Developing channels to enhance the customer experience

A report by the Efma Retail Banking Advisory Council, in partnership with Microsoft

A New Landscape for Retail BankingDeveloping channels to enhance the customer experience

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Efma and Microsoft are pleased to present the sixth edition of the Retail Banking Advisory Council report. Since its formation by Efma and Microsoft in 2005, the Retail Banking Advisory Council has aimed to establish an industry blueprint for the future of retail banking delivery, particularly in the area of channel management. The Council, which consists of senior executives from major banks across Europe, plays a pivotal role in providing guidance and support for the European banking industry.

Retail banking continues to go through a time of upheaval, influenced by the aftermath of the economic crisis, the development of new regulations and the challenges and opportunities resulting from advances in technology. In the midst of this, the Retail Banking Advisory Council continues to act as a focal point for the exchange of new ideas, debate on future strategies, and sharing of best practices.

In its role as a forum for encouraging, challenging and supporting retail banks, the Council has covered a wide range of topics. In previous years, these have included an emphasis on

multi-channel management; the future of multi-channel delivery; the changing role of the branch; and the use of customer intelligence in developing a new model for advising customers. The most recent series of Council discussions, outlined in this report, has focused on developing channels to enhance the customer experience. This has included the three main areas:

• The development and integration of channels. This includes the latest trends in alternative delivery channels and technologies, including mobile banking, ATMs and social media. There have been further discussions on changes in the function and format of branches

• The enhancement and measurement of the customer experience. The latest channel developments form part of a critical and continuing focus by retail banks: the need to drive (and measure) further enhancements in customer experience

• The transformation and refinement of the sales process. Customer experience is affected significantly by the sales process, and in its turn, affects the success of that sales. How can both aspects be transformed and improved?

The Efma-Microsoft Retail Banking Advisory Council

Contents Introduction

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Director’s summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

The development and integration of channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Multi-channel strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Branches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Digital banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Mobile banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Call centres . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Other developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

New technology: driving towards customer centricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

The enhancement and measurement of the customer experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

The transformation and refinement of the sales process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Case studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

BNP Paribas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Deutsche Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Isbank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

A New Landscape for Retail Banking

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Executive summaryHans van der Horst, Managing Director Retail Branch Banking, ING Group and Retail Banking Advisory Council Chairman

Over the last year, the financial services industry has continued to face many challenges. Though some European countries are showing signs of an economic recovery, others are still struggling. One of the exceptions seems to be Turkey. The Council has therefore taken a close look at activities and strategies in that country, as you will see in this report.

This year, the meetings of the Retail Banking Advisory Council have explored developments in the different channels; enhancements to the customer experience; and ways of driving sales productivity.

In relation to channels, we have again been looking at the perennial issue of the branch and its future role. This year, we have highlighted recent developments such as the concept store and the flagship branch. We have also been focusing on non-branch distribution and the latest advances in the digital space. Meanwhile, mobile banking (with an emphasis on new mobile applications) has really started to take off across Europe. There is enormous interest in social networks and in how these can be integrated into other channels. This will affect the ways in which customers interact with banks in the future.

An increasing number of banks are now migrating from a product-centric to a customer-centric approach. The focus is still on a multi-channel strategy, with customer experience the primary area of concern for most banks. A key issue facing financial institutions is the importance of providing a seamless and consistent customer service across all channels.

Banks need to ensure that they maintain the right approach to sales and service. There are also potential benefits that could be derived from looking at ways of driving sales in some of the non-branch channels.

With all the changes taking place in the financial sector, how will retail banks respond? In the past, financial institutions have been known for their often slow and cautious reactions to any changes. Inevitably, it is an industry where caution is often viewed as a virtue. However, the pace of change is now faster than ever before and banks risk being left behind if they fail to embrace and adapt to the latest trends.

Didem Dincer Baser Head of Retail Banking, Garanti Bank

Anubrata Biswas Head of Retail and Private Banking, ICICI Bank UK

Antonio Braghò Head of Direct Channels, Intesa Sanpaolo

Markus Burret Head of Strategy and Business Model Banking Center International, Allianz Deutschland

Enrico Conti Head of Change Management, BNP Paribas

Bertrand De Lachapelle Directeur Délégué de la direction commerciale et marketing de la banque de détail en France, Société Générale

Steven de Meyer General Manager Retail Sales, ING Belgium

Sven Eggefalk Head of Sales and Development, SEB

Carlo Giugovaz Head of Multichannel Direct Bank, Retail Area, UniCredit Group

Tobias Grieß Global Head Mass Market, Retail Marketing & Segments, HypoVereinsbank – UniCredit Bank

Recep Haki Head of Retail Banking Sales and Distribution Division, Isbank

Anne Kyhl Hauskou First Vice President, Nykredit

Graeme Hughes Head of Retail Operations, Nationwide Building Society

Mehmet Kırca Retail Banking Marketing Group Manager, DenizBank

Rainald Kirchberg Managing Director Sales Network Management, Deutsche Bank

Graham Lindsay Managing Director Community Banking, Lloyds Banking Group

Paolo Lombardi Executive Officer, Deputy Head Commercial Department, Monte dei Paschi di Siena

Eric Mackor Formula Manager, ABN AMRO Group

Alexey Marey Head of Retail Business, Member of the Executive Board, Alfa Bank Russia

Jorge Martínez-Arroyo Lopez Head of Brand Customer Experience, Santander

Jaroslaw Mastalerz Member of the Board, Head of Retail Banking, BRE Bank

Gökhan Mendi Deputy CEO, Retail and Private Banking Group, Türk Ekonomi Bankası

Eskil Myrmo Regional Manager, DnB NOR

Joep Paemen Business Development Mobile Financial Services, BNP Paribas Fortis

Margot Pammer Head of Group Business Development Privates & CRM, Erste Group Bank

Ian Park Acting Chief Executive Officer, ASB Bank

Narciso Perales Dominique Head of Business Development, Bankinter

Steve Reid Director, Retail, National Australia Group Europe

Theo-Jan Renkema Manager Architectuur, Directoraat Groep ICT, Rabobank

Juan Carlos Reyes García-AdámezManaging Director of Retail Marketing, Caja Madrid

Giovanni Rossi Head of Branch Network, CheBanca!

Patrik Rylander Manager Development Projects Online & Mobile Banking, Swedbank

Jacques Sainctavit Head of Group Strategic Analysis, Crédit Agricole

Pedro Sousa Cardoso Head of Direct Banking, Emirates NBD

Rui Manuel Teixeira Head of the Marketing Department, Millennium BCP

Claes Tell Marketing Director, Nordea Bank

Hans van der Horst Managing Director Retail Branch Banking, ING Group

Robert Wagner Managing Director, Head Advisory and Sales, Credit Suisse

Reto Wangler Head of Marketing and Distribution, UBS

Patrick Wolrige Gordon Business Development Director, Aviva

Efma and Microsoft would like to thank the following Retail Banking Advisory Council members for their participation in this report:


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Director’s summaryJohn Kirkbright, Retail Banking Advisory Council Director

Channels are changing. Many new channels have arrived in the last 20 years and the speed of adoption of these channels is increasing rapidly. There is now more contact, there are more services and there are more sales through these different channels (leading to more profits). Increasingly, an effective multi-channel strategy needs to be centred on customer experience and high levels of service.

There are various strategies in play. One solution is based around an industrial channel model, which will enable knowledge collected from anywhere in the world to be integrated quickly. This information can then be made available to different parts of the bank throughout the world. The starting point for this model is an optimised contact strategy; this needs to be both reactive and proactive. Underlying everything is the need for a customer-centric model, as the channels used can change.

An important aspect for any strategy is the number and quality of customer contacts that take place. Channels can support each other in this area to some extent: for instance, relationship manager meetings can be scheduled by the contact centre. A Retail Banking Advisory Council participant commented that relationship managers have many sources of stress, so the more easily they can plan ahead, the better. The contact centre can effectively become the relationship manager’s personal assistant.

In some countries, such as France, Belgium and Italy, banks tend to have a stronger central ownership of the multi-channel strategy, which ultimately rests with the CEO. It is no longer an issue of the product silos involved. One principle is that any customer has to be assigned to a portfolio. The portfolio will be assigned to a relationship manager, a remote advisor or a pool of advisors. Beyond that, responsibility for the customer lies with the bank.

A few banks have a model that aims to allow customers to decide which channel they use, enabling them to move easily from one to another. However, many banks are unable to provide this capability yet. A bank that has this type of model can use different levers to point customers to the right channel; the most effective of these is price.

A bank’s strategy will also depend partly upon the relative importance it gives to different channels. For instance, some believe branches are most important, because of the emphasis on customer contact, while others are trying to make the online relationship stronger and reduce their dependence on branches. The choice of strategy will also be driven by the national and cultural characteristics of individual markets.

Channel similarities and differencesBanks obviously need to prioritise channels that are most relevant to customers. But how should they do this? Do they choose the channels that the customers prefer or the ones that save the bank the most money?

Several Council members claimed that human contact is perhaps ten to twenty times more powerful than the use of direct channels. The results are higher satisfaction, loyalty and advocacy. Generally speaking, customers who have seen their relationship manager in the last three months are three times more satisfied than those who haven’t done so for over a year. Interactions are very important, but banks have to be selective: the profit pool in Europe isn’t as great as it used to be.

Customers also want seamless and consistent delivery through all channels, along with the ability to start a process in one channel and perhaps complete it in another. Consistency is very important: they want channels to have the

The development and integration of channels

Multi-channel strategiesThe Efma Retail Banking Advisory Council continues to play an important role in providing senior banking executives with the opportunity to discuss and respond to the major changes taking place in the retail banking industry. Several key features have dominated our discussions and debates during the latest series of meetings. I believe the most important issues currently facing Council members include:

• The accelerating rate of change in European retail banking

• The impact of regulation and compliance• The need to develop an integrated customer

experience• The impact of social media• New developments in mobile banking • The future role of the branch and how to

integrate successfully with other channels• Managing customer relationships remotely.

The main dilemma for banks is how to cope with the pressure for change and increasing customer demands whilst meeting profit targets and expectations. Banks in most European countries are still facing low levels of customer confidence and trust. There is an urgent need to focus on ensuring that customer service levels across all delivery channels are of a high standard.

Additionally, Council members face the challenge of building stronger customer relationships and selling an increasing number of products through all channels while simultaneously reducing cost (for example by moving more customers to non-branch channels). A number of banks have made considerable progress in this area. However, in the future we may see considerable differences between banks in the way they go about achieving the highest levels of integrated customer experience across delivery channels. Those that have already made the necessary investment in both technology and processes should be able to gain competitive advantage over the next few years as customers start to notice such differences in how banks operate.

Looking to the future, there are two key areas

I believe our Council members will need to master if they are to be successful in the channel management space.

Firstly, social media is forcing banks to look differently at their relationship with customers. Unfortunately, in too many cases, senior executives have struggled to move away from the ‘command and control’ style of management and attitude. They seem unable to move successfully towards the more customer-centric model (with customer dialogue, shared knowledge and information) that some new entrant banks are adopting. In future meetings, the Council will look more closely at how banks can have a successful dialogue with customers through different channels.

Secondly is the issue of managing relationships with customers through direct channels. Most banks are very concerned about how they can maintain close relationships with customers without face-to-face contact in branches. As very few customers are likely to be regular branch users in the future, it is imperative that banks significantly improve their ability to manage customers remotely. Some seem to be very good at doing this, so I’m sure that our future meetings will focus on learning from different best practices, not only from our own industry but also from elsewhere.


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same appearance, the same identity, the same method of working and the same language. Meanwhile, everything needs to be ‘instant’.

However, in reality, the ways in which channels actually work are very different. For example, if customers can conduct a transfer using their mobile phone, they expect it to happen immediately. But in the branch, they are used to waiting in a queue. The approach may be the same but the experience is very different.

Changes in multi-channel distributionSome of the changes that are taking place in multi-channel distribution can be seen from a progressive bank in Turkey. Its channels include ATMs, phone banking, Internet, kiosk, SMS and smart TV banking. It also has application-based mobile banking services. These all bring challenges in terms of complexity, as each channel has its own rules, processes and marketing. Therefore, it isn’t easy to introduce a new channel into the mix.

In terms of alternative delivery channels, non-branch channels were responsible for 70 per cent of all of the bank’s transactions in 2010. Of these, the Internet accounts for 36 per cent and ATMs

for 29 per cent of transactions. In the mid-term, the bank believes that transactions performed by branches could fall to around 20 per cent. However, if the proportion of transactions taking place through ATMs continues to increase, they will become less profitable. This highlights the challenge of making ATMs into sales channels as well. At the moment, the bank is losing opportunities to cross-sell and upsell.

So, why has the bank developed multiple channels? Approximately 36 per cent of the adult population has a degree. For the young generation, the adoption of new technology is much easier. In 2003, there were about 19,000 fixed broadband subscribers in Turkey; there are now over 8.5 million. Turkey has the fastest growing subscriber base in Europe.

Turkey also has 85 per cent mobile phone penetration. Almost 30 per cent of subscribers use 3G, which opens up new opportunities for banks. New regulations forced banks to establish their Internet banking or non-branch banking facilities in a two-factor authentication bank security system. This has increased customers’ perceptions of security, which in turn encourages Internet or mobile banking usage.

From a financial perspective, the bank followed the multi-channel route due to cost containment and decreasing margins. Turkish society has the lowest level of household indebtedness in Europe, which highlights the potential within this market.

The changing role of different channelsIf the direct-only banking model employed by some banks proves to be successful, will banks need branches any more? Branches are likely to remain a major channel, but with a new identity and new functionality. They are a major channel for customer acquisition; they play an important role in converting sales leads; and they are the preferred channel for advice. The threats to branches arise from the expense of running them.

There is also a risk of cannibalisation of channels. In the future, branches must be in synergy with other delivery channels. They need new roles and new formats. For example, this might include small branches (with less than ten staff) that open five days a week. The strategy for small branches could include increasing automation, through the use of smart ATMs, to reduce the need for tellers.

Tellers can then be converted into sellers to increase the bank’s sales capability. One Council member has discovered that directing leads through alternative delivery channels to branches, to be converted into sales, is more efficient than just sending them directly to the branches. In the future, banks will need to provide advisory services, even in small branches – but this must be done cost-effectively, with the help of technology.

A Council member suggested that in terms of the roles of different channels, the branch is still the main channel for customer acquisition. For sales, the Internet and the branch have huge potential. For lead generation, the Internet and ATMs are key. For service, the Internet, ATMs and call centres are the primary channels. The branch has a residual role in this area. For customer retention, the branch still has a key role to play.

In relation to alternative delivery channels, service quality is the engine of re-purchasing. If banks want customers to re-purchase through their alternative channels, they need to ensure the service quality

of those channels. For an offer the customer can’t refuse, the channel issues that matter are relevance; simplicity; clarity; security; and pricing. Pricing is one way of compensating for the lack of a face-to-face relationship. There can be two different models: one product, one price; or multi-channel pricing (which brings other challenges).

Under the spotlight: alternative delivery channelsCouncil members agreed the biggest problem in a multi-channel approach is the orchestration of the alternative delivery channels and the branch network. The strategy adopted will depend on the country involved. One Council member has a high (and increasing) number of sales through direct channels, but started to realise that being aggressive on alternative channels in terms of sales also leads to increases in customer complaints. One reason is that customers don’t fully understand what they’re buying. There is a trade-off between high quality service through the branches and high quality sales (for this bank, unlike some European banks, customers don’t have to go into the branch to complete the sale).

The bank in question has dedicated channel marketing managers who are responsible for collaboration between the alternative delivery channels and the business units. The bank focuses on two main areas: channel migration and sales through the alternative channels. Both have a strategic importance. In relation to sales, the bank has just started to develop an integrated system of conducted campaigns, using a multi-channel approach. There are many ways of using this infrastructure but the main focus is on lead generation and sales, depending on the channels and the nature of the products.

WHAT THE COUNCIL SAID:

There has been a significant change in behaviour in the ways in which people use different channels.

The problem is to adapt any approach to the value and potential of the client.

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The Retail Banking Advisory Council was asked about the likely role of the branch over the next few years. One member commented that he could see a place for branches for the next generation but that they will diminish in number and footfall will decrease. He thought it would be difficult to make a strong business case for investing in branch networks.

Another Council member agreed that over the next five years, there will be less and less branch traffic and banks will focus on trying to reduce costs. A bank in the Netherlands said it is obliged to have a minimum of two staff in the branch and the cost of this is still too high. It is looking at new ways of working with other branches as well as the ‘shopping shop’ concept.

Council members agreed that, depending on the market, there is always room to optimise the branch structure in terms of the number of branches, their age and the type of service they provide. Banks are now looking at renewing the branch structure. Transactions are declining, so they need to provide advice instead. This might also affect the number of branches, say, in some small cities. Now is the ideal opportunity to look at which branches are really needed.

Another member said her bank had recently been through a merger and it now needed to realign the branch network footprint and optimise the format of branches. It has already given a facelift to over 250 branches. The aim is to provide a consistent experience in all branches and to develop a new branch concept and sales and service model.

Overall, branches remain the main way of attracting new customers for many banks. At Efma’s recent ‘Branch of the Future’ conference, one bank in France said it had been experimenting with opening branches in apartment blocks for affluent customers. This project is apparently working well.

The Retail Banking Advisory Council members were asked what people would be doing in

branches in five or ten years’ time. One person responded that, although they would be doing less, without a branch it would be hard to get new clients. Another said that the client profile isn’t likely to change overnight.

The branch can perhaps attract younger customers, but they won’t use it so much. Banks need to reinvent the branch by finding a less expensive way of exploiting its capabilities while minimising its costs and maximising its productivity. One problem is that a branch usually needs a staff of at least two, but in the smallest branches there just isn’t enough work for them.

A Council member suggested that the branch is like an acquisition tool and banks need to look at the cost per acquisition. In the future, the role of the branch will change as banks acquire younger, more technologically-aware customers. So, will a bank really need a network in ten years’ time in order to acquire customers?

With any kind of channel that a bank wants to develop, the requirements include a strategy, an infrastructure, the right people and a vision.

The concept branchOne channel innovation that has arrived in recent years is the concept branch or concept store.

Branches

This is used by some banks so they can explore customer needs and ways of meeting them more effectively. Once surveys have been conducted to discover customers’ priorities, the bank can test some of these out at the concept branch.For instance, these needs might include a more friendly bank atmosphere, with areas that are comfortable and accessible, as well as dedicated spaces, and a choice between help and autonomy. Some of these ideas can’t easily be explored within a traditional branch setting.

The concept branch can act as a lab that tests different ideas as well as promoting new technology and new features. It’s like a showroom, although it is still a real branch with real customers. Some of the specific ideas that can be explored include: self service areas for transactions that are open seven days a week; a more friendly and welcoming reception area; a lounge for relaxing and surfing the Internet; an exhibition area; a play area for children; special advisory areas; and a sales area (a banking ‘boutique’).

The bank can also try out ideas such as confidential discussions in specialist areas that retain an equal balance between the advisor and the customer (rather than the advisor sitting behind a desk). Other ideas include occasional workshops for customers on a wide range

of topics. The bank can also experiment with different branch colours, furniture and other features (such as interactive walls) and even enticing aromas.

A bank that has recently developed a concept branch held a competition to find the architect who would design it, as it can be very hard to find a good designer. The bank had six propositions and eventually selected an architect who had worked mainly for hotels and restaurants, but who had never before worked for a bank.

A Council member remarked that, despite all the new developments, sometimes the most difficult things to change are the bank’s employees. Some of them just aren’t suitable for this type of experiment!

Flagship branchesFlagship branches differ from concept stores as they are not usually a lab – they are there to reinforce brand identity. Very few banks seem to have a brand that is the same throughout the world. To achieve this goal, there needs to be an emphasis on consistency and common standards. Positioning the brand is something that is becoming more and more important but when questioned, only one bank represented in the Council has a flagship branch (even though more of these now seem to be appearing across Europe).


The use of call centres and branches has fallen.

I wonder if young people will ever be likely to go back to the branch?

Banking in the future might not be all about branches any more.

Instead of looking at the branch of the future, banks should be looking at the future of the branch!

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The digital banking revolution continues. However, there are still some challenges faced by different financial institutions. One issue relating to the continuing development of digital banking is that some bancassurance companies sell products through their bank partners that are relatively complicated compared with those customers are used to handling. They have therefore developed expertise in enabling these complex solutions to be sold in the branch network. It will be difficult to transfer this capability to digital networks. In addition, some of these products are highly regulated.

Other issues include the new European solvency

standards that will be introduced at the end of next year. The world hasn’t yet fully appreciated the challenge of operational change. Similarly, it can be difficult for banks to keep in time with the pace of change among consumers in relation to technology. This has an impact in terms of how banks service customers. For example, one Council member mentioned his bank put a ‘click to call’ service on its mobile banking offering. If a customer wanted to know more about a product, they could click on the highlighted number and get through to a bank employee. However, the take-up was minimal. When the bank asked its customers why they didn’t use the click-through service, the biggest response they received was: “I don’t want to talk to someone. I prefer a

Digital bankingtext-based service so that I can text a question.” So, customer behaviour is changing – and many of these changes are being influenced by technology.

The bank had created something it thought would be convenient for users, but it didn’t fit their behaviour. Banks therefore need to get the timing right when they are thinking of introducing new ideas: if it is too early, users won’t take to it. At other times, banks may be too slow in introducing new technologies, which can create dissatisfaction because their customers see competitors moving more rapidly.

Social mediaDigital channels had a very flat content model at the start: banks pushed something out and people read it. That soon progressed as banks realised that they could create active experiences, which create emotions, which in turn encourage the buying of products. Over the last two years, rich media has become the norm.

So, life is moving quickly and the way that people use media is also moving very quickly. Banks need to act now or they will lose customers – and new market entrants will move in. For example, Vodafone has already developed a payment service in Kenya.

In the social media space, banks face the challenge of either being an innovator – and if so, judging how innovative they should be – or of sitting back and waiting to see what happens. Social media is broad and means different things to different people. Council members were asked if any of their banks accept complaints through social media sites but none offer this facility.

In the US, large banks ensure they respond rapidly to comments on Twitter, as the consequences of not responding are greater than if they do react. Banks need to be aware of what is being said about them on social networks.

A few Council members have found that an effective way of using social media is to develop

an employee intranet. In contrast, a bank that introduced very draconian rules about social media found that this had a very negative effect. People said it was restricting their freedom of speech.

The concept behind social networks isn’t new. People are always telling their friends about good or bad experiences. A dynamic social media environment can create emotion. Going forward, banks should therefore think about how they can use this to their advantage.

ConnectivityPeople are more connected now than ever before, wherever they are. Everyone has easy access to information, so its power is dissipating. People only choose the information that interests them. This has created more power for consumers. Put simply, information is available on demand, and it’s everywhere.

In terms of retail purchases, consumers can now be more selective. They often start a purchase process online and then move to other channels. They may go into a physical shop and try something on and go home and purchase it online because it’s less expensive. Perhaps banks should make this process easier for customers. Council members see this as a critical issue.

However, most banks don’t have the ability to enable customers to switch easily from one channel to another. Banks need to look at issues from the customer’s point of view. They must not force customers to carry out activities through a certain channel – but must instead give them a choice.


Targeting customers through a digital relationship may also help banks cope with new legislation, which is being introduced rapidly and is changing the business model.

Social networking has come of age in the last two years.

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The degree of social acceptance of mobile computing differs greatly from country to country and depends also on the segments on which the bank is focusing.

Three years ago, one Council member’s bank analysed the customers that were logging on to its online channel. It discovered that 20,000 customers per week were using a mobile browser. None of its competitors had an offering in this space, so it started to explore the possibilities. One of the clear drivers was accessibility – being able to reach more customers. The bank asked customers why they would use mobile banking. The top two reasons were to check their balance and to look at recent transactions.

The bank subsequently launched mobile banking and also introduced a text banking service. The basic service is free and is mainly an information provider but also enables users to make transactions. Another Council member questioned the rationale behind this, as there is no obvious profit involved. The bank responded that profit will come in time but initially, the focus is on building scale. There has been a lot of support from the marketing team, including a large campaign that drove up both registration and usage. So far, growth in this channel has been both consistent and fast. Currently, about ten per cent of the customer base is using the mobile service and a large proportion of users are under 35 years old.

Although mobile isn’t currently a profitable channel, it is perhaps more important for customer retention than for sales. Ultimately, customers want to access their banks in the way that suits them. They want easy access to products, more transparency and more choice.

Monetising mobile banking is therefore an enormous challenge. But banks need to stop thinking in terms of channels and start thinking from the customer’s point of view. This will inevitably involve the use of different channels.

Banks are already looking at the next generation of mobile technology and the potential of emerging

markets. Some recent interesting developments include the availability of transfers to mobiles and mobile payments. Financial institutions are also exploring where and how mobile banking fits into the multi-channel equation.

Participants were asked if mobile banking should be seen as a separate channel. Several Council members agreed that mobile isn’t a separate channel – it is part of a multi-channel approach, but has its own dynamics.

New developmentsThere are a lot of new developments in the mobile banking area as well as new applications. The development of new and cheaper handsets will also give more people access to banking

Mobile banking

services. So, what applications should banks be introducing and how should they be integrating mobile channel developments into everything else they are doing? Will the speed of change be dictated by banks or by other players? The answers will differ depending on the area: mobile payments, mobile marketing, mobile relationship management and so on. Each of these areas has its own dynamics.

The critical issue underlying mobile banking is not so much the technology, but having a really deep understanding of the customers. Banks need to look at what customers are and are not doing (and what they are willing to pay for).

From Council discussions, it seems that mobile

payments will be the major growth area in Europe. Indeed, the mobile payment industry is also a very hot topic for telcos at the moment. One Council member from Turkey commented that his bank is already providing and advertising mobile payments. Cards are likely to disappear and mobile will be the primary payment vehicle.

One potential benefit is that once client are captured and is using both mobile and online banking, it will make it more difficult for them to switch banks, as they could lose a lot of their data. If customers have no direct interaction with the bank, their loyalty becomes thin.

The mobile channel and related aspects will keep growing. This is evident from the explosion in the adoption of tablets. The challenge for banks and mobile operators is to keep costs at a manageable level. However, there are huge variations in the channel. For instance, mobile banking is very different in Turkey from the UK and there is a vastly different regulatory landscape between the two countries.

Overall, it’s still unclear what the role of mobile banking will be in the future. Firstly, there is no real definition of mobile banking and there are different opinions about its role. In some countries in the short term, it may remain as a platform for accessing the Internet. However, as it fits the behaviour of the younger generation, in a few years’ time it could become one of the major channels.


Mobile payment is not tomorrow – it is today!

In terms of investment planning, a lot of money is going into Internet and mobile banking.

What is the next step and where will the new revenue streams come from? Is mobile banking just the latest idea or is there more to it than that?

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A Council member remarked that the golden age of call centres has passed. There are now challenges from Internet banking, which has much more functionality and is probably much better in terms of customer experience. However, potential roles for call centres include branch lead generation; Internet banking support; and improving the high-value client experience.

One problem is that the customer experience of a call centre environment is not usually very good. This could partly be a result of this area having been neglected and also because banks tend to inflict the same processes on a call centre transaction as for an online transaction. In many ways, the telephone can be quite an attractive compromise, if only the people on the end of the phone are empowered to be human.

A Council member said that his bank is seeing fewer people making contact via the telephone, but the bank is talking to more customers on outbound calls. Inbound calls tend to come when the customer has a problem.

Although the role of call centres has been questioned within the Council, one member bank is currently developing some specific initiatives involving call centres to try and move away from a reliance on the branch. The bank carried out some analysis and realised that many customers only visit branches for transactions. This is the opposite of what the bank wants. Customers are using the Internet while the contact centre is slowing down as the number of customer calls is falling. The bank therefore decided on a new strategy: it introduced new contact centre services that originate on the Internet. When customers enter the website, they can get in touch with the contact centre at a click. The discussion can start as an online chat and if necessary can be upgraded to a conversation.

The Internet customer is recognised by the contact centre and the contact centre operative knows which page the customer was viewing when they clicked through. The bank now intends to build on this new method of contact. It wants to

use the call centre as a virtual branch, to stimulate sales from online customers. On the Internet, it is developing a new way to buy and sign contracts, including personal loans, car insurance and home insurance. This will involve a digital signature and a digital certificate.

Council members were asked if the call centre could have a major sales role in the future. At the moment, it sometimes seems to be the forgotten channel. A Council member suggested that the key lies in segmentation and having specific staff to work with specific segments. He also noted that statistics from his bank show that 80 per cent of customers using the call centre are ‘heavy users’ who do so several times a week.

Call centresA bank described an innovative virtual teller system that was launched in 2009. This involves serving branch customers through a call centre agent or a teller who is based at a different location. The virtual teller uses a combination of different technologies, such as video, a teller cash recycler, a digital pen and a scanner. The teller cash recycler is an innovative device that is used for physical cash transactions in over half of the bank’s branches. It will accept bundles of banknotes. It enables tellers to spend more time on face-to-face interactions with customers.

The bank currently has 14 virtual tellers and eight call centre agents. In branches that have virtual tellers, 15 per cent of the total branch transactions are made this way. Customers are happy with the system because it’s very easy to use and the speed of processing and the waiting period are both perceived as good.

The system encourages customers to use alternative delivery channels, while retaining the face-to-face interaction they would enjoy from a real teller. It combines low cost with high-quality, with the ultimate goal of customer satisfaction.

A Council member argued that one alternative would be to have a cash recycling ATM (which can handle most transactions) and add a camera.

However, the ATM is still a machine. The functionality of a virtual teller exceeds that of an ATM. Many customers also still prefer to have someone to whom they can talk. The virtual teller isn’t a substitute for real tellers – it is complementary to them. It’s ideal in times of heavy traffic when the bank isn’t able to transfer a real teller to the branch.

Another innovation is finger vein technology, adopted by one progressive member bank following an increase in skimming at ATMs. The customer merely inserts a finger into a recess in the ATM and it recognises them without any need for a PIN. Most of the bank’s customers will use this system eventually. Ultimately, the finger vein technique is highly convenient (as no card is needed for withdrawing cash) and there are significant potential savings in terms of fraud. The bank reports the technology is secure, accurate, fast and easy to use.

Other developments


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The Retail Banking Advisory Council concurred that the role of technology in optimising the customer experience is to empower people. Banking will always be a people business, however technology enabled it may become.

The proliferation of new channels has presented major technology challenges. Council members agreed they must adapt quickly to survive and recognised the need for a new customer relationship model. With transactions and customer information generated across multiple touch points, the reliance on siloed processes and technology reduces sales productivity and leads to an inconsistent customer experience. For decades the industry has focused on lowering the cost per transaction – but to be competitive in today’s economy, banks need to move from a transaction-centric architecture to a customer-centric model. The key to growth is unlocking the power of data in a way that differentiates the customer experience through delivering world class customer service, and innovative products and services seamlessly across channels.

Transforming the online experienceAs customers have embraced online channels in all aspects of their lives, many banks are finding that their online presence is no longer good enough, as they seek to create an interactive, insightful experience that provides real value. Today, customers have complete control over the time, place and channel of interactions. Additionally, customers are demanding access to online banking through an increasing number of devices. These ‘self-directed customers’ want to choose how they interact online with their bank via PCs or mobile devices – and are also increasingly communicating with and about banks via social media.

From Council discussions it is clear that modernising the online experience and ensuring seamless connectivity across all channels will allow banks to differentiate on customer service and drive higher-margin business. Banks must transform their online

channels into robust sales platforms that deliver targeted sales and integrated lead generation, and provide advanced analytic capabilities. Additionally, the online channel must evolve from a service platform focused on transactions to a relationship-building platform – providing consistent mobile and browser experiences integrated into the fabric of social media.

Creating this experience, however, is not easy. Despite the general recognition that there is a bright future for online sales, member banks are often encumbered with legacy IT systems and complex organisational barriers that are preventing them from achieving real success online. Operational errors, lapses in internal controls, manual handoffs, continual workarounds and reprocessing efforts amount to billions of dollars in wasted performance for the banking industry. These hefty operational expenses add to an already high cost of maintaining fragmented legacy IT systems.

Banks must consolidate the supporting technology infrastructure to optimise customer service levels, cost efficiencies and brand preservation. This requires not only innovation in the user interface, but also breaking down the many data silos within the bank. Banks need to use scalable solutions to predict with a high degree of relevancy what their customers want by segment, and then cater to those needs. This requires a vision – and a technology architecture – that transcends customer relationship management, customer data, and the application layer. Banks require strong real-time business intelligence capabilities across multiple data sets, as well as listening capabilities into social media to capture issues and opportunities that may be emerging from existing customers as well as means to attract new ones. Such a solution must allow services to be present in the lives of customers at any time, in any place, on any device and across any channel.

Optimising sales opportunities in the branchWhile Council members agree that the branch

New technology: driving towards customer centricity

will continue to play a pivotal role developing relationships, building trust and providing advisory services, the question of how the branch can attract its most valuable customers through its doors was a topic for much debate. Simply refreshing the brand and refurbishing the branch network is not enough. For branches, success will be defined and measured by how effectively they use face-to-face interactions as sales opportunities.

Branch sales staff, product specialists and tellers all have roles to play in the customer relationship. The teller may identify a sales opportunity and bring in a sales advisor, who may then need remote communication with a product specialist. Banks are therefore looking at innovative, yet low cost, unified communications technology to enable front line staff to communicate with customers in the way they prefer, and in the way that is most appropriate to the stage of the sales cycle. Through this technology the whole range of communication capabilities, including e-mail, telephone, SMS, instant messaging and video conferencing can be integrated. This also has

a significant impact on real-time collaboration between advisors and product specialists, or legal expertise within the bank, required to complete a proposal or customer analysis. The success and profitability of multi-channel banking depends to a large extent on enabling these people to work together efficiently and productively.

Council members also discussed the importance of having the capability to accumulate and analyse customer data, to obtain insight into customer needs, and provide that insight to frontline staff. With the right technology, banks will be able to provide a better and more consistent level of customer service and will be able to manage their business with real-time analytics and performance management. Customer relationship management backed by strong business intelligence is critical to better serving customers and supporting growth opportunities. Such solutions should be fully integrated with the day-to-day work environment of frontline staff and make it easy to translate customer insight and centralised marketing campaigns into successful customer interactions.

However, in many cases the inability to move data between channels creates service inconsistency and makes it more costly to introduce and support new products. Banks are therefore recognising the need to implement a service-oriented architecture (SOA) to create an agile infrastructure where back-end systems can be exposed to new services and channels as they emerge or evolve. This approach results in lowering costs through speed of development and integration, and allows banks to ensure that IT investment in one channel is a potential investment in all channels.

Successful multi-channel banking lets customers take control of when, where and how they interact with the bank while enabling staff to maximise profitability through access to information and efficient communication with specialists across the organisation. The technology already exists to support evolving customer relationship models by improving interconnectivity between channels. A key challenge for banks is in getting better use from existing technology investments while applying it where it will bring the most customer benefit.


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The enhancement and measurement of customer experience

Most banks agree that customer experience will be one of the main battlegrounds in the fight for competitive advantage over the next few years.

A key challenge for many financial institutions is to exceed rather than just meet customer expectations. This means delivering excellent service every day and learning how to improve it still further. It involves measuring different elements, sharing experiences and learning from each other. Sales and customer service should go hand-in-hand.

Peppers and Rogers carried out a study with Efma in 2010. The aim was to study the awareness and the readiness of banks to design and deliver exceptional customer experiences. A third of the participating banks had a clear definition of customer experience which usually included operational excellence and reputation. Most banks are still in a transitional stage and have an informal characterisation of customer experience.

A member of the Retail Banking Advisory Council said that he hasn’t yet found a bank that is really strong in the area of customer experience and he is disturbed by the lack of progress there has been in this area – a comment echoed by many Council members.

A participant asked whether there is a correlation between organisations that have a customer experience function, and the customer experience itself. The Peppers and Rogers team has noticed a correlation but this hasn’t been measured. One thought was that in the past, a separate department wasn’t needed for customer experience.

In the banking sector, there seems to be a lag in creating a customer experience or service quality culture when compared with other industry sectors. There is perhaps a lack of awareness of what is important to the customer. For example, the bank may be operating well but customers may feel it doesn’t understand their needs and isn’t providing relevant offers.

Putting customers firstCouncil members were asked about the value of a customer charter. This can be a massive statement of commitment to a good customer experience. Unfortunately, it doesn’t always work well if customers feel that the bank is just paying lip service to it. The right services need to be in place first, otherwise customers will think that the bank isn’t really committed to its promises.

It’s not sufficient just to get frontline staff committed. Support staff must also be aligned with the customer promises. One solution is not to make the promises public but still to try and deliver them so that customers have a better experience. At the same time, banks need to remember that customer experience isn’t just about service quality – it also means understanding and responding to different customer habits and behaviour. Direct channels are providing new ways of doing this.

How does a bank decide which issues have the largest impact on the customer experience? Council members agreed that banks need to take the whole customer process apart so that they can really see the areas on which they should be focusing. They also need to consult their customers and carry out analyses to try and understand the relative impact of improving or not improving the customer journey.

One bank said that it has a Customer Experience Manager who reports to the CEO. The bank has identified two main drivers – loyalty and value (the values created in the bank). Banks don’t listen to the voice of the customer enough. All too often, the bank itself is the centre of focus rather than the customer.

A concern that was raised was that this means that banks need to get a vision of what they want to achieve and then alter their structure and processes so that they can deliver it. But most banks aren’t organised for this, because they are organised in silos.

Moments of truthIn relation to customer satisfaction, it is important for banks to be able to anticipate any ‘moments of truth’ – key points in the customer’s life or relationship with the bank. Different organisations need different moments of truth. Some will be reactive, some proactive. They can also be different for different segments. One member bank recognised about 1,200 different transactional or behavioural events. However, ultimately there are perhaps only about eight or nine real moments of truth in someone’s life.

Customer informationOne bank said that to improve customer experience, it tries to capture all of the customer life events that it can. Social networks provide a great opportunity in this area. The captured information can then be shared with the bank worldwide. All of the bank’s advisors are trained to listen to customers and have the tools needed to record what they say. Customers might often say something that

isn’t immediately useful for the business. However, advisors can capture the information in case it can be used to produce leads in the future.

A Council member asked what incentive someone in the branch has to collect information and feed it into the system. Different countries have different incentive models, but the common base is training employees and embedding this type of behaviour in the organisation. It depends on the bank acquiring intelligence through all of the channels, by having the right contacts and advisors of the right quality.

New retail banking strategiesDespite the difficult financial climate, new entrants continue to join the market and transform the customer experience. Members don’t necessarily see these new entrants as a great threat – but there could be a lot of useful lessons that established banks could learn in terms of new branch formats and strategies.


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One member bank totally revised its distribution strategy two years ago, by blending a direct banking approach with a more traditional branch network. This twofold approach was developed in response to the changing behaviour of customers. The number of branch and call centre contacts is falling while the Internet is now hugely important. As a consequence, the bank is investing strongly in both Internet development and a new branch network. However, it believes that clients shouldn’t be owned by the branch. It has sales and advice relating to standard products in all branches, with specialist sales forces (independent of the branch) for complex products.

The main benefit of the bank’s strategy is that the cost of serving customers is significantly lower than for banks that have a full relationship model. This could be important at a time when margins are likely to get even tighter.

One of the recent entrants in the market is adopting a similar approach, by focusing more on developing the customer’s relationship with the bank, while also paying attention to Internet capabilities. Even though some customers might not use the branch, they expect the bank to be interested in them.

A member suggested that retail banks are like travel agents. Customers used to go to travel agents to book their holidays but now go to the Internet. However, like branch customers, they will still visit the travel agent if they need extra help.

Monitoring and measuring customer satisfactionOne approach to monitoring customer satisfaction is to conduct regular client surveys as well as mystery shopping. For instance, one bank carries out four rounds of customer surveys for each of its branches. This enables it to compare each branch with others either nearby or elsewhere. It also has a checklist for the branches that is checked regularly. About a third of the Retail Banking Advisory Council members use the Net Promoter Score.

This led on to the question of how banks can measure customer experience. There are some measures of customer satisfaction although not

necessarily for customer experience – which isn’t the same thing.

As part of the customer satisfaction process, banks might ask customers how they feel about the bank. This isn’t particularly helpful, as it’s subjective. More satisfaction benchmarks are needed, and the key is granularity.

Digital relationshipsThere is little doubt that technology can help improve customer experience. One member bank explained how it wanted to build a new online banking platform, as it had two models – a public site and an Internet banking service. It knew very little about its customers from its public site but knew a lot about them from its Internet banking service – but couldn’t talk to them. It therefore decided to fuse the two approaches.

The bank adopted a fairly sophisticated approach that allowed it to present users with offers similar to those they had previously examined. This improved efficiency and relevance for customers. Ultimately, the bank has built a real-time sense and respond engine that enables it to take existing CRM data, combined with the context of what the customer is doing in real-time with the power of the content management system – all in one place. The result is that the bank can have much more relevant and more engaging communications. Effectively, this is what its employees have always done in the branch. It now provides a similar capability on the Internet.

The next stage is likely to be customisation rather than personalisation – with customers being able to shape their own websites. This will enable people to have control over their environment and to configure the service in the way they want it.

The impact of regulationsMany European banks are coping with a new regulatory environment and are making sure they have the growth needed to cope with new costs due to capital requirements. Regulation will drive up costs in the coming years and there will be pressure to reduce distribution costs, but banks can’t get away from their dependence on branches. This is a major dilemma as banks need to keep most branches going, even if they operate them differently.

Members were asked about the impact of the regulator in their countries. In Switzerland, banks have to redesign the relationship with the client. For example, a direct transfer is changing everything – even the price at which banks can sell a product or service. The regulations also affect the investment product advice that banks can give to customers. Overall, the costs and risks of compliance are all increasing.

The way sales forces are incentivised will change how the banks manage customer relationships. The cost of face-to-face interactions is likely to increase dramatically for all customers and all banks. The question will be whether banks should process items directly using new technology, or use human resources.

Another Council member commented on how the mortgage review will result in higher costs and less choice for consumers. Much of the regulatory intervention will be at total odds with political pressure for financial institutions to lend more. The banks are caught in the middle.

Looking forwardA participant asked if, in the future, there would be a big difference between state-owned banks, private shareholder banks, stakeholder banks and mutual banks in terms of the quality of service they provide. He commented that the customer service in his bank was far better twenty or thirty ago than it is now. At that time, it wasn’t about selling as many products as possible, it was about offering good service.

Delegates were asked if their banks aspired to be like another company or whether there is another company they admire that provides a unique customer experience. Suggestions included the IKEA model, Starbucks and companies such as Waitrose (which appeals to a distinct niche and doesn’t try to meet everyone’s needs at the same time).

So, how can banks relate channel management to customer experience? How can they enhance this area and improve sales productivity at the same time? It seems as if regulators will play a massive role as they push banks to show that they are looking at customer needs and are avoiding issues such as mis-selling.


It’s time for banks to move from an internal focus to an external focus.

One important aspect involves optimising the effectiveness and productivity of advisors.

Banks need to deliver a seamless service across all channels, which firstly involves getting the basics right. There are good rewards for those that succeed: customer trust is magnified by an excellent customer experience.

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manager pushes too much and this affects the motivation of customer representatives, the bank can tell from the benchmark for the sales volume for each product or customer segment.

Relationship managers are responsible for contacting each portfolio customer quarterly. Each manager is assigned targets relating to loans, total deposits, increasing the overall assets of the customer and increasing the overall profitability of his or her portfolio. Relationship managers need to prepare an action plan for each customer. At the end of each quarter, they have to give a presentation on the portfolio performance to Head Office.

The bank can also generate leads for each customer and make offerings. The relationship manager has the final decision on whether the timing is right to offer a specific product.

Following the transformation programme, the bank will be increasing branch size. It believes that branches will continue to be important in the near future but might change into more advisory services and sales showrooms. However, branches are still the main point for customer acquisition.

ProductsOne bank announced it is launching new products for retail markets, including insurance, custody services and the trading of securities. Its aim is that these extra products will have a minimum impact on the distribution system combined with increased opportunities for cross-selling. The bank intends to sell the products directly through all channels, but believes that branches are crucial for cross-selling and upselling more complex products. Council members agreed with this, as research shows that when customers visit branches more frequently, cross-selling levels are much higher. Another member commented that one of the new market entrants initially employed front line staff with a retail background – but soon changed its policy due to the subject matter expertise and experience required to cross-sell such complex products.


Wells Fargo has said it aims to sell eight products per retail customer. But where are these sales taking place? At the moment, 70 per cent of them are still being booked through the branch.

The biggest opportunity for sales is from potential customers. If you can have a proactive sales process, your efficiency will grow dramatically.

Under the spotlight: a transformation programmeOne member bank recently embarked upon a major programme of transformation to shift from a product-centric to a customer-centric model. To do so, it reviewed and refreshed the methodology it applies to its people, technology, organisation and processes – with a specific focus on the sales process, sales organisation and the methods used in branches.

The transformation started with segmentation, using assets under management and also behavioural segmentation. There are 25 regions in the country in which the bank is based, with each region being divided into four main units. Each business unit has a marketing division, a sales division and a product division. For each division within the branches, there are relationship managers and customer representatives.

Portfolio customers have relationship managers, each of whom has to have quarterly meetings with their customers. Non-portfolio customers have customer representatives. There are some ten million non-portfolio customers, most of whom are mass customers. The bank has 3,000 customer representatives in mixed branches.

The bank now has a team management model. It has redesigned its organisational structure and sales processes, and retrained all of the sales staff. It has also changed its technology platform and defined a new branch target-setting and reporting mechanism.

Another important aspect was a new customer contact policy for each branch and each member of the sales staff. The bank has created a planning methodology, with sales activities for each product. Planning and monitoring is performed through each layer at head office, regions and branches. Each branch prepares the sales plan with the targets it must reach and the activities it will carry out each quarter.

On top of the segmentation, the customer base was also divided to form a priority matrix. The prioritised segments were divided into balance builders and carers. The bank decided to concentrate on the balance builders; then, using customer insight, the base was divided to show customers with the most potential in the balance builder group.

Targets are now assigned to branches for each six month period. If a branch manager isn’t performing, he or she has to change the plan. Each week, the targets or activities can be changed based on the performance of personnel. Internal benchmarking is also used. If a branch

The transformation and refinement of the sales process

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Conclusions

It is remarkable how quickly the financial services sector changes. In the 2009 Retail Banking Advisory Council report, members agreed that the key development of recent years had been the growth of online banking. Although the Internet will obviously play an important role in banking in the future, the last 18 months have also seen a huge growth of interest in mobile banking. This now seems likely to be the channel of the future.

Meanwhile, there has also been an explosion in the use of social media, forcing banks to look differently at their customer relationships. Banks must pay special attention to this arena. Many banks still seem unable to move successfully towards a more customer-centric model – with customer dialogue, shared knowledge and information – that new entrant banks are adopting.

While banks have been grappling with such technology related developments, there are also regulatory changes on the horizon. These will affect financial institutions in different countries in different ways. In some regions, they could provide new opportunities for banks; in others they are more likely to be seen as a sometimes unnecessary and costly distraction.

Behind all of this activity is the pressing need to regain customers’ trust and loyalty. This means delivering higher and more consistent levels of service at all times. It will also often mean giving customers more choice at a time when budgets are strictly limited.

So, perhaps the key questions for the immediate future are:

• Can banks be faster, leaner and more relevant? • Can they tighten up their cost bases while also

improving customer experience? • Can they integrate new technologies and ideas

quickly, seamlessly and effectively?

Ultimately, they must. However, when it comes to the issue of the future health of the industry, the answer still hangs in the balance.

This is a difficult but also stimulating time for the financial sector. There are important opportunities to be grasped by those banks that are brave enough to take them – particularly in relation to the adoption of new technologies. Perhaps financial institutions everywhere should adopt the motto made famous by the British SAS: ‘Who Dares, Wins’.

Innovation is an important means of differentiation in the banking industry and is core to BNP Paribas’ strategy. Consequently, the French retail banking arm of BNP Paribas has been constantly innovating over the past year.

In December 2010, the bank opened the first BNP Paribas Concept Store – the ‘2 Opéra’ – based at Place de l’Opéra in Paris. This laboratory branch, the only one of its kind, offers BNP Paribas customers a new approach to banking relationships and will be used to pilot potential new technologies in the branch.

BNP Paribas decided to involve clients in the design process by carrying out surveys before finalising the format of the new concept store. Customers stated they wanted their banking advisors to be available, approachable and ready to listen. They also said they wanted to have genuine human contact and a ‘friendlier’ branch atmosphere with welcoming areas that are open to the public, in addition to areas dedicated to specific requirements. Basically, customers wanted to have the choice to either ask for assistance or to act on their own, using innovative technology.

BNP Paribas used this feedback to develop a unique branch concept. Its main objectives were as follows:

• Offer everyone – both customers and non-customers – a new experience. The new store is therefore open to everyone.

• Reinvent the relationship with customers and prospective customers, based on a philosophy of openness and responsiveness. The approach is to provide customers with relevant information. An example is the educational workshops it runs on topics such as hedging instruments and market volatility

• Turn the branch into a ‘lab’ that can promote innovation and new features

• Position BNP Paribas as a pioneer of innovation.

The Concept Store is therefore structured into ten specific areas in line with the basic values

of commitment, approachability, learning, responsiveness and innovation. These areas include a self-service area, banking boutique, banking boutique plus, financial information area, advisory rooms, daily banking area, reception, exhibition area, play zone, and the lounge.

BNP Paribas believes that innovation is important, but to be valuable it should enable the bank to respond to the real needs and expectations of its existing and prospective customers.

BNP ParibasThe ‘2 Opéra’ concept storeNathalie Martin-Sanchez

CASE STUDYA New Landscape for Retail Banking

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Deutsche Bank is a premium provider with an extensive range of financial products and a professional consultation service. Indeed, consultancy is at the core of the bank’s services for private and business clients. The branch plays a pivotal role in this strategy and is still the central point of contact between the client and the advisor.

Because a premium consultation service demands a high-quality environment, Deutsche Bank has developed a new branch concept. The main aim is to have a stronger focus on the core of the relationship between client and bank – the advisory meeting. The key requirements were therefore:

• A strong emphasis on advisory services• A clear focus on the Deutsche Bank brand• A modular approach, to provide better features

at lower costs.

The bank started by screening 100 international architects. At the preliminary stage, thirty were selected. These were reduced to a shortlist of eight, who then took part in a competition. A jury of specialists from inside and outside the bank

voted on the submissions. The top three were shown to several Focus Groups, who selected the same winner that had been selected by the jury.

The winning entry developed a powerful visualisation of the consultation areas in the form of large cones with blue blades that echo the bank’s logo, reinforcing the brand image. ‘The Cone’ is a vivid reminder of the bank’s qualities of trust, stability, competence and discretion. The open room architecture is designed to encourage dialogue and facilitate more personal contact. Instead of the traditional counters that keep client and advisor apart, special dialogue counters reduce the barriers between them.

The new branch design also focuses on more innovation. This includes the latest electronic information systems (which provide the foundation for a modern, professional consultation meeting) and ergonomically optimised furniture. The special atmosphere of the branch is supported by the use of high quality materials, zones that aid orientation, and sophisticated lighting techniques that create a pleasant atmosphere in the consultation area.

The new branch concept incorporates some features that were previously tried and tested at Deutsche Bank’s pioneering Q110 concept branch in Berlin. In the new concept, the function of these features remains the same, but their look and feel has been modified to fit the new design.

The first of three pilot branches opened in December 2010. The response has been unanimously positive which has been highlighted by significant increases in customer and employee satisfaction. Customers feel comfortable from the moment they enter the branch and are delighted with the improved consultation opportunities.

Now the concept has been shown to work in reality, it is being refined. Deutsche Bank plans to start rolling it out to some 50 German branches and 50 other branches throughout Europe this year.

Deutsche BankA new branch design based around consultancyDr Rainald Kirchberg

Since the early 1970s, ATMs have been a key element of the retail banking channel mix. As the pioneering example of self-service banking, they are seen as a low cost way of transacting, with 24x7 availability.

In Turkey, as the branch density is only a quarter of the EU average, ATMs play an important role by filling the gap in the banking distribution system. Isbank, Turkey’s largest private bank, introduced ATMs into the Turkish market in 1982. ‘Bankamatik’, the brand name of its ATMs, has become the generic name of all ATMs in Turkey from the customer point of view. Today, with over 4,300 ATMs, Isbank has the country’s largest ATM network, used by over six million customers.

Almost two thirds of Isbank’s ATMs have fully automated deposit-taking facilities – accounting for some 30 per cent of the bank’s total transactions. It is possible to conduct over 150 different transactions on the ATMs (only half of ATM transactions at Isbank are cash withdrawals). The bank has consistently invested in its ATM network in terms of both capacity and capability. One recent innovation is a ‘finger vein authentication system’, which allows more secure, cardless transactions.

Isbank believes that ATMs also have a huge potential for sales. The number of ATM logins at the bank is 40 times higher than the number of face-to-face interactions at its branches. To exploit this potential, Isbank integrated its ATM network with its CRM system. In late January 2011, it started to conduct various below-the-line campaigns aiming either to sell financial products; to facilitate the updating of customer contact information; or to generate leads to be converted into sales by branches and call centres.

Marketing initiatives pursued through alternative delivery channels must be managed without any compromise in service quality and customer experience. Isbank has achieved this by using an ATM-specific queue management model, based

on usage frequencies. After a thorough analysis of usage frequencies, several different threshold options were specified and simulated so that the optimal one (which balances service standards and sales targets) could be selected.

That threshold has been embedded into the CRM system. Depending on the frequency of use of individual ATMs, every ATM can now decide on a real-time basis whether or not to show the customer an offer. If the usage of the ATM is above the defined threshold, the offer is bypassed so that the waiting time doesn’t exceed an acceptable limit.

The model allows Isbank to optimise each ATM interaction and enables it to leverage the sales and lead generation potential of its ATMs without compromising service quality.

IsbankRepositioning ATMs as a sales channel Recep Haki

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INGTurning visitors into ambassadorsHans van der Horst

I… The customer…

I prepare myself for work each day by learning about products, work processes, the latest news and the current work instrucations.

I notice every customer that walks in and greet him/her in an appropriate manner.

I listen carefully and act friendly and polite.

I make sure I inform the customer about all conditions, before he/she purchases a product.

I complete all proceedings of the process that I can in front of the customer.

I make sure expectations on the process and lead time are clear.

I offer customers the possibility to discuss delicate financial topics in the advisory room, when I notice a need for this.

I am an ING ambassador; I never speak negatively about my colleagues.

I pose a suitable, commercial question at the end of every conversation.

I thank the customer for his/her visit and wish him/her a nice day or evening.

The customer experiences the expertise of the advisor.

The customer feels welcome in the ING branch.

The customer feels appreciated in the ING branch.

The customer experiences ING as a no-nonsense and transparent organisation.

The customer feels everything is arranged in one stop.

The customer feels well-informed.

The customer feels comfortable.

The customer experiences the ING brand when visiting the branch.

The customer experiences an extra question as normal, and often as a great service.

The customer feels completely serviced.

Every customer leaves the ING branch an ambassador

The world is changing. Last year, over four million ING customers banked online – nearly three times as many as in 2005. For almost everyone, it has become the standard method of interaction with the bank. Consequently, the number of customer contacts per day through branches and call centres has fallen.

Like most other banks, ING is optimising its distribution model. This has involved both developing the online channel as well as a new branch network in the Netherlands. ING has also abandoned the philosophy of assigning clients to a branch. Today they are only assigned to the bank. In a multi-channel world, where customers conduct much of their business online and visit a branch less than once a year, a relationship model doesn’t add value.

To provide the best standard of customer service, ING has a specialist sales force for more complex products such as mortgages, pensions, life insurance and investments. The sales force is not attached to a branch, and therefore has more flexibility in providing advice where and when the customer wants it.

Having fewer branches has allowed ING to optimise its network for the future. It has therefore completely restructured its branch concept. When setting up its new network, the bank wanted to respond to the most important customer

complaints such as unapproachable staff, limited opening hours and lack of advice. It accomplished this by adopting best practices from the retail sector. To exceed customer expectations, ING started a ‘Retailing in Banking’ programme, including ‘ten golden rules’ for employees to follow during any client contact. Each of these has a direct impact on some aspect of the customer experience. The bank also incentivised advisors to follow the rules, with some 30 per cent of their bonus related to quality issues. ING implemented a new layout for 280 branches and extended opening times six days a week. In addition, no back office tasks are performed within the branch allowing ING to have just two main executives on site – the branch manager and the advisor.

The success of the new strategy is measured in various ways – by management reports; a regular branch checklist; frequent mystery shopping; customer satisfaction surveys; and the Net Promoter Score (NPS). Following the introduction of ING’s new model, the NPS results indicate that

Ten golden rules for customer service in ING branches

customers are now more likely to give referrals. ING believes its challenge now is continuously to exceed customer expectations. The bank must deliver excellent service every day and consistently improve it. It continues to measure progress, share experiences and learn. ING states

the real challenge lies in its commitment to doing everything a little better every day. Ultimately, ING believes that sales come from excellent customer service. By fully embracing this new approach, visitors to the bank will continue to become ambassadors.

CASE STUDYA New Landscape for Retail Banking

© 2011 Microsoft Corporation . All rights reserved .Microsoft and Windows are registered trademarks of Microsoft Corporation in the US and/or other countries .This document is for informational purposes only . Microsoft and Efma make no warranties, express or implied, as to the information in this document .

About us

Founded in 1975, Microsoft (Nasdaq ‘MSFT’) is the worldwide leader in software, services and solutions that help people and businesses to realise their full potential .

For more information on Microsoft, visit www .microsoft .com/financialservices

Efma, a not-for-profit association formed in 1971 by bankers and insurers, specialises in retail financial marketing and distribution . Today, more than 3,000 brands in 130 countries are Efma members including over 80 per cent of Europe’s largest retail financial institutions .

For more information on Efma, visit www .efma .com

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Developing channels to enhance the customer experience