personal & business banking sa - the vault | investor ... 9/2/2011 1 personal & business...
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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
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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
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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
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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
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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)
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We are still focused on service
7
We are open for business
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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
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BancassuranceAngela Mhlanga
www.standardbank.com
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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
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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
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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
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The distribution strategy has sought to balance customer centricity, planner value proposition, group interests and legislative requirements
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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
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Standard Bank Insurance ServicesDenise Shaw
www.standardbank.com
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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
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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
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Breakdown of bancassurance headline earnings
33%
44%
SIL Underwriting Profit
SBIB Broking Profit
Embedded Credit Life and Funeral Profit
20
24%
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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%
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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
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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
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Mobile BankingItumeleng Monale
www.standardbank.com
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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..
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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
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Challenges of gross shift in public behaviour
www.standardbank.com
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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
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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
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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
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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
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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
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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
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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
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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
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www.standardbank.com