Fabienne Konik Caroline Moss. Striving for Growth Best Practices in Retail Banking Sales and Service Channels

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1 Perspective Ala Gemes Fabiee Koik Carolie Moss Strivig for Growth Best Practices i Retail Bakig Sales ad Service Chaels

2 Booz & Compay is a leadig global maagemet cosultig firm, helpig the world s top busiesses, govermets, ad orgaizatios. Our fouder, Edwi Booz, defied the professio whe he established the first maagemet cosultig firm i Today, with more tha 3,300 people i 58 offices aroud the world, we brig foresight ad kowledge, deep fuctioal expertise, ad a practical approach to buildig capabilities ad deliverig real impact. We work closely with our cliets to create ad deliver essetial advatage. For our maagemet magazie strategy+busiess, visit Visit to lear more about Booz & Compay. CONTACT INFORMATION Amsterdam Christiaa Lageweg Pricipal christiaa.lageweg@booz.com David Wyatt Pricipal david.wyatt@booz.com Beirut Peter Vayaos Parter peter.vayaos@booz.com Hog Kog Adrew Caiey Seior Executive Advisor adrew.caiey@booz.com Lodo Ala Gemes Parter ala.gemes@booz.com Fabiee Koik Pricipal fabiee.koik@booz.com Carolie Moss Pricipal carolie.moss@booz.com Muich Reier Hoock Parter reihard.hoock@booz.com New York Paul Hyde Parter paul.hyde@booz.com São Paulo Iva de Souza Parter iva.de.souza@booz.com Roberto Marchi Parter roberto.marchi@booz.com Sydey Peter Burs Parter peter.burs@booz.com Arthur Calipo Pricipal arthur.calipo@booz.com Zurich Christia Reber Pricipal christia.reber@booz.com Origially published as: Strivig for Growth, by Ala Gemes, Fabiee Koik, ad Carolie Moss, Booz Alle Hamilto, 2007.

3 1 Strivig for Growth Best Practices i Retail Bakig Sales ad Service Chaels Retail baks are raisig their game across the board ad across the globe. I a comprehesive study of more tha 100 baks across 17 coutries, Booz Alle Hamilto foud that retail baks are developig ad adaptig their distributio chaels to meet the eeds of icreasigly demadig customers: braches are more attractive ad better desiged; Web sites are more secure; ad call ceters offer quicker solutios to customers problems. Some baks are achievig excellece i key fields, such as HSBC i Hog Kog, which is settig the stadard for brach bakig, or Woori Bak i South Korea, showig the rest of the pack how olie bakig should look, feel, ad fuctio. However, there is still a eormous amout of work to do. Despite efficiecy programs, most baks have ot sigificatly reduced their cost-to-icome ratios. While costs have falle, so have reveues, thaks largely to growig competitive pressures ad arrowig margis. Clear opportuities for expasio exist, but may baks are failig to adequately capitalize o the eormous potetial of the key growth chaels olie ad mobile sales forces because the performace of these chaels does ot yet meet customer eeds ad expectatios. Moreover, baks eed to pay greater attetio to chael itegratio, where this is relevat to cosumers, as few baks maage to achieve this today. Some baks have achieved excellece, but there teds to be a huge gulf betwee best practice ad average performace, suggestig that for the majority of baks, there is ample opportuity to improve performace ad boost reveues. To establish how far baks have come ad how far they have to go, Booz Alle carried out extesive research a study of cosumer isights based o iterviews with bak customers i Europe, North America, the Middle East, Lati America, ad Asia ad a comprehesive mystery shoppig exercise based o shoppig ad service experieces for each chael. Based o the fidigs of this research, the Booz Alle Reveue Ehacemet (BRE) Idex has bee developed, takig ito accout performace across the four mai chaels brach, olie, call ceter, ad mobile sales force as well as a multichael idex. What Do Customers Wat? Booz Alle s cosumer research reveals that despite the developmet of alterative chaels, customers still prefer to purchase i the brach. However, the importace of the brach is i declie, ad the mass affluet form the group leadig the march away from braches ad toward mobile sales forces ad the Iteret. Whe it comes to alterative chaels, customers prefer olie to telephoe trasactios, particularly whe the product ad the trasactio itself are relatively simple. Oe area i eed of sigificat developmet is the mobile sales force, which at preset is limited or oexistet i all but a few coutries.

4 2 While these are the broad treds, variatios exist i chael preferece, drive by the complexity of the activity, the complexity of product, the degree of affluece, ad the geographical regio. While customers are quite happy to purchase straightforward credit products such as cards ad persoal loas over the Iteret, they are much less likely to purchase pesios or ivestmets olie. Moreover, they are two ad a half times more likely to carry out a simple trasactio over the telephoe tha they are to purchase a product. Wealthier customers, who ted to be time poor ad require a more specialized service, are 30 percet more likely to prefer the olie chael. Regioal prefereces are also clear: North America customers, for example, strogly prefer to purchase products olie. Which Coutries Are Achievig Excellece? First-world coutries are ot always those offerig firstclass retail bakig service; baks i certai ewly idustrialized coutries, icludig South Korea ad Chia, ofte showcase elemets of best practice. The strogest regio overall, leadig the field i three out of the five categories, is Hog Kog. This is partly due to the advaced state of segmeted approaches i Hog Kog baks, such as premier bakig ad mobile sellig. Other top-performig coutries iclude Switzerlad ad the Uited States. Certai regios Most Valued Global Attributes of Each Chael (i Descedig Order) Brach Olie Call ceter Mobile sales force Privacy Product kowledge Query resolutio Cetral locatio Short wait time Staff kowledge of customer Robust security measures Simple ad quick logo Site availability All services o same site Clear ad ituitive layout Comprehesive iformatio Optio to speak to huma Fast security checks Query resolved withi call ceter Multiquery resolutio withi call Short wait time Few had-offs See same advisor agai Query resolutio Advisor completes request Automatic updates of all systems Product kowledge Time flexibility Exhibit 1 Global Cosumers: Preferred Purchasig Chaels Curret/Savigs Accout Credit Products Mortgages Geeral Isurace Life Isurace/Pesios/Ivestmets Brach Mobile sales force Telephoe Olie ATM Usure Source: Booz Alle Hamilto Reveue Ehacemet Study 2007

5 3 Exhibit 2 Top Three Coutry Performers i Each Chael 130 Hog Kog Hog Kog Idex of Performace Hog Kog Switzerlad Uited States Uited States Switzerlad Hog Kog Chia Switzerlad South Korea Hog Kog Spai Australia Uited Kigdom Uited Kigdom South Korea Uited States 90 Overall Idex Brach Call Ceter Olie Mobile Sales Force Multichael Idex Source: Booz Alle Hamilto Reveue Ehacemet Study 2007 excel i certai areas: Swiss ad U.S. retail baks, for example, have excellet braches, while South Korea leads the field by a cosiderable margi whe it comes to olie performace. The biggest gulf i performace exists i mobile sales teams; oly a few regios, icludig Hog Kog ad Australia, offer this service o a large scale. Which Baks Are Achievig Excellece? There is a very wide variatio i performace at the bak level, but the best performig retail baks overall are HSBC i Hog Kog, Switzerlad s Raiffeise, ad UBS i Switzerlad. HSBC Hog Kog tops the lists for best braches ad best mobile sales forces, while Citibak UK provides the best call ceters. Two baks i South Korea Woori Bak ad Citibak feature i the top three baks for the olie chael, while the Uited Kigdom s HBOS offers the best multichael itegratio. Overall, baks perform best i brach ad olie chaels. Call ceters are good for basic trasactios, but they are uable to cope with more complex products ad sales trasactios. Although the look ad feel of differet chaels might be the same, cross-chael fuctioality is limited; ad customers caot easily switch from oe chael to aother without repeatig themselves. Best Practice Lessos for those baks failig to achieve excellece are clear there are specific targets to aim for, across all chaels. The best braches have a hotel-lobbystyle appearace, ad the best call ceters have short waitig times ad istat coectios to real people rather tha to legthy recordigs. The best Web sites have ubeatable security complete with security certificates, PIN cards, ad eve radom-umber Exhibit 3 Best Performig Baks i Each Chael Olie Woorl Bak Korea Mobile HSBC Hog Kog Brach HSBC Hog Kog 4 1 = Poor service levels 2 = Average service levels 3 = service levels 4 = Excellet service levels Source: Booz Alle Hamilto Reveue Ehacemet Study Call Ceter Citibak Uited Kigdom Multichael Idex HBOS Uited Kigdom Best i class (baks) Global average

6 4 geerators. To achieve the gold stadard for certai segmets, baks should aim to offer the followig: Exhibit 4 Brach: Vital Attributes Relative Importace vs. Satisfactio Advisors with immediate access to customer iformatio who are able to suggest a rage of alteratives based o that customer s history ad circumstaces Private meetig rooms Specialist advisors, available immediately, both o the telephoe ad i braches Relative Satisfactio Pre-filled applicatio forms Short waitig time Exteded busiess hours 2 Miimal had-offs Holistic solutios Dedicated staff, offices, Web sites, ad call ceters for the mass affluet market. Get the Basics Right i Braches Despite techological advaces ad the shrikig of etworks i may coutries, customers still wat to do most of their bakig i braches. It is their preferred purchasig chael for all products but especially for curret ad savigs accouts ad mortgages. Iterestigly, the largest shift is a migratio away from braches toward mobile sales forces. This shift demostrates cosumer preferece for other face-toface chaels ad might be explaied by the fact that baks are still strugglig to get their braches right. Goals. The secret to successful brach maagemet is to get the basics cosistetly right. Customers should be welcomed; appoitmet systems ad sales processes must be sleek ad very well orgaized. Appoitmets should be cofirmed by text message or , ad advisors should be able to sell more tha oe product at a sigle meetig. The mass affluet should be offered a differetiated service, with a sese of exclusiveess evoked through icreased privacy. Performace. Although average service levels are higher for braches tha for ay other chael, there is still a sigificat differece betwee the performace of the best baks, which are at or ear excellet, ad the rest of the pack. I product kowledge ad trasactioal capabilities, performace is high, but segmeted offerigs ad customer isight are weaker. The best retail bak braches provide a hotel-lobby-style Privacy 1 16 Staff kowledgeable about products Staff able to resolve queries Mai street locatio Short waitig time Relative Importace satisfactio i areas of low importace; secod priority improvemet areas appearace, cocierge, ad iteractive iformatio. Their staffs have immediate access to customer ad product iformatio, ad meetigs with specialists ca be booked i advace. No More Hagig o the Telephoe Call ceters are becomig a less popular purchasig chael for customers, with just 7 percet of them sayig they would ope a savigs or curret accout over the phoe, ad oly 10 percet optig to apply for a mortgage from a call ceter. Buyig by phoe is more popular for credit ad geeral isurace products, but overall, call ceters are losig out to olie chaels, primarily because it takes too log for callers to get through to the right perso. I this cotext, baks might eed to revisit their call ceter strategy ad ehace call ceter performace as well as cosider use of complemetary chaels. Goals. Chagig the game is ecessary for baks if they wat to deliver a superior customer experiece ad drive profitable growth i their call ceters. With the optio to speak to a huma cosidered the most importat factor, the key to improvig the customer 111 Staff kowledgeable about customers Easy-to-uderstad products Exteded busiess hours Up-to-date iformatio Source: Booz Alle Hamilto Reveue Ehacemet Study 2007 Shoppig ceter locatio Pre-filled applicatio forms

7 5 Exhibit 5 Call Ceter: Vital Attributes Relative Importace vs. Satisfactio Relative Satisfactio Optio to speak to huma 1 16 Security complete i <20 secods Query resolved by call ceter Resolve queries i a sigle call Short waitig time Query resolved by call ceter 13 Resolve queries i a sigle call 14 Average <1 had-off Short waitig time Relative Importace Average <1 had-off 1 satisfactio i areas of highly importat areas; priority improvemet areas Aget easy to uderstad Call ceter i home coutry Staff kowledge about customer 16-hour telephoe service experiece lies i makig it a simpler ad less irritatig process by miimizig the umber of hadoffs. Staff should be traied to deal with all geeral queries ad traied o at least oe specialist product. Dedicated specialists with traiig i several product areas should also be available. I additio, advisors should have access to customer records with details of previous calls, ad a system should be implemeted whereby, if a had-off is ecessary, customers are ot required to repeat their iformatio. Iboud calls should be treated as a opportuity to stregthe customer isight ad to offer customers relevat products, based either o their particular query or o their circumstaces. Performace. Baks i Hog Kog ad Chia set the stadards for customer service i call ceters, offerig istat coectios, 24-hour access, multiligual specialists, ad segmeted call ceters for mass affluet customers. Bakig i Cyberspace: Differetiatio is Key Customers especially mass affluet customers are icreasigly demadig the opportuity to purchase products ad trasact olie, ad this tred is likely to Source: Booz Alle Hamilto Reveue Ehacemet Study Optio to speak to huma 1 accelerate as broadbad coectios reach more ad more homes worldwide. Goals. Security is absolutely paramout i the olie chael. Baks eed to develop systems that combie sophisticated security mechaisms multiple passwords ad virtual keyboards with simple logo procedures. Secure sites are a ideal sales chael because they offer a uique opportuity to tailor product alerts ad offers to the idividual. However, because ot everyoe is comfortable with techology, baks should be able to provide live techical support as well as aswers to product queries. Give the importace of the Iteret to time-poor customers, baks must develop Web sites targeted solely at the mass affluet if they are to fully exploit this segmet. Performace. At the very best baks, performace i the olie chael is ear perfect i all areas. However, global performace is much less impressive, with most baks achievig average scores, especially with regard to a segmeted offerig, where scores are weak. South Korea baks are leadig the field i olie bakig, offerig iovatios such as secure sites that ca be persoalized, security codes from separate devices, ad dedicated Web sites for the mass affluet. Exhibit 6 Olie: Vital Attributes Relative Importace vs. Satisfactio Relative Satisfactio Clear ad All service o same site ituitive layout 18 Robust security measures Simple ad quick logo Site available at all times All service o same site Staff ca follow up queries Comprehesive iformatio Relative Importace satisfactio i areas of low importace; secod priority improvemet areas Clear ad ituitive layout Quick page loadig Staff ca follow up queries Source: Booz Alle Hamilto Reveue Ehacemet Study 2007 Ca complete wide rage of trasactios 1

8 6 Greater Mobility Required Mobile sales forces are a popular way of purchasig products i particular, more complex products, such as pesios ad ivestmets but they are ot widely available i may coutries. Brazil, Hog Kog, the Uited Kigdom, ad Australia are amog the few markets where mobile sales forces are extesively ad successfully deployed. Goals. Mobile sales forces should be a itegral part of a bak s mass affluet service. As such, the developmet of sophisticated appoitmet systems is crucial as the target market is demadig ad time poor. Most importat is to give mobile sales force advisors the ability to complete requests; coectivity ad empowermet are key to success i this chael. Both specialist ad geeralist sales advisors should be available; there should be flexibility o the timig ad locatio of meetigs; ad customers should be remided of their appoitmets by text message. Follow-up is also crucial. Baks should sed out meetig summaries by letter or mail, ad where possible, customers should be able to see the same advisor o more tha oe occasio. Exhibit 7 Mobile Sales Force: Vital Attributes Relative Importace vs. Satisfactio Relative Satisfactio Ca see same advisor agai Ca resolve query i oe meetig Advisor completes request 19 Updates brach ad IT systems Kowledgeable about products Relative Importace 13 Flexibility to meet at coveiet time Flexibility to meet at ay locatio Advisor kows customer Ca meet i two days 1 Advisor completes request 12 Ca resolve query i oe meetig Performace. Very few baks offer mobile sales forces, ad overall performace amog those that do is relatively poor. The service teds to be limited to the mass affluet, ad the oly where customers are seekig to purchase complex products, such as ivestmets or mortgages. There are, however, a hadful of baks that achieve excellece i this field, offerig flexible meetig times ad locatios, welliformed advisors, ad i some cases, sedig out accout maagers alog with specialist advisors to cemet relatioships ad improve customer isight. Multichael Itegratio, Oly Where It Matters Multichael itegratio, across all chaels ad all products, is ot a priority for cosumers. However, cosumers choose chaels o a holistic basis ad, for some products, expect to be able to move across certai chaels without havig to repeat themselves. A key priority for baks is to idetify the products ad chaels where itegratio matters to their customers. Goals. Itegratio is about more tha just a cosistet look ad feel. Baks should cocetrate o deliverig a joied-up service ad value propositio across selected chaels ad products as a key part of success. For example, customers might start a mortgage applicatio olie ad complete it i a brach. Baks should be takig advatage of ew techologies to broade the rage of chaels they offer; for example, usig Skype ad exploitig opportuities i cyberspace. I additio, all chaels should have segmeted offerigs for the mass affluet. Performace. A limited umber of baks are offerig all major chaels with extras such as Skype ad SMS, mobile phoe bakig, ad special chaels for the deaf. However, overall performace is weak, with eve the best-i-class baks failig to achieve excellece i this area. satisfactio i highly importat areas; priority improvemet areas Source: Booz Alle Hamilto Reveue Ehacemet Study 2007

9 7 Raisig the Game i Retail Bakig Booz Alle s research shows there are clear opportuities to ehace reveue i retail bakig. Goig forward, retail baks eed to: Provide dedicated chaels (Web site, call ceter, mobile sales forces, ad specialist areas i braches) for mass affluet customers. Reduce waitig times i braches through the use of welcome desks (cocierge cocept) ad the optio of makig appoitmets i advace. Efficiet call ceter meus ad staffig that eable customers to quickly reach people who ca resolve their queries. Offer mobile sales advisors who ca complete trasactios at the meetig, for select customer groups. Ehace the ability to commece a trasactio o oe chael ad complete it o aother. I additio to the global themes idetified i this study, a set of coutry-specific isights have bee developed to help baks improve performace across chaels o a local basis. Coutries icluded i the study are Australia, Austria, Brazil, Caada, Chia, Germay, Hog Kog, Kuwait, the Netherlads, Saudi Arabia, South Korea, Spai, Switzerlad, Thailad, the Uited Arab Emirates, the Uited Kigdom, ad the Uited States. Eable customers to tailor Web sites, supported by strog security measures (e.g., radom umber geerators).

10 8 Methodology Booz Alle s 2007 Reveue Ehacemet Study set out to test the role of sales chaels i reveue geeratio, takig as its startig poit the fact that, across the globe, retail baks drive to improve efficiecy through cost reductio has bee offset by a declie i reveue geeratio. The study followed a two-fold approach: 1. MORI Ipsos, the idepedet cosumer research compay, was tasked with udertakig iterviews with bakig customers i Europe, North America, Asia, Lati America, ad the Middle East. Research covered 17 coutries ad assessed cosumer prefereces for each distributio chael ad overall satisfactio levels. 2. I additio, Booz Alle carried out a extesive mystery shoppig exercise at 100 baks, focusig o the cosumer experiece. This icluded a shoppig ad servicig questioaire i a umber of braches for each bak, plus Iteret assessmet, telephoe calls to call ceters, ad shoppig with mobile sales forces. Based o the fidigs of this research ad the mystery shoppig, Booz Alle defied five idividual chael idices to measure baks performace: brach, call ceter, olie, mobile sales force, ad a multichael idex. Whe these idices were weighted by cosumer importace, this formed the Booz Alle Reveue Ehacemet Idex Score, which was used to rak baks performace across the mai chaels. Exhibit 8 Booz Alle s Reveue Ehacemet Idex Brach Facilities Product kowledge Customer isight Sales focus Trasactioal capability Segmeted offerigs Multichael Idex Breadth of chaels offered Seamless chael itegratio Cosistet look ad feel Cosistet segmeted offerig across chaels Sales focus Segmeted offerigs Booz Alle Reveue Ehacemet Idex Call Ceter Accessibility Huma compoet Trasactioal capability Product kowledge Sales focus Segmeted offerigs Mobile Sales Force Accessibility Product kowledge Cross-chael likages Customer isight Sales focus Segmeted offerigs Security Accessibility Olie Trasactioal capability Service rage, depth, ad likages Sales focus Segmeted offerigs Source: Booz Alle Hamilto Reveue Ehacemet Study 2007

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