May 2015 Issue 713 www.retailbankerinternational.com

AWARDS SEASON IS HERE

THE 30TH RBI AWARDS IN LONDON AND THE 7TH ASIA TRAILBLAZERS SUMMIT

● DIGITAL: MOBILE WALLETS ● DISTRIBUTION: BRANCHES ● REPORT: WORLD RETAIL BANKING 2015 ● FEATURE: SWIFT

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Untitled-6 1 12/05/2015 11:57 Retail Banker International COMMENT: EDITOR’S LETTER

CONTENTS

2 PREVIEW: RBI AWARDS With the 30th Annual RBI Awards on the horizon, Patrick Brusnahan examines Branch closures accelerate previous winners and those to look out for this year in local UK communities 4 DIGITAL BANKING CLUB: ADVISORY PANEL Which digital issues are affecting the retail banking sector today? Douglas Blakey speaks to a panel of retail little over five years ago, the seaside That is that for another five years banking experts to see what is needed town of Westcliff-on-Sea boasted The UK banking sector will welcome the to stick out in this ever-technological world a Halifax, Barclays, NatWest and political certainty of the general election HSBC bank branch. result. Notwithstanding every opinion poll 8 COMMENT: STEFFAN AQUARONE A Halifax was the first to shutter its branch, for over a month ahead of the poll forecast- Steffan Aquarone considers the soon followed by Barclays and then last ing a hung parliament, the final result was reaction of banking following the wave of technological and non-bank year, NatWest leaving HSBC as the last bank decisive. competitors in the sector. Are they branch in the community. The clear cut if unexpected nature of the doing enough or do they risk being swept under? Until early May that is: HSBC has now Conservative victory removed fears about an axed its Westcliff outlet resulting in the early second election. 9 DIGITAL: MOBILE WALLETS natives of Westcliff having a two mile trip to Cameron’s victory also removed the peril Visa expects that by 2020, 50% of neighbouring Southend if they wish to visit of a Labour victory leading to even more all transactions will be via mobile. Is this realistic? Patrick Brusnahan a branch. penal bank levies. speaks to Visa Europe to try and find According to figures from the Campaign The appointment of former Deutsche out the reasons for this overwhelming prediction for Community Banking Services, banks in Bank director Sajid Javid as Business Secre- the United Kingdom more than doubled the tary will also be warmly welcomed by the 10 DISTRIBUTION: UOB rate of closures in 2014 to 479; 210 outlets banking sector. Once again, UK-headquartered company closed in the first quarter of 2015 along of He has, in the past, opposed strongly the allen international have dipped their toes into the world of bank branch which 55 were the ‘last branch in the com- concept of a renewed bonus tax and has design, this time with United Overseas munity’. urged politicians not to slam the City, say- Bank. Anna Milne investigates By coincidence, the closure of the last ing that it represented some of the best of 12 FEATURE: SWIFT branch in Westcliff coincided with the open- capitalism. Real-time payments are capturing the ing of Metro Bank’s first store in Southend. On a less positive note, the new govern- zeitgeist of the financial sector at the Metro Bank has now opened more than ment’s plans for an EU referendum introduce moment. Anna Milne speaks with Carlo Palmer from SWIFT to see what makes 500,000 accounts since launch in 2010 and some unwelcome uncertainty into the politi- them tick and what is holding them back has enjoyed a 56% increase in customer cal equation. It is important that the PM pro- 14 AWARDS: ASIA TRAILBLAZERS numbers in the past year. vides some certainty about the planned time- The annual Asia Trailblazer awards are Deposits grew by 18% in the first quar- table for the referendum as soon as possible. back with some very interesting insights ter to £3.4bn. Additionally, lending grew Another negative, at least for this writer, into the Asia region and how it differs by 12.5% compared to the prior quarter to was the extent of the Scottish Nationalists from the rest of the world. Sruti Rao reports £1.8bn. landslide in taking 56 of the 59 Scottish It seems a safeish forecast to say that seats. 16 REPORT: WORLD RETAIL BANKING 2015 Metro Bank can expect to perform strongly Any move towards another referendum on Patrick Brusnahan looks into the latest World Retail Banking Report, by in South Essex; all eyes will turn next year Scots independence - less than a year after Capgemini and Efma, to investigate why to two key tests. An IPO is expected to raise the proposal was defeated 55% to 45% - consumers are so dissatisfied with their banks and why so many are ready to £300m for Metro Bank and value the lender will do the banking sector north of the bor- make a change at £1bn; that also looks a safe bet. der no favours at all. The bigger test will be Metro Bank’s aim 20 COMMENT: HOWARD BERG to meet its timetable for profitability. Douglas Blakey Howard Berg from Gemalto examines the growing influence technology is [email protected] having on the financial sector. Are banks coping well? Or do they need to do more?

www.retailbankerinternational.com May 2015 y 1

RBI 713 May.indd 1 12/05/2015 10:31:08 PREVIEW: RBI AWARDS Retail Banker International

High standards at the 30th RBI Awards The RBI Awards, once again sponsored by Fiserv, is now in its 30th year and remains a benchmark for excellence in the industry. Highlighting the best retail banking has to offer worldwide, the winners are selected by an expert panel. Patrick Brusnahan examines this year’s shortlist and last year’s winners

ast year, the Global Retail Bank of the With the emergence of new challenger esco also released an F.Banking application Year was picked up by Royal Bank of banks, as well as Internet and technology on which enables customers to access their Canada, once again shortlisted this companies entering the fold, the market is account through Facebook. Since launch, it year, alongside another Canada-head- accelerating at a rapid rate. This makes the has had over one million people utilising the L European Retail Bank of the Year award one quartered bank, Scotiabank. The full short- platform. list for Global Retail Bank of the Year is: of the most exciting to judge. Nominees this Santander, which landed at 10th on RBI’s year include: Facebook Top 100, has been active in the • Barclays digital marketing and social media fields • Royal Bank of Canada • Alior Bank for quite some time. The bank incorporates • Santander • Barclays sponsorship deals with sports ambassadors • Scotiabank • KBC Bank to put a face on its content and generate • CaixaBank greater interest. This all surrounds its fre- Royal Bank of Canada (RBC) is no stran- • Santander quent content which aims to not only engage ger to award shortlists and their addition, as their consumer base, but inform them on well as Scotiabank’s, show the powerhouse Alior Bank, the winner last year, has been general financial practices, such as saving to that Canada is becoming for the retail bank- nominated again this year and seems to buy a house or student finance. ing sector. be attracting offers from across the globe, ICICI, 9th on RBI’s table, launched Pock- RBC had another record breaking year in which is remarkable for a bank so early into ets this year, a digital banking service which 2014 with profit increasing by 8% year-on- its lifespan. Santander is also making its sec- allows users to send or request money to any year (YOY) to reach C$9bn ($7.4bn). The ond shortlist appearance in a row. email, mobile number or friend on Facebook. bank also acquired City National in its big- Barclays’ Personal and Corporate bank- This can be utilised by consumers who are gest ever deal. ing unit posted a pre-tax profit of £2.88bn not customers of ICICI as well. In addition, Scotiabank’s profit for its ($4.39bn) in 2014, a 29% rise YOY. While digital is currently receiving all the fiscal year ending October 31st 2014 was Santander saw similar results in the first headlines, one should not forget the impor- $7.3bn, 10% more than the year prior. This quarter of 2015 as their profits spiked 32% tance of branches. The Best Branch Strategy is bolstered by the bank’s moves into Latin YOY to hit €1.72bn ($1.95bn). aims to highlight those keeping on a focus America with the acquisition of Citibank’s CaixaBank has been making huge moves on this side of distribution. With increas- retail operations in Peru with more possibly in the European markets with bids for ing pressures on profit margins, there has to come. Barclays’ Spanish retail operations and Por- been an increasing focus on downsizing and One of the hardest categories to judge tugal’s Banco BPI. consolidation, but we’ve picked banks that is the award for Retail Banker of the Year. The world is becoming more and more are focusing on maintaining the traditional With so many possible candidates in a large connected with each passing year and bank- touch. The nominees include: industry, the winner must have demonstrated ing is making full use of that fact. The nomi- outstanding dedication to retail banking and nees for Best Use of Digital Marketing and • Broadway Bank brought about significant change within their Social Media are varied. The nominees are: • HSBC Mexico bank. • Lloyds Bank International Last year’s winner Jorge Ruiz, head of • Bradesco • mBank business development and digital banking • Fidor Bank • Metro Bank for Citi in Latin America, was responsible • HDFC • Privredna banka Zagreb for transforming Citi into the number one • ICICI • PSJ PrivatBank digital bank in the region. In addition, he • Privredna banka Zegreb • Royal Bank of Canada introduced significant game-changing busi- • Santander • State Bank of India ness opportunities for the firm. He is also a member of the Citi Global Digital Execu- Bradesco, which was the highest rated mBank has embraced the idea of ‘the tive Committee, the Citi Global innovation bank in RBI’s Facebook Top 100, was the branch of the future’. The bank’s new physi- Council, the Citi Global Digital Governance first bank in Brazil to launch on Facebook cal delivery network, set to be completed in Office and the Latin American Operating to over 90 million Facebook users in the 2018 at a cost of $19m, is aiming to optimise Committee. country. Its customer service function on the the sales process while also attending to the The European market continues to push social networking site is operated 24 hours needs of the emerging digital consumer base. forward and leading the digital banking a day and guarantees a response within five This is set to include both Light Branches and revolution. minutes, no matter the circumstances. Brad- integrated Advisory Centres.

2 y May 2015 www.retailbankerinternational.com

RBI 713 May.indd 2 12/05/2015 10:31:08 Retail Banker International PREVIEW: RBI AWARDS

The much smaller Light Branch is aimed FULL SHORTLIST to be within higher consumer traffic loca- •African retail bank of the year KBC Bank tion, such as shopping centres, rather than CRDB Tanzania mBank focusing on lone, oversized branches. By Ecobank Transnational Incorporated Nationwide Building Society 2018, 40 of these branches will be operat- FirstRand Santander and Monitise ing within Poland. Standard Bank South Africa With the latest technology being utilised, United Bank of Africa •Best payment innovation the Light Branches have the appearance of Bank of the West •North American retail bank of the year Barclays Bank a high-end store rather than a bank branch. PNC Bank CaixaBank They include three 50-inch touchscreens Royal Bank of Canada Commonwealth Bank of Australia allowing customers to browse products Scotiabank Privredna banka Zegreb and services. Toronto Dominion PSJ PrivatBank The screens also have video cameras to Union Bank California TEB (BNPP Joint Venture) assist in the adaptation of content and will Wells Fargo eventually include biometric identification •Best use of digital marketing and social of customers, allowing a greater level of •European retail bank of the year media personalised service. Alior Bank Bradesco The Advisory Centres will be located in Barclays Fidor Bank KBC Bank HDFC office buildings in all of the major cities in LaCaixa ICICI which mBank operate. Focusing on adviso- Santander Privredna banka Zegreb ry, cross-selling and business banking sup- Santander port, 80 of these are set to be in circulation •Middle East retail bank of the year by 2018. ADCB •IT innovation of the year In addition, 60 new mKiosks are to be Al Ahli Bank of Kuwait CaixaBank placed in shopping malls. Private and cor- CSC Lebanon DenizBank porate customers will be able to use these Mashreq Fidor Bank manned kiosks to open an account, pur- IdeaBank chase savings, investment, and insurance •Latin American retail bank of the year Westpac Bancolombia products, as well as get a credit or debit BBVA Mexico •Product innovation of the year card. HSBC Mexico CGD (Direcão de Meios de Pagamento) State Bank of India (SBI) is also making Itau Unibanco PNC a huge effort in transforming its existing Santander Privredna banka Zegreb branches into something more engaging to Mashreq consumers. •Asia Pacific retail bank of the year TEB (BNPP Joint Venture) SBI has opened six digital branches across ANZ TSB Bank India as part of its programme to offer next Bangkok Bank Santander and Monitise generation banking solutions to the grow- Commonwealth Bank of Australia ing mobile phone and internet savvy cus- DBS •Most disruptive innovation of the year Maybank Fidor Bank AG tomer base. The branches include interac- OCBC UniCredit S.p.a tive LCD screens to aid SBI customers in Westpac mapping out their financial plans though •Best non-bank competitor services such as instant loan approval, •Best branch strategy Ffrees Family Finance investment portfolio assistance and mutual Broadway Bank Ratesetter funds information. HSBC Mexico Zopa Additionally, branches have access to Lloyds Bank International remotely based SBI advisors through video mBank •Retail banking security innovation of the conferences. Metro Bank year In efforts to digitise its front-office efforts, Privredna banka Zagreb Akbank PSJ PrivatBank Banco do Brasil SBI partnered with US-headquartered Royal Bank of Canada Halifax Entrust Datacard to implement the first State Bank of India National Bank of Greece integrated self-service kiosk solution for PRODAFT account-opening and secure instant debit •Best Use of Online Banking card issuance facilities. This is set to reduce Capital One •Global retail bank of the year account opening time by 80-90%. Fidor Bank Barclays The new kiosks perfectly service the Intesa Sanpaolo Royal Bank of Canada increasingly young population of India. KBC Bank Santander With the average age of India being a mere Privredna banka Zegreb Scotiabank 29, this satisfies the increasingly important •Best mobile banking strategy convenience factor which is so crucial for Bangkok Bank •Retail banker of the year younger generations. Bank of the West •Rising Star banker of the year The conference and awards takes place at Emirates the Waldorf Astoria, London. Good luck to all the finalists.<

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RBI 713 May.indd 3 12/05/2015 10:31:08 THE DIGITAL BANKING CLUB: ADVISORY PANEL Retail Banker International

Financial institutions must adopt a startup mentality The Digital Banking Club has established a high level Advisory Panel of digital financial services experts to offer their insights and expertise on policy issues that affect digital financial services providers in Europe. Douglas Blakey speaks with members of the panel in the first of a series of regular white papers

ext generation digital financial ser- “Whether you are a traditional provider or LaCaixa has run a series of FinAppsParty vices means much more than simply a new entrant/disruptor with around 60% hackathons, affording software developers migrating customer behaviour from of Brits stating mobile and digital banking the opportunity to compete to have their traditional channels to the smart- services are very important to them we all ideas developed by the bank. N need to find ways to engage with our cus- At the last such event, the bank received phone, tablet or PC. It means more than just increasing the products and services avail- tomers, stay abreast of developments in this over 40 proposals and Urbano says that able digitally. ever changing space and continuously inno- four or five of the developers’ projects are To succeed in the new age, financial vate with pace. None of us can rest on our being taken forward into development. services providers need to adopt a radical laurels.” “The day when we see the majority of approach challenging and examining every banking done on the mobile channel is not aspect of their supply chain and business Innovation is key as far in the future as some people seem to models. David Urbano, head of mobile at Spain’s think. It is not 10 years into the future it For those that succeed, there will be LaCaixa, is at pains to stress the importance will be much much less that,” says Urbano. scope to increase revenues and attract new of constant innovation. Puigdevall forecasts that mobile use could revenue streams through a greater under- He says: “CaixaBank must take full overtake internet banking use in as short a standing of customer insights. There will advantage of its capacity to innovate in time as a couple of years. also be scope to offer fundamentally supe- order to continue to be a leader in bank digi- In contrast to an established player such rior services. The most satisfied customers talisation and to expand its position in the as LaCaixa operating multi-channel, digital in the sector are customers who use digital multi-channel platform and mobility, with banking start-ups Starling Bank and Atom channels to consume financial services. a proposal which offers customers greater Bank have the advantage of starting with a And for the providers that succeed in opti- comfort and better service.” clean slate. mising the customer experience, there will His colleague, Benjamí Puigdevall, CEO Starling Bank Founder and CEO Anne be scope to attain leadership positions in of e-laCaixa adds: "We are committed to Boden has bigger ambitions than just a quality, trust and reputation while obtain- innovation from our origins because it is desire to innovate – she talks of shaking up ing recurring returns in excess of the cost allowing us to improve our products and the banking establishment. of capital. services and make it available to our cus- She argues that the big banks have added The above are just some of the key takea- tomers. channels such as telephone and internet ways from the first round of discussions “The adoption of new technologies causes banking and more recently the smartphone with members of The Digital Banking changes in customer habits while innovative but the model has not changed. Club’s Advisory Panel. use of information gathered from customer Digital banking is just like branch based Innovation, security, partnerships and behaviour can anticipate new demands,” banking on a screen. You’re provided with vendor selection, the future of mobile pay- says Puigdevall. what comes down to a self service terminal, ments, wearables and the internet of things LaCaixa already offers more than 70 which is a bit like playing radio on a TV, or are recurring themes in RBI’s discussions mobile apps. Each month, 2.2 million (and putting sales brochures on the internet. It with panel members and resulted in broad growing) LaCaixa customers access its kind of works, but she argues banks can do areas of agreement. mobile banking service, 300,000 of whom so much better. At the opposite extreme, there is a lack use the bank’s app optimised for tablets. Starling aims to create a truly smart bank of consensus with regards to legacy IT sys- By contrast, Puigdevall says that the bank that applies modern technology directly to tems. Are such systems millstones around has more than four million customers who solving customer problems, with a simple the necks of the traditional providers and a use the bank’s internet banking service easy to use interface. major inhibitor to digital transformation? every month. Indeed, can established financial services Mobile banking adoption at LaCaixa is Legacy issues providers assess the tech landscape, iden- growing at double-digit rates, up 50% from At Atom Bank, co-founder and CEO Mark tify the products and services that custom- 2012. Mullen argues that to be truly radical you ers want now and in five years time and use Puigdevall forecasts that it will be only a need to have a blank sheet of paper and cutting edge technologies such as the Cloud matter of time until most users are accus- build something from scratch. and build something truly transformation- tomed to more complex operations on “Then, every decision you make can be al? their phone than just checking a balance or aligned to your vision, and can be aligned Deborah Davis, non-executive director transferring funds from a savings account to the competitive advantages that you’re at Intelligent Environments, the founders to their current account. trying to create. Whereas if you are in a big of The Digital Banking Club, points out To promote its innovation strategy established bank, every decision you make

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RBI 713 May.indd 4 12/05/2015 10:31:08 Retail Banker International THE DIGITAL BANKING CLUB: ADVISORY PANEL

is compromised by the need for it to connect ferent set of customers as it does not have At LaCaixa, Urbano stresses the impor- to whatever is already on the table, by way to be for everyone. It allows us the bank to tance of technology partner selection. of legacy or by way of existing customer or narrow the range of things to focus upon. “We decided to work in the main with by way of existing products and services,” “The existing banks have a very diverse small partners. We have network agree - says Mullen. and wide ranging customer range from ages ments with more than 20 partners and that He adds:”The established banks are cop- 9 to 90. It is unreasonable to expect that is just to service the mobile channel. The ing with very complex archaic and expen- all age groups and demographics will adopt idea is not to work with very big companies. sive systems that are high risk. And who is new technology simultaneously. When LaCaixa rolled out its Google Glass to blame for that? Who is accountable for “It is a huge challenge for our industry as and wearables apps the best ideas came that having risen? One can only point to we see financial exclusion and technological from small companies.” these institutions. exclusion coming together. What the estab- Cordeiro flags up changes in the way that “They are trapped and I do have a huge lished banks have not done is bring custom- RBS has gone about vendor selection. amount of sympathy for them. It is a very ers with them on the digital journey.” “The focus is on solving problems and the difficult and expensive enterprise that they Until the end of March, panel member aim is to solve them as a group via a more face.” Terry Cordeiro was head of mobile at Royal collaborative approach based on the nature He says that they can and will spend huge Bank of Scotland (RBS). He is candid and of the problem rather than treating it as a amounts of money on investing in their digi- realistic about the challenges a bank of the siloed departmental problem. So we aim to tal platform – but when it comes to being scale of RBS faces compared to the new solve problems and agree on vendors as a radically different they will not succeed. banking kids on the block. group. At Atom, Mullen says there will be scope Cordeiro says: “We have legacy ways of “We are moving into a world where we to differentiate itself by not offering any operating and legacy IT systems that take should stop talking about banking and start product it does not believe in whereas the years and years to rip out and replace and talking about digital money and we see non- established players have to make sure all if you are building something from scratch financial institutions move into the digital existing products can be distributed by all like the new entrants, then clearly what you money space. channels, whether they are new or not. do is build it on the latest technology. “The firms that really interest me are the He says: “In the short term, do not expect “That means you do not tie yourselves in innovative smaller start-ups in the tech sec- us to be a big bank offering huge numbers knots like we do with our internal systems tor that take small elements of the whole of products and services. Expect us to be so the start-ups have certain advantages. banking experience and focus in on build- small and perfectly formed in so far as we “On the other hand, they do not have leg- ing a brilliant customer experience. can be. So what we will do we will try to do acy customers,” argues Cordeiro. “So Transferwise, for example, has taken ingeniously and well. Cordeiro left RBS to take up an exciting international remittances which is a part of “In the medium term we want to offer a and hugely influential role at the start of what banking is and turned it into a really full range of banking products and services April as Head of Proposition Development - slick experience,” says Cordeiro. because we do not think there is any rea- Digital, Transformation at Lloyds Banking At Alior Bank in Poland, Katarzyna son why pretty much all of them cannot be Group. Rybicka, head of strategy, points to the delivered by the desktop, tablet and mobile. The brief: to build a new bank for Lloyds, stunning success of the bank’s partnership “I genuinely believe it can be done in a bet- cloud-based, avoiding the plethora of legacy with T-Mobile. ter way than is currently being done in the issues that affect established banks. Once Says Rybicka: “The aim of the joint ven- majority of cases today. We can go further, up and running, the aim will be to migrate ture was to create a comprehensive set of faster.” customers of the Lloyds, Halifax and Bank client-friendly, mobile-centric banking So Atom will potentially focus on a dif- of Scotland brands over to the new bank. products and ensure multi-channel access

Advisory panel members Mark Mullen (CEO, Atom Bank) Benjami Puigedevall (Head of Electronic Channels, La Caixa) Mark is CEO of digital start-up bank Atom. Prior to heading up Atom, Mark served Benjami Puigdevall is head of electronic channels, managing director of La Caixa. in a number of senior roles within HSBC Group. Benjami is responsible for developing of all the electronic channels at Caixa. Katarzyna Rybicka (Project Management Director, Alior Bank) Deborah Davis (Non-executive Director, Intelligent Environments) Katarzyna has served as Project Management Director at Alior Bank since 2010. Deborah joined the board of Intelligent Environments in 2013 bringing more She joined Alior from Bank BPH where she served as managing director. than 25 years of technology and internet company experience. Anne Boden (CEO, Starling Bank) Douglas Blakey (Head of consumer titles, Timetric) Anne Boden, previously chief operating officer at AIB, is now working on the Douglas Blakey is group editor, Consumer Finance at Timetric, chief of judges for launch of a new digital bank for the European market. the annual RBI Awards and a lead market advisor for Timetric.

David Urbano (Director of Mobile Banking, La Caixa) Ahmet Ertan-Algan (ADC and Software Architecture Unit Head, Akbank) David Urbano is director of the mobile banking and digital networks at La Caixa, Ahmet Ertan Algan has been the mobile banking application development responsible for managing the mobile channel & social network strategies. manager at Akbank since May 2013.

Terry Cordeiro (Head of Proposition Development, Digital, Lloyds) Garvan Callan (Head of Direct Channels, Bank of Ireland) Terry has over 15 years experience in the telecoms and mobile industry working Garvan Callan was appointed as head of direct channels for Bank of Ireland in in both the public and private sector before joining Lloyds in 2015. September 2013 and is responsible for developing the performance of Bank of Ireland’s direct strategy across telephone, digital and social channels. <

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RBI 713 May.indd 5 12/05/2015 10:31:09 THE DIGITAL BANKING CLUB: ADVISORY PANEL Retail Banker International

to them via mobile, internet and the physi- Deborah Davis argues that security and HCE technology,” says Urbano. cal branch.” usability go hand in hand, and that security “We have worked in mobile payments for A combined team of 200 staff from Alior solutions with poor usability will never be the past four to five years in partnership and T Mobile spent five months working on successful in practice. with Telefonica but it is very difficult to the project that went live in May 2014. “According to research by ING, security communicate the service easily to custom- In terms of scale, it was the first project concerns remain the number one barrier ers. of its kind in Europe, covering design and to greater adoption of mobile and digital “You need handset agreements with the delivery of product offers, across channels, banking. Our own research highlights that MNO and mobiles with new SIM cards and sales and service processes. over half (51%) of UK banking customers the user experience has been difficult. “At the end of 2014, less than nine months expect their bank to introduce more innova- “Apple Pay is making it very easy for the after the launch of the T Mobile deal, Alior tive security measures. customer to pay by mobile and its growing gained 145,000 new customers, 85% of “It’s why Intelligent Environments con- popularity and use will boost public aware- whom had had no previous relationship tinues to look at new security frameworks, ness of the potential of mobile payments. with the bank,” says Rybicka. methods and tools such as Progressive “I am very positive about the whole area Alior currently has 2.6 million custom - Security, our attack-aware, AppSensorFS and while it will cost us money to reach an ers of whom 400,000 are using the bank’s technology and FIDO, our single sign-on agreement with Apple, the bottom line is mobile channel every month; by contrast authentication framework that could help that we must do a deal with Apple.” 750,000 customers use Alior’s internet usher in the end of the password. As I keep Cordeiro meantime argues that banks banking service. saying continuous innovation is critical.” will look to ramp up mobile payments adop- “Alior creates new value for customers by At LaCaixa, Urbano is upbeat about the tion as they gain greater understanding of constant development of its unique services, scope offered by biometrics, in particular customers spending behaviour such as the launch last year of Online Cur- voice, fingerprint technology and face rec- “Payments are just a small part of the rency Exchange; this has already been used ognition. spending experience but for customers there by more than 125,000 of our customers. “We can already offer customers the needs to be additional value beyond plastic.” “At the end of 2014, Alior launched a option to navigate by voice to check their Davis highlights the need for financial dedicated mobile app for OCE customers; balance and make a transfer and we have institutions to learn from tech innovators. we have also launched new mobile apps for had very good results. She says: “We all need to acknowledge that Alior Trader and Efx Trader, enabling quick “LaCaixa is also working on a voice tech customer expectations will continue to rise, and convenient investment on the Warsaw solution to replace customers’ ID number shaped by non-financial services providers’ Stock Exchange.” and password as well as biometrics with experiences delivered by the likes of Ama- Comparative mobile usage stats at RBS fingerprint to validate electronic purchases,” zon and Google. As pitched by Forrester are even more impressive. says Urbano. analyst Oliwia Berdak, not only can the “More than 3 million – about 25% of the Benjamí Puigdevall is particularly excited industry learn from best practices in the total customer base is using the RBS mobile about Línea Abierta Basic, the first Euro- tech space, there may also be opportunities channel, compared to about 50% of cus - pean application to perform banking medi- to partner. For example, with the launch tomer using the internet channel. ating voice commands. of a string of financial tools like mortgage “In the next few years RBS will look to “This service has been designed to explore calculators and digital wallets, Google may push it well over a third,” says Cordeiro. the possibilities of biometrics to improve have an important role to play in the indus- customer interaction with the financial try, not necessarily as a competing bank Security channels. but as a facilitator/aggregator of financial Asked to identify the biggest themes that will “It also offers the possibility to check the services for consumers. The risk of course dominate the digital banking debate in the status of accounts and transactions made is that some players could end up being dis- next few years, Mullen highlights cyber secu- on accounts and cards, as well as make intermediated." rity and cybercrime as huge areas of invest- transfers between accounts CaixaBank,” ment and concern. says Puigdevall. Wearables and the internet of things “It will be an area of constant evolution Davis adds: “Many providers are already LaCaixa claims another first as a result of a and revolution. How the industry reacts exploring the use of biometrics for authen- partnership with automaker Ford. and how can banks do it in the right way tication purposes. For example, HSBC has It is, says Puigdevall, a great example of that finds the balance between usability and introduced iris scanners and Barclays has banking extending to the internet of things. security versus customer acceptability even been experimenting with voice verifi- Its voice control application for cars using “There are big trade-offs to make. The cation. Ford’s SYNCC intelligent system means car customers want to have their cake and eat “The reason biometrics are proving users can find the nearest bank branches it too – they want to de-risk but they want increasingly popular is because they fit in and ATMs nearest to their location, in real banking to be easy and intuitive. around the way in which consumers like to time without leaving the car. Mullen is cautious about banks collabo- use their devices.” In addition, the application also provides rating to the extent of introducing standard- basic contact information and opening ised security protocols. Payments hours of these offices and allows telephone “This is a potential area for innovation Urbano and Cordeiro highlight payments as contact with the office. and investment so therefore it is a legitimate key areas to focus upon in the the next two "This is the first in the world in the finan- competitive environment to three years. cial sector and follows the trend of offering “How you solve the security concerns of “Apple Pay is going to be going to be very a seat adapted to each connected device," customer is an area for businesses to differ- important, as will the rival offering from explains Puigdevall. entiate themselves,” concludes Mullen. Samsung and then you have banks using At Atom, Mullen says that wearables are

6 y May 2015 www.retailbankerinternational.com

RBI 713 May.indd 6 12/05/2015 10:31:09 Retail Banker International THE DIGITAL BANKING CLUB: ADVISORY PANEL

really exciting and audio is also interesting. have a lot to learn such as Ebay and Ama- “I must stress that digital is not a threat “I am interested in Google glass and zon. We need to learn from them about the to the established parts of the bank. We are believe that wearables will have wide gener- discipline of their models and the scale and not an internet bank and our customers are ic acceptance,” he says. scope of what they do and they have not still encouraged to use the branch. Cordeiro has mixed views as regards the stood still. “We do not see digital as part of a strategy scope for wearables. “Now they are extending that into con- to drive branch closures. It must be the cus- He argues: “I do not believe that people tent origination and content development tomer who decides which channel to use,” will bank on their watches but people are – Amazon in particular. Netflix is another concludes Urbano. looking for little snacks of financial infor- business I am interested in; I look way And the measurement of the success of mation and this is where wearables can play beyond the banking industry for ideas.” digital investment will evolve, as Cordeiro a really good part in helping our customers For Cordeiro, he was flattering in the explains. understand their financial health. extreme about Airbnb, the US-headquar- “The very success of digital at RBS result- “So for example, I can see us presenting tered online marketplace for holiday rent- ed in unexpected and unintended additional you with snacks of info on a smart watch als that connects users with property to rent expense. without you having to log in. Say you have with users looking to rent the space. “One of the key metrics we looked at was £500 available to spend in your current “Airbnb as well as the likes of Uber are the monthly engagement rate – the number account. great inspirations because they offer an of times a customer would use the mobile “I do not actually need to see a number. If outstanding customer experience,” argues app, whether to check a balance or make I set a parameter of £500 and I look at my Cordeiro. a transfer. smart watch and the icon is green then all is “When I left RBS, the monthly engage - fine and I do not need to know my balance. Looking ahead ment rate for mobile customer had risen to But if the icon is showing as amber I need to “The key metric for RBS is and will remain 26. It is an interesting stat because it shows check and be cautious and if it is red I need customers Net Promoter Scores (NPS),” says a change in customer behaviour. to take action” Cordeiro. “Future thinking is that this measurement For Urbano, he remains concerned about NPS is the ultimate measure as higher is not necessarily such a good stat as what issues that remain unsolved such as limited NPS means greater loyalty and that means is happening is that customers look at their battery life on the smart watch. greater profitability. statement and if they do not understand “The wearable has to be in proximity with “We know that customers that bank with something then they call us. the handset and I am not sure wearables are us on mobile and tablet have the higher NPS “The result is that we have inadvertently going to be a market killer but we have to and the bottom line is that as a bank, we driven new cost into the business be prepared to offer this solution to our cus- need to make money. “Customers use it and rely on it and that tomers.” “In my time at RBS we were not focused is good. We could get that stat down and Deborah Davis is particularly upbeat on acquiring other banks customers. The would not be disappointed if it came down about the prospects for the Apple Watch way to get to profitability is to service the a little.” but cautions that banks must rise to the existing customer base well and provide a Mullen ends on a positive note. challenge. great experience. “We aren’t worrying about what other “Apple has an indisputable track record “I also believe there may be scope for banks are doing; there is plenty of opportu- of success in the smartphones and tablets banks to monitise digital. We see that nity for new players in the industry. I abso- marketplace and its entry into the wearable Barclays have franchised Pingit and opened lutely believe in digital, and not just as an market, stands a strong chance of being a it up as an API and pushed it out to third alternative channel. I’ve always believed in hit with consumers. parties. at as a fundamentally superior way of deliv- “This is supported by our research: More “The ability to franchise out services to ering banking services. The data doesn’t lie. than one in ten (12%) of Brits say they will third parties is potentially exciting and we The UK’s most satisfied customers are cus- buy the device as soon as it goes on sale in will see changes in perhaps the next three tomers who use digital channels to consume the UK. years. banking services.” “This presents banks with an exciting “As a bank, we spend an awful lot of The last word goes to Davis: opportunity to improve digital banking, money just to know who you are. Take the “There is a hugely exciting opportunity to making it more convenient, mobile and government as an example. Why do I need improve digital financial services, making effective than ever before. a separate ID to log on to YouGov or com- them more convenient, mobile and effec- plete a tax return? tive than ever before. Digital technologies Sources of inspiration “Why not ask us, the bank, to prove your will be key to driving top-line growth and Asked to highlight non financial institutions identity? We know who you are,” argues innovation, additionally they are critical to that they admire and look to for sources of Cordeiro. strengthening customer engagement which digital innovation, no member of the panel For Urbano, as he looks ahead, he is at in turn will deliver increasing revenues. At interviewed dared to mention a rival finan- pains to differentiate LaCaixa from a num- the end of the day digital delivers innova- cial institution. ber of major established banks that regard tive solutions that will not only solve cus - Says Mullen: “I do not believe the banks digital channels as offering the potential to tomer problems but is answering customer have exploited the opportunities of technol- scale back the branch network on a major demand. ogy innovation compared to other indus- scale. “But financial institutions must contin - tries - I do not look to banking as a source “All parts of the bank understand the ue to invest and be prepared to adopt the of inspiration. importance of digital; every employee innovative mindset of disruptors and tech “I still believe that some of the early pio- understands innovation and digital; it is a start-ups. This in itself is an interesting neers have a lot to teach and from whom we part of the DNA of LaCaixa. challenge.” <

www.retailbankerinternational.com May 2015 y 7

RBI 713 May.indd 7 12/05/2015 10:31:09 COMMENT: STEFFAN AQUARONE Retail Banker International

Will banks survive the onslaught of tech?

Steffan Aquarone from Droplet gives a fintech startup’s perspective, what it is that makes these new entrants to market more nimble and agile and it’s not just in the technology. Mind over matter is the order of the day and it needs to filter from the top down. C-level execs, take heed. May your approach be nimble

ofounding a fintech startup has got ing soon”. Then usually there’s mention of meaningful shot at success. me in front of some pretty senior the large number of customers they already Sometimes the signals that suggest peo- audiences from the banking industry have, the reach they have through part - ple actually like something can be faint at recently. There’s a strong temptation nerships and the amount they’re going to first, which is where the second problem C comes: measurement. In mobile, big brands to be bombastic about the rise of startups spend on marketing. Then it all goes quiet. in the thought-to-be impenetrable world of retail banking. But far more certain to “When only 5% of people are still using the product at the end of the me than who will be amongst the giants of month (the average for apps), they have nothing to explain why” tomorrow is how and why they’ll get there. I presented to a fintech audience in April The project disappears. Industry insiders launching digital products like traditional and a friend in the audience called it my whisper about £100m write-offs, or blame campaigns focus on metrics like engage - “Greed is Good” speech. Gordon Gekko stakeholders for not reaching consensus. ments, download numbers and transaction never uttered those exact words in the origi- As a startup entrepreneur, hearing this volumes – but these lose the signal in their nal Wall Street film and I didn’t actually say respect for O2 Wallet, Weve, V.me and own self-generated noise. When only 5% it, but “choice is good”. MasterPass was of course music to my ears: of people are still using the product after It’s a painful reality for big players to proof, surely, of the classic “innovators’ a month (the average for apps), they have stomach but in today’s world, people won’t dilemma” facing big businesses. nothing to explain why. do what their bank tells them to. This isn’t But the mistakes they made are much more Measuring things like retention rates, and because they hate their bank – it’s because straightforward and “innovators’ dilemma” talking to customers (another benefit of a of a fundamental shift in who’s in charge of is an intellectually lazy explanation. These low-key, digitally led initial approach), will consumer behaviour. projects failed because they didn’t listen to lead you to the indicators of success that can We used to get most of our information their customers, and find out where the shoe then be repeated at scale. from mainstream news media and adver- was pinching. tisements, plus a bit of kitchen table gossip. Shift in attitude: recognise failure Now peer-to-peer conversation has taken Startup strategy for success My personal opinion is that the mindsets in over and become a mainstream news source This is not about market research or custom- big business have already started to change. thanks to global real time communication er feedback, because you can’t reliably ask Someone senior in a bank recently told me networks like Twitter and the other usual people what they’re going to think or feel to remember that it takes startups a lot less suspects. about doing a new thing in a new way when time to realise the wind has fallen out of The only reason these platforms grew you don’t have a proper product. the sails than it does big institutions. They to global dominance was because people If you’re a traditional marketer, you’re were talking about one of the remaining big started to prefer them. And because of their used to agreeing your message, segmenting industry players that hadn’t even launched! nature, people can exercise their preferences your audience, and then planning and align- For established players to have a chance about who to listen to within these channels. ing each of your communications channels of success in the world I’ve just described, By extension, we have become highly selec- to deliver a consistent, carefully controlled leaders need to continue to drive a change tive about what to try, use or buy. and well-funded campaign across a series of of mindset, and then change the way they As a startup Droplet is utterly beholden to months. But in digital, planning way ahead measure success. its users. If they don’t like our product, they in detail when you’ve not yet started is folly. Startups succeed over big businesses not won’t use it and we will fail. In fact, for us to If you’re right about everything then it will (just) because they’re smarter, better attuned succeed, we need people to love our product work – and it does, one in a hundred times. to their audiences and free from incumben- so much that they tell everyone they know. Successful digital strategists enter the mar- cy. They succeed because they’re tenacious Bigger businesses struggle with so-called ket product-first, so they can test reaction. enough to adjust, adapt and shape shift as disruption because they’re finding it hard to Then they test different marketing or go to they go – sometimes failing altogether and cope with the new reality that you just can’t market tactics in the same way – dialling up rebooting – until they find the thing that tell people what to do any more. the ones that are working, and removing the people actually like. ones that aren’t. Droplet is a fee-free way of taking cash- Same old, same old The reason these big projects failed is less payments. We don't charge users or mer- We’ve seen it in droves from incumbents in because they were big projects, not because chants fees or monthly costs. No extra hard- our sector of mobile payments. The pattern they were created by big businesses. They ware/NFC tech is required to take Droplet of failure is surprisingly similar: established launched as if it was 1995, not 2015, and payments, just a compatible smartphone or player announces new product that’s “com- that meant they only gave themselves one tablet. <

8 y May 2015 www.retailbankerinternational.com

RBI 713 May.indd 8 12/05/2015 10:31:09 Retail Banker International DIGITAL: MOBILE WALLETS

Visa: 50% of transactions to be mobile by 2020

With Apple attracting attention towards the mobile wallets and payments, many mobile solution providers are looking for ways to take advantage of this interest spike. One of these is international payments giant Visa, which expects half of all transactions to be mobile by 2020. Patrick Brusnahan talks to Visa

obile payments and wallets are a question of ‘which platform does a bank Apple is gaining lot of attention through steadily rising in their acceptance. use to get the card details into the phone in work that companies such as Visa has been According to Statista, $235.4bn order to enable contactless transactions?’ working on for years. However, Nicholds was transacted worldwide over is not worried about Visa losing any of the M limelight. mobile payments services in 2013 with it set Turning a phone into a contactless device to reach $721.4bn by 2017, a rise of over There are a few options in transforming He says: “All of these solutions, from 200%. a phone into a contactless payment device. Apple to Samsung to whomever, they have MasterCard has also come out in support The phone can have a secure element in the their own technology at work, but it’s built of mobile purchases. It stated that by 2020, actual hardware, the details can be saved on on Visa technology. We’re enabling those mobile commerce will account for more the SIM card of the phone, or, most interest- solutions. We have the view that this has to than 75% of the world’s online transactions. ingly, the card details can be stored on the be a collaborative effort and no one party Consumers are becoming more aware of cloud. can do it by themselves. these mobile options and, as a result, more Nicholds says: “We are enabling and pro- “We’re still advocates of collaboration now, willing to adopt them. Statista recorded that viding support for banks to use cloud-based but also there are other options for banking 40% of consumers in 2013 would prefer to solutions and HCE (Host Card Emulation) to choose from. We’re very excited about pay via a mobile device than a traditional technology. We’re also working, particularly the cloud-based developments we have on wallet. This percentage got as high as 63% in the US, with a range of players including the go. We’re expecting 30 banks across and 60% in South Korea and India respec- Apple, Samsung and so on who are enabling Europe, including banks in the UK most tively. third-party wallets for banks to use to store likely, to introduce cloud-based solutions in those essential card details.” due course.” Visa’s presence in the mobile space Visa expects that their mobile wallet offer- Visa has not let this trend pass by. Apple Pay’s galvanising effect ing will have one million active users by the When talking to RBI, Jeremy Nicholds, While financial institutions such as Visa and end of 2015. Nicholds believes that it’s ‘on executive director of mobile at Visa Europe, MasterCard, as well as mobile providers like track for that’. In terms of future goals, they says: “What Visa is attempting to do is to Vodafone and O2, have been involved in this are much more optimistic. enable a number of different platforms for movement for some time, the emergence of He says: “We’ve made some predictions the banks to bring mobile payments services Apple Pay has galvanised the industry and and we think that by 2020, 50% of our to their customers at scale. consumers. transactions will be through mobile devices. “In terms of mobile payments, we’re talk- Nicholds says: “Apple Pay is currently That includes phones, tables and other devic- ing about proximity payments, using your only available in the US, but I’m sure, in due es. There’s also a lot of excitement around phone in a contactless sense to make a trans- course, Apple will announce the extension wearables. Those sorts of devices have a action, be that a low value transaction or of the programme in other markets. It would good level of activity among our cardholder even a high value transaction.” be no surprise if it came into Europe as it base. Nicholds believes the UK is a good exam- has an exceedingly good contactless infra- “We have 500 million cardholders in ple of somewhere that contactless mobile structure. Europe and we have significant numbers of transactions so we’re expecting those “We’re very excited about the cloud-based developments we have on increasingly to come from mobile devices. the go. We’re expecting 30 banks across Europe, including banks in If you look at e-commerce, it’s increasingly the UK most likely, to introduce cloud-based solutions in due course” becoming an m-commerce world.” Nicholds concludes: “People have been payments could really take off. “If you look at Spain, contactless accept- saying that ‘this is the year of mobile’ and This is mainly due to the infrastructure ance is three times the level what they are in they’ve been saying that for a number of already being in place thanks to the rise of the United States. If you look across Europe, years. It’s been a long time coming. contactless cards. The goal is to take that we have 2.4 million contactless terminals in “I think those key ingredients are very process and have inside of a mobile phone place. It’s very much ready and waiting for much in place now. There’s no point in instead of a card. Apple Pay and others to make use of. bringing out a new payment method if He says: “Over the years, we’ve been “As well as Apply Pay, there have been there’s no way to use it. By encouraging the investing in contactless acceptance infra- announcements from Samsung and Google, use of contactless cards, we’ve managed to structure and, in a number of markets, we as well as mumblings about Microsoft get- establish the infrastructure that supports not now have pretty good acceptance. ting involved. Mobile payments are very only contactless cards but mobile as well. “With that piece of the puzzle in place, it’s much a hot item.” That’s an essential building block.”<

www.retailbankerinternational.com May 2015 y 9

RBI 713 May.indd 9 12/05/2015 10:31:10 DISTRIBUTION: UOB Retail Banker International

United we stand, branch out and deliver

Singapore’s United Overseas Bank enlisted allen international to help draw up a branch concept unique to the Singaporean market. Consumer engagement, staff development and state of the art technologies all combined to put a new face to a well known name. Anna Milne speaks to design director Keith Holmes

nited Overseas Bank (UOB) has groups and life- stages but these pilots were browse products through interactive portals recently launched its new small-for- intentionally aimed at increasing awareness or have a one-to-one with a newly trained mat digital branches. As part of its universal banker who is able to access con- developing network strategy, UOB tent in one of the semi-private meeting pods. U Allen International looked at showcasing is focusing on densely-populated locations such as shopping malls, hotels and hospitals. the latest yet relevant to this market interac- The intention of UOB’s latest development tive technologies to engage with customers in its branches evolution was to deliver a dif- and demonstrate the benefits of alternative ferentiated, market leading and most impor- channels and individual product details. The tantly, engaging and exciting customer expe- design provided new solutions with regard rience with a greater emphasis on customer to the consultation process for the roles of engagement. the personal and business banker as well as It intentionally located its newest pilots in streamlining existing process systems with the recently renovated high footfall locations new interactive technology and providing of Suntec Mall and Farrer Park in Singapore. for the young professionals and families. easy migration from the counter to service UOB is well known for providing a The customer proposition was challenging solutions. thoughtful, evolutionary approach to its but well defined and at its core looked to These visually stunning and digitally- physical network but this time it was look- provide easy and efficient banking with clear enhanced environments are not only attract- ing to take a bigger step forward and there- choice and education across all channels. ing new customers but educating existing fore engaged allen international to provide Also it sought to create an exciting, engag- customers as to the benefits of alternative new thinking for a differentiated customer ing experience and the provision of a more products as well as UOB’s mobile banking journey to attract, entice and welcome new rewarding sales experience for the customer. channels. The new retail format is expect- customers. ed to become a natural extension of their The Discovery Zone already-effective distribution strategy. Creative brief The core of the solution was the creation Working closely with UOB’s internal design of ‘The Discovery Zone’ to promote UOB’s Staff development team, allen developed a creative brief and new ‘Dreams’ concept– financial education Just as key to the development of its bricks delivered a journey towards the next genera- digital communications – in an interactive and mortar solution, UOB has been develop- tion of banking on a number of levels. The and engaging manner. The intention was ing its staff with creation of the role of the brief included the following aspects: to encourage conversations about personal more highly trained universal banker. financial goals in a non-intimidating and These universal bankers will be capable of • To create a new customer journey; discrete envi- adapting to the • Creative utilisation of physical space, ronment. broad range of and The Discov- individual cus- • To promote and educate customers to ery Zone was tomer enquir- the benefit of self-service channels. to create a plat- ies and there- form for staff fore be able And to achieve these by: to engage with to undertake all customer a number of • engaging customers in the branch groups wheth- roles within the environment through needs-based er it be an branch, reac- solutions rather than product-led informal one- tively changing selling , and to-one conver- roles during • embracing digital technology to help sation with a busier times solve these challenges. customer or a of the day as more formal they mingle By looking at all these new customer solu- presentation or demonstration to invitees. with customers. This replaces the older, staid tions and innovations, UOB could assess Content for all the screens has been creat- staff model of sales staff standing protected potential deployment across its network as ed to enable a consistent sales process, deliv- behind counters waiting for customers to well as integrating a new sales journey. ering short movies which encapsulate the come to them. UOB wanted their staff to go UOB’s customer audience is across all age benefits of specific products. Customers can out and actively engage with the customer.

10 y May 2015 www.retailbankerinternational.com

RBI 713 May.indd 10 12/05/2015 10:31:11 Retail Banker International DISTRIBUTION: UOB

allen international

CIBC Developed new branch designs for full-service branches, small teller-free convenience branches and the branches it opened at Toronto’s Pearson International Airport. As of March 2015, the new design has been implemented in 35 branches, set to be over 50 by the end of the year. The branches include high-tech digital displays replacing all in-branch posters, as well as interactive iPads and laptops to encourage on-premise online banking registration and product research State Bank of India SBI has opened six digital branches across Interestingly, due to Allen International’s From the initial engagement of allen inter- the country as part of its programme to established regional Singapore office and national to the opening of the first branch at offer new banking solutions to the growing understanding of the local consumer hab- Suntec, the process took only four months. mobile and internet savvy customer base. its, the design was tailored to suit this very This is testament to the close working rela- The new sbiINTOUCH branches implement digital processes and technology while also providing back-end integration though “Zoning principles and physical population of space were employee training. LCD screens help SBI carefully considered and time taken for mocking up key branch customers map out their financial plans through instant loan approval, mutual elements- despite challenging schedule” funds information, and instant card issuance specific market. The use of large highly vis- tionship fostered between UOB’s internal Virgin Money ible interactive displays that work so well in team, its senior management approval group Special lounges with comfortable other nearby countries are not so suited to and allen international, which augmented its surroundings for Virgin Money customers. the more reserved Singaporean. Singapore team by flying in technical spe- Each lounge offers an in-flight The solution was therefore to create inter- cialists to work locally in order to meet the entertainment system, free refreshments, activity on a smaller scale within the branch required timeframe and high quality design free Wi-Fi, daily newspapers and facilities to and the larger digital intent. entertain children. Currently, there are five displays provided one UOB is currently in Virgin Money Lounges in the UK way content for the the process of gather- Banco de Occidente customer to watch. ing the required ana- New-generation branches with a modern Careful considera- lytics in terms of cus- authoritative brand that focuses on tion of zoning prin - tomer engagement customer service. Digital communication ciples, traditional and uplift and will outlets introduced at key points to better counter services and look at any potential inform and engage customers whilst in the sales pods as well as refinements to the branch all fixed furniture was pilots prior to bring- Allied Irish Bank critical from early on ing this exciting new A high-tech concept branch, nicknamed in the development proposal into its net- ‘The Lab’, was introduced in Dublin to process and how the work. develop the bank’s customers’ use of online staff would position allen international services. As well as access to free iPads and themselves in relation is assisting in this Wi-Fi, there are five ‘zones’ in the branch to their customers and process and is ready dedicated to certain needs. These include: The Quick Banking Zone, The Mobile how the space would for the next step in Banking Zone, The Product Zone, The be physically popu - UOB’s march for- Business Banking Zone, and The Lounge & lated was all carefully ward, following on Learning Zone thought out and developed during the design from this roll out. journey. The most satisfying result for allen inter- ING Turkey national was to see how the staff functioned A branch renovation programme across its Attention to detail within the newly opened branch, engaging 300-plus network with the aim to reduce Although there was a challenging schedule, with the customers in the Discovery Zone costs and appeal to younger customers. The UOB ensured that there was always time in a much more natural manner than in the branches will include ‘Interactive Corners’, provision for mocking up of all the key ele- previous format; coming out to meet and a cafe style bench linking the direct channels of internet and telephone banking, ments within the branch, which resulted in chat with them on the customer’s ground. service bars, and sales pods meant to create an ongoing refinement process that ensured UOB’s continuing journey of creating a greater sense of partnership between the quality of the materials and the detailing innovative, engaging branch experiences has salesman and customer < was of the highest retail standards. taken its next big step forward. <

www.retailbankerinternational.com May 2015 y 11

RBI 713 May.indd 11 12/05/2015 10:31:11 FEATURE: SWIFT Retail Banker International

Real time payments: The need for speed

What stage is the global transition towards real time payments at? What are the drivers, hindrances, how long will it take and what are the different countries’ priorities? SWIFT is on a mission to support faster payments implementation across markets with a scalable, replicable solution. Anna Milne writes

eal time payment systems have come growth. If a business is paid in real time it benchmark and in the US, the Federal a long way and the latest push by has a faster cash conversion cycle and better Reserve Banks’ financial services unit has SWIFT intends to have them come working capital, reducing the need for short- been studying options for faster payments even further, even faster. Mobile term financing. Equally, governments benefit and The Clearing House also has a faster R from formal economies by way of increased payments project on the go. money has created a huge demand for faster, 24/7 payments and banks stand to lose foot- taxes and foreign investors are attracted by In Sweden, there is a major drive to go ing and credibility if they do not keep up a modernised payments system. cashless altogether. Mobile payments have with the move towards real time payments. The Federal Reserve Bank stated in a taken off, creating the case for the Swedish Regulators play a key role in encouraging public consultation paper in 2013 that near real time payments system, BIR, from which banks to make the move. According to Juli- real time payment capability could support six of the largest Swedish banks run the pay- ette Kennel, head of market infrastructures economic activity in the US to the point of ment service, Swish. at the financial messaging network, “regu- maintaining the US dollar as the global trad- In Poland, banks have developed the KIR’s latory initiatives are proving to be the real ing currency. Elixir Express, to compete with the popular driver behind increased adoption of real time Different markets have adopted real time competitor BlueCash and In Mexico, the retail payment systems (RT-RPS) due to fac- payments in different ways- some have driver was mainly to bank the unbanked. tors such as consumer protection, reduced adapted current legacy systems; others have credit risk, transparency, financial inclusion, gone in wholesale by developing entirely Global infrastructure fostering of competition and wider macro- new systems. The latter has been the case The Australian system is the one SWIFT economic impacts.” in Australia. hopes to replicate in other markets. Its goal Banks’ own commercial interests are a sec- For banks, interoperability will be crucial is to deliver real time payments by 2017 and ondary driver by a long way. Results from as legacy and new models will need to co- SWIFT has been contracted to build and the latest SWIFT research show a ratio of exist both at a domestic and cross-border operate the system’s basic infrastructure, 73:27 for regulatory vs. commercial driv- level. which it hopes to complete by Q3 2016. Originally designed for cross border trans- n KEY DRIVERS INFLUENCING RT-RPS ADOPTION actions, SWIFT has evolved into a payment Competition from third parties 13% (especially Sweden and Poland) infrastructure and its real time domestic pay- ments system will incorporate peer-to-peer Commercial drivers 14% (especially South Africa and South Korea) technology, reusing and reconfiguring com- Regulatory initiative 73% ponents already deployed across 80 markets. Source: SWIFT and The Boston Consulting Group Comprised of three main components: a high volume 24/7 domestic messaging chan- ers for banks to adopt real time payments. Says Kennel: “The industry is going to nel; a clearing and settlement payments And regulators’ focus is inevitably on the have to come up with ways to enable banks gateway and a proxy address look-up ser- consumer impact, which impacts economic to offer real time capabilities while keeping vice which allows payment routing based costs in check. Collaboration and innova- on peronal identifiers such as mobile phone n REGULATORS’ FOCUS ON CONSUMER IMPACT tion is going to be key.” numbers or email addresses. UK The UK has been ahead of the game in US technology vendor Fiserv has devel- Switzerland adopting real time payments with its Faster oped an open payment infrastructure to help Platform development Singapore Payments Service, albeit something of a leap- establish real time payments. Taiwan frog transition from its BACS system, which “We have closely followed the discussion Turkey had a T+3 settlement cycle, taking three days led by the Federal Reserve and The Clearing UK for funds to be available to the beneficiary House and will continue to investigate if and Mexico Consumer protection customer. This being deemed unacceptable, how the Australian solution could apply,” Nigeria the regulator stepped up pressure to improve says Kennel. Chile the customer experience and in 2008 the UK Brazil went live with faster payments. In Europe Banks’ concerns Mexico Financial inclusion there is a T+1 (day plus one) guarantee with Building the business case from a bank’s per- Nigeria SEPA transfers. India spective is not as clear cut as from a regula- Other inititaives such as South Africa’s tor’s. It requires a high degree of investment Macroeconomic events Brazil Real-Time Clearing and Australia’s New -the one-off cost of transforming systems but Source: SWIFT and The Boston Consulting Group Payments Platform have also set a new also a new ongoing cost to maintain it 24/7.

12 y May 2015 www.retailbankerinternational.com

RBI 713 May.indd 12 12/05/2015 10:31:12 Retail Banker International FEATURE: SWIFT

n PAYMENT SUITABILITY FOR REAL TIME AS A PROPORTION OF GLOBAL VOLUME NON-CASH PAYMENTS Suitability for RT Segment Payment Type Share of Non-Cash Payments Growth Trend RT Payment Confirmation RT Funds Availability P2P E-payments 4% Increasing Completely Medium E/m-commerce 7% Increasing Completely Medium Physical point of sale 51% Increasing Completely Weak P2B Bill payments 18% (with large-value payments) No change Weak Weak Large-value payments 18% (with bill payments) No change Completely Completely B2P Salaries and pensions 20% (with invoices and large value payments) No change Negligible Weak Invoice payments 20% (with salaries and large-value) No change Medium Strong B2B Large-value payments 20% (with salaries and invoice) No change Completely Completely Source: SWIFT and the Boston Consulting Group

Going by figures quoted by UK banks as eBay purchase within hours of winning the “Even if we managed to get 10% of the to the cost of implementing faster payments, auction, they’ll quickly start to reconsider a cash market, it would already be beneficial 20% goes on actual implementation of the bank which can’t even process one portion to everybody involved,” says Carlo Palm- interbank system; 80-90% is the internal of that service in anywhere near the same ers, market infrastucture manager at SWIFT. upgrade. For a start, traditional batch sys- timeframe. Ultimately everyone does pay towards the tems are regularly switched off for update cash cost bill- in most countries consumers and maintenance. For an ongoing real time Payment types and suitability for RT are charged to use cash machines. Questions system handling much larger volumes of There is a more stringent need for a real remain as to whether certain transactions traffic, all of which needs the requisite secu- time payment when an intended purchase may still be charged for in a non-cash eco- rity, fraud and AML checks, not to men - is dependent on receiving funds from a pay- system but the overall cost is less. tion the dreaded customer service, this is no ment. In this case it is not even sufficient to “It will be difficult, we believe, to charge mean feat. have real time confirmation- it is real time the end consumer. In some kinds of real The UKs Faster Payment Service total funds availability that is required. There time transactions, the beneficiaries will be cost, including investment and running costs, are many systems in the world, for example willingly charged, as long as they are getting over a seven year period has been estimated Ideal in Holland, which give real time confir- that payment, they are happy. For example, at £800m ($1.237bn). This was enough to mation that the payment has been initiated a real estate transaction, it is worth some- send the Federal Reserve Bank of Boston but the merchant only receives the credit in thing indeed to make sure that money is running a mile, when looking to the UK as account the following day. For person-to- transferred immediately. The difference a case study. Nevertheless, the Fed’s mission person payments, a real time confirmation being ownership is transferred in minutes towards this is ongoing, despite the com - is imperative. rather than, in some cases, months.” plexities of the US system. Direct debits and salary payments are The driver for any eurozone conversion Banks also worry about there not being known about way in advance so the pay - is ECB. The ECB’s group, Euro Retail Pay- a standardised interoperable system and ment mechanism is already set in place. It is ments Board is currently examining the roll thus having to join several systems, as such, not necessary to use an extensive system to out of instant payments in the eurozone and increasing overall responsibility and cost. do a real time transfer. has stipulated the need for at least one pan- However, ultimately, the over-arching For real time payments, the cash market European system, meaning that although the threat of simply losing customers is what will is a very important target market: small drive from the consumer and merchant side push banks to go ahead with all this. And businesses, public transport systems, per- is mainly domestic, it wants a solution that they can collaborate to safeguard against son-to-person payments. Cash is expensive. will offer the possibility to be pan-European- loss of clientele to competitors. They’ll need Transportation, security, printing, general similar to SEPA. Beyond Europe, 18 markets to- when customers can be in receipt of an handling in shops- the cost is enormous. are already live with RT-RPS and about 13 are in the planning stages. n GROWTH DRIVERS A collaborative effort is required (how P2P and P2B E-Commerce often do we hear that?) on the part of banks, regulators, start-ups offering payment chan- Availability of mobile apps with same level of convenience as cash E-commerce payments growing 2-3 times faster than overall payments nels and new service providers. The new Strong growth of mobile payments (+16% pa, yet starting from low base) payment services directive, PSD2, is pushing banks and the banking community to offer P2B Physical Point of Sale easy access to payment service providers. Significant potential to replace cash at POS with electronic payments, especially in emerging markets New players will get access to payment sys- P2P Bill Payments tems they never had access to before. Emergence of convenient bill payment platforms/apps, less driven by real-time nature Palmer says, “The enormous possibility that such systems will open to the market B2B Invoice Payments is exciting. Once it’s in place you can have Appetite of corporates for real-time payments to reduce frictional costs or free up working capital immediate payments between any two B2B Large-Value Payments parties that don’t even know each other- e-commerce platforms, mobile applications. Possibility to make conditional payments We’ll see a lot in the coming years, making Source: SWIFT and the Boston Consulting Group use of these new possibilities. <

www.retailbankerinternational.com May 2015 y 13

RBI 713 May.indd 13 12/05/2015 10:31:12 AWARDS: ASIA TRAILBLAZER SUMMIT Retail Banker International

RBI Asia Trailblazer Summit 2015: Positioning a digital strategy for the future success of banks

Retail Banker International hosted its seventh annual RBI Asia Trailblazer Summit at the Carlton Hotel in Singapore. Bringing together senior retail banking executives to discuss the future strategies for the region, Sruti Rao reports on the takeaways from the conference and the winners of the annual awards

ligning to the digital wave in Asia is customer-centricity has also become a key and seamless experience. DBS’s various pro- a constant topic of discussion and strategy. However, there remains a challenge grammes, including its SMS queue initiative, deliberation across board rooms in in changing the mindset of institutions. were put forward as a successful example of the region’s retail banking sphere. Natividad Alejo, President, BP Family Sav- how convenience can drive revenue in the A ings Bank, added: “We just recently shifted The RBI Trailblazer Summit provided a front-end. platform for industry leaders to discuss the our view from being very much focused on Fuda said: “The simple service gave the opportunities and implementation challeng- products to having an unrelenting focus on customers less time at the branch, but it es that exist alongside their efforts to revamp the customer. This shift not only enforces brought about better customer engagement. their systems and re-engage customers. technology, but more importantly, requires We found double digit growth of products a different mindset from all the people in the sold at the branch as a result of this invest- Thinking ahead: Strategic decisions for organisation. This is a different type of cus- ment, and, overall, brought a positive expe- future success tomer. There needs to be an understanding rience.” • Natividad Alejo, President, BPI Family that customers are varied. Therefore, being As Anand Bajaj elaborated, expanding the Savings Bank / Executive Vice-President able to deal with the right kind of interac- digital servicing of clients is key to bringing and Head of Retail Segments and Chan- tion, and the right kind of experience, for customer loyalty: “There are very certain nels Group, Bank of the Philippine Islands that unique customer is necessary.” correlations between digital penetration and • Han Kwee Juan, Chief Executive Officer, Nonetheless, it remains hard for banks customer behaviour. Customers can have Citibank Singapore to keep pace with these customer expecta- two or three bank accounts but digital plays • Christopher Bayliss, Managing Director tions. This is due to legacy infrastructures a role in becoming that primary bank. Cus- and Global Head of Personal Clients Seg- that remain in place – a stark contrast to the tomers who use digital applications tend to ment – Retail Clients Group, Standard more agile non-bank players entering the have a higher balance in their primary bank.” Chartered Bank industry. Anand Bajaj said: “Banking is full Nonetheless, the sophistication of your • Anand Bajaj, President for Innovation & of legacies and infrastructure. The likes of digital product is important in the competi- Knowledge Management, YES Bank Facebook and others do not have a direct tive Asian market, as Keith Shaw highlighted, relationship with the customer itself. We because delivering a sub-par experience for Keynote speaker Han Kwee Juan of Citibank have our work cut out for us and have to the customer makes efforts in engaging with Singapore, highlighted three main trends think hard on how to solve this.” the customers redundant. arising in the retail banking sphere – the rise Shaw commented: “The user is becom- of the mobile population, the demographic The shift to digital banking ing so savvy with technology. It gives them trend towards cities, and the increasingly • Edrick Ho, Head of Digital and Channel the ability to find answers and solutions. digital service models coming to the fore. Management – Retail Banking Asia Pacif- What that means is your success or failure He said: “The rise of cities has caused ic, ANZ Banking Group will come down to your product. Be care- populations to go towards the urban cen- • Keith Shaw, Client Partner for Global ful how much technology you give people, tre. We see this and it is a huge trend for us, Banking & Financial Markets (GB&FM) because by giving them more technology, it and it is something that we feel ought to be – Asia, Middle East & Africa, BT Global gives them the ability to choose. In having addressed by all banks in the market.” Services that ability to choose, unless the end product Kwee Juan also highlighted that as banks • Domenic Fuda, Managing Director and is adequate, you are not going to be as suc- have embraced the digital bandwagon of Deputy Group Head, Consumer Banking cessful as your competitor.” online and mobile services, it is equally and Wealth Management, Development The importance of collaborative partner- important for institutions to harness their Bank of Singapore ships was also touched upon as a growing security features alongside their product • Rajat Mehta, President and Country Head opportunity in the region, for the advantages development. for Brand & Retail Marketing, YES Bank of scale and agility that they provide. Edrick “While we talk a lot about ‘let’s get on to Ho of ANZ Bank commented: “We have digital, let’s get on to mobile’, one of the The rising penetration of digital banking to be part of other ecosystems. Especially biggest things that banks need to focus on, services was the central topic of the second when it comes to digitisation, there is scale is to go get your internet security, go get panel opened by Domenic Fuda of DBS in other industries that we can only dream cyber security. Customer data needs to be Bank. Highlighting the central digital push of in banking. Using the strength of the non- secured and never compromised, because of the bank, Fuda hypothesised that the bank players through partnerships is a great the moment trust is broken, you can forget medium of online, mobile and social chan- opportunity. Adopting and learning from about digital.” nels need to be driven by the priority of pro- these partners in building your own capa- For smaller local banks, the trend towards viding the customer with an easy, convenient bilities needs to be developed.

14 y May 2015 www.retailbankerinternational.com

RBI 713 May.indd 14 12/05/2015 10:31:12 Retail Banker International AWARDS: ASIA TRAILBLAZER SUMMIT

“To be great bankers, you have to be tech- n RBI Asia Trailblazer Awards 2015: The Winners nologists nowadays, and banks have to build that capability within their organisations.” Service Excellence in Customer Experience: Channel Excellence in Internet Banking – Cross- Border: Financial inclusion: The profit potential in Winner: DBS Bank, Singapore Winner: CIMB Niaga, Indonesia ‘banking for all’ Highly commended: Krungsriayudhya Card Co. Ltd, Highly commended: Standard Chartered Bank, • Thomas DeLuca, Chief Executive Officer Thailand Vietnam & Co-Founder, AMP Credit Technologies Service Excellence in Mass Affluent Banking: C h a n n e l E x c e l l e n c e i n M o b i l e B a n k i n g – O v e r a l l : • Justin Hadgkiss, Head of ATM and Alter- native Channels for Asia Pacific, ANZ Winner: Taishin Bank, Taiwan Winner: DBS Bank, Singapore Banking Group Highly commended: Maybank, Malaysia Highly commended: Maybank, Singapore • Juanita Woodward, Principal, CTD Con- Service Excellence in Service Innovation: Channel Excellence in Mobile Banking – necting the Dots Customisation • Gilda Pico, President & Chief Executive Winner: Indusind Bank, India Winner: Taishin Bank, Taiwan Officer, Land Bank of the Philippines • Angelito Villanueva, Vice President and Highly commended: DBS Bank, Hong Kong Highly commended: CIMB Niaga, Indonesia Head of Financial Innovation, Digital Service Excellence in SME Banking: Channel Excellence in Social Media: Inclusion & Alliances, Smart e-Money, Winner: Alliance Bank, Malaysia Winner: YES Bank, India Inc. Best Initiative in Financial Inclusion: Highly commended: DBS Bank, Singapore The final session of the summit looked at the Winner: YES Bank, India Channel Excellence in Service Delivery – ATM emerging issue of financial inclusion and the Highly commended: AMP Credit Technologies, Hong Winner: HBL, Pakistan ecosystem that has to be built within Asian Kong markets to bring this opportunity to fruition. Highly commended: Bank Danamon, Indonesia Highly commended: UOB, Singapore The use of mobile money was highlighted by Angelito Villanueva of Smart e-Money due Product Excellence in Bancassurance: Most Innovative Branch Offering: to the scalable and accessible solutions they Winner: Bank Danamon, Indonesia Winner: Bank of East Asia, Hong Kong provide partnering institutions in banking Product Excellence in Loans: Highly commended: Citibank, Singapore the poor. Winner: Citibank, Philippines Channel Excellence in Multi-Channel Integration: Justin Hadgkiss echoed this sentiment in the session. He said that mobile payments Highly commended: DBS Bank, Singapore Winner: ANZ Bank, New Zealand provide an alternative and more effective Product Excellence in Mortgages: Highly commended: DBS Bank, China channel of reaching the unbanked than brick Winner: ANZ Bank, Singapore Strategy Excellence in Business Model Innovation: and mortar systems. Hadgkiss said: “Businesses must be sus- Product Excellence in Cards: Winner: Maybank, Malaysia tainable, and like every large volume, emerg- Winner: ANZ Bank, Indonesia Highly commended: CIMB Thai Bank, Thailand ing markets initiative you need time and Highly commended: DBS Bank, Singapore Strategy Excellence in Dynamic Third-Party investment. Considering the cost to imple- Partnership: ment a bank branch or installing an ATM Product Excellence in Investment Services – Retail Winner: Krungsriayudhya Card Co. Ltd, Thailand with information security, hardware, and Clients: software, mobile money is a fantastic way Winner: Standard Chartered Bank, Taiwan Highly commended: Standard Chartered Bank, to provide that reach without having to go Singapore through traditional channels.” Highly commended: DBS Bank, China The session highlighted the opportunity Strategy Excellence in Customer-Centricity: in rural banking services within emerg - Process Excellence in Communication and Client Winner: DBS Bank, Singapore ing markets, as Gilda Pico from Landbank Onboarding: explained, with the bank’s core proposition Winner: Standard Chartered Bank, Korea Highly commended: ANZ Bank, Australia being to partner with local banks and com- Highly commended: Indusind Bank, India Best Marketing Campaign: munities to bring more accessible credit. Winner: Taishin Bank, Taiwan However, a complementary view to this Process Excellence in Collection and Debt Management: was added by Tom Deluca of AMP Technol- ogies, on the opportunities that exist even Winner: ICICI Bank, India Highly commended: Standard Chartered Bank, Singapore in developed markets to provide for smaller business communities, ignored by the bank- Highly commended: Religare Finvest, India Best Community Outreach Programme: ing sphere. Process Excellence in Loan Origination: Winner: DBS, India De Luca concluded: “There are certainly Winner: ANZ Bank, Indonesia Highly commended: Alliance Bank, Malaysia financially excluded groups right here in Singapore. We provide to smaller businesses Highly commended: Land Bank of the Philippines Best Graduate Programme that are on the banking grid, with our credit Channel Excellence in Internet Banking – Overall: Winner: Alliance Bank, Malaysia technologies, loan origination and servicing Winner: UOB, Singapore Best Staff Training Programme platform that allows banks to reach out to Highly commended: CTBC Bank, Taiwan Winner: DBS Bank, Hong Kong these communities effectively and for these businesses to gain access to credit.” <

www.retailbankerinternational.com May 2015 y 15

RBI 713 May.indd 15 12/05/2015 10:31:12 REPORT: WORLD RETAIL BANKING 2015 Retail Banker International

Customers’ retail banking experience falls again

Capgemini and Efma’s twelfth annual World Retail Banking Report (WRBR) reported that, for the second year in a row, customer satisfaction has fallen and improvement in global retail bank customer experience is stagnating. What has caused this and how can banks pick up their game? Patrick Brusnahan reports

he WRBR is one of the financial sector’s lifestyle’. The report said: “Accustomed to available in a branch. largest customer experience surveys instant access and seamless transactions in The report states that the Internet has with this year’s report including over most aspects of their social and professional becoming the most-favoured channel by cus- 16,000 respondents across 32 countries. lives, Gen Y brings very high expectations to tomers in all regions. All the regions had two- T their banking interactions.” The 2015 report honed in on customer expe- thirds, or close to, of their customers utilising rience’s lack of improvement, competitive Another finding was that consumers were banking websites at least weekly. threats from outside the banks and the effect moving away from neutral experiences to In addition, the popularity of mobile rose poor middle- and back-offices are having on either positive or negative ones. In nearly in every region. Latin America, North Ameri- the overall customer experience. every region, the percentage of custom - ca, and Central Europe recorded double digit ers with positive experiences grew. Central rises in popularity over the last year. Across The consumer experience has stagnated Europe had the biggest increase, spiking from most regions, mobile usage is at approximate- According to the report, banks’ efforts to pro- 38.2% to 54.7%, bolstered by sizable increas- ly one-third of customers accessing it at least vide better services are not meeting customers’ es in Turkey and Russia, increases of 24.4% weekly. expectations. This has led to a drop in the and 23.6% respectively. Latin America was The significant rises in mobile and Internet Customer Experience Index (CEI), from 73.5 the next-highest jump in positive experience, usage, however, failed to have a significant in 2013 to 72.7 in 2015. going from 43.2% to 52.7%. impact on the branch. On the other hand, The most dramatic decreases in CEI were With Turkey in particular, the increase branch usage had a humble rise in North in the Middle East and Africa (with a current in positive sentiment was attributed to the America and Europe over the last year while average CEI of under 70 from 73.9 in 2013), upgrading of core systems and significant only decreasing slightly in Latin America and followed by North America (an average of efforts made in the back-offices. barely at all in Asia Pacific. 77.7, down from 80.1 in 2013). The United North America was the only region to Despite customers adapting to using the Arab Emirates was the country that saw the not follow this trend as positive experiences Internet and/or mobile devices to check largest drop in CEI (8.3 points) compared to declined from 56.4% to 55.6%. Capgemini’s their balances, the branch is still very much 2013. The other three were in Europe, with report believes that this could be down to the channel to handle any other matter. The Norway dropping 5.9 points, followed by the ‘return on investments in the front-office complexity of the product does not matter. Belgium and Germany, each with a decrease and digital channels are struggling to keep up 53.2% of customers said they would want to of five points. with evolving customer expectations.’ use the branch when applying for a simple Central Europe, partly due to large CEI Negative experiences are a different story. product; that amount being even higher than gains in Russia (71 to 75.8), Turkey (72.2 to Western Europe suffered from a substantial the 51.7% of customers who said they would 76.1), and the Czech Republic (74 to 77.5) increase in negative sentiment, from 4.9% in want to use the branch for a more complex over the last two years, recorded the largest 2014 to 11.7% in 2015. Eight of the top ten product. increase in CEI. Spain was joint-top with countries with the highest increases in nega- This is very much in line with what bankers Russia in improving its CEI with a rise of 4.8 tive customer experience were within the wanted as 52.4% of bankers surveyed would points. Western Europe region. Five of them even prefer customers to use a branch to apply for Perhaps not surprisingly, across all regions posted double digit increases. Only Japan, advice-based products. However, 56.1% of the lowest customer experience levels came with an increase of 13.7% beat them in this them reported that they would prefer cus- from Generation Y customers, reflecting category. tomers to use the Internet for simple products. their generally higher expectations. In North This extreme level of negative experience Interestingly, no bankers wanted customers America, the CEI for Gen Ys was 72.2, com- throughout Western Europe means that, for to apply for products on social media, wheth- pared to 80.1 for customers of other ages the first time, the region has overtaken Asia er they were complicated or not. within the region. Another example is in Pacific in this aspect, which only has 9.1% 16.2% of respondents visited a bank Latin America where the CEI for Gen Ys was negative experience. branch at least weekly. This is actually a rise 70.8 while all other Latin Americans regis- from two years ago. tered a CEI of 77.2. Newer channels failing to beat branches The report stated: “In effect, the banking The smallest gap was in the Middle East As pressures increase on margin in the bank- industry’s great effort to minimise the use of and Africa where Gen Ys recorded a CEI of ing sector, institutions have looked towards expensive branches by replacing them with 67.8 points compared to 70.8 points for eve- low-cost digital channels to curb spending lower-cost channels still leaves work to be ryone else; a gap of only three points. and, possibly, replace the physical branch. done.” The report states that these high expecta- The WRBR suggests that many customers The next challenge, according to the tions are down to the ‘high importance of do not actually believe that the new offerings WRBR, is convincing customers that the digital technology to that demographics’ can offer the same level and breadth of service standard or service is just as good through

16 y May 2015 www.retailbankerinternational.com

RBI 713 May.indd 16 12/05/2015 10:31:13 Retail Banker International REPORT: WORLD RETAIL BANKING 2015

the Internet or a phone as it is in branch. While this influx of new options is worry- fortable with conducting their banking Profitability is another challenge as the ing, banks have been holding their ground through these fields. This is higher than the standard methods of keeping customers, against this onslaught. Most customers, 64.8% who think customers have high levels cross-selling, and references are quickly a large 77.1%, maintained their current of comfort at banks. becoming inefficient. account at their primary bank, but were not In every region, the number of customer as loyal when it came to other products. Only Investing in the back and middle likely to stay dropped and the number of cus- 62.1% had their credit card at their primary A key problem for banks, as stated by the tomers unlikely to stay increased. In the Asia bank; 59.6% their personal loans, and 52.5% report, is the lack of investment in middle- Pacific region, 12.1% of customers said they their mortgage. and back-office functions. were unlikely to stay at their bank, a 12.3% The report states that banks should ‘pay Customer experience was prominent rise from the previous year. In Latin America, particular attention to the vulnerable pay- in terms of investment in the front-office, 46% of customers said they were likely to ments area’. This is due to customers being but not elsewhere. As a result, banks have stay with their bank, but that is 9.8% less engaged with other banks and financial ser- claimed that digital maturity in middle- and than 2014. vices providers at a relationship level when back-offices is much lower. Once again, Gen Y customers were less they strayed from their primary bank. The Over the next three years, it is predicted satisfied than other groups and were the main exception was credit cards where that investments in middle- and back-office most likely to switch banks. The difference Internet and technology companies have cre- functions are actually set to decrease while was particularly apparent in North America, ated a sizable presence. the high level of investment at the front where only 47.3% of Gen Ys believed they Given the focus that giants such as Google increases. were likely to stay with their bank in the next and Apple have places on developing new This is fairly distressing as Capgemini’s six months, compared to 69.8% of others. customer-orientated payments products, this research found that the majority of customer The report said: “As the wealth an influ- is not particularly surprising. dissatisfaction actually came from back- ence of Gen Y customers increases, their These alternative entities seem to have offices. increased tendency to switch banks may have made greater progress in North America and However, improving these offices has some important implications for profitability.” Western Europe. 23.5% and 20.4% of credit roadblocks; the cost and the need for a focus However, this seems unlikely as the num- cards in North America and Western Europe on digitisation. ber of switches is still very low. In the twelve respectively were held by entities other than 92.6% of bank executive respondents months from 1 April 2014 to 31 March 2015, banks, compared to only 14.9% in Latin claimed that customer experience was the there were 1.14 million switches in the UK. America and Asia Pacific. main driver for front-office investment. While This was a 7% increase in the 1.06 million Non-traditional entities had an even great- these investments are important, it detracts switches in the same time period the year er share of the market when it came to more attention from investing in middle- and back- before. So the trend has yet to significantly complex products. 43.3% said they turned office processes aimed at improving the cus- show itself at this time. towards other entities for mortgages, despite tomer experience. Only 53.8% of bank exec- only 23.6% of bankers believing they had utives cited customer experience as a driver Competition from the outside done so. for middle-office investments and only 46.3% As customers become ever more dissatisfied Capgemini said: “As entities other than of respondents believed it to be a driver for with banks, they are turning towards alterna- primary banks continue to make inroads into back-office investment. This has led to stag- tives for their financial needs. the various lifecycle stages of acquiring finan- nation in their development with nearly 85% While banks still hold the majority of cial services products, banks cannot remain of them only having access to basic digital products across all regions, other bodies idle. With every incursion by a non-bank into capabilities. have made significant steps within the North the financial services sales process, banks run This is in direct contrast to the front-office, America and Western Europe markets. a higher risk of becoming disintermediated where 31.5% of them have advanced levels of Banks have acknowledged this threat, but from their customers.” digital maturity. the danger is much higher than what banks Banking executives are particularly wor- The report concluded: “With the increasing are seeing. The report believes that customers ried about competitors coming from the competition and changing customer behav- are more likely to hear, research, and apply Internet and technology firms. Capgemini’s iours and preferences, the banking industry for different banking services using non-tra- poll of banking executives found that 83.3% is at an inflection point, the threat of disinter- ditional avenues. of them viewed customers as already com- mediation is real and imminent.” < FinTech firms have started carving sig- nificant inroads into the banking sector with n BANKS’ ASSESSMENT OF CUSTOMER COMFORT IN BANKING WITH DIFFERENT ENTITIES (%), 2015 potential to disrupt the market. Internet and technology firms have established a strong Internet technology firms 83.3% presence in the credit card and payment Banks 64.8% worlds. Banks actually believe that custom- ers are more comfortable with Internet and Price/product-comparison websites 55.6% technology firms than they are with banks. Supermarkets/retailers/telcos/others 53.7% However, this threat is not expected to be fully-formed for 36 months. Other financial service companies 48.1% The threat is due to the agility and ability Consumer advice websites 47.2% to leverage technology, derive insights from Agents/brokers data, and develop simple and intuitive offer- 27.8% ings. This is strange as banks have a substan- tial amount of data themselves. Source: Capgemini

www.retailbankerinternational.com May 2015 y 17

RBI 713 May.indd 17 12/05/2015 10:31:13 NEWS: DIGEST Retail Banker International

STRATEGY cheque books, linking of multiple bulletin. leverage Finacle on the cloud and National Bank of Oman proposes debit cards to accounts, blocking He added: "We continue to help them reduce infrastructure to buy United Finance of debit or credit cards, update of strive to improve our product and technology management personal details and raise issues offerings, by launching new costs while expanding opera- National Bank of Oman has related to Secure Token. products as we have demon - tions rapidly. reportedly offered to purchase The new online banking ser- strated in 2014 with the launch The partnership will enable fellow domestic lender United vice also provides mobile top-up of the Business Current Account banks to design their journey Finance, challenging the lat- facility for Ooredoo and Oman- and the Retail Current Account. to the cloud with a variety of ter's potential merger with Bank tel services. These accounts have generated a deployment choices with options Nizwa. Bank Muscat AGM of Cards lot of interest amongst customers, to select Azure as a production United Finance, which agreed & eBanking Tariq Atiq said: who wish to gain high interest. environment or for development in principle to merge with Bank "The new service spells con - "We also saw an amazing and testing purposes. Nizwa in February this year, said venience, doing away with the response to our 'Balance Trans- The financial institutions will that the proposal will be consid- requirement of visiting the bank fer Offering' on Credit Cards, in also be able to leverage hybrid ered when its board meets next. for various transactions. which the customers can enjoy models to process peak loads The latest proposed deal with "Driven by the latest technolog- 0% interest for 6 months if they by utilising cloud bursting tech- National Bank of Oman would ical features and offering a wide transfer their outstanding bal- niques, while continuing to run require the approval of its direc- range of options, the enhanced ances on their existing credit routine operations on an in- tors, shareholders and the regula- online banking service presents a cards." house environment tors, United Finance added. unique facility from Bank Mus- Infosys Finacle senior vice According to Thomson Reu- cat that lets customers bank at M&A president and global head ters’ data, National Bank of convenience 'anywhere, any- Scotiabank acquires Citibank's Michael Reh said: "The adop- Oman has a market capitalisa- time'." retail operations in Peru tion of cloud in the banking sec- tion of $1.08bn that makes it the tor has been relatively slow due country's third largest bank by STRATEGY Scotiabank's subsidiary in Peru to rising concerns about security, that classification. Mashreq Bank planning 30% has acquired the retail and com- reliability and compliance. headcount increase in Egypt mercial banking operations of "Banks are seeking opportuni- DIGITAL Citibank in Peru. ties to flexibly design their cloud Bank Muscat launches augmented UAE-based Mashreq Bank is The acquisition involves taking deployment strategies so that online banking service planning to hire more staff, over Citibank's Peruvian opera- they can cater to the increasing amongst other initiatives, to tion which has eight branches load of transactions from digital Bank Muscat has launched expand its presence in Egypt's and serve over 130,000 retail natives, while reducing technol- enhanced online banking service retail banking market. and commercial banking cus- ogy management costs. for its retail and corporate cus- Mashreq Bank head of retail tomers. "Finacle on Azure will offer tomers. banking Pankaj Kundra told Scotiabank group head of significant flexibility to banks The new 24/7 offering will be Daily News Egypt: "Our retail international banking Dieter to design their cloud approach. available in both English and business plans to increase the Jentsch said: "This acquisi - With Azure running on a net- Arabic on the bank's online number of staff by 30% in 2015." tion aligns with our strategy of work of Microsoft-managed banking website, and will facili- The bank will also bring new increasing market share in credit datacenters across 19 regions tate fund transfers between own technology to the Egyptian mar- cards and personal loans while and Finacle's experience of deliv- accounts, to third party accounts ket including the CRM platform, deepening our relationships with ering solutions across 84 coun- in Bank Muscat, to other bank interactive platforms and screens customers in Peru. This transac- tries, banks across the globe can accounts in Oman, international in branches and personalised tion is consistent with the Bank's enjoy the benefits of this partner- transfers and speed transfer to IVR. focus on increasing scale in Peru, ship." India. "We plan to enhance our servic- Mexico, Colombia and Chile." The bank will provide online es by launching new products to Citi head of Peru Julio Figuer- DISTRIBUTION registration facility for retail cus- serve both retail as well as SME oa said: "Citi has been commit- TSB to invest £250m to improve tomers so that the registration customers. ted to Peru since 1920 and we digital offering can be done by customers them- "Some of the services include will continue investing and grow- selves without having to fill any a market defining credit card, ing our Corporate and Institu- British lender TSB has said that forms. consolidate statements, enhanc- tional Business in Peru." it will invest £250m ($379m) to The facility will enable access ing our Mashreq Gold proposi- improve its digital offering and to account details, balances and tion, speedy servicing for SME DIGITAL branch network, as part of its transaction statements relating transactions, etc. We also plan Infosys join forces with Microsoft growth strategy. to accounts, fixed deposits, loans to enhance our brand equity to offer Finacle on Azure The bank, which is currently and credit cards and will permit through online and digital chan- the subject of a £1.7bn takeover online bill payment for utility nel marketing strategy," Kundra Indian IT major Infosys has by Spain's Banco Sabadell, is also services and Bank Muscat credit was further quoted as saying by extended its partnership with planning to double its digital cards. the publication. Microsoft to offer its Finacle banking team by hiring 42 new Using the service, customers Mashreq Bank has already suite of digital banking solutions members of staff. will also be able to make stand- secured the approval of the Cen- on Microsoft Azure. As a part of the growth strat- ing orders for one-time and tral Bank of Egypt to open mini The offering will allow banks egy, TSB has introduced a local recurring payments, requests for branches, Kundra told the daily of all sizes across the globe to number f every branch, extended

18 y May 2015 www.retailbankerinternational.com

RBI 713 May.indd 18 12/05/2015 10:31:13 Retail Banker International NEWS: DIGEST

the opening hours for 375 of its the financial system. sulted key stakeholders and care- account, from anywhere, using branches with 328 branches fully evaluated different models. the Quick Balance feature on remaining open on a Saturday DIGITAL As a result of our strategy review, Apple Watch. in addition to refurbishing 323 Tencent and Bank of Beijing forge we are convinced that pursuing The Scotiabank Mobile Bank- branches. $1.6bn online banking tie-up a focused client-centric business ing Apple Watch app will be TSB's managing director of model is the right choice for us. available on the Apple Watch branch and business banking Bank of Beijing has entered into "Our course for the next five App Store from 24 April 2015. Peter Navin said: "Our new look a strategic cooperation agree- years is simple: we are focusing Scotiabank vice president, self- branch design combines person- ment with Chinese internet firm to deliver value. We are confident service customer experience Jeff al service with new technology, Tencent Holdings. that, by 2020, Deutsche Bank Marshall said: "We are delighted which is just part of our commit- Under the agreement, BoB will be better capitalised and less to now make this popular app ment to bring better banking to will extend a sum of CNY10bn leveraged; more cost-efficient; available for Apple Watch. Britain. ($1.6bn) credit line to the Shen- well-funded; more value-creating "Mobile banking solutions "We've been watching the way zhen-based technology company for shareholders; and better gov- are the fastest growing banking customers use our branches and to help the firm better compete in erned, with stronger systems and channels at Scotiabank, and our where there are two branches online finance with rival Alibaba. controls." customers continue to view our close together, customers already The partnership will focus on iPhone app as a personal, safe have a clear preference to which the bank's Jingyitong initiative STRATEGY and convenient choice that pro- one they'd rather use. It's com- which will allow customers to HSBC may spin-off UK retail vides them with the information mon sense to close the 'spare' use chip-enabled cards at hospi- operations that they need while they are on branch and invest in the more tals to obtain medical care and the go." popular one to give a better ser- pay small medical fees via Ten- HSBC is considering spinning off vice and experience to our cus- cent's instant messaging mobile its UK retail bank in a deal worth DISTRIBUTION tomers." application WeChat. about £20bn ($30.4bn) as part Karnataka Bank inks ATM Tencent began trial operations of its plan to move away from outsourcing deal with FIS DISTRIBUTION of its WeBank service to issue the UK, according to a Sunday BBVA to close 285 branches, cut loans to individuals and small Times report. Karnataka Bank, a privately jobs in Catalonia and medium-sized businesses in A spinoff will advance propos- owned bank based in South January 2015. als for HSBC to move its head- West India, has signed a multi- Spanish banking group BBVA is The service is endorsed by the quarters out of the UK and will year ATM outsourcing agree- planning to close 285 branches government of China, which is result in recreation of Midland ment with FIS, a banking and and cut jobs in Catalonia, after gradually opening the banking Bank, which HSBC bought in payments technology firm, to the acquisition of the previously sector dominated by state-owned 1992. expand its transaction banking nationally-owned Catalunya giants. The decision results from a access to customers. Banc. UK law that requires lenders to Through the agreement, the The bank will lay off 1,700 STRATEGY separate their domestic retail bank will utilise FIS' "e-lobby" employees, which is 20% of the Deutsche Bank to dispose of operations from the rest of their services to extend its retail bank- local workforce including Cata- retail unit Postbank in new business by 2019. ing access to customers, 24 hours lunya Banc's staff as a part of a restructuring The bank has said earlier that a day, and seven days a week. restructuring plan, BBVA CEO Deutsche Bank has revealed it is reviewing whether to move FIS' e-lobby services will pro- Angel Cano was quoted as say- plans to spin off its Postbank its headquarters out of the UK vide bank customers with trans- ing. retail chain in Germany as part because of rising tax and regula- action access beyond branch According to the new plan, of a restructuring designed to tory costs. time zones in a digital or self-ser- 150 branches from Catalunya boost profitability. HSBC chairman Douglas Flint vice form, covering many of the Banc will be closed. As part of the restructuring, the has been under pressure from transactions most common in a BBVA, which has 639 branch- bank will also reduce assets in its investors to consider leaving Brit- full-service branch. es of its own in Catalonia, has investment bank while strength- ain, where a bank levy cost the The service will allow custom- been working on integrating the ening its transaction banking, firm £750m in 2014. ers to make deposits, withdraw- 728 branches from the recently- asset and wealth management, als, cheque remittance and other purchased entity. and own retail activities. TECHNOLOGY frequent transactions, including The acquisition of the Catalan The bank will substantially Scotiabank to bring its mobile statement request, pin change bank will bring positive figures invest in digital technologies banking to Apple Watch and passbook printing from a to the group's results by 2016 with additional investment of up nearby e-lobby site. and, by 2018, it will generate to €1bn over the next three to The Bank of Nova Scotia, com- FIS executive vice president some €300m ($334m) of BBVA's five years in digitisation to cap- monly known as Scotiabank, of global financial institutions total annual profits, said Cano ture new revenue opportunities is preparing to launch the Raja Gopalakrishnan said: while presenting the first quarter through remote advisory chan- Scotiabank Mobile Banking app "Outsourcing its e-banking ser- results for 2015. nels and automated or digitised on the Apple Watch. vices to FIS allowed Karnataka Catalunya Banc, which was processes. The app will enable the Cana- Bank to reinvent the way it inter- acquired in July 2014, is BBVA's Deutsche Bank co-CEOs Jür- dian lender's customers to check acts with customers, benefiting second acquisition in Spain, and gen Fitschen and Anshu Jain said: their bank balance and up to five customers by expanding service in Catalonia in particular, arising "Our strategy review process was of their most recent transactions while maintaining an eye on the from its restructuring process of thorough and rigorous. We con- from their preferred Scotiabank bottom line."<

www.retailbankerinternational.com May 2015 y 19

RBI 713 May.indd 19 12/05/2015 10:31:14 COMMENT: HOWARD BERG Retail Banker International

Embracing technology Editor: Douglas Blakey Digital advancement means consumers today connect with what they Tel: +44 (0)207 406 6523 want, where and when they want, and they increasingly expect instant Email: [email protected] Senior Reporter: Anna Milne gratification. Gemalto’sHoward Berg comments on this trend Tel: +44 (0)207 406 6701 Email: [email protected] Reporter: Patrick Brusnahan Tel: +44 (0)207 406 6526 Email: [email protected] Asia Editorial: Sruti Rao Email: [email protected] s consumer expectations evolve, the quickly and easily with the flexibility to use Group Publisher: Ameet Phadnis relationship between customers their preferred payment method, whether Tel: +44 (0)207 406 6561 and their banks alters. Following that is a credit or debit card, smartphone Email: [email protected] the global economic crisis of 2008, or other another payment device such as Sub-editors: Kev Walsh, Nick Midgley A wristbands or stickers. The ability of a bank banks fell out of favour with customers. In Director of Events: Ray Giddings 2015, truly connecting with customers and to issue payment credentials quickly across Tel: +44 (0)203 096 2585 making financial transactions more conveni- multiple devices, online and in proximity, is Email: [email protected] ent is still something FIs struggle with. of the utmost importance. Head of Subscriptions: Sharon Howley Tel: +44 (0)203 096 2636 According to KPMG’s April 2015 bank New, all-encompassing payment meth- Email: [email protected] benchmarking report, customer relation- ods offer an attractive value proposition for Sales Executive: Alexander Koidis ships and trust are major profit drivers, and banks, but they should work with retailers Tel: +44 (0)203 096 2575 in order for banks to increase profitability, to ensure these can be delivered conveniently Email: [email protected] customer engagement must be boosted. and securely to consumers. Customer Services: To boost customer engagement, banks will Tel: +44 (0)203 096 2636 or +44 (0)203 096 2622 Email: [email protected] need to adopt new technologies to support Retaining and growing the customer For more information on Timetric, visit our digital services delivery, and provide custom- relationship website at www.timetric.com. As a subscriber, ers with more value and better security. Once a customer has opened an account, the you are automatically entitled to online access Digital services reduce costs and increase onus then turns to retention – ensuring the to Retail Banker International. For more information, please telephone +44 (0)203 096 margin- driving profits, appeasing customers customer is not only happy with the service 2636 or email [email protected] making for a healthier bottom line. but also feels completely safe and secure in London Office their banking activities. Whether to do with 5th Floor, Modernising banking services communications, data exchanges or pay- Farringdon Place, Consumers are now treated to a wide range ments, security will always be a key issue for 20 Farringdon Road, London, EC1M 3AP of retail experiences (Amazon, Starbucks) consumers. One bad experience can turn a and they compare their experience with customer away for life. Asia Office 1 Finlayson Green, #09-01 banks to these. As a result, ensuring the confidentiality Singapore 049246 The retail industry has shown that tech- and integrity of customer data stored, trans- Tel: +65 6383 4688 nology exists to help banks enhance the cus- ferred or exchanged in the digital banking Fax: +65 6383 5433 [email protected] tomer experience and reduce overheads. As ecosystem is crucial. As traditional in-branch Email: Financial News Publishing Ltd, 2012 the digital landscape started to evolve, so did banking services lose ground to new online Registered in the UK No 6931627 consumers expectations, needs and habits. banking services, creating an increasing Unauthorised photocopying is illegal. The contents Retailers responded to customers evolving need to authenticate users online, the need of this publication, either in whole or part, may not be reproduced, stored in a data retrieval system needs, so it was clear to banks that this is a for security will only rise as customer data or transmitted by any form or means, electronic, lead they should follow, with an end goal of becomes more exposed to the dangers of the mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. For being able to actually lead the way in both online world. information on additional copies or syndicatedonline customer experience and innovation. Ultimately, banks still seem to be recov- access to this newsletter, please contact Customer The customer is king, regardless of wheth- ering from the global banking crisis, both Services. er they are new or longstanding and loyal. financially and in terms of their relationship Adopting a customer-centric approach to the with customers. However, by fixing the latter, design, offering and implementation of new they can address the former, and new tech- digital services is crucial. nologies are key to this. With each new customer offering, a new Digital banking transformation requires touch-point is created with the opportunity adapted processes and a cultural shift. Banks to further develop, or even redefine the exist- can’t change customer culture overnight, ing relationship. As a result, every element but they can start pushing them in the right DID YOU KNOW? of contact with the customer, from account direction. Banks have a responsibility to both Your subscription to this newsletter entitles you to access its five-year online archive. Go to www. acquisition to offering new banking services shareholders and customers, and by utilising retailbankerinternational.com must be highly scrutinised. innovative technology they can do more to Once the customer has opened a new service both. In the long run all parties will account, they will generally be payment- benefit – but only if the customer user experi- focused. They will want to make payments ence and security remain front of mind. <

20 y May 2015 www.retailbankerinternational.com

RBI 713 May.indd 20 12/05/2015 10:31:14 Delivering innovative mobile & online financial services solutions to organisations that need to provide secure access

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