Disruptive innovation in consumer banking channels


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We look at changes in the banking landscape and the advent of a new breed of banking offering.

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  • 85% of all transactions are still cashGovernments encouraging move to Electronic payments to curb the black economy
  • Gen-Y are• Practically Motivated• Tech-savvy• Socially Mindful• Financial Freshmen
  • 3.54 billion, is under the age of 30. Over the next 10 years, Gen-Y should constitute the majority of ‘wealth accumulators’ in developed economies and will look for financial products to maximize their wealth. This segment is expected to have a higher disposable income than their predecessors. Banks need to begin to engage with them now to reap benefits later.Banks with a Gen-Y focus should be able to launch a product in three months. 
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  • Consumer want a more a simple banking experience but you need to think through what simple is all aboutOpening Hours? Some banks are now opening on a SundayProcesses – How hard is it to get a loan? Or open an account? Or enroll in online banking? How many steps does it take? Are there unnecessary policies or complex procedures interfering with efficiency? How long does it take? Where are consumers frustrated by bureaucracy? What hoops do you make people jump through?Locations – Are your branches easy to find? How accessible are your ATMs? Is it easy to get in and out of your parking lots? Once inside, do people intuitively know where to go and what to do?Online – How hard is it for consumers to find what they are looking for on your website? How far do they have to dig? How many clicks does it take? Is your site map intuitive? Is the interface confusing? Do you overwhelm visitors with links? Can people open accounts and apply for loans online? Can people ask you questions live online?Service Delivery – What could people do online that they can presently only do by making a trip to a branch? How many times is someone handed off before they get the information they need? If someone talks to three different people, will they get three different answers? What’s your automated phone system like?Products – Do you make it easy for consumers to compare products? Are your products easy to apply for and use? How much paperwork is involved? Can people easily access current account information via various channels?Choices – Do you offer too many? Are the differences clear? How do you make it easier for people to make the right decisions?Transparency – How easy is it for consumers to understand what they’re getting?Image & Identity – What does your brand identity say about you?
  • “Don’t Make Me Think” is a famous book about usability. The lessons apply to banking too. Don’t make it difficult for the customer to buy from you, or transact with you.
  • Regulation is making it easier to enter the market
  • Disruptive innovation in consumer banking channels

    1. 1. Disruptive Innovation in consumer banking channels
    2. 2. Banking used to be…
    3. 3. But things change…Even Monopoly is electronic now
    4. 4. Defining your futuredepends on knowingand delivering yourcustomers‟ needs
    5. 5. Do you understand the needs of theGeneration-Y Persona?Do you know how to reach them? 3.54bn people are under 30 today They decide how and when they want to interact They want convenience and simplicity
    6. 6. How do you connect with Gen-Y? Do you have a Do you channel have a strategy to plan to provide reach services on them? their terms? Is your proposition Are yougoing to capture findable? their interest?
    7. 7. In the UK 27% of adults and almost 47%of teenagers now own a smartphone 59% of these acquired one in the last year! The growth in digital channels and the prolific use of Smartphones is changing how consumers will: • Buy goods • Make payments • Gain access to services • Interact with your Financial institutions
    8. 8. So we need to think beyond the branch.And channels need to be connected.Think „Martini Banking‟. Anyplace. Anywhere. Anytime. Customers are demanding a mix of channels and greater two way interaction from their financial services provider. People call this „channel banking‟ or „multichannel banking‟. Its definition is inconsistent but it depends on consistency of brand and customer experience which means channel integration. This is tricky when what consumers really want is for banking to be simpler.
    9. 9. Conflicting multichannel definitions “True multichannel banking provides a rich set of products and services to customers in a seamless and always available fashion across all channels” McKinsey Consulting, Banking on Multichannel, 2010 “The multi-product, multi-channel environment… presents a number of challenges. The first is an unfocused approach to delivering products and services to the market. Banks can easily fall into the “3E trap” of trying to be Everything to Everyone, Everywhere. ” World Retail Banking Report, Cap Gemini, Unicredit, EFMA 2011 “One of the things that continues to surprise me about many banks’ multi-channel strategies is how little most banks have integrated their ATMs into those strategies.” Benjamin Ensor, Forrester Research, 2010 “the ATM is not a channel as such, but call centre, internet and mobile are channels” Chris Skinner, The Multichannel Myth, FSClub Blog, 2009
    10. 10. By the way, we‟ve always thoughtmulti-channel banking means… Multi-·chan·nel bank·ing /ˈMul ˈ ˈ ti Chanl ˈbaNGkiNG/ n. def: “Creating a consistent and rewarding customer experience by offering an integrated multi-channel mix with specific products and services for each channel, delivered according to the way people want to interact on that channel” This is the essence of “Connected-Generation Banking”.
    11. 11. How do you offer a multi-channel bankingexperience to your customers? Good multi-channel Banking is not about making the “branch” available across different channels 1. The banking experience must be customer-centric, offering relevant, simple, and consistent services as consumers move from channel to channel. 2. Make both your brand and the quality of each customer’s experience consistent across all channels through multi- channel integration 3. Each delivery channel offering should be built from the ground up maximizing its particular interaction capabilities 4. Offer channel-specific services that consumers actually want to use on that channel (in a way they want to use them).
    12. 12. The end of „Casino Banking‟ “retail banking activities should be structurally separated, by a ring-fence, from wholesale and investment banking activities” - Sir John Vickers
    13. 13. Consumers want a “simple” banking experience(which is more difficult to achieve with complex legacy systems) Consider: 1. How many steps does it take to apply for a loan? 2. Can your consumers identify their needs on the homepage of your website? 3. Is there a digital channel for speedy customer service? 4. Is the the right mix of services available on the right channels without making the experience complex?
    14. 14. Remember bank customers are regularconsumers, who are used to interactingseamlessly with sophisticated retailers acrosschannels
    15. 15. New entrants are disrupting the landscape 1. Alternative Models Clear alternatives are offering simpler services, and bank-as- retailer convenience services 2. Tailored Product Selection Sourcing off-balance sheet and highly regulated product from “other” manufacturers 3. New Banks with out legacy processes can provide simpler and customer centric experience for consumers 3. The gate is open for more E-money and Payment services regulation making market entry easier for this type of new transaction centric financial services
    16. 16. It‟s a profitable market… Tesco‟s banking division made a £102m pre-tax profit in the first half of 2010 - up 92%
    17. 17. And a new opportunity is dawning… 1 Focused purely on consumers and retail banking transactions 2 Channel-specific solutions, which may be integrated but are not the same core stuff just rebadged over a new technology protocol 3 Simplified service offerings utilizing retailing principles and social media, when and where consumers want
    18. 18. Want to know more? Let‟s talk…bayberryconsult.comAbout Bayberry Bayberry ConsultingBayberry is a business strategy and Alexandra House, The Sweepstakesconsulting firm. We specialise in Ballsbridgebanking and payments, hi-tech and Dublin 4B2B marketing, and company growth. IrelandWhat makes us different is our focus Tel: + 353 1 2827103on turning the ideas we create into www.bayberryconsult.comresults for your company. info@bayberryconsult.com twitter: @bayberryconsult