emea retail banking study 2005 core banking and customer management of retail banks in europe,...
TRANSCRIPT
EMEA Retail Banking Study 2005 Core Banking and Customer Management of Retail Banks in Europe, Middle East and Africa (EMEA)
Kay PatzwaldSAP Business Consulting
Market & Competition
Cross border Banking Services in the EU increase competition.
Foreign Banks, competitors from other sectors and specialised institutions increase the competition.
New Technologies enable increasing communication, automation and analysis options.
Differentiation at product and service level becomes more and more difficult.
Increased transparency with regard to cost/benefit and decreasing loyalty of customers.
Motivation
EasyCheapFast
Reliable…
Goals of the Study
Status Quo evaluation of the Banking Industry in EMEA with regard to the performance of the core banking systems and the resulting ability to realise the Customer Management approach.
Identify the trends in Core Banking and Customer Management within the next three years.
Characteristics
Scope: Retail Banks in Europe, Middle East and Africa (EMEA)
Target Group: Vice President LevelSales / Marketing / CRM / IT
Medium: Web Questionnaire with 33 questions
Timeframe: Ongoing since Q4 2003
Partner: University of Mannheim / EFMA, Paris
Framework
Strategy
Information Technology & Application Systems
People & Organisation
Acquisition Advisory Processing ServiceProduct &
Service Development
Multi-Channel Customer Management
Business Intelligence & Controlling
Topography of the Study
Each block represents a set of questions in the questionnaire.
Countries and Customer Base
Source: E
ME
A R
etail Banking S
tudy 2005
13%
18%
37%
27%
5%
< 500' 500' < 1 Mio. 1 < 5 Mio. 5-10 Mio. > 10 Mio.
N = 42
Country Number of Banks
Belarus 4Belgium 4Croatia 1France 2Georgia 1Germany 3Hungary 2Ireland 1Italy 4Jordan 1Kazakhstan 1Netherlands 1Poland 1Portugal 2Romania 2Russia 1Serbia 2Slovenia 2South Africa 3Spain 1Sweden 2Switzerland 1UK 3
Current and Future Ranking
Significant differences with regard to the overall score.
Overall Score per Bank [%]
Number of Banks
420%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41
Source: E
ME
A R
etail Banking S
tudy 2005
N = 42Status Quo Expectation (+3 years)
Growth is the Primary Business Strategy
Key Finding I
Primary Business Strategy
What is your bank's primary business strategy?
Source: E
ME
A R
etail Banking S
tudy 2005
Most banks focus on a growth strategy - mainly achieved by cross selling to existing customers.
85%
15%9%
41%
50%
35%
50%
15%
0% 0%
Primarilydriven bygrowth
strategy
Externalgrowth bymerger &
acquisition
Newcustomer
acquisition
Cross-sellingproducts &services to
existingcustomers
Primarilydriven by
cost cuttingstrategy
Incrementalprocess
improvement
Broaderlarge-scalebusiness
process re-engineering
Head countreductions
Outsourcing/shared
services
Elimination ofunprofitablecustomers
Growth strategy Cost cutting strategy
Primary Strategy: N = 41 Growth Strategy: N = 35Cost Cut. Strat.: N = 6
Cross-Selling Ratio in Retail Banking
Typically how many of your products do your customers use?
Source: E
ME
A R
etail Banking S
tudy 2005
The cross-selling ratio is expected to increase significantly within the next three years.
18%
35%
20%
10%
17%
3%
15%
32%
12%
38%
< 2 2 - 2.5 2.6 - 3 3.1 - 3.5 > 3.5
N = 40Status Quo Expectation (+3 Years)
Cost/Income Ratio
What is the current cost/income ratio of the bank?
23%
31%
26%
10% 10%
< 50 % 51 - 60 % 61 - 70 % 71 - 80 % > 80 %
N = 39
What is the expected improve of the cost/income ratio?
N = 39
8%
10%
31%
38%
13%
0%
1 <= 3 %
3 <= 5 %
5 - 10 %
> 10 %
Source: E
ME
A R
etail Banking S
tudy 2005
51% of the banks intend to improve their cost/income ratio by more than 5 percentage points.
Data Management remains a future challenge with a high impact on Customer Management success.
Key Finding II
Customer Information Plan (CIP)
Do you have a comprehensive and accessible Customer Information Plan covering information value; acquisition priorities; information management and usage?
20%
54%
24%
2%2%
15%
59%
24%
None Partial Substantial Complete
N = 41Status Quo Expectation (+3 Years)
Source: E
ME
A R
etail Banking S
tudy 2005
The customer information plan is a basic instrument for further Customer Management activities.
Customer Data Capture
How capable are your IT systems in the collection, storageand effective retrieval of customer data?
Source: E
ME
A R
etail Banking S
tudy 2005
86% expect significant improvements of customer data capture capabilities.
5%
14%
50%
21%
10%
0% 0%
14%
41%45%
Little or no capability Capability being developed Some capability only Full capability but mixedusage
Full capability usedconsistently
N = 42Status Quo Expectation (+3 Years)
Customer Data Analysis
To what degree do you analyze or mine customer data?
Source: E
ME
A R
etail Banking S
tudy 2005
Regular Data Mining will become a common instrument for customer data analysis.
29%
21%
36%
14%
2%
12%
29%
57%
Ad-hoc basic analysis Regular, structured basic analysis Regular basic analysis with ad-hoc data mining
Regular & consistent process ofdata mining
N = 42Status Quo Expectation (+3 Years)
Leveraging IT on Inbound Contacts
To what extent do front line staff have Information Technology support to initiate appropriate sales opportunities versus simply responding to customer requests?
Source: E
ME
A R
etail Banking S
tudy 2005
10%
15%
51%
24%
0%0%
7% 7%
37%
49%
Little or no capability Capability being developed Some capability only Full capability but mixedusage
Full capability usedconsistently
N = 41Status Quo Expectation (+3 Years)
The expectation is to better exploit the sales potential of inbound contacts within the next three years.
Product/Service Expertise
To what extent do your front line employees have the automated tools to provide personalised service or advice across all Retail Banking products?
Source: E
ME
A R
etail Banking S
tudy 2005
Virtually all banks will set up automated front-line support.
7%
12%
21%
53%
7%
0%
5%
0%
50%
45%
Not at all Insufficient automation Inconsistent automation Partially automated Fully automated
N = 42Status Quo Expectation (+3 Years)
Real Time becomes a standard for processing and delivery.
Key Finding III
Campaign Development Timescale
How long does it take to deliver a major (TIME CRITICAL)direct marketing campaign?
17%
44%
24%
15%
7%
12%
27%
54%
> 12 weeks 8-12 weeks 4-8 weeks < 4 weeks
N = 41 Curr.N = 40 Exp.
Status Quo Expectation (+3 Years)
Source: E
ME
A R
etail Banking S
tudy 2005
Banks are targeting a more than 50% reduction in their direct marketing campaign development timescale within the next three years.
Timeliness in Delivering Account Products
What is your ability to deliver current & deposit or savings account products from the time of initial customer inquiry to account initiation?
Source: E
ME
A R
etail Banking S
tudy 2005
Real time account initiation will be the future standard.
14%
3%
19%
43%
21%
2% 0%3%
26%
69%
Varies significantly bychannel
Over 5 days in all cases 2-3 days on average Within 24 hoursirrespective of channel
Immediately (real time) inmulti-channels
N = 42Status Quo Expectation (+3 Years)
Handling Customer Enquiries
What proportion of customer enquiries, transactions and complaints do your call centre / banking help desk handle & close at first contact?
Source: E
ME
A R
etail Banking S
tudy 2005
Banks expect significant improvements in closing enquiries at first contact.
7%
18%23%
35%
17%
0%
7%
18%
25%
50%
None or hardly any < 25% 25<50% 50-80% > 80%
N = 40Status Quo Expectation (+3 Years)
Real Time Customer View
To what degree can customers access a real time, channel independent view of their portfolio?
Source: E
ME
A R
etail Banking S
tudy 2005
55% of the banks aim to achieve real time customer view for all products/services in all channels.
7%
29%
21%
33%
10%
0%
9%
17%19%
55%
No integrated accountstatus visible
Some products/services insome channels
All products/services insome channels
Some products/services inall channels
Yes - for allproducts/services in all
channels
N = 42Status Quo Expectation (+3 Years)
Customer Information Updating
How promptly is customer data or information updated across all channels?
Source: E
ME
A R
etail Banking S
tudy 2005
Real time updating of customer information will become the future standard.
19%
31%
14%
19%17%
0%
5%
12%
43%40%
Greater than 1 day forsome channels
24 hours on average Within hours - all channels Real time - most channels Real time - all channels
N = 42Status Quo Expectation (+3 Years)
Banks tend to adopt standard software for their Core Banking IT.
Key Finding IV
Strategic Value of IT
What is the strategic value added by your current IT systems?
Source: E
ME
A R
etail Banking S
tudy 2005
One third of the banks are currently limited to deliver their strategic promises due to weaknesses of current IT-Systems.
7%
29%
52%
12%
0% 0%
69%
31%
Strategic disadvantage Constrains our ability to deliver onour strategic promise
Sufficiently supports our businessstrategy
Strategic competitive advantage
N = 42Status Quo Expectation (+3 Years)
IT Investment
What percentage of your overall Retail Banking costs do you spend on information technology (ongoing & investments)?
Source: E
ME
A R
etail Banking S
tudy 2005
Virtually no bank will invest less than 6% of the overall Retail Banking costs.
15%
27%
35%
23%
3%
41%38%
18%
0-5% 6-10% 11-15% >15%
N = 34Status Quo Expectation (+3 Years)
IT Landscape
How would you characterise your current infrastructure for Core Banking?
Source: E
ME
A R
etail Banking S
tudy 2005
Banks intend to adopt a higher proportion of standard software in the coming three years.
7%
38%
48%
7%
0%0%
17%
52%
29%
2%
Completely developed in-house
Predominantly developedin-house
Mixed in-housedevelopment & standard
software
Predominantly standardsoftware
Completely standardsoftware
N = 42Status Quo Expectation (+3 Years)
Key Findings EMEA
Cross selling is the most important initiative to achieve the growth objectives for most of the banks.
Customer data planning, availability and analysis remain future challenges with a high impact on Customer Management success.
Real Time processing or delivery will become the standard for many processes.
Weaknesses of current IT-systems limit one third of the banks to deliver their strategic promises today. But in the future one third aims to achieve strategic competitive advantages by means of IT.
Banks are moving away from in-house development.
Status Quo (Average) Expectation (Average)
N = 42
0,20
0,40
0,000,00
0,20
0,40
0,60
0,80
1,00Strategy
Business Intelligence & Controlling
Product & Service Development
Acquisition
AdvisoryProcessing
Service
People & Organisation
Information Technology & ApplicationSystems
Overall Results per Section
EasternEurope
Strategy
Business Intelligence & Controlling
Product & Service Development
Acquisition
AdvisoryProcessing
Service
People & Organisation
Information Technology & ApplicationSystems
20%
40%
60%
80%
100%
0%
EMEA EMEA N = 42
N = 17Eastern Europe Eastern Europe
Status Quo Expectation (+3 years)
Overall Results per Section EMEA vs. Eastern Europe
Source: E
ME
A R
etail Banking S
tudy 2005
Primary Business Strategy (Eastern Europe)
What is your bank's primary business strategy?
Source: E
ME
A R
etail Banking S
tudy 2005
Growth strategy based on new customer acquisition predominant.
88%
12%14%
64%
22%
50% 50%
0% 0% 0%
Primarilydriven bygrowthstrategy
Externalgrowth bymerger &
acquisition
Newcustomer
acquisition
Cross-sellingproducts &services to
existingcustomers
Primarilydriven by cost
cuttingstrategy
Incrementalprocess
improvement
Broaderlarge-scalebusiness
process re-engineering
Head countreductions
Outsourcing/shared
services
Elimination ofunprofitablecustomers
Growth strategy Cost cutting strategy
N = 16
6%
23%
59%
12%
0%
7%
38%
48%
7%
0%
Completely developed in-house
Predominantly developedin-house
Mixed in-housedevelopment & standard
software
Predominantly standardsoftware
Completely standardsoftware
IT Landscape (Status Quo)
Source: E
ME
A R
etail Banking S
tudy 2005
Eastern Europe does apply a higher proportion of standard software for Core Banking today.
N = 17N = 42
Eastern Europe EMEA
Eastern Europe EMEA
How would you characterise your current infrastructure for Core Banking?
0%
6%
41%
47%
6%
0%
17%
52%
29%
2%
Completely developed in-house
Predominantly developedin-house
Mixed in-housedevelopment & standard
software
Predominantly standardsoftware
Completely standardsoftware
IT Landscape (Expectation)
The trend towards standard software in core banking for the future is stronger too.
Source: E
ME
A R
etail Banking S
tudy 2005
How would you characterise your current infrastructure for Core Banking?
N = 17N = 42
Eastern Europe EMEA
Eastern Europe EMEA
What is your ability to deliver current & deposit or savings account products from the time of initial customer inquiry to account initiation?
23%
0%
12%
47%
18%
14%
3%
19%
43%
21%
Varies significantly bychannel
Over 5 days in all cases 2-3 days on average Within 24 hoursirrespective of channel
Immediately (real time) inmulti-channels
Timeliness in Delivering Account Products (Status Quo)
Source: E
ME
A R
etail Banking S
tudy 2005
Eastern European banks are close to the real time capabilities of the EMEA sample.
N = 17
Eastern Europe EMEA
Eastern Europe EMEA
6%
0%
6%
12%
76%
2% 0%3%
26%
69%
Varies significantly bychannel
Over 5 days in all cases 2-3 days on average Within 24 hoursirrespective of channel
Immediately (real time) inmulti-channels
Timeliness in Delivering Account Products (Expectation)
Source: E
ME
A R
etail Banking S
tudy 2005
The expected real time capabilities are even higher for Eastern European banks.
What is your ability to deliver current & deposit or savings account products from the time of initial customer inquiry to account initiation?
N = 17
Eastern Europe EMEA
Eastern Europe EMEA
18% 18%
29%
35%
0%
10%
15%
51%
24%
0%
Not at all Insufficient automation Inconsistent automation Partially automated Fully automated
Source: E
ME
A R
etail Banking S
tudy 2005
The automated support for customer service employees is less developed in Eastern Europe today.
To what extent do your front line employees have the automated tools to provide personalised service or advice across all Retail Banking products?
Leveraging IT on Inbound Contacts (Status Quo)
N = 17N = 41
Eastern Europe EMEA
Eastern Europe EMEA
Within three years there are equal capabilities expected.
0%
12%
0%
41%
47%
0%
7% 7%
37%
49%
Not at all Insufficient automation Inconsistent automation Partially automated Fully automated
Source: E
ME
A R
etail Banking S
tudy 2005
To what extent do your front line employees have the automated tools to provide personalised service or advice across all Retail Banking products?
Leveraging IT on Inbound Contacts (Expectation)
N = 17N = 41
Eastern Europe EMEA
Eastern Europe EMEA
18%
29% 29%
12% 12%7%
18%23%
35%
17%
None or hardly any < 25% 25<50% 50-80% > 80%
Handling Customer Enquiries (Status Quo)
Source: E
ME
A R
etail Banking S
tudy 2005
Eastern Europe is behind EMEA with regard to the customer enquiries closed at first contact.
N = 17
Eastern Europe EMEA
Eastern Europe EMEA
What proportion of customer enquiries, transactions and complaints do your call centre / banking help desk handle & close at first contact?
0%
13%
29% 29% 29%
0%
7%
18%
25%
50%
None or hardly any < 25% 25<50% 50-80% > 80%
Handling Customer Enquiries (Expectation)
Source: E
ME
A R
etail Banking S
tudy 2005
What proportion of customer enquiries, transactions and complaints do your call centre / banking help desk handle & close at first contact?
The planned improvements for customer enquiries are less significant in comparison to whole EMEA.
N = 17
Eastern Europe EMEA
Eastern Europe EMEA
Key Findings Eastern Europe (compared to EMEA)
Primary business strategy is growth too. But realisation is intended by means of acquisition of new customers mainly.
Stronger focus on automation to exploit in-bound contacts.
Real time processing and delivery is a strong focus too.
The trend towards standard software is slightly stronger.
Consideration for Actions
Use a Customer Information Plan as strategic instrument to plan the required adjustments technically and organisationally
Successful Customer Management requires a combination of statistical knowledge (e.g. live cycle dependent models) and a deep level of customer individual data (e.g. moments of truth).
You can only show improvements in what you can measure.
Enhance traditional measures e.g. product profitability by the customer value analysis.
Comprehensive and realistic analysis of the current situation to develop realistic targets.
Include all aspects into the improvement process i.e. strategy, processes, organisational aspects and IT.
Status Quo Expectation (+3 years)
The self assessment seems partly unrealistic (Service) and not all aspects are considered (Strategy).
Source: E
ME
A R
etail Banking S
tudy 2003
0,00%
20,00%
40,00%
60,00%
80,00%
100,00%Strategy
Business Intelligence & Controlling
Product & Service Development
Acquisition
AdvisoryProcessing
Service
People & Organisation
Information Technology & ApplicationSystems
Real Case - Profile
Number of Banks
Source: E
ME
A R
etail Banking S
tudy 2003
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Expectation 72,5%
Status Quo 51,4%
Real Case – Overall Ranking
N = 23Status Quo Expectation (+3 years)
Overall Score per Bank [%]
The bank is currently below average and will loose further ground although significant improvements in some areas are expected.
Thanks for Your Attention
HTTPS://webserver2.psychologie.uni-mannheim.de/befragungen/EMEA/Banking/Study/
Kay PatzwaldSenior Business ConsultantSAP Business Consulting EMEA
SAP Deutschland AG & Co. KG Neurottstraße 15a69190 Walldorf
T +49-6227-7-47052M +49-160-90822957E [email protected]