we need to manage? Do not assume global works here or is replicated here. What are other emerging markets /rest of Africa/ the East seeing and doing?

•
Corporate and investment banking advisory
•
Agri banking in Africa
•
Work with our clients on their Africa strategies
• Bigger focus on insurance
• Do strategy sessions with our clients in the i-zone
• IT security
• Finance Transformation
• Data and analytics – focused on solutions to problems/predictive/doing analysis real-time
• Risk Intelligence
•
Making regulatory issues strategic/value adding
•
Results Management Office (RMO)
•
Outsourced insurance and back office support model/insurance in a box ( Interestingly, our Portuguese practice is already rolling out “Insurance in a box” in Africa and at the session Thys presented the banking equivalent)
• Invest in SAP banking services
•
Build skills in Public Finance/DFI space across Africa
•
Mobile-based solutions
•
Develop forward thinking solutions
– not just work with today’s issues and solutions
• Use crowd sourcing
• What are our views re unsecured lending?
• Banking the unbanked
• Tax technology, compliance, reporting systems, analytics in the tax space across Africa
• The digital workplace
• Customer-led operating models focused on efficiency and value maximisation

•
We need to articulate what FS3.0 stands for /what our signature solutions are/what we want to be known for
•
How are we going to communicate this to our clients/what are they going to experience that is different?
• Will this have a new “look and feel”?
• We need to spend more time on bold plays – how?
• Sales looks like it is driven through C&I but delivery is BU centric = disconnect?
• How will our remuneration structures support this? – they need to change
• Need a bigger focus on eminence
• What does “ubiquitous” mean ( Pervasive/everywhere)
• We need to differentiate from the opposition – this must do that
•
We will need to become client-centric
•
This needs to be an African operating model
– how do we take solutions to Africa?
•
This will never be achieved without better firm integration
– the silos will still work against each other

•
Where are the Chinese banks? ( Agreed
– we are looking at this more for the Pan-African plan)
•
Who are the new banks/new fin services providers
– where are they being picked up?
( We will focus on this )
•
Postbank
– why not an Advisory target? (
Primarily assurance
– we will re-evaluate
)
• Can’t audit Allen Gray – should be removed (It has now been removed)
• Ecobank? (it is one of the 10 key Pan African clients)
• JSE? And other African stock exchanges ( Will evaluate )
• Deutsche/Citi? ( Will evaluate )
• Renaissance Capital? ( Will evaluate )
• Marsh is moving towards being a Pan African client ( Noted )
•
United Bank of Africa? ( Being looked at as part of Pan-African plan )
•
Are we not targeting any Health clients ( No, they are in the Health Industry grouping and are not part of FSI)
•
Discovery is FSI not Health
– they do business administration and insurance is where their growth and profits are
(Point taken – been moved back into FSI)
• Maitland? (Now included)
•
Blue is Pan African ( Noted )
•
NSFAS is missing? ( Who??)
•
Should have a separate slide showing our actuarial footprint in insurance and use that to target work
• Where are the detailed client plans? They are lacking .( LCSP/D responsibility – picked up by C&I initiative )
• Old Mutual should be Pan Africa .( Will consider in African plan )
• LCSP/Ds must be accountable for fees across all service areas not just their “home” area ( Picked up by the C&I initiative )
•
National Treasury? ( Sits in Public Sector
– not FSI)
• Too many LCSP/Ds have multiple clients – lack of time and focus will result. Also what succession planning? (Good point
– being picked up by C&I client programme)
•
Targets not clearly prioritised (C&I focus is on OCEO and acquire)

•
High volume, low margin game
•
This is an audit play not an advisory play
•
Our competitors are here and we should be also
– not being there will impact negatively on the market perception of our FSI capability
•
We should leverage off our practices in Luxembourg, Bermuda, Cayman etc.
•
What is the addressable spend? History suggests not a big spender
•
It is a growing industry/critical for banks funding
•
Important to the Deloitte Western Cape office
• Large asset managers are linked to institutions we do not audit
• Pension Fund industry is an important contributor to our market eminence
• This is a big market – hedge funds, pension funds, unit trusts, Private equity
• Opportunities are outsourcing, Reg 28 consulting, risk management, new regulation in line with global trends, cost reduction/revenue maximisation,
• Must be in the market – just needs proper focus
• FS3.0 means banking, insurance AND investment management
• Key players are Old Mutual, Ethos, Peregrine, Coronation, Kagiso, PIC, Horizon, Investment Solutions, Cannon,
Prudential, MMI, PSG, Brait, RMB, MAM, Future Growth, co’s linked to all the major banks and insurers, Cadiz,
ASISA, trustees of large pension funds, focus on umbrella funds
Overall response was that we should do a proper analysis of the market, our capabilities and what it would take to make a success of this and then make a decision

•
Relationships must be developed beyond Sihlalo and Sonwabo
– can Futhi play a role? We have not invested enough in relationships. We need to position our experts
• Do enough Deloitte people really have the passion to work in this space?
• We need the right political relationships/ we are probably not the firm of choice
•
Difficult market
– full of ST strategies that constantly change – difficult to be anything other than a transactional consultant
• Service via solutions to problems as we do in the private sector
• Attend to the needs of all stakeholders – e.g. National Treasury, DPE
• Work with Frank Dubas in the US and Andre Pottas in SA
•
Need single PS focus with FSI just being a sub-component of that
•
Need comprehensive PS FSI focus
•
Help to add value by marrying private and public sector involvement to achieve PS goals and mandates
•
Are there cross functional offerings we can pitch to PS FSI?
• What is the role of the AG in allocating work in this sector? How do we work with the AG/around the AG?
• Priorities in PS FSI are: forensics, infrastructure financing, risk and corporate governance, regulatory guidance, technology, admin processes, funds management, lending/collections advisory, PPPs, skills training, outsourcing, executive remuneration, sustainability
Overall response was that
Sihlalo should develop his thinking further as this is an important market for us to operate in

•
Views on those we should have a relationship with are : SARB, FSB, National Treasury, ASISA, IISA, Banking
Association, NCR, Bank of International Settlements, the JSE, IRBA and SAICA, African Central Banks and regulators, SABRIC, the Banking Ombudsman, Insurance Ombudsman, FICA
• Key opportunities: Providing SARB with onsite support re all prudential regulation, integrated governance risk and compliance training, Twin Peaks consulting, training the SARB on insurance given their upcoming prudential role in this space, secondment of skills, forensics
• We are behind our competitors in relationship with regulators – they have broad representation and relationships with key individuals
• Who is Deloitte’s next Tim Store?
• We must develop relationships and share relevant IP – need to spend time with the regulators
• Identify an LCSP for centralisation of regulatory relationships
• Twin Peaks – SARB will be prudential regulator and FSB will be market conduct regulator
Overall response was that we need to formulate a coherent approach to managing the key FSI regulators

•
General comments:
•
Needs to support our strategic FSI objectives
•
Must identify key players in the firm who can market FSI and the firm/must be part of our KPCs
• We need media training
• We should create the waves and not just catch them
• Do we really work off our global thought leadership and tailor for local consumption
• We must have a strong social media presence as an industry and as individuals
• We do not have a coherent and consistent message to the market
• No-one is responsible for FSI marketing
•
We do not have strong relationships with the media
•
We must focus on key insights and differentiators
– do not regurgitate the known
•
Are we too long to market with our marketing ? Yes ,is the view with the following reasons given:
• We take too long to market as marketing is an afterthought
• We have too much red tape
• Not integrated into our proposition development
• We have day jobs/ we are too busy selling
• We are very risk averse and always want to be 100% right
• T he impact of the “brand police”
•
We do not seem to be confident in our points of view
•
We follow rather than lead
•
We are afraid of offending our clients
• And a caution……speed and agility in marketing should not be at the expense of quality and credibility

•
Work with the industry associations
•
A Deloitte FSI Song
(think this is Kevin’s contribution!)
•
We should adapt global thought pieces better
• We must have a point of view/house view on contentious matters and voice it
• We must have a cross-functional approach to our market
• Leverage off regular visits from overseas specialists
• We must present solutions – not just comment and critique
• We must all have a social media presence – but do not neglect the traditional media (strong view that we are overemphasizing social media)
• Be able to talk to our clients re topical issues
• Partner with industry bodies
• Involve marketing in the delivery of our services
• Talk about and publicise the things we have done
• Spend time at clients talking to them
•
We must make our people interesting (any ideas?)
•
More entertainment/golf/gifts etc. for key clients
•
Hold the GFSI Summit in SA
(actually, has been discussed……more cons than pros at present)
• Ask our clients what they want

1. Develop SAP banking services capability
2. ERP/Mobile technology integration layers for big banks
3. Develop performance fee based comprehensive opportunity, strategy and risk reporting service based on comprehensive data analytics
4.
Analysis and refinement of banks’ client –centric business model
These and the other ideas need to be properly unpacked and evaluated