Sanjoy Sen - Asia Financial Services Conference - Key Note Inaugural Presentation - Emerging Trends in Retail Banking - Feb 2013
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The document discusses key trends in retail banking in Asia Pacific. It notes that while developed markets still face downside risks, developing markets and frontier markets are expected to see healthier growth. Some of the main trends in Asia Pacific include increasing competition, more cautious customers, and technology enabling new types of customer interactions. The document outlines challenges facing retail banks in the region and proposes a "new retail banking order" with nine strategies for success, including simplifying costs, customizing offerings for different customer segments, redesigning channels like branches and digital banking, and focusing on customer centricity through advocacy, regulatory compliance, and loyalty programs.
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Sanjoy Sen - Asia Financial Services Conference - Key Note Inaugural Presentation - Emerging Trends in Retail Banking - Feb 2013
- 1. Retail Banking in APAC: Emerging Trends Sanjoy Sen Managing Director Retail Banking Asia Pacific
- 2. Agenda Global Outlook in Retail Banking Key Trends in Asia Pacific Changing Trends in Consumer Behavior New Retail Banking Order – The Winning Formula
- 3. Developed world – downside potential remains over the next 3-5 years….. Post the Global Financial Crisis Impact on banks post GFC •Deleveraging •Sovereign debt exposure •Social mood In response… •Cautious lending •Selling off surplus assets •Consolidation •Re-orientation of growth
- 4. Developing world and frontier markets….. will have healthier growth prospects • Higher forecasted growth rates (5-10%) • Healthy domestic demand • Increase in savings • Low levels of debt • Relatively tightly controlled financial sectors
- 5. Key Trends in Asia Pacific Agenda Changing Trends in Consumer Behavior Global Outlook in Retail Banking New Retail Banking Order – The Winning Formula
- 6. Retail Banking Challenges in Asia Pacific Your Bank Uncertainty operating conditions Regulatory compliance burden Increased competition Increasingly cautious customers Technology as enabler & differentiator Revenue erosion How will Retail banks in Asia respond to these challenges?How will Retail banks in Asia respond to these challenges?
- 7. The Asian Century Source: Trends in Asia Pacific Banking Trends - BCG By 2030, Asia will account for 50% of global GDP; and Asia’s private consumption will grow at 11% p.a..
- 8. Asia Pacific is the biggest and most profitable banking market, with higher returns in developing economies Source: Trends in Asia Pacific Banking Trends - BCG The outlook in Asia is relatively optimistic; as the region has weathered the storm better than others
- 9. No wonder today, 20 of the top 50 global banks are Asia Pacific Source: Trends in Asia Pacific Banking Trends - BCG
- 10. Agenda Global Outlook in Retail Banking Key Trends in Asia Pacific Changing Trends in Consumer Behaviour New Retail Banking Order – The Winning Formula
- 11. 5 significant shifts in the Asia consumers’ behaviour • Consumers are becoming less loyal to their financial institutions. • Consumers prefer to deal with a ‘local’ bank. • Consumers are more cautious about borrowing. • Consumers are going remote. • Consumers seek products they understand or can easily acquire knowledge about.
- 12. New Retail Banking Order – The Winning Formula Agenda Changing Trends in Consumer Behavior Global Outlook in Retail Banking Key Trends in Asia Pacific
- 13. Relook at your customer segmentation i) Simplify to take out costs ii) Customize your offerings iii) Use multi-dimensional segmentation 9 Key Strategies 9 key strategies to build for sustainable advantage & strong financial performance Redesign your channels i) Omni-channel distribution ii) Branch as a distribution channel iii) Digital interactions Redefine customer centricity i) Build customer advocacy ii) Customers and regulations iii) Build a holistic loyalty system
- 14. Complexity Efficiency Simplify to take out costs – Get super efficient to serve low value customer segments in order to fund differentiation for high value customers Many banks continue to spend more to serve its lowest value customers…they need to understand the “nuts and bolts” of “cost to serve” Many banks continue to spend more to serve its lowest value customers…they need to understand the “nuts and bolts” of “cost to serve”
- 15. Customize your offerings – Craft differentiated offerings and channels to serve high value segments Affluent customers need tailored offerings, specialized advice…..wrapped in a terrific customer experience…and they don’t think that they are getting it Affluent customers need tailored offerings, specialized advice…..wrapped in a terrific customer experience…and they don’t think that they are getting it Percentage of mass affluent customers in each region that demand customized banking solutions Source: Datamonitor’s FSCI survey 2010
- 16. Use multidimensional segmentation – target your customers by developing and maintaining a detailed understanding of needs, income, demographics, behavior and values Leave no customer segment unturned Meaningful segmentation will provide banks with an understanding of the fit between the capabilities of the bank and the requirements of current & potential customers Meaningful segmentation will provide banks with an understanding of the fit between the capabilities of the bank and the requirements of current & potential customers Source: Cap Gemini Consulting Analysis
- 17. Relook at your customer segmentation i) Simplify to take out costs ii) Customize your offerings iii) Use multi-dimensional segmentation 9 Key Strategies 9 key strategies to build for sustainable advantage & strong financial performance Redesign your channels i) Omni-channel distribution ii) Branch as a distribution channel iii) Digital interactions Redefine customer centricity i) Build customer advocacy ii) Customers and regulations iii) Build a holistic loyalty system
- 18. Omni-channel distribution – Redesign from “multi channel” to “omni channel”…..for seamless customer experience Omni channel distribution is seamlessly integrating the customer experience across disparate channels ….for better interaction Omni channel distribution is seamlessly integrating the customer experience across disparate channels ….for better interaction
- 19. Branch as a distribution channel – Move to smaller branches for new customers, advice and complex transactions Leverage the power of branches and branch staff in relationship building. Leverage the power of branches and branch staff in relationship building.
- 20. Digital interactions – Use mobile and digital banking as a powerful means to build loyalty As digital banking spreads, banks have new opportunities to create “wow” experiences to delight customers As digital banking spreads, banks have new opportunities to create “wow” experiences to delight customers Portfolio view of investments Card spending analysis E-Statements Internet Banking •View total portfolio in details and charts •Perform banking transactions & investment transactions •View investment risk profile •Access latest market news, information, rates, research, etc Mobile Banking •Account enquiry •Location based services for merchant offers or branch locations •Financial news •Credit card payment barcode •Integrated BillMinder calendar •Voice search and augmented reality for searching merchant offers •Interactive Lazy Susan game for dining offers Account Enquiry Rate Calculator Lazy Susan game Augmented reality BillMinder Credit Card Barcode payment
- 21. Relook at your customer segmentation i) Simplify to take out costs ii) Customize your offerings iii) Use multi-dimensional segmentation 9 Key Strategies 9 key strategies to build for sustainable advantage & strong financial performance Redesign your channels i) Omni-channel distribution ii) Branch as a distribution channel iii) Digital interactions Redefine customer centricity i) Build customer advocacy ii) Customers and regulations iii) Build a holistic loyalty system
- 22. Build customer advocacy – Shift marketing from “push” to “pull” and create an active customer advocacy community The secret to a winning advocacy strategy is to find the right people and get them talking about the right things in the right places. The secret to a winning advocacy strategy is to find the right people and get them talking about the right things in the right places.
- 23. Customers and regulations – Use customer excellence as an antidote to regulations Banks who educate customers, advertise honestly and have fair pricing ….will lead to cross-buying as opposed to cross- selling Banks who educate customers, advertise honestly and have fair pricing ….will lead to cross-buying as opposed to cross- selling
- 24. Build a holistic loyalty system – Move from cross-sell to relationship deepening Loyal customers buy more banking products, stay longer and urge others to become customers Loyal customers buy more banking products, stay longer and urge others to become customers Source: Bain Analysis
- 25. SUCCESSSUCCESS Simplify SEGM ENTATION SEGM ENTATIONCUSTOMERCUSTOMER CHANNELS CHANNELS Customize Multi-dimensional Omni-channel Branch Digital Advocacy Excellence Loyalty New Retail Banking Order – Winning Formula
- 26. The winning banks will be thoseThe winning banks will be those who seek to serve their customers,who seek to serve their customers, not just take their moneynot just take their money
- 27. Thank you