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The future of the SME revenue growth
opportunity in the digitalization era
April 2015

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  1. 1. NEXT GENERATION SME BANKING The future of the SME revenue growth opportunity in the digitalization era April 2015 Report Preview Luis Fernández de Nograro Head of Banking Practice in Spain @LuisFdezNograro
  2. 2. “Banks should be afraid, very afraid” - Antony Jenkins, Barclays CEO New players will change the Banking industry “There are hundreds of new companies, start-ups and developers, with lots of brains and money that are already working on alternatives to traditional banking”. - Jamie Dimon, JP Morgan CEO Silicon Valley’s companies have lots of brains and money working on alternatives to Traditional Banking
  3. 3. Banks as a key SME business partner SME will require more than money. They demand more complex financial products for helping them grow. SME SEGMENT CONTRIBUTION TO EU GBP OF EU COMPANIES ARE SME99% 60% SME ARE INTERNACIONALIZED27%Source: EU Commission - European SME 2014 EU COUNTRIES SME GROWTH TREND IN 2014
  4. 4. SMEs are a growth opportunity for European Banking. Knowing the digital SME banking customer is one of the great challenges to grow in this segment. Source: AXIS CORPORATE SME Survey - April 2015 / EU Commission - European SME 2014 80%OF SURVEY RESPONDENTS CONSIDER THAT TO GROW IN THE SME SEGMENT IS A PRIORITY AVG. OF TOTAL CLIENTS OF THE BANKS ARE SME CLIENTS 10%AVG. OF TOTAL CONTRIBUTION COMES FROM SME SEGMENT 12%
  5. 5. Banks have to work on how to meet digital SME expectations. Others can do it faster before and better than us. What does the digital native expect from his Bank?
  6. 6. Bank in the digital customer ecosystem First banks able to be accepted as a part of clients' digital ecosystem, will have a competitive advantage.
  7. 7. The SME segment will be digitized within the next 5 years. First banks to be digitized will capture the early adopters having a competitive advantage of 5% increase in Market Share(1). Source: AXIS CORPORATE SME Survey - April 2015 / (1) McKinsey Survey 2014 75%OF SURVEY RESPONDENTS CONSIDER THAT IN THE NEXT 3 TO 5 YEARS THE SME SEGMENT CLIENT WILL BE DIGITIZED Digital Adoption Level Growth in SME Banking Segment LEVEL 1. Simple & Safety Online Banking LEVEL 2. Advanced Online & Mobile Banking LEVEL 3. Omnichannel Integration & Social Banking
  8. 8. Applying for a working capital loan Recommending my bank to a friend Interested on a Exchange Risk Cover Banks need to answer to the real financial needs of SME client. Banking needs to shift from an Operational Customer Segmentation to a Unique and Cross-Segmentation OF BANKS STARTS USING BASIC BEHAVIORAL DATA FOR SEGMENTATION OF BANKS USE DEMOGRAPHIC DATA FOR SEGMENTATION 90% 55% Source: EFMA Survey - June 2014 / AXIS CORPORATE SME Survey - April 2015 OF BANKS ARE PLANNING T0 USE CUSTOMER LIFETIME VALUE FOR SEGMENTATION 40%
  9. 9. Source: AXIS CORPORATE Survey - April 2015 The new digital native demands Real-time Ommichannel Experience. 75% of SME clients interactions with Banks will be digital in 2020. SME CLIENT CHANNELS TREND
  10. 10. 50% OF SURVEY RESPONDENTS SAY DIGITAL CHANNELS WILL INCREASE SOCIAL ENGAGEMENT Digitalization of channels has direct effect on SME segment profit. Effective Omni-Channel Integration LIKEHOOD TO CROSS SELL1.8x AVERAGE ANNUAL CUSTOMER PROFITABILITY1.5x Source: AXIS CORPORATE Survey - April 2015 / PWC Survey 2015
  11. 11. Self-Remote Channels will be the main channel for SME Clients in 2020. Effective Omni-Channel Integration Source: AXIS CORPORATE Survey - April 2015 2015 Main Channel 2020 Main Channel
  12. 12. OF SURVEY RESPONDENTS SAY BRANCHS WILL FOCUS ON HIGH-VALUE ADVISORY SERVICES From branch to full-service hub Business Center 92% The branch will still play an important role in the relationship with SME client. My Financial Advisor My Trade Service Specialist Source: AXIS CORPORATE Survey - April 2015 “The biggest challenge in the traditional branch is to change people’s orientation: shift from a service vocation to a selling vocation". - Caixabank
  13. 13. Banks invest on new Financial Advisor profiles Financial Advisor is considered as a key figure for the growth and engagement of the SME client Source: AXIS CORPORATE Survey - April 2015 “We have doubled the number of SME financial advisors supported by sales teams and specialists, with an advanced customer segmentation base focus”. - Santander “We seek to improve the sales SME model with higher-profile advisors oriented to sales results and sales performance improvement“. - Deutsche Bank
  14. 14. Banks should move from transactions to Client Engagement Transparency and two-way interaction through social media will facilitate Banks to become Social. 98% OF BANKS ARE IN FACEBOOK BUT ONLY FEW HAVE TRANSACTIONAL APPS 50% OF RESPONDENTS SAY THAT DIGITALIZATION WILL INCREASE CLIENT ENGAGEMENT 30% OF BANKS DON’T PLAN TO BE ON LINKEDIN Source: AXIS CORPORATE Survey - April 2015 / Financial Brand Report 2014
  15. 15. Smart Omni-Channel Bank • Basic Multichannel integration • Basic presence in Social Media • Demographic-Based Segmentation • Low Cross-Selling • Partial Digital Value Chain Coverage • Virtual Branches for simple products Today Social Enganging Bank My Business Advisor Bank • Social media listinening and monitoring • Enhanced Customer Experiences • Influencers • Co-Creation • Transparency • Sharing Knowlege Communities Next Generation SME Banking • Banks as a trust business advisor • Building Relationships • Subject matter experts availables online and offline • Deep Client Understanding • Real Time Analytics-Based Segmentation • Tailor-Made products • Smart Interaction with clients • Mobility • Cross Channel Excellence • Streamlined Customer Processes • Self-Service Digital Transformation Challenges for SME Segment Banking Traditional Bank
  16. 16. Tangible Results Transformation Leaders New Digital Business Model Our Approach to Accelerate Digital Transformation Shared Vision Target Operating Model Continuous Improvement Transformation Execution Business Sponsors Existing Business Model Current IT Systems Omnichannel Integration New Digital Products New Digital Process Branch Network Optimisation New Technology Platform CIO CMO COO CxO CEO & Board Members Branches & Standard Products ERPs & Transactional Systems
  17. 17. Do you want to receive a copy of the Report? Please, request it at Barcelona · Madrid · Sao Paulo · London · Shanghai · Frankfurt · Boston · New York