It’s no overstatement to say that the legacy of the financial and economic crisis continues to strongly impact banks’ performance across the world. Banks are still subject to significant uncertainty and their customers’ trust and loyalty is at an all time low. To turn the tides they need to rebuild profitability and reboot shareholder value by driving growth in their core businesses.
In the race towards the future some banks are already taking a clear lead. Recent published Accenture report “Winning in the New Banking Era” examined the common characteristics and principles these leading banks share, and identifies seven key “strands” that create a foundation for achieving growth and reigniting shareholder value. Below I will discuss 3 out of 7 characteristics (as seen in the visual) in more detail.
Customer centric Universal Banking model
High performers strive for a customer centric—Universal Banking model with a focus on core customer groups and deep relationships. Banks reinforced their competitive position and now pivot around customer segment management rather than product management, ensuring strong connections between different lines of business.
Their relationship model takes a holistic approach to customer needs in order to build prime provider relationships. Product offerings are based not only on client segments but are also tailored to specific customer needs. They have configured their sales and service approach with simplicity, convenience and transparency as the key guiding principles. Therefore they enjoy a remarkable percentage of first contact sale ratios and rapid time to market to launch new products or services.
Multi-channel distribution model
High performers demonstrate that multi-channel clients can be twice as profitable and exhibit greater loyalty. Proximity, accessibility and innovation are the trademarks of a multi-channel distribution model that delivers a true and consistent 24×7 online/real-time customer experience with seamless customer interactions fully orchestrated across all channels.
Branches maintain their role as the center of high value added customer interactions, but many high performers focus on proactive sales and more profitable services to maximize employee productivity. They shift administrative tasks to central back offices or the most efficient channels, and use multiple branch formats and layouts to dynamically address market potential and customer needs. Finally, they are investing in data capture, management and analytics capabilities to, amongst others, multiply their number of interactions per customer, sell multiple products during each sales interaction, and provide ubiquitous access through an optimized channel mix; cost-efficiently.
Ability to export the model
The success of the high-performance Universal Banking model has been demonstrated by the ability to export (replicate) the model to global markets. High performers have a diversified business and geographical mix, straddling developed and with a international presence in emerging markets they are extending their customer-centric approach into new global markets.
For example: a large European bank deployed a common corporate operating model that makes increasing use of strategic BPO partners, global policies, multi-geography back office operations and centers of excellence. All these have fostered synergies and the cross-fertilization of best practices while retaining local innovation and customization in line with regulatory or business culture considerations. As a result, they now generate more than 50 percent of their net profit from foreign operations, with a broad international presence in emerging markets having gradually evolved from a single geography to a multi-local operating model.
So what’s required to emerge out of the crisis as a winner and deliver sustainable profitable growth? One thing is clear: sticking to past formulae won’t work. Banks that emerged successfully from previous downturns were not necessarily those that made the deepest cuts. Instead, they focused on optimizing and reinvesting immediate savings into strategic areas in order to be in the best position for growth ready for the inevitable upswing.
For more information, please read recently released report “Winning in the New Banking Era”: http://www.accenture.com/us-en/pages/insight-winning-new-banking-era-next-generation-core-banking-summary.aspx