1. Managing the banking
distribution mix so it is fit for
purpose
Presented by Sandeep Deobhakta
Sub-Group Head,
Chief Operating Officer
Retail Banking Sub-Group
May 4th, 2010
Lafferty Retail Finance
Convention West Africa 2010
2. 1
Key themes for today
# 1 We are witnessing a fundamental shift in customer behavior –
The customer buying process
The way customers use banks
# 2 The Branch is important…….but, it is an expensive channel
Managing cost is critical…..but not at the expense of the
customer experience
Using technology and an “assisted” customer experience
4. 3
Background – Shinsei Bank
Shinsei Bank was formed in March 2000 when the Long Term Credit Bank (LTCB) was
privatized.
The Old LTCB Individual Banking was a funding engine for the corporate loan business
The retail business was launched in 2001. Currently, the business has:
2.5 Million customers
Footings in excess of JPY 6.5 Trillion [USD 70 Billion]
Investment and Foreign currency AUMs of JPY 900 Billion [USD 10 Billion]
Mortgage loans of JPY 800 Billion [USD 9 Billion]
41 branches nationwide
Strong retail brand
Growing, profitable retail business
5. 4
The CEO’s vision for the new retail bank in 2001
Yashiro-san believed it was better standards of service,
and innovation in services,
that would ultimately attract customers to the bank.
6. 5
ATM Withdrawal Fee
¥ 0
Shinsei Bank ATMs, Seven Bank ATMs
<Available 24 hours>
Partner ATM fees will be refunded
ATM Withdrawal Fee
¥ 0
Shinsei Bank ATMs, Seven Bank ATMs
<Available 24 hours>
Partner ATM fees will be refunded
A unique customer proposition – free access, 24 x 7, global ATM card
International Cash Card
Withdraw your money in local currency
at overseas ATMs
International Cash Card
Withdraw your money in local currency
at overseas ATMs
PowerSmart Home Mortgage
Guarantee fee ¥ 0
Auto-early repayment fee ¥ 0
Group life insurance premium ¥ 0
PowerSmart Home Mortgage
Guarantee fee ¥ 0
Auto-early repayment fee ¥ 0
Group life insurance premium ¥ 0
ATM /Call Center /Internet /Mobile
24 h × 365 day
Banking Anytime, Anywhere
ATM /Call Center /Internet /Mobile
24 h × 365 day
Banking Anytime, Anywhere
Internet Domestic
Fund Transfer Fee ¥ 0
1, 5 or 10 times per month
based on customer stage
Internet Domestic
Fund Transfer Fee ¥ 0
1, 5 or 10 times per month
based on customer stage
Branches are open
Until 5 p.m. on weekdays
and on weekends
We do not close at 3 p.m. as others do
Branches are open
Until 5 p.m. on weekdays
and on weekends
We do not close at 3 p.m. as others do
7. 6
Get connected with the
World Market real time
Live FX rates
Get connected with the
World Market real time
Live FX rates
All-Inclusive Account
Yen / Foreign currency deposits,
Structured deposits, Mutual funds,
Stocks / Foreign bonds,
Annuity, Medical Insurance
All-Inclusive Account
Yen / Foreign currency deposits,
Structured deposits, Mutual funds,
Stocks / Foreign bonds,
Annuity, Medical Insurance
32 Color Cash Card
Carry your favorite color in your wallet
32 Color Cash Card
Carry your favorite color in your wallet
Full functionality -
Internet Banking
24 hours “Anytime, Anywhere”
Full functionality -
Internet Banking
24 hours “Anytime, Anywhere”
Security Measures
Power Yokin
Transfer your funds via phone,
Internet or mobile phone,
and withdraw at ATMs
Security Measures
Power Yokin
Transfer your funds via phone,
Internet or mobile phone,
and withdraw at ATMs
Alert e-mail to Mobile phone
Exchange Rate
&
Mutual Fund Net Asset Value
For timely transaction
Alert e-mail to Mobile phone
Exchange Rate
&
Mutual Fund Net Asset Value
For timely transaction
……and highly differentiated products and services
8. 7
That have been acknowledged by customers and the industry.
Consistently ranked in the top tier in the Nikkei’s Annual
customer satisfaction survey in Japan since 2004
Won the Asian Banker Award for the best retail bank in
Japan for 4 out of the 6 years since 2004. Always ranked in
the top 3
10. 9
The customer buying process – financial services
COMPARISON SITES
11%
ONLINE
COMMUNITIES
14%
OTHERS
21%
COMPANY WEBSITE
23%
TV / NEWSPAPER /
POINT OF SALE
31%
Online media accounts for 48% of the customer information gathering process.
Online communities and comparison sites account for 25%. This number is
growing rapidly.
Source: Nomura Research Institute – New Trend of Innovation in the web 2.0 Era
12. 11
In a First, Web Advertising
Outpaces TV in U.K.
Internet Now Commands 24% of Ad Spending to TV's 22%
Posted by Matthew Creamer on 09.29.09 @ 05:37 PM
13. 12
MEDIA SPEND - 2004-5
29%
60%
10% 1%
TV NEWSPAPER WEB OTHERS
As the customer buying process changes, we have changed our media
allocation
The role of newspaper advertising is no longer to “sell” but to create interest
so prospects “explore” us through digital media
MEDIA SPEND - 2009-10
43%
14%
42%
1%
NEWSPAPER WEB LISTING
WEB SEARCH OTHERS
Shinsei Bank – Mortgage [refinance] marketing media mix
14. 13
SOURCE - LEAD GENERATION
46%
16%
18%
20%
SEARCH / COMPARISION SITES
WEB ADS
SHINSEI WEBSITE
OTHERS
Acquisition - mortgage
APPLICATION BY CHANNEL
83%
8% 9%
INTERNET BRANCH CALL CENTER
15. 14
Example – “Search” engine marketing
Attention / Interest
Other banks’ AD
TV /
Newspaper /
Web banner Ads
Search
Search engine
( Yahoo / Google )
Action
Shinseibank.com
Starter Kit Request
Shinsei Bank’s
Newspaper
Advertising
16. 15
Keyword : mortgage
Search engine directs to
comparison shopping site
Shinsei Bank site
We want to cover the top 3 - 4 search engine
results with comparison sites and our own ads.
Example – “Search” engine marketing [contd.]
18. 17
In the US, online banking is now the most preferred channel
19. 18
Online channel usage at Shinsei Bank
55% of all new accounts are acquired online
75% of all deposit sales are non branch. Online alone is 45%
83% of loans originated online
72% of our new branch customers sign up for e-statements
Over 50% of mutual fund transactions are booked online
Our focus….keep improving the customer experience, especially online
21. 20
A large ATM and Branch network is important to Japanese customers
WHAT DID YOU CONSIDER IN CHOOSING YOUR MAIN BANK?
0 20 40 60 80 100 120 140 160
LARGE ATM NETWORK
NUMBER OF BRANCHES
SAFETY & CREDIBILITY
QUALITY OF INTERNET SERVICES
CUSTOMER ATTITUDE
INTEREST RATES
Source: Nikkei Veritas, June 2009
22. 21
In a recent article for BAI, Dave Kerstein, explores the role and the
future of branches
You don’t need as many iconic free standing branches.
You need more, smaller facilities that serve tighter, more
compact trade areas. These facilities need to be built
and managed differently.
23. 22
3 ideas for downsizing the branch
1. Make it easy for customers to do business…
2. Reuse Internet functionality in the branch
3. Eliminate cash handling and processing in the branch
24. 23
Make it easy for customers
to do business
without coming to the branch
25. 24
Q. Can customers do everything on the web, mobile and phone?
Our approach is to ensure that we have full functionality across channels for all
products and services
Q. Can we retain and use historical transaction data to make it easier for
the customer?
For overseas funds transfers, customers can send additional funds to certain
payees simply by calling, validating the payee and indicating the amount of
transfer.
Q. Does it require additional paperwork / forms?
The Shinsei PowerFlex Account structure is designed to provide full functionality
for FX and investments - every customer has access to 10 currencies, Mutual
fund and FX buy / sell
28. 27
Internet functionality is reused in the branch with a modified workflow. Additional
hardware installed for card embossing or card mailed to the customer.
Eliminates the need for paper forms, data entry and maker / checker. Customer is the
checker and signs the system generated a/c opening form.
Reuse Internet functionality in the branch [ Branch a/c opening workflow]
Card
embossing
Customer uses Internet
a/c opening module in-branch
Receives card and selects PIN
Documents
are scanned
30. 29
Some thoughts on self-service…
When you think of self-service, do you think of it as a cost savings or as
customer service?
Cost savings is a primary benefit of self-service. That is a fact.
Conversely, if your idea of self-service is taken from the viewpoint of
making customers’ lives easier – with faster and simpler transaction
processing and customer service – then you’ve shown customers
that they are important to you and that you’re thinking of them, not
just the bank
Source: BAI - The Conundrum of Self-Service: Cost Savings or Customer Service? By NICOLE STURGILL
31. 30
Airlines - before
When self check-in kiosks were first introduced, customers found them
confusing and lamented the loss of the counter agent…..
32. 31
Airlines - now
….fast forward to today when airlines have agents stationed in the
kiosk area to answer questions and guide customers through the
process
33. 32
Customer experience
“Indeed, the bank’s services were entirely self-completed; the staff was
present only to provide assistance as needed. Transactions took place
online, at Internet portals in the branch.”
David M. Upton & Virginia A. Fuller, Information Technology and Innovation at Shinsei Bank, Harvard Business School Case
STAFF COMPLETEDSELF COMPLETED WITH ASSISTANCE
34. 33
Reuse Internet modules for all investment product sales [under development]
This will eliminate paper forms, order booking data entry and checks
and will ensure version control, audit trails and improved compliance
with customer protection.
Staff uses Internet
Investment product module
with modified workflow
Order placement done exactly
as per Internet process
Order confirmation handed over
Prospectus / solicitation documents through
print on demand for version control & audit trails
36. 35
Cashless tellers
“Tellers were cashless. If a customer wanted to deposit or withdraw
money, the teller would walk over to an ATM with the customer and
execute the transaction with the customer’s participation.”
David M. Upton and Bradley R. Staats, Radically Simple IT, Harvard Business Review - March 2008
STAFF ASSISTED
37. 36
Eliminate processing in the branch
The branch receives the customer request, completes the verification
and sends the work to a remote processing center.
The branch also educates the customer that this can be done remote,
captures the email address and signs up e-statement delivery.
Customer hands over
transaction request Branch verifies the
Request and scans
the form
Branch Remote processing center
38. 37
3 additional ideas:
1. Sales process automation – is it as automated as the “best in class”
collections process?
2. Video consulting – an opportunity to create staffing flexibility and
reduction in branch headcount.
3. Record all branch sales interactions [audio / video] – compliance
checks can be done remote.
39. 38
RELATIONSHIP
MANAGER
RELATIONSHIP
MANAGER
Empowering people to succeed –
Wealth Management CRM process at Shinsei Bank
CUSTOMERCUSTOMER
Customer management
Based on customer profitability and potential.
Matched with RM – skill based assignment
Prioritization and coverage
Activity tracking and conversion performance
Customer management
Based on customer profitability and potential.
Matched with RM – skill based assignment
Prioritization and coverage
Activity tracking and conversion performance
Sales & Marketing effectiveness
Sales activity & effectiveness dashboards
Customized views for management
Effectiveness of marketing campaigns
Immediate feedback for all functional areas
Sales & Marketing effectiveness
Sales activity & effectiveness dashboards
Customized views for management
Effectiveness of marketing campaigns
Immediate feedback for all functional areas
Sales contact and service request management tool
Customer contact data, preferences & history
Sales opportunities developed centrally
Automated prompts for follow ups & opportunities
Cross channel view of service requests
RM has full view of service history and resolution
status
Sales contact and service request management tool
Customer contact data, preferences & history
Sales opportunities developed centrally
Automated prompts for follow ups & opportunities
Cross channel view of service requests
RM has full view of service history and resolution
status
Customer profile, product balances and history
Full view of customer product holding [inc. 3rd
party]
Customer profile, goals, risk profile and experience
is recorded and product performance is reviewed
History is captured – shows advise and actions taken
Household linkages can be viewed
Referrals are recorded and tracked
Customer profile, product balances and history
Full view of customer product holding [inc. 3rd
party]
Customer profile, goals, risk profile and experience
is recorded and product performance is reviewed
History is captured – shows advise and actions taken
Household linkages can be viewed
Referrals are recorded and tracked
Product performance, research and advisory
Product performance data available [various views]
Portfolio review tools and analytics can help the
RM to guide the advisory process
Market outlook, investment manager comments
and research reports available for consultative sales
Product performance, research and advisory
Product performance data available [various views]
Portfolio review tools and analytics can help the
RM to guide the advisory process
Market outlook, investment manager comments
and research reports available for consultative sales
Compliance and privacy protection
Audit trails of customer interaction – audio / video
recordings
Review process to ensure that customers protection
measures are effectively implemented
Exception reviews of customer profile
vs. product features
Compliance and privacy protection
Audit trails of customer interaction – audio / video
recordings
Review process to ensure that customers protection
measures are effectively implemented
Exception reviews of customer profile
vs. product features
41. 40
The Consulting Spot is a “sales only” mini branch
We are expanding our branch network with this model:
4-5 staff
75-100 sq. meters
Hub and spoke model
75 - 85% lower CAPEX & OPEX than a “hub” branch
Proactive sales model that targets:
1. Relationship growth with existing customers
2. Acquisition of new customers
“Cashless” [ATMs only], “Paperless” [imaging], “Sales &
service only” [minimal branch operations & centralized processing]
43. 42
The Consulting Spot financial model
Payback for Branch
Launch
24-36 months
Payback point for
Consulting Spot
1month
Pre-launch
Sales and
marketing
< 6 months
Cost reduction
75 - 85%
Cost reduction
75 - 85%
44. The first 7 Consulting Spots
opened in FY 2009 achieved
Break even in the first month
o f o p e r a t i o n s a t a d i r e c t
c o n t r i b u t i o n l e v e l
