Google ThinkFinance 2012 - Digital banking: How to capture the opportunity?

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About Digital Banking: What a Disruptive Future Could Look Like by Pierre Poignant, Associate Principal, McKinsey & Company

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Google ThinkFinance 2012 - Digital banking: How to capture the opportunity?

  1. 1. Digital banking How to capture the opportunity Singapore, May 31st, 2012 Conference Presentation CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited
  2. 2. McKinsey & Company 1| Explosion in digital interactions – By 2015, only 5% of interactions via the branch Network SOURCE: McKinsey 2012 Digital Banking survey, McKinsey research Digital interactions are exploding… 2010: 100%, Europe 70 42 30 19 29 28 25 2 Branch ATM Digital 2 34 2010 34 5 2015F Other Phone 4 5 28 12 2 2005 18 9 2 2000
  3. 3. McKinsey & Company 2| Yet, it isn’t a simple shift to digital channels. Customers are becoming multichannel users 1 Only most important paths are shown here 2 All arrows to maintenance actvities are directly from Subscription phase (i.e., Transaction and Service phases are not sequential) SOURCE: Asia PFS CDJ/multichannel booster survey 2011 Maintenance Transaction Service Research SubscriptionAwareness Non- channel Call center ATM Branch/personal DM Website/online banking Email/SMS 3rd party agent Online media WOM店舗 Offline media Past experience Mobile banking TraditionalDigital 3rd party 1 3 2 4 1 25 2 7 2 23 7 2 3 20 3 21 7 41 1 16 8 6 8 7 15 7 11 N/A N/A N/A 2 3 N/A N/A N/A 2 4 15 20 15 7 12 11 24 23 23 24 33 3330 12 6 7 6 9 9 Share of customers using each touchpoint/channel dominantly at each phase1 Percent Touchpoints/channels 47 21 23 2 3 24 25 4 3 4 4 3 34 4 4 4 6 3 INVESTMENT PRODUCT EXAMPLE
  4. 4. McKinsey & Company 3| Enormous benefits in terms of customer experience SOURCE: 2012 McKinsey Digital banking survey 9 Don’t knowDecrease 21 No change Increase 39 Significantly increase 31 % of respondents 1 No respondent indicated a ‘significant’ decrease in customer satisfaction What do you expect will be the effect of mobile banking on customer satisfaction in the next 5 years?
  5. 5. McKinsey & Company 4| Average products per client Number Digital servicing provides a better experience to clients translating into higher loyalty and value… 9 7 6 5 Multi- channel 3 channels 2 channels Mono- channel Average revenues per client Indexed 210 197 142 100 Multi- channel 3 channels 2 channels Mono- channel Perceived quality of multi-channel clients 10-15% higher than mono- channel ones Average attrition rate of offline clients 2x higher than online ones SOURCE: 2012 McKinsey Digital banking survey
  6. 6. McKinsey & Company 5| 0 5 10 15 0 100 200 300 400 500 600 700 800 Northern Europe Southern Europe Central Europe Branches per million inhabitants FTEs per branch Digitalisation enables radical reduction in costs as is already seen in Northern Europe – Online banking access need to go up first! 2016 2016 2016 SOURCE: 2012 McKinsey Digital banking survey
  7. 7. McKinsey & Company 6| Digital is considered as a defensive play mostly SOURCE: 2012 McKinsey Digital banking survey
  8. 8. McKinsey & Company 7| So far Banks see digital mainly as complementary 1 Excludes 7% of blank responses 2 For all customers SOURCE: 2012 McKinsey Digital banking survey 2 3 3 3 19 … USP to attract new customers … the primary channel for customer service … the primary channel for all banking activities2 … the primary channels for transactions 26 … complementing branch networks 38 … the primary channel for sales and advice Other % of respondents What is the vision for your bank's ‘digital proposition’ for the next 5 years? Digital channels as1 …

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