Process analysis Paving the way towards a superior customer experience Deloitte | Process analysis This document outlines how banks can leverage process analysis and process mining techniques to swiftly identify areas of improvement and work towards becoming a customer-centric organization. Deloitte | Process analysis Contents Introduction Disruption in the 04 Financial Services Industry 05 Process analysis: A Project examples stepping-stone for 20 transformation 12 03 Deloitte | Process analysis Introduction Banks around the world are embarking This document sheds light on selected key on a transformation journey to balance approaches used by Deloitte to identify between cost optimization and customer key pain-points and understand process experience. inefficiencies, thus enabling banks to simplify processes, eliminate waste and With a focus on meeting emerging strive for continuous improvement to customer needs, particularly after recent meet customer expectations and maintain disruptions and challenges caused by the business profitability. COVID-19 pandemic, banks are looking at thoroughly analyzing their processes to unearth direct and indirect improvement opportunities. 04 Deloitte | Process analysis Disruption in the Financial Services Industry 05 Deloitte | Process analysis Disruption in the Financial Services Industry Today, banks are faced with numerous ire ontryycontry coarison o cstoer seents challenges resulting from evolving customer expectations, growing Brazil 18% 32% 51% competition related to digital banking, United Kingdom increased pressure to reduce cost, 13% 40% 46% and most recently, major world-wide India disruptions related to the COVID-19 20% 38% 42% pandemic. Such challenges have forced Australia banks to adopt new strategies to remain 17% 45% 38% innovative and deliver new service Mexico offerings that transform the customer 24% 41% 35% journey to meet their expectations. To Norway cater for this transformation, process 12% 53% 35% improvement approaches, that are holistic Spain and agile, are crucial to adapt to changes in 31% 40% 29% customer needs, to face the competition, Singapore 21% 53% 26% and to help banks reduce their costs, Netherlands improve the customer experience and 11% 63% 26% tackle market changes. Canada 28% 47% 25% In the following sections, we will highlight France 4 key challenges faced by banks today that 41% 35% 25% can be tackled through end-to-end process United States improvement methodologies. 38% 39% 23% Switzerland 1. Evolving customer trends 21% 56% 23% In order to provide customers with optimal Germany experience, banks should place the 32% 47% 22% customer at the heart of their business China 21% 58% 21% by implementing customer-centric Indonesia approaches. 35% 47% 18% Japan To understand the latter, research 75% 17% 7% conducted by the Deloitte US Center for Financial Services in May 2019, querying Traditionalists Online embracers Digital adventurers 17,100 banking customers in 17 countries, Note: Percentages may not total 100% due to rounding. showcased the following distinction Source: Deloitte Center for Financial Services analysis. between customer preferences across 17 key countries. 06 Deloitte | Process analysis Online Embracers and Digital Adventurers Although the frequency of digital channel traditional channels over digital channels (Figure 1), who are more digitally engaged usage is a positive sign, it is important to for complex and advisory services. For with their banks and prefer online and make the distinction between the quantity instance, in order to get a personal loan, mobile apps to conduct banking services versus the quality of the interactions. 61% of customers chose ‘visiting the bank respectively, represent around 70% of In fact, the survey showed that digital branch’ as a preferred channel. This trend most countries’ populations. On the channels are mostly limited to informal also applies to the process of applying for other hand, Traditionalists, who prefer and transactional services such as new products, especially loans that require to do most of their banking in branches, transferring money, checking account multiple verification and documentation represent less than 30% of the customers balances and updating account details steps. across most countries. This shows that (Figure 3). Many customers still prefer it is more likely that bank customers are ire ost resonents reer traitional cannels to anle cole or aisory serices heading toward a path where they would Channels where respondents go to buy new products conduct most of their transactions via digital channels whilst expecting a superior Transactional products customer experience that integrates Checking account 54% 4% 30% 12% the benefits of digital and physical Savings account environments for banking. 54% 5% 30% 11% Similarly, figure 2 shows how customer- Debit card 49% 6% 33% 12% bank interactions are continuously changing over time with a 30% increase in Lending products digital channel usage from 2013 to 2020 Credit card 44% 7% 38% 11% (which was already the main used channel Personal loan as opposed to physical consultation and 61% 6% 25% 8% transactions). Mortgage/mortgage refinance 69% 6% 19% 6% ire erae ontly anin cannel sae er cstoers Bank branch Contact center Online banking Mobile banking app Source: Deloitte Center for Financial Services analysis. 62 118 87 ire esonents se oile an online cannels ost reently 106 98 Bank branch 2% 56 14% 61% 21% 3% ATM 1170 14% 33% 38% 9% 6% 1557 2% 1364 Contact center 22% 67% 8% 1% Online banking 18% 18% 29% 13% 22% 2020 2016 2013 Mobile banking app 29% 18% 21% 11% 22% Digital channel Physical consultation Never Less than once a month 2-5 times per month Physical transaction 6-9 times per month 10 or more times per month Source: Deloitte France Survey, April 2020. Source: Deloitte Center for Financial Services analysis. 07 Deloitte | Process analysis 2. Increased Competition for high-tech personalized services that reinvent the Further, with the continuous change in services customer experience and attract new customer preferences, competition from Customer expectations for digital services customers from all segments. Digital Fintech startups and changing regulations, are continuously being shaped by superior banks are capable of rolling out new and banks in the Middle East have also experiences provided by tech giants such enhanced money management, savings, been forced to innovate through digital as Google, Apple, Facebook and Amazon. investment and lending products, at much platforms. In particular, banks in the United Such companies set the bar high for digital lower costs than their traditional rivals. Top Arab Emirates (UAE), Saudi Arabia, and experiences and therefore customers tier banks have worked hard to keep pace other GCC countries including Bahrain are expect similar experiences from their with their own investments in Fintech, app- emerging as leading their transformation financial services providers. While digitally based banking and acquisitions; however, by undertaking numerous digital banking savvy millennials are responsible for the to compete on efficiency or experience initiatives and producing real-time digital enhanced service expectations, it is by no they will need to embrace a transformation solutions to meet their customers’ banking means restricted to them. The widespread journey in which they either replace needs. use of digital technologies across various their legacy systems or adopt massive industries has led the different generations simplification supported with intelligent A major step towards transforming the to adopt these digital trends, therefore automation to complement their legacy financial services industry in the region is making it imperative for banks to be on top systems. open banking, which would enable greater of their digital service delivery. transparency and inclusivity through open A major step towards data. Bahrain is the first in the region “Singapore-based Bank, OCBC, has to adopt open banking regulations, and started allowing voice-based commands transforming the financial Saudi Arabia is moving more aggressively for iPhone users, enabling them to do services industry in the towards similar regulations within the basic transactions such as checking bank next two years. According to research accounts, credit card details and making region is open banking, by Finastra in June 2020, 88% of UAE e-payments via Apple’s virtual assistant which would enable banks expect to enable open banking Siri. The transactions are authenticated and open API capabilities in the next 12 using biometrics such as facial-recognition greater transparency and months. Other examples of Middle East and fingerprints, thus providing a great inclusivity through open banks embracing digitization trends are as customer experience” follows: data. Banks previously used to personalize customer interactions through the “NatWest, one of the leading UK banks, branches; however, as digital banking launched “Mettle”, an innovative digital has become more popular, banks had platform that allows small and medium to identify other means to maintain that size enterprises to open a business current personal touch. With the use of predictive account in minutes, forecast their business United Arab Emirates analytics, artificial intelligence and machine performance, create invoices from their Emirates NBD launched Liv., a digital learning, they will increasingly personalize mobile phone and provide reminders for banking