Retail Banking Sales Tactics. Robert Wright

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1 Retail Banking Sales Tactics Robert Wright

2 Agenda Banking in Kosovo European banking industry challenges Customer loyalty Sales culture restrictions and challenges - bank needs v customer needs Impact of digital trends on sales approaches RBI BoM Meeting dd/mm/yyyy 2

3 Raiffeisen Bank International Geographic Footprint Central Europe (CE) Southeastern Europe (SEE) Austria, #3 Loans: EUR 24.8 bn Eastern Europe (EE) Non-Core Poland, #9 Loans: 8.1 bn Russia, #11 Loans: EUR 7.8 bn Belarus, #7 Loans: EUR 1.0 bn Leading regional player with CEE presence of over 30 years servicing approx.17 million customers Hungary, #5 Loans: EUR 3.1 bn Slovakia, #3 Loans: EUR 8.6 bn Ukraine, #8 Loans: EUR 1.9 bn Romania, #5 Loans: EUR 4.9 bn Covering 15 markets (incl. Austria), thereof eight are EU members and Serbia and Albania have candidate status Czech Republic, #5 Loans: EUR 9.5 bn Bulgaria, #6 Loans: EUR 2.2 bn Top 5 market position in 10 countries Croatia, #5 Loans: EUR 2.8 bn Bosnia & Herzeg., #2 Loans: EUR 1.2 bn Albania, #2 Loans: EUR 0.8 bn Note: Position based on loans and advances to customers as of 30/09/2016. Additionally, RBI operates leasing units in Slovenia, Moldova and Kazakhstan. Kosovo, #1 Loans: EUR 0.5 bn Serbia, #5 Loans: EUR 1.2 bn Strong market position with Austrian corporates focusing on CEE 3

4 Country overview Population 1.8mn Average age 29 GDP 6.4Bn $ GDP growth 3.8% Unemployment 32.9% Source: Kosovo Agency of Statistics (KAS),

5 Banking industry in Kosovo Number of Banks: 10 of which foreign owned: 8 Number of branches: 262 Assets 3.63 BN Loans 2.23 BN Deposits 2.90 BN Net Profit 75.5 MN Non-performing loans / NPL 4.9% Return on equity / RoE 22.2% Online accounts: 187,297 No.of ATM s 534 No. of POS 9,785 Source: Central Bank of Kosovo (CBK),

6 Raiffeisen Bank Kosovo overview Total assets 863 M Gross Loans 514M Deposits 725M Net Profit 17 M No of Customers 262,721 No of branches 50 No. of ATMs 109 No. of POS terminals 1,847 No. of cards 265,696 No of ATM transactions 4.6 M No of E-banking users 59,935 6

7 Banking in Kosovo had a late start 8

8 Our customers are fast adopters 9

9 There has been significant progress for the banking industry 60% 233% 18% 44% 9

10 Online banking transactions doubles every two years Online Bankiing Accounts Transaction Values (thousand ) 32% 32% No of transactions 17% (Source: CBK- Monthly report of cash and non-cash instruments- December 2015) 10

11 and after 15 years of banking we are finally catching up with the region in terms of maturity Number of outlets per 100,000 inhabitants (World Bank) 11

12 The Future challenges and opportunities 112

13 Return on Equity % KPMG The profitability of European Banks October

14 Cost Management % 80 Cost Income Ratio %

15 Non Performing Loans % 6 Non Performing Loans % KPMG The profitability of European Banks October

16 Regulation Regulatory Reform and Supervision 16

17 Customer Loyalty Simplicity and convenience not face to face friendly service. Aggressive but motivating customer migration branch closures and reduced hours Change habits and overcome fear of technology Incentivise through pricing Retain old interfaces - but at a price Bank with digital not a digital bank 17

18 Sales Culture Not the bank they joined No variable pay and by 2018 no cash incentives or rewards. 7 factors in a successful sales culture 1. Feedback and coaching 2. Positive reinforcement and celebration 3. Transparency 4. Healthy competition peer group pressure 5. Results and metrics 6. Change and adapt 7. Shared vision and strategy 18

19 The impact of digital on sales and product purchase decisions Customer and bank employees behavior is being significantly impacted by digital. Customers are having more data/information to make rational independent decisions. Banks must deliver a digital customer experience with appropriate features, benefits and pricing to match the new customer behavior. Banks must find opportunities to intervene in the purchase decision for example if a customer is searching for a new house, car or furniture, banks want to be a part of this process and digital provides the opportunity to achieve this. 19

20 Customer interface 20

21 Digital challenges in Kosovo Culture Bad experiences with banks during Yugoslav era, customers prefer to have physical contact with banks Cash-based society tax avoidance, off the radar Still teaching customers how to use ATMs i phone = 2 x monthly salary Trust Lack of awareness about potential risks of digital channels Lack of confidence in reliability of technology Not sure about responsibilities in case of incidents e.g. hacked accounts Legal Know Your Customer (KYC) and Anti Money Laundering (AML) encourage face to face banking. Legal system not able to support digital banking.

22 To sum up. Kosovo Europe s youngest population the banking industry is making fast progress the young customers want digital but the business case is weak. European Banking industry needs to improve Return on Equity, Cost Income Ratios and NPLs Regulation, technology and customer behaviour dramatically changing the sales approach Banks and their customer facing functions need to be involved in many more customer touch points on a daily basis. 22

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