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Winning Strategies for
           Omnichannel Banking

           Jörgen Ericsson, Vice President, Financial Services Practice, Cisco IBSG
           Philip Farah, Director, Financial Services Practice, Cisco IBSG
           Al Slamecka, Financial Services, Enterprise Marketing
           June 2012
           More info: http://www.cisco.com/web/about/ac79/docs/Cisco-IBSG-Omnichannel-
           Study.pdf
Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.   Cisco Public   Internet Business Solutions Group   1
Setting the Stage:
           From Multichannel to Omnichannel

            In an era rich with interaction channels (mobile, social, visual),
             consumers expect more control over how they shop, bank, and interact
             with service providers
            Consumers expect “here and now” from their bank, just like they
             receive from other industries
            Industries are reacting to this new reality by moving away from the
             traditional multi-channel approach (shifting customers to the least-
             expensive channel) to an omnichannel one
            The omnichannel approach is one where physical and virtual
             channels come together to enable a seamless experience
             embedded in people’s lives and businesses




Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.   Cisco Public   Internet Business Solutions Group   2
Omnichannel Research Scope
           and Methodology

            5,300 consumers across eight countries
                         – Developed countries:
                           Canada, France, Germany, U.S., U.K.
                         – Emerging countries:
                           Brazil, China, Mexico
            Primary research conducted May 2012
            Tested nine innovative omnichannel concepts:
                         –         Virtual banking                        –     Mobile banking
                         –         Specialty branch                       –     Social media
                         –         Streamlined branch                     –     Customer sensing
                         –         Banking pod                            –     Digital footprint management
                         –         Agent branch




Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.   Cisco Public            Internet Business Solutions Group   3
Omnichannel Banking: Transformation
           in Emerging, Evolution in Developed

            Top 3 concepts of interest across geographies: specialty branch,
             virtual banking, infomediary
            Emerging countries show high level of customer readiness
                  – Dissatisfaction with current banking services: 49% dissatisfied
                    with banking service in emerging countries vs. 26% in developed
                    countries
                  – Readiness for new interaction models: Average interest in our top
                    three concepts for emerging is 7.3 versus 5.2 in developed
                    (scale of 1-10)
            In developed countries, the evolution towards omnichannel is
                  underway with privacy concerns
                  – Lack of readiness to share personal information: developed 65% vs.
                    emerging 53%




Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.   Cisco Public   Internet Business Solutions Group   4
Four Pillars of Omnichannel Banking


                                                                      Omnichannel Banking

                   New
                                                                       Mobile             Social                    Video
                  Branch




Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.        Cisco Public       Internet Business Solutions Group   5
The Old Branch Is Dead—
           Long Live the Omnichannel Branch
            Omnichannel is about the choice to use ALL channels including
                   branches
                  – 30% of digital banking channel users are also frequent branch visitors
                  – 22% of people would switch banks if their bank went all virtual
                  – 82% of those who would abandon bank if branches close, are also
                    active users of virtual banking channels
            Branches key strength: personal attention, quality advice
                  – 26% of consumers will leave bank if advisers, personal advice removed
                    from branch
                  – 83% of consumers in favor of branches expanding their financial
                    advisory services
            Customers open to quality advice delivered virtually
                  – 23% of consumers in developed and 43% in emerging countries see
                    the use of video conferencing with remote experts from the branch as a
                    way to enhance the quality of advice in situations where access to
                    quality expertise is a concern

Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.   Cisco Public   Internet Business Solutions Group   6
Mobile:
           Bringing the Bank to the Consumers

            13% of consumers in developed countries and
             18% of consumers in emerging markets prefer to
             use mobile banking applications
            Most interesting mobile apps are: real-time
             expense tracking, personal finance management
             (PFM), payments and mobile commerce
            Consumers who strongly favor mobile banking are
             young (Gen Y or Gen X), tech-savvy, and frequent
             branch users (2.5+ visits per month)




Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.   Cisco Public   Internet Business Solutions Group   7
Social Banking—the Potential Is
           Here…When Will Banks Be Ready?

            Customers still hesitant to use social media for banking
                  – Only 1% of customers in developed
                  – 8% of customers in emerging countries
            Concerns due to privacy / lack of control
            One segment in favor: younger, tech-savvy customers
                  in emerging countries
            The most attractive concepts for Gen Y respondents
                  were learning communities, financial incentives to “refer
                  a friend” and financial games and competitions



Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.   Cisco Public   Internet Business Solutions Group   8
Video—Seeing Is Believing

            Video Key to Building Trust
            Video conferencing with remote experts enhances
                  quality of advice
                  – 23% customers in developed countries
                  – 43% customers in emerging countries
            Video key feature: Experience enhancer for locations
                  lacking availability of human expertise
                  – Unmanned banking kiosks, after-hour ATMs, virtual banking
            Video is ready for the mainstream: Gen X and early
                  majority technology adopters strong believers in video


Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.   Cisco Public   Internet Business Solutions Group   9
The Privacy Minefield—Tread Carefully

            Top concerns: privacy, security, identity theft
                  – 65% of customers in developed countries
                  – 53% of customers in emerging countries
            29% of those opposed to personal information access
             willing to share if on “opt-in” basis
            Consumers worldwide strongly in favor of banks as an
             infomediary
                  – 60% of customers in developed countries (Gen Y: 70%)
                  – 89% of customers in emerging countries (Gen Y: 92%)
            Banks chosen as favorite infomediary
                  – 42% prefer banks ahead of the government (19%), telcos (6%),
                    and social media sites (4%)


Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.   Cisco Public   Internet Business Solutions Group   10
So What? Implications for Banks

                         Consumer Needs                                              Implications for Banks
            Advice-centered,                                                         Optimized branches for
                  omnichannel branches                                                   personalized advice
                                                                                         (physical and virtual)
            Real-time, location-enabled
                  mobile financial services                                             PFM, payments, and
                                                                                         commerce-centric mobile
            Social media to provide                                                     apps
                  secure financial learning
                                                                                        Pilot virtual financial
                  communities
                                                                                         learning communities in
            More personalized, higher-                                                  social media
                  quality interactions enabled                                          Develop integrated
                  by video                                                               architectures
                                                                                        Introduce video interactions
                                                                                         with experts in branches
                                                                                         and at home

Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved.   Cisco Public            Internet Business Solutions Group   11
More information: http://www.cisco.com/web/about/ac79/docs/Cisco-IBSG-
Omnichannel-Study.pdf

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Winning Strategies for Omnichannel Banking

  • 1. Winning Strategies for Omnichannel Banking Jörgen Ericsson, Vice President, Financial Services Practice, Cisco IBSG Philip Farah, Director, Financial Services Practice, Cisco IBSG Al Slamecka, Financial Services, Enterprise Marketing June 2012 More info: http://www.cisco.com/web/about/ac79/docs/Cisco-IBSG-Omnichannel- Study.pdf Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 1
  • 2. Setting the Stage: From Multichannel to Omnichannel  In an era rich with interaction channels (mobile, social, visual), consumers expect more control over how they shop, bank, and interact with service providers  Consumers expect “here and now” from their bank, just like they receive from other industries  Industries are reacting to this new reality by moving away from the traditional multi-channel approach (shifting customers to the least- expensive channel) to an omnichannel one  The omnichannel approach is one where physical and virtual channels come together to enable a seamless experience embedded in people’s lives and businesses Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 2
  • 3. Omnichannel Research Scope and Methodology  5,300 consumers across eight countries – Developed countries: Canada, France, Germany, U.S., U.K. – Emerging countries: Brazil, China, Mexico  Primary research conducted May 2012  Tested nine innovative omnichannel concepts: – Virtual banking – Mobile banking – Specialty branch – Social media – Streamlined branch – Customer sensing – Banking pod – Digital footprint management – Agent branch Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 3
  • 4. Omnichannel Banking: Transformation in Emerging, Evolution in Developed  Top 3 concepts of interest across geographies: specialty branch, virtual banking, infomediary  Emerging countries show high level of customer readiness – Dissatisfaction with current banking services: 49% dissatisfied with banking service in emerging countries vs. 26% in developed countries – Readiness for new interaction models: Average interest in our top three concepts for emerging is 7.3 versus 5.2 in developed (scale of 1-10)  In developed countries, the evolution towards omnichannel is underway with privacy concerns – Lack of readiness to share personal information: developed 65% vs. emerging 53% Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 4
  • 5. Four Pillars of Omnichannel Banking Omnichannel Banking New Mobile Social Video Branch Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 5
  • 6. The Old Branch Is Dead— Long Live the Omnichannel Branch  Omnichannel is about the choice to use ALL channels including branches – 30% of digital banking channel users are also frequent branch visitors – 22% of people would switch banks if their bank went all virtual – 82% of those who would abandon bank if branches close, are also active users of virtual banking channels  Branches key strength: personal attention, quality advice – 26% of consumers will leave bank if advisers, personal advice removed from branch – 83% of consumers in favor of branches expanding their financial advisory services  Customers open to quality advice delivered virtually – 23% of consumers in developed and 43% in emerging countries see the use of video conferencing with remote experts from the branch as a way to enhance the quality of advice in situations where access to quality expertise is a concern Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 6
  • 7. Mobile: Bringing the Bank to the Consumers  13% of consumers in developed countries and 18% of consumers in emerging markets prefer to use mobile banking applications  Most interesting mobile apps are: real-time expense tracking, personal finance management (PFM), payments and mobile commerce  Consumers who strongly favor mobile banking are young (Gen Y or Gen X), tech-savvy, and frequent branch users (2.5+ visits per month) Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 7
  • 8. Social Banking—the Potential Is Here…When Will Banks Be Ready?  Customers still hesitant to use social media for banking – Only 1% of customers in developed – 8% of customers in emerging countries  Concerns due to privacy / lack of control  One segment in favor: younger, tech-savvy customers in emerging countries  The most attractive concepts for Gen Y respondents were learning communities, financial incentives to “refer a friend” and financial games and competitions Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 8
  • 9. Video—Seeing Is Believing Video Key to Building Trust  Video conferencing with remote experts enhances quality of advice – 23% customers in developed countries – 43% customers in emerging countries  Video key feature: Experience enhancer for locations lacking availability of human expertise – Unmanned banking kiosks, after-hour ATMs, virtual banking  Video is ready for the mainstream: Gen X and early majority technology adopters strong believers in video Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 9
  • 10. The Privacy Minefield—Tread Carefully  Top concerns: privacy, security, identity theft – 65% of customers in developed countries – 53% of customers in emerging countries  29% of those opposed to personal information access willing to share if on “opt-in” basis  Consumers worldwide strongly in favor of banks as an infomediary – 60% of customers in developed countries (Gen Y: 70%) – 89% of customers in emerging countries (Gen Y: 92%)  Banks chosen as favorite infomediary – 42% prefer banks ahead of the government (19%), telcos (6%), and social media sites (4%) Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 10
  • 11. So What? Implications for Banks Consumer Needs Implications for Banks  Advice-centered,  Optimized branches for omnichannel branches personalized advice (physical and virtual)  Real-time, location-enabled mobile financial services  PFM, payments, and commerce-centric mobile  Social media to provide apps secure financial learning  Pilot virtual financial communities learning communities in  More personalized, higher- social media quality interactions enabled  Develop integrated by video architectures  Introduce video interactions with experts in branches and at home Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Public Internet Business Solutions Group 11

Editor's Notes

  1. More information: http://www.cisco.com/web/about/ac79/docs/Cisco-IBSG-Omnichannel-Study.pdf
  2. More information: http://www.cisco.com/web/about/ac79/docs/Cisco-IBSG-Omnichannel-Study.pdf