sab: transformation banking distribution
TRANSCRIPT
The open banking platform. For each business. Everywhere.
The Challenges of the banking distribution
DIGITAL TRANSFORMATION
October 2015By Olivier Cruanès, Marketing Manager
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AGENDA
1 The digital revolution 2 The digital
transformation
The open banking platform. For each business. Everywhere.
5Global OverviewBUSINESS | TEAM | STRATEGY 1The digital revolution
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INTRODUCTION: THE DIGITAL REVOLUTION
At present there is talk of a new economic model where several human repetitive tasks are replaced by digital processes and in which the amount of work, especially intermediation activities, would be in a harsh contraction.
• The internal procedures and communications with the customers are simplified through computer, automation applications and connections to replace the role of collaborators.
• The Internet is becoming a substitute for the geographical allocation of production factors, enabling to delocalize and desynchronize the production cycles.
• A number of studies suggest that around 40% of jobs might be lost within this technological development, but of course other will emerge. “Uberization” of our economy: is the new logic that will address all jobs, including regulated or monopolist.
The digital revolution or the 3rd industrial revolution
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THE DIGITAL REVOLUTIONIZES THE BANKING DISTRIBUTION MODEL
For the banking sector, the digital transformation of the distribution model is a major issue and relies on information systems long been considered as strategic tools. This transformation requires a commitment to a long and deep process of adaptation to new characteristics of the market.
The digital revolutionizes the banking distribution model with customer experience optimization and transformation of relevant business model.
The current model of the distribution based on the territorial networking by a channel of general branches is no longer viable •for reasons of cost•since it does not satisfactorily meet customers expectations.
The consumer, permanently connected via their mobile, using at least one social network per day, expects •further interactions•continuity of service •greater simplicity of access and use of banking services.
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TWO DIFFERENT APPROACHES FOR THE SAME REVOLUTION
First, banks regarded the digital as an evolution vector of existing processes. Then, they started looking for the advantages of the digital in terms of short-term productivity gains :
documents digitization, Workflow setting, processes optimization…
Fintechs approach is to handle a business process and consider it vertically in full according to a permanent interaction with the end customer, as enabled by information technologies.
It is no more a question of proving the ability to offer an advanced technological service, but of showing how the
customer can be a player of the process.
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SOME BANKS HAVE ALREADY ANTICIPATED THE DIGITAL REVOLUTION
Some banks have already anticipated the digital revolution, such as:
Boursorama Banqueby Société Générale
Hello Bank! by BNP Paribas
Soon by Axa Banque
+ Based on the milestones of one of the first online brokers Fimatex before relying on IS of Caixabank, French former subsidiary
+ A « classic » offer of mobile daily banking service via a dedicated front-office
++ A simplified approach for mobile access to the account
++ Premium offer focused on transaction flow capture
- A significant adaptation of BNP P IS in order to process transactions, with the organization cumbersome
+ A slight adaptation of Axa Banque IS
The open banking platform. For each business. Everywhere.
2The digital transformation
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THE CHALLENGES
Transformation Transformation axesaxes
Permanent accessibility of services Simplification of offers1 2
Complying with the schedules of branches opening, which are often incompatible with the working hours, in order to carry out transactions or access to a customized information, is regarded as a constraint inconceivable by the consumer.
Studies have repeatedly shown that the simplicity, the banks and the insurances came in last in marks considered as « simple ». They are regarded as « complex », and even «not very transparent ».
The combination of these two axes, permanent access and simplicity, should therefore lead the banks to rethink their distribution model according to the customer experience concept. One of the challenges facing the digital transformation of banks is the continuity of customer relationship, regardless of the channel, place and schedule of use.
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In line with initiatives already taken in the sector of tourism, travel or taxis, the introduction of the digital in the in the daily life of consumers has led to a significant disintermediation phenomenon. The customer prefers to self-manage his current transactions with low added value via his computer, smartphone or tablet.The type of the relationship between the customer and the bank must be reconsidered also.
The banks are threatened by new entrants: telecom operators, computer or web giants (Google, Amazon, Facebook, Apple…), and innovate Fintechs. In order to react correctly, the banks shall provide to their customers customized guidance and service with high added value, regardless of the channel in use. To this aim, they must abandon their « product » approach and replace it by « customer centric » approach to be adapted to the new standards of the usage of the digital.
Disintermediation movement 1
New entrants2
THE CONSEQUENCES
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THE 3 MAJOR FIELDS FOR BANKS
Reconsider the distribution method
Streamline the production, find the production profits
Exploit the wealth of data managed by
the bank
The 3 major fields for banks within this digital transformation •cover the entire organization of establishments, •require investments in innovations that may be steered by productivity profits and distribution channels diversity.
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WHICH STRATEGIES? WHICH TRAILS …
Reconsider the distribution method of financial servicesWhich trails•Optimize the « commercial time » of the advisor to strength the commercial force •Transform the branch into points of sale •Increase the distribution channels•Simplify and customize products•Improve the accessibility and availability of distribution channels
Which trails•Optimize and automate the business processes •Pool the banking production with setting up a production center•Outsource the processes with low added value
Streamline the production, find the production profits
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WHICH STRATEGIES? WHICH TRAILS …
Which trail•Identify and analyze the managed « customers » data•Enhance customer profiling with creation of communities •Adapt and customize the offers in line with the constituted communities •Digitize the marketing •Manage the opportunities « at the right time »
Exploit the wealth of data managed by the bank
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THE GLOBAL APPROACH
How to implement ?
Some trails•Establish a separation « Distribution / Production » in the IS•Optimize and automate the business processes •Set up an omni-channel distribution •Set up« Banking production centers » to manage different distribution channel products •Set up tools for predictive analysis of data(« Big data »)•Use the digital innovations (marketing, coaching, etc…)
Distribution channels
Simplification and automation of processes
Customer centric
Security