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  • 1. CxBriefing4.14 New Thinking In Europe Discussions with 25 Retail Banking Executives Copyright Consumer Encounter. Information is confidential and may not used in any manner.
  • 2. CxBriefing4.14April, 2014 Over the past 6 weeks I have traveled throughout Europe meeting with senior marketing and distribution executive to discuss the state of the Europe’s retail banking vertical. During this time I visited Belgium, Italy, Denmark, Poland, Croatia, The Czech Republic, Ireland, France, Spain and Turkey. This month’s issue of Consumer Encounter’s Cx Briefing provides a brief summary of the common themes identified during these high level discussions. For a more detailed presentation of this information please contact me at aatkin@consumerencounter.com. Common Themes Self Service Technology Has Killed Customer Intimacy. Every bank has done an excellent job migrating routine transactions to low cost distribution channels. Unfortunately, this has come at the expense of maintaining intimate customer relationships. The technology solutions of most banks are so similar that “ease of account opening” has become one of the top reasons for switching banks. Banks are just beginning to wake up to this fact. They are looking for ways to create digital intimacy to replace the human contact facilitated by the branch network. Innovation Anarchy Is Alive And Well Most executives reported that Innovation was not well managed within their institution. They identified the fact that there was no central accountability for Innovation with various divisions innovating on their own. The technology function within most banks generated the most innovation activity. Innovation within the marketing function was in the nascent stages. Marketing innovation will be critical as technology innovation (within Banking) has few defendable barriers. Copyright Consumer Encounter. Information is confidential and may not used in any manner.
  • 3. CxBriefing4.14A Return To Branches?? Many banks expressed concern about the fact that they were “losing touch with the customer” as they migrated customers out of the branch network. The frequency of human contact that the branches provided has yet to replicated by digital delivery. Distribution managers are seeking ways to leverage the branch network to strengthen customer intimacy while not migrating routine transactions back to the branch. As one banker put it; “Why would anyone want to come to our branches?” Direct Banks and Telco's Many banks with whom I met have significant concerns about Direct Banks and Telco's (with banking services) entering their market. In countries where this has already occurred low cost products and convenient delivery have allowing these competitors to buy market share at the expense of their full service competitors. Even markets like Ireland (where customer churn is low due to the number banking options available) are vulnerable to alternative banks. Most believe that enhancing customer experience will be they key to surviving direct banks and telcos market penetration. Customer Solutions Versus Product Many banks recognize that they are rapidly becoming a financial utility in a market where brands have less meaning due to the sameness of product offering and delivery. A few banks mentioned the desire to move upstream in the value chain by providing total solutions (versus only financial ones) to customers. I believe that this where most of the innovation will take place in the coming year. Pricing Strategies Vary Significantly Across borders bank fees and pricing strategies vary widely. Banks in the Czech Republic depend upon high banking fees as a key component of their revenue streams. Conversely, Spanish banks offer free checking and low fees to most Customers. Product pricing for loans, and other complex products, are promotional in nature depending on market Conditions. Copyright Consumer Encounter. Information is confidential and may not used in any manner.
  • 4. CxBriefing4.14Bank fees and product pricing are the main reasons why customers switch to/from bank brands. Many banks mentioned that they needed to “change the conversation” from “fees to access my money” to “charging for added value.” Opportunities For True Innovation Exist At Consumer Encounter we believe that the themes identified in this briefing provide significant opportunities to innovate a new retail banking model. Together with our clients, we are exploring many strategies including: 1. The value of a networked bank. 2. New product offerings that address upstream consumer needs. 3. Membership programs that enhance customer loyalty and change the discussion on product fees. 4. Third party product and distribution partnerships. 5. New roles for branch networks. We would be happy to share some of our thinking with your team. Please contact Andrew Atkin. (aatkin@consumerencounter.com) 4 Copyright Consumer Encounter. Information is confidential and may not used in any manner.