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First Direct: Branchless

Submitted By:
Asmita Jha- PGP/17/072
Bhaskar Kashyap- PGP/17/073
Nikita Runwal- PGP/17/096
Ravi Kumar- PGP/17/110
Abhinay Lakra- PGP/16D/180
Will you survive the services
By Uday Karmarkar
Will you survive the services revolution?
Service jobs at risk in all developed countries
Transformation in service sector : Automation and Self service have a major impact
Why use a travel agent when you can book your own flight, reserve a hotel room, and rent a car online?
Trend in manufacturing sector
From 2000 to 2003, more than 2 million US manufacturing jobs lost to offshore outsourcing and global competition
Services sector is following the same trend; Major benefit to customers : low costs , greater convenience and
Service Migration
In information industry sectors, information trade occurs between countries with linguistic and cultural similarities
On the other hand, manufacturing industry where work migrates from high labor costs to low labor cost countries regardless of cultural or
linguistic differences
In the case also, First Direct chose Leeds because of cost advantages and also Yorkshire accent was recognized as easy to understand,
warm and friendly
Choosing Industrialization strategy
Automation, self-service, end to
end service, captive offshoring,
selective outsourcing
E.g. Retail Sales, Web Design
Insourcing, onshoring, selective
automation, selective outsourcing
E.g. Medical diagnosis, relationship
Offshoring, outsourcing, globalization,
one-stop shop, end- to end service
E.g. Retail banking, data management
Captive offshoring, in-house
automation, selective outsourcing,
E.g. Software development, Tax
Simple Process Complex Process
Realign, Redesign, Restructure
With new technology, the relationship between sources, services, channels, and customers
Many tasks shifts to customers as self service
Service becomes commoditized, competition intensifies and differentiation grows vital
With change in the strategy, processes needs to be more closely synchronized with the overall
Overhauling a traditional service design is not a one time deal
Technological and infrastructure changes, competition, and industry restructuring are ongoing,
service companies need to constantly experiment and fine tune the processes
Automation substitutes technology for people
Skill requirements for companies:
Understanding of the impact of technology change Include skilled managers in new areas
Technology experts needed throughout the organization
Learning to deal with new global allies and organizations with changing structure
Welcome To The Experience
By B. Joseph Pine ll and James H. Gilmore
Today, consumers seek to spend less time and money on goods and services,
but they want to spend more time and money on compelling experiences.
The canonical example is coffee. Coffee sold by wholesalers is a commodity.
Coffee sold by the cup in a restaurant is a service, but Starbucks is an experience.
Designing memorable experiences
Five experience design principles have been identified
Theme the experience with a concise and compelling theme which should drive all
staged events of experience towards a unified story line
Harmonise impressions with positive cues as impressions are the takeaways of
the experience and they fulfil the theme
Eliminate negative cues which diminish, contradict or distract from the theme
Mix in memorabilia which customers would be willing to pay for delightful
Engage all five senses to make the experience more effective and memorable
Introduction To The Case
Set-up in 1989, First Direct was the first bank to offer branchless
operation; 24-hour person-to-person telephone bank
Achieved break-even by the end of the FY 1994 and reported
its first full year of profitability in 1995
By early 1996, First Direct served a customer base equivalent to
200 branches
First Direct Products and

Debit/Credit cards
Saving and Investments
Travel Services

Rated several times among the Best buys by magazines consumer reports on retail banking
Won the 1995 Unisys/Sunday Times Customer Championship Awards for outstanding customer service in financial services
First Direct Survey conducted between 20 Nov 1995 and 21 Jan 1996: 87% of customers was either extremely or very
satisfied; 85% of its customer actively recommended the bank to friends, relatives and colleagues
What factors enable a company to create and maintain
good relationships with its customers? Evaluate First
Directs performance relative to these factors?
Factors and First Directs Performance relative to these factors
Factors Description First Directs performance
Products and
Should be based on customers
Traditional banking products with personalised
services (mail customers info only when they
need it)
Easy to use and easily available Convenience for customers and 24X7
availability of services
Reasonable/ competitive price Offered better interest rates on mortgages, etc.;
no annual charges on VISA;
Theme the experience;
Harmonise impressions with
positive cues;
Eliminate negative cues;
Mix in memorabilia;
Engage all five senses
Harmonised positive cues by relating their
conversation with prior knowledge of
customers thru database
Eliminated negative cues by reducing the delay
in receiving calls
Created a service halo
What are relative roles of information technology
and employees in First Directs relationship building
Relative roles of information technology and employees in First direct
relationship building strategy
ACD (Automatic
call distribution)
Managed high volume calls
Never allowed caller to hear busy signal
CIT (Computer
Helped BRs to access customer details quickly
Help to communicate and build trust in the brand through various mediums like digital text,
audio, video animations etc
recognition and
Again it leads to the timely and error free response providing the experience to customers
Internet world
wide web and
PC based access
Provide the ease of use and accessibility of bank services to customer making banking
hassle free for them and adding to their experience
Data analytics used to predict the customer behavior and planned accordingly

Role of people
Highly dedicated people leading to the 24x7 service of the customers
Highly trained BRs knew how to tackle calls by building personal relationship with
BRs handled more than 85% of the queries skillfully
An experience group of BRs named as Mushroom Squad to answer any type of
customer enquiry in any business area
BRs were flexible enough to accommodate customers complaints
BRs played important role to go overboard and recover customers in case things went
Eliminated negative cues by reducing the delay in receiving calls
What threats and opportunities face First Direct as it
seeks to both retain existing customers and attract
new ones?
Increased competition from Banking Institutions
By 1996, most banks and building societies offered their customers some form of direct access
Example: Direct Line Insurance
FD did not offer online banking. Bank such as Barclays offered online banking at home by 1995
Competition from Non-Banking Institutions
1979 Banking Act opened up the mortgage market to institutions other than building societies
Example: 1995, retailing chain Marks and Spencer offered life insurance
Consumer Behavior
British were more likely to change their partners than their bankers
Minority of the customers asking for online banking
Predicament of not compromising on service and price as business was growing too quickly
Management Concern
Management feared that its existing management system may not work when it grew to 4-5 sites
In 1970 bank of England allowed banks to provide personal financial services, share dealing and insurance
broking. Further in 1979 Banking Act opened up mortgage market to institutions other than building societies
too. This had helped to equip FD with multiple financial services
Other banks are trying to replicate few processes of FD. But the business of FD is based on branchless banking
which helps it to offer better int. rates due to low cost incurred. FD can build upon this PoD to attract customers
End-to-end information chain managed by a single point of interaction by FD. One stop solution differentiates it
from other banks
Should initiate the online banking system so as to offer customer multichannel carry out the transaction. It would
be like changing and growing with the technology
What are the pros and cons for First Direct of moving
into on-line home banking services? What are the
implications for its relationships with customer?
Offering dual option to the customer for
carrying out transactions as per convenience
without compromising on quality and at low
50% of the customers had PC so online
service would definitely benefit them
Consumers demanding for online banking as
offered by other banks. Thus FD had to prove
that it was changing too and growing with
technology rather than waiting and loosing
Would help to expand and open new centers
with less no. of bank reps. since load on
them would reduce
When travelling or no PC available customers
would always have a backup of telephonic
transactions assuring reliability 24x7
Experience of being provided customized
service would be lost by the customer
which was the competitive advantage of
FD (person-to person interaction)
Might be reduction in word of mouth
since similar service being provided by
other banks
Dilution of the PoD for FD if online
banking more preferred by customers
Cost implications of adding and
maintaining additional IT infrastructure

Online Home Banking Service
Consider Kevin Newmans statement that We are
not really in banking but distribution. Do you agree?
Why (or Why not)?
Using Telephone Banking as Stage to
The first 24-hour person-to-person
telephone bank
No frills, hassle free approach to
One stop solution for all banking
related queries
Efficient, Easy and Available when
you want it
You are what you charge for
Generating money on 60% of its
customers, compared to 40% at the
average British Bank
No transaction charges for any of
First Directs basic services
Visa card was free of annual charges
Better interest rates on mortgages,
personal loans and visa cards
Yes, we agree with Kevin Newmans statement, because
What actions should Newman take?
Realign Strategy
With increase in internet penetration, customers demands now where moving on to
online banking
To be relevant among the customers, First Direct should start with the online banking
service in addition to its core telephone person to person banking
Redesign Process
First Direct should synchronize the processes with the additional offering of online
It should add various IT capabilities and processes around them to support online banking
Restructure the Organization
To support online banking, new people with skill sets in IT and banking is required
In long term, First Direct can also go for cross utilization of its employees by training them
with relevant skill sets in telephone and online banking
Thank You !!