DNA, Diagnosis, Shoes and Sweet Spots

Transcription

1 THE AGILE BANK SERIES DNA, Diagnosis, Shoes and Sweet Spots Four Steps to Agile Distribution and Marketing in Retail Banking #TheAgileBank

2 Retail banks must make a choice. They can continue to spend 50 to 70 percent of their cost base on distribution models that are out of sync with the realities of digital banking. Or they can evolve into agile banks that reduce fixed costs, grow revenue and reinvent the customer experience. The right choice is clear. So how do banks become agile? Retail banks must make a choice 2 ACCENTURE AGILE BANK SERIES

3 A Strong Starting Point The agile bank shifts the traditional insideout, bank-first focus into an outsidein, customer-first mantra that infuses everything it does. Distinct markets drive product features, micro-segments, tailored communication and touch points. Marketdriven change happens fast and often. While most full-service banks are not agile banks yet, many are well positioned to transform. The combination of a digitalphysical footprint, trusted customer data access, and an innovative spirit creates a ready platform for success. Once banks develop agile building blocks customer obsession, unconventional collaboration and an adaptive operational backbone they can begin their journey. How to Become an Agile Bank The specifics of the agile bank journey are unique, influenced by how agile a bank is at the start as well as by customers, markets and competitors. Even so, every bank should move through the same four foundational steps to develop agile distribution and marketing in the digital banking landscape: 1. Confirm the Bank s DNA There is a saying that you cannot know where you are going without first knowing where you are. This is true of the agile bank evolution. As such, the first step involves an identity check to understand the bank s underlying identity today and to determine what business model can power the agile strategic vision. Banks should assess their current-state identity across two dimensions: Level of agility. Less agile banks generate business primarily through physical channels and have a complex infrastructure, making them unable to react quickly to changing market demand. Highly agile banks rely more on online and digital channels, use social media as an integral part of their strategy and are consistently centered on customers. Their flexible infrastructure simplifies processes so that they can turn on a dime as market needs require. Level of specialization. Specialized banks offer a narrow product set and/or serve targeted geographies. Higher priced, they compete on advice and product depth and differentiation. They put customers first, relying on a nimble infrastructure. Less specialized banks are commodity players with a mass-market focus. They are customer focused too, but compete on price and convenience. Their extensive legacy infrastructure slows change. After assessing the current state across these dimensions, banks must determine which of two agile business models along with the corresponding market segments, multichannel and customer strategies complements their DNA. These models include the either the Agile Specialized Bank or the Agile Efficient Bank (Figure 1). FIGURE 1: Banks must determine the right business model to power their agile vision. Highly Agile Tomorrow: Agile Specialized Bank Tomorrow: Agile Efficient Bank LEVEL OF AGILITY Today Less Agile Copyright 2015 Accenture. All rights reserved. Highly Tailored Value Propositions LEVEL OF SPECIALIZATION Large-Scale, Commodity Products DNA, Diagnosis, Shoes and Sweet Spots 3

4 The Agile Specialized Bank is agile because it has a hyper-targeted focus. It delivers a wholly different customer experience outside of traditional retail banking boundaries. Personalized customer advice is at the heart of this model. Not only does the agile specialized bank offer financial advice and niche financial products, it taps into cross-industry ecosystem teaming relationships to offer non-financial services for customers lives. The Agile Efficient Bank is agile because it has scale and cost-efficiency. It works as a retail banking utility, providing low-cost, robust financial products to many customer segments. The agile efficient bank succeeds by simplifying product offerings without sacrificing personalization. Features-driven, modular approaches allow customers to tailor just-forme products without threatening the bank s commodity-focused, low-cost value proposition. 2. Diagnose the Network Once a bank selects an agile business model, it must align necessary resources to make it a reality. The place to begin is with the physical distribution network. Accenture experience reveals that by streamlining bank branches, banks can save up to 30 percent of distribution costs while freeing up funds for their agile bank transformation. This process is about releasing the oxygen identifying the true value of out-of-date distribution investments and strategies and recalibrating them to support agile ways of working. The purpose is to help eliminate inefficiencies and selectively cut costs, and the process involves three phases (Figure 2). The first phase is to diagnose the performance of every bank branch. By analyzing internal and external data, banks can evaluate customer profiles, market share, foot traffic and proximity to other branches among other measures. Banks can rate each branch and cluster underperformers. Next, banks should rethink the network by creating a blueprint for the future. A view of performance, market attractiveness, and customer segment and multichannel strategies should inform the plan. With an eye toward growing revenues while reducing costs, banks must determine if branches should be revitalized commercially, shrunk, reorganized or closed or merged. Finally, banks implement the improvement blueprint. A word of caution here is that distribution rationalization cannot be done without impact. Banks should strike the right balance between making bold moves and providing proactive solutions that can mitigate any negative impact to the customer experience or brand. 4 ACCENTURE AGILE BANK SERIES

5 FIGURE 2: Releasing the oxygen to fund the agile transformation journey involves three phases. PHASE I: DIAGNOSE PHASE II: STREAMLINE PHASE III: ACT 1. Branch analysis and profile 2. Territorial potential analysis 3. Branch proximity/overlapping diagnosis 1. Revitalize commercially 2. Shrink 3. Reorganize 4. Dismiss or merge Execute network optimization actions Copyright 2015 Accenture. All rights reserved. DNA, Diagnosis, Shoes and Sweet Spots 5

6 3. Walk in Customers Shoes Becoming an agile bank involves more than streamlining the existing branch network. Agile is such a 180-degree shift from traditional approaches that banks simply do not have the capabilities they need to deliver fast-twitch, customerfirst, market-driven distribution strategies without new investments. The good news is that, as discussed, branch rationalization can release cost savings to fund these investments. But what is tricky is this. How banks invest in new agile components can make or break their agile future. All new agile enablers including back end, multichannel, front end and touch points must be redesigned through the lens of the customer experience. Banks must walk in their customers shoes before making any investments or risk the return. The key is to start from the agile customer experience and work backward from there to assess technology needs and build a new agile marketing toolkit. Consider just one aspect of what it looks like to build an agile bank through the lens of the customer experience. As an example, customers do not care what backend solutions the bank invests in from customer data management to analytics, content management and marketing automation. They want assurances that the bank knows them, understands their needs and preferences and can suggest the right offers at the right time. Gaining customer insight can be difficult, but retail banks have an advantage. Not only do they naturally have access to customer data, but they also have customers trust here. According to Accenture s 2015 North America Digital Banking Survey, 86 percent of customers trust their bank over all other institutions to securely manage their personal data Test the Sweet Spots Even with a well oiled branch network and agile enablers in place, the agile bank is always in motion as dynamic as the retail banking market. Where traditional financial institutions often bristle at change, agile banks thrive on it. Agile is a disciplined way of working committed to finding, testing and changing the bank s sweet spots across markets, customer segments and products and services. Once the bank has its agile distribution and marketing toolkit in place, it must continually design new strategies to push sales and service effectiveness to the next level. The key is to experiment, bringing innovative ideas to the field, testing them on real local customers and branch staff, first in broad markets and then in narrow sub markets. This creates a continual feedback loop that informs future product modifications. At the agile bank, no idea is every really finished. Start Your Agile Bank Future As retail banking advances in the digital banking era, agile banks are positioned to rise above the competition. In sync with market and customer realities and with the courage to innovate first agile banks provide superior customer experiences while reducing fixed costs and growing revenue. With such win-win-win potential, there has never been a better time to begin the agile bank journey. 6 ACCENTURE AGILE BANK SERIES

7 Accenture Agile Bank Series This series introduces agile banking concepts, explores the building blocks for getting started, and provides insights into how retail banks can strategically rethink all the elements of distribution and marketing to address the demands of the digital age. To find out more, visit: FAST TWITCH TEST, LEARN, TWEAK RIGHT CHANNELING CUSTOMER FIRST REVENUE READY DNA, Diagnosis, Shoes and Sweet Spots 7

8 Contact Us Christine Duque Financial Services Accenture Distribution & Marketing Services Follow us on #TheAgileBank Marco Magnini North America Banking Accenture Distribution & Marketing Services About Accenture Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions underpinned by the world s largest delivery network Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at Notes 1 Accenture, Banking Shaped by the Customer, 2015, insight-consumer-banking-survey.aspx. This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks. Copyright 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative. Links to websites which are not maintained by Accenture but third parties, Accenture is not responsible for the content on such sites and Accenture cannot confirm the accuracy or reliability of such sources or information U/9-9871