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Banking 2016
Accelerating growth
and optimizing costs in
distribution and marketing
2

    It is time for retail banks to change.          Current branch-based distribution              Accordingly, each bank needs to define
    Faced with a daunting array of                  models are no longer sustainable in            its own target business model in light
    market, regulatory, customer, cost and          most developed countries and are unable        of its history, market, positioning,
    operational challenges, many banks are          to meet the rapidly evolving customer          ambitions, etc. We think there are three
    struggling to post even moderate growth.        needs and requests for easy access and         business models banks should consider
                                                    simplicity across their banking services.      when defining their own model:
    Projected revenue growth rates, according
    to an Accenture analysis of 2011-2014           Accenture believes there is a clear path       1.	 ne that builds on enhanced
                                                                                                      O
    business plans for a group of 30 global         forward for banks that begins with the            multichannel experiences to
    banks, estimate 6.5 percent average             shoring up of core business operations to         engage customers and meet their
    growth (4 percent Europe/North America          improve efficiency, customer relevance and        financial needs effectively (the
    average) following -0.5 percent retail          profitability—in other words, “doing the          “Intelligent Multichannel” Bank),
    revenue growth for 2008-2011. Bankers           basics right.” While some banks may excel         with the strategic application of
    are beginning to realize that it will be a      simply by improving on the basics, including      analytics at the core of this model
    challenge to meet these growth targets and      “smart-sizing” their distribution networks,    2.	 ne that leverages social media
                                                                                                      O
    know they have to win three critical battles:   others need new business and operating            interactions to increase customer
    restoring customer trust and engagement,        models to compete and grow going forward.         intimacy (the “Socially Engaging” Bank)
    defending their payments business               Keeping one eye on the present and one eye
    against progressive disintermediation           on the future is the key paradigm we have      3.	 ne that places the bank at the center
                                                                                                      O
    from new entrants (e.g. Google Wallet,          defined as “Banking 2016—Next Generation          of an ecosystem selling financial and
    PayPal) and avoiding commoditization.           Banking”, drawing inspiration from some           non-financial services, leveraging
                                                    notably innovative retailing models.              in particular the power of mobile
                                                                                                      technology (the “Financial/Non-
                                                                                                      Financial Digital Ecosystem” Bank)
                                                                                                   The money on the table can be significant.
                                                                                                   A bank working aggressively to implement
                                                                                                   all three of these business models can
                                                                                                   double its annual revenue growth rate
                                                                                                   (from 4 percent to 8-plus percent in
                                                                                                   developed markets) while reducing its
                                                                                                   cost to serve by 20 percent or more.
                                                                                                   Regardless of the models being pursued,
                                                                                                   bank governance overall must evolve,
                                                                                                   giving appropriate weight to customer
                                                                                                   metrics in the key areas of reputation,
                                                                                                   commercial performance, service
                                                                                                   performance, sales performance and the
                                                                                                   capabilities required to support them.




    Accenture Distribution and Marketing Services
3

“Next Generation Banking” models

   Today                        “Next Generation Banking” models
                                                                                                           The “Financial/
    The “do the                 The “Intelligent                   The “Socially                           Non-Financial Digital
    basics right” Bank          Multichannel” Bank                 Engaging” Bank                          Ecosystem” Bank
    −− Optimized branch          −− Integrated                     −− Customer engagement                  −− Bank as trust center
         network and                 multichannel                      where they spend                        with an extended
         contact center              architecture,                     their time (e.g. on                     proposition (financial
                                     powered by analytics              social media) based                     and non-financial)
    −− Enhanced digital
                                     (real-time event                  on personal interests
         channels                                                                                          −− “The bank where you
                                     management, etc.)
                                                                   −− Leverage influencers                     are” leveraging the
    −− Need-based offerings
                                 −− Advanced digital                                                           power of mobile
         and consistent                                            −− Co-creation based
                                     advisory
         sales behaviors                                               on increased                        −− M-payment services
                                 −− Need-based offerings               customer intimacy
    −− Basic multichannel
                                     optimized by channels
         integration


                                “My bank effectively               “My bank engages with                  “My bank gives answers to my
                                engages with me on my              me where I spend time.”                needs, providing easy access.”
                                real financial needs.”

Source: Accenture




Customer-oriented metrics evolution
Profitability-based metrics     Holistic stakeholder perspective
   Management and
   investors view
   (Shareholders Perspective)                                                                  Commercial Performance
                                                                                               •	 ARPU (revenue per customer)
    −− Revenues                 Service Performance                                            •	 Net customer flow
                                •	 Customer engagement         Bank Reputation                 •	 Customer lifetime value
    −− Profitability
                                •	 Customer satisfaction       •	 Reputation index             •	 Cross selling
    −− Cost-to-income           •	 Net promoter score          •	 Brand recognition            •	 Recurring revenues %
    −− ROE
    −− Market share
    −− EVA
    −− Share price trend
    −− Market capitalization
    −− EPS


                                Sales Effectiveness
                                •	 Sale productivity
                                •	 Sales per square mile                                                          Capabilities
                                •	 Campaign effectiveness                                                         •	 Customer centricity index
                                •	 Product penetration
                                •	 Customer contacts
                                •	 Social channel engagement



Source: Accenture



Accenture Distribution and Marketing Services
4

    “Banking 2016—Next
     “Banking 2016—Next                     The key components of “doing                    Optimizing the
                                            the basics right” are:
     Generation Banking”                                                                    branch network
                                            1.	  ranch network optimization (number
                                                 B
     foundation: doing                           and size of branches), reviewing network
                                                                                            The most critical aspect of “doing the
                                                                                            basics right” is improving branch network
     the basics right                            architecture (i.e. hub and spoke model)
                                                                                            performance, ensuring sustainable positions
                                            2.	asic multichannel integration,
                                                 B
                                                                                            and creating adequate foundations for the
    What is “Banking 2016—Next Generation        alignment of channels and
                                                                                            “Intelligent Multichannel Bank” model.
    Banking”? It starts with getting             integrated governance processes
                                                                                            Branch network effectiveness can be
    the basics right to address banks’           for real-time banking
                                                                                            maximized through strategic localization
    most immediate challenges: eroding      3.	roactive and reactive management
                                                 P
                                                                                            (closing low-performance branches
    customer trust and satisfaction.             interaction based on customer needs
                                                                                            operating in markets with limited potential
                                            4.	perational customer
                                                 O
                                                                                            first), identifying the right number,
                                                 segmentation driven by a needs-
                                                                                            type, and format of branches according
                                                 based offering structure
                                                                                            to target customers and optimizing
                                            5.	  ales force effectiveness powered by
                                                 S
                                                                                            branch processes to free up commercial
                                                 consistent sales behaviors and tools
                                                                                            time and focus on sales generation.
                                            6.	imple and clear communication
                                                 S
                                                 with customers                             Networks composed solely of full-service
                                            7.	 Performance management (new                branches with duplicate services and skills
                                                 customer-oriented metrics) and             are no longer sustainable. The branch
                                                 tailored compensation schemes              network model must be designed with
                                                                                            careful consideration to differentiated
                                                                                            formats and integrated in a multichannel
                                                                                            view that is able to maintain territorial
                                                                                            coverage, react to local customer needs
                                                                                            and optimize skills and capabilities. This
                                                                                            extends beyond full-service branches and
                                                                                            hubs to include light branches (with an
                                                                                            average of 4-5 employees), kiosks and
                                                                                            cash-less branches. By migrating low-
                                                                                            value activities to digital channels and
                                                                                            retail-based formats, banks can satisfy
                                                                                            new customer segments and further
                                                                                            overall branch network transformation.
                                                                                            An efficient “hub and spoke” branch
                                                                                            model can help enable a bank to decrease
                                                                                            the branches in its overall network by
                                                                                            15-20 percent and reduce average branch
                                                                                            staff by 25 percent with the proper mix
                                                                                            of flagship, full-service, light and kiosk
                                                                                            branches. Furthermore, by specializing in
                                                                                            specific services or activities, each branch
                                                                                            format is able to deliver a more tailored
                                                                                            customer experience and, ultimately, help
                                                                                            increase customer satisfaction and loyalty.




    Accenture Distribution and Marketing Services
5

 Opportunities in the                                 •	  ocus on branch front-line staff
                                                         F                                               •	  estructure product catalogues by
                                                                                                            R
                                                         by designing specific profiles and                 customer needs and with service levels
 operational basics                                      dedicated training plans to create                 based on customer segmentation.
 In addition to optimizing the                           an empowered, unified workforce                 •	 ntegrate channels to facilitate
                                                                                                            I
 branch network, banks have other                        (we call this “workforce of one”);                 transparency and data sharing so each
 opportunities to become more proficient                 support branch employees with both                 customer’s buying habits and needs
 in operational basics and increase                      formal and informal learning tools                 are known and can be addressed
 sales. For instance, they can:                          that can be enabled and accelerated                across an integrated multichannel
 •	  edefine roles and activities at
    R                                                    by cloud-based collaboration                       buying experience (eliminating a
    branches through process optimization,               capabilities and social media.                     more silo-structured approach).
    standardization and initiatives                   •	  nhance digital capabilities to provide
                                                         E                                               If customers feel they are getting
    enabling focus on sales, such as                     a more personalized, streamlined and            proper service from their banks and
    digitalization, back-office automation               robust online banking experience,               the product mix and price points
    and integrated CRM systems. Gathering                complemented by educational tools               meet their expectations, the expected
    and pre-filling customer information                 and simulators to better address                result will be greater customer
    should also be considered.                           self-directed customers’ needs.                 satisfaction, retention and loyalty.
 •	 mprove branch sales force performance
    I                                                 •	  evelop basic mobile banking
                                                         D
    by implementing next-generation                      capabilities to provide services
    front-end workstations that can                      that take full advantage of the
    provide branch employees with the                    “on the go, anywhere, anytime”
    latest tools, information and guidance               nature of mobile devices.
    to engage customers effectively.




 Banks should consider differentiated branch formats

               Cash-less, kiosks—             Light branches—                    Full-service, hubs—                Flagships—
               maintain for service           maintain for sales                 maintain for advanced banking      innovate, attract
               COV. 50%                        COV. 30%                           COV. 15%                            COV. 5%
               sales services                  sales services                     sales services                      sales services


               −− 100% transactions           −− 50% transactions                −− 40% transactions                −− 30% transactions
                                                 and 50% sales                      and 60% sales                       and 70% sales
               −− Open with staff 1-2
                  days per week               −− Tailored hours                  −− Extended hours                  −− Extended hours
               −− Reciprocity income          −− Sales lead generation           −− Sales lead generation           −− Center of sales and
                                                                                                                        service excellence
               −− Minimal staffing            −− Regular staffing: meeter        −− Specific staffing:
DESCRIPTION




                  levels (not bank skilled       and greeter, cashier               dedicated business              −− Specific staffing
                  employees, people              and peripatetic RMs                cashiers and                        (depending on area/
                  from retailing sector)                                            permanent RMs                       segment served):
                                              −− Able to accept and                                                     dedicated business
               −− Fully automated                manage anything                 −− Highly specialized                  cashiers and
                                                                                    mortgage, trading                   permanent RMs
               −− Belonging to full           −− Belonging to                       advisers
                  service/light branches         full-service branches                                              −− Location of experts
                                                                                 −− Supports light branches
               −− Tailored merchandising      −− Standard merchandising             for complex service/sales       −− Supports all other types
                  (focus on area and                                                                                    for regulated sales
                  seasonal campaigns)                                            −− Full merchandising
                                                                                                                    −− Tailored merchandising,
                  generating branch traffic                                                                             focus on innovation
               −− Advanced ATM                −− Remote advisory                 −− Digital meeter and greeter
KEY FEATURES




                                                                                                                    −− Self-service,
                                                 supported by hubs                                                      innovative tools
               −− Opening hours
                  differentiated per          −− Flexible concepts
                  local needs                 −− Possible franchising model

 Source: Accenture




 Accenture Distribution and Marketing Services
6

    The future is now:                            As a first step, banks could design an
                                                  integrated customer experience based
                                                                                              Customers of the “Intelligent Multichannel”
                                                                                              Bank can benefit from the ability to
    three innovative                              on a streamlined multichannel approach      interact with the bank anywhere, anytime,
    “Banking 2016—                                and architecture. As banks activate         and can receive financial products and
                                                  new channels, customer inputs and           services based on their needs and behaviors
    Next Generation                               customer knowledge can be expected          through their preferred channels.
    Banking” models                               to increase, which would then enable        Spain’s Bankinter is a good example of an
                                                  banks to create micro-segments.
    Doing the basics right may be the ultimate                                                early adopter in advanced analytics. The
                                                  Micro-segments are the smallest set of
    objective for some banks. However, for                                                    bank started working on analytics several
                                                  customers with uniform demographics
    others mastering the basics becomes                                                       years ago and focused on developing
                                                  and social behaviors, and form the basis
    the foundation on which to build more                                                     commercial propositions based on customer
                                                  for defining strategic profit pools.
    innovative capabilities that can help                                                     intelligence and the frequency of customer
    address changing customer behaviors           The increased capture and application       contacts, both proactive and reactive, and
    and compete for the critical payments         of customer data, properly managed          then created the Engloba Geo CRM tool
    business against new entrants such as         and updated through an advanced             in 2009. More recently, Bankinter’s belief
    retailers, technology companies, mobile       CRM platform, can help enhance the          in analytics led it to introduce different
    operators and pure-play start-ups. These      value and return on product catalogues,     units influenced by CRM, such as Risk
    new capabilities are embodied in the three    commercial campaigns based on real-         CRM and Operation CRM, and its sales
    pillars of Accenture “Banking 2016—Next       time propositions, as well as lower         are still growing thanks to additional
    Generation Banking”: the “Intelligent         distribution costs by optimizing capacity   improvements to the Engloba tool.
    Multichannel” Bank, the “Socially             by micro-segment preferences.               Another Spanish bank, BBVA, is a good
    Engaging” Bank, and the “Financial/           A multichannel customer experience          example of a bank that operates within
    Non-Financial Digital Ecosystem” Bank.        is based on the right combination of        personal advisory space: 24/7 personal
    The “Intelligent                              online and offline processes and can        customer service is provided to its
                                                  be enhanced by focusing on dedicated        clients who use digital channels to do
    Multichannel” Bank
                                                  advisory services (remote or digital).      their banking rather than the branch
    The “Intelligent Multichannel” Bank                                                       but still want a personalized service.
                                                  Expanded bank “availability” for products
    frequently engages with customers
                                                  and services allows customers to make
    through different channels, taking personal
                                                  choices continuously based on their
    channel preferences into consideration.
                                                  needs, while helping the bank refine its
    The key differentiator of this model is
                                                  knowledge of customer preferences.
    the extensive use of analytics that can
    enable the bank to more effectively
    understand and meet customers’ needs.
    Key elements of this model are:               Bankinter illustration
    1.	 dvanced multichannel integration
       A
       focusing on digital channels and
       an integrated architecture                    2004
    2.	Pervasive analytics based on
                                                     The Science of
        effective customer data collection,          Managing Customers
        micro-segmentation and predictive
        modeling to determine the most
        effective basket of products
    3.	 eal-time interactions management
       R
                                                     2009
       that can increase conversion rates            Client Retention Model
       from inbound and outbound contacts
    4.	 dvanced advisory services leveraging
       A
       digital channels and personal analytics
    5.	  roduct offerings and related
        P
                                                     2010
        pricing schemes based on micro-              Analytics Pervasivity
        segments and optimized by channel



    Accenture Distribution and Marketing Services
7

Banks should consider a set of distinctive capabilities to compete in the future

   TODAY                       “Next Generation Bank” models
                                                                    −−   Effective multichannel integration
                                                                    −−   Pervasive analytics
    The “Do the                The “Intelligent                     −−   Real-time event management
    basics right” Bank
                               Multichannel” Bank                   −−   Personal digital advisory
    −− Branch network
       optimization                                                 −−   Product offering optimization and scientific pricing

    −− Basic multichannel
       orchestration
    −− Deep customer
       understanding                                                −− Social media listening and monitoring
    −− Need-based offerings    The “Socially                        −− Social digital marketing
                                                                       (clustering client engagement)
    −− Web and mobile          Engaging” Bank                       −− Social CRM (data enrichment
       channel marketing                                               and optimized offering)
       and effectiveness
    −− Empowered branch
       front-line and
       sales tools
    −− Smart interaction       The “Financial/Non-                  −−   M-payments
       with customers                                               −−   Mobile commerce ecosystem
    −− Performance
                               Financial Digital                    −−   Mobile marketing M-loyalty and analytics
       management              Ecosystem” Bank                      −−   Partnership and alliances management

Source: Accenture

                                                                                                                        Possible Paths




Pervasive analytics, a real-time marketing engine and advanced
multichannel integration can more than double conversion rates

   Customer Analytics                  Marketing Engine                                            Multichannel Interaction

   −− Continuously updated             −− Next best offer based                                    −− Real-time proposition
      customer data                       on real-time inputs and
                                                                                                   −− Customized paths based
      collection through                  micro-segment features
                                                                                                      on micro-segmentation
      all channels                        and actions prioritization
                                                                                                      (focus on pre-design
                                          (business rules)
   −− Dynamic segmentation                                                                            customer experience for
      and micro segmentation           −− Focus on moments                                            each micro-segment)
                                          of truth
                                                                                                   −− Cost optimization
                                                                                                      and channel capacity
                                                                                                      evaluation


                                       MONEY ON THE TABLE
                                       −− x 2/3 conversion rates
                                       −− x 2/3 customer interactions

Source: Accenture


Accenture Distribution and Marketing Services
8

    The “Socially Engaging” Bank                     The key components of the                     Most banks today cluster customers
                                                     “Socially Engaging” Bank are:                 through traditional drivers (such as average
    The second “Banking 2016—Next Generation                                                       revenue, cross-selling rate) and engage
    Banking” model emphasizes engaging               1.	 Social media monitoring to
                                                                                                   them on a “push” basis. In a “Socially
    customers where they spend their time,               identify opportunities to engage
                                                                                                   Engaging” Bank, interactions are much
    with a specific focus on social media to             customers, mitigate risks and
                                                                                                   more personalized. The bank has tailored
    increase customer intimacy. The intention            promptly react to issues
                                                                                                   interactions with customers based on their
    is to create relationships based on personal     2.	ocial digital marketing building on
                                                        S                                          interests and intentions communicated via
    interests, leverage influencers and facilitate      clustering to enable the bank to better    their actions on social media (for instance,
    co-creation (the bank and its customers).           define the best content for individual     by “liking” or sharing something). Such
                                                        customer profiles and attract them         actions can help the bank group customers
                                                     3.	ocial CRM enriching customer
                                                        S                                          by common interests, have dialogues
                                                        data with social media data, thus          with them daily on relevant subjects and
                                                        facilitating more effective propositions   offer products when customers need
                                                                                                   them. The bank subsequently becomes
                                                                                                   a daily partner, able to address client
                                                                                                   needs and play an active role along the
                                                                                                   entire purchasing path, instead of only
                                                                                                   engaging the client in the final phase.




    Social media positioning—transformation journey
       Build communities                                 Engage users                                    Drive business
       Create audience with several                      Have ongoing business interactions              Achieve results integrating social
       communities aggregated on                         with social media users                         media as an engaging layer
       relevant interest/topics                                                                          (“service platform”)

       −− By products                                    −− QA sessions                                 −− Product development
       −− By financial need                              −− “Offline” caring after                       −− Initiatives leveraging virality
                                                            online interception                             (e.g. member get member)
       −− By non-financial need
                                                         −− Customer care                                −− Initiatives leveraging
       −− By customer segment
                                                                                                            “social information”
                                                         −− Contests (to get influencers)
                                                                                                         −− Location-based initiatives
                                                         −− “Edutaining” videos
                                                         −− Entertaining apps/videogames
                                                         −− Virtual branch


                 −− Understand your position                     −− Address customer needs                        −− Develop new offerings
                    (brand and products)                            and complaints
                                                                                                                  −− Collect relevant data
                 −− Leverage influencers




                                                                                                     −− Overall positioning
                                                                           Brand
                                                                                                     −− Overall sentiment about
             Listen                                                      Product                        existing or new products
             Collect relevant feedback to
                                                                                                     −− Collection of feedback about initiatives
             feed other key components and                              Initiatives
             tune initiatives                                                                        −− Interception of customer complaints
                                                                        Customers                    −− Enrich customer profile by
                                                                                                        collecting customer interests


    Source: Accenture


    Accenture Distribution and Marketing Services
9

The more the bank interacts with customers,      American Express is one of the financial            via Facebook, Foursquare and Twitter,
the more information about customers’            services companies that have effectively            enhanced by geo-localization functionality.
lives and habits that can be collected to        applied a strategy of social engagement.            More recently, American Express developed
refine communities/profiles. This process        American Express started with customer              the Go Social platform, which has
can be further extended by introducing           service via Twitter and then expanded               helped its small-business clients create
real co-creation processes to develop            its proposition by taking a cue from                and autonomously manage commercial
new products or services and that can            Amazon, who asked its customers to link             campaigns (increasing merchants’
be subsequently offered to different             their Amazon accounts to their Facebook             acquisition rate from the program’s
profiles. Either way, customers are led          profiles in 2010. This allowed Amazon               first phase by more than 50 percent).
to feel that they are part of the bank,          to analyze a complete profile, including            Learning from other retail businesses
which helps to foster greater loyalty to         preferences, needs and friends, helping             can also be valuable: for example,
the institution and makes them less likely       it formulate customized offerings and               beverage maker Gatorade has created
to shop around for a different provider.         discounts. American Express created                 a Mission Control Center, a “war room”
                                                 “Small Business Saturday”, playing off
Investing in social media has essentially                                                            for monitoring its brand in real-time
                                                 more common sales days like Black Friday
become a requirement to engage today’s                                                               across social media, tracking various data
                                                 and Cyber Monday. The initiative, based
customers, considering the extraordinary                                                             and running detailed sentiment analysis
                                                 on linking customers’ American Express
growth in social media adoption (400                                                                 around key topics and products so it can
                                                 cards to their Facebook accounts to get
percent increase in the average time                                                                 respond or adjust its strategy accordingly.
                                                 rewards, has demonstrated itself to be
users spend on Facebook from 2009-
                                                 highly successful (30 percent increase in
2011, according to Comscore 2011) and
                                                 sales from 2009 to 2010). In 2011, another
Generation Y average usage. In addition, a
                                                 initiative, “Link, Like, Love”, further increased
surprising 75 percent of social media users
                                                 American Express’ relevance as a social
are above the age of 30, which suggests
                                                 media player by providing customized
that banks should test new approaches on
                                                 offerings to customers based on their
clients who fall into this age group first.
                                                 spending, location and social media profile


Amex illustration

   “We need to go where our
    Cardmembers and merchants are...”
     DAVID WOLF
     Vice President of Global Marketing Capabilities 		
     SOCIAL MEDIA VISIONS, 2010




     Small Business Saturday
     Nov. 27
     First business step on social media
     2010




     Link, Like, Love

     Cardholders benefit from personalized merchant deals linking their card with
     Facebook, Twitter and Foursquare
     2011



Accenture Distribution and Marketing Services
10

     The “Financial/                                                   competitiveness in the payment arena             services that are consistent with the bank
                                                                       and helps retain existing customers              vision and image, trusted by the customer.
     Non-Financial Digital
     Ecosystem” Bank                                   2.	 Enriched propositions through                                But how can the bank create attractive
                                                           mobile commerce focused on financial                         deals and improve customer engagement?
     The “Financial/Non-Financial Digital                  and non-financial offerings, mobile                          Analytics and marketing capabilities linked
     Ecosystem” Bank represents the bank                   marketing, m-loyalty and m-analytics                         with mobile services are required. This
     “where the customer is”, providing both                                                                            means the bank must be able to leverage
     financial and non-financial offerings.            3.	 Alliances and partnerships with
                                                                                                                        customer information gathered through the
     This model uses the power of mobile                   non-banking operators and
                                                                                                                        mobile device, such as mobile transactions
     technology to offer services extending                creation of related content
                                                                                                                        (m-payments) and geo-localization.
     beyond traditional banking products               The bank has the opportunity to become                           Combined with innovative marketing
     through a network of partners. The bank           a “one-stop shop” and satisfy all relevant                       initiatives based on mobile advertising,
     can decide to create or be part of a digital      customer needs starting from a unique                            daily deals, hot deals and loyalty
     ecosystem, depending on the payments              point of contact built on partnership and                        programs, the overall concept facilitates
     solution and the role it intends to play.         customer trust. As a first step, the bank                        interaction with customers in real time.
     The key components of the “Financial/Non-         must determine the most attractive non-
                                                                                                                        Mobile payment is a key capability here,
     Financial Digital Ecosystem” Bank are:            financial partners and related offerings
                                                                                                                        given the number of new entrants (e.g.
                                                       around which to design a complete
     1.	 Mobile payments based on Near                                                                                  telecommunications companies, retailers) in
                                                       customer experience. Operational alignment
         Field Communication (NFC) or                                                                                   the payment space. M-payments can enable
                                                       and management are crucial parts of
         mobile wallet, that enhances bank                                                                              transactions and ensure the connection to
                                                       delivering effective and secure integrated




     The bank ecosystem proposition

                                                                                  One-stop shop                             Extreme customization
        Many needs, one brand, one app
                                                                                  Offering portfolio                        Offering model

                                                                                  −− M-payments                              −− Daily deals
                                                                                  −− M-ticketing                             −− Geo-based offerings
                                                                                                                                and search nearby
                                                                                  −− Non-banking products and
                                                           Room for convergence




                                                                                     services (from partnerships             −− Cross-industry loyalty programs
                                                                                     with retailers, etc): lifestyle,           with reward system
                                                                                     retail and entertainment,               −− Product and pricing comparison
                                                                                     travel and transport
                                                                                                                             −− Social media integrated
                                                                                  −− Customized and integrated
                                                                                     financial offerings with                −− Digital marketing*
                                                                                     non-banking products                    −− Analytics and
                                                                                     (e.g. travel insurance,                    campaign execution*
                                                                                     consumer loans)
                                                                                  −− Traditional banking services
                                                                                     (e.g. money transfer)



         Both individual’s and merchant’s needs can be satisfied through a multichannel platform enabling trading and
         transactions “on the go”

     * Main impact on both individual and merchant needs


     Source: Accenture



     Accenture Distribution and Marketing Services
11

additional services usually included in the    very beginning and continue to do so           cloud storage and a best-in-class search
m-commerce proposition. We suggest banks       throughout by leveraging its partnerships      engine, proprietary browser (Chrome),
precisely define an m-payments strategy,       with non-financial institutions.               operating system (Chrome+) and the most
ideally based on the most common and                                                          common smartphone OS (Android), Google
                                               It’s important to emphasize that this
advanced payment solution such as the                                                         Maps, GoogleTV, YouTube, Talk and Google
                                               model has been designed with the view
mobile wallet. Once the payments solution                                                     Voice, proprietary apps domain, its own
                                               that customers dealing with so much
is in place, the customer base can be                                                         music offering, and Google+ (a mix of
                                               information will want and need to trust
better protected and the risk of customers                                                    Twitter and Facebook). Google also is an
                                               fewer ecosystem operators. We think
changing providers is reduced, given the                                                      important player in the NFC ecosystem.
                                               Facebook will be the operator for the “Share
increased natural trust for payment services                                                  Its relationship with MasterCard and Citi
                                               experience” ecosystem, Google for the
provided by banking institutions versus                                                       allows Google to offer retailers more data
                                               “Search” ecosystem, big telecommunications
companies from non-financial sectors.                                                         about their customers and help merchants
                                               companies for the “Connect me” ecosystem
                                                                                              target ads and discount offers to mobile-
In this way, the bank can assume the role      and big banks for the “Economic choices”
                                                                                              device users near their stores. Google
of trusted advisor, supporting customers       ecosystem. For banks that aspire to the
                                                                                              Wallet passes payment information over
with financial and non-financial offerings     “Financial/Non-Financial Digital Ecosystem”
                                                                                              existing payment protocols (including
and opportunities, such as buying a house,     model, lessons can be learned from some
                                                                                              MasterCard PayPass and Visa PayWave),
a car, or even supporting the customer         of the defined ecosystems, like Google.
                                                                                              and the Nexus S smartphone—which
preparing for marriage. For all needs          The online giant has created one of the
                                                                                              Google developed with Samsung—is
linked to economic choices, the bank is        most complete digital ecosystems through
                                                                                              already enabled for NFC transactions.
able to support the customer from the          a number of integrated services, including




The digital ecosystem:
keeping the customer connected, engaged


                                                                         “Connect me” ecosystem
                                                                         (ATT, Telefonica, Orange)
                          “Share experience”
                          ecosystem (Facebook)




                                                                                              “Economic choices”
                                                         Customer                             ecosystem (banks)



                   “Search” ecosystem
                   (Google)



                                                              “Discover” stuff
                                                              ecosystem (Amazon)




Accenture Distribution and Marketing Services
12

     Among banking players, Commonwealth
     Bank of Australia’s (CBA) mission is to be
     the first “truly mobile bank”. In 2010, CBA
     launched the CommBank Property Guide,
     a mobile app for customers who want to
     buy a home. Thanks to partnerships within
     the real estate industry, the bank is able to
     provide information about houses, prices,
     area attractiveness and then simulate
     tailored mortgage scenarios. This end-
     to-end approach has propelled the CBA
     app’s success and raised the possibility of
     extending its uses to other sectors, such as
     autos. Another step CBA took to establish
     its role in the mobile ecosystem is related to
     P2P payments and is based on the launch of
     its “Kaching” initiative, where customers can
     pay through Facebook, email or a mobile
     number: in less than two months the app
     has been downloaded by 110,000 customers.




     Commonwealth Bank of Australia illustration

     Vision for 2013
     2010
     Anyone, Anywhere, Anytime



     End to End Needs Coverage
     2010
     House need: real estate app produced
     1% of mortgages




     Kaching P2P APP
     2011
     110K downloads in 2 months




     Accenture Distribution and Marketing Services
13                                                         13


     “Given the current global banking landscape and
     the further changes and disruptions on the horizon,
     banks that grasp and execute these new business
     models and principles are better equipped to
     survive and thrive through 2016 and beyond.”




     Accenture Distribution and Marketing Services
14

     Capabilities mix
                                                                                                                  The “Financial/
                                                 The “Do the          The “Intelligent     The “Socially          Non-Financial Digital
     Focus areas
                                                 basics right” Bank   Multichannel” Bank   Engaging” Bank         Ecosystem” Bank


     Branch network optimization

     Web and mobile channel
     marketing and effectiveness

     Basic multichannel orchestration

     Empowered branch front-line
     and sales tools

     Deep customer understanding


     Smart interaction with customers


     Needs-based offerings


     Performance management


     Effective multichannel integration

     Pervasive analytics (next
     product, pricing, etc.)

     Real-time event management


     Personal digital advisory

     Product offering optimization
     and scientific pricing

     Social media listening and monitoring

     Social digital marketing (clustering,
     client engagement)

     Social CRM (data enrichment
     and optimized offering)

     M-payments


     Mobile commerce ecosystem


     Mobile marketing, M-loyalty and analytics


     Partnership and alliance management

                                                                                                            Low      Medium        High

     Accenture Distribution and Marketing Services
15

Moving forward:                                In planning for the future,
                                               we recommend banks:
adopting “Banking                              •	  efine a shared vision on future
                                                  D
2016—Next Generation                              scenarios/opportunities involving the
Banking” capabilities                             entire management team. In doing
                                                  so, it’s essential to assess customer
The three “Banking 2016—Next Generation           base and prospects to identify a
Banking” models are not final destinations        common foundation for any decision
per se, but rather represent the higher
                                               •	  efine a “North Star” model in light
                                                  D
maturity levels of all the capabilities
                                                  of the three defined business models.
they encompass. Each bank can develop
                                                  A “North Star” model is defined by the
their identified capabilities differently,
                                                  appropriate capability mix, and how it
but defining a clear strategy and
                                                  affects appropriate investment choices
customer proposition are paramount.
                                               •	  nsure a dedicated focus on
                                                  E
Capability maturity levels can be different.
                                                  “Doing the basics right”, creating
Banks can pursue their journeys toward
                                                  a “war room” if appropriate
their chosen model by considering a
broad mix of potential capabilities,           •	  reate a digital lab and foster a
                                                  C
each opting for the capabilities mix              “test and learn” approach across
most appropriate to its business and              social, mobile and digital services
operating model goals. They then need          •	  efine an appropriate sourcing
                                                  D
to develop and build out their own                strategy to scale and deliver
portfolio of capabilities to achieve them.        required capabilities at speed
This journey will be based on:                 By following the “Banking 2016—Next
•	 Market                                      Generation Banking” approach, banks
                                               are better positioned to achieve their
•	 Strategy pursued
                                               defined “North Star”, thereby increasing
•	  vailable capabilities/current
   A                                           performance and competitiveness in the
   capabilities maturity level                 near- and long-term. The money at stake
•	 Investment affordability                    is significant. With the right strategy and
                                               level of commitment, banks in developed
                                               markets stand to double their annual
                                               revenue growth rates (i.e., from 4 percent
                                               to 8-plus percent) and lower their costs
                                               to serve by more than 20 percent. Given
                                               the current global banking landscape
                                               and the further changes and disruptions
                                               on the horizon, banks that grasp and
                                               execute these new business models and
                                               principles are better equipped to survive
                                               and thrive through 2016 and beyond.




Accenture Distribution and Marketing Services
For more information, please contact:      Contributors:                       About Accenture
Global                                     Ambrogio Terrizzano                 Accenture is a global management
                                           ambrogio.terrizzano@accenture.com   consulting, technology services and
Piercarlo Gera
                                                                               outsourcing company, with more than
Piercarlo.gera@accenture.com
                                           Silvia Pesaresi                     246,000 people serving clients in
                                           silvia.pesaresi@accenture.com       more than 120 countries. Combining
North America                                                                  unparalleled experience, comprehensive
Nigel Smith                                Monica Del Naja                     capabilities across all industries and
Nigel.smith@accenture.com                  monica.del.naja@accenture.com       business functions, and extensive
                                                                               research on the world’s most successful
Stephen Gardiner – Canada
                                                                               companies, Accenture collaborates
Stephen.gardiner@accenture.com
                                                                               with clients to help them become
                                                                               high-performance businesses and
Europe, Africa, Latin America                                                  governments. The company generated
Alberto Antonietti – Italy                                                     net revenues of US$25.5 billion for the
Alberto.antonietti@accenture.com                                               fiscal year ended Aug. 31, 2011. Its
                                                                               home page is www.accenture.com.
Joël Nadjar – France
Joël.nadjar@accenture.com
Peter Kirk – UK/Ireland
Peter.kirk@accenture.com
Miguel Montañez – Spain
Miguel.montañez@accenture.com
Robin Silfverhielm – Sweden
Robin.silfverhielm@accenture.com
Flaviano Faleiro – Brazil
Flaviano.faleiro@accenture.com
Christof Innig – Germany
Christof.innig@accenture.com
 
Asia Pacific
Mark Halverson – Japan
Mark.a.halverson@accenture.com
Alexander T. Trott - China and Singapore
Alexander.t.trott@accenture.com
David J. Levi – South East
Asia and Australia
David.j.levi@accenture.com




Copyright © 2012 Accenture
All rights reserved.

Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.

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Accenture banking 2016

  • 1. Banking 2016 Accelerating growth and optimizing costs in distribution and marketing
  • 2. 2 It is time for retail banks to change. Current branch-based distribution Accordingly, each bank needs to define Faced with a daunting array of models are no longer sustainable in its own target business model in light market, regulatory, customer, cost and most developed countries and are unable of its history, market, positioning, operational challenges, many banks are to meet the rapidly evolving customer ambitions, etc. We think there are three struggling to post even moderate growth. needs and requests for easy access and business models banks should consider simplicity across their banking services. when defining their own model: Projected revenue growth rates, according to an Accenture analysis of 2011-2014 Accenture believes there is a clear path 1. ne that builds on enhanced O business plans for a group of 30 global forward for banks that begins with the multichannel experiences to banks, estimate 6.5 percent average shoring up of core business operations to engage customers and meet their growth (4 percent Europe/North America improve efficiency, customer relevance and financial needs effectively (the average) following -0.5 percent retail profitability—in other words, “doing the “Intelligent Multichannel” Bank), revenue growth for 2008-2011. Bankers basics right.” While some banks may excel with the strategic application of are beginning to realize that it will be a simply by improving on the basics, including analytics at the core of this model challenge to meet these growth targets and “smart-sizing” their distribution networks, 2. ne that leverages social media O know they have to win three critical battles: others need new business and operating interactions to increase customer restoring customer trust and engagement, models to compete and grow going forward. intimacy (the “Socially Engaging” Bank) defending their payments business Keeping one eye on the present and one eye against progressive disintermediation on the future is the key paradigm we have 3. ne that places the bank at the center O from new entrants (e.g. Google Wallet, defined as “Banking 2016—Next Generation of an ecosystem selling financial and PayPal) and avoiding commoditization. Banking”, drawing inspiration from some non-financial services, leveraging notably innovative retailing models. in particular the power of mobile technology (the “Financial/Non- Financial Digital Ecosystem” Bank) The money on the table can be significant. A bank working aggressively to implement all three of these business models can double its annual revenue growth rate (from 4 percent to 8-plus percent in developed markets) while reducing its cost to serve by 20 percent or more. Regardless of the models being pursued, bank governance overall must evolve, giving appropriate weight to customer metrics in the key areas of reputation, commercial performance, service performance, sales performance and the capabilities required to support them. Accenture Distribution and Marketing Services
  • 3. 3 “Next Generation Banking” models Today “Next Generation Banking” models The “Financial/ The “do the The “Intelligent The “Socially Non-Financial Digital basics right” Bank Multichannel” Bank Engaging” Bank Ecosystem” Bank −− Optimized branch −− Integrated −− Customer engagement −− Bank as trust center network and multichannel where they spend with an extended contact center architecture, their time (e.g. on proposition (financial powered by analytics social media) based and non-financial) −− Enhanced digital (real-time event on personal interests channels −− “The bank where you management, etc.) −− Leverage influencers are” leveraging the −− Need-based offerings −− Advanced digital power of mobile and consistent −− Co-creation based advisory sales behaviors on increased −− M-payment services −− Need-based offerings customer intimacy −− Basic multichannel optimized by channels integration “My bank effectively “My bank engages with “My bank gives answers to my engages with me on my me where I spend time.” needs, providing easy access.” real financial needs.” Source: Accenture Customer-oriented metrics evolution Profitability-based metrics Holistic stakeholder perspective Management and investors view (Shareholders Perspective) Commercial Performance • ARPU (revenue per customer) −− Revenues Service Performance • Net customer flow • Customer engagement Bank Reputation • Customer lifetime value −− Profitability • Customer satisfaction • Reputation index • Cross selling −− Cost-to-income • Net promoter score • Brand recognition • Recurring revenues % −− ROE −− Market share −− EVA −− Share price trend −− Market capitalization −− EPS Sales Effectiveness • Sale productivity • Sales per square mile Capabilities • Campaign effectiveness • Customer centricity index • Product penetration • Customer contacts • Social channel engagement Source: Accenture Accenture Distribution and Marketing Services
  • 4. 4 “Banking 2016—Next “Banking 2016—Next The key components of “doing Optimizing the the basics right” are: Generation Banking” branch network 1. ranch network optimization (number B foundation: doing and size of branches), reviewing network The most critical aspect of “doing the basics right” is improving branch network the basics right architecture (i.e. hub and spoke model) performance, ensuring sustainable positions 2. asic multichannel integration, B and creating adequate foundations for the What is “Banking 2016—Next Generation alignment of channels and “Intelligent Multichannel Bank” model. Banking”? It starts with getting integrated governance processes Branch network effectiveness can be the basics right to address banks’ for real-time banking maximized through strategic localization most immediate challenges: eroding 3. roactive and reactive management P (closing low-performance branches customer trust and satisfaction. interaction based on customer needs operating in markets with limited potential 4. perational customer O first), identifying the right number, segmentation driven by a needs- type, and format of branches according based offering structure to target customers and optimizing 5. ales force effectiveness powered by S branch processes to free up commercial consistent sales behaviors and tools time and focus on sales generation. 6. imple and clear communication S with customers Networks composed solely of full-service 7. Performance management (new branches with duplicate services and skills customer-oriented metrics) and are no longer sustainable. The branch tailored compensation schemes network model must be designed with careful consideration to differentiated formats and integrated in a multichannel view that is able to maintain territorial coverage, react to local customer needs and optimize skills and capabilities. This extends beyond full-service branches and hubs to include light branches (with an average of 4-5 employees), kiosks and cash-less branches. By migrating low- value activities to digital channels and retail-based formats, banks can satisfy new customer segments and further overall branch network transformation. An efficient “hub and spoke” branch model can help enable a bank to decrease the branches in its overall network by 15-20 percent and reduce average branch staff by 25 percent with the proper mix of flagship, full-service, light and kiosk branches. Furthermore, by specializing in specific services or activities, each branch format is able to deliver a more tailored customer experience and, ultimately, help increase customer satisfaction and loyalty. Accenture Distribution and Marketing Services
  • 5. 5 Opportunities in the • ocus on branch front-line staff F • estructure product catalogues by R by designing specific profiles and customer needs and with service levels operational basics dedicated training plans to create based on customer segmentation. In addition to optimizing the an empowered, unified workforce • ntegrate channels to facilitate I branch network, banks have other (we call this “workforce of one”); transparency and data sharing so each opportunities to become more proficient support branch employees with both customer’s buying habits and needs in operational basics and increase formal and informal learning tools are known and can be addressed sales. For instance, they can: that can be enabled and accelerated across an integrated multichannel • edefine roles and activities at R by cloud-based collaboration buying experience (eliminating a branches through process optimization, capabilities and social media. more silo-structured approach). standardization and initiatives • nhance digital capabilities to provide E If customers feel they are getting enabling focus on sales, such as a more personalized, streamlined and proper service from their banks and digitalization, back-office automation robust online banking experience, the product mix and price points and integrated CRM systems. Gathering complemented by educational tools meet their expectations, the expected and pre-filling customer information and simulators to better address result will be greater customer should also be considered. self-directed customers’ needs. satisfaction, retention and loyalty. • mprove branch sales force performance I • evelop basic mobile banking D by implementing next-generation capabilities to provide services front-end workstations that can that take full advantage of the provide branch employees with the “on the go, anywhere, anytime” latest tools, information and guidance nature of mobile devices. to engage customers effectively. Banks should consider differentiated branch formats Cash-less, kiosks— Light branches— Full-service, hubs— Flagships— maintain for service maintain for sales maintain for advanced banking innovate, attract COV. 50% COV. 30% COV. 15% COV. 5% sales services sales services sales services sales services −− 100% transactions −− 50% transactions −− 40% transactions −− 30% transactions and 50% sales and 60% sales and 70% sales −− Open with staff 1-2 days per week −− Tailored hours −− Extended hours −− Extended hours −− Reciprocity income −− Sales lead generation −− Sales lead generation −− Center of sales and service excellence −− Minimal staffing −− Regular staffing: meeter −− Specific staffing: DESCRIPTION levels (not bank skilled and greeter, cashier dedicated business −− Specific staffing employees, people and peripatetic RMs cashiers and (depending on area/ from retailing sector) permanent RMs segment served): −− Able to accept and dedicated business −− Fully automated manage anything −− Highly specialized cashiers and mortgage, trading permanent RMs −− Belonging to full −− Belonging to advisers service/light branches full-service branches −− Location of experts −− Supports light branches −− Tailored merchandising −− Standard merchandising for complex service/sales −− Supports all other types (focus on area and for regulated sales seasonal campaigns) −− Full merchandising −− Tailored merchandising, generating branch traffic focus on innovation −− Advanced ATM −− Remote advisory −− Digital meeter and greeter KEY FEATURES −− Self-service, supported by hubs innovative tools −− Opening hours differentiated per −− Flexible concepts local needs −− Possible franchising model Source: Accenture Accenture Distribution and Marketing Services
  • 6. 6 The future is now: As a first step, banks could design an integrated customer experience based Customers of the “Intelligent Multichannel” Bank can benefit from the ability to three innovative on a streamlined multichannel approach interact with the bank anywhere, anytime, “Banking 2016— and architecture. As banks activate and can receive financial products and new channels, customer inputs and services based on their needs and behaviors Next Generation customer knowledge can be expected through their preferred channels. Banking” models to increase, which would then enable Spain’s Bankinter is a good example of an banks to create micro-segments. Doing the basics right may be the ultimate early adopter in advanced analytics. The Micro-segments are the smallest set of objective for some banks. However, for bank started working on analytics several customers with uniform demographics others mastering the basics becomes years ago and focused on developing and social behaviors, and form the basis the foundation on which to build more commercial propositions based on customer for defining strategic profit pools. innovative capabilities that can help intelligence and the frequency of customer address changing customer behaviors The increased capture and application contacts, both proactive and reactive, and and compete for the critical payments of customer data, properly managed then created the Engloba Geo CRM tool business against new entrants such as and updated through an advanced in 2009. More recently, Bankinter’s belief retailers, technology companies, mobile CRM platform, can help enhance the in analytics led it to introduce different operators and pure-play start-ups. These value and return on product catalogues, units influenced by CRM, such as Risk new capabilities are embodied in the three commercial campaigns based on real- CRM and Operation CRM, and its sales pillars of Accenture “Banking 2016—Next time propositions, as well as lower are still growing thanks to additional Generation Banking”: the “Intelligent distribution costs by optimizing capacity improvements to the Engloba tool. Multichannel” Bank, the “Socially by micro-segment preferences. Another Spanish bank, BBVA, is a good Engaging” Bank, and the “Financial/ A multichannel customer experience example of a bank that operates within Non-Financial Digital Ecosystem” Bank. is based on the right combination of personal advisory space: 24/7 personal The “Intelligent online and offline processes and can customer service is provided to its be enhanced by focusing on dedicated clients who use digital channels to do Multichannel” Bank advisory services (remote or digital). their banking rather than the branch The “Intelligent Multichannel” Bank but still want a personalized service. Expanded bank “availability” for products frequently engages with customers and services allows customers to make through different channels, taking personal choices continuously based on their channel preferences into consideration. needs, while helping the bank refine its The key differentiator of this model is knowledge of customer preferences. the extensive use of analytics that can enable the bank to more effectively understand and meet customers’ needs. Key elements of this model are: Bankinter illustration 1. dvanced multichannel integration A focusing on digital channels and an integrated architecture 2004 2. Pervasive analytics based on The Science of effective customer data collection, Managing Customers micro-segmentation and predictive modeling to determine the most effective basket of products 3. eal-time interactions management R 2009 that can increase conversion rates Client Retention Model from inbound and outbound contacts 4. dvanced advisory services leveraging A digital channels and personal analytics 5. roduct offerings and related P 2010 pricing schemes based on micro- Analytics Pervasivity segments and optimized by channel Accenture Distribution and Marketing Services
  • 7. 7 Banks should consider a set of distinctive capabilities to compete in the future TODAY “Next Generation Bank” models −− Effective multichannel integration −− Pervasive analytics The “Do the The “Intelligent −− Real-time event management basics right” Bank Multichannel” Bank −− Personal digital advisory −− Branch network optimization −− Product offering optimization and scientific pricing −− Basic multichannel orchestration −− Deep customer understanding −− Social media listening and monitoring −− Need-based offerings The “Socially −− Social digital marketing (clustering client engagement) −− Web and mobile Engaging” Bank −− Social CRM (data enrichment channel marketing and optimized offering) and effectiveness −− Empowered branch front-line and sales tools −− Smart interaction The “Financial/Non- −− M-payments with customers −− Mobile commerce ecosystem −− Performance Financial Digital −− Mobile marketing M-loyalty and analytics management Ecosystem” Bank −− Partnership and alliances management Source: Accenture Possible Paths Pervasive analytics, a real-time marketing engine and advanced multichannel integration can more than double conversion rates Customer Analytics Marketing Engine Multichannel Interaction −− Continuously updated −− Next best offer based −− Real-time proposition customer data on real-time inputs and −− Customized paths based collection through micro-segment features on micro-segmentation all channels and actions prioritization (focus on pre-design (business rules) −− Dynamic segmentation customer experience for and micro segmentation −− Focus on moments each micro-segment) of truth −− Cost optimization and channel capacity evaluation MONEY ON THE TABLE −− x 2/3 conversion rates −− x 2/3 customer interactions Source: Accenture Accenture Distribution and Marketing Services
  • 8. 8 The “Socially Engaging” Bank The key components of the Most banks today cluster customers “Socially Engaging” Bank are: through traditional drivers (such as average The second “Banking 2016—Next Generation revenue, cross-selling rate) and engage Banking” model emphasizes engaging 1. Social media monitoring to them on a “push” basis. In a “Socially customers where they spend their time, identify opportunities to engage Engaging” Bank, interactions are much with a specific focus on social media to customers, mitigate risks and more personalized. The bank has tailored increase customer intimacy. The intention promptly react to issues interactions with customers based on their is to create relationships based on personal 2. ocial digital marketing building on S interests and intentions communicated via interests, leverage influencers and facilitate clustering to enable the bank to better their actions on social media (for instance, co-creation (the bank and its customers). define the best content for individual by “liking” or sharing something). Such customer profiles and attract them actions can help the bank group customers 3. ocial CRM enriching customer S by common interests, have dialogues data with social media data, thus with them daily on relevant subjects and facilitating more effective propositions offer products when customers need them. The bank subsequently becomes a daily partner, able to address client needs and play an active role along the entire purchasing path, instead of only engaging the client in the final phase. Social media positioning—transformation journey Build communities Engage users Drive business Create audience with several Have ongoing business interactions Achieve results integrating social communities aggregated on with social media users media as an engaging layer relevant interest/topics (“service platform”) −− By products −− QA sessions −− Product development −− By financial need −− “Offline” caring after −− Initiatives leveraging virality online interception (e.g. member get member) −− By non-financial need −− Customer care −− Initiatives leveraging −− By customer segment “social information” −− Contests (to get influencers) −− Location-based initiatives −− “Edutaining” videos −− Entertaining apps/videogames −− Virtual branch −− Understand your position −− Address customer needs −− Develop new offerings (brand and products) and complaints −− Collect relevant data −− Leverage influencers −− Overall positioning Brand −− Overall sentiment about Listen Product existing or new products Collect relevant feedback to −− Collection of feedback about initiatives feed other key components and Initiatives tune initiatives −− Interception of customer complaints Customers −− Enrich customer profile by collecting customer interests Source: Accenture Accenture Distribution and Marketing Services
  • 9. 9 The more the bank interacts with customers, American Express is one of the financial via Facebook, Foursquare and Twitter, the more information about customers’ services companies that have effectively enhanced by geo-localization functionality. lives and habits that can be collected to applied a strategy of social engagement. More recently, American Express developed refine communities/profiles. This process American Express started with customer the Go Social platform, which has can be further extended by introducing service via Twitter and then expanded helped its small-business clients create real co-creation processes to develop its proposition by taking a cue from and autonomously manage commercial new products or services and that can Amazon, who asked its customers to link campaigns (increasing merchants’ be subsequently offered to different their Amazon accounts to their Facebook acquisition rate from the program’s profiles. Either way, customers are led profiles in 2010. This allowed Amazon first phase by more than 50 percent). to feel that they are part of the bank, to analyze a complete profile, including Learning from other retail businesses which helps to foster greater loyalty to preferences, needs and friends, helping can also be valuable: for example, the institution and makes them less likely it formulate customized offerings and beverage maker Gatorade has created to shop around for a different provider. discounts. American Express created a Mission Control Center, a “war room” “Small Business Saturday”, playing off Investing in social media has essentially for monitoring its brand in real-time more common sales days like Black Friday become a requirement to engage today’s across social media, tracking various data and Cyber Monday. The initiative, based customers, considering the extraordinary and running detailed sentiment analysis on linking customers’ American Express growth in social media adoption (400 around key topics and products so it can cards to their Facebook accounts to get percent increase in the average time respond or adjust its strategy accordingly. rewards, has demonstrated itself to be users spend on Facebook from 2009- highly successful (30 percent increase in 2011, according to Comscore 2011) and sales from 2009 to 2010). In 2011, another Generation Y average usage. In addition, a initiative, “Link, Like, Love”, further increased surprising 75 percent of social media users American Express’ relevance as a social are above the age of 30, which suggests media player by providing customized that banks should test new approaches on offerings to customers based on their clients who fall into this age group first. spending, location and social media profile Amex illustration “We need to go where our Cardmembers and merchants are...” DAVID WOLF Vice President of Global Marketing Capabilities SOCIAL MEDIA VISIONS, 2010 Small Business Saturday Nov. 27 First business step on social media 2010 Link, Like, Love Cardholders benefit from personalized merchant deals linking their card with Facebook, Twitter and Foursquare 2011 Accenture Distribution and Marketing Services
  • 10. 10 The “Financial/ competitiveness in the payment arena services that are consistent with the bank and helps retain existing customers vision and image, trusted by the customer. Non-Financial Digital Ecosystem” Bank 2. Enriched propositions through But how can the bank create attractive mobile commerce focused on financial deals and improve customer engagement? The “Financial/Non-Financial Digital and non-financial offerings, mobile Analytics and marketing capabilities linked Ecosystem” Bank represents the bank marketing, m-loyalty and m-analytics with mobile services are required. This “where the customer is”, providing both means the bank must be able to leverage financial and non-financial offerings. 3. Alliances and partnerships with customer information gathered through the This model uses the power of mobile non-banking operators and mobile device, such as mobile transactions technology to offer services extending creation of related content (m-payments) and geo-localization. beyond traditional banking products The bank has the opportunity to become Combined with innovative marketing through a network of partners. The bank a “one-stop shop” and satisfy all relevant initiatives based on mobile advertising, can decide to create or be part of a digital customer needs starting from a unique daily deals, hot deals and loyalty ecosystem, depending on the payments point of contact built on partnership and programs, the overall concept facilitates solution and the role it intends to play. customer trust. As a first step, the bank interaction with customers in real time. The key components of the “Financial/Non- must determine the most attractive non- Mobile payment is a key capability here, Financial Digital Ecosystem” Bank are: financial partners and related offerings given the number of new entrants (e.g. around which to design a complete 1. Mobile payments based on Near telecommunications companies, retailers) in customer experience. Operational alignment Field Communication (NFC) or the payment space. M-payments can enable and management are crucial parts of mobile wallet, that enhances bank transactions and ensure the connection to delivering effective and secure integrated The bank ecosystem proposition One-stop shop Extreme customization Many needs, one brand, one app Offering portfolio Offering model −− M-payments −− Daily deals −− M-ticketing −− Geo-based offerings and search nearby −− Non-banking products and Room for convergence services (from partnerships −− Cross-industry loyalty programs with retailers, etc): lifestyle, with reward system retail and entertainment, −− Product and pricing comparison travel and transport −− Social media integrated −− Customized and integrated financial offerings with −− Digital marketing* non-banking products −− Analytics and (e.g. travel insurance, campaign execution* consumer loans) −− Traditional banking services (e.g. money transfer) Both individual’s and merchant’s needs can be satisfied through a multichannel platform enabling trading and transactions “on the go” * Main impact on both individual and merchant needs Source: Accenture Accenture Distribution and Marketing Services
  • 11. 11 additional services usually included in the very beginning and continue to do so cloud storage and a best-in-class search m-commerce proposition. We suggest banks throughout by leveraging its partnerships engine, proprietary browser (Chrome), precisely define an m-payments strategy, with non-financial institutions. operating system (Chrome+) and the most ideally based on the most common and common smartphone OS (Android), Google It’s important to emphasize that this advanced payment solution such as the Maps, GoogleTV, YouTube, Talk and Google model has been designed with the view mobile wallet. Once the payments solution Voice, proprietary apps domain, its own that customers dealing with so much is in place, the customer base can be music offering, and Google+ (a mix of information will want and need to trust better protected and the risk of customers Twitter and Facebook). Google also is an fewer ecosystem operators. We think changing providers is reduced, given the important player in the NFC ecosystem. Facebook will be the operator for the “Share increased natural trust for payment services Its relationship with MasterCard and Citi experience” ecosystem, Google for the provided by banking institutions versus allows Google to offer retailers more data “Search” ecosystem, big telecommunications companies from non-financial sectors. about their customers and help merchants companies for the “Connect me” ecosystem target ads and discount offers to mobile- In this way, the bank can assume the role and big banks for the “Economic choices” device users near their stores. Google of trusted advisor, supporting customers ecosystem. For banks that aspire to the Wallet passes payment information over with financial and non-financial offerings “Financial/Non-Financial Digital Ecosystem” existing payment protocols (including and opportunities, such as buying a house, model, lessons can be learned from some MasterCard PayPass and Visa PayWave), a car, or even supporting the customer of the defined ecosystems, like Google. and the Nexus S smartphone—which preparing for marriage. For all needs The online giant has created one of the Google developed with Samsung—is linked to economic choices, the bank is most complete digital ecosystems through already enabled for NFC transactions. able to support the customer from the a number of integrated services, including The digital ecosystem: keeping the customer connected, engaged “Connect me” ecosystem (ATT, Telefonica, Orange) “Share experience” ecosystem (Facebook) “Economic choices” Customer ecosystem (banks) “Search” ecosystem (Google) “Discover” stuff ecosystem (Amazon) Accenture Distribution and Marketing Services
  • 12. 12 Among banking players, Commonwealth Bank of Australia’s (CBA) mission is to be the first “truly mobile bank”. In 2010, CBA launched the CommBank Property Guide, a mobile app for customers who want to buy a home. Thanks to partnerships within the real estate industry, the bank is able to provide information about houses, prices, area attractiveness and then simulate tailored mortgage scenarios. This end- to-end approach has propelled the CBA app’s success and raised the possibility of extending its uses to other sectors, such as autos. Another step CBA took to establish its role in the mobile ecosystem is related to P2P payments and is based on the launch of its “Kaching” initiative, where customers can pay through Facebook, email or a mobile number: in less than two months the app has been downloaded by 110,000 customers. Commonwealth Bank of Australia illustration Vision for 2013 2010 Anyone, Anywhere, Anytime End to End Needs Coverage 2010 House need: real estate app produced 1% of mortgages Kaching P2P APP 2011 110K downloads in 2 months Accenture Distribution and Marketing Services
  • 13. 13 13 “Given the current global banking landscape and the further changes and disruptions on the horizon, banks that grasp and execute these new business models and principles are better equipped to survive and thrive through 2016 and beyond.” Accenture Distribution and Marketing Services
  • 14. 14 Capabilities mix The “Financial/ The “Do the The “Intelligent The “Socially Non-Financial Digital Focus areas basics right” Bank Multichannel” Bank Engaging” Bank Ecosystem” Bank Branch network optimization Web and mobile channel marketing and effectiveness Basic multichannel orchestration Empowered branch front-line and sales tools Deep customer understanding Smart interaction with customers Needs-based offerings Performance management Effective multichannel integration Pervasive analytics (next product, pricing, etc.) Real-time event management Personal digital advisory Product offering optimization and scientific pricing Social media listening and monitoring Social digital marketing (clustering, client engagement) Social CRM (data enrichment and optimized offering) M-payments Mobile commerce ecosystem Mobile marketing, M-loyalty and analytics Partnership and alliance management Low Medium High Accenture Distribution and Marketing Services
  • 15. 15 Moving forward: In planning for the future, we recommend banks: adopting “Banking • efine a shared vision on future D 2016—Next Generation scenarios/opportunities involving the Banking” capabilities entire management team. In doing so, it’s essential to assess customer The three “Banking 2016—Next Generation base and prospects to identify a Banking” models are not final destinations common foundation for any decision per se, but rather represent the higher • efine a “North Star” model in light D maturity levels of all the capabilities of the three defined business models. they encompass. Each bank can develop A “North Star” model is defined by the their identified capabilities differently, appropriate capability mix, and how it but defining a clear strategy and affects appropriate investment choices customer proposition are paramount. • nsure a dedicated focus on E Capability maturity levels can be different. “Doing the basics right”, creating Banks can pursue their journeys toward a “war room” if appropriate their chosen model by considering a broad mix of potential capabilities, • reate a digital lab and foster a C each opting for the capabilities mix “test and learn” approach across most appropriate to its business and social, mobile and digital services operating model goals. They then need • efine an appropriate sourcing D to develop and build out their own strategy to scale and deliver portfolio of capabilities to achieve them. required capabilities at speed This journey will be based on: By following the “Banking 2016—Next • Market Generation Banking” approach, banks are better positioned to achieve their • Strategy pursued defined “North Star”, thereby increasing • vailable capabilities/current A performance and competitiveness in the capabilities maturity level near- and long-term. The money at stake • Investment affordability is significant. With the right strategy and level of commitment, banks in developed markets stand to double their annual revenue growth rates (i.e., from 4 percent to 8-plus percent) and lower their costs to serve by more than 20 percent. Given the current global banking landscape and the further changes and disruptions on the horizon, banks that grasp and execute these new business models and principles are better equipped to survive and thrive through 2016 and beyond. Accenture Distribution and Marketing Services
  • 16. For more information, please contact: Contributors: About Accenture Global Ambrogio Terrizzano Accenture is a global management ambrogio.terrizzano@accenture.com consulting, technology services and Piercarlo Gera outsourcing company, with more than Piercarlo.gera@accenture.com Silvia Pesaresi 246,000 people serving clients in silvia.pesaresi@accenture.com more than 120 countries. Combining North America unparalleled experience, comprehensive Nigel Smith Monica Del Naja capabilities across all industries and Nigel.smith@accenture.com monica.del.naja@accenture.com business functions, and extensive research on the world’s most successful Stephen Gardiner – Canada companies, Accenture collaborates Stephen.gardiner@accenture.com with clients to help them become high-performance businesses and Europe, Africa, Latin America governments. The company generated Alberto Antonietti – Italy net revenues of US$25.5 billion for the Alberto.antonietti@accenture.com fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com. Joël Nadjar – France Joël.nadjar@accenture.com Peter Kirk – UK/Ireland Peter.kirk@accenture.com Miguel Montañez – Spain Miguel.montañez@accenture.com Robin Silfverhielm – Sweden Robin.silfverhielm@accenture.com Flaviano Faleiro – Brazil Flaviano.faleiro@accenture.com Christof Innig – Germany Christof.innig@accenture.com   Asia Pacific Mark Halverson – Japan Mark.a.halverson@accenture.com Alexander T. Trott - China and Singapore Alexander.t.trott@accenture.com David J. Levi – South East Asia and Australia David.j.levi@accenture.com Copyright © 2012 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.