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The conundrum facing most banks the world over is that, even as their customers make less use of branches, the banks have yet to find an equally good way of drawing new customers. Little more than a decade ago most retail banks feared the internet. Then they decided largely to ignore it. Now it is becoming ever clearer that the future belongs to those that are nimble and far-sighted enough to embrace it. Understanding customer preferences and habits through trending real time analytics, in addition to being technologically prepared for the advancements in mobile and digital banking services will yield new revenue streams for all the major players who wish to capitalize on emerging resources.
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Canadian Banking 2012 – Overview
“ The conundrum facing most banks the world over is that, even as their customers
make less use of branches, the banks have yet to find an equally good way of
drawing new customers”
tdmc
T H E D ATA M I N I N G C O M PAN Y
tdmc creative data intelligence strategy solutions for small, medium and corporate enterprise
A N A LY T I C S D E S C R I P T I V E P R E D I C T I V E P R E S C R I P T I V E
Visit us at:
www.thedataminingcompany.com
human interface business consulting services
Services include in depth analysis of your business and industry with unbiased advice to analyze and optimize your industry specific challenges for the new digital economy.
Services Include: Business Assessment – Measures business health and positioning. Big Data – Are you making the most use of your data streams? Data Integrity Evaluation – Is your IT system giving you the right numbers? Data Intelligence Analytics – Extracting Business Value – What is your data worth? Data Management at Project Implementation - Is your data as clean as possible? Supply Chain Analysis and Optimization – Are you running a lean operation? Market Research Intelligence Services – What is the industry doing? White Paper Research and Intelligence – What information is important? Business Requirements – Translating for digital products? Going Digital– Optimize ROI for digital transformation? Understanding the Consumer – Ecommerce and Social Media strategy optimization.
T H E D ATA M I N I N G C O M PAN Y
tdmc
www.thedataminingcompany.com
tdmc
“Understanding customer preferences and habits through trending real time
analytics, in addition to being technologically prepared for the advancements in
mobile and digital banking services will yield new revenue streams for all the major
players who wish to capitalize on emerging resources.”
Internal Objectives
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Canadian Banking Consumers
EY Global - Consumer banking Survey 2012
Deloitte - Top 5 trends in Retail Banking
Deloitte - Mobile Banking, A Catalyst for improving bank performance
KPMG Insights into Canadian Banking
PwC - Perspectives in the Canadian Banking Industry
PwC - Rebooting the Branch in a multi-channel global environment
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Canadian Banking Consumers – Facts and Figures Source – Global Consumer Banking Survey 2012, EY
Customer Confidence - 28% of Canadians report a decrease in confidence
Multi-Banking - 35% of customers multi-bank to obtain the best rates and fees for varied products
Finding information on banking products and services - 67% turn to discussions with family and friends - 21% gather information from social networks
Drivers of attrition - 54% of those who have switched banks cite high fees as the main cause - 37% cite poor branch experience
Canadian Banking Consumers – Facts and Figures Source – Global Consumer Banking Survey 2012, EY
Personalization - 73% of customers would be willing to share personal information to receive better
service from their bank
Improve Customer Satisfaction - 33% of respondents want their bank to improve its fees and charging structures
Loyalty Program Appetite - 35% have enrolled in a bank loyalty program (+16% since 2011) - 42% would value cash back on CC or DC transactions
Key Takeaways – Stats and Solutions Globally, 50% of respondents cite dissatisfaction
with high fees as the most important driver of
attrition
35% of customers have enrolled in a bank loyalty
program. A 16% increase since 2011.
Attrition rates in Canada have increased from
38% to 45% in the past year
Give Customers more flexibility
Help Customers Shape their experience
Shape Business Models around customer needs
Reports and Industry Analysis Sources
Global Consumer Banking Survey 2012
Key Takeaways – Market Dynamics Recent years have shown increase in
numbers of new entrants.
New entrants are mostly Canadian branches
and subsidiaries of foreign owned banks and
newly created banks controlled by non
financial service groups
i.e. ING Direct (recently acquired by Scotia for
$3.1B)
i.e. PC Financial, Walmart Banking Services,
Rogers applies for Bank Licence
Reports and Industry Analysis Sources
Global Consumer Banking Survey 2012
Global Consumer Banking Survey 2012 - Ernst and Young
Conclusions
Global Consumer Banking Survey 2012 - Ernst and Young
Conclusions
Global Consumer Banking Survey 2012 - Ernst and Young
Conclusions
Reports and Industry Analysis Sources
The TOP 5 trends in Retail Banking - Deloitte
Key Takeaways The ROI for an advisory discussion with an
individual retail banking client exceeds 100%
With regards to NFC (Near Field
Communications) in Canada mobile adoption
has increased 10 fold since 2008
Canada has the worlds heaviest social media
usage per capita
To win with client analytics and increase ROI
focus on multi channel strategies through offer
content, offer timing, and offer channel
Key Takeaways – Industry Analysis The most recent financial crisis has spurred
changes in regulatory provisions in banking
communities worldwide
Knowledge and data is most valuable when it
describes customer behavior
In the evolving world of mobile banking,
customer loyalty will be congruent with the
most secure applications
Legacy IT systems need to be updated to
handle the real time streaming influx of data
Reports and Industry Analysis Sources
Insights into Canadian Banking - KPMG
Key Takeaways – Customer Analysis for
effective product development Banks must discover and assess customer
needs and then apply the knowledge to
product development decisions
What? Do our customers need?
What? Products or Services should we offer?
How? Do we effectively market our offerings
to meet needs?
Which? Customers should we focus on?
Which? Customers are most profitable?
Reports and Industry Analysis Sources
Insights into Canadian Banking - KPMG
Alignment of the channels
The bank to customer relationship needs a
360 degree 3 dimensional approach
across all channels
Regulatory Operational Risks Evaluate the operational risk of regulatory
compliance
New capital and liquidity demands will be a
key factor in determining business plans,
changing the cost profile of banking products
Basel III
OFSI Office of the Superintendent
of Financial Institutions
Volcker Rule
FACTA – Foreign Account Tax
Compliant Act (USA)
Dodd-Frank (USA)
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
Consumer Lending Survey 2012 - Key Takeaways 59% are comfortable with their debt levels
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
Total Revenue Net Income ROR
RBC $23,100,000,000 $4,850,000,000 21.00%
TD $20,130,000,000 $5,890,000,000 29.26%
BNS $17,290,000,000 $5,180,000,000 29.96%
BMO $13,720,000,000 $3,270,000,000 23.83%
CIBC $11,410,000,000 $3,080,000,000 26.99%
NBC $4,470,000,000 $1,210,000,000 27.07%
$90,120,000,000 $23,480,000,000 26.05%
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
26%
22% 19%
15%
13% 5%
Big 6 Total Revenue distribution 2011
RBC TD BNS BMO CIBC NBC
21%
25%
22%
14%
13% 5%
Big 6 Net Income distribution 2011
RBC TD BNS BMO CIBC NBC
21.00%
29.26% 29.96%
23.83% 26.99% 27.07%
0%
5%
10%
15%
20%
25%
30%
35%
RBC TD BNS BMO CIBC NBC
ROR
Big 6 – Key Corporate Events
Mergers, Acquisitions, Divestitures
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Top 6 – Key Corporate Events
RBC pulling back on US retail operations sold its US regional banking retail operations to PNC Financial for $3.6B
Completed acquisition of Blue Bay Asset Management for $1.5B
Completed divestiture of Liberity Life Ins. to Athene holdings for $628M
Launched a new trading floor in Hong Kong
European and Caribbean operations face challenges
European debt crisis
Caribbean slowdown in tourism revenue
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
Top 6 - Key Corporate Events
TD bank has the largest US retail arm of all the Canadian banks Operates more than 1200 stores
Dodd Frank will have a significant impact on US operations
Owns 45% of online brokerage TD AmeriTrade
Acquired 100% of Chrysler Financial for $6.4B
Acquired South Financial Group
Acquired MBNA credit card portfolio for $7.8B
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
Top 6 – Key Corporate Events
Scotiabank is Canada’s most international Bank Operates in 55 countries worldwide
35% of Net Income is generated from foreign sources
Concentrates in high growth emerging markets
Mexico, Caribbean, Asia
Central, Latin, and South America
Assets under management increased to $103B from $54B
Significant transactions in 2011 19.99% interest in China’s bank of Guangzhou
51% interest in Colombia’s Banco Colpatria
Acquired Dresdner Bank in Brazil
Acquired Nuevo Banco Comercial SA in Uruguay
Acquired Dundee Wealth Making it second largest mutual fund provider in Canada
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
Top 6 - Key Corporate Events
BMO The largest P&C banking operating group of Big 6
Completed the acquisition of Marshall & Ilsley for $4B
Gives BMO a significant market presence in the Midwest across 8 states
Purchase of Hong Kong based portfolio manager Llyod George
US branches more than doubles from 312 to 679
Increase managed assets to over $530B
Anticipates increased regulatory compliance costs
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
Top 6 – Key Corporate Events
CIBC is mostly focused on domestic activities Purchased a 41% interest in American Century Investments
A US asset management company
Opened a new wholesale banking office in London, Eng.
Opened a new Corporate Credit products office in Houston, TX
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
Top 6 – Key Corporate Events
NBC operations primarily focused in Quebec 70% of revenue obtained from Quebec operations
27% of revenue is from the rest of Canada (looking to extend)
3% of revenue derived from international operations
P&C activity represent nearly half of all NBC operations
Acquired Wellington West Holdings for $280M
Agreed with HSBC Canada to acquire HSBC securities
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
70% 27% 3%
The New Digital Tipping Point - PwC
“More people across the planet now take home new iPhone’s every day (402,000 units per day),
than take home human babies (300,000 human births per day). - January 2012
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Payments and transfers processed by Monitise now over $25bn annually,
versus $1bn a year ago
More than 18m customers now registered to Monitise Mobile Money
services, compared with 5.5m in December 2011.
The group has a pipeline of more than 100 financial institutions via its
partners and direct sales teams looking to adopt mobile banking, payments
and commerce applications developed by Monitise.
Further to the recently announced global alliance with information technology
business Cognizant, Monitise is also in talks with a number of major
technology businesses interested in partnering with Monitise, reselling the
Group’s banking, payments and commerce solutions and collaborating on
mobile technology innovations.
Reports and Industry Analysis
Facts and Figures – Explosive Growth
Partners
Digital Integration in an forward evolving industry
Generation Y (1980-1990) deciding primary banking relationships
Quality of the digital offering is an important factor in decision process
Banks need to act now to lock in the future value of this segment
Banks digital strategies need to move beyond cost reduction objectives
The wide availability of information about financial products on the internet
Digital Banking is evolving into a new set of offerings User experience
Mobile hardware device and networks
Social Media and Collaboration
Customer Analytics
Channel Integration
Wide availability of information about financial products on the internet Exposes the gap between price and value for banking products to consumers
Banks now need to demonstrate intrinsic value to their customers
Reports and Industry Analysis
The Digital Tipping Point - Price Waterhouse Coopers
Research Reveals that digital engagement and share of wallet are directly correlated
Digitally active customers tend to have the largest product holdings
Primacy in a banking relationship drives increased share of wallet
Leads to higher revenue generation from the customer pool
Future will incorporate location based offers and interactive applications
Digital feature sets will override traditionally important criteria like branch location and
brand
Reports and Industry Analysis
The Digital Tipping Point - Price Waterhouse Coopers
Reports and Industry Analysis
The Digital Tipping Point - Price Waterhouse Coopers
The battle amongst banks for customer relationship primacy
Embrace Change and serve customers in a way the customer wants
Partner with innovators from technology and telecommunications industries
Develop a vision and a central strategy with the customer as the fulcrum
Achieve First Mover advantage by partnering with innovative technologies
Reports and Industry Analysis
The Digital Tipping Point - Price Waterhouse Coopers
New digital services may become new sources of revenue for banks Consumers are willing to pay for innovative readily available digital services
Reports and Industry Analysis
2 out of 5 mobile banking users in Canada use iPhones
Reports and Industry Analysis – Source, Vancom Mobile Consulting
Mobile Banking benefits:
Cash is King: Mobile banking can make a fast contribution to the bottom line. A bank with 100
branches and 250 ATMs could save $5M annually by converting 20% of
transactions to mobile
Innovation Drives differentiation: Early investments in mobile banking can drive competitive advantage and attract
new customers. Having a mobile presence will drive loyalty and promote buy in to
your brand.
Reports and Industry Analysis – Source, Vancom Mobile Consulting
Focus on growing revenue: Mobility means greater volume of transactions, monetizing customer data, faster
access to services, marketing based on new knowledge of consumers
Cost savings: The cost of processing a mobile transaction can be as much as 10 times lower than
at an ATM
Reports and Industry Analysis – Source, The Economist
Mobile Payments – A Wealth of Wallets
Reports and Industry Analysis – Source, The Economist
Mobile Payments – A Wealth of Wallets
Appendix
Bank Assets – TOP 25
Net Income Segments
Key Factors impacting earnings
Data Analytics Sources
Industry News Sources
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Top 6 – Results by Business Segments
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
Top 6 – Key Criteria
Reports and Industry Analysis Sources
Price Waterhouse Coopers – Canadian Banks 2012
Data Analytics Partnerships - Click logo to Link Source
APT Video
News and Industry Insights – Click Logo to Link Source
T H E D ATA M I N I N G C O M PAN Y
tdmc creative data intelligence strategy solutions for small, medium and corporate enterprise
A N A LY T I C S D E S C R I P T I V E P R E D I C T I V E P R E S C R I P T I V E
Visit us at:
www.thedataminingcompany.com
human interface business consulting services
Services include in depth analysis of your business and industry with unbiased advice to analyze and optimize your industry specific challenges for the new digital economy.
Services Include: Business Assessment – Measures business health and positioning. Big Data – Are you making the most use of your data streams? Data Integrity Evaluation – Is your IT system giving you the right numbers? Data Intelligence Analytics – Extracting Business Value – What is your data worth? Data Management at Project Implementation - Is your data as clean as possible? Supply Chain Analysis and Optimization – Are you running a lean operation? Market Research Intelligence Services – What is the industry doing? White Paper Research and Intelligence – What information is important? Business Requirements – Translating for digital products? Going Digital– Optimize ROI for digital transformation? Understanding the Consumer – Ecommerce and Social Media strategy optimization.
T H E D ATA M I N I N G C O M PAN Y
tdmc
www.thedataminingcompany.com
END
“Little more than a decade ago most retail banks feared the internet. Then they
decided largely to ignore it. Now it is becoming ever clearer that the future belongs to
those that are nimble and far-sighted enough to embrace it.”
tdmc
