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Innovation in Multi-Channel Management
John Kirkbright
Chief Executive K-Strat International
Senior Retail Banking Adviser to EFMA
Chairman EFMA Banking Advisory Council
Moscow March 2010
Background to EFMA
Banking Advisory Council
EFMA Banking Advisory Council established in 2005 with the support of Microsoft
Senior Executives from leading European Banks meeting 4 times a year to discuss trends and create a blueprint for future financial services delivery
Members include ABN Amro, BNP Paribas Unicredit, Lloydstsb, Caja Madrid, Citibank, Nordea, Fortis, Rabobank, Bankinter, Erste Bank etc
First report on the Future of Multi-channel Delivery published in 2006
2009- Survival 2010 - Rebuild
2009 has seen the unprecedented demise
of many well known banks either through
takeover , state aid or bankruptcy.
“ 85% of the banks who have failed are
either focused on one product or one
geography”
2010 – a year to rebuild customer trust and
confidence and establish a new banking
model to suit the new economic
environment
Key Channel Facts
Most banks sell 80-90% of their products
through branches
Most banks want to increase the % of sales
through remote channels from 8-10% to
20-30%
Finalta estimate that online banking
activity will increase by 30-50% in the
next 5-10 years
5
SALES BY CHANNEL
Across Europe, the branch is the dominant sales channel today –
by volume and value
What percentage of your product sales (by volume) are carried out through the
following channels in 2007?
Source: Finalta / EFMA Multichannel study 2007
Branches
Telephony
Internet
Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fra BEN IB Italy GAS CE UKI SEE EE Nord Average
% of products
sold through
each channel
79%
7%
6%
8%
Region
Innovation in Multi-Channel
Conclusions of the 2009 Report
Innovation in multi-channel is an essential ingredient of success but progress is slow and needs to be accelerated
Banks are still too reliant for sales on branches and need to significantly increase sales through non branch channels
Providing a truly integrated customer experience is becoming a major strategic priority for many banks
Banks need to move towards streamlined processes with an emphasis on major cost reduction
Customers have lost considerable trust and confidence in their banks – rebuilding it will be a priority
The rewards for success in the multi-channel area are immense – real winners and losers will emerge sooner rather than later
What bankers say about Multichannel
“We have not yet created an „Amazon‟ buying experience in
financial services
“Having the right people for each channel is key.”
“We will lose 5-10% of our clients if we do not make products easily available through other channels”
“Perhaps the best buying experience for
the customer is directly related to the investment made in a
channel”
What keeps Senior Banking Executives
awake at night
Compliance and regulation
How to radically reduce costs
Making staff redundant
Creating a truly integrated overall customer
experience
Increasing the sales efficiency of all channels
Recruiting and training the bank staff of the
future
Communicating with customers more effectively.
Bankers priority investment plans
Anything that is essential to make them compliant and
meet regulatory needs to keep their “banking licences”
Anything that reduces cost without significantly harming
customer service
CRM that assists retaining most profitable customers
Channel migration support that reduces cost to serve
Investments in the on line buying experience
Channel integration interconnectivity that has quick
payback on investment
Key buzz words for 2010 Bankers
Reducing the cost to serve
Accelerating the “tipping point” to getting customers to using other channels
Developing needs based selling techniques branches?
Improving the customer experience
Having a two way dialogue with customers
Collecting and using customer insights
Understanding the customer journey – customer mapping
Developing end to end processes
Bankers Priority Check List
Compliance and Regulation
Reduce costs
Find new sources of income – non interest fee income
Retain profitable customers
Sell more products through on line channels
Migrate customers to less expensive channels
Building the right people skills for each channel
Understand customer needs better
Match products to customer needs – needs based selling
Trust and Confidence in Banking
“The bank becomes more trustworthy when the channel is perceived to be so”
“Building trust in buying through on line channels will be very challenging in the current environment”
“Trust is the number one priority :so that customers feel they are getting the best advice”
“You are less likely to trust on line services if you do not trust the bank already”
ABN Amro Teleportal Branch
ABN Amro Teleportal Branch
ABN Amro Teleportal Branch
Rabobank
Use of LCD interactive technology in new look branch
Deutsche Bank
Relaxed open
style format
Deutsche Bank
A relaxed “department store feel and look”
Deutsche Bank
Deutsche Bank
Unicredit
Segmented micro-market branch formats
BNP Paribas
Automated branches with high self-service
Chebanca
Chebanca – Cheek to Cheek Banking
Chebanca branch interior
• Welcoming Customers
• Educating on Capitalia
Delta2 services and
opportunities
• Facilitating access to
banking products and
services
• Handling of
appointments with
external professionals
• Queue management
Role & Responsibilities
CAPITALIA DELTA 2 - The Concierge
Channel Innovation Examples
A webdesk, a television channel and blogging
Pre-paid phone cards through ATMs and all paper output being made available online
Online banking with enrolment – customers with ATM or credit card can access on line banking without using a branch
Mobile SMS for fraud prevention, mobile portal, pre approved consumer loans, electronic identity cards
Innovation is the key...
• MobileLoan
• WebLoan
• smsLoan
• ATMLoan
• Loan Machine
• Business Partners
• Specialized
Branches
“Loan Machine”: Credit origination in 7 steps, without going to branch
Gets personal
information
Takes the signature
Takes a photo
of the customer
Sends credit
response via SMS
Hands over the
consumer loan card
Prints out the
credit agreement
Scans the ID
card
ROYAL BANK OF SCOTLAND
Remote Mortgage Sales and Fulfilment
Creating the Smarter Knowledge Bank
Bankinter - Videocall
•Access to a bank relationship manager - but without the need to physically visit the branch
•The convenience of telephone banking -but with the option of sharing written information
•Efficient „to-the-point‟ communication as with Internet banking
- but with the ability to ask questions and interact with bank staff in real time
Banco Best Web 2.0 approach
Banco Best – New Virtual Branch
Branch Transformation Programmes
Automation
Branch formats
Sales efficiency
Sales platform
Interconnectivity with other channels
Branch closures
Branch closures
Still a very sensitive but critical issue for all European banks
Some large European banks may have to close 20%-30% of their branch networks
“Having the right branch format and location for the branch will be absolutely essential.”
Providing acceptable alternatives to the branch
Selling through non-branch channels
“We now have more online than branch customers, but most of our sales are still through our branches.”
“The online customer experience at most banks is still very poor -a lot can still be done to improve the buying experience through non-branch channels.”
“Our biggest challenge is to be able to ensure bigger sales through our non-branch channels.”
“The cost of sales is likely to go up – not down – so it will become increasingly important to drive sales through cheaper direct channels.”
European Regional Differences
Turkey – very young population, innovative product environment
Austria – ageing population – more focus on branch
Scandinavia – pioneers of on line banking – now need to develop step change in on line buying experience
Spain- very intensive branch coverage may be under pressure to change
Customer Relationship model
Key challenges:
Customers are more in control
Customers have access to a far wider range of channels and information sources
What combination of face to face and remote?
How much self –help?
Pricing to reflect the level of customer relationship management provided
Bankers worst dreams
Replacing lost sources of revenue – developing non-interest fee incomethart
the regulators find acceptable
Ethical banking – using customer information in an ethically responsible
manner
Managing large levels of branch closures
Displacing large numbers of branch staff
Retaining your best staff
Takeover or state bail-out
Key issues for Bankers in 2010
Find ways of reducing distribution costs and the cost to serve without impacting service levels negatively
Improving the retrieval and use of customer insights and customer knowledge
Rebuilding customer trust and confidence
Developing two-way communication channels with customers
Accelerate the “ tipping point” to get customers to use and buy through on-line channels
Essential to equip all distribution channel teams with the right knowledge and support tools
Conclusions – Council member quotes
“We have to do something to radically reduce costs.”
“Its a matter of offering the same service and capabilities across all channels worldwide”
“There will only be two types of bank in the future: those
with a reasonable service and those with an excellent service”
Conclusions – Council member quotes
“We need to offer as many end-to-end processes as we can to make the overall customer buying experience easier”
“There is no substitute for knowing what the customer knows about what he needs. So we have to give them the opportunity to tell us.”
Ideal Scenario – Customer perspective
Start a transaction in one channel, continue in another and finish in another
Receive timely informative communications from the bank
Be able to use the bank‟s channels as and when I want to use them
Have the bank channel identify me on entry and treat me as an individual to understand my needs
Have one phone number and one person to speak to regarding complaints or problems
Deal face-to-face with the bank on more complex products.
The Customer Acid Tests
Pricing – do they reward my loyalty?
Flexibility and Commitment – do they love my dog?
Buying – How easy is it? Do I have to go in a branch?
Service – how convenient is it for me to use them?
Interconnectivity of Channels – the 9.00am teller test
Communication – how can I contact them
Brand – do they deliver their brand promises?
Do they love my dog?
Do they love my dog?
Keep It Simple
Simplicity and speed to organise
ICICI Bank India – Fastest growing bank in the world have
30 million customers and aim to reach 70 million in 5 years –
“If it can’t be done in 90 days don’t do it”
Speed, agility and simplicity aids customer focus and flexibility
Customer Insights and Intelligence
perspectives
“Bankers need to focus on the human element and how we interact with customers as this is what will make the real difference”
“We need to get the right information from the client and increase ways of getting our clients interest”
“We need to ask customers which channels they want to be contacted on and use every contact we can”
The Future – Bank Executive Quotes
“The challenge is how to provide advice at the right cost level. How can technology help a branch network provide a high
quality customer advisory service?”
“Branches are our best point of sale but in the future we need to focus more on our people and on segmentation and
personalisation. We also need to know how other channels can push branch sales. This is where future potential lies.”
“The majority of our branches in future will focus on selling no more than four
core products which we believe will meet the majority
of our customers‟ needs.”
Key Challenges for Banks in 2010
Decide which type of operating model to focus on – distribution, cost or product led
Get the right mix of distribution channels
Develop an integrated customer experience
Obtain and develop the right people skills and provide staff with the support to give excellent service and advice
Ensure processing excellence
Get the right balance between sales and service
Balance short and long term needs but remain truly customer centric
Future Focus
“Getting channel management right is critical to
our future – the price for getting it wrong is we will
not survive”
“Recent events are a wake-up call to banks
to rebuild customer trust and relationships”
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