Google ThinkFinance 2012 - Digital banking: How to capture the opportunity?

Digital bankingHow to capture the opportunity

Singapore, May 31st, 2012

Conference Presentation

CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of McKinsey & Company is strictly prohibited

McKinsey & Company 1|

Explosion in digital interactions – By 2015, only 5% of

interactions via the branch Network

SOURCE: McKinsey 2012 Digital Banking survey, McKinsey research

Digital interactions are exploding…

2010: 100%, Europe

70

4230

19

29

28

25

2

Branch

ATM

Digital

2

34

2010

34

5

2015F

Other

Phone

45

28

122

2005

18

92

2000


Yet, it isn’t a simple shift to digital channels. Customers are

becoming multichannel users

1 Only most important paths are shown here

2 All arrows to maintenance actvities are directly from Subscription phase (i.e., Transaction and Service phases are not sequential)

SOURCE: Asia PFS CDJ/multichannel booster survey 2011

Maintenance

Transaction ServiceResearch SubscriptionAwareness

No

n-

ch

an

ne

l

Call center

ATM

Branch/personal

DM

Website/online

banking

Email/SMS

3rd party agent

Online media

WOM店舗

Offline media

Past experience

Mobile banking

Tra

dit

ion

al

Dig

ita

l3

rd

pa

rty

1

3

2

4

1

25

2

7

2

23

7

2

3

20

3

21

7

41

1 16

8

6

8

7

15

7

11

N/A N/A N/A

2

3

N/A N/A N/A

2 4

15 20

15

7

12 11

24 23 23 24

33 3330

12

6

7 6

9 9

Share of customers using each touchpoint/channel dominantly at each phase1

Percent

Touchpoints/channels

4721

23

2

3

24 25

4

3

4

4

334

4

44

63

INVESTMENT

PRODUCT EXAMPLE


Enormous benefits in terms of customer experience

SOURCE: 2012 McKinsey Digital banking survey

9

Don’t knowDecrease

21No change

Increase39

Significantly

increase31

% of respondents

1 No respondent indicated a ‘significant’ decrease in customer satisfaction

What do you expect will be the effect of mobile banking on customer

satisfaction in the next 5 years?


Average products per client

Number

Digital servicing provides a better experience to clients

translating into higher loyalty and value…

9

7

6

5

Multi-

channel

3 channels

2 channels

Mono-

channel

Average revenues per client

Indexed210

197

142

100

Multi-

channel

3 channels

2 channels

Mono-

channel

Perceived quality

of multi-channel

clients 10-15%

higher than mono-

channel ones

Average attritionrate of offline clients 2x higher than online ones



0

5

10

15

0 100 200 300 400 500 600 700 800

Northern Europe

Southern

Europe

Central

Europe

Branchesper million inhabitants

FTEsper branch

Digitalisation enables radical reduction in costs as is already seen

in Northern Europe – Online banking access need to go up first!

2016

20162016



Digital is considered as a defensive play mostly



So far Banks see digital mainly as complementary

1 Excludes 7% of blank responses

2 For all customers


2

3

3

3

19

… USP to attract new customers

… the primary channel for customer service

… the primary channel for all banking activities2

… the primary channels for transactions 26

… complementing branch networks 38

… the primary channel for sales and advice

Other

% of respondents

What is the vision for your bank's ‘digital proposition’ for the next 5 years?

Digital channels as1 …

Google ThinkFinance 2012 - Digital banking: How to capture the opportunity?

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Transcript of Google ThinkFinance 2012 - Digital banking: How to capture the opportunity?