Winning Strategies for Omnichannel Banking

Winning Strategies for Omnichannel Banking Jörgen Ericsson, Vice President, Financial Services Practice, Cisco IBSG Philip Farah, Director, Financial Services Practice, Cisco IBSG Al Slamecka, Financial Services, Enterprise Marketing June 2012 More info: http://www.cisco.com/web/about/ac79/docs/Cisco-IBSG-Omnichannel- Study.pdfCisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 1

Setting the Stage: From Multichannel to Omnichannel  In an era rich with interaction channels (mobile, social, visual), consumers expect more control over how they shop, bank, and interact with service providers  Consumers expect “here and now” from their bank, just like they receive from other industries  Industries are reacting to this new reality by moving away from the traditional multi-channel approach (shifting customers to the least- expensive channel) to an omnichannel one  The omnichannel approach is one where physical and virtual channels come together to enable a seamless experience embedded in people’s lives and businessesCisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 2

Omnichannel Research Scope and Methodology  5,300 consumers across eight countries – Developed countries: Canada, France, Germany, U.S., U.K. – Emerging countries: Brazil, China, Mexico  Primary research conducted May 2012  Tested nine innovative omnichannel concepts: – Virtual banking – Mobile banking – Specialty branch – Social media – Streamlined branch – Customer sensing – Banking pod – Digital footprint management – Agent branchCisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 3

Omnichannel Banking: Transformation in Emerging, Evolution in Developed  Top 3 concepts of interest across geographies: specialty branch, virtual banking, infomediary  Emerging countries show high level of customer readiness – Dissatisfaction with current banking services: 49% dissatisfied with banking service in emerging countries vs. 26% in developed countries – Readiness for new interaction models: Average interest in our top three concepts for emerging is 7.3 versus 5.2 in developed (scale of 1-10)  In developed countries, the evolution towards omnichannel is underway with privacy concerns – Lack of readiness to share personal information: developed 65% vs. emerging 53%Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 4

Four Pillars of Omnichannel Banking Omnichannel Banking New Mobile Social Video BranchCisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 5

The Old Branch Is Dead— Long Live the Omnichannel Branch  Omnichannel is about the choice to use ALL channels including branches – 30% of digital banking channel users are also frequent branch visitors – 22% of people would switch banks if their bank went all virtual – 82% of those who would abandon bank if branches close, are also active users of virtual banking channels  Branches key strength: personal attention, quality advice – 26% of consumers will leave bank if advisers, personal advice removed from branch – 83% of consumers in favor of branches expanding their financial advisory services  Customers open to quality advice delivered virtually – 23% of consumers in developed and 43% in emerging countries see the use of video conferencing with remote experts from the branch as a way to enhance the quality of advice in situations where access to quality expertise is a concernCisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 6

Mobile: Bringing the Bank to the Consumers  13% of consumers in developed countries and 18% of consumers in emerging markets prefer to use mobile banking applications  Most interesting mobile apps are: real-time expense tracking, personal finance management (PFM), payments and mobile commerce  Consumers who strongly favor mobile banking are young (Gen Y or Gen X), tech-savvy, and frequent branch users (2.5+ visits per month)Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 7

Social Banking—the Potential Is Here…When Will Banks Be Ready?  Customers still hesitant to use social media for banking – Only 1% of customers in developed – 8% of customers in emerging countries  Concerns due to privacy / lack of control  One segment in favor: younger, tech-savvy customers in emerging countries  The most attractive concepts for Gen Y respondents were learning communities, financial incentives to “refer a friend” and financial games and competitionsCisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 8

Video—Seeing Is Believing Video Key to Building Trust  Video conferencing with remote experts enhances quality of advice – 23% customers in developed countries – 43% customers in emerging countries  Video key feature: Experience enhancer for locations lacking availability of human expertise – Unmanned banking kiosks, after-hour ATMs, virtual banking  Video is ready for the mainstream: Gen X and early majority technology adopters strong believers in videoCisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 9

The Privacy Minefield—Tread Carefully  Top concerns: privacy, security, identity theft – 65% of customers in developed countries – 53% of customers in emerging countries  29% of those opposed to personal information access willing to share if on “opt-in” basis  Consumers worldwide strongly in favor of banks as an infomediary – 60% of customers in developed countries (Gen Y: 70%) – 89% of customers in emerging countries (Gen Y: 92%)  Banks chosen as favorite infomediary – 42% prefer banks ahead of the government (19%), telcos (6%), and social media sites (4%)Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 10

So What? Implications for Banks Consumer Needs Implications for Banks  Advice-centered,  Optimized branches for omnichannel branches personalized advice (physical and virtual)  Real-time, location-enabled mobile financial services  PFM, payments, and commerce-centric mobile  Social media to provide apps secure financial learning  Pilot virtual financial communities learning communities in  More personalized, higher- social media quality interactions enabled  Develop integrated by video architectures  Introduce video interactions with experts in branches and at homeCisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 11

More information: http://www.cisco.com/web/about/ac79/docs/Cisco-IBSG-Omnichannel-Study.pdf

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Winning Strategies for Omnichannel Banking

by Cisco IBSG (Internet Business Solutions Group) on Jun 15, 2012

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