Many of you commented positively about my recent blog, summarizing the pillars that underpin the “Everyday Bank” across distribution and marketing. The key question Clients have been asking me is that, yes, the Everyday Bank is a compelling point of view, but how does it drive value and growth?

The Everyday Bank looks at a broader set of opportunities and threats, namely the 30+ percent of revenues at risk by 2020. The difference between being versus not being an Everyday Bank is estimated in the (significant!) region of 50 percentage points of operating income.

I see three key drivers of growth, and the numbers I quote are the result of actual work being conducted globally.

The first driver is very much about the digitalization of customers, and the impact this has on the physical channel and the omni-channel strategy, and breaks down into:

  • Optimizing the branch network, by evaluating the geographical footprint and understanding new customer behaviors, resulting in fewer branches focused on specific local needs (i.e., advice, customer contact) and integrated with the omni-channel framework. This may mean remote advisory for complex products through Facetime/Skype-type applications, intelligent use of contact centers, use of apps for tablet and smartphone and use of automated technology in the branch for physical-type transaction. I estimate the impact to be in the region of 20-40 percent fewer branches, and 20-30 percent fewer workers per branch.
  • Creating and offering a digitally-engaging platform that provides excellent customer experience, driven by best-in-class user experience design (for customer-facing but also for all processes in the back-office) that covers all social platforms and provides relevant digital tools and apps. Here a number of impacts are identified:
      • Double the number of omni-channel active users – perhaps best described in our Customer 3.0 point of view. For instance if omni-channel active users are 20 percent of clients, take them to 40 percent.
      • Halve the churn rate for digital customers to a manageable 10 percent, (thus reducing acquisition/retention costs, and retaining profitable/”best” customers) through improved knowledge of the customer (i.e., use of micro-segmentation) as well as providing a “fuller” digital experience.

The second driver I foresee is the outright acquisition of digital customers by optimizing and “humanizing” digital touch-points, by leveraging the bank’s analytics capabilities to understand where interest is generated, by exploring the use of alternative engagement tools such as gamification and by exploiting the physical element. An example is when a physical in-store purchase may trigger the download/use of a digital app to access price comparators, offers and discounts, as well as point-of-sale loans and extended warranties. Our experience and estimates show the opportunity as:

  • Increasing traffic by up to a factor of 3;
  • Converting 3-5 percent of traffic into sales (by selling one or more products);
  • Further on-boarding customers by cross-selling to 60 percent of the new (converted) customers at least one additional product in the first 6 months, through use of micro-segmentation and leveraging processes around the Customer Analytic Record (CAR).

Finally, activating and developing the digital ecosystem will be a key driver for revenue growth and fulfilment of a broader customer experience. By “ecosystem” I mean going back to basics and engendering meaningful and targeted conversations between the bank, its retail (individual) customers and corporates/SMBs/merchants. This allows the bank to offer a broader set of financial service (FS) and non-FS products and services, as well as playing up the bank’s extended role as advice provider, access facilitator and value aggregator. The opportunity for the bank lies in:

  • Multiplying interactions with customers by up to a factor of 5-10, by leveraging physical and digital touch-points across the ecosystem;
  • Adding at least 1 percent to operating income by accessing new profit pools – offering FS and non-FS products and services from ecosystem partners;
  • Attracting an additional 5-10 percent of the existing customer base by offering these new products and services, thus a more fulfilling experience for daily and lifetime transactions. This benefits both the individual customer (such as saving 3-4 percent on yearly spend) and merchants (by increasing store traffic by 10-15 percent, and doubling conversion rates through improved customer insight).

These are compelling numbers which, at the least, are a good starting point to build the business case for a bank’s digital journey. More importantly, I think they show the potential for banks to think outside the box, embrace the digital revolution and become an Everyday Bank, ideally before non-FS competitors decide it is worth their effort to play in this space!

Submit a Comment

Your email address will not be published. Required fields are marked *