dr adam becht may 17th, 2011. capgemini global financial services 2 © 2011 capgemini – all rights...

dr Adam BechtMay 17th , 2011

Capgemini Global Financial Services2

© 2011 Capgemini – All rights reserved

2011 WRBR_Spokesperson Training Deck_26_v3.pptx

Managing Mortgage Profitability: Retail

Banks at a Crossroad

Organic Growth in Domestic Markets

Small Business Banking and the Crisis: Managing

development and risk

The Future Role of the Branch in a Multi-Channel, Multi-Product Environment

Each year Capgemini, in co-ordination with Unicredit and Efma, publishes insights on the Retail Banking sector

The World Retail Banking Report is a leading, industry report that provides strategic insights into critical issues and trends impacting the global banking industry.

The World Retail Banking Report is a leading, industry report that provides strategic insights into critical issues and trends impacting the global banking industry.

2011201020092008




Contact Information

Key Findings Overview




The report’s findings draw on the ‘Voice of Customer’ survey data and executive interviews with ~50 senior banking executives

The 2011 WRBR highlights the top CEI ranked country in each of the five regions.The 2011 WRBR highlights the top CEI ranked country in each of the five regions.

Countries Included in Voice of Customer Survey and Region CEI Leaders, 2011




The 2011 WRBR proudly introduces the new ‘Customer Experience Index’ and analyzes the Future Role of the Branch

The CEI model provides information about how customers are viewing the banking industry, specifically what is important to customers and how satisfied they are currently.

The model uncovers how customers interact with the bank in regards to sales, service, and information gathering across products and channels.

The model analyzes the experiences of customers across select banking products and channels. The typical banking lifecycle of the average customer was divided into four discrete stages in order to provide a more granular view of the customer experience.

Customer Experience Index

The branch channel remains a key consideration in a firms overall retail delivery strategy.

However, banks can not afford to let their branches stay stagnant but must transform them to be an effective resource within a multi-product, multi-channel environment.

Innovative trends and leading practices are being implemented to overcome people, process and technology challenges resulting from the branch evolution which are converging across four main areas: branch layout & design, technology, sales & service, and staff & people .

Future Role of the Branch in a Multi-Channel, Multi-Product Environment




Channels

Prod

ucts

Custom

er LifecycleCEI

• Information Gathering• Transacting• Problem Resolution• Account Status & History

• Branch• Internet• Mobile

• Current, Depository Accounts & Payments

• Credit Cards• Loans• Mortgages

• Phone• ATM

Dimensions of Capgemini’s Customer Experience Index (CEI)

The 2011 WRBR Customer Experience Index (CEI) measures the customer experience across three dimensions

The 2011 WRBR Voice of the Customer (VoC) provides insights into customer perceptions and current satisfaction levels with retail banking products.

The 2011 WRBR Voice of the Customer (VoC) provides insights into customer perceptions and current satisfaction levels with retail banking products.

Source: Capgemini Analysis, 2011.




• Customers are generally satisfied, but opportunities exist to increase satisfaction in the areas that matter most:• Globally, banks’ success in delivering positive customer experiences is high, with a global average

Customer Experience Index rating of 72.2 out of 100.

• However, banks have been far less successful in generating high levels of satisfaction in the areas that matter most to customers achieving a global average of only 35.8% of satisfaction with regards to experience levers that are most important to customers.

• Channels are the key differentiators in satisfying customers on what they perceive as important:• Customers still consider the branch a top channel for carrying out their banking business, despite the

growing influence of direct channels. A shift is also underway as customers increasingly view the branch as fulfilling an advisory role thought they still use the branch to carry out basic financial transactions.

• The branch is still a valued channel for customers, but it’s role must evolve to meet changing preferences and expectations:• Banks are evaluating six major themes for adoption as they transition their branch networks to play a

more effective role in today’s retail banking environment. While there is no “one-size-fits-all” approach, each bank will gradually shift to one or more of these themes as they redefine their channel strategies.

Key Findings from WRBR 2011

Capgemini Global Financial Services82011 WRBR_Spokesperson Training Deck_26_v3.pptx


Source: 2011 Retail Banking Voice of the Customer Survey, Capgemini, 2011

Despite low levels of banking clients’ trust and confidence, customers globally emerge quite satisfied with their banks

Although a majority of customers are generally satisfied with their primary banks, opportunities still exist to enhance the overall banking customer experience.

Although a majority of customers are generally satisfied with their primary banks, opportunities still exist to enhance the overall banking customer experience.

Customer Satisfaction with Primary Bank, Region Leaders (%), 2011



Globally, banks have been fairly successful in delivering a positive level of overall customer experience

Four different regions were represented in the top six ranked CEI countries.Four different regions were represented in the top six ranked CEI countries.


Customer Experience Index, Region Leaders, 2011




Despite delivering an overall positive experience, banks in most countries have not generated the ‘Wow’ factor

Banks will need to differentiate themselves from the competition by offering an outstanding banking experience in the areas deemed most important by customers.

Banks will need to differentiate themselves from the competition by offering an outstanding banking experience in the areas deemed most important by customers.

Customers with a Positive/Negative Experience, Region Leaders, (%), 2011



High customer satisfaction levels of a bank do not always translate to high positive customer experience levels

a) Positive Satisfaction has been defined as positive or very positive; b) Positive Experience has been defined as positive or very positive; Note: Only Top 10 CEI Countries labeled.Source: 2011 Retail Banking Voice of the Customer Survey, Capgemini, 2011

While most countries had 50% - 70% of customers with positive satisfaction, positive customer experience typically ranged from 30%-40%.

While most countries had 50% - 70% of customers with positive satisfaction, positive customer experience typically ranged from 30%-40%.

Positive Customer Satisfactiona Vs. Positive Customer Experienceb, 2011






• However, banks have been far less successful in generating high levels of satisfaction in the areas that matter most to customers achieving a global average of only 35.8% of satisfaction with regards to

experience levers that are most important to customers.



• The branch is still a valued channel for customers, but it’s role must evolve to meet changing preferences and expectations:• Banks are evaluating six major themes for adoption as they transition their branch networks to play a

more effective role in today’s retail banking environment. While there is no “one-size-fits-all” approach, each bank will gradually shift to one or more of these themes as they redefine their channel strategies.





Satisfaction levels with most channels for each lifecycle stage generally correlates to their perceived importance


Global Customer Importance Vs. Satisfaction of Channels by Life Cycle, across all Products, 2011

Importance and satisfaction for most lifecycles is highest with the internet and lowest with mobile banking.

Importance and satisfaction for most lifecycles is highest with the internet and lowest with mobile banking.




Though online has emerged as a key banking channel, branches remain important for daily banking activities

Customers still prefer visiting branches for problem resolution or buying complex products such as loans and mortgages.

Customers still prefer visiting branches for problem resolution or buying complex products such as loans and mortgages.

Source: 2011 Retail Banking Voice of the Customer Survey, Capgemini, 2011; Capgemini Analysis, 2011Note: The importance of branch relative to direct channels by products and lifecycle stage is rated on a scale of 1-7 with 7 being very important and 1 being the not at all important




Source: Capgemini Analysis, 2011

The internet and branch are the most successful channels offering a positive experience across all age groups

However, banks have not been successful in delivering as positive an experience with the mobile and phone.

However, banks have not been successful in delivering as positive an experience with the mobile and phone.

Customers with a Positive Experience by Channel, Region, and Age (%), 2011




Despite the growing influence of new channels, the branch has remained a cornerstone of banks’ sales and service


The existence of large branch networks continue to create cost challenges for banks.

The existence of large branch networks continue to create cost challenges for banks.




Customers continue to see the branch as an important channel for carrying out financial transactions

Customers primarily visit the branch to carry out financial transactions but are increasingly expecting advisory services and more relationship management.

Customers primarily visit the branch to carry out financial transactions but are increasingly expecting advisory services and more relationship management.

Source: 2011 Retail Banking Voice of the Customer Survey, Capgemini, 2011; Capgemini Analysis, 2011

Most Important Role of the Branch to Customers in the Past, Present, and Future (%), 2011

Financial Transactions in the branch are expected to continue to decline while Advisory Services are expected to increase






• However, banks have been far less successful in generating high levels of satisfaction in the areas that matter most to customers achieving a global average of only 35.8% of satisfaction with regards to experience levers that are most important to customers.



• The branch is still a valued channel for customers but it’s role must evolve to meet changing preferences and expectations:• Banks are evaluating six major themes for adoption as they transition their branch networks to play a

more effective role in today’s retail banking environment. While there is no “one-size-fits-all” approach,

each bank will gradually shift to one or more of these themes as they redefine their channel strategies.





Positioning the branch to play an effective role in an overall retail delivery strategy will require changes across four areas

Challenges

Outdated Skill-Sets of Branch Staff

Lack of Authority to Act

Misaligned Incentive System

Unavailability of Tools

Recruitment & Training of Branch Staff

Emerging Trends

Empowerment of Branch Staff

Enhancing Quality of Branch Staff

Investments in Training and Development of Employees

Elevation of Customer Experience as a KPIs for Branch Staff

Challenges

Inefficient Sales Process

Lack of Targeted Sales & Service Strategies

Lack of Multi-Channel Sales and Service Strategies

Moving from Transactional to Relationship/ Advisory Based Sales

Emerging Trends

Targeted Service Strategies for Customer Segments

Improving Efficiencies Across Sales Process Through Automation

Multi-Channel Based Sales and Service Strategies

Shifting from Transactional to Advisory Relationship

Challenges

Legacy Systems

Cross-Channel Integration

Adoption of Modern Technologies

Customer Analytics/Intelligence

Customer Personalization Technologies

Emerging Trends

Customer Analytics/ Business Intelligence

Seamless Multi-Channel Integration

Adoption of Modern/ Innovative Technology

Customer Personalization Technology

Challenges

Outdated and Awkward Layouts

Format Optimization

Personalization and Customization

In-Branch Service Model

Emerging Trends

Branch Re-Design

Branch Automation to Improve Convenience & Service

Branch Layout Aligned with Customer Needs

Customized Branches for Different Customer Segments

Branch Layout & Design

TechnologyStaff & People

Sales & Service


Key Areas AroundBranch

Transformation




There is no one size fit all approach and banks will adapt one or more of these themes depending on their channel and business strategy.

There is no one size fit all approach and banks will adapt one or more of these themes depending on their channel and business strategy.

Six themes are emerging around the future role of the branch network in the retail banking space

Key Themes Emerging Around Future Role of the Branch Network, 2011


Branchless

Core of a Multi-Channel Network

• Banks that are strictly online or mobile and do not have a brick and mortar presence

• Branch is at the core of the network and owns the customers

Trusted Advisor

• Banks wants the branch to be viewed as a trusted advisor and prefers for the customer to handle day to day banking transactions through other channels

Seamless Multi-Channel Network

• Customers have a consistent experience that allows them to start/stop any transactions seamlessly utilizing any channel for the banking relationship

Independent Network

• Banks use a space that doesn’t belong to them such as a post office, supermarket or pharmacy allowing customers to bank while doing other activities

Physical Space for Virtual Relationship

• Branch doesn’t handle transactions but provides space for customers to come and have video conferences with specialists (mortgages, investments)

Bank Branch

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‘Branch at the Core of a Multi-Channel Network’ and is the key relationship hub between the bank and its customers

Branch at the Core of a Multi-Channel Network


CommentaryCommentary

• The branch is at the center of the customer relationship where they open and manage customer relationships, providing a full array of advisory and day-to-day transactional services.

• Direct channels are deployed more as aids for basic financial transactions or information gathering

• Advantages: • Ideal for attracting high-value customers• Advisory services for more complex products

and services w/ higher margins• Disadvantages: • High overhead and operating costs for people

and technology• Maintaining and updating branch designs and

layouts

• The branch is at the center of the customer relationship where they open and manage customer relationships, providing a full array of advisory and day-to-day transactional services.

• Direct channels are deployed more as aids for basic financial transactions or information gathering

• Advantages: • Ideal for attracting high-value customers• Advisory services for more complex products

and services w/ higher margins• Disadvantages: • High overhead and operating costs for people

and technology• Maintaining and updating branch designs and

layouts




‘Branch As a Trusted Advisor for Customers’ with all the day-to-day banking transactions moving to direct/ alternate channels

Branch As a Trusted Advisor for Customers



• The branch provides advisory services and builds the relationship, as daily financial transactions move to direct channels

• The branch manages the relationship with predictive sales processes and excellent customer support

• Advantages: • Focus on profitable high-margin sales• Clear customer segmentation based on

relationship management• Disadvantages: • Significant training to upgrade staff skill sets

for regulatory requirements and to understand needs-based selling

• Investments to maintain and keep direct channels functioning well so customers utilize those channels for basic transactions

• The branch provides advisory services and builds the relationship, as daily financial transactions move to direct channels

• The branch manages the relationship with predictive sales processes and excellent customer support

• Advantages: • Focus on profitable high-margin sales• Clear customer segmentation based on

relationship management• Disadvantages: • Significant training to upgrade staff skill sets

for regulatory requirements and to understand needs-based selling

• Investments to maintain and keep direct channels functioning well so customers utilize those channels for basic transactions




Moving branches to ‘Independent Networks’ where current and prospective customers visit frequently to improve access to banks


Branch As an Independent Network


• Branches are positioned in unconventional locations such as, grocery stores, super markets, and pharmacies to provide banking services at the customer’s convenience

• Advantages: • Minimal marketing expenses for customer

acquisition due to a built-in client base • Reduced cost by utilizing existing infrastructure• Strong deposit gathering capabilities

• Disadvantages: • Simple products with no customization or

personalization • Regulatory compliance and privacy laws

related to sharing customer data• Bank partner may decide to become a

competitor (i.e., Wal-Mart and Tesco)

• Branches are positioned in unconventional locations such as, grocery stores, super markets, and pharmacies to provide banking services at the customer’s convenience

• Advantages: • Minimal marketing expenses for customer

acquisition due to a built-in client base • Reduced cost by utilizing existing infrastructure• Strong deposit gathering capabilities

• Disadvantages: • Simple products with no customization or

personalization • Regulatory compliance and privacy laws

related to sharing customer data• Bank partner may decide to become a

competitor (i.e., Wal-Mart and Tesco)




The ‘Branchless Bank’ has attracted a loyal customer base due to high interest rates and convenience/ease of use

The Branchless Bank



• Branchless banks have no brick-and-mortar presence allowing the channel to own the customer relationship while delivering banking sales and services

• Direct banks enter the market with either a full banking or niche product approach

• Advantages: • Greatly reduced cost structure • Can offer lower fees and higher rates on

products • Disadvantages: • No physical location for clients to visit• Reliance on strong marketing campaigns to

attract new customers• May attract “rate chasers” and fail to develop a

loyal customer base

• Branchless banks have no brick-and-mortar presence allowing the channel to own the customer relationship while delivering banking sales and services

• Direct banks enter the market with either a full banking or niche product approach

• Advantages: • Greatly reduced cost structure • Can offer lower fees and higher rates on

products • Disadvantages: • No physical location for clients to visit• Reliance on strong marketing campaigns to

attract new customers• May attract “rate chasers” and fail to develop a

loyal customer base




‘Branch As a Part of a Seamless Multi-Channel Network’ where the customer relationship is managed through multiple channels

Branch As a Part of Seamless Multi-Channel Network

Source: Capgemini Analysis, 2011; Multichannel Banking in Europe, Finalta, 2011

TWITTERFACEBOOK


• The branch is an equal partner with the direct channels in managing the customer relationship. This approach recognizes the branch is important but direct channels have become essential elements for retail delivery.

• Advantages: • Strong competitive advantage in the market • Clear customer segmentation and clearly

defined product offerings• Elimination of channel conflicts related to

customer ownership and revenue • Disadvantages:

• Large investments to integrate all channels• Internal change management issues related to

breaking down channel silos• Maintenance expenses related to technology to

keep channels functioning properly

• The branch is an equal partner with the direct channels in managing the customer relationship. This approach recognizes the branch is important but direct channels have become essential elements for retail delivery.

• Advantages: • Strong competitive advantage in the market • Clear customer segmentation and clearly

defined product offerings• Elimination of channel conflicts related to

customer ownership and revenue • Disadvantages:

• Large investments to integrate all channels• Internal change management issues related to

breaking down channel silos• Maintenance expenses related to technology to

keep channels functioning properly




‘Branch As a Physical Space for Virtual Interactions’ helps in enhancing trust and create brand awareness amongst customers


Branch as a Physical Space for Virtual Relationship Management


• The branch provides a physical space for customers executing virtual interactions or banking transactions

• Branches also act as experience centers designed to reinforce a particular brand image or value proposition

• Advantages: • Recognized by customers and the market as

innovators• Unique way of connecting with and engaging

clients• Disadvantages:• Expensive to redesign or build branches for

this approach• Training to upgrade staff skill sets• Changing customer perceptions to accept new

concept

• The branch provides a physical space for customers executing virtual interactions or banking transactions

• Branches also act as experience centers designed to reinforce a particular brand image or value proposition

• Advantages: • Recognized by customers and the market as

innovators• Unique way of connecting with and engaging

clients• Disadvantages:• Expensive to redesign or build branches for

this approach• Training to upgrade staff skill sets• Changing customer perceptions to accept new

concept




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Deciding how best to leverage the branch network will require a thorough consideration and analysis of the themes


Advantages and Challenges for Banks While Adopting Emerging Themes

Banks are not limited to only one theme but may implement various themes across different regions or demographics depending on their strategy and business priorities.

Banks are not limited to only one theme but may implement various themes across different regions or demographics depending on their strategy and business priorities.

Branchless Banking

Branchless Banking

• Increased convenience/ accessibility

• Reduction in operating costs

• Overhead costs savings helps pay higher interest rates or charge lesser fee

• Increased convenience/ accessibility

• Reduction in operating costs

• Overhead costs savings helps pay higher interest rates or charge lesser fee

• Limited and basic products on offer

• Regulatory barriers limits banks to the extent they can leverage direct channels

• Price is the biggest differentiator

• Limited and basic products on offer

• Regulatory barriers limits banks to the extent they can leverage direct channels

• Price is the biggest differentiator

Branch Is a BankBranch Is a Bank

• Personal relationship/ face to face interaction

• Attracts high value transactions & clients to branch

• Delivers advisory services

• Personal relationship/ face to face interaction

• Attracts high value transactions & clients to branch

• Delivers advisory services

• High operating costs (People, technology)

• Requires highly trained staff

• High investment required in existing branches

• Sophisticated technology upgrades required

• High operating costs (People, technology)

• Requires highly trained staff

• High investment required in existing branches

• Sophisticated technology upgrades required

Branch As an AdvisorBranch As an Advisor

• Clear client segmentation

• Product offerings are aligned to the segments

• Branch are purely advisory oriented with Low value transactions pushed to direct channels

• Clear client segmentation

• Product offerings are aligned to the segments

• Branch are purely advisory oriented with Low value transactions pushed to direct channels

• Up-skilling of branch staff

• Renewed strategy to hire right skills

• Invest to build strong multi-channel capabilities and automation

• Up-skilling of branch staff

• Renewed strategy to hire right skills

• Invest to build strong multi-channel capabilities and automation

Multi-Channel Integration

Multi-Channel Integration

• Strong multi-channel capabilities

• Different channels have different roles for different client segments

• Client satisfaction oriented service delivery

• Strong multi-channel capabilities

• Different channels have different roles for different client segments

• Client satisfaction oriented service delivery

• High degree of business transformation risk

• Huge upfront investment to upgrade systems/ technology

• High degree of business transformation risk

• Huge upfront investment to upgrade systems/ technology

Independent Network Banks

Independent Network Banks

• Accessible to a large client base

• Encourages client self-service

• Reduced operating cost

• Deferred model that piggy backs on an existing relationship

• Accessible to a large client base

• Encourages client self-service

• Reduced operating cost

• Deferred model that piggy backs on an existing relationship

• Only sell simple products

• Bank partner can become competitor, e.g. Tesco Banks

• Advanced system support required

• Data sharing may lead to privacy issues

• Only sell simple products

• Bank partner can become competitor, e.g. Tesco Banks

• Advanced system support required

• Data sharing may lead to privacy issues

Physical SpacePhysical Space

• Innovative and unique concept to enhance client engagement and service

• Strongly reinforce banks brand image and value proposition

• Innovative and unique concept to enhance client engagement and service

• Strongly reinforce banks brand image and value proposition

• High input cost with un-tangible benefits

• Banks have to make efforts to shift client perception to accept the new concept branches

• High input cost with un-tangible benefits

• Banks have to make efforts to shift client perception to accept the new concept branches




Conclusion• Despite customers’ lack of trust in the banking system, globally, banks have done relatively well

ensuring customers are satisfied:

• However, the number of customers having a positive customer experience around levers most important to them is not as high, putting banks at the risk of losing customers unless they significantly improve the customer experience

• Identifying the factors of greatest importance to their customers and then delivering on those dimensions will help banks drive positive customer experience

• Globally, customers have the most positive customer experience with the branch and the internet, the least positive with mobile banking:

• While customers perceive the internet as the most important channel for most lifecycle stages, they still view the branch as the most important channel for problem solving, suggesting customers prefer a human touch in certain interactions with the bank.

• The branch is still a valued channel and banks are transforming them to meet changing customer preferences and expectations:

• Innovative trends and leading practices are being implemented globally and regionally to overcome people, process and technology challenges resulting from the branch evolution.

• Determining how to leverage the branch in a multi-product, multi-channel environment remains a key consideration in a firms overall retail delivery strategy:

• Six key themes are shaping the channel landscape and redefining the future role of the branch. Banks are not limited by only one theme but have the ability to implement various themes across different regions or demographics depending on their business priorities and targeted customer base.

www.capgemini.com/financialserviceswww.capgemini.com/financialservices

dr adam becht may 17th, 2011. capgemini global financial services 2 © 2011 capgemini – all rights...

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