Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Reinventing Banking


Published on

Keynote "Reinventing Banking" of our CEO Banking Benelux Hans van der Noordaa for the Irish Banking Federation Conference 2013.

Published in: Economy & Finance, Business
  • Be the first to comment

Reinventing Banking

  1. 1. Reinventing Banking Irish Banking Federation, 20 November 2013
  2. 2. ING Bank is a large international player with strong retail and commercial banking activities Northern European home markets: Leading domestic banking positions in the Netherlands, Belgium, Germany and Poland European markets: Combining ING Direct franchise with CB operations; selectively evolving towards mature domestic banking model Leading Commercial Bank in Benelux and CEE, supporting domestic economy. Leaders in specialised finance and financial markets Central-and Eastern Europe and Asia: Domestic banks provide options for future growth
  3. 3. ING Bank, a well capitalized European bank with sound financials Balance Sheet ranking of European banks Total Assets as per year-end 2012 (EUR bln; source: annual reports) HSBC Deutsche Bank BNP Paribas Crédit Agricole Barclays Santander Societe Generale Lloyds Banking UniCredit ING Bank Credit Suisse Rabobank Nordea BBVA Commerzbank ABN AMRO KBC Group Erste 2,042 2,012 1,907 1,842 1,838 Underlying pre-tax result Bank (EUR million) 1,169 1,110 1,147 1Q13 2Q13 1,103 1,270 1,251 1,140 927 836 766 752 677 638 636 283 3Q12 4Q12 3Q13 394 257 214 Core Tier 1 ratio (in %) 12.1% 11.9% 3Q12 4Q12 12.3% 11.8% 12.4% ING Bank is part of ING Group, a global financial institution of Dutch origin. Since January 2011, ING Bank has been operating as a standalone company under the umbrella of ING Group. The Group is working towards a full separation via divestments of its Insurance businesses. 1Q13 2Q13 3Q13
  4. 4. Lessons learned from the crises Solvency is important but liquidity is key Statistical models help, but common sense works better Customer behaviour and technology are changing rapidly European Banks: "commodity plus ?" Stakeholder engagement ING Investor Day - 13 January 2012 3 Focus of today
  5. 5. Technology has been transforming the way we live for generations
  6. 6. In 1990 in Europe there were 26 telephones per 100 persons… …today there are128 mobile phones per 100 persons in Europe
  7. 7. The first PC weighed 11000 grams and had a memory of 16 KB … …iPad 4 weighs 652 grams and has a memory of 16 million KB
  8. 8. These changes disrupt industries, creating winners and losers
  9. 9. Second-largest US bookstore went out of business in 2011… ...Amazon e-book downloads overtook print sales in 2012
  10. 10. 46% Fortune 500 companies did not exist 10 years ago … … in 10 years 40% of today’s Fortune 500 will be gone
  11. 11. Is the banking industry on the verge of disruption?
  12. 12. The banking industry is facing unprecedented change Retail customers There is a revolution underway as customers become more self-directed and spread their business across multiple institutions Corporate customers Corporate clients can borrow cheaper in bond markets, and other banks are ahead in digitalising the financial environment Key forces challenge the future role of banking Regulation There is an urgency to adapt more quickly to the tougher regulatory environment Technology Technology continuously redefines the way we interact with our customers, who our competitors are, and the way we will define competitive advantage going forward Agility towards change is the only way to secure a sustainable, competitive customer franchise in this new world order 11
  13. 13. Added value of banks has been questioned over the last couple of years Banking - Investments - Life Insurance - Retirement Services 12
  14. 14. Creating a more sustainable future together with customers and stakeholders 13
  15. 15. Some examples… convenient, safe and efficient offering for our customers Mortgages Savings Transparency Transparency in pricing (via Pro active communication on interest rate periods Customer Care • Product offering has been simplified and made more transparent (see below) • Simplification of products made it possible to streamline the client processes and related client channels • As a result of our efforts, NPS improved strongly since the crisis Arrear support face to face contact with one contact to help clients recover Support and tooling to prevent late payments 62 Examples # Retail savings products offered in NL 20 Mortgage alert email to alert client on interest period Seminar / Education to inform/educate clients on relevant developments 8 Pre-merger Postbank - ING Variable Customer Experience 14 Post-merger Fixed Today Other
  16. 16. Consumers are becoming more self-directed, even faster than we anticipated… The self-directed segment currently includes ~40% of all consumers and represents ~45-50% of banking revenues Customers in Northern Europe are most self-directed, however other countries are catching up… Dominant segments by revenue group and life stage Level of self-directed consumers (%) Youth Multi-channel ~5% 10-15% Revenue group Self-directed consumer segment is expected to reach ~80% in Europe within 10-15 years Elderly High Sweden 75 Life stage Branch lovers Netherlands ~45% 50 France 30-35% UK Turkey Self-directed Poland Germany ~40% 45-50% Spain Russia 25 Italy Payments only ~10% 10-15% Low xx% Size of segment xx% Size of revenues • • 0 Prefer to do transactions through remote channels Prefer physical channels for advice on complex products 15 0 20 40 60 80 Online banking access Percent
  17. 17. Customers are increasingly spreading their business across multiple institutions Customers are increasingly willing to change banks Percent of respondents that are planning or have changed bank, Europe 45 46 How do we establish a deeper customer relationship and increase cross-sell among self-directed consumers? 35 Service quality is main reason to switch, followed by price and products/services on offer 16
  18. 18. Technology is changing the way we interact with our customers… Massive shift to mobile and direct channels expected to be main channels in all European Markets % of interactions, Europe 2010 2 5 4 2 9 19 2 12 2 18 34 28 29 34 28 70 42 25 30 5 2000 Branch 2005 ATM 2010 Digital 2015F Mobile 17 Other • Online and mobile banking are fast becoming the norm: while it was once a competitive advantage, this is no longer a differentiator
  19. 19. We are now closer to our customers - through multichannels Branches ATMs Mobile app  Direct if possible, advice when needed  Easy and fair  Low costs products and services 18 Internet Call Center
  20. 20. ... With different customer behavior 19
  21. 21. New customer expectations Content Speed is crucial speed of delivery speed of connection speed of improvement “less is more” relevance: right content @ the right place @ the right time On-the-go functionality orientation / GPS camera Consistent interface design & user experience Integrated experience across all channels multiple screen sizes, landscape vs portrait switching`the “Mobile Rule Of Thumb” consistent with ATL advertising same view for employees & customers 20
  22. 22. Technology is also changing the way our customers interact with each other … In 2013 200 million active users posted 400 million tweets a day If Facebook would be a country it would be the third largest in the world …20% of internet users in Europe use Facebook to follow retailers Only 46% of people trust banks While 90% of consumers trust peer recommendations • Customers act as a community, not just as individuals • Information asymmetry, where banks had an advantage, no longer exists 21
  23. 23. … or just the infrastructure? Will banks be the locomotive …
  24. 24. New specialists are entering the market, redefining who our competitors are… Telcos Retailers Crowd funding Aggregators Tech giants Payment players Traditional players New specialists 23
  25. 25. …and what we’re competing for Big data is transforming businesses Access to vast data… …advanced analytics… …new innovative services • Transactions • Transparency • New personalized services • Mobile / devices • Faster experimentation • New targeting services • Social data • Smarter segmentation • New logistics services • Science / engineering • Automation (rule-based) • Risk management …to improve the core business (marketing, product development, operations)… …with the option to extend beyond the core by introducing new services • Video / images Leverage house or external data (with privileged or open access)… 24
  26. 26. However banks’ ownership of customer data may be at risk New entrants aiming to monetize customer data… • • …while regulation opening up payments markets • Non-bank players such as payment specialists (e.g., Paypal) or online giants (e.g., Google) increasingly grabbing “share” of customer data Strategic objectives of new entrants include revenue enhancement and deepening customer relationship • Will banks leverage the data to provide a personalised customer experience and deepen the relationship? Payment Services Directive: defines conditions of access to the information on the availability of funds for third party providers Payments Account Directive: allowing new payment services providers to enter markets …or will banks become white-label product providers and lose the customer relationship to aggregators and digital payment players? 25
  27. 27. Stakeholder engagement: an ecosystem Employees Clients / consumer organisations Rating agencies Media Banks Shareholders Governments / parliament / politicians Scientists Supervisors 26
  28. 28. Questions ? This presentation is available on Slideshare: 27
  29. 29. Disclaimer ING Group’s Annual Accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘IFRS-EU’). In preparing the financial information in this document, the same accounting principles are applied as in the 2Q2013 ING Group Interim Accounts. Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation: (1) changes in general economic conditions, in particular economic conditions in ING’s core markets, (2) changes in performance of financial markets, including developing markets, (3) consequences of a potential (partial) break-up of the euro, (4) the implementation of ING’s restructuring plan to separate banking and insurance operations, (5) changes in the availability of, and costs associated with, sources of liquidity such as interbank funding, as well as conditions in the credit markets generally, including changes in borrower and counterparty creditworthiness, (6) the frequency and severity of insured loss events, (7) changes affecting mortality and morbidity levels and trends, (8) changes affecting persistency levels, (9) changes affecting interest rate levels, (10) changes affecting currency exchange rates, (11) changes in investor, customer and policyholder behaviour, (12) changes in general competitive factors, (13) changes in laws and regulations, (14) changes in the policies of governments and/or regulatory authorities, (15) conclusions with regard to purchase accounting assumptions and methodologies, (16) changes in ownership that could affect the future availability to us of net operating loss, net capital and built-in loss carry forwards, (17) changes in credit-ratings, (18) ING’s ability to achieve projected operational synergies and (19) the other risks and uncertainties detailed in the Risk Factors section contained in the most recent annual report of ING Groep N.V. Any forward-looking statements made by or on behalf of ING speak only as of the date they are made, and, ING assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason. This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities. 28