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Insight Report: Best Practice Ensuring Optimal Customer Service and Relationship Management Product Code: VR1059MR Published Date: March 2014 www.timetric.com
TABLE OF CONTENTS TABLE OF CONTENTS 1 Executive Summary... 6 2 Customer Service and Relationship Management by Banks and Payment Companies... 8 2.1 Background... 8 2.1.1 Key drivers... 11 2.1.2 Emerging trends... 12 2.1.3 Regulatory developments... 14 3 Best Practices in Customer Service and Relationship Management... 17 3.1 Customer Relationship Management Applications... 17 3.1.1 Regional analysis adoption of CRM applications in retail banking... 18 3.1.2 Europe... 19 3.1.3 Americas... 20 3.1.4 Asia-Pacific... 21 3.1.5 The Middle East and Africa... 22 3.2 Contact Center Management... 24 3.3 Multi-Channel Banking Channels Proving Consumer Convenience... 26 3.3.1 Self-service branch banking models... 28 3.3.2 Online, social media and other digital channels... 31 3.4 Customer Segmentation and Personalized Offerings... 35 3.4.1 Customer segmentation based on demographics and income level... 35 3.4.2 Customer segmentation based on relationships... 39 4 Implementation Strategies and Case Examples... 42 4.1 Strategic Roadmap for Customer Service and Relationship Management... 42 4.1.1 Relationship-based services and pricing... 42 4.1.2 Reward programs will improve customer relationship... 42 4.1.3 Expansion of distribution network to offer services at customers door step... 43 4.1.4 Use of digital channels as a cost-effective means of reaching customers... 43 4.1.5 Utilizing technology to improve customer experience... 43 4.2 Case Studies... 45 4.2.1 Barclays introduced an online platform allowing customers to share ideas... 45 4.2.2 Chirpify reinventing payments through social media... 46 4.2.3 Citibank s launch of time-based relationship pricing with the Citi Prestige Card in Hong Kong... 47 4.2.4 HDFC Bank adopted a CRM application to streamline customer services... 49 4.2.5 Starbucks improved customer convenience by allowing mobile payments... 50 4.2.6 Royal Bank of Canada introduced self-service kiosks with video-enabled assisted services... 52 4.2.7 La Caixa s introduction of the world s first contactless ATMs in Spain... 52 4.2.8 Alpha Bank s instant rewards through POS terminals... 54 4.2.9 Russian Standard Bank (RSB) benefited from an analytics platform... 55 4.2.10 Westpac offering quality service via its speech recognition solution... 56 5 Appendix... 58 5.1 Methodology... 58 5.2 Contact Timetric... 58 Insight Report: Best Practice Ensuring Optimal Customer Service and Relationship Management Page 2
TABLE OF CONTENTS 5.3 About Timetric... 58 5.4 Timetric s Services... 58 5.5 Disclaimer... 60 Insight Report: Best Practice Ensuring Optimal Customer Service and Relationship Management Page 3
LIST OF FIGURES LIST OF FIGURES Figure 1: Global Spending on CRM Applications in the Retail Banking Industry, 2012... 9 Figure 2: Shift From Product-Centric to Customer-Centric Approach... 10 Figure 3: Global Spending on CRM Applications (US$ Billion), 2012 2017... 17 Figure 4: Regional Spending on CRM Applications in Retail Banking (%), 2012 and 2017... 18 Figure 5: Spending on CRM Applications in Retail Baking in Europe (US$ Million), 2012 2017... 19 Figure 6: Spending on CRM Applications in Retail Baking in the Americas (US$ Million), 2012 2017... 20 Figure 7: Spending on CRM Applications in Retail Baking in Asia-Pacific (US$ Million), 2012 2017... 21 Figure 8: Spending on CRM Applications in Retail Baking in the Middle East and Africa (US$ Million), 2012 2017... 22 Figure 9: Development of Self-Service Channels in Retail Banking Industry... 27 Figure 10: Self-Service Branch Banking Models... 28 Figure 11: Broadband Internet Users on Mobile Devices (Million), 2009 2013... 32 Figure 12: Growth of HNWIs in Key Countries, 2008 2012... 36 Figure 13: Young Populations (Aged 15 24) in Key Countries, 2010 2020... 37 Insight Report: Best Practice Ensuring Optimal Customer Service and Relationship Management Page 4
LIST OF TABLES LIST OF TABLES Table 1: Commercial Bank Branches (per 100,000 Adults), 2008 2012... 11 Table 2: Global Spending on CRM Applications (US$ Billion), 2012 2017... 17 Table 3: Spending on CRM Applications in Retail Baking in Europe (US$ Million), 2012 2017... 19 Table 4: Spending on CRM Applications in Retail Baking in the Americas (US$ Million), 2012 2017... 20 Table 5: Spending on CRM Applications in Retail Baking in Asia-Pacific (US$ Million), 2012 2017... 21 Table 6: Spending on CRM Applications in Retail Baking in the Middle East and Africa (US$ Million), 2012 2017... 22 Table 7: Internet and Mobile Penetration Across Developed and Emerging Economies, 2011... 31 Insight Report: Best Practice Ensuring Optimal Customer Service and Relationship Management Page 5
EXECUTIVE SUMMARY 1 Executive Summary Customer satisfaction has always been a priority for banks and payment companies. With the advancement of technology, rising competition and changing consumer preferences, it has become even more important to have effective customer service and relationship management (CRM) to retain existing customers as well as acquire new ones. Companies have adopted a number of best practices, including strengthening existing CRM platforms and installing new ones, managing contact center operations effectively, offering customized products and pricing at an individual level, and using online and social networking platforms to address customers complaints. Adoption of CRM solutions to improve customer service Banks and payment companies have adopted CRM applications to improve customer services and provide suitable products, indicating a positive outlook for successfully understanding customers. Companies in the Americas and Europe were early adopters of CRM applications, and are using them as a platform to develop new products. The Asia-Pacific region is at an intermediate level in terms of use of CRM solutions, while it is still a relatively new concept in the Middle-East and Africa. Overall global spending on CRM applications by retail banks reached US$X.X billion in 2012, accounting for XX.X% of the overall global spending on CRM. Spending is expected to accelerate further over the forecast period (2013 2017), increasing from US$X.X billion in 2013 to US$X.X billion in 2017 at a CAGR of XX.XX%. Analytical tools enable customer segmentation to offer personalized services and products The use of analytical tools by banking and payment companies was initially for the purposes of attracting customers to certain products using a product-centric approach, but today it is used as a customer-centric approach. Banks and payment companies have shifted their focus to developing products beneficial for certain types of customer. Analytical tools use CRM as a platform to segment customers by age, gender and income to offer personalized products. Customer segmentation is also carried out on the basis of existing relationships with banks, benefitting both the customer and the bank. Social CRM is gaining prominence among retail banks and payment companies With the advancement of technology and improvements in digital channels, customers are interacting with banks through various networking platforms. Social CRM is an initiative adopted by various organizations and financial institutions to help understand customers and provide appropriate solutions. Banks and payment companies set up accounts and profiles on social platforms such as Twitter, Facebook and LinkedIn to address customers issues, complaints and feedback. This helps them to maintain relationships with customers and retain market share. Mobile banking a new experience for customer convenience The number of people using mobile devices to access the internet grew significantly during 2008 2012. The total number of mobile subscribers with access to broadband internet is expected to reach X.X billion by the end of 2013, up from XXX million in 2009, registering a CAGR of XX.XX%. The growing number of people using the internet on phones and tablets indicates that the consumer segment with access to advanced services through mobile devices is also expanding. As a result, banks and payment companies have increased their focus on making services accessible through mobile devices. Mobile banking enables banks and payment companies to offer a substantially updated banking experience. Banks and payment companies have developed mobile phone applications that allow customers to access their accounts and make online transactions, giving rise to the concept of omni-channel banking where banks can provide customers with a single view of their finances using a mobile device. Regulatory developments to help protect customer information and banks The rise in online banking through social platforms has led to regulatory developments for banking and payment companies, particularly in terms of know your customer (KYC), anti-money laundering and privacy. Insight Report: Best Practice Ensuring Optimal Customer Service and Relationship Management Page 6
EXECUTIVE SUMMARY The increasing use of social media and online banking may hamper banks reputations in of the event of loss of customer information. Developments also include protection against credit or debit card fraud, maintaining the security of both cardholders and service providers. To increase transparency in banking and payments, regulators in various markets have enacted guidelines requiring companies to disclose policies, terms and conditions, and other details to customers. The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 in the US and the Consumer Credit (Disclosure of Information) Regulations, 2010, in the UK are examples of regulations aiming to increase transparency for customers. Insight Report: Best Practice Ensuring Optimal Customer Service and Relationship Management Page 7
APPENDIX 2 Appendix 2.1 Methodology Timetric s dedicated research and analysis teams consist of experienced professionals with industry backgrounds in marketing, market research, consulting and advanced statistical expertise. Timetric adheres to the Codes of Practice of the Market Research Society (www.mrs.org.uk) and the Society of Competitive Intelligence Professionals (www.scip.org). All Timetric databases are continuously updated and revised. 2.2 Contact Timetric If you have any queries about this report, or would like any further information, please contact info@timetric.com. 2.3 About Timetric Timetric is a leading provider of online data, analysis and advisory services on key financial and industry sectors. It provides integrated information services covering risk assessments, forecasts, industry analysis, market intelligence, news and comment. Timetric helps over 1,500 financial services institutions and their partner companies around the world benefit from better, timelier decisions. Timetric provides: High-quality data including proprietary, specialized industry data, survey-based research, social media monitoring, macroeconomic data and forecasts Expert analysis from experienced economists and analysts, who use robust proprietary models, indices and forecasts Powerful proprietary visualization and workflow technologies developed over years of extensive investment Timetric has office locations in London, New York, San Francisco, Hyderabad, Seoul, Singapore and Sydney. It employs 500 people, including 150 analysts and economists, and 200 professional researchers. 2.4 Timetric s Services Intelligence Centers Timetric s industry intelligence centers are premium web-based services that provide access to interactive tools, comprehensive research and expert analysis in key sectors. They provide invaluable decision support presented in an easily digestible format and grounded in deep research. Timetric offers Intelligence Centers covering the following industries: Banking Insurance Wealth Construction Travel and Tourism Insight Report: Best Practice Ensuring Optimal Customer Service and Relationship Management Page 8
APPENDIX Briefing Services Timetric offers a range of briefing services, which offer cutting-edge thought leadership and expert commentary on and for the financial services industries. Driven by influential and respected editorial teams with years of experience in their respective fields, these services deliver need-to-know insight and analysis to decision makers across the financial services value chain. Timetric offers briefing services covering the following financial sectors: Accountancy Asset Finance Banking Cards and Payments Insurance Consultancy Timetric specializes in the development and delivery of innovative research solutions designed to provide competitive advantage and profitability to clients. Dedicated industry analysts and economists provide expert advice and actionable recommendations underpinned by Timetric s market and country knowledge, experience and proprietary databases, panels and research infrastructure. For projects requiring quantitative data, Timetric undertakes special research projects using its in-house panels and survey technology. These provide ready access to an extensive source of specialist business executives and consumers. Core capabilities include: Economic Research and Consulting Highly experienced economists provide a number of bespoke research services covering subjects ranging from macroeconomic forecasting to sector outlooks, business presentations and workshops. Industry Analysis and Consulting Information analysis, independent expert opinion and advice, facilitated decision or strategic support, are provided by Timetric s extensive body of proprietary data and analysis models. It provides expertise-based consulting to deliver solutions that best suit its clients requirements. Quantitative Research Timetric connects with thousands of potential customers for various markets every day. Using sophisticated, interactive and highly engaging graphical surveys, research speed is increased and costs reduced, while ensuring that respondents deliver the insight needed. Qualitative Research Timetric s Qualitative Research service helps customers understand the emotional and cultural behaviors of a target audience. Timetric provides unique access through market-leading publications and information services to decision makers specifically brought together to discuss topics that are important to the client. Technology Solutions Timetric has built a unique technological platform to collect and visualize data, and employs some of the world s leading experts on data collection and visualization. Through technology and software consulting services, Timetric can provide clients with the means to gather and visualize the data the client has, or wants to collect. Insight Report: Best Practice Ensuring Optimal Customer Service and Relationship Management Page 9
APPENDIX 2.5 Disclaimer All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Timetric. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Timetric delivers will be based on information gathered in good faith from both primary and secondary sources, the accuracy of which Timetric is not always in a position to guarantee. Timetric will accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect. Insight Report: Best Practice Ensuring Optimal Customer Service and Relationship Management Page 10