John Kirkbright Chief Executive K-Strat International Senior Retail Banking Adviser to EFMA Chairman EFMA Banking Advisory Council

Transcription

1 Innovation in Multi-Channel Management John Kirkbright Chief Executive K-Strat International Senior Retail Banking Adviser to EFMA Chairman EFMA Banking Advisory Council Moscow March 2010

2 Background to EFMA Banking Advisory Council EFMA Banking Advisory Council established in 2005 with the support of Microsoft Senior Executives from leading European Banks meeting 4 times a year to discuss trends and create a blueprint for future financial services delivery Members include ABN Amro, BNP Paribas Unicredit, Lloydstsb, Caja Madrid, Citibank, Nordea, Fortis, Rabobank, Bankinter, Erste Bank etc First report on the Future of Multi-channel Delivery published in 2006

3 2009- Survival Rebuild 2009 has seen the unprecedented demise of many well known banks either through takeover, state aid or bankruptcy. 85% of the banks who have failed are either focused on one product or one geography 2010 a year to rebuild customer trust and confidence and establish a new banking model to suit the new economic environment

4 Key Channel Facts Most banks sell 80-90% of their products through branches Most banks want to increase the % of sales through remote channels from 8-10% to 20-30% Finalta estimate that online banking activity will increase by 30-50% in the next 5-10 years

5 SALES BY CHANNEL Across Europe, the branch is the dominant sales channel today by volume and value What percentage of your product sales (by volume) are carried out through the following channels in 2007? 100% 90% 6% 8% Other Internet 80% 7% Telephony % of products sold through each channel 70% 60% 50% 40% 79% Branches 30% 20% 10% 0% Fra BEN IB Italy GAS CE UKI SEE EE Nord Average Source: Finalta / EFMA Multichannel study Region

6 Innovation in Multi-Channel Conclusions of the 2009 Report Innovation in multi-channel is an essential ingredient of success but progress is slow and needs to be accelerated Banks are still too reliant for sales on branches and need to significantly increase sales through non branch channels Providing a truly integrated customer experience is becoming a major strategic priority for many banks Banks need to move towards streamlined processes with an emphasis on major cost reduction Customers have lost considerable trust and confidence in their banks rebuilding it will be a priority The rewards for success in the multi-channel area are immense real winners and losers will emerge sooner rather than later

7 What bankers say about Multichannel We will lose 5-10% of our clients if we do not make products easily available through other channels We have not yet created an Amazon buying experience in financial services Having the right people for each channel is key. Perhaps the best buying experience for the customer is directly related to the investment made in a channel

8 What keeps Senior Banking Executives awake at night Compliance and regulation How to radically reduce costs Making staff redundant Creating a truly integrated overall customer experience Increasing the sales efficiency of all channels Recruiting and training the bank staff of the future Communicating with customers more effectively.

9 Bankers priority investment plans Anything that is essential to make them compliant and meet regulatory needs to keep their banking licences Anything that reduces cost without significantly harming customer service CRM that assists retaining most profitable customers Channel migration support that reduces cost to serve Investments in the on line buying experience Channel integration interconnectivity that has quick payback on investment

10 Key buzz words for 2010 Bankers Reducing the cost to serve Accelerating the tipping point to getting customers to using other channels Developing needs based selling techniques branches? Improving the customer experience Having a two way dialogue with customers Collecting and using customer insights Understanding the customer journey customer mapping Developing end to end processes

11 Bankers Priority Check List Compliance and Regulation Reduce costs Find new sources of income non interest fee income Retain profitable customers Sell more products through on line channels Migrate customers to less expensive channels Building the right people skills for each channel Understand customer needs better Match products to customer needs needs based selling

12 Trust and Confidence in Banking Trust is the number one priority :so that customers feel they are getting the best advice The bank becomes more trustworthy when the channel is perceived to be so Building trust in buying through on line channels will be very challenging in the current environment You are less likely to trust on line services if you do not trust the bank already

13 ABN Amro Teleportal Branch

14 ABN Amro Teleportal Branch

15 ABN Amro Teleportal Branch

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19 Rabobank Use of LCD interactive technology in new look branch

20 Deutsche Bank Relaxed open style format

21 Deutsche Bank A relaxed department store feel and look

22 Deutsche Bank

23 Deutsche Bank

24 Unicredit Segmented micro-market branch formats

25 BNP Paribas Automated branches with high self-service

26 Chebanca

27 Chebanca Cheek to Cheek Banking

28 Chebanca branch interior

29 CAPITALIA DELTA 2 - The Concierge Role & Responsibilities Welcoming Customers Educating on Capitalia Delta2 services and opportunities Facilitating access to banking products and services Handling of appointments with external professionals Queue management

30 Channel Innovation Examples A webdesk, a television channel and blogging Pre-paid phone cards through ATMs and all paper output being made available online Online banking with enrolment customers with ATM or credit card can access on line banking without using a branch Mobile SMS for fraud prevention, mobile portal, pre approved consumer loans, electronic identity cards

31 Innovation is the key... MobileLoan WebLoan smsloan ATMLoan Loan Machine Business Partners Specialized Branches

32 Loan Machine : Credit origination in 7 steps, without going to branch Scans the ID card Takes the signature Sends credit response via SMS Takes a photo of the customer Prints out the credit agreement Gets personal information Hands over the consumer loan card

33 ROYAL BANK OF SCOTLAND Remote Mortgage Sales and Fulfilment

34 Bankinter - Videocall Access to a bank relationship manager - but without the need to physically visit the branch The convenience of telephone banking -but with the option of sharing written information Efficient to-the-point communication as with Internet banking - but with the ability to ask questions and interact with bank staff in real time Creating the Smarter Knowledge Bank

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36 Banco Best Web 2.0 approach

37 Banco Best New Virtual Branch

38 Branch Transformation Programmes Automation Branch formats Sales efficiency Sales platform Interconnectivity with other channels Branch closures

39 Branch closures Still a very sensitive but critical issue for all European banks Some large European banks may have to close 20%-30% of their branch networks Having the right branch format and location for the branch will be absolutely essential. Providing acceptable alternatives to the branch

40 Selling through non-branch channels Our biggest challenge is to be able to ensure bigger sales through our nonbranch channels. We now have more online than branch customers, but most of our sales are still through our branches. The online customer experience at most banks is still very poor -a lot can still be done to improve the buying experience through nonbranch channels. The cost of sales is likely to go up not down so it will become increasingly important to drive sales through cheaper direct channels.

41 European Regional Differences Turkey very young population, innovative product environment Austria ageing population more focus on branch Scandinavia pioneers of on line banking now need to develop step change in on line buying experience Spain- very intensive branch coverage may be under pressure to change

42 Customer Relationship model Key challenges: Customers are more in control Customers have access to a far wider range of channels and information sources What combination of face to face and remote? How much self help? Pricing to reflect the level of customer relationship management provided

43 Bankers worst dreams Replacing lost sources of revenue developing non-interest fee incomethart the regulators find acceptable Ethical banking using customer information in an ethically responsible manner Managing large levels of branch closures Displacing large numbers of branch staff Retaining your best staff Takeover or state bail-out

44 Key issues for Bankers in 2010 Find ways of reducing distribution costs and the cost to serve without impacting service levels negatively Improving the retrieval and use of customer insights and customer knowledge Rebuilding customer trust and confidence Developing two-way communication channels with customers Accelerate the tipping point to get customers to use and buy through on-line channels Essential to equip all distribution channel teams with the right knowledge and support tools

45 Conclusions Council member quotes There will only be two types of bank in the future: those with a reasonable service and those with an excellent service We have to do something to radically reduce costs. Its a matter of offering the same service and capabilities across all channels worldwide

46 Conclusions Council member quotes We need to offer as many end-to-end processes as we can to make the overall customer buying experience easier There is no substitute for knowing what the customer knows about what he needs. So we have to give them the opportunity to tell us.

47 Ideal Scenario Customer perspective Start a transaction in one channel, continue in another and finish in another Receive timely informative communications from the bank Be able to use the bank s channels as and when I want to use them Have the bank channel identify me on entry and treat me as an individual to understand my needs Have one phone number and one person to speak to regarding complaints or problems Deal face-to-face with the bank on more complex products.

48 The Customer Acid Tests Pricing do they reward my loyalty? Flexibility and Commitment do they love my dog? Buying How easy is it? Do I have to go in a branch? Service how convenient is it for me to use them? Interconnectivity of Channels the 9.00am teller test Communication how can I contact them Brand do they deliver their brand promises?

49 Do they love my dog?

50 Do they love my dog?

51 Keep It Simple Simplicity and speed to organise ICICI Bank India Fastest growing bank in the world have 30 million customers and aim to reach 70 million in 5 years If it can t be done in 90 days don t do it Speed, agility and simplicity aids customer focus and flexibility

52 Customer Insights and Intelligence perspectives We need to ask customers which channels they want to be contacted on and use every contact we can Bankers need to focus on the human element and how we interact with customers as this is what will make the real difference We need to get the right information from the client and increase ways of getting our clients interest

53 The Future Bank Executive Quotes The majority of our branches in future will focus on selling no more than four core products which we believe will meet the majority of our customers needs. The challenge is how to provide advice at the right cost level. How can technology help a branch network provide a high quality customer advisory service? Branches are our best point of sale but in the future we need to focus more on our people and on segmentation and personalisation. We also need to know how other channels can push branch sales. This is where future potential lies.

54 Key Challenges for Banks in 2010 Decide which type of operating model to focus on distribution, cost or product led Get the right mix of distribution channels Develop an integrated customer experience Obtain and develop the right people skills and provide staff with the support to give excellent service and advice Ensure processing excellence Get the right balance between sales and service Balance short and long term needs but remain truly customer centric

55 Future Focus Getting channel management right is critical to our future the price for getting it wrong is we will not survive Recent events are a wake-up call to banks to rebuild customer trust and relationships