digital banking: why are banks not performing as well as they could do?

Services & Consulting for

Digital Leadership

Why are banks not performing as well as they could do?!Stefan F. Dieffenbacher"

How much time did the average bank customer spend in 2013 …!

In the branch! In the digital channels!

Data source: hard data from 5 out of the top 20 banks in Europe 2013!

What % of customers were going at all to a branch in 2013?!

Branch visitors! Digital Channels only!

59.6%!40.4%!

Channel usage intensity and frequency by 2015 in % *!

Desktop / browser Banking!

Mobile Banking!

Software (i.e. Quicken)!

Cash / non-cash ATMs!

Branches!*by usage frequency and usage intensity!

The Digital Channels are already today #1.

The branch network is the alternative channel.

Really?!

Sales (by numbers and volume) compared!

Branch! Digital Channels!

Final conclusion: banks don’t manage to make money

out of their online customers. !

The User perspective!

Coralie „Youngster distant functionalist“!

2!Top Prio: 5

Banking behaviour and attitude !Number of banks 1 Primary bank Fortis Banking likes No personal relationship, as long as the bank does a good job doesn't need

specialists currently, and prefers a distance with bank employees, likes simulations, access flexibility, general flexibility, simplicity

Banking dislikes No interest in banking and the financial world in general, banking must not take up too much time, doesn't want to be confused by her bank, modern atmosphere, too much formality and administration

Banking fears Little fear due to small exposure to banks Service frustrations Lack of efficiency, poor quality of advice, complicated language, marketing is to

obvious, daily service is too expensive

Literacy and devices

Computer Literacy Good computer Literacy and frequent use of other digital devices (digital natives) but finance plays no major part in life as of now, heavy Facebook user

Finance Literacy Low interest in finance and little Literacy Devices PC, iPhone 3, Android tablet

Proposition Matrix!Brand affinity Brand-agnostic Products u. Mngmt Savings, some current account, Mine pack, 1-2-ring Advice type Almost no use of PC banking due to limited product usage, contact via self

service in branch and face-to-face, but high affinity towards digital channels, Need specialist help, concise, no proactivity, trusts friends

Financial evolution Towards Nexus Retail, Nexus HiPo, risk: becoming a Retail Up and cross selling Cards, current accounts, travel insurance, PFM

Key data Age: 13 Location: Charleroi Language: French Education: Primary school Salary: €0.9k Assets: €6k Segment size 160 000

Lifestyle

Background: •  upper middle class

Life goal: •  rather vague: go to university

Life events: •  graduation, education choice, marriage, birthdays

Customers want to have it easy!

-668,61!04!Apr!

And be proactively informed!

They expect banks to help them understand their financial life!

… and across their family / relevant entities!

Customers look at their bank to help them understand how they spend!

And be supported in their financial planning!

Creating transparency & trust!

+40% conversion rate for ABN AMRO.!!

Eradicate barriers for your potential customers!

(1) Easy sign-up! (2) Photo authentication!

(3) Automatic login after sign-up!

(4) Customer does multibanking setup (! bank knows user’s

monthly income)!

(5) Bank grants !pre-approved credit!

The ideal customer sign-up process!

(4) Customer does multibanking setup (! bank knows user’s

monthly income)!

(1) Easy sign-up! (2) Photo authentication!

(3) Automatic login after sign-up!

(5) Bank grants !pre-approved credit!

The ideal customer sign-up process!

The customer banks within 5 minutes!

The external environment!

Increasing proliferation of consumer decision making processes!

Need to invest!

Online purchase!

Price comparison!

website!

Website!visit!

Print!campaign!

Youtube!Channel! Facebook!

Posts!

Family!discussion!

Community!review!

Friends!recommen

dation!

Branch visit!

€ Video!review!

€ Touch points where the bank can influence (potential) customers!

Consumers directly interact with Merchants – the banks are not in the picture!!

MicroPayment, Pay as you go & Mobile Payment - all managed online.!

•  Premium SMS!•  Operator billing!•  App billing !•  In-app payments!•  NFC and mobile contactless payments !•  NFC trials so far !•  ‘Pay by mobile’ for digital goods !•  PayPal as a mobile channel !•  The single-click credit card checkout !•  Square and Bump: physical mobile

payments!•  Mobile money and banking!•  Micro Web-payments!•  Gaming coins!

And even sending money is being threatened.!

The business lens.!

3 months to launch a banner ! ROI maximized performance marketing!

Design goes beyond colours…!

Without data collection, no customer insights!

Data from the CRM & core banking system!•  Customer value!•  Last branch visit!•  Current residence!

Data from PFM!•  Saving goals: user saves up for an own home!•  Free finances: <€500 / month!•  Rent: <€500 / month!

Unified Consumer Banking Data

Model!

•  Last login, frequency of logins!•  Which advertisements did the user click on?!•  Which offers has the user been interested in?!ex

amples!

Data from analytics!

… and no personalization & targeting!

Drive marketing!

•  Optimize On-&Offline Marketing Budget!•  Targeted multichannel campaigning!

Drive product recommendations, !online marketing & sales!

•  3D realtime campaign management!

Drive advisory across the branch network!

•  Advice customers holistically with consideration of their (saving) goals, lifestyle, expenses, overall financial situation and dreams!

Drive content & features!

•  Drive content towards each sub-segment and potentially against real-time micro-segments!

Unified Consumer Banking Data

Model!

Relaunch: align business & IT on the longer term! Excerpt of the Digital Leadership Strategy Framework!

Stakeholders + other inputs!

Expected Benefits!

Overall Direction!

“The Product”!

Costs! Business Case!

Approach & Plan!

Stakeholder identification!!Personas!!Initial market & competitive analysis!!Other inputs to needs!

Departmental inputs!!Benefits identification!!Benefits breakdown & prioritization!!BI & Analytics review!!Initial opportunity identification!

Vision!!Goals!!Business objectives!!Project Motivation!

Key user tasks!!Cross-channel customer experience journeys!!Scope Landscape!!Roadmap!!!Content org model!Site org model!

Technical architecture! !Draft cost breakdown!!Initial project plan!!Organisational setup post launch!!Cost assumptions!

Business case!!Funding options!!Business Case presentation!

Initial draft plan till go-live!!Project plan strategy & concept phase!

1! 2! 3! 4! 5! 6! 7!

Understanding the areas of value creation!

Online-Banking The Online-Banking Strategy Framework!Prioritized benefits = strategic objectives

Benefits sought

Enable Online Data for branch advisory

Marketing

Enable Online-Data for Offline-Marketing

Unified data collection

Increased customer retention

Stickiness of the site

Chat & video

Online self-advisory tooling

Multibanking

Financial literacy

Financial planning

Loyalty program

Advisory

Financial vision

Bundling

Higher share of wallet

Realtime segmentation & targeting

Improved productinformation

Connection withloyalty program

User centered scenarios

On-site & conversion measures

Increased customer acquisition

Off-site marketing

Off-site measures

Content marketing

SEM & SEO

Affiliate marketing

Recommendation mar-keting

Ratings & Reviews

Analytics, goals &AB testing

Competitive comparison

Cross-channelMultibanking core

Ajusting channel mix

Adjusting for all screen sizes

Mobile push

Online- / Offlineconversion scenarios

Creating a large screen experience

Customer support

Cost reductions

Improved maintainability

Higher scalability

Centralized IT development

Improved integrability

Less customer service incidents

Improved perception of support / help

Operations

Decreased contentmaintenance effort

Improved campaign management

Professional usability

Necessities / must do’s

Move away from aging platform

Legal requirements

Mobile integration

Highest Important Complementary

Governance!

Security & complianceTechnologyIntegrationSystem Administration

Access & ChannelsRoles & responsibilitiesCollaboration & supportOrganization & structure

Brand & PerceptionMedia & ContentBehaviour & FunctionalitySite setup & structure

User needsCorporate goalsVisionObjectives, goals & KPIsFeedback mechanismsOutside of DC Governance

Digital Channels Governance Focus Areas

Direction

PeopleCore c

ponents

Governance focuses on the discrepancy to goals!

Security & complianceTechnologyIntegrationSystem Administration

Access & ChannelsRoles & responsibilitiesCollaboration & supportOrganization & structure

Brand & PerceptionMedia & ContentBehaviour & FunctionalitySite setup & structure

User needsCorporate goalsVisionObjectives, goals & KPIsFeedback mechanismsOutside of DC Governance

Digital Channels Governance Focus Areas

Direction

PeopleCore c

ponents

What have we done today?!

We have considered about 25 challenges banks may have to

address!

But which one is important?!

A proposal for a basic prioritization framework!

Depths(of(product(/(offering(

Custom

er(nee

ds(/(bu

ss(nee

1) Plotting of potential actions!

Custom

er(nee

ds(/(bu

ss(nee

Smartphone / photo !customer sign-up!

Next gen UX!Intelligent alerts!

PFM analysis of finances!Mobile payment!

Multibanking!

Financial planning!

(transparent) product reviews!

*exemplary plotting of potential actions!

2) Understanding how these action items are likely to evolve in the marketplace!

Custom

er(nee

ds(/(bu

ss(nee

Multibanking!

Financial planning!

(transparent) product reviews!

3) Final step: Where should we focus on?!

Custom

er(nee

ds(/(bu

ss(nee

Multibanking!

Financial planning!

(transparent) product reviews!!

Continue investments!

Delete!!

Minor investments, unless important niche

clientele!!

!Invest heavily!

Digital Leadership

Stefan F. Dieffenbacher - Brussels, 21st of August 2014!

Digital Leadership

Thank you!!

Stefan F. Dieffenbacher - Brussels, 21st of August 2014!

Contact details!

Stefan F. Dieffenbacher!Executive MBA, PMP, CPM, Scrum Master!Managing Director!

Digital Leadership GmbH!Landsberger Straße 217!D-80687 München!

+49 (0)176 / 638 020 11!+49 (0)89 / 748 600 32!sd@digital-leadership.net!www.digital-leadership.net!!

mobile:!office:!

e-mail:!Internet:!

Let me know how I can help!!

digital banking: why are banks not performing as well as they could do?

Business

37921541 final non performing assets of banks repaired)

non-performing assets and public sector banks in...

pro-cyclical management of banks’ non-performing loans by...

a study on non- performing assets of nationalised banks ·...

non performing loans in commercial banks: a case … ·...

14245136 non performing assets of banks

performing assets (npa’s) in cooperative banks(dccb’s)...

non-performing assets in indian banks: this time it is ......

guidance to banks on non-performing loans (npls) · in...

ecb: public consultation on draft guidance to banks on...

banks non-performing assets dcember e ... › information...

rising non-performing loans and banks profitability in...

comparative analysis of non performing assets of public...

the impact of commercial banks non performing...

non performing assets in indian banking sector · sbi &...

non-performing assets in indian banks: this time it is

impact of non performing assets on profitability for public...

internship report on non-performing loans of commercial...

banks non-performing assets dcember e quarter … · 1...

managing non-performing loans in banks: a review of the...