Transcript CIO/CTO Panel: Matching Business Priorities within IT

Why the Branch of the
Future is a Key
Industry Initiative
Monique Gibelli
Vice President
Agenda
 What have we learned?
 Customer Care and Channel Requirements
 Branch of the Future: Vision and Reality
 Looking ahead
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
2
What Have We Learned….
 Surveyed executives at 91 financial institutions using a
global and cross-segment sample methodology
 Survey focused on business initiatives driving IT
choices and IT spending
 Participants selected from the top 1000 institutions:
– Banks ranked by assets
– Capital markets ranked by capital or assets under
management
– Insurance ranked by premiums written
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
3
CEO Perceptions of Technology
All Banks
North America
Europe
Asia Pacific
0%
20%
40%
60%
80%
100%
% of Respondents
Technology Driven
N: All Banks=45; NA= 27;
Europe =11; APAC = 7
Selective Investments Worthwhile
Indifferent to Technology
Technology not Strategically Valuable
Source: Financial Insights 2004 IT Spending Survey
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
4
Impact of Initiatives Varies by
Industry Segment
Infrastructure
Back Office
Core Accounting
Centralized Customer Mgmt
Front Office
Operational Risk
Financial Reporting
Regulatory Compliance
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
% of Respondents Ranking Initiative as Important or Very Important
N=91
Banks
Capital Markets
Insurance
Source: Financial Insights 2004 IT Spending Survey
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
5
Drivers for Change at Banks
Infrastructure
Back Office
Core Accounting
Acquisition
Regulation
Market
Cost
Centralized Customer Mgmt.
Front Office
Operational Risk
Financial Reporting
Regulatory Compliance
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
% of Respondents
N=45
Source: Financial Insights 2004 IT Spending Survey
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
6
Annual Technology Impact by
Business Priority at Banks
Infrastructure
Back Office
Core Accounting
Centralized Customer Mgmt
Front Office
<$1M
Operational Risk
$2–5 M
Financial Reporting
>$5M
Regulatory Compliance
0%
10% 20% 30% 40% 50% 60%
% of Respondents
N=45
Source: Financial Insights 2004 IT Spending Survey
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Channel Preferences of All
Respondents by Age
100%
90%
80%
ATM
70%
Branch
60%
Call Center
50%
IVR
40%
Online
30%
20%
10%
0%
0-20
21-30
31-40
41-50
51-60
61-70
71-80 81-120
Age
Source: Financial Insights, Federal Reserve Board Survey of Consumer Finance
This is Figure L from “Consumer Channel Utilization: A Demographic
Analysis of Preferences in the US ” document #FIN1500, August 2004
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Channel Preferences of All
Respondents by Income
90%
80%
70%
60%
ATM
50%
Branch
40%
Call Center
IVR
30%
On line
20%
10%
0%
$0 $25K
$25K $50K
$50K $100K
$100K - $250K - $500K $250K $500K
$1M
>$1M
Source: Financial Insights, Federal Reserve Board Survey of Consumer Finance
This is Figure P from “Consumer Channel Utilization: A Demographic
Analysis of Preferences in the US ” document #FIN1500, August 2004
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Top Two Ranking of Business Priorities –
Brazil Banks in 2005
1 Increase credit operations
2 Increase number of clients
3 Increase number of products offering
4 Increase banking operational efficiency
Large Banks
Small Banks
5 Increase number of branches
6 Bacen/Basel II e Sarbanex Oxley requirements
7 Increase number of channels to achieve C/D/E
8 Integrate databases (unique client view)
9 Modernize their branches
0%
(c) 2005, Financial Insights, an IDC company, All rights reserved.
10%
www.financial-insights.com
20%
30%
40%
50%
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How Can Institutions Sustain
Competitive Advantage?
 Product leadership
Service is the only
sustainable advantage
for the vast majority of
institutions
 Price leadership
 Superior service and
customer relationships
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Service Is
Helping
Service isn’t the
contact center or the
branch …
Support
It is a business
strategy that
pervades the
institution
Delivery
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Customer Care Overview
 Where does customer care fit…
– in the customer management framework?
– in the organization?
 Where is customer care going?
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Customer Management Evolution
Dynamic Marketing
eCare & Self Service
Mass Customization
Customer Profitability & Risk
1990
Sales force
automation
- Point solutions
- Low adoption
- Fragmented
DOS/mid-range
mid-90s
late-90s-2002
2002+
Integrated sales
& service begins
Wider deployment/
access (Web tech)
CRM & care begin to be
part of channel
framework
- Usability improves
- Adoption
increases
- Silo mentality
prevails
- Multichannel
begins
- Hype cycle starts
& almost kills
CRM
- Collaborative
infrastructure, database virtualization
- Customer hub born
Windows
(c) 2005, Financial Insights, an IDC company, All rights reserved.
Web-Gen #1
Unix/J2EE
www.financial-insights.com
Web Services/ Data
Management
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Where Does Customer Care Fit?
Back
Office
LOB
Product
System
Operation Silos
Customer Care
Risk
Process Automation
Middle
Office
Profitability
Data/Resource
Virtualization (Hub)
Collaboration
Implementation
Front
Office
Sales/Pipeline
Customer Portal
(c) 2005, Financial Insights, an IDC company, All rights reserved.
Service Channels
www.financial-insights.com
Employee Portal
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But, ….. Channels Are Saturated
 Institutions can’t afford more channels
???
 Customer adoption slow or low
IP Telephony
WebTV
 Who needs more channels?
SMS Mobile Phones
Video Conferencing
Interactive
TV
 Integration is complex
Internet
Dial-in Windows PC banking
Growth in number of
financial service
delivery channels
Kiosks
In-Store Branches
Dial-in DOS PC banking
Videotex
Call Centers
ATMs
Agency & Branch
Simple
1975
Proliferation
1985
1995
Complex, saturated
2000
2005
Source: Meridien Research
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Integrated, Multichannel Vision Is
Necessary For Full Service Banks
Shared Infrastructure and Legacy Systems
Full-service Branch
Inquiry
Transfer
Deposit
Withdrawal
Account Opening
Loan Origination
Trading
Fin’l Planning
Seminars
Training
ATM
Inquiry
Transfer
Deposit
Withdrawal
Source: Financial Insights
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Branch of the Future
Business Partner
Branch
Enterprise NetworkExtranet
Multichannel
Web
Application
Servers
Platform
Traditional
branch
activities
Expanded
product set
Web platform
IP Telephony
Branch
Servers
Core
Application
s
CIF/CIS
Product
Specialists
Web teller
Data
Warehouse
Web kiosk
Voice
Network
Operational
excellence
Customer
focused
Web ATM
Web video
conference
Intranet
Extranet
Contact
Center
Customer
Analytics
…
IP Wan
External
ATM
& Bank
Networks
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Retail Bank Branch of the Future
30 years in the making
Technology changes
 Moore’s law : power, cost
– 90% of customers use branch  Bandwidth explosion
– 70% use > 1 channel
 Multichannel delivery
 Continuous competitive pressure  Internet & Web technologies
 Undifferentiated products
Marketplace changes
 More channels
Traditional
branch
activities
Expanded
product set
Operational
excellence
Customer
focused
(c) 2005, Financial Insights, an IDC company, All rights reserved.
Future Near Term
Market Vision
Now
Technology Vision
• IP Telephony
• Web branch … platform & teller
• Common IP voice & data backbone
• Web ATMs & Kiosk
• Wireless LAN
• Video
www.financial-insights.com
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Architecture for the Future
Branch
Enterprise Network
Multichannel
Web
Application
Servers
Platform
Web platform
IP Telephony
Branch
Servers
Product
Specialists
Web teller
Voice
Network
Web kiosk
Intranet
Extranet
Web ATM
IP WAN
Web video
conference
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
Contact
Center
Business Partner
Extranet
Core
Applications
CIF/CIS
Data
Warehouse
Customer
Analytics
…
External ATM
& Bank
Networks
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Branch of the Future Business Case
Lower Cost
Competitive Advantages
Improved Service
(c) 2005, Financial Insights, an IDC company, All rights reserved.
• Improve efficiency ratio
• Increase customer
satisfaction
• Increase retention
• Improved lead generation
Future Benefits
• Increased market share
• Shorter
to market
• Increased
wallettime
share
• M & A consolidation
• Speeds business process
deployment
• Sustains existing
investments
www.financial-insights.com
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Product Complexity Affects Interaction
Product/Service
Complexity
High
Branch
Video
Meetings
with Expert
Branch
Teller/Platform
Call
Center
Online Agent
Banking
ATM
Low
Product or Customer
Profitability
High
Source: Financial Insights, 2005.
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
22
Technology Must Solve Multiple Needs
High Value
Interactions
High
High
Low
Low
Low
Customer Appreciation
High
Source: Financial Insights, 2005.
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Case Study: NECU (Australia)
 Cooperative Bank in New South Wales, Australia
–
–
–
–
–
–
Competes with the Big 4 (CBA, NAB, ANZ, Westpac)
Customer base of 45,000 consumers
$320M in assets, 22 branches (ranging from 2-23 staff)
20% market share in rural NSW
Products: insurance, investments, lending, and deposits
Branch network spans 1,500 km
 Post Year 2000 strategic analysis
– Executives recognized branch network was most
valuable asset
– Key requirement: effectively control and simultaneously
improve customer service across the branch network
– Conclusion: invest in centralized communication
technologies with high bandwidth network
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
24
NECU Leveraged IPT and Video to
Focus on Five Objectives
1. Create and enhance contact center
experience by efficiently using resources
2. Training across the network
Core
Systems
Core
Systems
Core
Systems
Customer
Knowledge
Interaction
Back Office Systems
Core
Systems
Core
Systems
Core
Systems
Connectivity
Presentation
Transactions
Mess
Business Rules aging Business Objects
PFM
Core
Systems
Core
Systems
Core
Systems
Content
Shared Delivery Infrastructure
–
Centralize Specialists in Sydney then
train rest using video
3. Expand wealth management reach
–
Financial service regulation change
–
Real-time service w/ certified adviser
Knowledge Factories
Metrics
Management
4. Offer instant service on key products
–
Higher margin loans & investments
–
Extends coverage for staff absence
5. Conduct management meetings
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
25
NECU Business Benefits (2005 vs. 2002)
 Productivity up, internal travel down
 Optimized HR across the branch network
 Increased sales per branch
 Delivering higher quality customer service
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Cross-Sell at Banco Comercial Portugues
 Focused on small businesses and
self-employed customers about
high-value services (including
retirement products)
3.71x
78% Video
Close rate
3.80x
3.61x
3.53x
2001
2002
2003
2004
Source: BCP Investor Presentations.
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Attrition Rates at Key Bank and Wachovia
20%
Wachovia Attrition
Key Bank Attrition
16%
12%
8%
4%
0%
2000
2001
2002
2003
2004
Source: Wachovia and Key Bank Annual Reports, Financial Insights estimates.
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
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Success Factors
 Project execution is critical
– Getting something of value is better than having nothing
now
 Leverage current investments
– You don’t have the money to start again
– Build toward the future with each decision
 Invest for the long term…but with short-term return to
the business
– Senior management can’t/won’t wait for results
– BUT, you should not be shortsighted
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
29
Looking ahead
 Channel convergence around customer is key
 Real-time data access for customers required
 Leaders will leverage in multiple directions
– Value-added services for customers will distinguish
winners from losers
– Across employers to their employees
– Partner with complementary product companies
– Open and secure architecture for flexibility and
scalability
– Aura of leadership position adds to momentum
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
30
Questions?
Monique Gibelli
Vice President
IDC Latin America
8200 NW 41 ST
Miami, FL 33166 USA
[email protected]
+1.305.351.3200
(c) 2005, Financial Insights, an IDC company, All rights reserved.
www.financial-insights.com
31