Global Perspectives In Retail Banking Webinar

Financial Services presents:

Global Perspectives in Retail Banking:
Leading Practices for Transforming the
Branch

Moderator: Don Ogilvie

Presenter: Scott Burgess, Chris Gill

May 20, 2008

Agenda

• Introductions

• A Global Tour In Search of Retail Insights

• Getting Customers in the Door

• Enhancing the Customer Experience

• Leveraging New Distribution Models

• Questions & Answers

Copyright © 2008 Deloitte Development LLC. All rights reserved. 1

Branch density varies significantly across geographies
Branch Density Underlying Factors
Number of Branches per Million People in 2005
1000
952 • Self-service channel usage
800 – Penetration of direct deposit of payroll
563 – Cultural preference for face-to-face
600 436
400 304 312 contact
200
0 • New branch formats
Australia U.S. Japan Germany Spain – Smaller branch footprints
Number of 6 92 56 46 42
branches (000s)
– Supermarket banking

1200 1116
1000 862
• Retail banking competitive
800
environment
600 – Shared branching
400 270 317 332 – Usage of post office locations for
200 banking transactions
0
New York Chicago Tokyo Frankfurt Madrid
Number of 5.8 3.2 4.2 0.6 5.4
branches (000s)

Source: US: FDIC; Australia: Australian Prudential Regulation Authority; Japan: BIS, Japan Bankers Association, Tokyo Metropolitan Government;
Germany: Deutsche Bundesbank; Spain: Accom Consulting, European Central Bank, CECA, AEB; Population data from the Economist Intelligence Unit

Poll question #1

1. How many times per month do you visit a branch for your
personal banking transactions?

A. 0
B. 1-2
C. 3-4
D. 5 or more


Why focus on the branch?

• Face-to-face contact in branches is
Branch Transactions by Type
still preferred for certain types of
2006 2010 interactions
– New account opening (82% of consumers)
23% – Problem resolution (51%)
21%
• Convenient branch access remains
one of the most important criteria in
selecting a bank
12% – In a recent Deloitte survey, 40% of
consumers said convenient locations were
extremely important

4% • Branches allow banks to compete on
service and convenience rather than
price
Sales Service


Poll question #2

2. What is your most important reason for visiting a branch
(rather than using another channel such as an ATM,
telephone banking, or online banking)?

A. Open a new deposit account / apply for a loan
B. Conduct a complex transaction or make a significant deposit or
withdrawal
C. Report / resolve a problem or servicing issue with your account
(e.g., change your address, obtain a notary signature)
D. Obtain specialized / personalized financial advice
E. Visit your safe deposit box
F. None of the above


A global tour in search of retail insights

• United Kingdom • Amsterdam
– Barclays – Rabobank
– Coutts – ABN AMRO
– HBOS – Postbank
– Hoare & Co. • Dubai
– HSBC – Emirates Bank
– Lloyd's – Mashreqbank
– Nationwide Building Society – United Bank
– Sainsbury
– Tesco • Australia
– Australia Post
• Spain – ANZ
– Banco Santander – Bank of Queensland
– Banco Popular Espanol – Bendigo Bank
– Bancaja – Commonwealth Bank
– Bank Inter – GE Money Australia
– BBVA – HBOS
– MBF
– CAN
– Members Equity
– El Corte Ingles
– National Australia Bank
– St. George’s
– Westpac


Getting Customers In The Door

Enhancing The Customer Experience

Leveraging New Distribution Models


Creating a showcase destination
Rabobank

Source: Rabobank website


Creating a showcase destination

Umpqua Bank

BBVA

Source: BBVA, Umpqua Bank


Partnering with cell phone providers
• Sign up for cell phone service and
obtain equipment at a Rabobank
branch (in partnership with
Orange Mobile)
• Conduct financial transactions
– Pay bills
– Transfer funds
– Check balances
• Use your phone to buy
merchandise and tickets
• SMS messaging with special
offers


Poll question #3

3. What is your interest level in mobile banking for making
transfers or paying bills?

A. Already using mobile banking for these transactions
B. Very interested
C. Somewhat interested
D. Not at all interested
E. Not sure


Promoting the branch as a community center

Umpqua Bank

CAN (Madrid)

Source: CAN, Umpqua Bank


Offering crowd-pleasing promos

High-Demand
Exclusive
Promotional Gifts

New Account
Sweepstakes

Source: Mashreqbank


Poll question #4

4. Which of the following events would be of greatest interest
in getting you to visit your branch more often?

A. Seminars on financial topics (e.g. investments)
B. Seminars on non-financial topics (e.g. digital photography, wine
tasting)
C. Social networking events
D. Special marketing promotions (e.g. obtain a “hot” new product at a
discount when opening a new account)
E. Local community events (e.g. community organization fundraiser)


Self-service – the next generation
HSBC London

Greeter

Dance Floor

Source: HSBC

Replacing branch specialists with
videoconferencing and webcams
Ask an Expert

Source: Umpqua Bank

Poll question #5

5. When purchasing a specialized financial product, if your
options are to either meet immediately with a specialist
over a videoconferencing link, or schedule a face-to-face
meeting with a bank representative at a later date, at the
branch or your home/office, which option would you
select:

A. Videoconferencing link
B. Face-to-face meeting in the branch
C. Banker visit at your home or office
D. None of the above


Enhancing customer service and transparency

The Bancaja Commitment
• Bancaja has a 17 point commitment contract it has made to
its retail customers in relation to their personal transactions.
Sample Commitments Penalty

3. We will notify our customers of If we fail to send the SMS message, we
insufficient funds and non-payments by will pay €10.
means of an SMS message.

6. We will reply to loan applications within In case of breach, we will waive the
24 hours. arrangement fee.

9. We will inform you about the status of For each day of delay, we will pay €5, up
your claims within 48 hours. to a maximum of €50.

11. We will replace your card within 24 hours In case of breach, we will pay €10.

14. If you lose your job, we will defer your In case of breach, we will defer an entire
mortgage repayments for 6 months for year's repayments at no cost.
no extra charge.

Source: Bancaja Web site

Leveraging third party sale forces to visit
your customers

mortgage connect 1 300 555 222 mobile home loans

Source: Deloitte Australia


Franchising –“McBanks” compete with
community banks

Bank of Queensland

Bendigo Bank

Source: Bendigo Bank Web site, Bank of Queensland Web site


Franchising –“McBanks” compete with
community banks

Customer Satisfaction Financial Impact
Deposit Growth – 3 years
Bendigo 88% Franchisors 178

Major 4 Banks 100
BOQ 79%
0 50 100 150 200
Loan Growth – 3 years
ANZ 74%
Franchisors 157

Major 4 Banks 100
Westpac 69%
0 50 100 150 200
PE Multiples
NAB 68%
Franchisors 17.8

CBA 65% Major 4 Banks 14.5

0.0 5.0 10.0 15.0 20.0
Source: Roy Morgan; IRESS; Deloitte Consulting analysis


Poll question #6

6. Would you be more or less likely to conduct your banking
at a franchised branch location vs. a bank-owned branch,
assuming you had the choice?

A. Franchised branch
B. Bank-owned location
C. Not sure


Expanding geographic reach through
partnerships


Poll question #7

7. What aspect of franchising appeals to you the most?

A. Local ownership
B. Local credit decision-making
C. Better pricing flexibility tailored to the local market
D. Re-investment of branch profits into the community
E. Greater commitment to customer service


What are the implications for your institution?

• Create better opportunities to
interact with retail and small
business customers

Branch • Position the branch as a retail
Design outlet or community center, rather
than as a transaction center

• Tailor branch “look and feel” to the
local community



• Position the branch as a
“destination”

• Pursue opportunities to better
understand customer needs and
increase sales
Customer
Experience • More aggressively promote options
for routine transactions through
multiple self-service channels

• Better leverage emerging
technology to support specialized
product sales


• Provide greater transparency of
fees and charges
Customer
Relationship • Establish commitments to specific
Building service levels



• Leverage third party distribution

• Establish partnerships to expand
Distribution customer reach and reduce
Strategy servicing costs

• Create lower-cost branch
prototypes


Join us on May at 2 PM EST 27th

as Financial Services presents:

Online Loans:
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Thank you for joining
today’s webcast.

To request CPE credit,
click the link below.


Contact info

Don Ogilvie: email: dogilvie@deloitte.com

Scott Burgess: Tel: +1 703 251 3459
email: scottburgess@deloitte.com

Chris Gill: Tel: +1 704 887 1855
email: cgill@deloitte.com


This presentation contains general information only and is based on the
experiences and research of Deloitte practitioners. Deloitte is not, by means of this
presentation, rendering business, financial, investment, or other professional
advice or services. This presentation is not a substitute for such professional
advice or services, nor should it be used as a basis for any decision or action that
may affect your business. Before making any decision or taking any action that
may affect your business, you should consult a qualified professional advisor.
Deloitte, its affiliates, and related entities shall not be responsible for any loss
sustained by any person who relies on this presentation.


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