personal & business banking sa - the vault | investor ... 9/2/2011 1 personal & business...

9/2/2011

1

Personal & Business Banking SAAnalyst day 1 September 2011

www.standardbank.com

Customer Value Proposition/Segment

Customer Interaction

Fulfilment and

Customer Segments

– Inclusive Banking

– Personal Banking

B i B ki

How we organise ourselves

I l d i

Fulfilment and Infrastructure

– Business Banking

Bancassurance

Marketing

Value creation Effectiveness Efficiency

Growth through profitable and customer centric value

propositions

Increase sales and service revenues by converting leads

and deepening CVP penetration through

convenience and customer relevance

Highly efficient / low cost operations and

enablement

2

9/2/2011

2

Customer Offerings: Defining the Value Proposition

Zweli Manyathi

Director, Business Banking Offerings Previous Positions (SBSA): Director, Corporate Banking (CIB)Length of Service: 3 yearsQualifications: BCom Honours (Financial Management), Senior Executive Programme, MDP

Leon Barnard

Director, Inclusive Banking Previous Positions (SBSA): Director, Personal Banking Offerings; Director, Customer Offerings gLength of Service: 20 yearsQualifications: B Iuris

Audrey Mothupi

Director, Banking and Lending ProductsPrevious Positions: Chief Executive: Group Strategic Services (Liberty)Length of Service: 7 years Liberty + 1 year PBBQualifications: BA Honours (Political Science and Psychology)

Richard Irvine

Director, Personal Banking Offerings Previous Positions (SBSA): Global, Chief Risk Officer; Global Chief Operating OfficerLength of Service: 4 yearsQualifications: BCom Honours, CA (SA)

3

Funeka Ntombela

Director, Home Loans Previous Positions (SBSA): Chief Financial Officer (P&BB SA)Length of Service: 4 yearsQualifications: BCom Honours (Accounting), MCom, CA (SA)

Sugendhree Reddy

Director, Banking Products Previous Positions (SBSA): Director, Personal and Business Transactional Products; Director, Business Transactional ProductsLength of Service: 7 yearsQualifications: BCom, BA Law, HDip Tax, MBA, CPA Australia

Customer Channels: Customer Interaction

Lincoln Mali

Director, Customer Channels Previous Positions (SBSA): Director, Branch, Business and Private Banking; Director, Gauteng ProvinceLength of Service: 10 yearsQualifications: BA, LLB, MBA

Itumeleng Monale

Director, Direct ChannelsPrevious Positions (SBSA): Director, Self-Service Channels; Head, Mass Market Segment StrategyLength of Service: 7 yearsQualifications: BSc, completing MBA

Willie Stegmann

Director, Core Banking TransformationPrevious Positions (SBSA): Director, BPS; Director, Business OperationsLength of Service: 7 years

Core Banking Transformation

4

Willie Stegmann Length of Service: 7 yearsQualifications: BEng, MCom (Business Management), Advanced Management Program (Oxford)

Wally Fisher

Director, Core Banking ImplementationPrevious Positions (SBSA): Director, HR P&BB; Head, HR – Operations, Head, Provincial HR - GautengLength of Service: 16 yearsQualifications: BCom Honours

9/2/2011

3

Enabling and Support Functions

Jörg Fischer

Chief Operations OfficerPrevious Positions (SBSA): Chief Information Officer, Group IT; Chief Financial Officer, Retail BankingLength of Service: 14 yearsQualifications: BCom, BAcc, HDip Tax, CA (SA)

Jacqui Carnelley

Director, Marketing P&BBPrevious Positions (SBSA): Director, Marketing - AfricaLength of Service: 18 monthsQualifications: BA, PDM, MBA, currently DBA

Chief Finance Officer – 18 monthsPrevious Positions (SBSA): Director Finance – Customer Offerings; Director

5

Arnold Dippenaar

Previous Positions (SBSA): Director, Finance – Customer Offerings; Director, Finance - CardLength of Service: 11 yearsQualifications: BCom Honours, CA (SA)

Saras Govender

Director, Human ResourcesPrevious Positions (SBSA): Head, HR - Customer Channels; Head, HR – Product Segments Length of Service: 9 years

Enabling and Support Functions

Global Chief Risk Officer, P&BB

g yQualifications: BCom

Sarah-Anne Opharnides

Director, PBB Markets and CustomersPrecious Positions: Director, Retail Marketing, Director Group Marketing and CommunicationsLength of Service: 9 yearsQualifications: B Social Sciences, Honours (Economics), MBA, Advanced Management Programme

6

Keith Fuller

Previous Positions (SBSA): Chief Credit Officer (P&BB SA); Director, Banking ProductsLength of Service: 24 yearsQualifications: Bachelor Agricultural Management, Honours ; Master Agricultural Management, Advanced Executive Programme (UNISA), Senior Executive Program (Columbia Business School)

9/2/2011

4

We are still focused on service

7

We are open for business

8

9/2/2011

5

Topics to be covered today

• Home loans

• Bancassurance

- Agreement with Liberty and complex productsg y p p

- Simple products, short-term insurance and brokerage

• Mobile banking

• Business banking

• Inclusive banking

9

BancassuranceAngela Mhlanga

www.standardbank.com

9/2/2011

6

Bancassurance agreement with Liberty

• In 2010, opportunity arose to revise evergreen Bancassurance agreement with Liberty

• Parties recognised that the strengths and skills of both parties were still strong

- Liberty as the leading long term insurer and investment group

- Standard Bank as the leading bank in South Africa with a customer base that requires bancassurance products as part of the holistic value proposition

• By December 2010 the terms of agreement had been concluded and were effective from 1 January 2011

11

Bancassurance agreement with Liberty

• Benefits expected include the opportunities to

- Leverage cost and operational synergies

- Attract and retain scarce talent by providing extended career opportunities

- Access retail and corporate clients in South Africa and Africa

• Currently Standard Bank

- Contributes ⅓ of Liberty’s new business sales

- Originates ±20% of Stanlib’s flows

- Accounts for ±35% of funds under management in Stanlib

12

9/2/2011

7

New products, acquisition models and geographies will be pursued and implemented to fully capture the opportunity

Products

To:From:

GeographiesTo:From:To:

• Life• Investments• Health• Short term

From:

• Life • South Africa• Africa

• South Africa

Business modelsTo:From: To:

• Embedded• Transactional• Advisory• Specialist

From:

• Simple –embedded

• Complex –advisory

13

The distribution strategy has sought to balance customer centricity, planner value proposition, group interests and legislative requirements

14

9/2/2011

8

Key areas of focus

• Advisory and transactional direct component is significant for Liberty

• Advisory component streamlined

- Tied and multi-tied forces (implementation by March 2012)p y

- Significant portion of force will offer group products to selected segment of the bank

- Increased depth of knowledge of products for advisors, transparency and simplicity of offering to customers

• Transactional direct will be launched in Q4 2011

- Direct call centre capability to provide life products

15

Standard Bank Insurance ServicesDenise Shaw

www.standardbank.com

9/2/2011

9

Agenda

• Structure

• Overview of the business

• ResultsResults

• Performance drivers

• Financial position

• Challenges

17

Structure

Bancassurance

JV with LibertyStandard Insurance

Limited (SIL)

Standard Bank Insurance

Brokers (SBIB)

18

Complex products

Simple products

= Standard Bank Insurance Services

9/2/2011

10

Overview of business

• Standard Bank Insurance Services provides the following insurance covers

- Homeowners insurance

- Household and vehicle insurance

- Commercial insurance (recently launched)

- Funeral insurance

- Personal debt insurance

• Homeowners, household, vehicle and commercial insurance is underwritten by SIL

• Funeral and personal debt (embedded/simple products) insurance• Funeral and personal debt (embedded/simple products) insurance products are underwritten by Liberty with SBIB acting as a broker

• Bancassurance agreement with Liberty provides for the sharing of embedded products manufacturing profits

19

Breakdown of bancassurance headline earnings

33%

44%

SIL Underwriting Profit

SBIB Broking Profit

Embedded Credit Life and Funeral Profit

20

24%

9/2/2011

11

Performance drivers

• Gross written premiums grew by 12% to R735 million mainly as a result of growth in policy base and premium indexation

• Excellent insurance underwriting results with overall loss ratio of SIL (non-g (embedded products) at 48.5% compared to 53.2% in 2010

• ROE for SIL greater than 30%

• Commission revenue grew by 11%, largely due to growth in policy base

• Penetration of embedded products into core banking product base increased from 38.4% in 2010 to 41.1%

21

Financial position

• SIL is well capitalised

• Regulatory solvency at 1H11 was 54.4% compared to regulatory solvency requirement of 25%q

• Targeted solvency ratio is 40%, implying a targeted buffer of 15%

• Strong focus on optimisation and effective utilisation of capital

• Financially, SIL is poised for growth and opportunities that will arise from the commercial insurance offering

22

9/2/2011

12

Challenges

• Grow our recently launched commercial insurance offering

• Successfully implement our broker direct initiative

• Implement Solvency Assessment and Management (SAM)Implement Solvency Assessment and Management (SAM)

• Improve penetration into the bank’s core product base

23

Mobile BankingItumeleng Monale

www.standardbank.com

9/2/2011

13

Mobile Banking customers

Unbanked and under-banked Youth What mobile banking offers:

• Reduced cost of banking

• Ease of use

B k b fi i l

25

Middle Market Business

• Bank becomes a financial partner

• Increased convenience and access

• Increased flow of value and information

Transaction notification

Account viewing &

maintenance

Functionality versus mobile technologies

USSD

WAP

Account & beneficiary

payment

Remittance

NFC

Apps

Mobile Technology

Mobile Functionality

In-band two-way communication

Instant transactions &

micro payments

WIG

GSM..

26

9/2/2011

14

The mobile banking value proposition is segment focused

Inclusive YouthMiddle Market

Business

Balance enquiry

Mini statement

Prepaid

P2P

Balance enquiry

Mini statement

Prepaid

Beneficiary payments

Transfers

Location based

services

Simple information

Balance enquiry

Prepaid

Beneficiary payments

Transfers

Payment authorisations

Balance enquiry

Mini statement

Prepaid

Beneficiary payments

Transfers

Location based

services

Social networking

Mobile wallets

Advice and information

27

Challenges of gross shift in public behaviour

www.standardbank.com

9/2/2011

15

Key drivers of customer adoption

Provide a Compellin

Break the habit!

Incentivise / Reward

Behaviour

Compelling

AlternativeCritical Success Factors

Staff adoption and usage of the service Staff commitment to behavioural shift Customer perception of security,

value and ease of use Assisted adoption and education Simultaneous on-boarding at point ofhabit! Simultaneous on boarding at point of

origination Finding seducible moments and

application of the compliance laddering approach

29

Example of compliance laddering approach

You have withdrawn 2000 Rand

Would you like to know your

account balance?

Check youraccount balanceanytime on your

phone by..

Shift customers to Digital Channels

for banking

Would you like the receipt to be sent to your

- Email - Mobile

Sample transaction:Withdrawing money from an ATM

Past transactionsxx/xx/xxx Joe cheque xxxxx/xx/xxx xxxx ATM xxx

xx/xx/xxx Joe cheque xx Transfer funds to Joethrough net banking

ATM transaction You have withdrawn

2000 Rand. You can view allyour past

transactions here

Seduciblemoment

30

9/2/2011

16

How are we doing?

Active customers

31

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

Jan 2011

Feb 2011

Mar 2011

Apr 2011

May 2011

Jun 2011

Jul 2011

Aug 2011

How are we doing?

71 200

Behaviour is evolving according to expectations

2

3

4

5

6

400

600

800

1 000

Rand value per

Transaction

Rand value per Customer

Average transaction

s per customer per month

32

0

1

0

200

July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

9/2/2011

17

What is the current customer behaviour?

13%

38%Airtime

Balance Enquiry

Banking Transactions

49%

33 Source: Market Insights & MIS

Focus areas

• Enterprise person-to-person remittance

• Zero rating of the USSD service

• Mobile applicationspp

• Alternative mechanisms for messaging efficiency

• Repeat loan extension via mobile

34

9/2/2011

18

Business BankingZweli Manyathi

www.standardbank.com

50

60

Small Enterprises (R150k-R10m) Business (R10m-R100m) Mid Corporate (R100m-R600m)

Market share

3132

2930

30

26 2422

24 23

20 21

29 29 2726

27

3233 32 29

33 3634

24 2524

27

23 23 2323

2223

24

1513

1916 18 19

19 21 20 20 18 19

0

10

20

30

40

2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2010 2011 % 00(n=1611)

008(n=1599)

009(n=1584)

0 0(n=1411)

0(n=1081)

00(n=596)

008(n=603)

009(n=606)

0 0(n=501)

0(n=654)

0 0(n=192)

0(n=349)

Absa Standard Bank First National Bank Nedbank

%

Source: Standard Bank ResearchNote: Calculated on weighted base

36

9/2/2011

19

Business banking successes

• VAF continues with its monthly payout above R2 billion and reclaiming market share

• Successful acquisition in card acquiring

- e.g. Shoprite and Moresports with a strong pipeline

• Good wins in the public sector

- e.g. Mpumalanga, Mogale City, Metsimaholo, Ehlanzeni District Municipality, Saldanha Bay

• Automation of credit origination (cost to serve)

• Agriculture continues to deliver strong, good quality asset growth

• 35 000 net new small enterprise current accounts, up from 15 000 in 2010

• Launch of BizConnect for the small enterprise segment

37

Market leader in electronic banking services

30

35

10

15

20

25

38

21 25 16 32 6

Absa FNB Nedbank Standard Bank Other

0

5

%

Source: BMI-T, 2011

9/2/2011

20

Deposit balances

16.00%

18.00%

Actual 2011 vs Actual 09/10/11 Total deposit balance (Y/Y Growth)

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

39

0.00%

2.00%

Future focus areas

• Improved efficiencies, customer turnaround and cost to serve- Digital channels (BizDirect), scored lending, self service, account opening

optimisation

• Attract talent, skills and succession of relationship managersAttract talent, skills and succession of relationship managers

• Enhanced solutions for customers- Supply chain finance solutions - contract finance, purchase order finance

- Cash solutions and cash optimisation

- Competitive Start-up package

- Merchant offering for the small enterprise market

• Extracting more value from our existing client base

• Ongoing focus on public sector, franchising and new sectors (financial g g p , g (services and retailers)

• Business portal to help customer growth, support and reducing the risk of failure

• Growing profitable market share in product and segments

40

9/2/2011

21

Credit loss ratio

5.175

6

4.38

3.143.20

2

3

4

41

0.77

1H09 FY09 1H10 FY10 1H11

0

1

%

Credit loss ratio

Conclusion

• Market share has stabilised and is increasing in key segments

• There are good success stories in the turnaround of VAF, lending and the credit outlook remains reasonable

• Focus on leveraging strengths (e.g. BOL, deposit franchise) and delivering the full value of the firm

• Continued investment in our people, especially the relationship management teams

• Future pipeline of opportunities to enhance customer value (e.g. ED, EFL) thereby growing our revenue, while maintaining focus on efficiency

42

9/2/2011

22

www.standardbank.com