2014 Retail banking trends

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2014 Retail banking trends

Source: bai.org/bankingstrategies, Deloitte banking industries outlook

Drive-to-Digital: Impacting delivery, marketing and service usage

• In 2014 there will be greater experimentation in products and revenue build around mobile, web and social commerce. With the increase of ownership of devices, today's consumer wants to be able to research, purchase and manage their financial services on demand using the device(s) of their choice, wherever, whenever. Reinventing the financial services purchase funnel, the way people conduct daily banking, and the interaction between channels, the drive-to-digital will provide both opportunities and challenges for financial institutions.

Increased competition: New players, technologies and innovations

• In 2014, the trusted role of financial institutions as the collector of funds, provider of loans, processor of payments and financial advisor will continue to be challenged from non-traditional players including new financial organizations (neobanks), hardware providers, third party payment processors, and mobile app developers. This could potentially result in the impact of losing the financial insight and relationship with the customer experience and their potential future loyalty.

Branch Optimization: Maybe not branchless, but certainly less branches

• Current branch-based distribution models are no longer sustainable and are unable to meet the rapidly evolving customer needs for real time access and simplicity in banking interactions. As a result, retail banking and credit union executives will be focusing on 'smart-sizing' distribution networks in 2014, closing offices, shrinking footprints and integrating new technological breakthroughs to digitize transactions without dehumanizing interactions.

The banking industry appears to be at a turning point in the post-crisis era. Even though there is considerable uncertainty around regulatory impact and economic growth, there are a number of positive signs that banks are now ready to pick up their pace in pursuit of growth.

Proprietary and Confidential 3

2014 Retail banking trends

Source: bai.org/bankingstrategies, Deloitte banking industries outlook

Focus on customer 3.0: digitally astute, social and yearning for insight

• Customer 3.0 is digitally connected, informed and demands a highly personalized approach with their banking products and service. These customers purchase their banking services much like they purchase music, books or other products – online, 24/7, relying on friends, family and social media reviews. The bar for engagement is set high for these customers, since their frame of reference are the best digital retailers and social marketers. Neobanks and banks with a simplified mobile-first strategy are the strongest competitors for these customers.

Breaking down silos: product and data silos begin to crumble

• In order to manage customer information more effectively, banks will begin to eliminate silos by integrating data, systems and processes across products. Moving to a service-oriented architecture (SOA), data will be shared and leveraged in real-time on all of the bank's touchpoints, allowing the bank to provide more personalized service based on a complete customer profile.

Differentiating brands: avoiding commoditization in a digital world

• Banks and credit unions will begin to find ways to stand out in a crowded competitive marketplace in 2014, leveraging all channels to make their message heard. Leaders who can balance innovation and customer experience with the pressure of regulatory compliance will differentiate their brand and win.

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2014 Retail banking trends

Source: bai.org/bankingstrategies, Deloitte banking industries outlook

Leveraging data for improved service• A new type of marketing will emerge in 2014 — activity-based marketing —

or marketing within the context of an activity being performed by a customer. Activity-based marketing changes the point of interaction for banks, moving that point much closer to the identification of the need or want for the product/service using advanced customer insight. This will improve the targeting of offers, and social media channel insight will be used to improve service and delivery.

Simplifying engagement: removal of steps to engage • In 2014, financial institutions will begin to realize that simplicity is mutually

beneficial to both customers and the organizations. Those firms that simplify will see improved customer loyalty, and savings. Simplified processes will include:

− Leveraging the photo taking capability of a mobile device to eliminate keystrokes, simplify applications, facilitate bill payment and account transfers, provide digital security for documents and validate customer information.

− Voice and gesture recognition, multichannel video chat, branch-based digital billboards and real-time spending updates via a customer's mobile device.

Global innovation perspective: expanding view of tomorrow's innovations

• Banks and credit unions will begin to look beyond our shores for innovative ideas in 2014, learning from overseas organizations that in some cases are far ahead of our domestic offerings.