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Creating a new digital experience - Ideas and Case Studies


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Presented on P.World event - 3rd International banking forum in Belgrade (Serbia)

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Creating a new digital experience - Ideas and Case Studies

  1. 1. Creating a New Digital Finance Experience - from online service to online sales & e-commerce Alexey Kazakov Head of Electronic banking, OTP bank, Russia Special for P.World event – 3rd International Banking Forum, Belgrade, Serbia
  3. 3. Russian retail banking: Current state Russia market overview Russia market overview - Overall retail credit portfolio volume >9 700 000 000 000 rubles (~225B Euro). Y2Y growth: 23% - 205 000 000 cards issued overall, >26 mln – credit cards. Y2Y growth: 6% - Major players: Sberbank (>30% market share), VTB24, Tinkoff CS (online bank), Alfa bank, Russian standard bank OTP OTP Bank Russia – TOP 15 Retail bank Russia – TOP 15 retail bank - holds 2nd position in POS landing segment. Market share is about 20%. Credit portfolio is almost 50 Bln rubles (Q2’13) –more 1,1B EUR - holds 6th position in Credit cards segment. Market share is 4,1%, portfolio more then 40 Bln rubles (Q2’13) – more 0,9B EUR - Presence and network: 3 700 cities, 157 branches, 32 000 POS locations Sources: - official data from Russian Central Bank - market review from Frank Research Group for OTPbank 3
  4. 4. Online retail banking in Russia: Key figures TOP-5 most USED online functions      42558 Mobile, internet payments Utility payment Transfers to e-money (PayPal, QIWI, etc) TP2G payments (traffic police, taxes) Domestic transfers (VPP, MCMS) TOP-5 most GROWING online areas      Online banking TURNOVER, mln EUR Online request for a card delivery-at-home Online deposits and loans Mobile applications with geo-locations P2P transfers (on phone#, card#) Individual pre-scored offers 2017F 740 674 13744 2012 158 188 9870 2011 107 135 3198 2008 40 42 1 10 100 Internet-bank 1000 10000 SMS-banking 100000 Mobile bank Online banking USERS, mln 25 22,2 20 TOP-5 TRANDS in online banking      E-invoicing online shopping Direct debit from other cards UX interface re-design Expenses categorization PFM Credit registry request 15 9,9 10 8 5 2,4 0 2012 Mobile bank Sources: - J’son and Partners market research, Apr 2013 1,9 0,7 2017F SMS-banking Internet-bank 4
  5. 5. OTP RU online retail banking: Key achievements  OTPdrekt - Internet, Mobile and SMS banking User activity dynamics, units/quarter Unique logins Transactors  According to “Markswebb Rank and Research” agency report in 2013, OTPdirekt is: • TOP-10 in mobile banking (IOS, Android) • TOP-30 in internet banking +130% +424% Q1 '12 Q2 '12 Transaction ,units /quarter Service payment Intraclient transfer Domestic transfer Intrabank transfer TOTAL Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q2' 13 Q3' 12 SMS bank ussage /quarter Templates & oths DEPOSIT LIST CARD CREDIT +113% KURS REKV UP BAL +540% Q1 '12 Q2 '12 Q3 '12 Sources: - Own data sources, Oct 2013 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q1' 12 Q2' 12 Q3' 12 Q4' 12 Q1' 13 5
  6. 6. Lack of “online” culture Russia population is about 143 000 000 people … BUT, only 13 % - of Russians uses online banking services 3% 2% 5% 20% 21% 23% it is too expensive for me it is not enough secured No reason/need 13% 48% 61% I don't know how to use it It is not a convinient for me 4% 1% Phone call Physical locations Internet, Mobile, SMS I don't know what is it Social media E-mail, internet site chat Sources: - National research agency (ФОМ) , 2012 - Statistical data, OTPbank RU, 2013 6
  7. 7. Major challenges What prevent people from getting online banking experience? Lack of Usability Lack of Convenience Lack of Trust Transparency • Inconvenient and unfriendly user interfaces, too many legal and official terms in forms. Too many fields should be filled • Personal visit to bank is always needed, difficulties with generating (recovering) passwords, scratch cards (OTP, token )should be in a pocket, too much of security, etc. • Online service is unstable (not really 24/7/365), incorrect fin info (not up-to-time), visible bugs, too many hidden restrictions, no relevant feedback from service (Is my transaction proceeded?) Lack of Productivity • “It is better to call to a bank than to navigate inside”, not all browsers are supported, no mobile versionapplication Lack of Customer care • no (or late) feedback from a bank support, irrelevant help on problems resolution, no demo and education materials, unfriendly user manuals (papers, terms …) Sources: - Markswebb Rank & Report, «Internet Banking Rank 2012» 7
  8. 8. Case Study #1 – Yandex. Dengi & Sberbank Short PIN for login under same device (no pword) Well organized menu –all functions on “finger tips” Fast launch - most required information on main page Navigation is adopted to particular platform & UX Most convenient type of keyboard for each task 8
  9. 9. Usability: Everyday payments go much simple Custom and pre-set templates Visualization of selected payment source Structured service payment catalog with contexts search “Favorites” and Last payments Add note or capture to a payment Recently used amounts 1 Pre-delinquency reminder Geo-location service: Bank’s and Partner’s places 9
  10. 10. Схема процесса Usability: E-invoicing for forced e-commerce Client should not think about payment transfer requisites … E-invoicing – bank fills up a payment bill, and client just may to accept or decline it in one click in web or mobile! • Utilities, internet, mobile payments • P2G payments (taxes, police) • P2P transfers (money sharing, sending money to relatives or friends) • Calendar based notification and recurrent payments • Payment confirmation by web, SMS or via Mobile bank (push) • Online and even offline purchases - Merchant sends payment request to a client webmobile bank via integration provider (aggregator) or directly 10
  11. 11. Convenience: Balance bw security and usability Think about clients’ insights, when you start to expand online banking: • • • Single combination of loginpassword and phone number for all channels Templates sharing between web, mobile, SMS and even kiosksATM Cardaccount or even online banking channel itself could be blocked on similar way in any channel or device Transaction limits for one channel, could be adjusted in other channels Mobile bank Control Payments, transfers, reports, fin information • Access blockage Transaction limits Management Mobile phone management Management Creation Templates Access blockage Control 11
  12. 12. Case Study #2 – RSB and Alfa-bank Online services should NOT be sold offline way … • Loginpassword delivery on air (SMS) – NO tokens, NO scratch cards … • Access recover block with SMSMobile or on web interface (card number and key-word are required) • Using SIM-card and device data for harmonization bw usability and security: No need to re-authorize for fin info enquiry, but you have to do it for paymentstransfers Mobile payment on internet bank templates without mandatory authorization Transactions on small amounts (or “one-more payment”) without mandatory SMS confirmation 12
  13. 13. Transparency: Electronic wallets How to attract new clients from online and … by online process: Electronic Wallet (EW) – technical “account” in IT systems, with prepaid “balance”, which might be opened, filled and debited without KYC • • • • • • Sources: Market data, 2012 10% of Russians uses EW, 34 mln. EW are issued EW is mostly used for instant payments, P2P transfers, online shopping Max limittransaction – 15 000 RUR (350 EUR), Max monthly turnover – 40 000 RUR (930 EUR) In 2011 e-wallets became get a legal basis (161FL) in 2012 e-wallets top-up come closely to 300B RUR (7 000 mln EUR) In 2012 Russian banks start to open own e-wallets with a target to e-commerce expansion and new client acquisition from online and via kiosksATMs 13
  14. 14. Case Study #3 - Sales model for “walk-in” clients Usage of e-wallet technology could convert 100% visitors of bank’s locations – to online product users (and Bank’s clients!): • “Short – scale” based on e-wallet • “Full – scale” based on regular accountcard online access (Internet, mobile, SMS) OTP - Existing sales scheme Branch, POS location Client submit application to loan, card, deposit, etc.) Not approved Approved ! FULL-SCALE functional - Payments transfers form ANY source - Credit funds usage - ALL fin info for ALL products - ALL features Open contract to ACCOUNT CARD Client scans QR at POS location branch and download Mobile application! Push clients to Identification in Branch or POS via individual pre-scored offers individual pre-scored offers Client is interested in using Payment transfer services OBLY Open online contract to ELECTRONIC WALLET Simple authentification SHORT-SCALE functional - E-wallet balance - Payments - Transfers - SOME features OTP - New sales scheme - to be launched in 2013 - 2014 14
  15. 15. Case Study #4 - “invite a friend” sales model Usage of e-wallet technology could push your existing clients to spreadshare money with their friends (not banks’ clients yet) and give an opportunity to turn them to new clients in a minutes! Not your client yet Client #1 log-in to Mobile App or use Web page Client #1 choose “Send funds to a friend” and add participants from Address book Approved ! Friend #2 receive SMS with transfers details and links to App Stores and Bank Web page Approved ! Client #1 Fill up transfer form with amount and push “Send” Confirmation SMS/email/notification Your client already Transfer is done. Friend is able to opendownload Mobile App and get access to funds - Amount + Amount New clients on boarding process Friend is #2 able to download App or go to web form by following link Friend #2 goes thru simple registration process for contacts data validation • Alias for access (simple enough to remember) • Demographic data • Contact data (mobile number, email - to be validated) • Password Code (simple, but secure) Friend #2 open Ewallet, and become a Client #2 Welcome SMS, e-mail 15
  16. 16. Customer care: Single-entry-point support You can not control customer satisfaction, wout communication management … Communication channels Branch Level 1: Customer support team in Contact center (24/7/365) Level 2: Professional support team in IT OPS (24/7/365) Contact Centre Cooperation in issue resolution Online chat E-mails Cooperation in customer satisfaction Social medias News updates Online products team Training & educational materials News about functional changes Incentive programs for usage increase 16
  17. 17. Case Study #5 – TCS, RSB, Alfa,Sberbank Rotate, resize filter a map objects for better result Issue with smth just – call to bank directly from Mobile app Route calculation - find a way and arrange proper time is simpler Find closest point of loan repayment (partner) or a place with special offers Get a welcome wizard on first launch, shake device for help screen Check branch open hours and query online 17
  18. 18. Customer care: Social media Social media is not about direct sales, because there are no BUYERS in SM … Know your customers, be aware where they are and be a friend to them, especially, when advice is needed. Gamification – is a power tool to explain complex things (or products!) on a most simple language for widest audience “Help, Care, Entertain” – use different social medias for appropriate tasks: • • • for being transparent and getting more respect for teasing and getting customers to be involved for education and advertising 18
  19. 19. Case Study #6 – Ubank (AUS) People like to be “not worse” than neighbors. Let’s monetize it … 1. Type down info about themselves on website (6 steps) 2. Obtain information how many people like you on your neighborhood 3. Learn how much money they spend and how much is transmitted to deposits 4. Choose a personal financial plan 5. Share your accomplishments with a friends on Social Media 19
  20. 20. Case Study #7 – Westpac bank (NZL) How to get new clients and sell deposits widely - make a “virus” App 1. 2. 3. 4. Download the application to your Smartphone Open deposit account remotely …. Press the RED button, and top up you deposit on $5 instead of "impulse buying“ during shopping 5. Share your success with friends thru Social media 20
  21. 21. E-BUSINESS. WHAT IS THE NEXT? “The future has already arrived. It's just not evenly distributed yet” William Gibson
  22. 22. Digitality - is today's reality! Russia population is about 143 000 000 people, again, and … 45 - of Russian people goes online at least once a 24 hrs. Monthly figure is even higher - 57% 22 - overall number of active Smartphone users in Russia. BTW, in first half of 2013, >7 mln devices have been sold % m National research agency (ФОМ) , June 2013 J’son & Partners Consulting, for Google, 2012 Market research done by “Svyaznoy” retail network, June 2013 … it is a proper time for mobile payments innovations! 22
  23. 23. Cards – are “granny's payment too”  Plastic cards are enough expensive (to accept) for a Merchant  … Inconvenient for a Customer (how many card do you have in your pocket?)  … low protected - In e-commerce world all traditional card protections (PINChipEMV) are zero   Cards' branding is disappearing. If a Card linked to electronic wallet (QIWI, PayPal) or to online shops account (AppStore, Google play) - all money are in one secured place Customer just need ONE password to access them all Now it is matter “Who?”, but not “with What?” 23
  24. 24. Merchant – a major “customer” for payment innovations   Merchant resists to payment innovations in acceptance, if there isn't long-term and transparent value (lower MDR, loyalty features, etc.) Any equipment for acceptance brings freedom restriction for a Merchants and exchange it to a dependency on external factors (internet connection, physical damages, etc.) MS, Chip, NFC Devices (HW) Issues Devices (HW) Card systems Acquirers Banks Banks Customers Merchants Apps (SW) Alternative PS Apps (SW) Banks “On-air” banking: less infrastructure and 3rd parties – minimum costs and fees 24
  25. 25. Digital world brings more opportunities  Mobile technologies allows to implement the best user experience (UX), constantly adapted to suit the needs of specific customers;  Delivery speed of innovation to gadgets and Apps is a maximum.  In online world various technologies could be used to ensure a balance between security and usability.  Digital security provides the necessary speed and stealth design in response to (or even ahead of the curve) to fraud activities Rapid adaptation, best UX, scalable technologies – key features of digital banking 25
  26. 26. Case Study #8: Extra convenience with !!!!! Payment service, bases on QR codes  Ideal for the Customer - quickly and safely - just one click to start the application  Beneficial to the Merchant – low (and most importantly - a transparent) merchant discount rate without additional fees  A great opportunity to do experiments with a customers loyalty - merchant can configure, run, and analyze a promotional company himself  QR reading from smartphonetablet or from cheap, modern-look and completely secure device 2 % fee 1 M users 26
  27. 27. Case Study #9: Extra profit with Payment service, bases on direct debit from Customer account  Extremely beneficial to the Merchant and still - no cash;  Convenient for the Customer confirmation with a single password;  Fast growing network - all acceptance places on the interactive map;  Can be used as mobile applications or being integrated with a traditional cash-desk solution  0% .25$ <10$ >10$ 10K merchants Additional free services - P2P transfers, etc. 27
  28. 28. Case Study #10: Purchase as a tweets with !!!!! Online purchases with Twitter and AmEx  Register a card on AMEX Sync;  Find special offers from partners of American Express on Twitter;  Place a #hashtag with the name of the special offers (eg # AmexFlowersShop);  Get a discount on next purchase with AMEX cards in this store OR  Pay off the full purchase (confirmation comes from @ AmexSync). Goods will be delivered right to a home 28
  29. 29. Case Study #11: Why NFC IS DOA (“dead on arrival”) Payment application + "beacon» (beacon) base on BLE (Bluetooth low energy) technology • Easy to start: no additional equipment - "beacon" is connected to USB (and Bluetooth exists in each Smartphone); • Hands-free payments – it is enough verbally confirm a payment from PayPal account • Individual offers and discounts – right at a time when they may excite the customer (based on inside-building geo-positioning) • Safe, it's PayPal iBeacon в IOS 7 payments standard from Apple is close? 29
  30. 30. Case Study #12: Converting loyalty to payments innovations Pure loyalty – The Customer returns to a particular Merchant for personalized service and special benefits: • Tie a Starbucks card to the mobile application; • Proceed payment by barcode on the screen: • Apply instant discounts and gifts from payment application (coupons are stored in the Apple Passbook); 7 K locations In U.S. Starbucks mobile application integrated with Square Wallet - Check-in in a shop Let a system to recognize you Say your name to a cashier That is ALL! 30
  31. 31. Payments should be invisible Nobody really like to DO a payment. Ideal purchase: Come in – Choose – Take away … … Some settlement stuff (which nobody really doesn't want even to think about) 31
  32. 32. Thanks for your attention! Alexey Kazakov, О группе ОТП Дирекция розничных бизнес - технологий, ОАО «ОТП Банк»