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.

Next Generation of Banking: Bolder

323 views

Published on

Once run by a few large banks, it has been taken over by smaller, more nimble and technology-driven disruptors who are putting the power back into the hands of consumers.

Banks need a more customer-centric way to do business and to differentiate themselves in new ways.

This report series will explore the most crucial changes happening in the finance industry, and how legacy banks need to act today to be around tomorrow.
This is part 1/3, diving into the world of finance exploring how traditional banks need to act today to be around tomorrow.

- The current state of banking
- 5 Key expectations that banks should be responding to with both services and communications
- An opportunity for banks to begin exploring opportunities for self-disruption

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

  • Be the first to like this

Next Generation of Banking: Bolder

  1. 1. NEXT GENERATION OF BANKING. CUSTOMER EXPECTATIONS ARE EVOLVING & BANKS NEED TO KEEP UP THE LATEST INSTALLMENT OF OUR: Near Future Of Series
  2. 2. ABOUT. At LHBS, we believe in continuously observing and learning from what’s happening in the market. We’ve created our Near Future Of (NFO) series which consists of inspiration and insights reports designed to highlight what is happening today and how it can share tomorrow for brands, businesses and entire industries. This issue explores the key challenges of traditional banks, and evolving consumer expectations in the world of banking and finance to help legacy organizations to identify opportunities for differentiation and adding customer value. We hope you enjoy this deck and find inspiration for your innovation process. DISCOVER DEFINE DEVELOP DELIVER LHBS // NFO: NEXT GENERATION OF BANKING INTRODUCTION. - 03 -
  3. 3. CONTENTS. CONTEXT CHAPTER 01: BANKS NEED TO BE BOLDER - AN INCREASING IRRELEVANCE - DIFFERENTIATE ON CUSTOMER EXPERIENCE - THE 5 KEY EXPECTATIONS INFLUENCING TOMORROW’S BRAND EXPERIENCE + BEST PRACTICES EXPLORE YOUR OPPORTUNITIES P 07 P 20 P 27 P 35 P 64 - 03 -
  4. 4. LHBS is a marketing & innovation firm with offices in Berlin and Copenhagen. We help clients to understand today's emerging customer expectations and to shape their business offerings for tomorrow. www.lhbs.com Kathleen McCaffrey Analyst at LHBS lhbs.com | kmc@lhbs.com Once run by a few large banks, it has been taken over by smaller, more nimble and technology-driven disruptors who are putting the power back into the hands of consumers. Banks need a more customer-centric way to do business and to differentiate themselves in new ways. This report will explore the most crucial changes happening in the finance industry, and how legacy banks need to act today to be around tomorrow: • Banks need to be bolder by standing for a value or experience that differentiates them from the crowd. • Banks need to be faster by identifying and transforming both simple & complex processes to responsive, more customer-focused experiences. • Banks need to be smarter by harnessing their mass of customer data for more personalized experiences and adapting external technologies and knowledge. THE FINANCE INDUSTRY IS EVOLVING.INTRODUCTION. INTRODUCTION.LHBS // NFO: NEXT GENERATION OF BANKING - 04 -
  5. 5. CHAPTERS INTRODUCTION.LHBS // NFO: NEXT GENERATION OF BANKING - 05 -
  6. 6. BANKS NEED TO BE BOLDER. BANKS NEED TO BE FASTER. BANKS NEED TO BE SMARTER. CHAPTER 1 CHAPTER 2 CHAPTER 3 CONTENT.LHBS // NFO: NEXT GENERATION OF BANKING - 06 -
  7. 7. CONTEXT OF THE BANKING INDUSTRY CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 07 -
  8. 8. The majority of consumers do still trust traditional banks more than newer digital payment solutions such as Apple Pay, Google Wallet, PayPal etc. 86%OF CONSUMERS DO STILL TRUST IN THEIR TRADITIONAL BANK HOWEVER… Source: Civic Science, 2017 CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 08 -
  9. 9. THE NUMBER OF CONSUMERS TRUSTING MORE IN DIGITAL SOLUTIONS IS GROWING THROUGH THE GENERATIONS BABY BOOMERS GENERATION X MILLENNIALS GENERATION Z 8% 14% 20% 25% Source: Civic Science, 2017 CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 09 -
  10. 10. Consumers are turning towards alternative banking solutions mainly because traditional banks aren’t keeping up with them, and as a result… CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 10 -
  11. 11. THINGS ARE SHAKING UP.SHAKINGSHAKING CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 11 -
  12. 12. A RESULT OF SHIFTING EXPECTATIONS HAS SEEN A HUGE INCREASE IN BRANCH CLOSURES AND FINTECH INVESTMENT IS GROWING EXPONENTIALLY. No. of global FinTech deals HAS RISEN sharply from 1800 to 2700 in just one year. Total global investment in FinTech ventures REACHED us $97.7 billion between 2010 and 2017. Source: Accenture analysis of CB Insights CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 12 -
  13. 13. JEFF YABUKI. “The only thing advancing faster than technology is consumer expectations. …New entrants are redefining financial experiences and challenging incumbent financial institutions by driving technological innovation in pursuit of meeting changing consumer expectations.” PRESIDENT AND CEO, FISERV. CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 13 -
  14. 14. “Banking is necessary. Banks are not.” FOUNDER OF MICROSOFT. BILL GATES. Even back in 1994, field leaders were taking notice of the banking industry shift… CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 14 -
  15. 15. Source: The Millennial Disruption Index Consumers are anticipating the financial world of tomorrow, AND believe that innovation will come from outside the industry. 33% OF MILLENNIALS BELIEVE THEY WON’T EVEN NEED A TRADITIONAL BANK Today, your consumers are catching on - and some traditional banks are yet to respond… CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 15 -
  16. 16. SO WHAT CAN BANKS DO? CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 16 -
  17. 17. CHAPTER 01 WILL EXPLORE THE NEW EXPECTATIONS BANKS NEED TO ADDRESS TODAY TO STILL BE AROUND TOMORROW. CONTEXT.LHBS // NFO: NEXT GENERATION OF BANKING - 17 -
  18. 18. 01.CHAPTER - 18 -
  19. 19. 01. BANKS NEED TO BE BOLDER. Today’s generations have choice. One in three Millennials are willing to switch if a better option comes their way - and it will. Fintechs are expanding well into the industry with billions of dollars of VC investment. They are not only meeting today’s consumers’ greater expectations of brands, but are helping them to reimagine how banking and managing their money could be. Traditional banks need to compete on customer experience, identify their key differentiators and cut through the noise to communicate them to their audience. LHBS // NFO: NEXT GENERATION OF BANKING - 19 -
  20. 20. “Now we will see the possibility of what we call a 'Kodak moment', where increasingly banks become irrelevant to their customers. Banks can avoid that, but they have to act now, and what they really need to do is think about innovation, but also transformation, doing something radically different.” ANTONY JENKINS. FORMER CHIEF EXECUTIVE OFFICER OF BARCLAYS. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 20 -
  21. 21. WHY ARE TRADITIONAL BANKS BECOMING INCREASINGLY IRRELEVANT TO CONSUMERS? BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 21 -
  22. 22. RESEARCH HAS REVEALED THAT NO OTHER INDUSTRY SUFFERS FROM SUCH A PROFOUND LACK OF DIVERSITY IN TERMS OF BRAND CHARACTERISTICS THAN BANKING EVEN OIL INDUSTRY BRANDS ARE MORE DIFFERENTIATED. Source: Clear: Brand Desire Survey LHBS // NFO: NEXT GENERATION OF BANKING BANKS NEED TO BE BOLDER. - 22 -
  23. 23. Every bank in the recent Clear study was seen as being highly “organized” and “sensible.” There isn’t anything wrong with this, but it became clear it is very rare to find a bank who stands for much else. PERSONALITY PROFILES OF MAJOR BANKS. Source: Clear: Brand Desire Survey BANKS NEED TO BE BOLDER. LHBS // NFO: NEXT GENERATION OF BANKING - 23 -
  24. 24. MILLENNIALS’ PERCEPTIONS OF THEIR BANKS. 53% of Millennials don’t think their bank offers anything different than other banks. “I don’t see the difference between my bank and all the others.” ALL FOUR of the leading banks in the US are among the 10 least loved brands by Millennials. Four leaders: JP Morgan Chase, Bank of America, Citigroup & Wells Fargo Source: The Millennial Disruption Index BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 24 -
  25. 25. are more excited about new, financial offerings from the likes of  Google, Amazon, Apple, PayPal or Square than by their own banks. 73%OF MILLENNIALS Source: The Millennial Disruption Index BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 25 -
  26. 26. Source: The Millennial Disruption Index THE TOUGH LESSON: You don’t stand out and 1 in 3 of (your) Millennials have said they’re open to switching banks in the next 90 days BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 26 -
  27. 27. TRADITIONAL BANKS NEED TO BE BOLDER BY DIFFERENTIATING ON A KEY CUSTOMER EXPERIENCE. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 27 -
  28. 28. “Customer experience is fast becoming the new battlefield” GARTNER PREDICTS: and by 2020 it will become the largest driver of customer acquisition between businesses. Source: Gartner BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 28 -
  29. 29. If you consider any top FinTech banks today, it’s very likely you can also associate one thing they do well, more specifically, one experience they are known for above all else… BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 29 -
  30. 30. Flexibility to suit needs. Real-time access - 100% mobile. Limiting global fees for limitlessness. Secure spending. It’s not just coincidence. You need to find your key differentiating experience if you want to stand out from the noise. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 30 -
  31. 31. Your customer’s last great experience from any industry is their new benchmark for your business. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 31 -
  32. 32. “To stand a chance, banks need to become differentiated by reinventing the relevance of the experience they offer within consumers’ lives.” RENATA VARGA, SNR. CONSULTANT AT LHBS SAYS: BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 32 -
  33. 33. THIS GENERATION ARE LOYAL TO EXPERIENCES, NOT TO BRANDS. Source: Prof. Rodrigo García de la Cruz BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 33 -
  34. 34. HOW CAN BANKS DIFFERENTIATE ON CUSTOMER EXPERIENCE? BANKS NEED TO BE BOLDERLHBS // NFO: NEXT GENERATION OF BANKING - 34 -
  35. 35. HERE’S THE 5 KEY SHIFTS IN EXPECTATIONS Recent research reveals five evolving expectations of a brand experience that today’s Millennial generation want to see from banks: BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 35 -
  36. 36. 5. Convenience through connectivity TODAY’S CONSUMERS WANT… 2. Customization 1. Real-time services 3. To be valued 4. Banking partner BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 36 -
  37. 37. EXPECTATION 1 TODAY’S CONSUMERS WANT REAL-TIME SERVICES. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 37 -
  38. 38. Source: Accenture - Beyond Digital of young adults want tools to help them monitor their monthly budget, with real-time adjustments based on their spending. 59% BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 38 -
  39. 39. Source: Fiserv, Harris Poll 2016 Average of overall population Millennials Gen Xers (37-51 years old) 93%76% 85% Younger generations expect faster payments, saying it is at least somewhat important that payments they make are made in real-time. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 39 -
  40. 40. The new financial product called Hoot is a debit card with added features for instant access to individual information and analytics via a small screen, Bluetooth and a physical button. The card can be connected to smartphones, which enables the card owner to display their image on the screen on the card. The button can be pressed to receive details about bank details, spending habits and financial tips. DEBIT CARDS FOR MILLENNIALS. EXPLORE SIGN BEST PRACTICE. LHBS // NFO: NEXT GENERATION OF BANKING // BANKS NEED TO BE BOLDER. - 40 -
  41. 41. MOBILE BANKING WITH VOICE.Garanti Bank - one of the largest private banks in Turkey - brought a conversational interface to it’s app for faster access to simple tasks. Garanti bank integrated the virtual assistant and more natural language understanding technology of Nuance’s Nina into their app, iGaranti. This enables customers to enquire about their funds, make transfers, get exchange rates among other functions through conversational voice recognition. EXPLORE SIGN BEST PRACTICE. LHBS // NFO: NEXT GENERATION OF BANKING // BANKS NEED TO BE BOLDER. - 41 -
  42. 42. EXPECTATION 2 TODAY’S CONSUMERS WANT CUSTOMIZATION. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 42 -
  43. 43. of Millennials are interested in real-time and forward-looking spending analysis. of shoppers think info their get from retailers is relevant - but 90% of organizations say they are focused on personalizing the CX. of Millennials feel their bank understands them financially. 40%48% 5% ONLY Source: Forrester Research BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 43 -
  44. 44. Swiss-based Bank Cler recently launched a 100% mobile banking app. “Zak” makes it simple for users to save, pay and control their money, and create their own personal finance goals. The user-friendly design makes it simple to drag-and-drop custom amounts of money within one’s account to various “saving pots” for different goals, for example holidays, a new car etc. EXPLORE SIGN ZAK - YOUR NEW BANKING PARTNER. BEST PRACTICE. LHBS // NFO: NEXT GENERATION OF BANKING // BANKS NEED TO BE BOLDER. - 44 -
  45. 45. MANAGING MONEY TOGETHER. Fintech startups are developing customized services to customers, where they can link accounts with that of their partners and organize accordingly. These services reflect new types of personal, financial and relationship needs of Millennials. Honeydue and Honeyfi, for example, offer an option for couples to link their accounts to the app, where they can decide what to share with their partner, and then organize and track their finances in the app itself. EXPLORE SIGN BEST PRACTICE. LHBS // NFO: NEXT GENERATION OF BANKING // BANKS NEED TO BE BOLDER. - 45 -
  46. 46. EXPECTATION 3 TODAY’S CONSUMERS WANT TO BE VALUED. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 46 -
  47. 47. MILLENNIALS’ PERCEPTIONS OF THEIR BANKS. 8/10 Millennials switch banks to obtain better rewards for completing specific goals. “Value my time and you value me.” The #1 way Millennials say their bank can be a valued partner is by rewarding their loyalty (60% want their bank to be a partner/friend). #1TIMES Source: Kasasa, Shep Hyken - customer service expert & NYTimes bestseller BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 47 -
  48. 48. DBS - a Singapore-based bank - had the lowest customer satisfaction scores of any bank in Singapore. COO Paul Cobban started running a series of cross-functional workshops, each lasting 5 days with the goal of improving processes. The metric chosen to improve was the customer hour, and the company ended up saving 250 million wasted customer hours each year. “One year later, we had the top customer satisfaction scores in Singapore,” Cobban says. BEST PRACTICE. HOW DBS REACHED FIRST PLACE. EXPLORE SIGN LHBS // NFO: NEXT GENERATION OF BANKING // BANKS NEED TO BE BOLDER. - 48 -
  49. 49. The Ant Forest App by Chinese mobile payments leader Alipay turns mundane finance activities - such as paying bills - into a greener act. It also rewards users who opt for more eco-friendly activities such as taking public transport and walking to work. Users collect “energy points” and compete with friends to grow their virtual tree, and in response real trees will be planted in Inner Mongolia or Gansu province. BEST PRACTICE. BANK FOR GOOD. EXPLORE SIGN LHBS // NFO: NEXT GENERATION OF BANKING // BANKS NEED TO BE BOLDER. - 49 -
  50. 50. EXPECTATION 4 TODAY’S CONSUMERS WANT A BANKING PARTNER. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 50 -
  51. 51. 53% of Millennials say they have no-one to turn to for financial guidance. 78% of consumers would be interested in receiving financial advice or guidance from their bank, however… only 28% said they currently receive financial advice. Source: LendIt Fintech USA, 1.3x Millennials are 1.3x more likely to turn to a financial advisor than Gen Xers. Now with digital means, customers are 10x more likely to engage with banks vs. non-digital customers. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 51 -
  52. 52. “Gen Zers want stability, they want partnership, they want their bank to feel like part of their squad.” Source: Civic Science BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 52 -
  53. 53. Santander bank launched “Prosper and Thrive”, a content hub to help Millennials navigate the financial world. The aim is to give younger customers access to practical advice for financial well-being and digestible descriptions of financial jargon without it sounding like it’s coming from a traditional bank. They partnered with several content businesses including SapientRazorfish, Contently and Newscred. EXPLORE SIGN SANTANDER’S CURATED CONTENT HUB FOR MILLENNIALS. BEST PRACTICE. LHBS // NFO: NEXT GENERATION OF BANKING // BANKS NEED TO BE BOLDER. - 53 -
  54. 54. Orange are looking to provide optimized customer experience and banking services through their network of things by harnessing artificial intelligence such as chatbots powered by IBM's Watson. The Orange chatbot will apply machine learning to gradually understand more about the user, like future needs and wants, along with projected spending habits. They’re programmed to detect emotion through 'sentiment analysis' where the customer may require human advice over machine.  EXPLORE SIGN BEST PRACTICE. ORANGE BANK CHATBOTS. LHBS // NFO: NEXT GENERATION OF BANKING // BANKS NEED TO BE BOLDER. - 54 -
  55. 55. EXPECTATION 5 TODAY’S CONSUMERS WANT CONVENIENCE THROUGH CONNECTIVITY. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 55 -
  56. 56. “Disruption is coming not from new products, but from new services that enable consumers to simply bypass legacy processes.” JOANNA BAKAS. MANAGING PARTNER, LHBS. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 56 -
  57. 57. MILLENNIALS Consider an “easy to use smartphone app” a primary factor when selecting a bank. This falls to 16% for older generations. Are open to having a virtual meeting (video chat) with their financial advisor. 75% MILLENNIALS ARE READY FOR THE CONVENIENCE THAT COMES WITH DIGITAL. 32% Source: Intelligent Environments - Generational Shift BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 57 -
  58. 58. 62% Of consumers believe that the best brands make their lives easier. 92% Of young adults would choose a bank for its’ digital services. 72% Of UK Millennials now use a banking app. This number drops to 45% for the overall adult population. Source: CustomerThink, 2017 BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 58 -
  59. 59. Millennials are three times more likely to open a bank account on a phone vs. in a branch. x3 Source:Source: American Bankers Association BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 59 -
  60. 60. Yolt, the multiple account management app from ING has become the first to connect customers through Open Banking. It’s allowing users to view and manage all their bank accounts from multiple banks on one simple interface. This will give users more insight and control over their money. BEST PRACTICE. YOLT CONNECT UNDER OPEN BANKING. EXPLORE SIGN LHBS // NFO: NEXT GENERATION OF BANKING // BANKS NEED TO BE BOLDER. - 60 -
  61. 61. ABN AMRO, a Dutch banking group has piloted several wearable items connected to customers’ current accounts for easy, on-the-go payments. The wearables include a ring, watch, bracelet or keyring, each of which can be connected to the customer’s account for easy, contactless payments at many locations worldwide. BEST PRACTICE. ONE BANK’S WEARABLES RANGE. EXPLORE SIGN LHBS // NFO: NEXT GENERATION OF BANKING // BANKS NEED TO BE BOLDER. - 61 -
  62. 62. Source: MX To understand today, banks should observe how other customer-centric organizations outside of the industry act and follow in their footsteps. They need to allow themselves to be shaped by customer demand in order to shape their tomorrow. By acting less traditionally and exploring more digital, more two-way, more real-time experiences, banks can remain relevant to customers by giving them what they want, when they want it. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 62 -
  63. 63. WANT MORE SIGNS?Start your signmesh demo today and stay updated on the latest brand innovations. .com LHBS // NFO: NEXT GENERATION OF BANKING BANKS NEED TO BE BOLDER. - 63 -
  64. 64. NOW IT’S YOUR TURN. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 64 -
  65. 65. Disruption is a buzz word with real and tangible consequences. What or who will challenge your business, and when? Do you want to explore where your strengths and vulnerabilities lie? Contact us for a one day opportunity-exploration workshop to better prepare for the future of your business. OPPORTUNITY WORKSHOP. JOANNA BAKAS Managing Partner +49 151 6462 0741 jb@lhbs.com BOOK YOUR SCHEDULE NOW BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 65 -
  66. 66. ABOUT. A marketing & innovation firm, we work primarily with legacy organizations to adapt their customer value proposition to meet emerging customer expectations. Together with our clients we discover business opportunities and deliver integrated customer offers for products, services, experiences and communication.DISCOVER DEFINE DEVELOP DELIVER Explore further on our website, and discover more industry insight reports. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 66 -
  67. 67. THANK YOU. You can explore more industry insights reports on our website. BANKS NEED TO BE BOLDER.LHBS // NFO: NEXT GENERATION OF BANKING - 67 -

×