Canadian Banking 2012_v06
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Canadian Banking 2012_v06

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The conundrum facing most banks the world over is that, even as their customers make less use of branches, the banks have yet to find an equally good way of drawing new customers. Little more than a ...

The conundrum facing most banks the world over is that, even as their customers make less use of branches, the banks have yet to find an equally good way of drawing new customers. Little more than a decade ago most retail banks feared the internet. Then they decided largely to ignore it. Now it is becoming ever clearer that the future belongs to those that are nimble and far-sighted enough to embrace it. Understanding customer preferences and habits through trending real time analytics, in addition to being technologically prepared for the advancements in mobile and digital banking services will yield new revenue streams for all the major players who wish to capitalize on emerging resources.

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Canadian Banking 2012_v06 Canadian Banking 2012_v06 Presentation Transcript

  • Canadian Banking 2012 – Overview “ The conundrum facing most banks the world over is that, even as their customers make less use of branches, the banks have yet to find an equally good way of drawing new customers” Prepared by F. Alfieri January, 2013 Updated August 6, 2014
  • For business consulting advisory services and/or a more detailed analysis of your industry specific Supply Chain please contact me at : frank.alfieri@videotron.ca Services include in depth analysis of your business and industry with unbiased advice to analyze and optimize your industry specific challenges. Custom Services Include: Business Assessment – Measures business health and positioning. Big Data – Are you making the most use of your data streams? Data Integrity Evaluation – Is your IT system giving you the right numbers? Data Intelligence Analytics – Extracting Business Value – What is your data worth? Data Management at Project Implementation - Is your data as clean as possible? Supply Chain Analysis and Optimization – Are you running a lean operation? Market Research Intelligence Services – What is the industry doing? White Paper Research and Intelligence – What information is important? Competitor and Industry Analysis – What are your competitors doing? Process Re-organization – Are your processes leaking valuable dollars? Powerpoint Summaries – Present with confidence and clarity. The information format that has been consolidated and reported in this document is Copyrighted. For publishing or usage rights please contact Frank Alfieri.
  • “Understanding customer preferences and habits through trending real time analytics, in addition to being technologically prepared for the advancements in mobile and digital banking services will yield new revenue streams for all the major players who wish to capitalize on emerging resources.” Internal Objectives
  • Canadian Banking Consumers  EY Global - Consumer banking Survey 2012  Deloitte - Top 5 trends in Retail Banking  Deloitte - Mobile Banking, A Catalyst for improving bank performance  KPMG Insights into Canadian Banking  PwC - Perspectives in the Canadian Banking Industry  PwC - Rebooting the Branch in a multi-channel global environment
  • Canadian Banking Consumers – Facts and Figures Source – Global Consumer Banking Survey 2012, EY Customer Confidence - 28% of Canadians report a decrease in confidence Multi-Banking - 35% of customers multi-bank to obtain the best rates and fees for varied products Finding information on banking products and services - 67% turn to discussions with family and friends - 21% gather information from social networks Drivers of attrition - 54% of those who have switched banks cite high fees as the main cause - 37% cite poor branch experience
  • Canadian Banking Consumers – Facts and Figures Source – Global Consumer Banking Survey 2012, EY Personalization - 73% of customers would be willing to share personal information to receive better service from their bank Improve Customer Satisfaction - 33% of respondents want their bank to improve its fees and charging structures Loyalty Program Appetite - 35% have enrolled in a bank loyalty program (+16% since 2011) - 42% would value cash back on CC or DC transactions
  • Key Takeaways – Stats and Solutions  Globally, 50% of respondents cite dissatisfaction with high fees as the most important driver of attrition  35% of customers have enrolled in a bank loyalty program. A 16% increase since 2011.  Attrition rates in Canada have increased from 38% to 45% in the past year  Give Customers more flexibility  Help Customers Shape their experience  Shape Business Models around customer needs Reports and Industry Analysis Sources Global Consumer Banking Survey 2012
  • Key Takeaways – Market Dynamics  Recent years have shown increase in numbers of new entrants.  New entrants are mostly Canadian branches and subsidiaries of foreign owned banks and newly created banks controlled by non financial service groups  i.e. ING Direct (recently acquired by Scotia for $3.1B)  i.e. PC Financial, Walmart Banking Services, Rogers applies for Bank Licence Reports and Industry Analysis Sources Global Consumer Banking Survey 2012
  • Global Consumer Banking Survey 2012 - Ernst and Young Conclusions
  • Global Consumer Banking Survey 2012 - Ernst and Young Conclusions
  • Global Consumer Banking Survey 2012 - Ernst and Young Conclusions
  • Reports and Industry Analysis Sources The TOP 5 trends in Retail Banking - Deloitte Key Takeaways  The ROI for an advisory discussion with an individual retail banking client exceeds 100%  With regards to NFC (Near Field Communications) in Canada mobile adoption has increased 10 fold since 2008  Canada has the worlds heaviest social media usage per capita  To win with client analytics and increase ROI focus on multi channel strategies through offer content, offer timing, and offer channel
  • Key Takeaways – Industry Analysis  The most recent financial crisis has spurred changes in regulatory provisions in banking communities worldwide  Knowledge and data is most valuable when it describes customer behavior  In the evolving world of mobile banking, customer loyalty will be congruent with the most secure applications  Legacy IT systems need to be updated to handle the real time streaming influx of data Reports and Industry Analysis Sources Insights into Canadian Banking - KPMG
  • Key Takeaways – Customer Analysis for effective product development  Banks must discover and assess customer needs and then apply the knowledge to product development decisions  What? Do our customers need?  What? Products or Services should we offer?  How? Do we effectively market our offerings to meet needs?  Which? Customers should we focus on?  Which? Customers are most profitable? Reports and Industry Analysis Sources Insights into Canadian Banking - KPMG Alignment of the channels  The bank to customer relationship needs a 360 degree 3 dimensional approach across all channels
  • Regulatory Operational Risks  Evaluate the operational risk of regulatory compliance  New capital and liquidity demands will be a key factor in determining business plans, changing the cost profile of banking products  Basel III  OFSI Office of the Superintendent of Financial Institutions  Volcker Rule  FACTA – Foreign Account Tax Compliant Act (USA)  Dodd-Frank (USA) Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012
  • Consumer Lending Survey 2012 - Key Takeaways  59% are comfortable with their debt levels Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012
  • Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012 Total Revenue Net Income ROR RBC $23,100,000,000 $4,850,000,000 21.00% TD $20,130,000,000 $5,890,000,000 29.26% BNS $17,290,000,000 $5,180,000,000 29.96% BMO $13,720,000,000 $3,270,000,000 23.83% CIBC $11,410,000,000 $3,080,000,000 26.99% NBC $4,470,000,000 $1,210,000,000 27.07% $90,120,000,000 $23,480,000,000 26.05%
  • Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012 26% 22% 19% 15% 13% 5% Big 6 Total Revenue distribution 2011 RBC TD BNS BMO CIBC NBC 21% 25% 22% 14% 13% 5% Big 6 Net Income distribution 2011 RBC TD BNS BMO CIBC NBC 21.00% 29.26% 29.96% 23.83% 26.99% 27.07% 0% 5% 10% 15% 20% 25% 30% 35% RBC TD BNS BMO CIBC NBC ROR
  • Big 6 – Key Corporate Events  Mergers, Acquisitions, Divestitures
  • Top 6 – Key Corporate Events  RBC pulling back on US retail operations  sold its US regional banking retail operations to PNC Financial for $3.6B  Completed acquisition of Blue Bay Asset Management for $1.5B  Completed divestiture of Liberity Life Ins. to Athene holdings for $628M  Launched a new trading floor in Hong Kong  European and Caribbean operations face challenges  European debt crisis  Caribbean slowdown in tourism revenue Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012
  • Top 6 - Key Corporate Events  TD bank has the largest US retail arm of all the Canadian banks  Operates more than 1200 stores  Dodd Frank will have a significant impact on US operations  Owns 45% of online brokerage TD AmeriTrade  Acquired 100% of Chrysler Financial for $6.4B  Acquired South Financial Group  Acquired MBNA credit card portfolio for $7.8B Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012
  • Top 6 – Key Corporate Events  Scotiabank is Canada’s most international Bank  Operates in 55 countries worldwide  35% of Net Income is generated from foreign sources  Concentrates in high growth emerging markets  Mexico, Caribbean, Asia  Central, Latin, and South America  Assets under management increased to $103B from $54B  Significant transactions in 2011  19.99% interest in China’s bank of Guangzhou  51% interest in Colombia’s Banco Colpatria  Acquired Dresdner Bank in Brazil  Acquired Nuevo Banco Comercial SA in Uruguay  Acquired Dundee Wealth  Making it second largest mutual fund provider in Canada Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012
  • Top 6 - Key Corporate Events  BMO  The largest P&C banking operating group of Big 6  Completed the acquisition of Marshall & Ilsley for $4B  Gives BMO a significant market presence in the Midwest across 8 states  Purchase of Hong Kong based portfolio manager Llyod George  US branches more than doubles from 312 to 679  Increase managed assets to over $530B  Anticipates increased regulatory compliance costs Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012
  • Top 6 – Key Corporate Events  CIBC is mostly focused on domestic activities  Purchased a 41% interest in American Century Investments  A US asset management company  Opened a new wholesale banking office in London, Eng.  Opened a new Corporate Credit products office in Houston, TX Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012
  • Top 6 – Key Corporate Events  NBC operations primarily focused in Quebec  70% of revenue obtained from Quebec operations  27% of revenue is from the rest of Canada (looking to extend)  3% of revenue derived from international operations  P&C activity represent nearly half of all NBC operations  Acquired Wellington West Holdings for $280M  Agreed with HSBC Canada to acquire HSBC securities Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012 70% 27% 3%
  • The New Digital Tipping Point - PwC “More people across the planet now take home new iPhone’s every day (402,000 units per day), than take home human babies (300,000 human births per day). - January 2012
  •  Payments and transfers processed by Monitise now over $25bn annually, versus $1bn a year ago  More than 18m customers now registered to Monitise Mobile Money services, compared with 5.5m in December 2011.  The group has a pipeline of more than 100 financial institutions via its partners and direct sales teams looking to adopt mobile banking, payments and commerce applications developed by Monitise.  Further to the recently announced global alliance with information technology business Cognizant, Monitise is also in talks with a number of major technology businesses interested in partnering with Monitise, reselling the Group’s banking, payments and commerce solutions and collaborating on mobile technology innovations. Reports and Industry Analysis Facts and Figures – Explosive Growth Partners
  • Digital Integration in an forward evolving industry  Generation Y (1980-1990) deciding primary banking relationships  Quality of the digital offering is an important factor in decision process  Banks need to act now to lock in the future value of this segment  Banks digital strategies need to move beyond cost reduction objectives  The wide availability of information about financial products on the internet  Digital Banking is evolving into a new set of offerings  User experience  Mobile hardware device and networks  Social Media and Collaboration  Customer Analytics  Channel Integration  Wide availability of information about financial products on the internet  Exposes the gap between price and value for banking products to consumers  Banks now need to demonstrate intrinsic value to their customers Reports and Industry Analysis The Digital Tipping Point - Price Waterhouse Coopers
  •  Research  Reveals that digital engagement and share of wallet are directly correlated  Digitally active customers tend to have the largest product holdings  Primacy in a banking relationship drives increased share of wallet  Leads to higher revenue generation from the customer pool  Future will incorporate location based offers and interactive applications  Digital feature sets will override traditionally important criteria like branch location and brand Reports and Industry Analysis The Digital Tipping Point - Price Waterhouse Coopers
  • Reports and Industry Analysis The Digital Tipping Point - Price Waterhouse Coopers  The battle amongst banks for customer relationship primacy  Embrace Change and serve customers in a way the customer wants  Partner with innovators from technology and telecommunications industries  Develop a vision and a central strategy with the customer as the fulcrum  Achieve First Mover advantage by partnering with innovative technologies
  • Reports and Industry Analysis The Digital Tipping Point - Price Waterhouse Coopers  New digital services may become new sources of revenue for banks  Consumers are willing to pay for innovative readily available digital services
  • Reports and Industry Analysis 2 out of 5 mobile banking users in Canada use iPhones
  • Reports and Industry Analysis – Source, Vancom Mobile Consulting Mobile Banking benefits:  Cash is King: Mobile banking can make a fast contribution to the bottom line. A bank with 100 branches and 250 ATMs could save $5M annually by converting 20% of transactions to mobile  Innovation Drives differentiation: Early investments in mobile banking can drive competitive advantage and attract new customers. Having a mobile presence will drive loyalty and promote buy in to your brand.
  • Reports and Industry Analysis – Source, Vancom Mobile Consulting  Focus on growing revenue: Mobility means greater volume of transactions, monetizing customer data, faster access to services, marketing based on new knowledge of consumers  Cost savings: The cost of processing a mobile transaction can be as much as 10 times lower than at an ATM
  • Reports and Industry Analysis – Source, The Economist Mobile Payments – A Wealth of Wallets
  • Reports and Industry Analysis – Source, The Economist Mobile Payments – A Wealth of Wallets
  • Appendix  Bank Assets – TOP 25  Net Income Segments  Key Factors impacting earnings  Data Analytics Sources  Industry News Sources
  • Top 6 – Results by Business Segments Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012
  • Top 6 – Key Criteria Reports and Industry Analysis Sources Price Waterhouse Coopers – Canadian Banks 2012
  • Data Analytics Partnerships - Click logo to Link Source APT Video
  • News and Industry Insights – Click Logo to Link Source
  • For business consulting advisory services and/or a more detailed analysis of your industry specific Supply Chain please contact me at : frank.alfieri@videotron.ca Services include in depth analysis of your business and industry with unbiased advice to analyze and optimize your industry specific challenges. Custom Services Include: Business Assessment – Measures business health and positioning. Big Data – Are you making the most use of your data streams? Data Integrity Evaluation – Is your IT system giving you the right numbers? Data Intelligence Analytics – Extracting Business Value – What is your data worth? Data Management at Project Implementation - Is your data as clean as possible? Supply Chain Analysis and Optimization – Are you running a lean operation? Market Research Intelligence Services – What is the industry doing? White Paper Research and Intelligence – What information is important? Competitor and Industry Analysis – What are your competitors doing? Process Re-organization – Are your processes leaking valuable dollars? Powerpoint Summaries – Present with confidence and clarity. The information format that has been consolidated and reported in this document is Copyrighted. For publishing or usage rights please contact Frank Alfieri.
  • END “Little more than a decade ago most retail banks feared the internet. Then they decided largely to ignore it. Now it is becoming ever clearer that the future belongs to those that are nimble and far-sighted enough to embrace it.” Prepared by F. Alfieri January, 2013 Updated August 6, 2014