Navigating the Financial Services Sea Change

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1 Navigating the Financial Services Sea Change Kevin Sullivan SVP, Head of Decision Sciences Group 2016 Mega Event: Transformational Project Management Fifth Third Bank All Rights Reserved

2 How you likely feel after two full days 2 Fifth Third Bank All Rights Reserved

3 Today s Conversation A little about Fifth Third Bank The New Normal in Banking Regulation Digital Banking Digital Marketing Analytics Implications for Project Management Q&A 3 Fifth Third Bank All Rights Reserved

4 Who is Fifth Third Bank? Commercial Banking Branch Banking Consumer Lending Wealth Management Footprint In footprint markets National commercial banking In footprint markets National consumer lending Business Lines Commercial Bank Retail Bank Cards Home Equity Mortgage Auto Private Bank Retail Brokerage Institutional Services 18,300 employees; $6.5 billion in 2015 revenue; $94 billion in loans; $100 billion in core deposits 4

5 Where did the name come from? June 1, Fifth Third Bank All Rights Reserved

6 The New Normal: Increased Regulation greater level of oversight in the wake of financial crisis 6 Fifth Third Bank All Rights Reserved

7 Major U.S. Financial Legislation by number of pages Dodd-Frank Act (2010) 2,319 U.S. Constitution (1787) 4 Declaration of Independence (1776) 1 Source: Strategas 7 7 Fifth Third Bank All Rights Reserved

8 The New Normal: Digital Banking the way that customers want to interact with banks is changing Millennials conduct more than 70% of all their banking on machines (mobile, tablet, desktop, laptop, and ATMs). Use of Mobile Banking in Past 12 Months by Age (Source: Federal Reserve, March, 2016) 11-1/2 years to reach 20% 6-1/2 years to reach 20% 8 Fifth Third Bank All Rights Reserved

9 Implications for the Branch Network while still critical, decline in usage is accelerating Fifth Third Branch Teller Transactions Annual transactions in millions Down 7.9% Down 8.5% Down 9.3% 9 Fifth Third Bank All Rights Reserved

10 Reasons for Decline in Branch Usage 1. With declining use of cash and paper checks, there are fewer reasons to have to visit a branch Source: 2013 Federal Reserve Payments Study 2. Self-service increasingly viewed as convenient, empowering 10 Fifth Third Bank All Rights Reserved

11 Financial Impact of Channel Migration interests of customers and shareholders are aligned Weighted average rank 1 for each channel Operational cost per transaction by channel 2 Online/ Mobile ATM Branch Telephone Customers prefer interactions at lower cost self-service channels Source: TowerGroup, Fiserv/M-Com Data (2012), 2012 Oliver Wyman Survey of North American Consumers 1. Ranking of channels is in descending order, rank 5 being the most important 2. Cost assumes an 80/20 mix of Online & Mobile transactions and a 70/30 split of Agent/IVR telephone transactions 11 Fifth Third Bank All Rights Reserved

12 Could we Bend the Curve? test-and-learn pilot demonstrated ability to impact customer behavior In 2013, piloted new branch formats to increase efficiency by bending the curve of transaction migration Envelope-free, Image-based Deposit ( Intelligent Deposit ) Experimental Branch Concept Branch lobby equipped with free-standing and/or in-line ATMs Branch personnel available to offer help when needed Goals Redefine branch operating model Enhance multi-channel customer experience Migrate customers to self-service channels Sample Results: Year-over-year change in teller deposits Jan Feb Mar Apr May Jun Pilot branches Pilot launch Jul Non-pilot branches Aug Sep 83% of pilot customers were first time users of ATM for check deposit 12 Fifth Third Bank All Rights Reserved

13 The New Normal: Digital Marketing Demands nimble, customer-intimate approach to technology, resourcing, and process From Traditional purchasing funnel No ability to identify or address visitors No visibility to where people travel online Marketing to broad customer segments Primarily campaign-based, batch marketing Minimal channels, limited ability to measure Multi-month technology release cycles based on detailed business requirements To More like winding road or vortex Visitors become known and addressable More comprehensive view of digital behavior Customer-intimate segments of one Always-On, data-driven, real -time marketing Integrated channels, designed for measurability Agile development enables test-and-learn, fail quick environment 13 Fifth Third Bank All Rights Reserved

14 Redesigning 53.com company s website is effectively its new storefront Redesigned website launched November, New site is fully responsive across mobile and tablet. Averages ~300K visitors a day. 14 Fifth Third Bank All Rights Reserved

15 Managing the Complexity integration of new marketing channels 15 Fifth Third Bank All Rights Reserved

16 Workflow Managing the Complexity integration of new digital platforms Audience Platforms Media Execution Channel Execution Integration Analytics DMP Decision Management Identity Management Marketing Database 16 Fifth Third Bank All Rights Reserved

17 The New Normal: Analytics banks availability of data is both a blessing and a curse Volume Variety of data collected from disparate systems of data about accounts, customers, households, business relationships Velocity of transactional data from mobile and online banking Lots of Data Lots of Insight 17 Fifth Third Bank All Rights Reserved

18 Translating Data into Actionable Insight requires curation of data Source: TechCrunch, The Big Data Fallacy And Why We Need To Collect Even Bigger Data 18 Fifth Third Bank All Rights Reserved

19 Uncovering Hidden Gems of Insight to learn something you didn t know before Who is this guy? 19 Fifth Third Bank All Rights Reserved

20 Decision Sciences Functions Modeling (the statistical kind) Financial Analysis Web Analytics Database Management Business Intelligence Data Science Marketing Analytics Logic Development 20 Fifth Third Bank All Rights Reserved

21 Implications for Project Management Manage the (technological) complexity Simultaneously solve for improving customer experience optimizing financial return satisfying regulatory constraints Use analytics to enforce test-and-learn discipline control groups feedback loops 21 Fifth Third Bank All Rights Reserved

22 Questions? 22 Fifth Third Bank All Rights Reserved