aparna mittal fore
DESCRIPTION
ING Hunt for LionsTRANSCRIPT
APARANA MITTAL
FORE School of Management
Hunt for the Lions – The ING way
Digital Banking OutlookConsumer Survey and
SWOTRoad Map
Objectives
Analysis
Insights
Recommendations
To study the digital banking industry, growth drivers, trends and challenges
Digital banking is registering a steady growth but the adoption rate is still poor
Growth Drivers – Rise in young population, high internet and smart phone penetration.
To understand the demographics of digital banking users and non-users and segment them.
The average age of digital banking users is fairly young and security tops the concerns of non-users
Large number of respondents are still not using digital banking channels, it is advisable to target them. Tablets are seen to be emerging.
To suggest a suitable roadmap for the enterprise as well as product offerings.
Cross-channel collaboration and use of analytics to predict consumer preferences is an area of interest.
Bank-end CRM systems have to be in place to integrate data from various channels. Market ING as the safest bank to work with.
Advisable to educate the branch visitors and alleviate their security concerns and get them to adopt digital banking channels. Work towards cross channel optimization strategy.
353430
464 458
2001 2011 2021 2026
Youth Population (in millions)
• By 2020, the average age of India will be 29 years .
• 64% will be in the working age group
68.5
99
130.4 137 141158
56.5
80
108116 120
136
Jun-11 Jun-12 Jun-13 Oct-13 Dec-13 (est)
Jun-14 (Est)
Overall Internet Users (in millions)
Claimed ActiveWhat does young India want? Real time online information Convenience Ease of engagement
Digital Banking –Growth Drivers
Penetration rate = 17%
48
91110
130
349
Jun-12 Jun-13 Oct-13 Dec-13 Jul-14
Social Media Apps11%
Youtube16%
Game Apps11%
Location based Apps
5%
Banking or Finance Apps
7%
Others50%
Smart Phone Usage
Mobile Phone Penetration – 28%Smart Phone Penetration – 13%
Mobile Phone Users (in millions)
Internet Banking - Growing
35
17.5
10
35
20
11
Public Domestic Private Foreign
Increase in registered users in %
2012 2013
32 31
90
68 69
10
Public Domestic Private Foreign
Internet Banking - Active v Inactive Users in %
Active Inactive
But the active users are still very less.
95.2
3.8 0.5 0.5
82.7
13.90.9 2.5
97.8
1.8 0.4 0.1
Branch Banking Online Banking Mobile Banking Phone Banking
Average daily number of requests services in %
All banks Private PublicAs per industry researches the key reasons cited for low adoption rates are :
Deep rooted faith in paper transactions Belief that branch is where all banking happens Fear of transacting online.
There exists a significant opportunity to migrate more customers to the digital
banking channel.
Demographic
Gender – 62% Males, 38% FemalesAverage household Income – Rs 6.5 LPAAverage Age – 22.5 yearsEmployment Status – 50% employed, 50% studentsEducation Level – 75% Graduate, 25% High School
Top 3 uses of digital banking
#1 – Account balances tracking (48%)#2 – Transaction history (23%)#3 – Funds transfer (14%)
Importance of security feature
71 23 4 2
Highly Important Important
Somewhat Important Not Important
Security of digital transactions is a major concern among banking customers.
Deterrents to Digital Banking Usage
Lower Transaction Fee
for other payment option
3%
Lack of Knowledge
7%
Interface not user friendly
15%
Security of Transaction
25%
Prefer other options such as
debit card/credit card50%
Tablet v Smart phones
42% - Tablet 32% - Smart phones
Disinclined Conservatives
Aspiring Bloomers Liberal Users
Ardent Affluents
Cautious Senior
High LowIncome-level
Rel
ativ
e-u
sage
of
dig
ital
b
anki
ng
Hig
hLo
w
Aspiring Bloomers : Digitally inclined, use digital banking atleast a month, willing to try and adoptadvanced features like e-wallet Ardent Affluents : Highly engaged with mobile devices, seek value-added services such as spendingpattern analysis, rewards/points. This segment will respond strongly to tab-banking. Liberal Users : They use digital banking but not extensively. Cautious Senior : Value seekers, interested in products offering tangible rewards, highly sensitive tosecurity concerns Disinclined Conservative : Serious concerns about safety and security. Rely more on branchbanking, banks can gain from informing them about the benefits of mobile banking and alleviatingtheir security concerns. This could encourage this segment to try mobile banking.
Who to target ? (Highlighted in Red)
Size of the circle denotes the number of respondents identified to be from that segment
Strengths
Online
- No limit about time and domain (89% of the respondents prefer 24*7 fulfillment of
their banking needs)
-Reach Globally
-Economies of Scale
Branch
- Strong Management
- Higher sales
Weakness
Online
- Technologically efficient staff shortage.
- Lack of Security (64% of those who do not use digital banking cited security as the
biggest concern)
Branch
- Lack of scale
Opportunity
Digital
- Use of social networking sites (77% of respondents would like to use social
networking portal to carry out banking activities)
- Tab–banking (64% respondents said they prefer using tabs to mobile)
- Increased demand for financial products (72 % Customers use Internet as the source
of information about financial products)
Branch
- Expanding value added services
Threats
Digital
- Law is not sufficient
- Lack of follow up supervision
- Foreign Banks hit
Branch
- Political Risk
Online v Digital
Marketing and Sales Customer On boarding and account opening
Servicing
Cross-channel collaboration and sales force enablement
Cross-channel customer, 360-degree, lead and insight capture and delivery
Cross-channel marketing and sales enablement
Insight – driven organization
Status-tracking, status-reporting and customer communications
Cross-channel application management
Personalization and self service
Customer experience management
Cross channel service management
Cross channel Process, Case and Data Management
Multi-mode channel listeners
Analytics modeling and insight delivery
Reporting and Dashboarding
A cornerstone channel optimization strategy is critical as it will create :• Seamless, integrated customer experiences
ING should leverage analytics for changing customer behavior across all touch points.• Fortify ING brand and reinforce ‘Safest Banker’ and ‘Top 5 trusted brand’ image
Key Partners :1. Digital
Partners2. Merchants3. Payment
Networks4. Telcos5. Technology
Partners6. Logistic
Partners
Key Activities:1. Payments2. Lending3. Deposits
Key Resources :1. Capital2. Sales Channel3. Branches4. Employees5. Sales brokers
(Lending)
Cost Structure1. Credit pricing/Lower credit volumes2. Cost of compliance3. Cost of capital (lower interest rates
so lower deposit volumes)4. Broker Fees
Value Proposition:1. Convenience2. Self-service3. Trust4. Liquidity
Customer Relationship1. Customer lifetime
value2. Improved customer
engagement3. Loyalty4. Repeat transactions
Channel Value to BankSales Service
Branch H LWeb H HMobile H HChat L LSocial H LATM H L
Customer Segment1. Convenience2. Self-service3. Trust4. Liquidity
Revenue Structure1. Subscription (Annual Fee)2. Bait and hook (free checking, debit card-
based payments, transactions using checks)3. Free channel services promoting bill
pay, etc.4. Merchant-funded offers.
Digital Banking – Multi dimensional Attributes for ING
H=High, L=Low
Online
Mobile
SMS
Phone
Social Media
Why should ING leverage the digital channels?
Digital Banking will offer the best of two worlds
Fair price with transparency and
comparability
Immediate high quality interaction
Fast and secure processing
Rich Spectrum of Products and Services
Lean channel and organization structure
Streamlined Governance and agile
culture
Integrate IT infrastructure
Enhanced revenue model
Best of Both
Worlds
Outside – New Customer Experience
Inside – Efficient and effective operating model
11% of total population is using social media
platforms.Facebook is the most
frequently used platform. Integrate the data
with bank-end CRM systems
Tablet
Product CurrentSituation
Proposed Channel to beleveraged
OtherComments
Preferred Banking Relies uponthe branchstaff –RelationshipManagers(RMs)
• Use of Skype/Facetime toget in touch with the RM.• Through Decision SupportSystems, ING can usepurchase decisions of peersto help customers make adecisions, give automatedproduct recommendations,etc.• Add demos to help ineasier access.
• Internet – bycreating adedicatedplatform.
• Mobile –through INGMobile App
78% of thesurveyedpeople preferself servicerather thansomebody attheir disposalall the time.
Forex Solutions 6 currencies –1 cardTC – ValidityboundSinglemerchantpartner (VISA)
• Increase number ofcurrencies of the card (AED,SGD, SEK, CHF)• Unlimited TC validity.• Partner with master card.• Make the card virtual,create a world e-walletservice of the 23 currencynotes to make paymentsworldwide.
• Mobile – AddForex Solutionsto the INGMobile App.• Give rewardpoints formaking apurchaseabroad throughe-wallet.
62% of thesurveyedpeople preferto use mobilephones fornet bankingwhentravellingabroad.
Product CurrentSituation
Proposed Channel to beleveraged
OtherComments
FD Digitalizedthrough SMSand phone.
• Add “Book FD option” to the INGmobile App.• Nomination facility through NetBanking, Mobile App.
Both internetand mobile
--
BillPayment
150+ BillersRemindersCan addregistered bills
• Make a suite of bill-managementactivities.• Provide capabilities to organizebills as a dashboard, ING App willwarn customers of unusually largebills or insufficient funds.
The suite to bemadecompatiblewithcomputers,tablet as wellas mobile.
32% of therespondentsuse digitalbanking topay theirbills.
Contd..
Other Suggestions :
Link Accounts : Complete control and seamless access to loan, demat and credit cardaccounts held with ING Bank by linking them with the one account accessible viamobile and internet platform. Create an App which specifically uses facebook credentials to log in and offerscustomers the convenience of banking through facebook. Tablet-specific Apps should be made.
ING Vysya Bank services 2 million customers on a PAN India basis (Source : ING Investor Presentation)Out of these 7% are already using net banking. (Study by McKinsey & Company, http://www.business-standard.com/article/finance/7-account-holders-in-india-use-net-banking-study-111072000193_1.html)
As a reference point we begin with 140,000 customers already using digital banking at ING Vysya Bank
Adoption rate = Assuming 10% of the non-online customers become online customers every year we get
In India, Cost of servicing at the branch = Re. 1Cost of servicing through internet = 10pCost of servicing through phone = 35 pCost of servicing through debit cards = 20 p (Also, assuming all the channels are simultaneously used toservice the customers)*Cost Savings will be Rs. 11,84,541 in the next three years.
2015 2016 2017
186000 167400 150660
ITEM Web Phone Debit Cards
2015 167400 120900 148800
2016 150660 108810 133920
2017 135594 97929 120528
*Source : http://www.icmrindia.org/free%20resources/casestudies/banking3.htm
The bottom line: Based on these assumptions, a 10% increase in online banking adoption could reduce support costs by about Rs 1.1 million.
Digital Banking is to grow at an exponential rate till 2050
Adoption rate is low which is reflected in the survey undertaken also. Hence disinclined conservatives should be targeted by educating them about digital banking experience to increase the adoption rate as well as retain them. Key is to market ING’s image as “Safest Bank” to work with.
Currently, internet is the most commonly used channel for digital banking followed by mobile. But it is seen that customers are very inclined to use tablets for net banking. Hence tab-specific banking applications should be made.
An emerging trend of using social media (like Facebook) to use carry out banking transaction is noticed.
ING’s roadmap to go digital should provide a seamless experience that lets customers decide how and when they interact with the bank. 360-degree channel strategy should be adopted.
• Key attributes to be considered are partner relationship, integrating customer data, creating value proposition and targeting customers based on that proposition
References :
• http://wearesocial.net/tag/india/• http://ingvysyabank.com/IngBlog/Media/PDF/Investor-Presentation_Q1-FY15.pdf• http://www.ingvysyabank.com/personal-banking/products/home.aspx• http://www.bain.com/publications/articles/digital-challenge-to-retail-banks.aspx• Growth and Development of Retail Banking in India: Drivers of Retail banking, Dr. Samiksha Ojha and Vibhu Bhandari• Internet Users in India Crosses 200 Million Mark , Internet and Mobile Association of India Report, 2013• http://www.fmsi.com/-what-will-your-branch-transaction-volume-be-in-2025.xhtml
PRIMARY SOURCES :
• Consumer Survey (Structured Information)• Conversation with the respondents (Unstructured Information)