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Accenture Report: Banking 2016 - Accelerating Growth and Optimizing Costs

Accenture Report: Banking 2016 - Accelerating Growth and Optimizing Costs

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Published by Accenture
Read this Accenture Banking 2016 report to learn how enhanced multichannel experiences, social media interactions and mobile technology can enable banks to achieve success—today and in the future. To view the interactive infographic visit: www.accenturebanking2016.com.
Read this Accenture Banking 2016 report to learn how enhanced multichannel experiences, social media interactions and mobile technology can enable banks to achieve success—today and in the future. To view the interactive infographic visit: www.accenturebanking2016.com.

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Published by: Accenture on Jun 12, 2012
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10/27/2013

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Banking 2016
Accelerating growthand optimizing costs indistribution and marketing
 
Accentre Distribtion and Marketing Serices
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Accentre Distribtion and Marketing Serices
2
Cstomer-oriented metrics eoltion“Next Generation Banking” models
Profitabilit-based metricsHolistic stakeholder perspectie
It is time for retail banks to change.Faced with a danting arra of market, reglator, cstomer, cost andoperational challenges, man banks arestrggling to post een moderate growth.
Projected revenue growth rates, accordingto an Accenture analysis of 2011-2014business plans for a group of 30 globalbanks, estimate 6.5 percent averagegrowth (4 percent Europe/North Americaaverage) following -0.5 percent retailrevenue growth for 2008-2011. Bankersare beginning to realize that it will be achallenge to meet these growth targets andknow they have to win three critical battles:restoring customer trust and engagement,defending their payments businessagainst progressive disintermediationfrom new entrants (e.g. Google Wallet,PayPal) and avoiding commoditization.Current branch-based distributionmodels are no longer sustainable inmost developed countries and are unableto meet the rapidly evolving customerneeds and requests for easy access andsimplicity across their banking services.Accenture believes there is a clear pathforward for banks that begins with theshoring up of core business operations toimprove efficiency, customer relevance andprofitability—in other words, “doing thebasics right.” While some banks may excelsimply by improving on the basics, including“smart-sizing” their distribution networks,others need new business and operatingmodels to compete and grow going forward.Keeping one eye on the present and one eyeon the future is the key paradigm we havedefined as “Banking 2016—Next GenerationBanking”, drawing inspiration from some
 
notably innovative retailing models.Accordingly, each bank needs to defineits own target business model in lightof its history, market, positioning,ambitions, etc. We think there are threebusiness models banks should considerwhen defining their own model:
1. One that bilds on enhancedmltichannel
experiences toengage customers and meet theirfinancial needs effectively (the“Intelligent Multichannel” Bank),with the strategic application of analytics at the core of this model
2. One that leerages social media
 interactions to increase customerintimacy (the “Socially Engaging” Bank)
3. One that places the bank at the center
of an ecosystem selling financial andnon-financial services, leveragingin particular the power of mobiletechnology (the “Financial/Non-Financial Digital Ecosystem” Bank)The money on the table can be significant.A bank working aggressively to implementall three of these business models candouble its annual revenue growth rate(from 4 percent to 8-plus percent indeveloped markets) while reducing itscost to serve by 20 percent or more.Regardless of the models being pursued,bank governance overall must evolve,giving appropriate weight to customermetrics in the key areas of reputation,commercial performance, serviceperformance, sales performance and thecapabilities required to support them.
Management andinestors iew
(Shareholders Perspective) 
Source: AccentureSource: Accenture
 
Revenues
 
Profitability
 
Cost-to-income
 
ROE
 
Market share
 
EVA
 
Share price trend
 
Market capitalization
 
EPS
“Next Generation Banking” models
 
Optimized branchnetwork andcontact center
 
Enhanced digitalchannels
 
Need-based offeringsand consistentsales behaiors
 
Basic mltichannelintegrationThe “IntelligentMltichannel” BankThe “do thebasics right” BankThe “SociallEngaging” BankThe “Financial/Non-Financial DigitalEcosstem” Bank
 
Integratedmultichannelarchitecture,powered by analytics(real-time eventmanagement, etc.)
 
Advanced digitaladvisory
 
Need-based offeringsoptimized by channels
“My bank effectivelyengages with me on myreal financial needs.”“My bank engages withme where I spend time.”“My bank gives answers to myneeds, providing easy access.”
 
Customer engagementwhere they spendtheir time (e.g. onsocial media) basedon personal interests
 
Leverage influencers
 
Co-creation basedon increasedcustomer intimacy
 
Bank as trust centerwith an extendedproposition (financialand non-financial)
 
“The bank where youare” leveraging thepower of mobile
 
M-payment services
Toda
Bank Reptation
•Reputationindex•Brandrecognition
Commercial Performance
•ARPU(revenuepercustomer)•Netcustomerflow•Customerlifetimevalue•Crossselling•Recurringrevenues%
Serice Performance
•Customerengagement•Customersatisfaction•Netpromoterscore
Sales Effectieness
•Saleproductivity•Salespersquaremile•Campaigneffectiveness•Productpenetration•Customercontacts•Socialchannelengagement
Capabilities
•Customercentricityindex
Accentre Distribtion and Marketing Serices
 
Accentre Distribtion and Marketing Serices
5
Accentre Distribtion and Marketing Serices
4
“Banking 2016—NextGeneration Banking”fondation: doingthe basics right
What is “Banking 2016—Next GenerationBanking”? It starts with gettingthe basics right to address banks’most immediate challenges: erodingcustomer trust and satisfaction.The key components of “doingthe basics right” are:1.
Branch network optimization
(numberand size of branches), reviewing networkarchitecture (i.e. hub and spoke model)2.
Basic mltichannel integration
,alignment of channels andintegrated governance processesfor real-time banking3.
Proactie and reactie
 
management
 interaction based on customer needs4.
Operational cstomersegmentation
driven by a needs-based offering structure5.
Sales force effectieness
powered byconsistent sales behaviors and tools6.
Simple and clear commnication
 with customers7.
Performance management
(newcustomer-oriented metrics) andtailored compensation schemes
Optimizing thebranch network
The most critical aspect of “doing thebasics right” is improving branch networkperformance, ensuring sustainable positionsand creating adequate foundations for the“Intelligent Multichannel Bank” model.Branch network effectiveness can bemaximized through strategic localization(closing low-performance branchesoperating in markets with limited potentialfirst), identifying the right number,type, and format of branches accordingto target customers and optimizingbranch processes to free up commercialtime and focus on sales generation.Networks composed solely of full-servicebranches with duplicate services and skillsare no longer sustainable. The branchnetwork model must be designed withcareful consideration to differentiatedformats and integrated in a multichannelview that is able to maintain territorialcoverage, react to local customer needsand optimize skills and capabilities. Thisextends beyond full-service branches andhubs to include light branches (with anaverage of 4-5 employees), kiosks andcash-less branches. By migrating low-value activities to digital channels andretail-based formats, banks can satisfynew customer segments and furtheroverall branch network transformation.An efficient “hub and spoke” branchmodel can help enable a bank to decreasethe branches in its overall network by15-20 percent and reduce average branchstaff by 25 percent with the proper mixof flagship, full-service, light and kioskbranches. Furthermore, by specializing inspecific services or activities, each branchformat is able to deliver a more tailoredcustomer experience and, ultimately, helpincrease customer satisfaction and loyalty.
“Banking 2016—NextGeneration Banking”fondation: doingthe basics right
Light branches—maintain for salesFll-serice, hbs—maintain for adanced bankingFlagships—innoate, attract
Banks shold consider differentiated branch formats
Cash-less, kiosks—maintain for sericeCOv. 50%
sales services 
COv. 30%
sales services 
COv. 15%
sales services 
COv. 5%
sales services 
   K   E   y   F   E   A   T   u   R   E   S
 
40% transactionsand 60% sales
 
Extended hors
 
Sales lead generation
 
Specific staffing:dedicated bsinesscashiers andpermanent RMs
 
Highl specializedmortgage, tradingadisers
 
Spports light branchesfor complex serice/sales
 
Fll merchandising
 
Digital meeter and greeter
 
50% transactionsand 50% sales
 
Tailored hors
 
Sales lead generation
 
Reglar staffing: meeterand greeter, cashierand peripatetic RMs
 
Able to accept andmanage anthing
 
Belonging tofll-serice branches
 
Standard merchandising
 
Remote adisorspported b hbs
 
Flexible concepts
 
Possible franchising model
 
100% transactions
 
Open with staff 1-2das per week
 
Reciprocit income
 
Minimal staffingleels (not bank skilledemploees, peoplefrom retailing sector)
 
Fll atomated
 
Belonging to fllserice/light branches
 
Tailored merchandising(focs on area andseasonal campaigns)generating branch traffic
 
Adanced ATM
 
Opening horsdifferentiated perlocal needs
 
30% transactionsand 70% sales
 
Extended hors
 
Center of sales andserice excellence
 
Specific staffing(depending on area/segment sered):dedicated bsinesscashiers andpermanent RMs
 
Location of experts
 
Spports all other tpesfor reglated sales
 
Tailored merchandising,focs on innoation
 
Self-serice,innoatie tools
   D   E   S   C   R   I   P   T   I   O   N
Opportnities in theoperational basics
In addition to optimizing thebranch network, banks have otheropportunities to become more proficientin operational basics and increasesales. For instance, they can:
•Redefinerolesandactivitiesat
branches through process optimization,standardization and initiativesenabling focus on sales, such asdigitalization, back-office automationand integrated CRM systems. Gatheringand pre-filling customer informationshould also be considered.
•Improvebranchsalesforceperformance
by implementing next-generationfront-end workstations that canprovide branch employees with thelatest tools, information and guidanceto engage customers effectively.
•Focusonbranchfront-linestaff
by designing specific profiles anddedicated training plans to createan empowered, unified workforce(we call this “workforce of one”);support branch employees with bothformal and informal learning toolsthat can be enabled and acceleratedby cloud-based collaborationcapabilities and social media.
•Enhancedigitalcapabilitiestoprovide
a more personalized, streamlined androbust online banking experience,complemented by educational toolsand simulators to better addressself-directed customers’ needs.
•Developbasicmobilebanking
capabilities to provide servicesthat take full advantage of the“on the go, anywhere, anytime”nature of mobile devices.
•Restructureproductcataloguesby
customer needs and with service levelsbased on customer segmentation.
•Integratechannelstofacilitate
transparency and data sharing so eachcustomer’s buying habits and needsare known and can be addressedacross an integrated multichannelbuying experience (eliminating amore silo-structured approach).If customers feel they are gettingproper service from their banks andthe product mix and price pointsmeet their expectations, the expectedresult will be greater customersatisfaction, retention and loyalty.
Source: Accenture
 
Accentre Distribtion and Marketing Serices

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