bcg retail banking benchmarking, u.s. bank s.t.a.r.t. … · bcg retail banking benchmarking, ......
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Almost one-half of the 40 largest banks participatedOver $14 Trillion in assets, 400 M customers, 50K branches
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Note: Largest banks ranked by deposits; excludes investment banks and processing banksSource: The Banker Top 1000 World Banks 2011, Company documents
Four main levers for Operational Excellence in Retail Banking
Client excellence
1
Branch excellence
Online excellence
End-To-End performance
Multi-channel delivery
Call center excellence
y
2 3Efficient and effective processes
Streamlined organization
Efficient new product
processes
Efficient administration
processes
Process
Leanorganization
Sales focused FTE distribution
Adequate Opsautomation &
sharing
4
q pfootprint (loca-
tions, sourcing)
Underlying capabilities
2
Complexity management
Performance management
Continuous improvement
Effective front/back office
collaboration
Four levers of Operational ExcellenceRetail Banking Process & Productivity Benchmarking overview
What is this benchmarking about?
Four levers to achieveOperational Excellence
Key Performance cockpit
Top 30 retail banks• North America• Europe• Asia-Pacific
U i b h ki
Client excellence • Maximized customer facing
resources• Aligned with profitability• High utilization
7.5%4.5%5.6%
5.42.64.1
Customer attrition rate
Call handling time (minutes) S
ampl
e K
IPIs1
Unique benchmarking• All retail products• Operations and customer-facing
activities• Activity-based FTE mapping,
rather than organization-based16%2% 4%
803219460
New product sales per sales FTE
Sales conversion per inbound call S
ampl
e K
IPIsEfficient and effective processes• High level of industrialization• Processes simplified• Harmonized activities
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rather than organization-based, applicable to all business models
Banks covering• $14.5 trillion in assets• 450 million customers 87%51%
1,270307437
Customers per total FTE
Share of sales & ser-vice as % of FTEs S
ampl
e K
IPIsStreamlined organization
• Reduced complexity; clarified accountabilities
• Sub-scale units consolidated
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• 51,000 branches
Number of products 21726
58
87%51% 71%vice as % of FTEs
Incentives for i i O
Sm
ple
KIP
Is
• Effective use of sourcing/shoring
Underlying capabilities• Continuous complexity reduction • Rigorous people performance mgmt
across sales and operations
4
3
improving Ops performance
"None" "Aggres-sive" S
am
BestWorstMedian
across sales and operations• Transparency on performance, cost
Benchmarking summary across full value chain and linked to four levers of Operational Excellence
Benchmarking overviewValue chain data collection
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Detailed insights
Critical capabilities and practices
Customer facing FTEs/rolesCustomer-facing FTEs/roles
Call centers service levels
Client excellence KPIs
5
From academic to reality, from theoretical to practical
Benchmarking Action
Ranking
Issue identification
Identified the problem
Formed a team to figure out a
Anecdotal lessons from top performers
gsolution across at least six silos/groups• Retail banking• Credit cards
Implication for US Bank• Not a cost issue at all• Sales force effectiveness
• Credit cards• Technology• Finance• Marketing
• Growth• Innovation
• Enterprise revenue office
CEO mandate• New value proposition to grow
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New value proposition to grow
Context and objectives of the effort
Context Objectives
Competitors launching new products
Create a powerful value proposition
Positive impact on consumer Highly profitable, but no core relationship growth, lack "hook"
C h th t t
engagement
Generate excitement, strong desire t ll f fi ld / b h dConsumer research– they want to
save and need help doing it
Lack of collaboration across silos
to sell for field / branch and corporate employees
Provide a compelling example toLack of collaboration across silos, inhibiting integrated offering
Focus on delivering value in
Provide a compelling example to reinforce innovation theme
Provide a structure to facilitate
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Focus on delivering value in current fiscal with full roll within a year
Provide a structure to facilitate cross-silos work
New product developed using rigorous customer research process
Over 20 concepts brainstormedby senior leaders New product candidatesy
Tested concepts through over 30 one-on-one customer interviews
p
One-on-one interviews
Identified and refined high-potential concepts based on interviews Final
Tested concepts in a quantitative ( i t " t l" t )
Concepts
survey (against "control" concepts)
Analyzed survey results and id tifi d t f k t l h
Survey
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identified concept for market launch
Final Product
Consumer responses to further probing informing development of functional product features
Qualitative research
Wary, quick to detect
gimmicks
Desire help with 'forced'
• Idea must be simple enough to fully communicate
• Avoid "too-good-to-be-true"• Simple to communicate• Avoid "too-good-to-be-true" gimmicks,
'fine print'savings
Do not want toCreating
Avoid too good to be true kickers or language
• Avoid focus on 'goal • Disliked slow savings options Do not want to much bank exposure
Creating significant
value
identification • Very negative reaction to
"name" use of funds
Disliked slow savings options• A few mentioned low balance
generation from "Keep the Change"
Coupons not viewed as true
way to save
Choice, control,
flexibility
• Discounts typically had to be in 15%+ range
• Preferred store selection varies considerably
• Not want to feel "forced" • Need to be able to change their
mind later y
Aversion to f dit
y
Simplicity (despite
varies considerably
• Trying to avoid further spend
• "Single-feature" concepts performed well
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use of credit cards,
( pwanting
everything)• Mass affluent still seeking
rewards maximization
performed well• Refer back to a single
reference/sticking point often
Auto Savings and Rewards candidates for further testing
Qualitative research
Neutral UnfavorableFavorable
Flexible rewards 67 14 19
Cash back rewards only 71 14 14Auto SaveSelected f
Rewards & Auto Sweep 48 19
Choice in Auto Sweep only 57 29 14
Travel rewards only 62 14
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Flexible rewards 67 14 19
24Rewards
Auto Save
for quan-titative
and banker testing specific
Cash & Gift Cards only1 50 50
Silver Package 33 24 43
Pick Your Perk 38 33 29
Lock w Reward 40 30 30Pick Your Perk
Control
Goal Save
Rewards
g pexamplesremoved
forconfidentiality
as
Locked - Branch unlock 27 18 55
Coupons 29 48
Dollar a Day1 33 17
CD - Incrementing Rate2 40 40 20Auto Save
Discount Savings
Goal SaveDe-
prioritized for further
t ti
as manystill are
attractive
CD - Tiered 10 40 50
Combination 335214
Reward choice only 18 73 9
Locked - Branch unlock 27 18 55
Goal Save
testing
10
80604020
Auto sweep choice only 67 33
1000
%
Discovered consumer resonant concept that compared favorably with competitive offerings
Quantitative research
NoveltyPurchase intent versus novelty for mass/middle-income subjects
60
50
SAV-1KR
Novelty
ControlTurboSavings
Peer B50
40
C-W2S C-KTC
SAV-RSCBS
Control
Peer A
30
C-P
TL-F
TL-T
SAV-SRPeer C
0605040300
C PC-S
Current offering
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Purchase intentNote: Matrix represents share of respondents with top-2 responses for initial purchase intent, novelty. Crosshairs represent arithmetic mean values on each axis for control concepts. Top-2 responses for purchase intent "Definitely" and "Probably would sign up for;" for novelty "Extremely" and "Very new and different."Source: Consumer survey (~2,500 completes)
Product featuresSavingsAccount
SavingsAccount SavingsAccount
SavingsAccount
4000 1234 5678 9010
Bank
Pat Anderson
4000 1234 5678 9010
Bank
DebitBank
Customers build savings through an automatic plan• Prescheduled transfer
1 Cash back to savings• Debit card
2
Pat Anderson
4000 1234 5678 9010
Bank
Pat Anderson
• With debit transactions ($ / transaction)• With credit card transaction (% / $ / transaction)
S T A R T rewards card
Congratulations
S T A R T rewards card
Congratulations
• Credit card
SavingsSavings
Customers earn Customers earn
Reward
Congratulations
Reward
63 4 Customers"ThinkTwice5
Sav
AccountSav
Account
Customers earn a Prepaid Card when they build their savings
Customers earn Prepaid Card when keep savings for a year
63 4 Customers automatically qualify for banking package
"ThinkTwice hold" that customers can install and remove
5
13
year remove
Tested better than BofA Keep the Change on novelty and purchase intent
Product description
Savings Today And Rewards Tomorrow™S T A R T makes it simple for you to “start” a savings planS.T.A.R.T. makes it simple for you to start a savings plan that’s right for you, stay on track to meet your savings goals and earn rewards along the way.
All d t d i t i t f fAll you need to do is set up recurring transfers from your U.S. Bank Package Checking account into your U.S. Bank Package Money Market Savings account. You can save a little every week, with every paycheck, or with every credit y , y p y , yor check card purchase. And without even thinking, you can save $1,000!
When you do you’ll earn a $50 U S Bank Rewards VisaWhen you do, you’ll earn a $50 U.S. Bank Rewards Visa Card. Keep a balance of $1,000 or more for a year and earn another $50 Rewards Card.
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Tested better than all other competing offers in marketSource: USBank Web site
Best practices that drove success
Early organizational commitment allowed a "full speed ahead" approach (with appropriate senior touchpoints for regular evaluation/redirection of program)
• Enables rapid marshalling of resources and short time-to-market
Seniorleadership
commitment
Key success factor1
p g• Empowers team to take creative risks
Understanding of customer needs
commitment
Development of customer knowledge thoroughly research-driven• Provides hard facts to inform discussions and provides a level of confidence as team makes decisions • Provides credibility with the field and increases engagement• Leads to discovery of counterintuitive results
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• Leads to discovery of counterintuitive results
Willingness totry new approaches
3 Team was willing to "do things differently" and take creative risks at several stages of the project – a result of senior management mandate and confidence in the research and process
• Allows for true breakthroughs (rather than incremental change)• Creates opportunities for experimentation and learning
Constantdialogue with
the market
4 Solicited input from bankers / local leadership early and continued to engage them throughout the process
• Avoids a "think tank" approach to product design and implementation• Provides continuous reality checks throughout process• Builds engagement and credibility with the field
Early & activecross-BU
engagement
All involved parties across functional silos were at the table from day one as active members of project team, each with early opportunities to provide input and clearly articulated responsibilities
• Minimizes ambiguity by facilitating coordination and planning across silos• Allows for rapid problem-solving
5
g g y
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Coordinatedinternal and
external communication
Consistent messages and coordinated timing in all communications were critical to securing engagement• Creates simple, straightforward product identity consistent with the US Bank brand• Allows leveraging of materials for multiple purposes and avoids duplication of efforts
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Results
More than $2 7 billion saved byMore than $2.7 billion saved by customers enrolled in program
$20 illi iEnrollment Goals Exceeded
$20 million in rewards earned
56% of non-customers surveyed said S.T.A.R.T. was important in
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2009 Year End 2010 Mid 2010 Year End 2011 Mid 2011 Year End account opening decision