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RETAIL BANKING
“Key Trends in Retail Banking - And What They Mean to You”
William HippensteelEVP, Director of Product Development
Commerce BankRockford, IL
August 8, 2018
August 8, 2018
William HippensteelExecutive Vice PresidentCommerce Bank
Key Trends in Retail BankingAnd What They Mean to You
• State of the Industry• Five Key Trends• What these trends mean to you
Agenda2
State of the Industry3
Bank net income has mostly recovered
-10
-5
0
5
10
15
20
25
30
35
40
45
50
1Q89 1Q91 1Q93 1Q95 1Q97 1Q99 1Q01 1Q03 1Q05 1Q07 1Q09 1Q11 1Q13 1Q15 1Q17
1Q15 … 1Q16 2Q16 3Q16 4Q16 1Q1739.8 … 39.0 43.6 45.6 43.2 44.0
Quarterly Net Income (1Q89 – 1Q17)
Note: Net Income displayed is Net Income Attributable to Banking OperationsSource: FDIC, Capital Performance Group analysis
Ne
t In
com
e (
$B
)
Near record-level industry profitability
Note: Net Income displayed is Net Income Attributable to Banking Operations
Source: FDIC, Capital Performance Group
…and revenue had been flat since 2009 until 2Q 2016 when it began to rise.
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
0
50
100
150
200
1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17
Net Interest Income Non-Interest Revenue Revenue Growth
Quarterly Revenue and Growth (1Q04 – 1Q17)
Note: FAS 166-167 accounting change in 1Q10 resulted in a one-time increase in revenue, by bringing credit card receivables back on balance sheetSource: FDIC, Capital Performance Group analysis
FAS*
1Q16 2Q16 3Q16 4Q16 1Q17Revenue 172.7 179.2 183.2 181.8 183.6Net Int Inc 112.3 113.4 118.7 119.3 121.1 Non Int Rev 60.4 65.8 64.5 62.5 62.5
5
Re
ven
ue
($
B)
Re
ven
ue
Gro
wth
(%)
Returns are lower than before…Quarterly Return on Equity, Return on Assets (1Q04 – 1Q17)
Source: FDIC, Capital Performance Group analysis
Re
turn
on
Ave
rage
Eq
uit
y (%
) Re
turn
on
Ave
rage A
ssets (%
)
1Q16 2Q16 3Q16 4Q16 1Q17ROE 8.61% 9.45% 9.76% 9.24% 9.37%
ROA 0.96% 1.06% 1.09% 1.03% 1.04%
6
7
New normal for bank profitability
Metric Old Norms New Norms
New
“High Performers”
ROAA 1.25% 1.0% 1.2%
ROAE 15% 10% 12%
TCE Ratio 6.5% 8.0% 10.0%
LLR/Loans 1.25% 1.50% 1.75%
LLR/NPLs 150% 200% 200%
Efficiency Ratio 58% 65% 60%
Source: Sandler O’Neill + Partners, LP
Five Key Trends8
What trends are having the greatest impact on
banking?
Five Key Trends9
Drive to Digital
has transformed the industry
Scale & EfficiencyAre gaining
market share
Payments Landscape
Is both disruptive and opportunistic
Regulations & RiskImpacts
decisions & resources
Business Model
Shifts require new
approaches
1. Drive to Digital10
How is the drive to digital transforming your
job and your organization?
We have been transforming into a digital world….
11
11
….for quite some time, but it is rapidly evolving.
12
12
MusicPhotographyVideo Rental
TVNewsTravel
Recruitment
RetailAutomotive
FinanceHealthcare
Waves Upon Waves of Digital Disruption
13
1995+ 2010+ 2015+
Aft
er
Befo
reFinancial Impact of Disruption
14
Trading AdvertisingMusic Retail
GlobalMusic Market
$28Bin 2000
$15B2014
$9BNASDAQ trading
floor revenuesin 2000
$2.5B2014
US NewspaperPrint Ad Market
$65.5Bin 2000
SourceIFPI (Music), Securities Market by Richard J. Hillman (Trading), Statista.com (Retail) Newspaper Association of America (Advertising)
$17.3B2013
Percentage of USRetail sales through
E-commerce
.09%in 2000
5.8% in
2013 but 75% of
growth is coming
online
62 years
28 years
12 years
2 years
Number of years to 50 million users
15Source: Brett King, Bank 3.0
Pace of Change is Accelerating
16
Omni-Channel Evolution
• Dramatic shift in branch personnel composition
• Continued investment in new technology and new business partners
• Greater integration of all channels for both information and customer experience
Integration and transformation of the delivery network
1. Drive to digital is transforming the industry
17
Omni-Channel Evolution
• Dramatic shift in branch personnel composition
• Continued investment in new technology and new business partners
• Greater integration of all channels for both information and customer experience
Integration and transformation of the delivery network
Centralized Marketing
• Complete shift from traditional to digital marketing.
• Emphasis on use of analytics, social media, digital channels, integrated value propositions and mobile sales.
• Requires new talent in leadership positions for both customer facing and support functions.
Shifting from decentralized branch to centralized digital sales model
1. Drive to digital is transforming the industry
18
Omni-Channel Evolution
• Dramatic shift in branch personnel composition
• Continued investment in new technology and new business partners
• Greater integration of all channels for both information and customer experience
Integration and transformation of the delivery network
Migration towards putting the customer at the center of the
business
• Shift from product to customer centric strategies.
• Connecting with your customer in different ways by using story telling. Creates a more personal and relevant connection.
• Meet higher level of customer expectations since experiences are based on outside the industry.
Client ExperienceCentralized Marketing
• Complete shift from traditional to digital marketing.
• Emphasis on use of analytics, social media, digital channels, integrated value propositions and mobile sales.
• Requires new talent in leadership positions for both customer facing and support functions.
Shifting from decentralized branch to centralized digital sales model
1. Drive to digital is transforming the industry
Night before
Omni-Channel Travel
19
Pick seats
Day of travel
Arrival
Car to airportCheck in Mobile boarding Inflight internet
What are the new service expectations?Hotel check-in
1. Instant information availability2. Ubiquitous access across channels3. Personalized service4. Direct control over the process5. Information for decision support
Car rental Restaurant
Pay for bags
Source: US Bank
Omni-Digital Banking
20
Shopping
Cloud
Social
IoT
Messaging
Partner
Wearables
Omni-ChannelSeamless experience across
our channels
Customer-controlledFinancial experiences across a
customer’s life
Growing beyond omni-channel distribution…The future is not always about customers coming to us
What Will Happen in the Next 60 Seconds?
22
Source: www.domo.com
users upload
300 hours of new video
users like
1,736,111photos
users pin
9,722 images
users download
51,000apps
receives
4,310unique visitors
make
110,040 calls
users like
4,166,667posts
users send
347,222tweets
I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I ----- I 1
minute
23
23
Marketing Budgets are Changing…….
Digital and Analytics are driving spend…
24
Google and Facebook dominate digital ads
25
Staff Functions are Shifting…
26
-4%
-22%
-5%-8%
12%
24%31%
-14%
-28%
-13% -13%
16%13%
41%
-12%
-32%
-23%-15%
11%7%
29%
-40%
-53%
-30%
-47%
22%
32%
24%
-21%
-31%
0%
-15%
33%38%
26%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Branch Management(Regional BM, BM,
Assistant BM)
Teller/ TellerSupervisor/
Universal Teller
Branch CustomerService
Branch Platform Licensed FinancialSpecialist
Private/WealthManagement
Small Business Staff
Community Super Community Regional Super Regional Large
www.BAI.org/research
30. How has the number of people in each of these roles changed in the past two years?
The digital maturity spectrum is expanding, with disruptors organizing around innovative digital-first models
• Experience driven by vendor constraints, doesn’t support brand
• Mobile is subset of online banking
• Innovation is low grade, often independent of core online/mobile banking
• Focused on translating existing processes to the digital channel
• Measured is on active users, direct revenue, cost to serve, OAO rates
• Experiences managed in house around customer journeys, brand standards
• Mobile acquires unique capabilities, recognize ‘mobile first’ opportunity
• Innovation includes target states for online/mobile banking, socialized with LOBs
• Measurements employ cross-channel measurement, less emphasis on in-channel behavior
• Commitment to a design target and digital-led target customer journeys
• Holistic digital vision describes unique contribution of mobile, desktop, alerts, third part wallets etc.
• Innovation agenda is coordinated across functions and includes organizational alignment
• Digital and other functions are measured on their contribution
• Leveraging unique functionality of devices to deliver unique experience that target revenue stream with high friction points
• Typically single product solution providers not broad financial services providersSource: Novantas analysis
Low Maturity Medium Maturity High Maturity
Think like Hana Bank
28
What is your bank doing to become more efficient and
leverage your size?
2. Scale & Efficiency29
2. Scale and Efficiency are gaining market shareIndustry Consolidation
• Consolidation will continue as larger scale is needed to succeed and as regulations and risk costs continue to escalate and talent is hard to recruit.
• There are 6,891 banks, 7,351 credit unions, 4,446 brokerage firms, and 571 mutual savings associations.
• Still opportunities for smaller niche players.
Industry challenges and over supply is creating a migration to
consolidation
31
2. Scale and Efficiency are gaining market shareScale Matters
• The transformation to digital experiences are pushing organizations to a more centralized marketing approach.
• Greater importance on analytics, digital communications and sales. Larger organizations are winning here.
• There is a fight for talent in improving digital customer experiences, sales, information and mixing virtual & physical.
.
Larger banks finding success in leveraging analytics, digital marketing
and national brands
Industry Consolidation
• Consolidation will continue as larger scale is needed to succeed and as regulations and risk costs continue to escalate and talent is hard to recruit.
• There are 6,891 banks, 7,351 credit unions, 4,446 brokerage firms, and 571 mutual savings associations.
• Still opportunities for smaller niche players.
Industry challenges and over supply is creating a migration to
consolidation
32
2. Scale and Efficiency are gaining market shareScale Matters
• The transformation to digital experiences are pushing organizations to a more centralized marketing approach.
• Greater importance on analytics, digital communications and sales. Larger organizations are winning here.
• There is a fight for talent in improving digital customer experiences, sales, information and mixing virtual & physical.
.
Larger banks finding success in leveraging analytics, digital marketing
and national brands
Industry Consolidation
• Consolidation will continue as larger scale is needed to succeed and as regulations and risk costs continue to escalate and talent is hard to recruit.
• There are 6,891 banks, 7,351 credit unions, 4,446 brokerage firms, and 571 mutual savings associations.
• Still opportunities for smaller niche players.
Industry challenges and over supply is creating a migration to
consolidation
New Distribution Networks
• Mixture of banks approach to branch closures and expansion.
• Branch transactions are migrating to both mobile and contact centers.
• Emphasis on investment advisory and small business skills to drive more revenue
• Build networks that appeal to future generations.
Migration to digital means different distribution strategies
Branches are changing ….
33
28%
46% 47%
15%
43%
59%28%
18%
23%
18%
14%
27%
35%
62%
39%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Community Super Community Regional Super Regional LargeIncrease No change Decrease
www.BAI.org/research
49. How has the number of branches in your institution’s network changed in the past 12 to 24 months?
The number of banks is in a steady decline
34
Source: FDIC, OCC, Novantas analysis
Number of Banks and Drivers, 1990-2014 YTD
-1,000
-800
-600
-400
-200
0
200
400
600
800
1,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Ban
ks (
Ch
ange
)
Ban
ks (
Tota
l)
Failed
Merge
New
Total
Other major markets (Canada, UK, Europe, Australia) have 4 to 5 major players. Why is the US different?• Restrictions on branching/merging from “dual
regulation”• Political involvement of community banks
Top Retail Banks
(Retail Deposits – 2014)
Top Retail Banks
(Retail Deposits – 2003)
With significant consolidation in past 10 years
35
Rank Company $ bil Share
1 Bank of America 229 7.51%
2 Wells 122 4.00%
3 Wachovia 113 3.71%
4 Washington Mutual 81 2.67%
5 Bank One 81 2.67%
6 Citi 76 2.49%
7 US Bank 71 2.32%
8 JPM Chase 67 2.21%
9 Fleet Boston 67 2.20%
10 SunTrust 51 1.66%
11 RBS Citizens 43 1.41%
12 National City 40 1.31%
13 BB&T 39 1.29%
14 Fifth Third 35 1.16%
15 PNC 33 1.07%
16 HSBC 30 0.98%
17 Key 28 0.92%
18 Sovereign 25 0.81%
19 Charter One 24 0.79%
20 Allied Irish (M&T) 24 0.78%
Top 3 Share 464 15.2%
Top 10 Share 958 31.4%
Top 20 Share 1,279 42.0%
Total Retail Deposits 3,046
Note: Retail Deposits = Consumer and Small Business Deposits
Source: FDIC, Novantas BranchScape 2012
Rank Company $ bil Share
1 Wells 441 9.89%
2 Bank of America 428 9.59%
3 JPM Chase 381 8.53%
4 Citi 131 2.93%
5 PNC 128 2.88%
6 US Bank 113 2.54%
7 TD Bank 95 2.14%
8 BB&T 83 1.86%
9 SunTrust 74 1.67%
10 RBS Citizens 72 1.62%
11 Regions 68 1.52%
12 Capital One 60 1.35%
13 Fifth Third 51 1.14%
14 Santander 39 0.88%
15 Bank of the West 38 0.85%
16 M&T 37 0.83%
17 Key 35 0.78%
18 Union Bank 33 0.73%
19 Comerica 31 0.69%
20 BBVA 31 0.68%
Top 3 Share 1,250 28.02%
Top 10 Share 1,948 43.65%
Top 20 Share 2,371 53.13%
Total Retail Deposits 4,462
Regionals used to grow organic deposits at near-parity with big banks, but the dynamic has changed
36
4.2%
3.3%3.8%
5.8%
0%
1%
2%
3%
4%
5%
6%
7%
2003-2011 CAGR
National Superregional
Regional Community
Organic retail deposit growth (historic)
Source: FDIC, Novantas BranchScape database, 2013
37
4.2%
3.3%3.8%
5.8%
0%
1%
2%
3%
4%
5%
6%
7%
2003-2011 CAGR
National Superregional
Regional Community
Organic retail deposit growth (recent)Organic retail deposit growth (historic)
Source: FDIC, Novantas BranchScape database, 2018
7.3%
2.8% 2.7%3.4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
2011-2013 CAGR
National Superregional
Regional Community
Regionals used to grow organic deposits at near-parity with big banks, but the dynamic has changed
2011-2017 CAGR
38
IT/OperationsScale driven
BrandAwareness
translates to multiple areas
DigitalGreater scale than physical
network
AdvertisingPurchasing
power & strong digital media staff
AnalyticsTranslates data into
value
Larger players are gaining share through scale
Source: Novantas
Scale is increasing in degree and value
39
IT/OperationsScale driven
BrandAwareness
translates to multiple areas
DigitalGreater scale than physical
network
AdvertisingPurchasing
power & strong digital media staff
AnalyticsTranslates data into
value
Larger players are gaining share through scale
Value relevant, impact not as strong
Local Presence
Scale exists, not as much as
digital
Client Knowledge
Assists with sales & credit,
big data strong
Client Preference
Impactful for 1:1 but analytics better for e-
channel
Customer Touch
Impactful but lesser as clients
move to e-channel
Source: Novantas
Scale is increasing in degree and value
40
40
41
42
42
43
Understanding the Purchase Journey
Traditional View of Customer Journey
Source:CEB Analysis 2017
44
44
Understanding the Purchase Journey
Source:CEB Analysis 2017
3. Payments Landscape45
How are changes in the payments area
affecting your bank?
3. Payments continue to create disruption and opportunity
46
Shift to Mobile
• Mobile has become the fastest growth channel in bank history.
• Mobile is also the lowest cost and serves bank’s most valuable clients.
• Challenges are with monetization and positioning in the payments space.
• Rapid expansion of mobile functionality.
Mobile adoption within payments is transforming landscape
3. Payments continue to create disruption and opportunity
47
Shift to Mobile
• Mobile has become the fastest growth channel in bank history.
• Mobile is also the lowest cost and serves bank’s most valuable clients.
• Challenges are with monetization and positioning in the payments space.
• Rapid expansion of mobile functionality.
Mobile adoption within payments is transforming landscape
New Players
• New players include retailers , established technology providers and start-ups.
• Attractive market entry given significant profitability and non-financials have brand, service and cost advantages.
• Emphasis is on who will control the customer and the payment information.
Lack of barriers to entry is bringing a new breed of
competitors
3. Payments continue to create disruption and opportunity
48
Data Integration
• Integration of simplified technology and client wallet
• Understanding what and where your customers buy is extremely powerful.
• Focus is on enhancing customer experiences by providing useful customer data and unique value propositions.
Linking payment information with buying behavior is
powerful
Shift to Mobile
• Mobile has become the fastest growth channel in bank history.
• Mobile is also the lowest cost and serves bank’s most valuable clients.
• Challenges are with monetization and positioning in the payments space.
• Rapid expansion of mobile functionality.
Mobile adoption within payments is transforming landscape
New Players
• New players include retailers , established technology providers and start-ups.
• Attractive market entry given significant profitability and non-financials have brand, service and cost advantages.
• Emphasis is on who will control the customer and the payment information.
Lack of barriers to entry is bringing a new breed of
competitors
Capital One Spark Pay.Spark Pay is Capital enables small business owners to take credit card payments and manage finances using their own mobile and digital devices. Capital One provides merchants with payment information to manage their inventory and marketing. They can also create custom offers for customers, customize receipts with social media links, manage inventory across channels, and more.
Transactions
Banking
Offers
Settings
Business Innovation: Data
Best Financial Friend, by
Umpqua Bank, is a strategy to
keep the “bank + consumer”
relationship intact by using
technology to bring the two closer
together. That’s their “human +
digital” strategy. Customers can
receive support and advice
through their BFF financial expert,
who serves as their personal
private banker devoted to their
banking needs — via voice, video
or chat. And just like you get to
pick your best friend in real life,
customers will literally get to pick
the Best Financial Friend they want
to work with. Ratio is 1 to 1,000,
good for acquisition. Bank will be
closing 35% of their stores and
this is more scalable for FTEs.
Consumer Innovation: BFF
51
Consumer/Business Innovation: BiometricsWells Fargo Bank’s is
using two innovative
technologies for both
consumers and
businesses that provide
a fast and simple
alternative to
traditional
authentication methods:
Face + Voice, and
Eyeprint.
These technologies
provide a quick, easy
and secure way to
authenticate and no
more token codes.
52
New Partnerships are Forming…
There is a fintech startup today for any bank service….
53
New Partnerships in the past 2 Years
Who is Driving Change in the Payments Industry?
54
Start-ups Technologygiants withpaymentsambitions
Banks Paymentschemes
Established payments
technologyvendors
20%
40%
60%
80%
100%
70%
28%
2.5%0% 0%
Source: Jury Report, 2015
“Banks are structured to manage paper. Technology companies are structured to manage data.”
55
Chris SkinnerChairman, Financial Services Club
The New Commerce Experience
56
Connect Discover Incent Pay Reward Manage
• Social
Networks
• Affinity
Groups
• Search
• Location
Based
• Coupons
• Deals
• Online
• Physical Store
• Mobile
• Points
• Coupons
• Accounts
• Offers
• Loyalty
Shopping isn’t what it used to be
“Omni-Channel ”
Starbucks – The Breakthrough Example
57
Discover
58
Starbucks – The Breakthrough Example
Discover Pay/Manage
59
Starbucks – The Breakthrough Example
Discover Pay/Manage Reward
60
Starbucks – The Breakthrough Example
Discover Pay/Manage Reward Connect
Banks can succeed in the digital age…
• Leverage their large customer base and access to rich transactional data to offer integrated financial services.
• Concentrate on ridding themselves of legacy (legacy technology and processes) systems.
• Develop balanced multichannel delivery models.• Deepen their data analysis capabilities. • Play a larger role in their customers’ lives (cross the path
of purchase to influence behavior).
61
4. Regulatory Impacts62
How is the regulatory environment changing
your business?
4. Fraud ®ulatory continue to impact resources
63
New Regulations
• The bcfp will continue to take an aggressive stance within consumer financial services.
• The Wells Fargo fraudulent-sales scandal will change the way regulators and the banking industry view cross-selling and incentive practices.
• While repeal of the Dodd-Frank is unlikely, hope exists for modest relief
Banks are making significant investments in time & people to
meet new guidelines
4. Fraud ®ulatory continue to impact resources
64
New Regulations
• The bcfp will continue to take an aggressive stance within consumer financial services.
• The Wells Fargo fraudulent-sales scandal will change the way regulators and the banking industry view cross-selling and incentive practices.
• While repeal of the Dodd-Frank is unlikely, hope exists for modest relief
Banks are making significant investments in time & people to
meet new guidelines
Fraud Threats
• Regulators and management are placing greater emphasis on staffing, technology and reserves.
• Regulators are stepping up their scrutiny of the integrity of financial, risk data and reporting .
• Cyber fraud listed as greatest potential threat to the industry.
More resources are being directed to protect customers
and the bank from fraud
4. Fraud ®ulatory continue to impact resources
65
New Regulations
• The bcfp will continue to take an aggressive stance within consumer financial services.
• The Wells Fargo fraudulent-sales scandal will change the way regulators and the banking industry view cross-selling and incentive practices.
• While repeal of the Dodd-Frank is unlikely, hope exists for modest relief
Banks are making significant investments in time & people to
meet new guidelines
Fraud Threats
• Regulators and management are placing greater emphasis on staffing, technology and reserves.
• Regulators are stepping up their scrutiny of the integrity of financial and risk data and reporting .
• Cyber fraud listed as greatest potential threat to the industry.
More resources are being directed to protect customers
and the bank from fraud
Managing Risk
• Rising interest rates will provide an increase in short term profits, but growing competition for liquidity.
• Managing credit risks in the new dynamics.
• Despite resistance from the FDIC, the OCC will continue to move forward with its plan to grant special-purpose national bank charters to fintech companies.
Attention to credit and interest rate risk models are a primary
focus
5. Shifting business models66
Is your organization adopting to the new business models?
67
5. Shifting business model requires new approachesReinventing the
Workplace
• Continuing to better leverage the workforce to increase productivity.
• Attracting different types of talent including more analytics, digital marketing and communications and social media.
• Need to reduce resources in “business as usual” to areas of growth.
Banks are transforming themselves to better meet the
future
68
5. Shifting business model requires new approachesReinventing the
Workplace
• Continuing to betterleverage the workforce toincrease productivity.
• Attracting different typesof talent including moreanalytics, digitalmarketing andcommunications andsocial media.
• Need to reduce resourcesin “business as usual” to areas of growth.
Banks are transforming themselves to better meet the
future
Focus on Analytics & Benchmarks
• Migrating from data tointelligence
• Greater use ofbenchmarking, clearergoals, greater reportsand more incentives fordefined performance
• Utilizing customerinformation in better ways.
Greater use of data and insights to make informed
decisions
69
5. Shifting business model requires new approachesReinventing the
Workplace
• Continuing to better leverage the workforce to increase productivity.
• Attracting different types of talent including more analytics, digital marketing and communications and social media.
• Need to reduce resources in “business as usual” to areas of growth.
Banks are transforming themselves to better meet the
future
Focus on Analytics & Benchmarks
• Migrating from data to intelligence
• Greater use of benchmarking, clearer goals, greater reports and more incentives for defined performance
• Utilizing customer information in better ways.
Greater use of data and insights to make informed
decisions
Impact of Innovation
• Few innovative players are driving higher customer expectations and forcing others to follow quickly/
• Innovation is often driven by visionary leadership, crisis or outside of the industry.
• Adopting an innovation culture to adopt and experiment quickly is the key to success.
Innovation is driving a greater impact on differentiation &
shareholder value
Global Innovation70
Who is the most innovative bank in the
world?
La Caixa Bank-Segur Caixa Auto
SegurCaixa AutoFull integration of car shopping, insurance and financing.In just 7 months this application of Caixa Bank has hadmore than 89,000 downloads, and it has a score of 4.7 inGoogle Play.
71
CaixaBank Innovation Process Is Based On 3 Main Sources
72
In-house Talent1
Our Customers
Talent Beyond
the Company
2
3
Talent Beyond The Company
73
A leading Hackathon for young developers, designers,
creators and innovators.
Last Edition’s Goal: creating mobile application prototypes for
financial services
Next Waves for Innovation?
74
La Caixa’s “Connected Car” integrates
both bank location and payment system
information into the car’s
computer. Also a pioneer in wearables.
Next Waves for Innovation?
75
La Caixa’s “Connected Car” integrates
both bank location and payment system
information into the car’s
computer. Also a pioneer in wearables.
Bank of Tokyo using robotics in
branches that utilize biometrics, voice
recognition and speaks 19 languages.
Cost per robot is $8,000.
76
Hana Bank – One Click Mortgage
E-application
1
2
E-underwriting
3
E-signing
4 5
E-RegistrationE-document
2
4
3
5
One Click Mortgage Process includes five easy online steps
Main Strength of One Click Mortgage
Application by Internet &
mobile phones without
visiting branches
e-signing ,e-
registration,
Less required
documents.
Save the Cost
by online e-registration
Fast
One Click
MortgageDirectCost
Saving
Paper
-less
Loan Application by
Internet & Automatic
Underwriting
Hana Bank introduced the first fully processed online mortgage product platform developed to simplify the complicated mortgage process. The process is conducted entirely online from e-application to e-closing. During the process, the potential borrowers do not need to visit branches. Approval is within minutes. Closing can be within 48 hours.
“Creativity is thinking up new things. Innovation is doing new
things.”
77
Theodore Levitt
Five Key Trends78
What do these trends mean to you and your
bank?
Market Positioning
• Clearly defined target markets that you passionately serve and are well positioned.
• Extremely customer-centric in your market approach.
• Great integration of all channels for both information and customer experience for unique segments.
Create a unique brand and position within the
market
Achieving success rests on several factors
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Market Positioning
• Clearly defined target markets that you passionately serve and are well positioned.
• Extremely customer-centric in your market approach.
• Great integration of all channels for both information and customer experience for unique segments.
Create a unique brand and position within the
market
Value Proposition & Pricing
• Everyone within your organization has a very clear understanding of the purpose of your organization.
• The mission and vision of your company dictates all of your business decisions.
• Requires new talent in leadership positions for both customer facing and support functions.
Develop a differentiated value proposition
Achieving success rests on several factors
80
Market Positioning
• Clearly defined target markets that you passionately serve and are well positioned.
• Extremely customer-centric in your market approach.
• Great integration of all channels for both information and customer experience for unique segments.
Create a unique brand and position within the
market• A product that truly
provides customer value. • An offering that can be
clearly differentiated within the marketplace.
• Program delivers strong customer experience and profitability.
• Co-creation process in design of products, pricing, delivery and communication.
Instill a strong message, personality and purpose
Company Culture Value Proposition & Pricing
• Everyone within your organization has a very clear understanding of the purpose of your organization.
• The mission and vision of your company dictates all of your business decisions.
• Requires new talent in leadership positions for both customer facing and support functions.
Develop a differentiated value proposition
Achieving success rests on several factors
81
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Name me a purpose-driven company.
Building a Purpose-Driven Company
“Purpose driven organizations outperformed
general market companies & comparative
companies 15:1 & 6:1, respectfully.”
Jim CollinsAuthor of Good to Great
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GE connecting employees for a purpose
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Summary85
Drive to Digital
has transformed the industry
Scale & EfficiencyAre gaining
market share
Payments Landscape
Is both disruptive and opportunistic
Regulations & RiskImpacts
decisions & resources
Business Model
Shifts require new
approaches
Take-aways
1. Outlook for banking sector is good, but significant challenges exist over long term
2. Change is now a way of life – so embrace it3. Biggest drivers of change: technology and consumer
behavior. 4. Emphasize your culture, transformation to digital, and being
innovative and agile.5. Marketing and management is quickly becoming more
about leveraging analytics6. Become a more purpose-driven company.
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Any Questions?
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August 8, 2018
William HippensteelExecutive Vice PresidentCommerce Bank
Key Trends in Retail BankingAnd What They Mean to You