www.retailbankerinternational.com Issue 750 / June 2018
RBI #750
AFTER 37 YEARS AND 750 ISSUES, HOW HAS THE RETAIL BANKING LANDSCAPE CHANGED?
AWARDS FEATURES AND MORE
The RBI Global Annual RBI speaks to Itau ...HSBC, Emirates NBD, Awards recognise the best Unibanco, BBVA, Metro Citi, Tinkoff, Ally Bank and in retail banking worldwide Bank, BBVA, RBC and... Wells Fargo as well
RBI 750 June 2018.indd 1 31/05/2018 10:35:16 contents this month
COVER STORY NEWS 05 / EDITOR’S LETTER 39 / DIGEST • Iberiabank to close 22 branches • UK court dismisses Barclays charges • Digital transformation fostering new risks in financial services • Fifth Third Bancorp agrees MB Financial acquisition • Mobile banking use higher than ever • Investors eye Meezan Bank stake • Technology a bigger banking trend than regulation • FNB enables customers to open accounts with selfies • BofA introduces AI-based virtual financial assistant
RBI#750 06, 07
Editor: Group Editorial Director: Head of Subscriptions: Douglas Blakey Ana Gyorkos Alex Aubrey +44 (0)20 7406 6523 +44 (0)20 7406 6707 +44 (0)20 3096 2603 [email protected] [email protected] [email protected]
Senior Reporter: Sub-editor: Director of Events: Patrick Brusnahan Nick Midgley Ray Giddings +44 (0)20 7406 6526 +44 (0)161 359 5829 +44 (0)20 3096 2585 [email protected] [email protected] [email protected]
Junior Reporter: Publishing Assistant: Briony Richter Mishelle Thurai +44 (0)20 7406 6701 +44 (0)20 7406 8633 [email protected] [email protected]
Customer Services: +44 (0)20 3096 2603 or +44 (0)20 3096 2636, [email protected] Financial News Publishing, 2012. Registered in the UK No 6931627. ISSN 0956-5558 40 Unauthorised photocopying is illegal. The contents of this publication, either in whole or part, may not be reproduced, stored in a data retrieval system or transmitted by any form or means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. For more information on Verdict, visit our website at www.verdict.co.uk. As a subscriber you are automatically entitled to online access to Retail Banker International. For more information, please telephone +44 (0)20 7406 6536 or email [email protected]. London Office: 71-73 Carter Lane, London, EC4V 5EQ Asia Office: 1 Finlayson Green, #09-01, Singapore 049246 Tel: +65 6383 4688, Fax: +65 6383 5433 Email: [email protected] follow RBI on twitter @retailbanker
2 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 2 31/05/2018 10:35:22 contents june 2018
RBI#750 RBI GLOBAL AWARDS 06 / ISSUE 1 07 / BRANCH NUMBERS 16 / WINNERS The world of banking has changed Some 14,000 UK bank and building society Now in their 33nd year, the RBI Global Annual dramatically. As RBI celebrates issue 750, branches have closed since the first issue of Awards celebrate the best in global retail Briony Richter looks back to issue number RBI was published on 18 May 1981. As it banking. The quality and sheer quantity of one, published in May 1981, to see how the celebrates issue 750, Douglas Blakey looks at the submissions received again do the awards landscape of banking has transformed the changing face of the UK branch network proud, writes Douglas Blakey STRATEGY DISTRIBUTION 16 08 / RBC 20 / TINKOFF Having just received the JD Power award for Oliver Hughes joined Tinkoff as CEO in Highest in Customer Satisfaction among 2007, and under his leadership it has grown Canada’s major banks, and RBI’s award for into the world’s largest independent digital DIGITAL Best Retail Bank North America, RBC’s Neil bank by customer base. Hughes discusses McLaughlin talks to Douglas Blakey Tinkoff’s growth plans with Douglas Blakey 28 / WELLS FARGO Wells Fargo has announced major innovations 10 / STANDARD CHARTERED 21 / BBVA to improve its digital banking users’ customer Aalishaan Zaidi, global head of digital Robin Arnfield talks to Çagrı Süzer, head experience. It is also reimagining the future banking at Standard Chartered, discusses the of retail banking at BBVA Compass. While of personal finance to optimise the customer bank’s digital vision with Douglas Blakey. mobile banking numbers are soaring and experience. Robin Arnfield reports The objective, according to Zaidi, is to be products are increasingly sold digitally, BBVA “digital with a human touch” remains committed to the branch channel MARKETING 11 / EMIRATES NBD 26 / ALLY BANK 37 / LOYALTY Emirates NBD’s Suvo Sarkar was recognised as Ally Bank has been adding products to offer Ten Group CEO Alex Cheatle discusses his 2018 Retail Banker of the Year at RBI’s annual its customers a ‘one-stop shop’. The result firm’s technology-enabled lifestyle, travel global awards (see page 12). Sarkar discusses has been major growth in deposits and client platform and concierge services with Douglas with Douglas Blakey the bank’s vision of numbers, deposits and consumer strategy Blakey. The premium service is already offered furthering digital innovation in the UAE executive Anand Talwar tells Robin Arnfield to customers of a growing number of banks 24 / HSBC 29 / ITAÚ UNIBANCO INDUSTRY INSIGHT Digital tech is revolutionising banking and Itaú Unibanco, Brazil and Latin America’s improving the overall consumer experience. largest bank, has made significant investments 35 / FISERV HSBC’s Raman Bhatia foresees a makeover in in digital technology. It has also formed a PSD2 and the implementation of Open retail banking as the sector moves into a new Latin American strategic council to drive its Banking in the UK create a wealth of ecosystem. Briony Richter reports expansion. Robin Arnfield reports opportunities. However, it has been one of the biggest compliance tests the industry has ever 32 / CITI 36 / BRANCHES faced, writes Fiserv’s Andrew Steadman Will Howle tells Robin Arnfieldhow Michael Allen is the founder of strategic design a lean branch network, a transformed company allen international. He discusses with 38 / P2 CONSULTING mobile acquisition, service and engagement Douglas Blakey some of the most significant Financial services rarely stands still, and some experience, and the US’s largest fee-free ATM branch projects in which he has been involved, areas have seen a complete transformation of network position Citi for exciting growth and looks ahead to the future of the branch the roles and skills required. One area that has seen a cataclysmic shift in expectation is AML PEOPLE 26 compliance, writes Phil Rolfe 34 / METRO BANK 42 / M WORLDWIDE In RBI’s 37-year history, few bankers have Start building relationships with consumers been as quotable, colourful or successful as while they are still young, or risk missing out Vernon W Hill II. Rightly described as having on opportunities to help shape their financial revolutionised retail banking in the US, he tells perspectives and build brand preference for Douglas Blakey the reasons for his success the long haul, argues David Martin
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IE Adverts - 2018.indd 1 07/02/2018 10:41:07 editor’s letter
750 and counting: there has never been a better time to be covering retail banking
Douglas Blakey, Editor
s a rule it is always better to look forward than The need for challengers back, but for one issue we have been looking We are still talking about the need for challengers and A back as RBI celebrates its 750th issue. greater competition. Looking back to issue number 1 in May 1981 and The big story in issue 1, May 1981, was the outbreak subsequent early issues of RBI has been huge fun. of a bidding war for RBS, with rival bidders HSBC and Issue number 1 was published in May 1981. In the Standard Chartered. interim, there have, of course, been huge changes in That was to become quite a saga, and if the Thatcher channels – for example, our branches table in 1981 government – yes, the free market government of showed 22,000 bank and building society branches in the Margaret Thatcher – had not ultimately blocked both bids, UK. Today it is about 7,800 (see page 7). NatWest, to pick banking history would have been very different. just one example, is down from 3,370 then to 655 today. We might never have heard the name Fred Goodwin. It We also reported on banks trialling also seems to suggest that a Standard ATMs; in 1981 Barclays had a mere Chartered/RBS combined bank would 240 ATMs across 3,014 branches. not have bid for a toxic bank in the But the biggest change, arguably, Netherlands. is not in channels but relates to the Two other things have not changed unbanked – and it is actually a great since 1981: Vernon Hill (see page banking success story. In 1981 we 34) was stirring up the market and reported on the great unbanked bucking the market with his focus British. The UK banks’ own research on the branch – sorry, store – and organisation at the time said that a his focus on building fans through staggering 45% of Brits did not hold service and convenience. a current account. Today, some 46 And closer to home, the biggest million Brits hold a current account – about 90% of all thing that has not changed is that the UK is a great adults. market for retail banking. In issue number 1, we headlined We reported on the need for cash displacement in a feature: The UK – a great market for retail banking. 1981, and that subject remains topical today. Today’s That was true then, and arguably is even more accurate millennials will be amazed to learn that, in 1981, a today. Witness the explosion in the number of start-up majority of UK workers were still paid weekly and in cash and challenger banks. – 14 million workers. I have only been involved with RBI since about issue Much, however, has not changed since 1981. Issue 1 520, so almost one-third of the title’s history. It has talked of the future of current accounts – should interest been huge fun, and seems an appropriate time to say a be paid on current account balances? heartfelt thanks to all subscribers, contributors, bankers, There was discussion about fears over margin pressure PRs and press officers for their help. and forecasts of a coming era of lower interest rates: for And just to put May 1981 into some kind of non- the record, the net interest margin enjoyed by Barclays in banking historical perspective, in other news that month, the period 1978-1980 was in the region of 6-8%, against Bob Marley died, the musical Cats was performed for the about 2-3% today. And there was talk of the dominance first time, and number 1 in the charts was Bucks Fizz’s of the Big 4 and the need for greater competition. Making Your Mind Up. <
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RBI 750 June 2018.indd 5 31/05/2018 10:35:29 rbi#750 | issue 1
At the time, HSBC had no presence in the UK, and although Standard Chartered had rbi#750 retrospective: headquarters in London, the bank had no retail presence in the UK. The bids came under political scrutiny as the UK government was opposed to a takeover looking back to by HSBC, and eventually both bids were referred to the UK Monopolies Commission to be investigated. Racing forward to 2018, one wonders 1981 and RBI #1 what would have become of RBS had it been acquired by Standard Chartered or HSBC. Currently, the bank is having its own troubles. The world of banking has changed dramatically. As RBI Leaders of RBS have been accused of lying to celebrates issue 750, Briony Richter looks back to issue MPs amid claims that staff at banks poised for number one, published in May 1981, to see how the closure have continued to be given targets on convincing customers to go digital. landscape of banking has transformed in the last 37 years CEO Ross McEwan appeared before the Scottish Affairs Committee on 8 May to argue rom the rapid rise of electronic UK has some 1.5 million unbanked citizens. the case for closing a further 62 branches. payments and digital technologies, Without so much as a current account, the Fto AI automation and branchless unbanked population is excluded not just CASH TO CASHLESS banks, the way we bank today would be from access to mainstream credit and banking unrecognisable to the industry in 1981. services, but from making basic transactions in In 1981, RBI reported that transactions by So, let us step back to what RBI reported in the growing number of stores that no longer card witnessed a tenfold increase between May 1981 to see the extent to which banking accept cash. 1971 and 1979. However, Brits were not and the UK market have progressed. taking to the new payment form too easily, TAKEOVER BATTLE with card payments representing less than CURRENT ACCOUNTS one household in 15. In the 1980s, cash was Between the late 1970s and early 1980s, the clearly still king. The most astonishing difference is the number UK was engulfed in battles to take over the The dominant credit card provider in the of Brits without current accounts in 1981 Royal Bank of Scotland (RBS). In 1981, RBI UK at the time was Barclays, powered by compared to today. reported on these controversial bids; the two Visa. The bank was the first to launch a credit The first issue of RBI explored the main contenders were Standard Chartered card in 1966 and, according to RBI, in April unbanked in the UK. In 1981, it reported Bank and HSBC. 1981, 5.5 million people in the UK used a that, although the UK was considered the Initially the offer from Standard Chartered Barclaycard. banking capital of the world, a staggering 45% Bank was approved by the Bank of England. Fast-forward to today and cash has of adults did not have a current account. However, HSBC swooped in with a rival offer. definitely lost its crown – in fact it is not even The article, The UK – a market opportunity, in the running as the competition now firmly quoted Frank Stankard, senior executive of stands between digital payment methods. international banking at Chase Manhattan UK accounts in 1979 According to a report by CACI, mobile Bank, as saying: “In some ways, England has Percentage of adults holding banking is set to soar past usage of online some aspects of an underdeveloped country.” accounts, by account type banking by 2019. The data analyst predicts % RBI in 1981 reported that although 45% 60 that 35 million people – 72% of the UK adult of UK adults did not hold a current account, population – will conduct their banking tasks only 15% were without any form of account. 50 through a mobile phone app by 2023. The article highlights: “The message seems Visiting a branch in 1981 was extremely to be that a large number of British adults 40 common and frequent, as many employers manage quite well without going near a bank.” still paid staff in cash or by cheque. CACI has 30 At least in terms of financial inclusion, predicted that by 2023, the average person the UK has improved. Around 46 million 20 will only visit a branch twice a year. people in the UK now hold current accounts. Just two years after RBI’s first issue, online According to the Financial Inclusion 10 banking hit the screens of the UK population. Commission, the UK ranks ninth in the world That changed the whole landscape as 0 in terms of banking inclusion; furthermore, it traditional face-to-face banking started to lose
reports that only about half of the unbanked account account out to digital solutions. Bank current Bank deposit/ None of these population would like a bank account. Building society The transformation in how we bank has savings account(via Post Office) However, existing from day to day using National Savings Bank been astounding– and the revolution is only just cash was a lot easier in 1981; today, the Source: RBI, 1981 going to continue. <
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RBI 750 June 2018.indd 6 31/05/2018 10:35:29 rbi#750 | branch numbers
BUILDING SOCIETIES rbi#750 retrospective: In 1981 there were around 250 building societies in the UK, against 44 today. Building society branch numbers in the UK in 1981 totalled 5,147, against 1,519 today. two-thirds of Legislation in 1986 enabled building societies to offer current accounts and SME loans, and to demutualise. The second-largest society at the time, Abbey National, converted branches axed to a bank in July 1989 and was subsequently acquired by Santander in 2004, rebranding to its parent group in January 2010. Some 14,000 UK bank and building society branches have Other significant demutualisations closed since the first issue of RBI was published on 18 May included: Cheltenham & Gloucester, acquired 1981. As it celebrates issue 750, Douglas Blakey looks at the by Lloyds in 1995; Alliance & Leicester in 1997, later acquired by Santander in 2008; changing face of the UK branch network since RBI launched Woolwich converted to a bank in 1997 and was acquired by Barclays in 2000; Northern t seems like another world. In 1981, Jump forward to the start of 2018 and Rock and Bristol & West also converted the then big four UK retail banks – Barclays ranks first by brand with 1,208 to banks in 1997, the latter being acquired INatWest, Barclays, Midland and Lloyds branches. NatWest has closed four in five of by Bank of Ireland. Santander now has 818 – operated a combined UK branch network its branches, shrinking from 3,370 to 655 branches, comprising former Abbey, Alliance of 11,400 outlets. outlets. Midland/HSBC has closed over 2,000 & Leicester and Bradford & Bingley outlets; NatWest was some 19 years away from branches, or three out of every four outlets, the latter converted to a bank in 2000, and being acquired by Royal Bank of Scotland and reducing to 625 branches. Lloyds has closed was acquired by Santander in 2008. boasted a network of 3,370 branches, ahead of a relatively modest 60% of its branches, The biggest demutualisation was the Barclays with 3,014. reducing from 2,311 then to 967 now. country’s biggest society, Halifax. It converted Midland, destined to become part of HSBC The ownership structure of the traditional to a bank in 1997, merged with Bank of in 1992, rebranded under its parent moniker big four has undergone a radical change. Back Scotland in 2001 to form the ill-fated HBOS, in 1999 and ranked third in 1981 with 2,705, in 1981, Barclays owned a 35% stake in Bank and was acquired by Lloyds in 2009. The ahead of Lloyds with 2,311. of Scotland, Midland owned the Clydesdale country’s largest society today, Nationwide, Bank, while Lloyds held a 16% stake in RBS. accounts for almost half of all society UK BRANCHES BY NUMBERS 1981-2018 The three Scottish brands – RBS, Bank branches, with a network of 680 units; other of Scotland and Clydesdale – have between notable society branch networks include may 1981 jan 2018 them closed more than three-quarters of their Coventry (87), Yorkshire (70), Skipton (62), NatWest 3,370 655 Scotland-based branches since 1981, almost Nottingham (60) and Leeds (53). Barclays 3,014 1,208 1,200 branches in total. Midland/HSBC 2,705 625 In Scotland, RBS’s branch count is down WILLIAMS & GLYN – RBS Lloyds 2,311 967 from 606 to 89, with Bank of Scotland’s shrinking from 567 to 206. Meantime, The branch network least affected by closures TSB 1,611 559 Clydesdale has closed more than 80% of its since RBI first published is the one most likely Cooperative Bank 880 95 branches, reducing to 71 from 376. to attract press attention in coming years: Royal Bank of Scotland 606 89 RBS’s branch network in England and Wales. in Scotland TSB Branded as Williams & Glyn (W&G), the Bank of Scotland 567 206 network comprised 320 outlets in 1981; today Clydesdale Bank 376 71 In 1981, the TSB was in the process of the branches are branded as RBS and total Williams & Glyn/RBS 320 280 bringing together around 20 regional savings around 280 units. Following the crisis, RBS in England and Wales institutions and developing a nationwide tried – and very publicly and humiliatingly Yorkshire Bank 194 99 branch network capable of competing with failed – to spin off the branches under a plan Halifax n/a 621 the big four. TSB operated 1,661 branches in that would have resurrected the W&G brand. Handelsbanken n/a 207 1981, against 559 today. As recently as 2016, RBS planned to list Virgin Money (formerly The Cooperative Bank has closed nine in W&G on the London Stock Exchange, with a n/a 73 Northern Rock) ten of its branches since 1981, with a network then 307-strong branch network serving about Metro Bank n/a 58 today of 95 branches against 880 in 1981. 1.4 million retail customers and more than Building society By contrast, Clydesdale Bank’s sister brand, 200,000 SME customers. It is difficult to see 5,147 1,519 branches Yorkshire Bank, has closed a mere 50% of its RBS wanting to rebrand the existing network Total branches 21,101 7,332 branches in the past 37 years, down from 194 – around 280 Royal Bank-branded branches Source: RBI in 1981 to 99 today. in England and Wales – as NatWest. <
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RBI 750 June 2018.indd 7 31/05/2018 10:35:30 strategy | rbc
rbc: building on its success
In May alone Royal Bank of Canada has been recognised with the JD Power award for Highest in Customer Satisfaction among Canada’s major banks, and scooped RBI’s award for Best Retail Bank North America. Neil McLaughlin group head, personal and commercial banking at RBC, discusses the bank’s winning strategy with Douglas Blakey
hen RBC president and CEO and 16% over five years, making it Canada’s five business lines to ensure the company’s Dave McKay tapped Neil most profitable public company in 2017. relevance in an increasingly digital age. W McLaughlin to take the helm McKay’s plan includes investing in of RBC’s leading personal and commercial FROM THE CLIENT IN innovation both internally and within banking franchise, the long-time employee Canada’s wider innovation ecosystem, was honoured to be chosen. While there is no doubt that the retail division simplifying processes and systems, and While he was proud of the work he was is operating from a position of strength – transforming the bank’s corporate culture so doing to support the country’s entrepreneurs RBC holds the number one or two market that it is more agile and adaptive, and focused as head of the bank’s crucial business financial positions across all key product categories in on building from the client in, instead of services division, McLaughlin was ready to Canada – McLaughlin took the reins at a time the historic mainstay of the bank out. The take on the new challenge. of incredible change. retail arm is playing a critical role in this Now as head of RBC’s largest business line, Under McKay’s leadership, RBC is transformation. McLaughlin is in a position to help many undergoing a transformation across all of its “We’re building a digitally enabled Canadians realise their goals – everyone from relationship bank where the client is at the young family moving into their first home, customer satisfaction the centre of every decision we make,” to the newcomer looking to establish roots, to RBC ranks top of the Big 5 McLaughlin tells RBI. the business owner planning an international 800 “It’s a multi-faceted approach where we’re expansion. integrating our mobile, digital and branch Since becoming group head, personal channels, investing in emerging technology 775 and commercial banking last May, RBC’s and developing a more agile culture so that we Canadian retail division posted record year- can deliver better products and services to our end results, delivering revenue of $15.9bn 750 clients when, where and how they prefer.” and contributing fully 50% of RBC’s overall record net income of $11.5bn in 2017. POWERING INNOVATION RBC’s impressive financial results included 725 achieving all of its medium-term objectives, That focus on client convenience and
delivering a return on equity of 17% and 700 effectiveness has energised McLaughlin’s
returning a record $8.2bn of capital in RBC CIBC team who are accelerating the bank’s digital Bank of dividends and share buybacks to shareholders. TD Canada Montreal transformation, simplifying processes, and Big 5 average Overall, RBC outperformed its global peer Note: overall satisfaction index developing and delivering first-of-its-kind group, delivering compound annual total scores ranked out of 1,000 products and services to the Canadian market, shareholder returns of 12% over three years, Source: JD Power many in just the last few months.
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RBI 750 June 2018.indd 8 31/05/2018 10:35:31 strategy | rbc
In the Autumn of 2017, the bank launched a new branch format that moves introduced NOMI, a new feature for the RBC beyond banking and provides information, mobile app, which happens to be Canada’s expertise and services to help newcomers on most utilised money management platform. their settlement journey. NOMI uses artificial intelligence to provide The bank is also opening its On Campus clients with personalised financial insights to format at universities across Canada to help help them with their day-to-day needs. young people navigate financial services for Using NOMI’s predictive technology, the first time, and it is piloting on-the-go clients are twice as likely to save as those formats that offer quick and convenient employing traditional self-serve products. services in well-travelled commuter locations. It was just one of the 22 new mobile app The industry has taken notice of the capabilities RBC released to retail customers bank’s explicit focus on the client, with RBC last year – more than all of its Canadian taking home several coveted national awards, competitors combined. notably earning the JD Power award for RBC’s investment in mobile technology highest in customer satisfaction among its is paying off. In the first quarter of this year, main Canadian competitors for three years mobile became the retail bank’s number running and winning top spots for mobile app one digital channel, with 3.4 million active capabilities and separately for advice. users, up 19% from a year ago. Some 85% of While awards are heartening, McLaughlin financial transactions are now performed in points out they only underscore that RBC is self-serve channels. firing on all cylinders and the core changes With the rising popularity of digital essential to McKay’s vision are already paying channels RBC is placing greater focus on off. Neil McLaughlin, RBC data security. “Data is becoming crucial to customising consumer experiences and how RIGHT LEADER, RIGHT TIME we protect, manage and utilise that data is BRANCH EVOLUTION equally important,” McLaughlin says. With technology and innovative offers, you Helping to lead the bank’s transformation “We’re committed to maintaining might be thinking: what about the branch? is something McLaughlin’s 20 year career at the highest possible privacy and security RBC has the largest branch network in RBC has well prepared him for. standards, and being transparent and explicit Canada, but there too McLaughlin says Learning the business from the ground up, around customer consent.” the company is innovating to tailor to its he has worked in credit cards and personal But RBC’s focus on innovation is not just customers. lending, marketing, channel strategy and, about technology, the bank continues to “Our branches continue to be a vital part importantly, lead risk operations for the look for new ways to add value and reinvent of our presence in Canada; they are a key Canadian retail banking division, where mainstay products and services. In October touchstone in the community,” he explains. he managed credit adjudication, fraud, 2017, McLaughlin’s team partnered with “But today, we’re moving away from a one-size collections, operational risk and commercial another iconic Canadian brand, oil and gas fits all structure and exploring new formats to adjudication. company Petro-Canada, to offer clients instant meet and anticipate the changing needs of our With his background as a foundation, savings on fuel purchases and loyalty rewards clients.” McLaughlin has a view that is both thoughtful from both companies. New Canadians represent a growing client and customer-centric. While technology may What makes the offer unique is clients can segment for RBC, and in April the bank create the runway, he knows it will be people realise the benefits using any of their existing that will lead RBC into the future. RBC credit or debit cards, whereas in the past JD Power: ‘RBC LEads for “At our core we are a people business,” says the benefits would have been exclusive to a digital transformation’ McLaughlin. “While technology will provide specific – likely co-branded – card. the tools and insights, it will be our people “The power of this partnership and the Of the Big 5 Canadian Banks, RBC that build stronger relationships with our program we’ve launched is that it’s incredibly leads the digital charge with 49% of clients, and help them realise their goals. And simple to take advantage of,” says Deborah its customers in the digital-centric no one has better people.” Gullaher, vice-president, sales and marketing segment; TD Canada Trust is at the Overall, McLaughlin is approaching the at Petro-Canada. future optimistically and with a real sense of other end of the spectrum. with only “Most fuel savings offers are either limited purpose. to a co-branded credit card, or involve 36% digital-centric customers. “Dave [McKay] has given us an incredible minimum spends and annual rebates. Among mid-size Banks, Tangerine framework and the permission to make the Gullaher continues: “We’ve taken away all (93%) and Simplii (84%) boast the changes we need to get to the next level,” he of the complicated calculations, limitations says. largest proportions of digital-centric and extra cards to make it possible for “We have the right vision, the right strategy customers, with ATB Financial (32%) Canadians to enjoy instant fuel savings while and most importantly the right people. It’s an they earn more points on any linked RBC having the smallest. incredibly exciting time to be a part of RBC, debit or credit card.” and I’m proud to lead our retail team.” <
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RBI 750 June 2018.indd 9 31/05/2018 10:35:32 strategy | standard chartered
launched Ivory Coast’s first 100% digital bank, which was also Standard Chartered’s standard chartered: first fully digital bank.” Standard Chartered expects the country’s bank account take-up – led by digital – to rise rapidly over the next five years, with the digital with a country poised to act as a digital banking catalyst for the wider region, just as Kenya sparked East Africa’s mobile money revolution a decade ago. human touch Chat and video banking are now offered in China, Hong Kong, India, Taiwan, Kenya, Malaysia, Singapore and the UAE Aalishaan Zaidi, global head of digital banking at “Clients are able to use chat and video Standard Chartered, discusses the bank’s digital vision to open an account, get financial advice or buy investment products while enjoying the with Douglas Blakey. The objective, according to Zaidi, is flexibility and convenience of banking from to develop an offering that is ‘digital with a human touch’ any location using their laptop or mobile devices,” Zaidi says. igital banking is, says Aalishaan Feedback from clients has been very Zaidi, all about giving people positive: “Good experience. No need to wait Dchoice and not, as some believe, through all the recording if I call the call removing face-to-face interactions entirely. centre,” (Singapore); “This is so much easier It is about digital with a human touch. than calling the bank,” (Malaysia); “It was a Zaidi tells RBI: “We see ourselves as being great experience. Please maintain it that way,” here for our clients, to help them achieve their (the UAE). dreams and ambitions. That means we design Zaidi continues: “This is one of the many our products, services and platforms with, and ways our clients love to get in touch with us, around, our clients. on top of the more traditional ways we still “It’s about offering digital banking that is offer – such as support via our contact centres. easy, convenient and secure. It means giving Having seen the positive client feedback, we clients the choice to do everything digitally if are now extending the chat and video banking they want. When they want more advice – for capability to include post-login services a big financial decision, for example – they across all these markets. This is scheduled for can also get help via the phone, an online completion by the end of this year.” chat, a video link or a visit to a conveniently As for other targets Standard Chartered has located branch.” set itself – including paper-based on-boarding A perfect example of Standard Chartered’s to reduce from 90% to 10%; turnaround drive to leverage technology to make banking times reduced from five days to less than an more intimate is its Retail Workbench, already hour; online sales to increase from 10% to Aalishaan Zaidi, Standard Chartered running in nine markets. This digital ‘bank 30%; branch transactions to reduce from 80 in an iPad’ sales-and-service tool allows sales about how digital investment will reposition million to 40 million, and staff productivity to staff to open an account for a client in any the bank – and, says Zaidi, the investment is increase by 25% – Zaidi says the bank is “very location, and makes banking services such as already showing a return. much on track”. loan approvals and credit card issuance fast, “We have made excellent progress – many Looking ahead, Zaidi is enthusiastic about simple and completely paperless. of the bank’s investments in the last two to further possible strategic partnerships and Standard Chartered’s digital strategy is built three years are yielding results.” opportunities with fintechs, as they allow the on four key areas that drive transformation: Standard Chartered’s clients’ digital bank to provide greater choice for customers. account opening, transacting and servicing, adoption rate – customers using online or “In payments, we now provide more borrowing and investing. mobile banking – is now 45%, up from just payment options than any other international “From our voice-recognition platforms 32% in 2014. In the bank’s key markets, it bank in our footprint, thanks to partnerships to our new payment options on mobile and now takes customers only 15 minutes to open with Apple, Google, Samsung and others. tablet devices, every innovation is based on an account; Standard Chartered offers internet “We now offer Apple Pay, Samsung Pay and client insights. We spend time getting to know banking in 27 markets and mobile banking in Android Pay in seven markets, and in 2017 we our clients and understanding their human – 25. Digital sales via online and the mobile app also launched BharatQR in India and became and financial – drivers and goals.” are soaring and have doubled since 2015. the first international bank to offer QR When Standard Chartered CEO Bill Zaidi explains: “We have also launched payments there.” Winter announced the bank’s latest $1.5bn some very innovative initiatives, considered Digital, yes, with a human touch – but also investment in digital, he spoke positively real market ‘disruptors’. For example, we with a compelling business case. <
10 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 10 31/05/2018 10:35:34 strategy | emirates NBD
banking into a new e-commerce platform and was launched in July 2017, the aim being to emirates nbd: maximise profit from online banking through increased product sales, enhanced customer service and improved digital customer experience. All that was required to be sarkar leads achieved while minimising the operating cost. Facelift also includes personal finance management with smart insights, personalised saving goals, online advice, personalised digital revamp design, a digital store and application tracking. LOOKING AHEAD Emirates NBD’s Suvo Sarkar was recognised as 2018 Retail Banker of the Year at RBI’s annual global awards “We are currently up to between 12% and 20% of all sales, depending on product, sold (see page 12). Sarkar discusses with Douglas Blakey the digitally. We have set a target of getting up to bank’s vision of furthering digital innovation in the UAE 50% by 2020,” notes Sarkar. “We start with credit cards instantly arkar has good cause to be proud of live chat with a real relationship manager. approved online and in real time, as well as many achievements in his time at Individual customers can benefit whenever personal loans, auto loans and overdrafts. SEmirates NBD, but he is most proud needed, rather than visiting a branch or calling With the credit bureaux in place and given to have contributed towards the change in the call centre. As with Liv, Facebanking has our connection with the bureaux, the 50% customer behaviour. An impressive 54% exceeded the bank’s own targets. aspiration is achievable.” (and rising) of Emirates NBD’s customers Unlike other video banking solutions Emirates NBD is already blazing a trail in are actively engaged digitally with the bank. already implemented by relatively few banks the region to go paperless. Adds Sarkar: “Some Emirates NBD has been transformed globally, the Emirates NBD implementation 80% of all personal loans applications are digitally. And Liv, the lifestyle digital bank focuses on end-to-end digital fulfilment. This paperless across all our channels, but we can launched by the bank for millennials, has allows its customers to start a loan application take this up to 90% for all products by the attracted 10,000 new customers every month via any channel and complete it online via end of the year.” during its first year of operations to make Liv FaceBanking, or start and finish online in just The news that Amazon might partner with the fastest growing bank in the UAE. a few minutes. banks to offer a white-labelled hybrid-type Says Sarkar: “This is just the start – the current account prompts Sarkar to assert that Liv product and lifestyle propositions will be PROJECT FACELIFT the future is about collaboration. “We are augmented.” open to working with big techs or fintechs in Over five in six Liv customers are Facebanking was just one element of Project generating more business for both parties. millennials and new client wins for the bank. Facelift – an entire renewal of online banking “We have a construct called Future Lab set The cost-income ratio for such customers are dedicated to a game-changing innovation in up for that purpose to work with partners and about one-half of customers of traditional the user experience of banking online. experiment. If it generates more business and customers for the parent brand, while Liv The revamp transforms traditional online gives customers a better experience, we are engagement levels are such that customers log open to collaboration. We welcome a more in, on average, every second day. open ecosystem – it is good for consumers.” Liv features digital onboarding, money Despite all the bank’s digital achievements, transfer via social media, split bill payments, there remains the challenge in the UAE of an international real-time remittances and over-reliance on cash. “Old habits die hard,” personalised savings plans. Its success is such explains Sarkar. “Cash still accounts for 80% that the Liv proposition can be extended by of all personal consumption. The number Emirates NBD to other markets in the region. is moving and there is a huge move by the government and the central bank of late to OTHER DIGITAL HIGHLIGHTS try and move customers to digital from cash. Everyone is playing their part. Facebanking was introduced across the online “Cash is a cost for merchants and a cost and mobile banking channels last June, adding for the banks. It will take time, but in the a human touch to create a seamless, fast and next three to five years we can get carded sophisticated banking experience. transactions up from 20% to 40-50%.” By implementing Facebanking, the bank Emirates NBD’s targets, in particular the redefined the boundaries of digital capability digital sales target, is ambitious but given and offers customers personalised advisers Sarkar’s track record, few would bet against his with the option of instant video, audio and Suvo Sarkar, Emirates NBD team achieving the goal. <
www.retailbankerinternational.com | 11
RBI 750 June 2018.indd 11 31/05/2018 10:35:35 rbi global awards | winners
the best of the best: the rbi 2018 global award winners revealed
Over 100 financial institutions participated and a record number of submissions were received across the 29 Awards categories at the 2018 RBI Global Retail Banking Awards. Bank of America scooped the award for Global Retail Bank of the Year; it was also a good night for Emirates NBD with three awards, and for Royal Bank of Canada with two. Douglas Blakey reports with the full roll call of honour
AFRICAN RETAIL BANK OF THE YEAR NORTH AMERICAN RETAIL BANK OF THE YEAR
Capitec, First National, Standard Bank, Standard Bank of America, Citigroup, Chase, Royal Bank of Shortlisted Shortlisted Chartered Canada
The winning bank in 2017 had another record year The winning bank enjoyed a strong 2017 with – the most profitable public company in its domestic headline earnings up by 14%. Its return on equity market and North America’s best-performing large rose by two percentage points to 17%, while its bank based on a variety of financial metrics. cost-income ratio was successfully reduced by 60 judges’ notes basis points (bps). judges’ notes Its group ROE was 17%, while its retail banking ROE was 28.3%. Provisions for credit losses were just Digital banking channel highlights included a rise in 21bps, and retail banking earnings grew by 11% in mobile banking volumes up by 32% in 2017 to reach 2017. More than 84% of retail transactions were 2.2 million users. made through self-serve channels.
winner Standard Bank winner Royal Bank of Canada
12 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 12 31/05/2018 10:35:40 rbi global awards | winners
EUROPEAN RETAIL BANK OF THE YEAR MIDDLE EAST RETAIL BANK OF THE YEAR
Arab Bank, Emirates NBD, Hapoalim, Qatar Shortlisted ING, IntesaSanPaolo, Nordea, Santander Shortlisted National Bank
Despite a challenging local environment, the winning The winning bank’s acquisition of Banco Popular bank had a record 2017 with net profit rising by was one of the most significant M&A deals. Digital 15%. In digital banking it is simply world class, and successes include a 24% rise in digital customers it completed a five-year digital transformation across the group to 27.3 million. judges’ notes judges’ notes programme in 2017. Its cost-income ratio in the mid-40s remains one It now offers paperless loans and account openings, of the most competitive in its peer group, and its and voice recognition. It is a leader in the use of AI Openbank digital bank subsidiary is up to over 1 and blockchain, and launched digital sub-brand Liv., million customers. targeted at millennials.
winner Santander winner Emirates NBD
LATIN AMERICAN RETAIL BANK OF THE YEAR
Shortlisted Banco do Brasil, BBVA, Santander, Scotiabank
With a strong focus on Mexico, Peru, Chile and Colombia, the winning bank delivered record earnings in 2017 – up 15% year-on- year, and strong market share gains in Chile. judges’ notes Its Digital Factory Network is now fully operational in Mexico, Peru, Chile and Colombia, as well as Canada, and represents a successful key pillar of the bank’s digital strategy.
winner Scotiabank
ASIA-PACIFIC RETAIL BANK OF THE YEAR
Shortlisted DBS, Maybank, State Bank of India, Standard Chartered
The winner reported record full-year earnings for fiscal 2017, with impressive market share gains and a growing worldwide judges’ notes reputation for best-in-class customer service and digital banking – including the launch of the world’s largest banking API platform. Other digital highlights included phenomenal customer acquisition at its digibank subsidiary in India and Indonesia.
winner DBS
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RBI 750 June 2018.indd 13 31/05/2018 10:35:51 rbi global awards | winners
BEST BRANCH STRATEGY
Shortlisted CIBC, DBS, ICICI, Lloyds
The winning bank has a branch network of around 1,076 outlets, down by only 4% since 2015, and while over 80% of its transactions are already completed via digital channels – a figure expected to reach 90%+ by 2020 – and digital sales increased from 12% in 2016 to 17% in 2017, it is simultaneously transforming its branch network. The bank kicked off a complete redesign of its smaller-format branches to make its delivery a more personal and interactive judges’ notes experience. With open, modern, inviting spaces, the new-format branches leverage the bank’s digital innovations. None of its rival banks has undertaken a full redesign on such a scale, and already around 30% of its urban network has been transformed. The bank’s branch investments are also driving net sales growth – ahead by an average of around 21% six months after successful branch transformation.
winner CIBC
BEST USE OF ONLINE BANKING
Shortlisted Emirates NBD, Synchrony Bank, USAA
The winning bank’s Project Facelift is an entire renewal of its online banking channel, and was launched in July 2017. The platform is distinct for taking service beyond banking transactions, statements or campaign banners. Every detail is the outcome of deep analysis on customer behaviour. Beyond innovative judges’ notes and enriched features like responsiveness, touchscreen compatibility and a unique single-page approach, customers enjoy a completely new digital customer experience with no friction or complexity. Facelift also includes the Smart Insights, Personalised Saving Goals, Online Advice, FaceBanking, Personalised Design, Digital Store and Application Tracking services.
winner Emirates NBD
BEST MOBILE BANKING STRATEGY
Shortlisted ICICI, PKO Poland, Royal Bank of Canada, Standard Chartered Korea
A tough category: any of the banks shortlisted would have been worthy winners, with strong arguments in favour of all of them. PKO, for example, is consistently top-ranked in app store rankings. judges’ notes RBC has a winner on its hands with its NOMI Insights and NOMI Find & Save, the first Canadian bank to offer clients personalised financial insights and a fully automated savings service, and user stat growth at ICICI has been phenomenal. The winner, however, combined biometric advances with new customer wins – 80% of accounts opened are by new clients.
winner Standard Chartered
14 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 14 31/05/2018 10:35:56 rbi global awards | winners
BEST PAYMENT INNOVATION BEST USE OF DIGITAL MARKETING AND SOCIAL MEDIA
Ecobank, ICICI, Israel Discount Bank, Standard Capital One, Citigroup, Emirates NBD, Shortlisted Shortlisted Chartered Nationwide
The winning bank launched a simple, quick P2P With its series of viral videos, the winning institution money transfer service to its customers, based on has brought itself into the forefront of the public voice commands using Apple’s Siri service. mindset. judges’ notes The payment innovation has not only smashed its judges’ notes Gathering over a million views in three months, just internal uptake targets, it has enhanced customer on its official channel, has shown how popular this experience and increased digital engagement levels. marketing campaign has been. The winner’s Voices It is a first in its local market, and has successfully campaign has been a huge hit, and smashed all of its empowered the bank’s digital brand. key business targets
winner Israel Discount Bank winner Nationwide
BEST USE OF DATA ANALYTICS BEST DIGITAL STRATEGY
BBVA, Ecobank, Emirates NBD, Shortlisted Barclays, Capital One, ICICI Bank, NatWest Shortlisted ICICI
The winning bank’s app is the The winning bank shared a number of key banking metrics with only unified banking app across the judges, highlighting how optimisation of data analytics has 33 countries in Africa which combined to boost new client wins and significantly increase new judges’ notes allows transactions in 18 different client onboarding, as well as increasing cross-sell and upsell ratios. currencies and four major languages. At the same time, the bank has successfully used predictive The judges were impressed with the analytics to improve delinquency and loan-loss rates judges’ notes huge success of its Xpress Account: a KYC-lite digital only account to improve financial inclusion. winner ICICI Bank It has run digital marketing campaigns on a massive scale, leveraging the Google and Facebook BEST CUSTOMER-FACING TECHNOLOGY platforms in 2017.
Shortlisted Arion Bank, ICICI, Israel Discount Bank, Royal Bank of Canada winner Ecobank
The winning bank’s MyAdvisor facility is a new digitally enabled investment advice experience that helps clients reach financial goals with the support of an advisor through the channel of their choice. The platform’s AI-based personalisation engine captures clients’ financial data and sends automated alerts and updates about how investments are performing compared to set goals. It also reminds clients to talk to advisors, and uses innovation and digitisation to judges’ notes support the branch network While MyAdvisor has only been in the market on a limited basis since the third quarter of 2017, it has already generated strong results, with 20,955 clients activating their personalised plan, over 4,000 clients completing financial health consultations with financial experts, and assets under management growing by 8.1%, compared to 5% in the control group – a 60% net increment on the client side.
winner Royal Bank of Canada
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RBI 750 June 2018.indd 15 31/05/2018 10:36:00 rbi global awards | winners
BEST IT TRANSFORMATION
Shortlisted Arion Bank, ICICI, Open Bank Santander, Zions Bank
The winning bank has rolled out one of the biggest core banking projects seen in the US in recent times, and is recognised for a very successful implementation. judges’ notes Inter alia, the project reduced 15 loan operation centres to two, and consolidated 529 retail products into 129. The bank has boosted its wealth management and trusts revenue by 16%, and reduced its expenses by 5% through rationalisation of its operations. In the meantime the bank has reduced staffing by 22%.
winner Zions Bank
IT INNOVATION OF THE YEAR
Shortlisted Arion Bank, ICICI, Nordea
In 2017, the winning bank launched its Open Banking Portal, with the aim of becoming the go-to-hub for banking APIs in its region. The portal does much more than merely comply with the regulatory requirements of PSD2. It is a future-oriented platform that will provide premium APIs to third-party developers and fintechs. The bank built the platform with both external and internal developers in judges’ notes mind as it wanted to foster innovation within the bank and in collaboration with third parties. Within 72 hours of launch it had received 300 sign-ups; within a few weeks it had received over 700. The project strengthens the bank’s goal to continue to be a relationship bank, putting customers first, strengthening its collaboration with fintechs, and going beyond regulatory requirements by providing premium APIs that fit the changing needs of customers across all segments.
winner Nordea
PRODUCT INNOVATION OF THE YEAR
Shortlisted Credit Suisse, Ecobank and Emirates NBD
The winning bank’s new digital moneybox, Digipigi, is a fun way for children to learn about cash and digital money. The Digipigi Kids app lets children easily set their own personal saving goals, and record and track savings. It is also the first banking product based on Internet of Things technology worldwide. judges’ notes A new banking product, Viva Kids, was also launched – initially for the Swiss market – with tremendous success. It sold over 10,000 units in the first two months, with 60% of the clients being new to the bank, increasing its market share by 50% – this in the supposedly ‘overbanked’ Swiss market.
winner Credit Suisse
16 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 16 31/05/2018 10:36:07 rbi global awards | winners
MOST DISRUPTIVE INNOVATION OF THE YEAR
Shortlisted Arion Bank, Emirates NBD, ICICI, Starling Bank
A radical overhaul of its end-to-end mortgage process and a customer journey redesign has resulted in the winning bank increasing its mortgage lending by 100% in 2017 and its net promoter score in just one year rose judges’ notes from minus 2 to plus 32. At the same time, its two local rivals mortgage volumes have been more or less stagnant which has led to a big increase in market share in mortgages for the winning bank.
winner Arion Bank
BEST NON-BANK COMPETITOR
Shortlisted Circle, Moneybox, Revolut, Yolt
The past year has been an exciting and busy one for the winner. In November 2017, it hit 1 million users. judges’ notes It now features 130 currencies, including three cryptocurrencies, and in March of this year it launched its pioneering single-use virtual cards. It is also the newest Unicorn.
winner Revolut
BANKING LAUNCH OF THE YEAR
Shortlisted Chetwood, ClearBank, Redwood Bank
The winning bank represents a unique private-public partnership. Having received its initial banking licence in April 2017, the bank’s licence restrictions were removed in August – one of the fastest licence-to-launch phases of any new bank to date. judges’ notes With advanced systems, service based on traditional banking values while developing strong relationships with its customers, it has already grown its team to 44 executives. The bank’s brand has also already established itself as a competitive player in the Best Buy price-comparison websites.
winner Redwood Bank
BANKING SECURITY INNOVATION OF THE YEAR
Shortlisted BBVA, NatWest, Nordea, Rabobank
The winning bank is recognised for its pioneering work with Vocalink Analytics to develop, test and launch Fraud judges’ notes Insights, which uses AI and machine-learning techniques to identify and flag suspicious non-real time payments.
winner NatWest
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RBI 750 June 2018.indd 17 31/05/2018 10:36:15 rbi global awards | winners
BEST SERVICE INNOVATION
Shortlisted Arion Bank, Emirates NBD, N26, MUFG
The winner was launched to offer the best of of bricks and clicks, with accessible online banking, market-leading rates, no fees and exceptional client service. The PurePoint offering is complemented by physical locations that enable clients judges’ notes to get great in-person service, and a client support centre to service client needs by telephone. Unlike traditional branches, PurePoint Financial centres offer a streamlined, cashless and digital-enabled experience with beautiful décor in a relaxed setting, omitting the teller lines historically seen in banks.
winner MUFG for PurePoint Financial
EXCELLENCE IN CUSTOMER-CENTRICITY BEST SELF-SERVICE STRATEGY
Shortlisted Emirates NBD, KBC, Metro Bank Shortlisted AirBank, Akbank, CTBC, ING
With its new initiative of Advice and Experience The winning bank is recognised for an innovative branches across the Netherlands, helping customers solution based on blockchain technology. to achieve their goals in a bank branch has never The integrated app was rolled out to relieve much of been easier. the administrative burden for customers when they judges’ notes judges’ notes In addition, its SelfBank solution has expanded into are buying a new car. Romania after great success in Belgium, and is now The solution is an ideal, world-class example of closer to achieving its self-service digital model in how a bank is using new technology to make its the region without losing any of the bank’s physical customers’ lives easier. footprint.
winner KBC winner ING
BEST DIGITAL ONBOARDING STRATEGY
Shortlisted Fidor Bank, Metro Bank, N26, National Australia Bank
The winning bank has become the first UK high street retail bank to roll out selfie technology to open current accounts online. judges’ notes The launch represents the seamless integration of digital and physical, with debit cards available to collect in store, and is already winning new customers in impressive numbers.
winner Metro Bank
DIVERSITY AND INCLUSION
Shortlisted Bank of America, Barclays, Citi, Lloyds
In 2017 the winning bank was awarded top spot on Stonewall’s Top 100 Employer list. It placed in the top five of 2018’s list, and was the top-ranked bank. judges’ notes In February 2018, the bank announced plans to increase the proportion of staff from black, Asian or minority ethnic backgrounds to 8% of senior management by 2020, becoming the first FTSE 100 company to set an official target.
winner Lloyds
18 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 18 31/05/2018 10:36:21 rbi global awards | winners
BEST OPEN BANKING
Shortlisted BBVA, HSBC, Lloyds
In 2017, the winning bank strengthened its world class reputation for innovation in general and digital banking leadership in particular with a number of notable firsts, including the launch of its API Market. The bank is helping start-ups to transform the judges’ notes financial services industry in ways never before imagined. Other highlights include its Open Talent competition, which looks to draw the latest and greatest fintech start-ups to the Spanish bank with the prize of funding, mentorship and an excellent global customer base.
winner BBVA
GLOBAL RETAIL BANK OF THE YEAR RETAIL BANKER OF THE YEAR
The winning bank has enjoyed an outstanding 12 In his role since June 2012, the RBI Retail Banker months. Its share price passed the symbolic $30 of the Year has the mandate to oversee all aspects mark, a price not seen since October 2008 in the of Emirates NBD’s retail banking and consumer midst of the financial crisis. finance businesses, including branches, retail loans, It has consistently outperformed the market over mortgages, credit cards, wealth management, direct the past two years as its shares almost tripled in banking, SME, sales and marketing, as well as setting value boosted by margin improvement and cost judges’ notes judges’ notes new standards in product innovation. efficiencies. In 2017 it successfully reduced its The winner, the bank’s general manager, retail efficiency ratio from 45% to 43%. banking and wealth management, is an outstanding Other highlights include a rise in digital banking inspirational leader, and also a visionary executive customer numbers by two million to reach 34.9 who is the main driver of the bank’s regional and million in 2017, a 12% rise in mobile banking global achievements in retail banking, innovation customers to 24.2 million, and three million new and digital. accounts opened, up 17% year on year.
winner Bank of America winner Suvo Sarkar, Emirates NBD the 2018 RBi global annual awards African Retail Bank of the Year Best Use of Online Banking Best IT Transformation Best Service Innovation Standard Bank Emirates NBD Zions Bank MUFG for PurePoint Financial
North American Retail Bank of Best Mobile Banking Strategy IT Innovation of the Year Excellence in Customer-Centricity the Year Standard Chartered Korea Nordea KBC Royal Bank of Canada Best Payment Innovation Product Innovation of the Year Best Self-Service Strategy European Retail Bank of the Year Israel Discount Bank Credit Suisse ING Santander Best Use of Digital Marketing and Most Disruptive Innovation of Best Digital Onboarding Strategy Middle East Retail Bank of the Social Media the Year Metro Bank Year Nationwide Arion Bank Emirates NBD Diversity and Inclusion Best Use of Data Analytics Best Non-Bank Disruptor Lloyds Bank Latin American Retail Bank of the ICICI Bank Revolut Year Best Open Banking Scotiabank Best Customer-Facing Technology Banking Launch of the Year BBVA Royal Bank of Canada Redwood Bank Asia-Pacific Retail Bank of the Global Retail Bank of the Year Year Best Digital Strategy Banking Security Innovation of Bank of America DBS Ecobank the Year NatWest Best Branch Strategy Best Open Banking CIBC Suvo Sarkar, Emirates NBD
www.retailbankerinternational.com | 19
RBI 750 June 2018.indd 19 31/05/2018 10:36:21 distribution | tinkoff
Notes Hughes: “Tinkoff Investment, a retail securities trading platform-broker also exceeded expectations with over 70,000 tinkoff: transforming brokerage accounts opened by year-end 2017. We are already a big player in retail securities in Russia.” In May, Tinkoff rolled out its own platform, russia’s financial offering brokerage accounts directly to customers. As a result, the overall contribution to total gross revenue from all non-credit- related business lines, including Tinkoff services market Insurance, doubled in 2017. Hughes continues: “We remain on track to report net income growth per year in the 20- Oliver Hughes joined Tinkoff as CEO in 2007, and 40% range to the end of fiscal 2019.” Segmentation strategy is very much the under his leadership the branchless innovator has mid-market, but Tinkoff is increasingly grown into the world’s largest independent digital moving into the mass affluent and lower end bank by customer base. Hughes discusses Tinkoff’s of the high net worth segments, as evidenced by its launch of Tinkoff Black, which offers future growth plans with Douglas Blakey concierge services.
ussia’s Tinkoff Bank is little more current accounts, we are opening 120,000 ATMS, BUT NO TO BRANCHES than 10 years old, but has made new accounts per month.” R quite a splash in its short history. Tinkoff is successfully disrupting the Highlights for 2017 included Tinkoff In 2017, Tinkoff cemented its position as existing market, while its current account net launching its own ATM network, initially the number two credit card player in Russia promoter score of +57 is sector-leading. with 200 units, but Hughes already has plans with a market share of 11.6%, acquiring Tinkoff’s move into the SME sector in 2016 for an additional 400, and says the network 1.8 million new credit card customers. The has kicked off so well that that business line will hit 1,000 before long. self-styled online financial supermarket in the reached break even in June 2017. As at year- Hughes’s position on the branch, however, cloud is now making waves in the current, end 2017, Tinkoff served about 250,000 SME remains resolute. He insists: “We do not need SME and investment account segments. customers, a fivefold increase in one year. branches and will not have any branches At first glance, Tinkoff’s current profit For fiscal 2017, SME business contributed of any format. Some [digital] banks have forecasts may appear ambitious – it says RUB3.2bn in fees and commission income, experimented with fancy branches or cafe it is on track to hit net income of at least and over RUB800m in net segment income. formats or used the branch to promote their RUB24bn ($390m) in FY2018, up from Diversifying Tinkoff into new sources of brand. We do not need any branches for RUB19bn in 2017 – but, if anything, the non-credit revenue is giving it an increasing brand presence.” forecasts appear somewhat modest given share of customers’ wallets, and it is proving Tinkoff’s use of biometrics puts many a Tinkoff’s track record. that it can build and scale in new segments established Western bank to shame. Hughes Tinkoff Bank CEO Oliver Hughes, tells profitably. Tinkoff Black and Tinkoff explains: “We have been using biometrics RBI: “We are opening over 400,000 accounts Mortgage both broke even in 2017, while its for many years now. Customers to our call per month across all products. In consumer into the investment sector is also proving a hit. centre are identified by voice – so no need for codewords, passwords or questions about your Tinkoff growth mother’s maiden name. Tinkoff debit card customers Russian credit card market shares “Already we have five million voice prints. It not only enhances the customer experience; it increases call centre efficiency and security.” Tinkoff customers are also photographed as accounts are opened, and the image shared with credit agency Equifax. The Tinkoff image library is approaching five million users. Hughes concludes: “We are moving biometric security to the next level – with a two-factor biometric database for the state. “Other banks have started to contribute customer images, so that in time there will be voice and face prints for all consumers. It really will be a great fraud-prevention Source: Tinkoff instrument.” <
20 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 20 31/05/2018 10:36:22 distribution | bbva
bbva compass: branches remain the key channel
Robin Arnfieldtalks to Çagrı Süzer, head of retail banking at BBVA Compass, the US subsidiary of BBVA. While mobile banking numbers are soaring and an increasing number of products are sold digitally, BBVA remains committed to the branch channel
BVA Compass operates 649 US branches will be cut by 20% by 2020. job to provide them with the training that will branches in Texas, Alabama, At BBVA Compass, we’re in the people help them better understand this new world, BArizona, California, Florida, business. Yes, routine transactions are moving so they can help customers do the same. Colorado and New Mexico. from the branch to digital channels, but this Our goal here is to help branch personnel It ranks among the top 25 largest US is happening across the industry. Our belief is transition from a transactional role, where commercial banks based on deposit market that branches continue to be important and, they helped customers with some of the most share. Its predecessor, Compass Bank, became most specifically, our branch employees are common transactions – for example, those a wholly owned subsidiary of BBVA in 2007. critical, especially for our clients. Technology that can be done via mobile – to one blending In 2009, BBVA Compass launched its first can’t replace people. We hold this belief so banking and technology to the benefit of iPhone app, while its 2014 acquisition US- strongly that we grew our branch personnel customers. based digital bank Simple for $117m attracted significantly above the US average in 2017. To support our universal banker strategy, headlines around the world. The role of bankers in our branches is BBVA Compass is building a proprietary RBI discusses channel strategy with Çagrı changing, with branch personnel becoming front-end sales and service application. Süzer, head of retail banking at BBVA technology facilitators and product advisors, Dubbed Banking on the Go, Client Vista is a Compass. similar to the Genius Bar in Apple stores. single application which merges account and We’re working on helping employees customer relationship management systems, RBI: Mobile banking growth – are you transition to this role, and increasing and also integrates other tools, like Salesforce. happy with the figures? their confidence in blending financial and Client Vista connects the bank’s real-time core Çagrı Süzer: While I can’t release specific technology conversations with customers. banking platform to the sales and service team. numbers on digital banking customers, I In our branches, we’re working on digitising Bankers can use Banking on the Go to have can say that our mobile banking app had the branch operating systems to support a a full view of the client relationship, originate a 30% year-over-year jump in active users. universal banker approach, where our bankers new products and services, maintain existing We feel this is proof positive that our digital are a ‘one stop shop’ for customers. customers and accounts, and help resolve transformation strategy is working. Last Autumn, BBVA Compass’s Channels customer issues. Banking on the Go will allow An active user is defined as a customer who team travelled across our footprint, our bankers to serve customers wherever they signs in to the mobile banking app at least conducting in-depth training for over 650 are, inside or outside the branch. once per month for three consecutive months. client experience managers on our mobile We’re now piloting the programme and banking app to help them become technology meeting customers away from branches to RBI: As for the branch channel, BBVA facilitators for customers. talk about their financial needs and open their Compass is investing heavily here. Can The simple fact is that the world is accounts right there, using tablets. you summarise your branch strategy? becoming more digital. Because we believe CS: There are statistics claiming that, due in branch personnel are hugely important to our RBI: What is your focus in terms of large part to technology, the total number of customers’ experience with the bank, it’s our products for US consumers?
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RBI 750 June 2018.indd 21 31/05/2018 10:36:22 distribution | bbva
CS: We launched fully digital personal loan and credit card applications in 2017, where customers and non-customers can get funded online or get a card online in a few minutes. There is great effort behind the scenes to automate the process and provide a tailored customer experience. Our next step is to do the same for other products. BBVA is one of the most digital banks globally, and we’re receiving excellent feedback so far from our US customers.
RBI: What is the adoption of the BBVA Compass Express Personal Loan (EPL)? CS: In March 2018, BBVA Compass launched the digital BBVA Compass EPL to customers and prospects across its footprint, not including California, just one year after the bank booked its first end-to-end digital loan. In branches and digital, we are seeing record production levels. We’re seeing good progress and interest in the product across our footprint. Çagrı Süzer, BBVA Compass
RBI: What about other recent digital accounts they hold at other financial BBVA is an active participant in several banking and payments initiatives? institutions, to one of their BBVA cross-border payments initiatives, and other CS: Functionalities that BBVA Compass Compass Accounts, and areas where blockchain could be applicable. added in 2018 to the BBVA Compass Mobile • BBVA Compass added a “green button” It participated in a project with Ripple Banking App include the following: in its mobile app, so customers can now last year to glean learnings on the efficacy of • A search engine inside the app, so users apply for digital products – chequeing cross-border payments in various contexts can fully capitalise on the many features and savings accounts, money market, using real money, not cryptocurrency. We also that have won it multiple awards. With CDs, credit cards, and EPLs among carried out a series of tests with blockchain the new search function, users simply them – directly from the app. Customers consortia R3, Hyperledger and Ethereum start typing what they would like to do in have strong controls by receiving alerts on Enterprise Alliance to get insights into the use the search bar, and the app automatically transactions. They can choose what to get; of blockchain in the financial services sector. displays a list of applicable functionalities for example, in our mobile wallet, they get from which the user can select. When the spending alerts and they can redeem their RBI: Please tell me about your core client taps on one of the results in the list, points right at the cashier line. banking system and the open banking the app automatically navigates the client platform that you are implementing to the exact spot in the app where that RBI: What new payment services have within BBVA Compass. functionality is, or information is located; you launched? CS: Our core platform, which was announced • A direct deposit form, which prefills CS: The BBVA Group created a new mobile in 2012, provides real-time banking and customers’ banking information, including money transfer app, called Tuyyo, which greater transparency of account information. routing (sort code) and account numbers, allows US senders to transfer funds to Mexico The BBVA API Market, the open platform, to make it easier for customers to auto- via a mobile device. With Tuyyo, BBVA wants part of the BBVA Group’s New Digital deposit salary cheques. The customer can to grow the digital-to-digital and digital-to- Business (NDB) unit, enables fintechs to send, print or save the document as a PDF, cash market, adding more security for senders become our clients or partners. It gives them making the process of setting up direct and receivers, as well as increased convenience, access to our APIs that they can combine with deposits quicker and easier; speed and efficiency. their own technology to design disruptive • Actionable push notification account alerts: Provided by licensed money transmitter business models. Our goals are to become a when a client taps on the alert they will see BBVA Transfer Services, a BBVA Compass better partner to fintechs, and also to develop a list of actions they can take right from affiliate, Tuyyo seeks to build on the emotional a new ‘banking as a service’ business. the notification. This only applies to push connection remittances generate – the app’s notification alerts, not email or text alerts. tagline is “send a little love” – by allowing RBI: How are BBVA Compass’s • Clients can use payments and transfers the sender and receiver to communicate via in-house fintech developments in mobile banking to pull funds from photo, text and, shortly, videos about the progressing, and how is the bank chequeing, savings or money market transfers sent through the app. partnering with the fintech sector?
22 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 22 31/05/2018 10:36:24 distribution | bbva
CS: BBVA Compass works through the We are people serving people, which is • Blockchain: BBVA is exploring the use BBVA Group’s NDB unit for in-house fintech why branches continue to be important to of blockchain in corporate loans. This development and partnerships. NDB invests bank efforts as places where people come for technology has the potential to add a lot of in, partners with, incubates and acquires personalised service, high-value transactions, transparency, efficiency and immutability, disruptive financial technology firms as part of and problem resolution. and offers a wide array of other possible BBVA’s focus on delivering innovation in the BBVA Compass’ advanced digital uses. banking sector. capabilities – an award-winning mobile app, • Lending: The EPL demonstrates BBVA NDB has offices in Madrid, San Francisco, a modern core platform, and differentiated Compass’ strengths as a digital innovator Hong Kong and London, and through it, online and mobile platforms – give it a striving to help its clients take better BBVA has acquired Simple (US), Holvi distinct competitive advantage, which has control of their financial lives. With EPL, (Finland), and Openpay (Mexico) and owns been made possible thanks to its strong digital BBVA Compass intends to become a key a substantial stake in Atom (UK). BBVA also foundation. player in the $1.3trn online consumer loan invests in fintech through its venture capital Enriching the investor experience remains marketplace. arm, Propel Venture Partners. central for BBVA Compass Investment It has incubated a number of fintech start- Solutions, a division of BBVA Securities Inc. BBVA Compass believes that the demand ups including: and BBVA Wealth Solutions. for personal loans represents an opportunity • Azlo, a digital business account that seeks Three areas we’ve been investing in and for banks, which hold customer relationships, to increase the availability of both domestic focusing on are supporting self-service for have the needed funding and boast a physical and cross-border banking services for an investors, enhancing mobile access, and network – our internal studies have shown expanding and changing demographic of delivering two distinct digital product branches as being important for attracting customers by offering accounts with no offerings, a digital brokerage account for more digital sales. EPL portends more fully fees or minimum monthly deposits; equity, mutual fund and ETF discount digital products for the bank, built on similar • Covault, which uses key encryption linked trading, and a digital managed money rails to those of this loan. to the biometric signature on the user’s solution. From a customer value standpoint, EPL device – enabling the user to digitally Providing access to a variety of digital can help consolidate debt, and save money on protect their sensitive information from solutions is important for many of our interest payments. Features include: being accessed without their authorisation; clients, and we want to provide the essential • 1.00% interest rate discount when loan • Denizen, a unified banking platform capabilities of digital services with the payments are auto-debited from a BBVA and the first true global account, which convenience and power of a single fully- Compass chequeing account, potential allows expats and international workers integrated solution within NetXInvestor, same-day funding upon approval; to maintain bank accounts in multiple our client portal for brokerage and managed • No collateral needed, just a signature; countries but with one balance – money accounts. • Loans from $2,000 up to $50,000 and up minimising the need to do cross-border Last year, we released our branded mobile to $35,000 when applying online, and transfers, but allowing functions like direct app featuring mobile cheque deposit for our • The ability to check your rate before debits and standing orders, and clients, which enables them to quickly deposit deciding, with no impact to your credit • Muno, a digital insurance product for funds from their mobile device as well as easily score. self-employed workers that operates in view account information and place trades. a guild-style format, meaning there is a Other digital personal financial RBI: Lastly, can you give an update on profit-sharing facility so those who don’t management resource tools we offer include: the integration of Simple’s customer claim during the year will receive some of • A complimentary online Retirement base into BBVA Compass? their premiums back. Check-Up and Education Cost CS: Simple is a technology company changing calculator: This is client-directed planning, the way people bank and think about their While BBVA Compass no longer works through video guides and a live-support money by setting a new customer experience with its previous fintech partners, Future online planning tool, that allows existing standard. Advisor and Dwolla, two fintech start-ups and prospective clients to begin their Its February 2014 acquisition fits well we’re particularly close to are Azlo and financial plan digitally in the privacy with BBVA’s digital investment strategy of Denizen. Both Azlo and Denizen use BBVA of their home, with the option for full partnering with leading fintechs and creating API Market and BBVA Compass APIs to run collaboration and engagement with our reciprocal value while working to become the their businesses. financial advisors; leading digital bank of the 21st century. • Planning Client Portal: This is an online Simple is opening new customer accounts RBI: Let’s discuss future tech dashboard clients can use to track the on BBVA Compass’s core platform, and has developments – what are the bank’s progress of their financial goals, and review integrated its existing customer accounts to priorities? common ‘what if’ scenarios – inflation BBVA Compass’s platform, though all Simple CS: BBVA Compass wants to give customers risks, market swings, death of a loved one, customers remain just that: customers of amazing products, and an anywhere, anytime, etc. – and model changes to their plan. Simple. all-the-time customer experience to help them This collaborative tool allows the client and Simple continues to remain a stand-alone make better financial decisions. So the bank’s the advisor to review ‘what if’ scenarios to subsidiary of BBVA Compass to allow it to efforts to be a digital challenger continue to be ensure an optimal plan that is tracked and focus on its continued success while allowing important, as does its strong branch network. monitored electronically. us to learn from a new business model. <
www.retailbankerinternational.com | 23
RBI 750 June 2018.indd 23 31/05/2018 10:36:24 strategy | hsbc
banks and especially trusted banks like HSBC rank very high, and that applies to millennials hsbc: as well.” At the centre must be customer experience. To reinvent the image, retail banking is embracing technology and partnerships what it means Bhatia highlights: “In an open world, you have to embrace the spirit of being open. That implies partnering with new sorts of players and we have been involved in partnerships. It’s to be a bank now not always easy to partner. “If you take Open Banking to its extreme conclusion, for us, it is a seamless partnership Digital technology is revolutionising banking and with multiple players, with our trusted brand at the centre.” improving the overall consumer experience. To make In an Open Banking environment, the the most of the transformation, banks must be willing work between banks and fintech firms is to collaborate with other players and embrace digital becoming ever more important. Small and large tech firms are battling for consumers’ solutions. HSBC’s head of digital bank, Raman Bhatia, attention, at a time when consumers are set to foresees a makeover in retail banking as the sector moves gain the ability to use disparate services from into a new ecosystem. Briony Richter reports a single platform. For banks similar to HSBC, the only way to ensure continued success is through smart collaboration. owerful forces are reshaping the banks have been breaking barriers ever since banking sector. HSBC’s Raman by focusing solely on enhancing customer FIRST DIRECT PBhatia has the task of accelerating experience. digital innovation to provide the best However, HSBC had prepared for Open In a more digitally focused society, more possible services for its customers. Banking and sees it as an opportunity to find consumers are switching to branchless banks Speaking to RBI, Bhatia describes his role the right partners. Bhatia notes that much of and so the quality of the mobile app is vitally at HSBC: “My role includes setting the digital what the challengers are doing is being done important. strategy – managing the digital agenda, which at HSBC. First Direct prides itself on high customer is very broad. Asking whether incumbent banks can satisfaction and innovation. In 2006, it was “It is about all customer journeys. It is keep the loyalty of their customers with new one of the first to introduce mobile banking. about personalisation of the experience for entrants flooding in, Bhatia states: “There is Keeping customers happy is at the core customers and then innovation as well because a trust paradox. Whilst the repetition of the of what First Direct does. Asking how the whole landscape of banking is changing. banking sector post crisis and the episodes those standards are continually kept, Bhatia “I joined HSBC roughly three and a half that have happened in the UK have taken a explains: “I think it’s a unique magic formula; years ago, from a non-traditional background; battering, when it comes to holding people’s it goes back to the very DNA of what First I was not in financial services. I was at a start- money and keeping it safe, across the board, Direct stands for. It starts from the very outset up called HouseTrip, which was bought by Tripadvisor.” Enthusiastic and energetic, Bhatia believes bhatia’s five BIG banking trends that right now is an exciting time to be in • Personalisation: “The level of personalisation using digital and creating one-on-one banking, and he is tasked with the job of experience. We are still in the early days of using the power of digital and data to create reinventing our perception of what a bank is, the best personalised services and products.” and what it can do for customers • Open Banking: “Although there will be some teething issues, incumbent banks will need “What is exciting is the fact that to open up and explore more partnerships and evolve their business models gently but convergence of changing customer behaviour, surely to explore opportunities.” tech trends, and regulation are creating a • Tech giants: “It’s becoming very apparent that there is non-traditional competition which perfect storm which is changing what it means will be heightened in the years to come. Who will be the winners and potential losers we to be a bank.” won’t know yet. However, it is clear, starting with payments, that there is an opportunity for non-traditional players to intercept and determine the customer relationship.” OPEN BANKING SUCCESS • Artificial intelligence: “We are already using AI to fight financial crime. There will be more application of AI through conversational banking, but also through providing better recommendations for customers.” Dubbed a ‘banking revolution,’ Open Banking went live in January 2018, enabling • Data: “High sensitivity around data – the players who take data seriously and come up with mindful propositions with very transparent customer consent will emerge stronger the creation of new types of interactive smart in this period of uncertainty. That will be a key part for the next few years.” banking service. The tech-savvy challenger
24 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 24 31/05/2018 10:36:24 strategy | hsbc
Connected Money HSBC is the first of the big four banks in the UK to release an Open Banking app. Connected Money allows HSBC customers to view all their financial accounts in the same place. Is this the start of new type of customer relationship? Patrick Brusnahan writes Connected Money, now live for all live-testing features and services or, as customers after a year of piloting, is one of Moffat puts it, “co-creating with customers”. the first steps UK banks have taken into the In September 2017, it was opened up to a new open banking era. select number of customers to see people HSBC customers can see their current using the app, where they focused their accounts, savings accounts, mortgages, attention and what could be improved. loans and cards held across 21 banks, It was added to the app store in February including Barclays, Lloyds and Santander 2018 and launched to all HSBC customers – all in one app. In addition, a spending in May – a fairly speedy process, especially analysis tool, Balance after Bills, shows given how slow banks can be, but how customers how much money they will have many customers will use Connected Raman Bhatia,HSBC after bills, as well as in-app messaging for Money? Moffat says: “We hope that many insight into finances. hundreds of thousands will use it over time. of recruitment. We painstakingly recruit Upcoming features include a tool that We obviously have the HSBC core banking people that show empathy with customers. rounds up debit card purchases and puts app as well; the two are companions. If Then it flows through straight to customer the extra money into a savings account, you have all your relationships with HSBC, service.” He adds: “Because our customers are similar to Moneybox, and a ‘savings nudge’ the core banking app is absolutely the mobile-first, our priority is translating that tool. Every bank is looking to make strides right app. If you’re looking for tools around in Open Banking, but why is HSBC offering your broader financial relationship, and we high empathy into the mobile interaction.” this solution? recognise that a significant number of our First Direct customers very rarely switch, customers have relationships with other HSBC’s head of personal banking, Becky institutions, then Connected Money can due to continuing efforts to improve upon Moffat, tells RBI: “What we found at HSBC add value.” all its services and products. In the past, the is that we had a whole base of customers digital bank has struggled to entice younger who were not digitally engaging with us Raman Bhatia adds: “We’ve been leading customers: the average age group is in the 40s. and were not really getting help in making the way for the last three years. Open Banking was a catalyst, but we started However, Bhatia says that is starting to change the most out of their money particularly millennials. We did a lot of customer almost three years ago with something with the new First Direct app. research and found that their relationship designed to drive engagement around He explains: “It’s about preserving that with their money was quite different to everyday banking. Whether it’s millennials customer service ethos, and translating that perhaps people of a slightly older era. They or any other generation, there’s a sense into a digital-first approach through mobile. were facing a number of challenges. of dread and inertia when it comes to managing money. Once you have mobile onboarding, a simple “None of this is news. However, the big authentication journey and a system of smart theme coming out of all of the research was “That’s what we were trying to help with ‘smart nudging’ around financial behaviour. nudges to interact with customers in a mobile that they really wanted a trusted brand to help them have a better relationship with Along came Open Banking and we were setting, then you have the recipe to gain their money. That can range from very opening up our architecture anyway, younger customers.” specific things about where their spending regardless of regulation. Now we have the goes, or complicated things such as helping ability to allow customers to pull all their to save.” financial accounts into one place. We want TRENDS TO LOOK FOR to become the financial hub for customers.” One of the often-cited pain points for This is not all HSBC hopes to offer; it One of the issues that traditional banks face is customers was balances at the end of the also believes Open Banking can help not being able to move as quickly as start-ups. month. Moffat states that all customers, irrespective of age, struggle with this, and customers with lending. Bhatia continues: This is mostly due the legacy systems that hold it led to the creation of Balance after Bills. “Getting customers to pull their accounts banks back. To change this and move forward This predicts your balance before payday from other banks assessing affordability with technology, Bhatia and his team focus on and tracks it in an easy way, rather than is actually helping us approve customers. Instead, they would go through a journey embracing new technology. creating a spreadsheet or writing it down. and be declined. I think that’s a very big Bhatia believes there are four or five big Moffat explains: “What we’ve tried to do is opportunity in the market to better match trends in banking that will have massive provide them with tools to help them gain customers with their lending needs to the impacts on the financial sector (see box). It more control and feel they have a more right products.” positive relationship with their money. That In terms of customers, is HSBC hoping that will be the convergence of tech, data and is, in a nutshell, where we are. the ability to efficiently and positively serve those attached to banks that are not HSBC “Although targeted for a younger audience, customers that will shape the future of the will take notice? Moffat concludes: “As we in the research we have done, a significant move forward, we have started with HSBC banking industry. number of the features we are designing customers, but we see a world where we Although there is stiff competition, retail and developed have a strong resonance can engage with customers even if they banking is not losing its ground. The impact across generations, particularly where are not customers of HSBC in a traditional people want to plan with their money.” of game-changing technological innovation sense. At the moment, we do not have that is inevitable, and banks have the chance to The idea for Connected Money originated capability, but it is absolutely something 18 months ago. Since then, HSBC has been that is in our mind.” < harness all its opportunities. <
www.retailbankerinternational.com | 25
RBI 750 June 2018.indd 25 31/05/2018 10:36:25 distribution | ally bank
ally bank: phenomenal growth in clients and deposits
Ally Bank has been adding products so it can offer its customers a ‘one-stop shop’. The result has been major growth in client numbers and deposits, with millennials accounting for over 50% of new customers in the past year, Anand Talwar, Ally’s deposits and consumer strategy executive, tells Robin Arnfield
eading US digital-only bank Ally RBI. “We’ve seen phenomenal growth in the “The majority of our customer interactions was founded in 2009, as the direct banking side of our business. are via desktop and mobile, but we find that Lbanking subsidiary of Detroit- “We strive to be consistently competitive our call centres are definitely a strategic asset,” based automotive financing provider Ally in the marketplace in terms of interest rates,” says Talwar. “A lot of customers want to talk Financial. Talwar continues. “In comparison with the to a real person, and not just when they have It offers online and mobile bank accounts, broad market, we’re very competitive, but a problem. along with mortgages, savings products, Ally there are online-only banks that have more “We have a wide customer demographic Invest wealth management products, car competitive interest rates. However, they do and good distribution across demographic loans, vehicle-protection products and credit not offer the broad value that we offer beyond bands. But in the last year over 50% of new cards. As of 31 December 2017, Ally Bank interest rates in terms of our suite of products customers were millennials. This is because had 1.4 million banking customers, up from and customer service. millennials are likely to be comfortable 1.2 million a year earlier, with $77.9bn in “For example, we offer 24-7 customer care, banking via digital channels.” direct customer deposits, up 17% year on year so you can always speak to a human being. We Turning to the bank’s new products, Talwar from $66.6bn at the end of 2016. have a best-rate guarantee for our mortgage says: “Our customers said they wanted more In addition to direct customer deposits, rates – if you can get a better rate from products from us, for example credit cards and at the end of 2017 Ally also had $15.3bn in another provider in the last five days, we will investment tools. So we’ve added products brokered deposits and deposits from mortgage match it.” that customers told us they wanted in order to escrow, dealers, Ally Invest sweep deposits and be able to expand their relationship with us.” other deposits. This was up from $15.2bn at CUSTOMER INTERACTIONS In May 2017, Ally Financial launched 31 December 2016. its digital-only brokerage and wealth “The growth in bank deposits is fuelled Ally said in its March 2018 earnings statement management platform Ally Invest. The by new customers and also significantly by that its goal for its mortgage business is to launch follows Ally’s June 2016 acquisition existing customers, Anand Talwar, Ally’s grow to $3bn-plus of annual originations over of US online brokerage TradeKing, which it deposits and consumer strategy executive, tells the medium term. integrated with its Ally Bank subsidiary and
26 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 26 31/05/2018 10:36:28 distribution | ally bank
deposit and customer growth In 2015, Ally introduced an online CD management tool with interest disbursement Total deposits, 2014-2017 ($bn) Retail deposit customers (millions) options for non-IRA CDs. Initially available $bn m only for customers logging in via the Ally 100 1.5 website, the CD portfolio management tool is now also available for mobile app users. 80 1.4 “In the past, you did not need to watch your CD rates,” says Talwar. “But, as rates rise, 60 1.3 people want to be able to manage their CDs more actively.” 40 1.2 The CD management tool allows clients to specify renewal instructions for their CDs up 20 1.1 to a year in advance without having to contact the call centre. For example, they can roll the 0 1.0 CD into a different type of CD, add money
Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q1 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 either from an Ally or non-Ally account, or move funds to their Ally bank account. Source: Ally Bank Clients can also set CD interest disbursement options online or using their smartphone. rebranded as Ally Invest. As a result of this growth in applications for the credit card. However, customers who prefer to talk to an integration, when customers log in to their “The card offers unlimited cashback agent on the phone may continue to do so, Ally banking and investing accounts on rewards,” says Talwar. “There is no annual fee Ally says. Ally.com, they see a single dashboard for all and cardholders get 2% cashback on petrol their Ally accounts. and grocery purchases, plus 1% cashback on ASSIST AND SKILL “Our goal is to enable customers to access everything else. We offer a 10% bonus on our products seamlessly,” says Talwar. “We the cashback if it is deposited into an Ally Introduced in 2015, Ally Assist is an Apple- offer a single sign-on, allowing customers account.” Siri style mobile virtual assistant for iPhone to view all their accounts and carry out In its March 2018 earnings statement, Ally users that responds to queries and commands transactions across their entire relationship said that the majority of its credit cardholders submitted via speech or text. with us via our mobile app and our website. are multi-product Ally Bank customers. In 2017, Ally launched Ally Skill for Alexa, We just have one app now where you can do In February 2018, Ally Ventures, Ally which enables customers to manage Ally everything.” Financial’s Fintech investment arm made accounts using an Amazon Alexa-enabled an undisclosed investment in Greenlight device. Customers can interact with Ally Skill ALLY INVEST Financial Technology, creator of a smart debit to perform common tasks such as balance card for teenagers and college students. checks, making transfers or listing recent As of 30 January 2018, Ally Invest had The prepaid card comes with a mobile app transactions. 260,000 customer accounts totalling $5.4bn which the teenager or student and their parent The AI-based tool includes Ally CurrenSee, in assets. In the year to 31 December 2017, both download, and that helps the parent to which is designed to help customers make the number of funded brokerage accounts rose control their child’s spending. The app also more informed buying decisions, examples of by 7% year on year, and customer assets were sets savings goals for the young person. which include telling cardholders how many up 12% year on year. Ally says the investment supports Ally hours they have to work to pay for the price of “Ally Invest has two options for customers,” Ventures’ goal of promoting innovation a purchase. says Talwar. “You can have a DIY self- through key alliances with young companies Other digital banking innovations include directed brokerage account and pay $4.95 that are developing new financial services offering Face ID and Touch ID on iPhones, per self-directed trade. We also offer a technologies. The investment also aligns with peer-to-peer transfers via the Zelle network managed product which consists of a suite Ally’s broader corporate focus on financial to any US bank customer’s email address or of professionally developed and rebalanced wellbeing, and empowering consumers with mobile phone number, and the Ally Card portfolios. smart digital financial products, along with Controls mobile app. “Many people in the industry would call knowledge, tools and resources to help them While other issuers simply offer and this account a robo-advisor, although we do better manage their money. on-or-off control for customers’ cards, Ally not use this term. In the managed account, we Talwar adds: “We do not have any plans to Card controls gives Ally debit cardholders a interact with you to understand your goals, offer a smart debit card with Greenlight as yet. range of options. “With our card controls, risk tolerance, and time horizons. Then we But we are looking at what products it would you can block international transactions or recommend the right portfolio for you and make sense for us to develop with them.” transactions at certain categories of merchant, offer rebalancing.” Ally offers a range of savings products or turn off online transactions or ATM Ally offers a cashback credit card which including money market accounts, interest- withdrawals,” says Talwar. is co-branded with its issuer, US-based TD bearing current accounts, savings accounts, “You can ring-fence the region where the Bank. Although unable to disclose cardholder certificates of deposit (CDs), and individual card can be used – for example only in the data, Talwar says Ally has seen significant retirement accounts (IRAs). area where you live.” <
www.retailbankerinternational.com | 27
RBI 750 June 2018.indd 27 31/05/2018 10:36:28 digital | wells fargo
can be transferred to savings accounts. “While the shift from cash is happening wells fargo: more slowly in the US than elsewhere, mobile technology and digital commerce have escalated consumer demand for simple, fast money movement,” notes DuBois. “Banks outlining new are best positioned to be the disruptors. Take Zelle, the bank-owned P2P network that Wells Fargo, Bank of America and Chase launched in June 2017. It lets customers move digital ambitions money directly between participating bank accounts in real time, instead of having to In the last year Wells Fargo has announced major innovations move money to a separate account first, from a third-party wallet, and taking up to three to improve its digital banking users’ customer experience. It days to transfer to your bank account. is also reimagining the future of personal finance to optimise “Consumers value real time. In 2017 – the the customer experience. Robin Arnfield reports year Zelle was rolled out – total [all banks] payment volume through Zelle was $75bn, ast October, Wells Fargo launched “Since the announcement of its Payments, with over $25bn moved through Zelle. As a NFC functionality at over 5,000 Virtual Solutions and Innovation group point of reference, Venmo [PayPal] payment LUS ATMs, enabling customers to in 2016, Wells Fargo’s goal has been to volume was a little over $33bn in 2017. initiate ATM transactions with wearables redefine the next generation of capabilities “Today, convenience means we go to or mobile wallets like Apple Pay, Android and offerings, and prioritise research and our customers where they are, and we give Pay, Samsung Pay as well as Wells Fargo’s development – elevating the customer them more choices for how they interact Android-based wallet. experience and making it easier for customers with us,” says DuBois. “Earlier this year, Wells Fargo plans to upgrade the rest of to achieve financial goals,” DuBois says. Apple announced Apple Business Chat, its over 13,000 ATMs with NFC hardware “We use AI to enhance some of our internal and named Wells Fargo as one of its launch by 2019. Since 2016, Wells Fargo mobile processes, such as fraud management, and we partners. In March 2018, we were one of the users have been able to use a one-time code use AI in our mobile app – in our predictive first companies to roll out this messaging on their smartphones for Wells Fargo ATM banking feature – to examine customers’ cash experience to our customers. transactions. During its first 2018 quarter, flow patterns and give pointers and insights.” “With APIs, customers can connect with Wells Fargo rolled out its digital mortgage The predictive banking feature analyses us where they are, even outside Wells Fargo application plus the new predictive banking account information, indicating, for example, digital properties. Say you’re selling your car functionality in its mobile app. that customers have higher-than-normal through an online marketplace. If that website Last July, Wells Fargo piloted a digital automatic monthly payments or that they or app uses the ACH system’s API, you could banking experience with its staff to help have surplus funds in chequeing accounts that confirm that the buyer has made a payment simplify customers’ fragmented financial lives, and the real-time status of that payment. with rollout due in 2018. The experience, Key metrics DuBois continues: “With the pace code-named Control Tower, will give of technological change, our fintech In February 2018, Wells Fargo had 28.8 customers a single view of their ‘digital collaborations are becoming increasingly million active digital customers, up 3% financial footprint’ – including places their year on year (YoY), including 21.8 million important to us. Fintechs have challenged Wells Fargo card or account information active mobile users, up 8% YOY. us to think differently about how we use is connected, such as recurring payments, Primary consumer chequeing account data creatively to provide fast, simple and mobile wallets, devices, subscriptions, etc. – customers were up 0.2% YoY in personalised experiences to customers. Banks and will enable customers to control via an November 2017, and up 0.9% YoY in and fintechs complement one another, and on/off function from one location how their February 2018 to 23.7 million. the most innovative solutions will likely be a Wells Fargo accounts and cards are shared. Teller and ATM transactions fell by 4% product of fintechs and large banks such as Other enhancements include data-exchange YoY to 343.3 million in the first quarter Wells Fargo working together. agreements with several popular financial of 2018, reflecting continued customer “Wells Fargo fosters innovation with start- migration to virtual channels and lower management tools, plus an AI-driven chatbot customer growth. ups in several capacities, such as with the experience for Facebook Messenger. Wells Fargo Startup Accelerator. We mentor Total digital secure sessions of 1.57 “Wells Fargo is reimagining the future billion were up 13% YoY in Q1 2018, early-stage companies and help them refine of personal finance to deliver secure and reflecting increased usage and adoption. their potential breakthrough technologies for convenient customer experiences,” says bank Wells Fargo plans to close around 900 financial services and other applications. spokesperson Sarah DuBois. “It’s important branches by 2020 to cut operating “We currently have 17 companies in to recognise that customers aren’t asking for costs and offset expenses relating to its our portfolio, and continue to add more. disruption. Our efforts to advance products, mis-selling scandal. It had 5,861 retail Technologies from some of these companies, services and experiences are about increasing branches as at 31 December 2017, as well as from other partners, power the falling to 5,805 as at 31 March 2018. choice and customisation.” experiences we are delivering.” <
28 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 28 31/05/2018 10:36:28 distribution | Itaú Unibanco
Itaú Unibanco: ramping up its digital ambition
Itaú Unibanco, Brazil and Latin America’s largest bank, has made significant investments in digital technology. The bank has also formed a Latin American strategic council to drive its expansion across the region. Robin Arnfieldreports
or Itaú, digitisation means and Agile development principles. In its seek operational efficiency, such as applying transforming the entire bank’s management report for the fourth quarter AI in its credit models, and to understand Foperational processes and fostering a of 2017, Itaú said this had led to a 14% clients’ behaviour in all points of contact with digital mindset among staff. productivity gain last year in technology the bank. In the past two years, Itaú has increased the development, and a 22% reduction in time to Itaú is a member of an international number of staff with digital expertise in fields market for new projects. consortium of banks which have taken an such as design, user experience, analytics, equity stake in financial blockchain developer digital media and cybersecurity thirteen-fold. CUSTOMER-CENTRICITY R3, and are testing the blockchain with R3. It has developed over 1,500 APIs which allow Over 80% of Itaú’s Brazilian retail banking the creation of reusable apps. Customer-centricity is a key focus in its transactions now take place digitally, up from Itaú has created a collaborative working development efforts. Itaú is deploying cloud 25% in 2008. However, Candido Bracher, model in its IT Department based on Lean computing, machine learning and big data to Itaú’s CEO, told an analyst call for the
www.retailbankerinternational.com | 29
RBI 750 June 2018.indd 29 31/05/2018 10:36:30 distribution | Itaú Unibanco
fourth quarter of 2017 that not all digital embrace digital evolution, and Cubo is a key transactions performed by the bank’s clients component of this process,” Lineu Andrade, are actually digital end-to-end. He said Itaú’s who manages Cubo within Itaú, said in a efforts are now geared towards digitising more statement. “Cubo stimulates our employees and more of its back-office operations. to think outside the box and develop new Over six million Itaú account-holders were solutions to meet our clients’ needs, infusing a using its mobile app every month in 2017, culture of innovation in everything we do.” according to Lívia Martines Chanes, Itaú’s Cubo’s co-founder is Redpoint eventures, director of digital channels, user experience an early-stage venture capital firm. Other and CRM analytics. partners in Cubo include Accenture, Cisco, Mastercard, Microsoft, Coca-Cola, Saint- DIGITAL INITIATIVES Gobain and Rede, the Brazilian cards acquirer owned by Itaú, In 2017, Itaú announced a number of key “Itaú is going to take direct investments digital initiatives to improve client satisfaction. in the fintechs housed at Cubo,” Jerry Silva, However, unlike its rival Bradesco with Next, global banking research director at IDC it did not launch a standalone digital bank in Financial Insights, says. response to challenger banks such as Banco Original. CONSUMER CREDIT Itaú’s 2017 initiatives included the launch of Itaú Light, which it developed jointly with Despite Brazil’s challenging economic its clients and now has over 500,000 users. environment, Itaú, the country’s largest credit The app offers intuitive browsing, uses less card issuer, is looking to expand its Brazilian smartphone data and memory, and is easier to Candido Bracher, Itaú Unibanco consumer lending business. navigate than Itaú’s traditional app. Itaú Brazil has around 29.2 million credit The Itaú Abreconta (account-opening) app Itaú has two million digital branch card accounts and 26.2 million debit card was launched in 2017, offering an entirely customers; its digital branches are 20-30 accounts. Its Brazilian credit card transaction digital current account-opening experience. percentage points more efficient than its volume rose by 10.8% year on year to Itaú says that over 190,000 current accounts bricks-and-mortar branches. BRL80.3bn in the fourth quarter of 2017, have been opened with the Abreconta app. while its Brazilian credit card lending was In April 2018, Itaú became the first BRANCH NETWORK up 6.8% to BRL63bn in the same quarter. Brazilian bank to launch Apple Pay for its Overall Brazilian lending to individuals was cardholders. Apple Pay will be exclusively Between December 2016 and December up 1% to BRL185.3bn in the fourth quarter available in Brazil for 90 days to Itaú’s 2017, Itaú reduced its Brazilian bricks-and of 2017. approximately 1.2 million Brazilian mortar branches from 3,653 to 3,520, and “Itaú expects to increase its loan portfolio cardholders with an iPhone 6 or more recent its Brazilian client service branches (banking in 2018 as [Brazil’s] economic growth iPhone model. kiosks) from 755 to 703. accelerates,” Moody’s wrote in a March 2018 In March 2017, Itaú launched the Itaú still sees branches as very important report. “We expect Itaú to focus more on Personnalité Investimento 360 platform for opening new accounts, but is looking higher-margin secured consumer lending, for its Personnalité customer segment, who intensively at how to transform its branches as well as loans to small and medium- have monthly incomes of above BRL10,000 ($2,996) or assets of over BRL100,000. The platform provides a range of investment At Itaú we’re constantly looking to products offered by Itaú and other FIs through Itaú Corretora, its retail brokerage arm, plus a embrace digital evolution, and Cubo is specialist advisory service. In 2017, Itaú opened 25 digital branches, a key component of this process taking the total number of digital branches to 160 at the end of 2017. The digital branches are virtual branches offering communications for new usages, and this is more of a focus sized companies backed by self-liquidating via SMS, email, telephone and internet than efforts to close branches. receivables, as corporate borrowers struggle to messages, and extended hours of customer Since 2015, Itaú has been a founding improve their finances and liquidity levels.” service for Itaú Personnalité and Uniclass partner in Cubo Coworking Itaú, a In October 2017, Itaú completed its $220m customers. Silicon Valley-style hub for technological acquisition of Citigroup’s Brazilian retail The Uniclass segment comprises customers entrepreneurs in São Paulo. Several digital banking and insurance business, following with monthly incomes of BRL4,000-10,000. start-ups based at Cubo are Itaú contractors approval by Brazil’s Central Bank. In the fourth quarter of 2017, Itaú had 1.5 and suppliers, but Cubo’s digitalisation remit The acquisition strengthened Itaú’s share of million Uniclass customers and 527,000 goes beyond financial services. the high net worth banking market in Brazil, Personnalité customers. “At Itaú we’re constantly looking to adding BRL8.6bn in assets to its operations,
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including a BRL6.2bn credit portfolio, BRL4.8bn in deposits, 71 branches and around 300,000 customers. In March 2018, Brazilian competition regulator CADE approved Itaú’s acquisition of a non-controlling stake in wealth management firm XP Investimentos, without demanding additional asset sales by Itaú. The deal, which is subject to Brazilian Central Bank approval, involves Itaú buying 74.9% of XP and a 49.9% holding in its voting capital by 2022 for BRL5.7bn. There is speculation that Itaú could take a controlling share in XP’s voting capital by 2024, which would require separate regulatory approval. The XP deal will help Itaú respond to the advent of new Brazilian retail financial services firms. Brazilian banks typically allow clients to invest only in products managed by themselves, while XP is an open investment platform providing access to several In 2016, Itaú completed its 2014 because the queues are so long. People even independent managers. acquisition of Chile’s CorpBanca which has an make arrangements to meet each other at Itaú CEO Bracher said last year in an operation in Colombia. a branch, especially older customers. Also, analyst call: “We believe that a distribution Itaú CorpBanca Chile is currently 36.06% Brazil’s national payments system enables of financial products through open platforms owned by Itaú, 30.65% by CorpGroup, and customers to make payments at any bank’s branches, even if they are not customers of that bank.” Brazilians see branches as a place to Silva continues: “In the 1970s, Latin America leaped ahead of the rest of the world socialise, because the queues are so long. in terms of electronic banking and payments technology to cope with very high daily people even make arrangements to meet inflation. At the time, Latin American banks had the best electronic payments systems in will be more relevant for the industry and 33.29% by minority shareholders. Since 2012, the world.” more important for our clients. So, for us, this Itaú Corpbanca has acquired two banks in “Now it has come full circle, as Latin transaction is an important step towards this Colombia: Banco Santander Colombia and American banks are dealing with legacy core aim of better serving our clients.” Helm Bank. IT systems and legacy branch networks. So Itaú competes with Spain’s Santander, which Itaú is trying to do that leap forward again, REGIONAL EXPANSION operates retail banks in Brazil, Mexico, Chile and bring digitalisation and mobile banking and Argentina, and with BBVA, which has back to the forefront,” Silva explains. Ricardo Villela Marino, executive VP and a subsidiaries in Argentina, Chile, Colombia, “Digitisation solves problems for Itaú. member of Itaú’s board, has been named chair Peru, Paraguay, Uruguay and Venezuela. It is expensive to run branches, and banks of the new LatAm Strategic Council. Bradesco has a credit card and retail have to justify the cost, especially with the Itaú says the council was created to lead its banking subsidiary in Mexico, following its problematic Brazilian economy. It makes sense internationalisation process, one of the bank’s acquisition of Mexico’s IBI from C&A. not necessarily to close branches but to decide most important strategic fronts for the next how best to use branches that are kept open.” few years. It will investigate opportunities for ANALYST COMMENTS Commenting on Brazil’s challenger banks expansion as well as integration of existing such as NuBank and Banco Original, Silva businesses. Jerry Silva, global banking research director says: “These fintechs are a challenge, but Itaú has expanded its retail presence in at IDC Financial Insights, notes: “Having they are also not a challenge. Their value Latin America, particularly in the Southern a digital focus plus a focus on branches is a proposition consists of one or two products Cone, due to its aggressive acquisition strategy. balancing act for many banks in Brazil and such as a digital wallet or a credit offering in It has retail operations in Argentina, Chile, Latin American countries such as Argentina, digital form. Colombia, Panama, Paraguay and Uruguay, as Colombia and Uruguay. “They may steal some business from large well as a private banking business in Miami. “Digitisation must be balanced with Brazilian banks, but will not take customers Itaú says internationalisation involves customers’ cultural attitudes and preferences. away on a wholesale basis. It takes fixed “reaching, in the countries where we are In Brazil, banks are sensitive to cultural investments to maintain a broad portfolio present, the same management quality and attitudes about branches being a focal point. of products and a broad physical channel results that we have in Brazil”. Brazilians see branches as a place to socialise, infrastructure.” <
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RBI 750 June 2018.indd 31 31/05/2018 10:36:33 strategy | citi
Howle adds: “We’re leveraging our success in wealth management in Asia to deepen our client penetration. We launched our enhanced Citigold Wealth Management offering in citi aims for the US in late 2016, and we’re continuing to see very good results. We’re seeing growth in households and balances and an increased penetration of investment product.” being best over Since 2011, the number of households served by Citigold relationship managers has expanded over tenfold, Howle tells RBI. being biggest RETAIL REVIVAL “Following a multi-year transformation, the US retail bank is back on the offensive, as we deepen growth in our six core US markets and roll out a new mobile-based National Digital Will Howle, head of Citi’s US retail bank, Banking platform this year to serve customers coast-to-coast. We like to say it’s all about discusses with Robin Arnfield how a lean branch getting the right mix of bricks and clicks. network,combined with a totally transformed mobile “We’re seeing strong results. Excluding acquisition, service and engagement experience, a mortgages, US Retail Banking revenues rose 8% in the first quarter of 2018, driven by ubiquitous brand and the country’s largest fee-free continued growth in deposit margins, growth ATM network position Citi for exciting growth in investments and loans and increased commercial banking activity.” Howle adds: “As our customers increasingly engage with Citi digitally, we’ve seen digital and mobile self-service increase by 51%, “ iti’s US Retail Bank has undergone SEGMENTATION STRATEGY while teller and call centre transactions have a tremendous transformation declined by 30%. Cin the past few years in terms Howle explains: “Our segments are Citigold, “Our first-quarter 2018 earnings statement of streamlining our branch footprint, which serves the affluent market, Citi noted that US mobile usage increased by intensifying our focus on wealth Priority, which serves the emerging affluent almost 25% and digital by 25% year on year, management, and massively improving the segment, and Citi Banking, which serves outpacing peers. And we certainly don’t see client experience,” Howle tells RBI. the mass market with a strong basic banking this trend slowing down anytime soon.” “Much of this relates to the relaunch of proposition that leverages digital. Citi’s digital initiatives include: our Citigold [wealth management] offering, “This client-led model supported by • Enabled P2P payments via Zelle to more clearly defining the value proposition to global capabilities is deployed locally and cut than 86 million consumers in the US; provide a holistic client view and a wide through locally. • Delivered Quick Lock for Debit and range of benefits and services. These include Howle continues: “Citigold is institutional- Credit; preferred pricing as well as access to market grade execution for the retail client: it provides • Enabled ATM/debit card PIN reset and outlook events, wealth management seminars, insight, fund access, dedicated bankers and activation of new or replacement cards; and unique access to sporting, entertainment a range of exclusive privileges and pricing. • Enhanced mobile cheque deposit with and cultural events.” It is a great example of how the consumer is increased limits ($5,000) and a new user Howle continues: “Also, in late 2016 we leveraging institutional research and trading experience; launched a Citigold app offering combined capabilities as we bring the best of Citi • Real-time trading and brokerage account banking, trading and investing in one app – a International Clients Group to our retail opening for Citigold; first of its kind for a global bank. Our strategy clients. • One-touch ‘click to call’ functionality to is to drive client-led growth by delivering “Across our global franchise, Citigold connect customers with financial advisors; world-class value for each segment we serve. A represents 60% of our total loans, deposits • Dispute a card charge; add an authorised relationship banking model serves our clients and assets under management – and it’s our user; scan to activate in the app; across the full spectrum of their needs, as they fastest-growing segment with very attractive customized spending summaries, and borrow, pay, save, invest and protect. economics. Citigold clients generate 25 times • Digitising the mortgage experience from “Citi isn’t a monoline. Once you become a more revenue than clients in the mass market end to end. Citi customer, you can stay a Citi customer as segment, and these relationships tend to your needs evolve through your life stages and be broader and deeper, hence the quantum Howle notes: “We’re building an end-to- you move up through the wealth continuum.” increase in their value.” end digital bank, one that makes our services
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pervasive to reach beyond the constraints of “An adjacent Citigold lounge offers a the traditional physical channels. Over time, relaxing, private space to meet with Citigold we expect digital will become the primary relationship managers, financial advisors, small channel by which we acquire, service and business bankers and home lending officers. engage with our clients. Videoconferencing also provides clients “Our first step is paperless, branchless, worldwide access to Citi. instant account-opening. It must be simple “It’s a great example of our smart banking convenient and faster than ever before. model, which combines the important human We’re also introducing a compelling set of element with advanced digital capabilities. We capabilities that deliver for our clients.” have these flagship branches in New York City, Other initiatives include in-app account and we’re building one now in San Francisco.” opening: consumers may open a bank account Howle notes: “While our customers become entirely within the app in minutes, and begin increasingly digital, we recognise there remains using their account instantly – no need to wait a need for cash. That’s why we nearly doubled for a debit card to arrive – and take immediate our fee-free ATM network last year, making it advantage of Citi’s suite of wellness tools. the largest nationwide with more than 60,000 Citi is also the first major US bank with locations coast to coast. a mobile app that can serve as a single hub “We also increased our investment in for users’ entire financial lives, eliminating Will Howle, Citi our people, launching a unique, multi-year the need for additional financial tracking education programme for wealth advisors in and budgeting apps. This feature provides Howle continues: “In these markets, we October 2015 with the Wharton School of customers with a holistic view of their have a strong position in the affluent segment, the University of Pennsylvania.” financial lives across Citi accounts and those where we lead in deposits per branch. Over He adds: “We believe that branches will of other financial services providers. time, we’ve seen a significant migration from continue to evolve to reflect how clients bank Howle says Citi’s app puts customers’ data higher-cost-to-serve channels, such as tellers today and will in the future. Service delivery to work for them, with access to accurate, and call centres, to self-service offerings as will become almost fully digital, reducing cost meaningful insights. Customers are able to we’ve invested in digital. and complexity while improving quality of track monthly spending versus income, make “This has contributed to a significant execution as the model becomes leaner and we progress towards weekly spending goals, turnaround in pre-tax earnings. Excluding automate and digitise.” unlock opportunities to save, and illuminate the mortgage business, our retail banking insights across all their spending. earnings have grown by more than four times FINTECH STRATEGY Customers also asked for a more since 2013. We believe we’re probably gone comprehensive, intuitive bill-pay capability, through an acceleration of growth in the US Howle sums up Citi’s strategy as “integrating and Howle believes Citi has delivered. Retail Bank, as we now have the tools to better the best fintech innovations – something “Mobile users can easily view their bills – segment and serve our client base. we call ‘fintegration’.” He explains: “Pitting everything from mortgage payments and Howle adds: “We’re investing in highly incumbent banks against start-up fintechs in student loans to gym memberships and trained bankers and we are ‘hubbing’ them a winner-take-all competition is appealing streaming video services – not just those they in dedicated wealth centres. We’re supporting to many, but not a sophisticated view of the pay with a Citi card. the Citigold value proposition using current or future landscape. Fintech start-ups “Managing bills is about more than paying unique digital capabilities to meet the most cannot easily build the secure and sizable them. It’s about being notified when a bill sophisticated needs of these clients. infrastructure of big banks, and no single bank increases and providing customers with full “We believe there is significant upside from could consistently produce the latest digital visibility and control over recurring charges.” this point by increasing penetration, where experiences that would be better than the best Howle adds: “What’s more, these they are existing affluent clients to drive more emerging out of the fintech ecosystem. capabilities will be available to customers and revenue growth.” “Through some degree of controlled but non-customers alike. If someone isn’t ready Citi is investing in what it terms a “forward- open architecture, fintegration allows us to to open an account but wants to try account compatible infrastructure” that does away leverage our scale, brand and track record in aggregation, they can create a ‘lite’ profile to with a one-size-fits all approach to branches providing secure, trustworthy services while test drive account aggregation and spending and instead develops multiple sizes and leveraging the quality of customer experiences insights by linking external accounts.” formats, ranging from large flagship centres that the best in fintech can provide. incorporating every service Citi offers, to He concludes: “We’re not expecting TRANSFORMATION smaller digital branches. overnight success: building a client base Says Howle: “For example, last year we outside our footprint takes time. “We began our US network transformation opened our new Bayfront Citigold Center “Again, we are keeping our eye on the ball – in 2013, and, since then, have reduced in Miami that features new ‘workbench’ focusing on new and deepening relationships our branch footprint by nearly a third. At terminals that enhance side-by-side in our core markets with the opportunity the same time, we’ve been upgrading and interactions with personal bankers, while to use digital as a launch pad for growth ‘smartifying’ our format, and concentrating providing in-branch access to Citi’s digital nationwide. Our goal is not to be the biggest our resources in our six core markets.” banking platform. – but we are aiming to be the best.” <
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RBI 750 June 2018.indd 33 31/05/2018 10:36:38 people | metro bank
metro bank: the road to its success
In RBI’s 37-year history, few bankers have been as quotable, colourful or successful as Vernon W Hill II. From founding a single branch office bank in 1973 at the age of only 26, Hill is rightly described as having revolutionised retail banking in the US. He tells Douglas Blakey the reasons for his success over the past five decades
ot only did Hill transform retail money every month to make sure it will “Grow your core deposits at a very high banking in the US, it should not happen.” rate of growth at a relatively low cost of Nbe forgotten that in the process, he Cynics – of whom there were many in the money through the service, convenience and created outstanding shareholder value and press, not including RBI – and the analyst customer experience model, and focus on attracted millions of fans. community suggested that the UK would not improving service every year – that was always For all the talk of fintechs potentially take to Hill’s new Metro Bank project. our model at Commerce Bank, and it is the disrupting banking, Hill has mastered the art Hill had seen it all before. His mantra in model at Metro.” of disruption; by his own admission he loves the US with Commerce Bank was that the So, while the average US bank branch to disrupt and he has form. customer wants every delivery channel; no might grow its deposits by about $1m-2m a Take Commerce Bank, dubbed America’s channel replaces another and you have to year, the typical Metro Bank branch grows Most Convenient Bank. Founded in 1973, deliver the very best of every channel. deposits by $106m a year. Commerce grew its store network to 27 by He tells RBI: “We kept on opening Hill said he would build fans in the UK, 1990, 95 by 1995, 150 by 2000 and when branches while other banks shrank their and again the cynics scoffed. His numbers Hill sold out in 2007 – famously just ahead networks. We were told that ATMs would back up that he is, indeed, winning here. of financial crisis and at the top of the market take over banking in the 1980s and 1990s, “The typical UK bank branch at rival banks – Commerce was a top 20 US bank with a and then we were told that online banking might open one or two new accounts a day. market cap of $8.5bn, about $50bn in assets would take over. We kept on building stores.” Our branches will open about 25 accounts a and almost 500 stores. Hill argues: “Everything we did in the US day – 750 accounts per month.” at Commerce is working even better today VERNON IS BACK in the UK for one simple reason: for so long HIGH STREET RIVALS the Brits did not have a choice in banking, The writer has written several thousand and what they needed badly was outstanding Hill is proud of the fact that Metro Bank beat headlines over the past 13 years working on customer service and convenience.” its more established high street rivals to the RBI; few were as enjoyable to write as one He adds: “A bank is a government licence to rollout of fully digital current account opening written in November 2008 entitled Vernon borrow money cheaply by accepting low-cost via selfie technology. is Back. Hill told the writer in 2008:“We are core deposits. Anyone can make loans, but It is early days, but Hill describes going to do it again. I am spending serious only banks can accept deposits. the numbers as being way ahead of his expectations. “I was surprised that 70% of the new accounts being opened remotely are in DEPOSITS AND STORES GROWTH METRO BANK TARGETS areas where we already have stores. number of total deposits 2017 2020 2023 “It tells me that the brand is already pre- stores (£bn) actual Target target sold. Our brand recognition in the London 2013 24 1.3 Deposits (£bn) 11.7 27.5 50-55 area is 89%, yet we spend less than £100,000 2014 31 2.9 Mkt share (%) 0.5 c1 c2 a year on ads. Hill concludes: “The Metro Bank brand 2015 40 5.1 Stores 55 c100 c140-160 recognition is so high because of the stores. 2016 48 8.0 Loans (£bn) 9.6 23-25 44-50 “Today, more than ever, it is about clicks 2017 55 11.7 RoE (%) 1.2 c14 c17-19 and bricks: the winning banks will be those Source: Metro Bank Source: Metro Bank that unite all the channels of delivery.” <
34 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 34 31/05/2018 10:36:39 industry insight | fiserv
open banking: suiting up for a sprint, and showing up for a marathon
The European Banking Authority’s Second Payment Services Directive (PSD2) and subsequent industry implementation of Open Banking in the UK create a wealth of opportunities for financial institutions. However, their introduction has been one of the biggest compliance tests the industry has ever faced. Fiserv’s Andrew Steadman writes
n many cases, banks prepare for a sprint the challenge of initial compliance. While Open Banking is the beginning of what will to compliance, only to find they are a number of banks were able to muscle ultimately be an industry shift to API-based Iactually facing a marathon of sustained their way to the deadline, the number of financial services, enabling consumers to change. hours invested in these projects appears access financial information when and where The goals of the PSD2 regulations have unsustainable for the long term. they want. always been consistent: to set an industry- In addition, banks that take a broader wide framework with the aim of improving COMPLY; STAY COMPLIANT view of Open Banking will increasingly customer satisfaction and encouraging realise that open APIs are a two-way street, competition between banks, lowering banking Open Banking regulations are set to evolve, allowing them to access and bring more costs for consumers ,and improving security and focusing only on initial compliance will intelligent experiences to their own customers and consumer protection as data sharing lead to greater cost and time investment in the within their own interfaces. This changes increases. This was never a ‘one and done’ long term. the perspective that these regulations are proposition, and that has only become clearer Meeting a compliance deadline is not a one-sided mandate to provide access to in the days since the initial deadline for the finish line but, in fact, the starting line. information to others. compliance among the CMA9. If banks direct huge amounts of resources As banks, regulators and the fintech Ongoing success in an Open Banking toward building a solution internally from the community work together to deliver PSD2 world will require a change in both ground up, they risk reaching this starting line standards on time, as well as engage third- thinking and approach. In 2016, as a result and realising every change from that point will party providers and the developer community, of PSD2 regulations, the Open Banking require a similar amount of effort. the regulations’ impact will begin to spread. Implementation Entity (OBIE) was Although it may seem of little importance Those banks that collaborate, partner, assembled. Created by the nine largest banks at the start, taking a longer-term view to invest in and support new fintech innovations and building societies in the UK, known as ensure ongoing compliance is critical. With are ultimately the ones that will be able to the CMA9, its goal was to create a better this in mind, some banks are beginning to see leverage the capabilities of these innovations, way to move data and manage money for the appeal of fully managed services, which get new services into production and provide banking consumers. As the first adopters of can provide banks with the necessary tools customers with new experiences, reflective of the regulations, the CMA9 have underscored to get compliant and stay compliant, and specific wants and needs, at greater speed. the challenges of becoming and staying help ensure banks are fit for PSD2 regulatory In an ever-evolving industry, regulatory compliant, providing lessons that can be changes which will come in the future. This change is inevitable. While current usage of applied by others. frees up the banks’ internal resources to focus open APIs to share financial information is On the whole, the CMA9 treated meeting on other high-value work. low, there will be a tipping point – perhaps Open Banking regulations as a special There is a lot at stake for banks to meet the emergence of a game-changing use case project, completed by internal teams with an compliance standards and stay compliant. – when the pace of change will become 10 investment of substantial employee hours. However, for banks that can reach continuous times faster and the scope of change 10 times Although all were provided with OBIE compliance there is also a wealth of broader. roadmap considerations, not all were prepared opportunities that the regulations can bring. Financial institutions that are prepared for to implement standards when the deadline Freeing up resources will allow banks to the marathon of Open Banking are setting arrived in the UK in January this year. focus on the larger impact of Open Banking themselves up for success, no matter what The fact that several of the banks sought, and its potential to change the way financial the unknown future of the financial services and were granted, extensions underscores services will be delivered and consumed. market may bring. <
www.retailbankerinternational.com | 35
RBI 750 June 2018.indd 35 31/05/2018 10:36:39 distribution | branches
it offers a new customer experience for the connected age. Emirates NBD established its allen international: Future Banking Lab as a key initiative of its digital strategy, that enables and accelerates the development of next-generation digital and mobile banking services with the aim to the branch’s increase smart service adoption in the UAE.” Allen notes: “The innovative digital branch incorporates both physical and digital designs and incorporates three seamlessly connected bright future zones. I like the project a lot.” Two Irish projects are also among Allen’s Michael Allen is the founder of strategic design company allen favourites. “Allied Irish Bank commissioned us to craft a totally unique concept store international, and for over 20 years has had a ringside seat as which would provide a learning and research bank branch design has evolved. He discusses with Douglas environment focused on enabling customers Blakey some of the most significant branch projects in which to get the most from their current and next generation banking services. Even now, four or he has been involved, and looks to the future of the branch so years on, the Lab branch looks great. “Bank of Ireland is another great one – new ichael Allen is uniquely qualified smaller banks are more adventurous, and branches that have been really successful to discuss the branch past, Mauritius Commercial Bank transformed its in attracting start-ups and SMEs as new Mpresent and future. cold, grey branches into vibrant department customer wins for the bank.” The firm bearing Allen’s name produces store-like centres in a bold project. Another favourite is Allen’s work with proprietary products including Kit of Parts, State Bank of India to launch next- ABC-D retail communications, Brand DNA, RETAIL CONCEPTS generation digital branches for its sub-brand, Retail Academy and Multi-Sensory Branding. sbiINTOUCH, across the country as part of Specialties include communications, In the UK, Allen flags up retail concepts for SBI’s programme to offer banking solutions to strategy, branding, retail design, layout Virgin Money and Santander as of particular the growing mobile phone and internet-savvy planning, 3D modelling, profile drawings, note. “Virgin Money really has combined customer base. implementation and design standards retail with banking – it breaks the mould. On the future, Allen’s message is mixed. “I manuals. Many of the most significant branch “Virgin Money Lounges are unique in UK have visited so many branches where digital is projects reported on by RBI in its first 750 banking. They are interesting, stimulating and, just not integrated into the customer journey. issues have been led by Allen. above all, comfortable places where customers It has to be done carefully, and there is more “DBS was one of the most interesting and local communities can come together. to it than just installing some iPads. projects,” Allen tells RBI. “The brief was Allen adds: “Lounge visitors can choose to He warns: “It is surprising that so many to implement the very latest in banking put their feet up and enjoy the facilities, or bank branches today are really dreadful places; technologies to enhance and improve the use the Lounge for an informal meeting. If many banks still have a lot of work to do.” in-branch experience for customers at its a customer decides they want to undertake Overall, however, he remains upbeat about new headquarters branch in the Marina Bay some personal banking, that choice is available the future of the branch concept. There are, Financial Center Tower, Singapore. too. It has been a really big success for them. he argues, reasons to be optimistic: younger “The design utilises a motion-sensitive “At Santander, the new concept store – people still want a face to face relationship interactive digital welcome wall, quick- such as the one at Tottenham Court Road to discuss really important financial service stations for fast transactions, and the in London – is a brave project but looks arrangements. installation of teller-assist units in the semi- amazing, and is now being rolled out around Allen concludes: “The branch remains a private consultation pods.” the world.” great brand builder; it is a great relationship Another project Allen enjoyed is one for For Allen, top of mind is the project for builder, and is still the best way to acquire new Mauritius Commercial Bank. Often the Emirates NBD. “It is bold in the way that clients. The future is bright.” <
Virgin Money Santander AIB
36 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 36 31/05/2018 10:36:42 marketing | loyalty
Ten and Coutts ten group: Ten has worked with Coutts since 2006 when it was brought in as an added benefit to its Coutts World card programme. Following the success of the programme’s initial roll-out and positive the second wave member feedback, Coutts rebranded its Silk Card in 2013. At the end of 2016, Coutts decided to focus solely on concierge and the Thank You From Coutts of concierge programme as card benefits. the approach: To engage Coutts’ highly valued clients, Alex Cheatle, CEO of Ten Group, discusses his firm’s Ten runs a proactive concierge programme technology-enabled lifestyle, travel platform and concierge to help members with personal and business travel, tickets to the most services with Douglas Blakey. It is a premium service already popular events, through to tables at the on offer to customers of a growing number of leading banks, most in-demand restaurants. Ten offers bespoke events and benefits, including Coutts, Investec, Barclays, OCBC and HSBC such as complimentary Charlotte Tilbury makeovers, access to Selfridges and heatle has a simple but persuasive Clients include NatWest Black and Barclays Mulberry presales, preferential rates at pitch to retail and private bankers: Premium in the UK, internationals OCBC top retailers, and invitations to events such as flower arranging at Claridge’s. “Would you like to deliver services and Itaú, and private banks such as Coutts. C Clients also earn rewards based on card to your most premium customers that Emerging markets are especially promising, spend through the Thank You From will allow you to increase retention rates, with exciting growth in China, Japan and Coutts programme, with rewards ranging increase acquisition rates and grow clients’ South East Asia. In Latin America, Ten Group from fine dining at top restaurants to the engagement overall with your bank? We can employed fewer than 50 staff six months ago; latest gadgets – the majority of which are prove that we do that.” today that number has risen procured and fulfilled by Ten. It may be simple, but it to over 200. To ensure a personalised service, Ten has resulted in Ten Group “Our net promoter score uses targeted CRMs based on members’ location and interests to offer services and being successful with 28 of has gone through the roof, updates they will want to hear about. Ten its last 32 pitches to financial and that directly impacts the also shares regular insights with Coutts institutions. Not many NPS of the retail or private into trends and feedback to help its service providers or tech bank – and impacts on private bankers build better relationships firms can boast such a successful tendering people’s intention to stay with their bank. with clients. track record. “Our services have got to the point where Finally, Ten offered Coutts first access Off the back of that kind of hit rate, backed members get access to the world’s best to its proprietary digital platform, which saw Coutts add online concierge to its up by revenue growth – in 2015 revenue of restaurants; we can get tables all over world. offering in 2015, setting its service apart £20m ($26.5m); 2016: £24.3m and 2017: In London alone, we hold hundreds of held from competitors and resulting in industry £33.2m – Ten Group listed successfully in tables at the top restaurants. Members of the accolades for its Loyalty and Benefits late 2017 on London’s AIM market. Ten is public calling the same restaurants will be told programme. no new kid on the block, however, having there is no table available for the next three the results: been launched by Cheatle 20 years ago, but is months. • High member satisfaction, with Coutts coming to the fore on the back of impressive “Tickets at face value for Adele, Coldplay or Concierge’s NPS score rising by 25 results and a stellar client list. the Rolling Stones? Not a problem. Everyone points to +74 in March 2018 since its Looking back, Cheatle says concierge and else has to rely on the secondary market. On benchmark monthly NPS result related services have had an interesting history: hotel pricing, we can beat Expedia; on flights • In 2006, Ten was managing around “We are now witnessing the second wave of we can offer better pricing than is available on 1,500 requests per month, with the concierge. In the early days, it was little more the airlines’ own websites.” service available to less than half the Coutts clients Ten serves now. This than a tick-box indicator for banks.” In the early days of concierge, the benefits has now increased to almost 10,000 Banks wanting to repeat the success of the would be attached to a single product, requests a month. American Express Centurion card would offer generally the credit card. Today, banking • In 2017, Ten successfully completed something that looked premium – little more clients of Ten tend to attach the benefits to more than 100,000 requests for Coutts than a signifier and dismissed by Cheatle as “a the entire banking relationship, so benefits on behalf of 10,000 Coutts clients – a marketing thing”. are felt across the whole banking and wealth 30% increase on 2016. He explains: “We have taken concierge to management proposition. • Almost 30% of Coutts clients have being a strategic tool. The top end of retail “We are offering genuine value add – real now activated their online account, banking is crucial for us, and represents the value that drives people to love their bank,” resulting in more than 26,000 online requests throughout 2017 alone. < majority of our business.” concludes Cheatle. <
www.retailbankerinternational.com | 37
RBI 750 June 2018.indd 37 31/05/2018 10:36:43 industry insight | p2 consulting
are being asked to opine on issues at pace and under pressure. They are visible and they are ivory tower to firing line: being held accountable. COMING OVER THE HILL...
the trajectory of The barrage of AML regulation has been enormous, from the Serious Crime Act in 2015 – the updated Proceeds of Crime Act – to the Money Laundering Terrorist Financing aml compliance and Transfer of Funds Regulations in 2017. AML-compliance professionals have not Financial services rarely stands still, and some areas have stopped, and it is not going to get any better. We also now have a new overarching financial seen a complete transformation of the roles and skills crime regulator, the Office for Professional required. One area that has seen a cataclysmic shift in Body Anti-Money Laundering Supervision, expectation is anti-money laundering (AML) compliance, so expect to see more AML regulation coming your way. writes Phil Rolfe, financial services director at P2 Consulting The major problem for financial institutions is that few have recognised the paradigm shift ast your mind back to pre- door seeking approval for a new product in how compliance has changed. The increase financial crisis, before the barrage which was already live, or a deal which was in visibility and pressure of sitting in the hot Cof regulation began. The AML already done. This resulted in much wringing seats has not been matched by commensurate compliance and advisory department was of hands, and after lots of reviews, approval increases in rewards, and so vacant roles are a sleepy backwater, where bright introverts was eventually coaxed out of the individual, not being filled. went to quietly work their way up the pay their boss and their boss’s boss. This is a vicious circle: long-term unfilled scales and into small offices with doors, vacancies lead to increased pressure on which were rarely left open. OH, YOU WORK THERE! permanent employees; increased pressure over It was an ivory – often shiny glass – tower sustained periods leads to burnout; burnout role in head office, which was seen as ‘business Now AML compliance and advisory is front puts fear into people who may have gone for prevention versus value add’. Then in 2010, and centre – these teams are struggling to the promotion or moved into compliance the fines started to really ramp up. The recruit, and most financial institutions are roles. This all leads to undersupply, which is proliferation of AML regulation – and the understaffed and under pressure. exacerbated by remuneration not keeping pace subsequent breaches by financial institutions – Those who had aimed for a career with the profile and challenges of the role. resulted in some really breathtaking fines. culminating in their own small office in Remember when HSBC was fined $1.2bn HQ are finding themselves in unchartered WHERE NEXT? by US authorities for its Mexican operations? territory – and many do not like that territory A US Senate investigation said the UK- Companies need to recognise that AML headquartered bank had become a conduit for compliance and advisory roles are now critical “drug kingpins and rogue nations”. Ouch. No to their success, and they have to attract a wonder banking executives were left quaking different type of person and leader. in their boots. Gone are the intellectual introverts who The upshot of this step change was to turn have never strayed out of head office, and in the spotlight on the hidden corridors of HQ few have recognised are the extroverts who have more experience where compliance lived. As banking executives of working around the world in front office, hunted for solutions, those who had sought the paradigm shift technology, risk, operations and change. sleepy backwater roles were thrust into the There are a few role-model senior leaders glare of the regulatory spotlight. in how compliance out there, but they are few and far between. has changed Those leading the charge are struggling to find YOU WORK WHERE? talent in their existing pools of traditional compliance professionals – who are still hiding Attracted by a structured, regulatory-driven behind closed doors – and are being forced to environment that edged forwards through recruit those with the right business skills and cycles of consultation and approval, traditional very much. Not only does the phone never adding compliance expertise once on board. compliance professionals liked the intellectual stop ringing, but the emails keep coming and If you want a challenging role that makes challenge of regulatory interpretation, the slow people are actually kicking the closed doors a difference to our industry and society, then pace of change, and the role’s relative isolation. down and asking them to attend committees, seek out a new era leader, grab your tin hat The only excitement occurred when boards and external regulatory meetings. In and join the party. I guarantee one thing: it someone slipped a piece of paper under the addition to a barrage of calls and mails they will be one heck of a ride. <
38 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 38 31/05/2018 10:36:44 industry insight | m worldwide
june news
Iberiabank to close 22 branches Digital transformation US-based financial services company Iberi- as part of on-going efforts to improve the fostering new risks in abank is planning to close or consolidate 22 efficiency of our franchise. branch locations during the second and third “As our clients increasingly use and become financial services quarters of this year in a bid to improve its more reliant on our digital channels, we con- operational efficiency. tinuously review our distribution channels to The bank said that the plan will be in- ensure we are operating efficiently.” cremental to branch consolidations that are After the completion of these closures, the already planned with regard to its acquisition bank expects an improvement on annual run- of Gibraltar Private Bank and Trust. rate operating expense by more than $8m on a Since 2014, Iberiabank has opened or pre-tax basis. It also expects an additional $2m acquired 81 branch locations, and has closed drop in non-interest expense in the fourth or consolidated 53 branches, including those quarter of this year. The total cost associated A new report by trade association UK referred to in the latest announcement. with the branch closures is estimated to be Finance and Parker Fitzgerald has stated Following the consolidation process, the com- around $12m in non-core charges. that digital transformation in the financial pany will have 296 operating locations across A regional financial company, Iberiabank services industry is accelerating the the US’s south-east region. has offices in the US states of Louisiana, creation of non-financial risks. Iberiabank president and CEO Daryl Byrd Arkansas, Tennessee, Texas, Alabama, Florida, The report, Sustainable Financial Services commented: “These closures are intended Georgia, New York, North Carolina and in the Digital Age, says firms need to assess < to optimise our branch and ATM network South Carolina. operational resilience and risk exposure in the digital age. It states that new technology such as artificial intelligence, UK court dismisses Barclays charges cloud computing and distributed ledger technology enables the financial services industry to provide new services, develop new platforms, and reduce operating costs. However, it adds that failure to resolve new risks and address internal risk- management processes can result in systemic and operational threats, including cybervulnerabilities. Accordingly, the report recommends collaboration with technology suppliers, and both domestic and cross-border regulators to develop a risk framework that will secure data at the core of sustainable digital finance, The Crown Court in the UK has dismissed the Fraud Act 2006, Section 1(1) of the and reduce the difference between digital all charges against Barclays and Barclays Criminal Law Act 1977, and Section 151(1) aspirations and the reality of legacy IT Bank concerning capital-raising deals made of the Companies Act 1985. systems. It also recommends assessing the in 2008. In a statement, Barclays stated that integrity of fintech solutions that are part The charges, brought by the Serious the SFO may appeal to the High Court to of the supply chain. Fraud Office (SFO), included two offences recommence proceedings on the same UK Finance’s director of technology against Barclays for conspiring with some charges. The trials were scheduled to and digital, Dan Crisp, said: “Given today’s senior officers for committing fraud commence from January 2019. ever-increasing threat of cyberattacks and through false representations regarding The SFO brought the charges against data-protection violations, it’s vital that the signing of two advisory services Barclays in February. If proven, the bank the financial services sector prioritises agreements with Qatar Holding in 2008. may have faced regulatory sanctions and operational resilience – just having a The SFO also brought another charge even cancellation of its licence. firewall simply does not cut it. The speed against Barclays and Barclays Bank for Last month, Barclays reported a pre-tax and scale of digital transformation makes providing $3bn in illegal financial assistance loss of £236m ($315m) for the first quarter it essential for new technologies to be to Qatar in November 2008. The charges of 2018. In the same period last year, the integrated safely within existing operating were brought under Sections 1-2 of bank registered a profit of £1.68bn. < models while minimising risk.” <
www.retailbankerinternational.com | 39
RBI 750 June 2018.indd 39 31/05/2018 10:36:47 News | digest
Fifth Third Bancorp agrees MB Financial acquisition Fifth Third Bancorp has agreed to acquire MB share of middle-market relationships in Chica- Financial in a stock-and-cash transaction val- go, ranking it second. ued at about $4.7bn, with an aim to broaden Fifth Third Bancorp’s chair, president and its middle market customer base in Chicago. CEO, Greg Carmichael, said: “There were no For each share of MB Financial, its share- other potential partners of the same calibre holders will receive the equivalent of around as MB Financial in the Chicago market, and $54.20, comprising 1.45 shares of Fifth Third we are very pleased to reach an agreement to common stock and $5.54 in cash. This repre- merge our companies. sents a premium of nearly 24% on the closing “We view MB Financial as a unique partner price of MB Financial’s common shares on 18 in our efforts to build scale in this strategically May 2018. important market. Customers of both banks Chicago-based MB Financial, the parent will benefit from greater convenience and the company of MB Financial Bank, manages complementary capabilities that our banks, about $20bn in assets. On completion of together, can offer.” merger, the combined entity will have a According to the merger agreement, two total 6.5% deposit market share in Chicago, members of MB Financial’s board of directors ranking the combined company fourth in will join the Fifth Third Bancorp board. total deposits and second in estimated retail The transaction is likely to cut Fifth Third’s deposits among the nearly 200 banks in the regulatory common equity Tier 1 ratio by market. The merged entity will have a 20% approximately 45 basis points. <
Mobile banking use higher than ever Investors eye Consumers in the UK are showing a greater way we communicate, work and shop and, affinity for communicating with their bank as a result, the way we choose to manage our Meezan Bank stake online and via mobile channels than ever. money. The industry has responded to this At least six US and European investors According to research from UK Finance seismic social change, which is very much led are in talks with Kuwait’s Noor Financial and EY, customers logged into mobile bank- by customers looking to make the most of Investment to acquire a combined 9.59% ing apps 5.5 billion times in 2017. This was digital innovation for convenience. interest in Pakistan-based Meezan Bank, a 13% increase on 2016, with an average of “The assumption that British consumers according to Reuters. 275 logins per customer. Britons also shy away from talking about money The investors interested in purchasing increasingly turned to their smart- looks to be consigned to the last a stake in the Sharia-compliant Meezan phones, with 22 million using a century, as webchats and video Bank are Ruane, Cunniff & Goldfarb, RWC banking app in 2017, up from banking prove increasingly Partners and Tundra Fonder. According to 19.6 million the previous year. popular. And with over 22 its last annual report, Noor Financial held a Consumers also increas- million British customers 49.1% stake in Meezan Bank, which valued ingly used mobile banking having downloaded banking nearly $330m based on Meezan’s market for tasks other than checking apps, this trend is not going capitalisation. balances, with 51% paying bills away.” The sources also told the news agency using mobile banking, 62% utilis- Dan Cooper, UK banking and that no investor will acquire more than ing it to transfer money between friends, capital markets leader at EY, said: “Digi- a 5% stake in the bank to ensure swift and 27% using apps to set up standing orders. tal innovation is transforming how we engage approval from the banking regulator. Approximately 512 million text alerts were with our banks – we’re now able to make Noor recently stated that it is sent to customers in 2017. payments and communicate with our banks negotiating with international investors In addition, webchats increased in popu- at times which suit us through increasingly to sell part of its stake in Meezan, without larity. Over 5.5 million webchats took place sophisticated apps and webchat services. disclosing any names. Islamic Development between customers and banks in 2017, at an “Given how busy people’s lives are nowa- Bank and Pakistan Kuwait Investment are average of 622 an hour. Moreover, 71% of days, this is proving to be a real game changer. also major stakeholders in Meezan Bank. adults in the UK used online banking, repre- What’s great to see is that people of all ages are One of the largest Sharia-compliant senting some 38 million adults. taking advantage of these latest innovations. Islamic banks in Pakistan, Meezan Bank As a consequence, the report titled The Way “Perhaps unsurprisingly, millennials are commenced operations in 2002. Its retail We Bank Now reported that bank branch visits currently the biggest adopters, but the stere- banking network in the country comprises had dropped sharply by 26% between 2012 otype that tech only appeals to the younger more than 600 branches in 150 cities. and 2017. generations is being proven to be just not true Noor focuses on investment activities Stephen Jones, chief executive of UK anymore, with almost half (49%) of 65-year- and financial services in the Middle East, Finance, said: “Technology is changing the olds now using online banking.” < Asia and other emerging markets. <
40 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 40 31/05/2018 10:36:53 News | Digest
Technology a bigger banking trend than regulation For the first time in five years, banks are now with customers’ wants while keeping their technology mix, just over 20% of respondents more concerned with technology-driven money and data safe. said they will improve the user experience. trends than they are by regulation, according Nearly 71% of participants said they are More than 61% said they still see a place for to a study released by banking software com- focusing their digital investment on cyber se- the traditional transaction-based branch mod- pany Temenos. curity, while only 17% said they are thinking el, nearly twice as many as those who believe it Nearly 78% of bankers believe platformisa- about the risks from third-party relationships will be dead by 2020. tion of banking sector will guide the market as a result of Open Banking. Temenos CEO David Arnott said: “Bank- and help them to retain and regain business The new study, which surveyed around ing has reached a watershed moment with against new payment players such as Google, 400 global banking executives, also highlights changing customer behaviours, disruptive new Apple, Facebook and Amazon, the report says. that banks can take on fintechs by building technologies and a dramatic increase in com- Conducted for Temenos by the Economist all-encompassing platforms that are seamless petitors from within and outside banking. Intelligence Unit, the report provides a global with other products and services. “The most enlightened banks understand examination of the strategic concerns of retail Digital investments are being executed to that to become truly digital they need to banking executives. strengthen digital channel delivery capabilities update their systems front-to-back. It points out that despite the banking world such as mobile (cited by 54% of respondents), Arnott added: “This will fulfil their business moving towards the implementation of Open cloud-based technologies (48%), and in mod- need for product agility; they can offer the Banking, all stakeholders need to co-operate ernising front- and back-end systems (37%). right products, over the right channel, and at to provide a user experience commensurate Despite AI becoming a key part of the new the right time.” < BofA introduces FNB enables customers to AI-based virtual open accounts with selfies financial assistant Bank of America (BofA) has introduced an artificial intelligence (AI)-based virtual financial assistant. The new solution, Erica, which will cater to the bank’s 25 million mobile clients, is the bank’s latest digital offering, following the introduction of Digital Mortgage Experience, Merrill Edge Guided Investing and Business Advantage. Its roll-out is scheduled to run until June this year. BofA digital banking head Michelle Moore said: “Everything we do is based on what we hear from our clients – how they want to interact with us and how we can make their financial lives better. South African-based First National Bank better world for years to come.” “Erica delivers on this in many ways, (FNB) has introduced a new service that will Although focus on fintech has increased from making it easy for clients to find what enable customers to open or switch a bank ac- significantly in Africa, FNB stated that most they are looking for to providing new and count in minutes through selfie authentication players lack the scale to offer a single us- interactive ways to do their banking using and digital know-your-customer processes. er-friendly platform that will not increase cost, voice, text or gesture. The paperless cheque account-opening pro- security and administrative burdens. “Through Erica, we are also delivering cess, available for the SME customers, will be FNB business CEO Mike Vacy-Lyle said: personalised solutions at scale by providing carried out through the FNB app, which uses “It was imperative that we not only inte- insights, such as how you can improve your biometric technology to authenticate the busi- grate key solutions, but further incorporate credit score or create a budget.” ness and its owner. Through the app, SMEs trust and simplicity to our platforms, while Erica utilises AI, predictive analytics can order new cards, switch debit orders, and ensuring that we do not add complexity in an and natural language to search past set up digital banking immediately. already overcrowded marketplace.” transactions on accounts, determine credit FNB CEO Jacques Celliers commented: “It The FNB app can be used to extensive- scores, help navigate the app, and locate is through this contextually helpful platform ly enhance the SME customer experience, ATMs and financial centres. that we can offer holistic financial solutions including the onboarding process, day-to-day It can also be used to view bills, schedule and become a trusted partner to the broader banking, authentications, business administra- payments, arrange face-to-face meetings, society. This will enable us to help create a tion and relationship management. < and transfer money with Zelle. <
www.retailbankerinternational.com | 41
RBI 750 June 2018.indd 41 31/05/2018 10:36:56 industry insight | m worldwide
of advice, funding and training. Every week, free events and seminars the stage is set: cover everything from first-time buying to hot topics such as GDPR and cybersecurity. Partners like Google and Microsoft lend an international perspective. The space time for the new also supports community partners, local employability initiatives, and even teaches kids to code through Minecraft. The space is truly dedicated to help local people and businesses branch ecosystem to upskill and thrive.
Retail banks blew it with millennials – they waited too long Financial services supermarkets Historically, banks have been quite territorial to go after them. The lesson to be learned? Start building and not particularly good at sharing resources, relationships with consumers while they are still young, but more and more are beginning to embrace or risk missing out on opportunities to help shape their the idea of partnering with other specialists within the branch. financial perspectives and build brand preference for the Imagine if some day you could pop over long haul, argues David Martin, joint MD at M Worldwide to your local financial services wellbeing supermarket – a hub of brands in a shared nter Gen Z – generally defined as reframe the whole bank experience. space that caters to all your financial needs? those born after 1 January 2000. In the UK, Metro Bank offers instant There is much talk about this in financial EMany do not even know what bank customised card creation. This really appeals services circles, but it has not quite reached branches are for these days – and feel they to the ‘now’ generation that thrives on instant reality yet. have no reason to use them. gratification. However, the idea of shared space with In fact, only 48% prefer to Frank by OCBC has a format complementary service retailers – rather than conduct most of their banking that specifically targets students. shared space cafés and suchlike – to fill space face to face, according to Located in Singaporean and drive footfall is indeed happening now. In a recent study by Raddon shopping malls, it is modeled Scandinavia, Nordea shares space with estate Research Insights. after familiar youth shopping agents and Arion Banki is being integrated As much as banks move experiences, like those for within Hagkaup supermarket. to digitisation, and channels David Martin, gadgets or fashion items. become more seamless, the M Worldwide The store’s design allows The future: data is the new currency physical offline channel is still ‘young’ customers to take their time Open Banking provides the opportunity for lagging. to browse, touch, ask questions about the banks to play a more proactive role to help It is true that retail banks are working products, and discuss banking needs. customers navigate across an increasingly hard to redefine and repurpose their physical complex landscape. Many suggest that banks offer, and branches might look friendlier with Events and shared workspaces must behave more like tech companies, insofar more welcoming staff. But from a consumer Bank branches are also starting to connect to as the data they hold about customers, their perspective – especially Gen Z – this is often people by providing meeting and shared co- habits and money is the new gold. just a ‘makeover’ rather than a truly customer- working space for start-ups, entrepreneurs and To better personalise and customise the centric compelling offer. local community groups. Not only does this branch experience, banks must leverage this increase footfall and relevance, but it elevates data. Mobile devices, biotech, augmented Tailor experience to customers the bank from ‘reactive product supplier’ to reality, and virtual reality will bridge online Branch experiences and environments are still ‘proactive service and information provider’. and offline with individualised content – and by and large reactive, process-led and counter- Umpqua Bank remains true to its help with product and service activation. based. Gen Zers are digital natives so they do community approach in the US – it not only Consumers are taking more responsibility not need to be taught about that, but they do lends space to community groups and local for their wellbeing – witness the growing need to be introduced to what the physical businesses, but also actively promotes them phenomenon of health, beauty, and fitness channel can do for them. in-branch. in shopping malls. It is ironic that personal Branches need a dramatic reframing Another excellent case in point is Lloyds finance plays a huge role in our overall to remain relevant – with compelling Bank’s flagship branch in Manchester. A wellbeing, and yet so many people are, at propositions and fresh ideas tailored to dedicated Business Hub provides local best, ‘not confident’ when it comes to their customers. There are some great pioneering start-up businesses with specialist help and finances, and completely illiterate at worst. examples of these kinds of change. Over in a professional space in which they can work Leveraging data to provide truly relevant the US, Capital One does not just offer a café and network. An on-site Business Connector branches to support the next generation in in a bank – like so many others. Instead it has works both in-branch and out in the their financial journey will result in a win-win adopted all the positive attributes of a café to community to link entrepreneurs with sources scenario for banks and customers alike. <
42 | June 2018 | Retail Banker International
RBI 750 June 2018.indd 42 31/05/2018 10:36:57 HEAR ∤ NETWORK ∤ DISCOVER ∤ CELEBRATE SHAPE THE FUTURE OF LIFE INSURANCE LIFE INSURANCELife INTERNATIONAL Insurance International: Innovation Forum and Awards 2018 Innovation Conference & Awards 20177th November 2018 ∤ Waldorf Hilton, London London The 2018 edition of the Life Insurance International: Innovation Forum and Awards will be taking place in London on 7th November at the iconic Waldorf Hilton. We will once again be bringing together life insurers, insurtechs and solution providers for a day of discussion covering the major issues in the retail banking sector.
Event Highlights :
∤ Two-stream format, with a wider variety of ∤ Oxford-style live debate considering whether Life Insurance International is the only global newsletter talks andanalyzing discussions, all of the latest trends case and developments studies in andthe global life and health insurance advances markets in robo-advice and D2C insurance keynote presentations will make most financial advisors extinct ∤ Many issues related to innovation, ∤ Industry thought leaders from the transformation, regulation and change to be established insurers to those that are discussed to give a rounded picture of the life up-and-coming along with solution providers insurance market today ∤ Awards ceremony celebrating the ∤ InsurTech innovation lab where five of the excellence in the life insurance industry best insurtech firms can demonstrate their innovative solutions
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Page 1 Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580 HEAR ∤ NETWORK ∤ DISCOVER ∤ CELEBRATE SHAPE THE FUTURE OF PRIVATE BANKING Private Banking and Wealth Management London 2018 7th June 2018 ∤ Waldorf Hilton Hotel, London
Private Banking & Wealth Management: London brings together private banks, family offices, independent wealth managers and intermediaries in an active discussion of the key issues facing the industry. The event is an opportunity to share ideas, discover trends and network with peers across the wealth industry.
Event Highlights :
∤ A high profile programme featuring keynotes ∤ Get up-to-speed with the policy update presentations, case studies, Q&A with the and review of regulatory parameters speakers and exciting debates on a wide range of key issues challenging the market ∤ User perspective on technology in private banking and wealth management ∤ All top wealth managers and private banks in attendance and share best practice and ∤ CPD certified event that lets you earn points experience towards your professional development ∤ Be an active part of discussions and interact ∤ Unrivalled networking opportunities in a with speakers through our new technology 5 star venue at the centre of London tool Slido ∤ Gala dinner to reveal the winners of the ∤ Learn about market trends and the rising Private Banker International 2018 Awards, competition in the UK wealth management celebrating excellence in the wealth market industry
Gold Sponsor: Silver Sponsors: Brand Sponsors: Supported by
For more details please contact:
Page 1 Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580