The Future Role of the “Bank Store” and its Interconnectivity with Other Channels Tony Emerson, Microsoft Banking Director - EMEA Presenting on behalf of: John Kirkbright Chief Executive K-Strat International Senior Retail Banking Adviser to EFMA Chairman EFMA Banking Advisory Council Lisbon. May 20,2008 Background to EFMA Banking Advisory Council EFMA Banking Advisory Council established in 2005 with the support of Microsoft Senior Executives from leading European Banks meeting 4 times a year to discuss trends and create a blueprint for future financial services delivery Members include ABN Amro, Millenium BCP, Unicredit, LloydsTSB, Caja Madrid, Citibank, BNP Paribas, Nordea, Fortis, Rabobank, Bankinter, Erste Bank etc First report on the Future of Multi-channel Delivery published in 2006 The Future of Multi- Channel Delivery 2006 Report Conclusions Need for a much more customer centric approach to financial services Move towards providing a truly integrated channel and customer experience - progress has been slow to date Process excellence will be an increasing requirement to provide the superior customer experience Desire to provide a simpler set of product and service propositions Bankers admit to not using technology and CRM systems to maximum effect Matrix management of product, channel and customer has proved difficult – need a simpler model Developing the right people skills and support is an increasing problem Channels – some key facts In most retail banks distribution accounts for 70% or more of the total costs of the bank New branches need to become profitable much quicker – the norm for many banks has been 3-5 years – best practice is now 18 months In the past twenty years the number of bank branches in the USA has almost doubled and in Western Europe it has increased by a third Sales – Some key facts “A resounding vote for the Branch” Leading Worldwide Retail Bank – “80% of new sales are to existing customers “ “70% of all our profitable customers visit the branch at least once a week” 80%- 90% of financial product sales still come through branches Most banks sell less than 10% of their product sales through non- branch channels Branches are seen by many as the “ cornerstone of delivering financial service products” Quote from Chief Executive of Leading European Bank “The available potential in the retail banking business segment will only be successfully exploited in the long run if a more integrated customer approach is combined with better and intelligent distribution channel integration” People and Management Issues Branch staff quality is a key determinant of future success Pressure on staff to sell more but also spend more time with customers New skills required - recruiting for aptitude and attitude rather than traditional banking skills Need new types of staff with more interpersonal skills and customer care focus The increasing importance of the meeter/greeter or concierge role in the branch Devote more resource and time to staff training What bankers say about their People “The performance of the branch depends on the quality of the people working in them. You can have a marvellous technology system and physical lay-out, but at the end of the day the people are the most important thing. We need to give the branch staff better support tools to do a better job.” “Our branch sales advisers spend 30 per cent of their working day calling customers.” “We are currently finding it a challenge to find people with “Give me someone good in the right skills to customer service – I can teach work in our branches.” them to be a banker in 6 months Bank Staff Revolution –Key roles in Banks in need of Transformation Branch or Local Retail Outlet Manager Teller or Customer service representative in branch or call centre Relationship Manager or product sales representative Branch Manager Key challenges - Branch profit performance - Sales growth - Cost control - Manage compliance and regulation - Staff development and skills - Create a more welcoming attractive environment - Customer retention and acquisition - Provide leadership and strategy to achieve branch goals Teller or Customer Service Manager Key challenges: - Under pressure to serve more customers faster - Better understanding of individual customer needs - Meet compliance and regulatory needs - Better communication tools to serve customers better - Increasing need to spot sales opportunities for other staff to follow up on - Work more effectively with other channels to deliver an integrated customer experience - Front line in handling initial customer complaints - Simpler quicker processes to reduce delivery time and improve quality of service Sales representative or account manager Key challenges - Sell more product quicker and faster - Better identification of customer needs and specific sales opportunities - Quicker application and delivery process - Meet compliance and regulatory requirements - Develop good product knowledge of all existing and new products - Understand how to get the best use of personal skills and technology to achieve the above. - Better communication and marketing material to facilitate product sale Key issues for Advisory Council members The future role of the branch Creating a truly integrated overall customer experience Increasing the sales efficiency of all channels Distribution cost control The role of technology Recruiting and training the bank staff of the future Communicating with customers more effectively. Key Council member questions What products and services should a branch offer? How many different types of branch format do we need? How can we make sure we have the right staffing and people skills for each distribution channel? How can we make sure the right types of customers are coming in to our branches? How do we best communicate with our customers in the future? Future role and function of the branch differing views “I do not believe that “Any bank and any branches, as such are the relationship should be based future, but I believe the on trust. I do not think you people in the branches are.” need branches for that.” “The biggest challenge is “It is the people and functions redesigning the role of the you make available to branch and redesigning the customers that are essential” customer relationship.” Making Segmentation work at a national and local level Specialisation and segmentation The need for different branch formats in different micro-markets The investment and use of detailed micro-market analysis The importance of the right location for branch formats Learning from the experience of retailers. Segmentation “We can learn from the way “The main reasons for supermarkets operate on different customers choosing a scales and with different formats branch are influenced adapting their offering to the time by the branch format.” of the day and the specific market segments they are targeting.” “I can certainly see us “We are moving towards offering or promoting offering a different range of different products at products in different channels different times of the day.” and branches.” Future Look and Feel of the Branch “It is important to create an atmosphere in branches that attracts people.” “We will have to go through a couple of branch designs before we find the right one.” “Branch opening hours are still a really big issue – we need to be a lot more flexible on this issue.” “Over a third of our branches already have no teller function (cashless) and we expect that to increase considerably over the next few years.” Branch closures “We closed perhaps 10 per cent of our branch network due to the development of the Internet. “It is possible to close branches [without any adverse effect].” “There is a natural equilibrium you have to reach in each local market with regard to density of branch coverage per head of population.” “Having the right location for the branch is absolutely essential.” Creating Branch Traffic “Artificially creating a lot of “We invite customers in branch traffic is not going to be to our branches for a very helpful when they are not meeting at least once a the right type of customers year.” visiting the branch.” “We invite 30 per cent of our customers to come regularly to branches.” Creating Branch Traffic “We need to encourage customers to come in to the branch and talk to us.” “Our main problem is branch traffic generation.” “The people we want are not coming to the branch.” New Branch Concept Case Studies ABN Amro Deutsche Bank Rabobank Unicredit BNP Paribas ABN Amro Case Study Teleportal Branch “ high tech bank” concept Interactive technology No need for staff in the branch Can perform most of the functions of a traditional branch Customer interacts with a camera and a 3D like projection screen – near live meeting experience created – very positive response from customers so far ABN Amro vision is that within 5 years the internet will be the primary channel for customers ABN Amro Teleportal Branch ABN Amro Teleportal Branch Rabobank Case Study New customer experience retail stores being created by Rabobank with learnings from major retailers Fresh modern in store image focusing on the quality of peoples lives Use of video walls for broadcasting and LCD touch screens for narrowcasting. Use of video/photomail so customers can send messages by internet Rabobank Use of LCD interactive technology in new look branch Deutsche Bank Case Study New Q110 concept creates new type of branch experience more akin to visiting