Branch Banking InnovationCustomer Experience and

Emerging Technologies

IBM Centre of Competence Banking Front Office Barcelona

Despite the emphasis on alternative channels, bank customers remain branch loyal

European Consumers Channel Preferences 2002

In four of Europe’s leading banking markets – France, Spain, Germany and Italy – at least 80% of customers prefer personal bank visits over other available channels

79%

11%

4%

3%

0% 20% 40% 60% 80% 100%

Personal Visit

Phone

Internet/ E-mail

Mail/ fax

EuropeSweden

Italy

UK

France

Spain

Germany

Currently, more than 60% of banking customers are not interested in using other channels than the branch channel

This data is expected to change by 2008, when more than 50% of the banking population in Europe will normally access banking services through more than one channel.

Nevertheless, 40% of the European banking population will continue to use only the branch network, meaning that branches will lose volume but not their central role in the banking distribution system, as branch addicted clients will not disappear.

Source: Financial Insigjts 2005

Old Bricks

Self-Service Branch

SalesBranch

Wealth Mgmt BranchWealth Mgmt Branch

Relationship Mgmt Center

Bus

ines

s D

river

Time

Branch Office transformation

An Smart Branch is a Networked Service Center that drives Open Business Networks

Reinventing Branch Banking – Forrester Study

“thinly staffed collaborative service centers based on open standards and connected to internal or external service networks through integration hubs”

Branch Transformation projects will change…

PremisesPremises

PeoplePeople

ProcessesProcesses

Improved serviceSales cultureProductivityCollaboration – linkage with other channelsSkills

ProductivityStraight-through processingMulti-channel Paperless

Modern, open planZoned for different activitiesRetail orientedCustomizedMultiple formats

In-store,financial center, assisted service

… not just the technology…

Today’s branch transformationprojects are about making

fundamental changes to the way business is done in the bank

branch.

… but technology will support new business capabilities

By creating a single customer viewby understanding the right offer to

make and how best to deliver advice to enhance customer’s

wallet share

By providing Branch employee with an integrated access to all the stuff

related to its role, enhancing the toolsand elements that the employee

requires in daily business activities.By enabling technology to make networking of

applications, processes, systems and people

(employees & customers)easier

How a Bank makes its Branch smart?

By differencing the brand through a better ‘consumer’

experience

of senior business leaders believe Customer Experience is the next

battleground in retaining customers and growing71%

of US executives rank Customer Experience as critical or very important, but only 38% do it (Forrester, 2003)

92%

of senior business leaders believe they could increase customer loyalty and market share by focusing their organization on integrated Customer Experience strategies and implementation

85%

Customer experience is important for business growth

of bank customers would give their bank only two chances to fail before considering switching50%

of consumers commit to a deeper product or service relationship with a brand after a satisfying experience

79%

of retail banking customers indicate they have had at least one negative experience during the past year

70%

Customer experiences are important to customers too

What makes a good experience?A good experience is a subjective interpretation. It is therefore not possible to determine what makes a good experience for all people, but we can identify the four elements, which help create a good experience:

The experience realm (physical facilities or a special atmosphere)

Image (adds prestige to the experience or contributes to our identity in other ways)

Other customers (the communitiesto which we belong contribute to the experience)

The service encounter (the reception, the quality of the service, the personnel's attitude)

Branch Office layout

New layout that matches the branch office new characteristics and functions

ƒSelf Service/Discovery Zone

ƒReception Zone

ƒTransactional Zone

ƒSales/Advisory Zone

Self Service/Discovery Zone

Channel integration, holistic customer experiencePersonalization (More used txs, etc)Cash and check depositMarketing contents Offers/New products adsTicketing/...Internet BankingProduct simulatorsLocal/Remote supportVirtual agent/AvatarAccesibility

FunctionsNew ATM generationKiosks/PcsDigital MediaDigital TelesurveillanceRFIDSmartcards/EMVBiometricsWeb conferenceProjectors/LCD/TFT displaysIP telephony

Technology

Reception Zone

Central point of informationCustomers identificationQueue busterMigration support to new channels/

featuresDynamic informationƒNew products, offers, promotions, Local information, stock exchange, etc

Functions TechnologyPDA/Tablet PC/ThinkpadRole based integrated workplaceCRMIP telephonyWIFI/WLANRFIDDigital MediaDigital TelesurveillanceCollaborationDisplays

Advisory/Sales Zone

Relationship/Personalized sellingSpecific customer segments

managementFinancial assessment/SimulationsComplex product salesNew customers acquisitionMobilityVirtual Branch

Functions Technology

Thinkpad/Tablet PCRole based integrated workplaceCRMWIFI/WLANIP TelephonyVideoconferenceCollaboration

Transactional Zone

Singular payments/depositsChecksControl de vivencia

Functions TechnologyRole based integrated workplaceIntegrated devicesIP TelephonyBiometrics (DSV)Digital MediaDigital TelesurveillanceCollaborationCRM

Branch Office:Paperless branchDigital AdvertisementSmart brochuresDigital signatureSpeech recognitionVideo ConferencingContact center<-> branch interaction

(Joint calendar, intelligent call routing)

Distributed data management E-Learning / Knowledge ManagementCollaboration toolsCoin cashment / CashlessAssisted self service ATM integration Kiosk integration

Multichannel facilities:Internet BankingVirtual BranchMobile Banking (Sales force automation)Contact Center / Call Center services

RFID

Enabling infrastructure:Wireless (IP telephony) / PervasiveSmartcards, CardreaderIP Telephony (XML applications, integration with CRM)

Security (Identity, Single management solution)

Video surveillanceCorporate Communications

Building the Smart BranchEMEA CoC Showroom inBarcelona