LEADING WITH GRC. Retail evolution and disruption. Gordon Smith CEO, Chase Consumer & Community Banking

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1 LEADING WITH GRC Retail evolution and disruption Gordon Smith CEO, Chase Consumer & Community Banking

2 The game changer $2,495 - $3,495 $600 $499- $

3 Smart phones created a massive shift in customer behavior & expectations 95% 5 hours 62% 40% of Americans own a mobile phone; 77% own a smart phone 1 spent on mobile on average per day 2 of smartphone owners made a mobile purchase in the last 6 months 3 of Black Friday sales came from mobile in Source: Pew Research Center Mobile Fact Sheet, January 12, Source: Mary Meeker Internet Trends report Source: Outerbox Mobile Ecommerce stats in 2017 and the Future, May 4, 2017 GRC Summit 2017 All All Rights Reserved

4 Physical retailing: evolving but still very relevant e-commerce companies going physical Physical companies dominating e-commerce Stores serving as brand flagship

5 Battles are being waged for market share in payments Between credit cards Between mobile wallets Between P2P payments Banks Banks Travel rewards FinTechs Third-parties Digital giants Cash back Merchants

6 Wallet adoption is slow because the credit card isn t broken Mobile wallet share of Card transactions <1% Apple Pay, Android Pay and Samsung Pay U.S. consumers reasons for not using a mobile payment service % U.S. consumers who have not used a mobile payment service It's easier to pay with credit/debit or cash 80% I'm concerned about security 67% I don't see any benefit 65% 99% All other retail POS payments I don't trust the technology I don't understand the different mobile options 36% 47% Source: Merchant, Bank Mobile Wallets Prove Value Where Apple, Google, and Samsung Have Not. Javelin Strategy & Research, Aug Source: Excerpted from the Consumer and Mobile Financial Services Report, Federal Reserve Board, 2016

7 So what does this mean for Chase? GRC GRC for for High High Performers Performers GRC Summit 2017 All All Rights Reserved

8 Chase CCB Snapshot: We have tremendous reach with our customers 60 million Chase households (FY16) 4 million Small Business customers (FY16) 45 million Active digital users (90-day active) (1Q17) 27 million Active mobile users (90-day active) (1Q17) $28 billion QuickPay annual volume (FY16) 41 million Debit and credit transactions per day (1Q17)

9 Our card & payments strategy integrates consumers & merchants Payments strategy Consumer-to-Business Person-to-Person Integrated Merchant Experience Deliver superior consumer value by launching new and enhanced products Lead payments innovation with unique solutions Build simplified, real-time P2P payment solution Core acquiring and processing services ChaseNet closed loop system Integrated merchant loyalty Our overall goal: To ensure Chase cards can be used everywhere our customers shop

10 We are partnering with FinTechs when we can get to market faster Research/customize your car on Chase digital channels Lock in your Chase auto loan Choose from Chase s local dealer partners Pick up your car from the dealer Small business pilot launched in April 2016 Pre-approved offers Digital checkout Loans deposited same day Pilot launched early 2017 Stay up-to-date on status with tracking tools View, upload and esign Interact with the Chase team online, collaborate with realtors

11 For us, providing a great customer experience isn t either/or it s both Leading Physical Franchise Leading Digital Platform in points of U.S. ATM #1 convenience #1 network 2 (branches + ATMs) Chase Top 10 market by deposit balances 1 Chase deposit growth rank Chase deposit growth vs. market 1 New York, NY #1 2.3 x 2 Los Angeles, CA #1 2.2 x 3 Chicago, IL #1 5.7 x 4 Houston, TX #1 1.5 x 5 Dallas-Fort Worth, TX #1 1.8 x 6 San Francisco, CA #3 1.8 x 7 Miami, FL #2 2.7 x 8 Phoenix, AZ #1 1.2 x 9 Detroit, MI #1 2.5 x 10 San Diego, CA #1 2.0 x CAGR Growth vs. Market Summary of Deposits Survey per SNL Financial rated mobile most visited online #1 banking app #1 3 banking portal 4 % of households who are digitally-engaged 4Q12 +18ppt 4Q16 ~80% of transactions are completed through self-service channels today 2 Based on competitor filings 3 Source: 2016 Mobile Banking Financial Institution Scorecard, Javelin Strategy & Research, May Ranking is among large banks. Active mobile users based on disclosures by peers in 4Q16 4 Source: SimilarWeb.com as of December 2016 (formerly compete.com)

12 Our combination of branches + digital is working 75% of deposit growth comes from customers who use Chase branches Growth in deposits CAGR 1 9.8% DIGITAL clients attrite much less (11ppt) 6.3% All other households Digitally engaged households Industry avg. growth = 4.0% and are more satisfied (Net Promoter Scores) 2.7% 2.8% ~+20% Chase National Banks Super Regional Other Summary of Deposits Survey per SNL Financial All other households Digitally engaged GRC Summit households 2017 All Rights Reserved

13 3/4 of our growth comes from customers who use our branches Chase Consumer Bank deposit growth attribution by channel usage segment ( ) Households across generations continue to use the branch Branch-centric 16% Other 6% Digitally-centric 18% % of households using the branch (4Q16) Avg. visits/quarter 1 Millennials 57% 3 Gen X 64% 4 Baby Boomers 70% 5 Multi-channel 60% Silent Generation 71% 5 1 Average visits per quarter for those who used the branch in 4Q16

14 A physical presence is still critical but we re evolving with our customers The Chase Experience The Chase Branch

15 We continue to invest in digital solutions to meet our customers needs Click-to-sign eliminating 500 million paper forms QuickDeposit 93% of checks can now deposited on mobile Consumer and Business Banking (CBB) mobile usage 1 +12% households using mobile vs log-ins per week in 2016 CBB Chase QuickDeposit usage 1 +19% households using QuickDeposit vs mm transactions in 2016 CBB Chase QuickPay usage 1 1 Households using mobile defined as households that have at least one log-in through the Chase Mobile app or via mobile browser in 4Q16. Households using QuickDeposit or QuickPay are defined as households that complete at least one of the specified transactions in 4Q16 +30% households using QuickPay vs mm transactions in 2016

16 As a result, we ve reduced ~25% of teller transactions since 2014 Transaction Withdrawals Deposits 1 Cash a check Other Total 2016 ATM Transactions (%) ~90% ~60% 0% ~60% 2 ~70% 2016 Teller Transactions (%) ~10% ~40% 100% ~40% 3 ~30% 1 Deposits made from digital channels (QuickDeposit) are not included 2 Fund Transfers, Payments, Balance Inquiries 3 Fund Transfers, Payments, Coin Orders, Cash Advances, Other Transactions

17 and see decreases in our contact rates as customers migrate to digital Metric Mobile Active Users 1 Customer Service Contact Rate 2 Chase QuickPay Transactions, # 3 Change (2016 vs. 2014) +40% -2% +106% Chase QuickPay Transactions, $ 3 +96% Mobile Chase QuickDeposit SM Transactions, # 4 +64% Mobile Chase QuickDeposit SM Transactions, $ % 1 Represents figures for CCB users of all mobile platforms who has logged in within the past 90 days 2 Contact Rate is defined as offered calls divided by statement active accounts (Card) and DDA and Liquid accounts (Retail) 3 Represents figures for CCB users only who have agreed to Chase Quick Pay legal agreements and sent a payment via Chase Quick Pay during the selected time frame (as of March 2017) 4 Represents figures for CCB users only who have agreed to Chase Quick Deposit legal agreements and deposited a check via Quick Deposit during the selected time frame (as of March 2017)

18 But we still see more opportunities to build additional self-service options into our ATMs Today, you still need to visit a teller for Cashing checks Making mortgage and auto payments Depositing into CDs / IRAs / Brokerage accounts / Annuities Advances on lines of credit Ordering coin and currency Larger dollar transactions Printing and presenting official checks, counter checks and cashier s checks

19 In a mobile-first world we d like to advance Chase digital from app to platform in a future state Primarily deposit account-focused Limited marketing capabilities Growth in adoption starting to plateau Digital wealth management dashboard File a dispute Apply for mortgage Use points Shop for car loans Do account maintenance Set appointments Run my budget Apply for business credit line Check rates

20 Our lessons learned throughout our journey Look at everything through the customer s point of view; break down silos Rethink talent acquisition and retention; employee + customer experience go together Agile development; fail fast and learn from pilots before making sweeping changes Put teams together in scrums work together across functions and skill sets Be the disruptor; don t wait to be disrupted Relentlessly simplify

21 Thank You! Continue the conversation online #GRCSummit