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WRBR08_ CONVENTION_EFMA_ENGLISH
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Bertrand LavayssièreManaging Director, Global Financial ServicesCapgemini
30th Efma Convention: Leadership in retail finance
13 p.m. & 14 March 2008 - Paris
Press conferenceAmsterdam, March 12th 2008
WRBR08_ CONVENTION_EFMA_ENGLISH
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Introducing…
Patrick DESMARES, Secretary General, European Financial Management & Marketing Association (EFMA)
Bertrand LAVAYSSIERE, Managing Director, Global Financial services, Capgemini
Felix POTVLIEGE, Head Strategy & Business, Development of Retail Banking, ING Group
WRBR08_ CONVENTION_EFMA_ENGLISH
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Agenda
Presentation of the World Retail Banking Report
Pricing Indexes – Key Findings
Organic Growth in Domestic Markets – Key Findings
Questions & Answers
WRBR08_ CONVENTION_EFMA_ENGLISH
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DashboardsOverview based on
macroeconomic data and on analyses of local evolutions in
the retail banking sector(Cf. www.wrbr08.com)
Pricing indexes
Index of prices for product and services based on their
frequencies of use, and updated yearly
2008Spotlight
“Organic Growth in Domestic Markets”
The spotlight is based on case studies, quantitative analysis and interviews with 52 banks
The World Retail Banking Report (WRBR) aims to Highlight the Trends in the Retail Banking Industry on a Global Scale
© 2008 Capgemini - All rights reserved
Croatia Dashboard WRBR2008
• GDP at current prices and PPP : 229 billion HRK• Population : 4.44 million• GDP per head : 51560 HRK• Importance of Banking in GDP: n/a• Economic growth rate : 4.3%• Consumer confidence indicator : -26• Unemployment rate : 12.7%
• GDP at current prices and PPP : 229 billion HRK• Population : 4.44 million• GDP per head : 51560 HRK• Importance of Banking in GDP: n/a• Economic growth rate : 4.3%• Consumer confidence indicator : -26• Unemployment rate : 12.7%
Macro economic indicators (2006)Macro economic indicators (2006)
• Banking staff: 24000• Number of branches: 1114• Number of ATM: 2307• Households savings ratio : 1.9%• Inflation rate : 3.3%• Interest rate for consumer credit: 12%• Interest rate for residential mortgage: 5%
• Banking staff: 24000• Number of branches: 1114• Number of ATM: 2307• Households savings ratio : 1.9%• Inflation rate : 3.3%• Interest rate for consumer credit: 12%• Interest rate for residential mortgage: 5%
Retail banking environmentRetail banking environment
Taxation of xx on capital gains
Taxation of xx on capital gains
RETAIL BANKING MARKET
Type and size of PlayersType and size of Players ProductsProducts TrendsTrends
Regulatory ChangesIn December 2006, HNB announced further tightening of regulations. Effecti ve from January 2007, the growth of the banks’ loan portfolios i s rest ri cted to 12 percent per annum. Any excess of the growth rate must be foll owed by mandatory purchase of low-yielding HNB bills i n the amount of 50% of the excess placement.
Competition environment• Major Banks in pri vate foreign ownership have retained their dominant positions in all business segments •Increase of capital carried out, sharp competi tion and slowing down of the net i ncome growth showed the effects, Banks ROAE decrea sed to 12% or 9%. • Banks continue to compete with new products and services showing raise in fee income and income from other services such a s credi t cards, investment banking.• In meanwhile, two main sources of funds for Banks´ growth were more barely available: foreign funds become more expensive due to HNBrest ri ctions and domestic funds (client deposits) were channeled into investment funds and stock market.• Latest acquisi tions: Hungarian OTP Group (Nova Banka) end of 2005; Société Générale (Splitska Banka) in 2006; Bayrische Landesbank (Hypo Alpe Adria Bank Group) in 2007.
Customers • Customers are becoming more demanding in terms of product offerings .• At the end of 2006 IPO of INA introduced the significant number of small individual i nvestors at the money market. This moved the small pri vate investors into di fferent dimension, from non risky savings to taking certain risk for investments such a s securiti es (fol lowed by IPO of HT in Sep 2007)• Loans to retail customers remain a key business, but most Banks have started to target SME businesse s a s an untapped revenue segment.
Product Trends• Most Banks offer c redi ts in domestic HRK and EUR/CHF (value clause); Consumer loans have become highly popular among the customers. • Payments service s stil l represent the highest revenues for core banking services in Croatian banks. • Banks are focused to innovati ve and retail clients oriented products and services and they strongly compete wi th each other. • The signifi cant acti vi ti es in investment banking means for Banks greater competi ti on regarding funds source s and as a consequence new credit activiti es (margin credi ts).• Packages of products and se rvi ces are being introduced to the market.
Regulatory ChangesRegulatory ChangesIn December 2006, HNB announced further ti ghtening of regulationIn December 2006, HNB announced further tightening of regulation s. s. Effective from January 2007, the growth of the banksEffective from January 2007, the growth of the banks’’ loan portfolios is loan portfolios is rest ricted to 12 percent per annum. Any excess of the growth ratrestricted to 12 percent per annum. Any excess of the growth rat e must be e must be followed by mandatory purchase of followed by mandatory purchase of lowlow--yielding HNB bil ls in the amount of yielding HNB bill s in the amount of 50% of the excess placement50% of the excess placement . .
Competition environmentCompetition envi ronment•• Major Banks in private foreign ownership have retained their doMajor Banks in private foreign ownership have retained their dominant minant posi tions in all business segments positi ons in all business segments •• Increase of capital carried out, sharp competiti on and slowing dIncrease of capi tal carried out, sharp competition and slowing d own of the own of the net income growth showed the effects, Banksnet income growth showed the effects, Banks´ ROAE decrea sed to 12% ROAE decrea sed to 12% or 9%. or 9%. •• Banks continue to compete with new products and servi ces showinBanks continue to compete with new products and services showin g g rai se in fee income and income from other services such a s crediraise in fee income and income from other servi ces such a s credi t cards, t cards, i nvestment banking.investment banking.•• In meanwhile, two main sources of funds for BanksIn meanwhile, two main sources of funds for Banks´ growth were more growth were more barely available: foreign funds become more expensive due to HNBbarely available: foreign funds become more expensive due to HNBrest rictions and domestic funds (cl ient deposits) were channeledrestricti ons and domestic funds (cli ent deposi ts) were channeled into into investment funds and stock market.investment funds and stock market.•• Latest acquisitions: Hungarian OTP Group (Nova Latest acquisitions: Hungarian OTP Group (Nova BankaBanka ) end of 2005; ) end of 2005; SociSociéé ttéé GGéé nnéé ralerale ((SplitskaSpli tska BankaBanka ) in 2006; ) i n 2006; BayrischeBayri sche LandesbankLandesbank (Hypo (Hypo AlpeAlpe AdriaAdria Bank Group) in 2007.Bank Group) i n 2007.
Customers Customers •• Customers are becoming more demanding in terms of product offerCustomers are becoming more demanding in terms of product offerings .i ngs .•• At the end of 2006 IPO of INA introduced the significant numberAt the end of 2006 IPO of INA introduced the signifi cant number of small of small i ndividual investors at the money market. This moved the small pindividual investors at the money market. This moved the small p rivate rivate investors into different dimension, from non risky savings to tainvestors into different dimension, from non ri sky savings to ta king certain king certain risk for i nvestments such a s securities (foll owed by IPO of HT iri sk for investments such a s securities (followed by IPO of HT i n Sep n Sep 2007)2007)•• Loans to retail customers remain a key business, but most BanksLoans to retail customers remain a key business, but most Banks have have started to target SME businesse s a s an untapped revenue segment.started to target SME businesse s a s an untapped revenue segment.
Product TrendsProduct Trends•• Most Banks offer credits in domesti c HRK and EUR/CHF (value claMost Banks offer c redits in domestic HRK and EUR/CHF (value cla use); use); Consumer loans have become highly popular among the customers. Consumer loans have become highly popular among the customers. •• Payments service s still represent the highest revenues for corePayments servi ce s sti ll represent the highest revenues for core banking banking services in Croatian banks. services in Croatian banks. •• Banks are focused to innovative and retail clients oriented proBanks are focused to innovative and retai l cli ents oriented pro ducts and ducts and services and they strongly compete with each other. services and they strongly compete with each other. •• The signifi cant activiti es in i nvestment banking means for BankThe signi ficant activities in investment banking means for Banks greater s greater competition regarding funds source s and as a consequence new crecompetition regarding funds source s and as a consequence new cre dit di t acti vities (margin credits).activi ties (margin credits).•• Packages of products and se rvi ces are being introduced to the mPackages of products and se rvices are being introduced to the m arket.arket.
supervisory institutions• GDP at current prices and PPP : € 34 Billion• Inhabitants : 4.41 million• GDP per head : € 7 638• Economic growth rate : 4.8%• Consumer confidence indicator : -22• Unemployment rate : 12.0%• Consumer Price Index: 3.2%
• GDP at current prices and PPP : € 34 Billion• Inhabitants : 4.41 million• GDP per head : € 7 638• Economic growth rate : 4.8%• Consumer confidence indicator : -22• Unemployment rate : 12.0%• Consumer Price Index: 3.2%
• Banking staff: 19 096• Number of branches: 1 118• Number of ATMs: 2 649• Households savings ratio : 2.0%• Inflation rate : 3.2%• Interest rate for consumer credit: 9.5%• Interest rate for residential mortgage: 5.5%• Interest rate on long term bonds: 4.1%
• Banking staff: 19 096• Number of branches: 1 118• Number of ATMs: 2 649• Households savings ratio : 2.0%• Inflation rate : 3.2%• Interest rate for consumer credit: 9.5%• Interest rate for residential mortgage: 5.5%• Interest rate on long term bonds: 4.1%
Croatian National Bank (HNB)
Croatian Agency for Superv ision of
Financial Serv ices (HANFA))
Financial Agency(FINA)
Croatian Competi tion Agency (AZTN)
• Respon sible for competition control
• Central bank, respon sible for overall stabi lity of financial system
• Control of all banking activities
• Supervi sion of domestic payments system (clearing and RTGS)
• Respon sible for Central Account Register
Regulatory Organisations
Croatian Chamber of Economy (HGK) -
Financial Department
• Advisory body on poli cy and developments within the banking industry
• Data selection and processing from card management fi eld
• Supervi sion of banks, pension and investment funds, insurance companies, brokerage house s
Credit activities: In 2006 Banks granted credits to a total amount of EUR 25.6bn (both in HRK and in foreign currency); 23.6% increase compared with the previous year.
Deposits: Ban ks we re very active in deposi ts collection. T otal deposi ts increased to EUR 27.5bn or 18.2%.
New technologies, credit and debit card transactions: Croatian banks continue to invest in technology development i n order to increase the number and quality of financial products and services. Card transactions have become an increasingly important sphere of business for Croatian banks in the past few years, and bank clients have recognized the advantages of using cards.
Some new introduced products in 2006: Chip cards (EMV platform);Co-Branded Cards; E-ban king, m-Payments; Multiple types of mortgage loans; Dri ve-in ATMs; Enhanced ATM servi ces (e.g. recharge of the mobi le prepaid card, deposits, statement servi ce s); Share trading and high yield savings linked to bonds/investment funds; Consumer loans for house refurbishing and repairing; Product Packages
FINALPRICE_FIGURES WRBR08 V1.12.PPT 4
Source: Capgemini analysis, 2008.
101 €
136 €
197 €
104 €
122 €
45 €31 €
49 €
22 €35 €
79 €
52 €70 €75 € 74 €
0 €
50 €
100 €
150 €
200 €
250 €
Europe Eurozone Europe Non-eurozone North America Asia-Pacific Average
Figure 1.3 Average Local Profile PricesAnnual prices of core banking services by geographic area and usage pattern, 2008 (€)
Very Active User priceActive User priceLess Active User price
FINALSPOTLIGHT_FIGURESV7.2.PPT 5
Figure 2.3 Domestic Retail Banking: Growth of Revenue vs. Costs for Selected Banks, 2002-2006 (%)
Sources : Capgemini analysis, 2008 , and bank annual reports.Note: CIR before impairment losses.(1) CAGR calculation using 2007 currencies.
OperatingcostgrowthCAGR 02-06(1)
Revenuegrowth
CAGR 02-06 (1)
La Caixa
Citigroup
Wachovia
Mizuho
Sumitomo Mitsui
Dexia BNPP
Crédit Agricole
CM-CIC
SocGen
Deutsche Bank
SanpaoloUniCredit Banca
ABN AMRO
ING
BBVA
Nordea Barclays
Bank of America
Wells Fargo
RBSANZ
CBA
Westpac
Santander
Banques Pop
Caja Madrid
Caisse d'Epargne
Banca Intesa
-0,05
0
0,05
0,1
0,15
0,2
-0,15 -0,1 -0,05 0 0,05 0,1 0,15
HBOS
Resona
KBC
Dresdner Bank
HVB
LCLFortis
Rabobank
WRBR08_ CONVENTION_EFMA_ENGLISH
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Agenda
Presentation of the World Retail Banking Report
Pricing Indexes – Key Findings
Organic Growth in Domestic Markets – Key Findings
Questions & Answers
WRBR08_ CONVENTION_EFMA_ENGLISH
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World Retail Banking Report – Price Index Key Messages Summarized
Prices vary significantly across the globe while consumers pay an average of €70 a year for banking services
Influencing consumers seems to have been the main driver of banks’ pricing strategies from 2006 to 2008
Banks cut the price of sales influencers
Banks acted on prices of behaviour influencers according to their costs
Banks kept prices unchanged for unseen services
Prices were stable in Europe
European prices remained stable with a small 0.8% price increase across both the eurozone and non eurozone
With the advent of SEPA, prices of pan-European payments have stabilised in the eurozone, and (excluding Ireland) even decreased faster in Europe eurozone than in the rest of the world
Prices rose in North America (+5.7%) and dropped in Asia-Pacific (-11.1%)
North America’s price rose the most—averaging 5.7%—resulting primarily from higher prices for payments and cash utilisation; its price had declined during the three previous years due to fierce competition on account management fees.
Asia-Pacific’s price fell by 11.1% this year, essentially because of intensified competition in Australia and India, particularly in payments and account management.
WRBR08_ CONVENTION_EFMA_ENGLISH
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While consumers pay an average of €70 a year for banking services, prices vary significantly across the regions of the globe
Average Local Profile Price (€)
Source: Capgemini analysis, 2008.
WRBR08_ CONVENTION_EFMA_ENGLISH
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While consumers pay an average of €70 a year for banking services, prices vary significantly across the 26 studied countries
13 24 1959
18 5812
136
54434233396166
32544758
4142
64 354534
124
167
278
243 215
112
185 159
105 98
210
114122117
113 95
85 99
74
72
95
1717
30
33
123
132
116 119
8695 90 85 84 60
82 7072
7059
68 5452
72
34
0
50
100
150
200
250
300
350
400
450
A B C D E F G H I J K L M N O P Q R S T U V W X
Very Active User PriceActive User Price
Less Active User Price
WRBR08_ CONVENTION_EFMA_ENGLISH
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Influencing consumers seems to have been the main driver of banks’pricing strategies from 2006 to 2008
0,4%
1,9%
0,2%0,1%-1,6%
-1,2%
2%
-0,4%-0,3%
0,9%1,1%
0,3%0%-0,6%-2,3% -0,5%-1%-1,3%0%
Cur
rent
Acc
ount
Cre
dit C
ard
Deb
it C
ard
SALES INFLUENCERS ( -0,8%)
Cal
lC
entr
e
Onl
ine
Ban
king
Cas
h D
epos
it at
A
TM
With
draw
al a
t oth
er
bank
s’A
TM n
etw
ork
With
draw
al a
t ba
nks’
ATM
Dire
ct D
ebit
Exte
rnal
Tra
nsfe
r
Inte
rnal
Tra
nsfe
r
Stan
ding
Ord
er
BEHAVIOUR INFLUENCERS,Less costly ( -0,2%)
Cas
h de
posi
t at d
esk
With
draw
al a
t des
k
Che
que
Ban
ker’s
dra
ft
Che
que
Stop
Deb
it C
ard
Stop
Doc
umen
t Sea
rch
BEHAVIOUR INFLUENCERS,more costly ( -0,9%)
UNSEEN SERVICES ( 0%)
WRBR08_ CONVENTION_EFMA_ENGLISH
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Prices were Stable in Europe Eurozone with a 0.8% (€0.6) rise only for local active users
Product and Service Price Variations vs. Last Year for the Local Active User in Europe Eurozone (€)
Source: Capgemini analysis, 2008.
Sources of Fees for Core Banking in Europe Eurozone (%)
Source: Capgemini analysis, 2008.
WRBR08_ CONVENTION_EFMA_ENGLISH
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With the advent of SEPA, prices of pan-European payments have stabilised in the eurozone
Price of Pan-European Payments Means for the Local Active Profile (€)
Source: Capgemini analysis, 2008.
A B C D E F G H I J K L M N O P Q R S T U V W X Y
Average Eurozone* €38 vs. €41 in 2007
Average Rest of the World €33 vs. €34 in 2007
*Note: For methodological reason one country has been taken off
WRBR08_ CONVENTION_EFMA_ENGLISH
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Prices were Stable in Europe Non-eurozone with a 0.8% rise (€0.6) only for local active users
Source: Capgemini analysis, 2008.
Sources of Fees for Core Banking Services in Europe Non-eurozone (%)
Product and Service Price Variations vs. Last Year for the Local Active User in Europe Non-Eurozone (€)
Source: Capgemini analysis, 2008.
WRBR08_ CONVENTION_EFMA_ENGLISH
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0,2%3%
-8%
-1%-3%
-22%
-0%
-44%
3%
-1%
15%
-4%-4%
-4%-4%
-3%-4% -3%
-14%
-1%
0%
-17%
-1%
-8%
-2%-5%
-2%
0%1%
13%
-5% -2%
7%
-11%
16%
0%
3% 0% -2%
37%
4%
-10%
-26%
-38%
12%
-17%
7%
-53%
-18%
-83%
-60%
14%25%
0%
-5%0%
-11%
14%
0% -2%
12%
-28%
-5% 13%
27%
-57%
12 3 4
5 6 7
8
9 10
11
12
13
-7%
13%
-10%
-25%
-13%
-25%
0%-1%
12%
18%
4%0%
-3%
1%4%
1%5%
-1%
Prices evolutions over the last three years do not show resilient policies at work
Country A
1 2 3 4
5 6
Country B
11%
0%
16%16%
0% 0%0%0%0%0,2%5%
29%
0% 0,2%
-2%
Country D
1 2 3 4 5
Country C
1
2 3 4 5
6
7
8
9
Var. 06/05Var. 07/06Var. 08/07
WRBR08_ CONVENTION_EFMA_ENGLISH
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World Retail Banking Report – Price Index Key Messages Summarized
Prices vary significantly across the globe while consumers pay an average of €70 a year for banking services
Influencing consumers seems to have been the main driver of banks’ pricing strategies from 2006 to 2008
Banks cut the price of sales influencers
Banks acted on prices of behaviour influencers according to their costs
Banks kept prices unchanged for unseen services
Prices were stable in Europe
European prices remained stable with a small 0.8% price increase across both the eurozone and non eurozone
With the advent of SEPA, prices of pan-European payments have stabilised in the eurozone, and (excluding Ireland) even decreased faster in Europe eurozone than in the rest of the world
Prices rose in North America (+5.7%) and dropped in Asia-Pacific (-11.1%)
North America’s price rose the most—averaging 5.7%—resulting primarily from higher prices for payments and cash utilization; its price had declined during the three previous years due to fierce competition on account management fees.
Asia-Pacific’s price fell by 11.1% this year, essentially because of intensified competition in Australia and India, particularly in payments and account management.
WRBR08_ CONVENTION_EFMA_ENGLISH
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Agenda
Presentation of the World Retail Banking Report
Pricing Indexes – Key Findings
Organic Growth in Domestic Markets – Key Findings
Questions & Answers
WRBR08_ CONVENTION_EFMA_ENGLISH
17
WRBR 2008 spotlight theme
The sub-prime crisis and forecast economic slow down has highlighted theimportance of growth in mature countries. We decided therefore to focus our 2008 analysis on :
Organic Growth in Domestic Markets
2007Transforming Operating Models in Retail Banking
2006The Rise of Remote
Channels: Building a New Client Relationship Model
2005Increasing Share of Wallet from High-Potential Clients
in Mature Markets
2004Pricing in a
Global Market
WRBR08_ CONVENTION_EFMA_ENGLISH
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World Retail Banking Report – Spotlight Key Messages Summarized
Leading banks have well performed on their retail domestic operations over the last 5 years, steadily growing their revenue faster than their costs
Four pillars have supported their efforts to achieve profitable organic growth in their domestic markets
1. Combining fast time to market, innovation, and local client intimacy
2. Full multi-channel integration and optimisation
3. Increasing sales productivity through dynamic branch management
4. Leveraging a multi-brand portfolio to create attractive value propositions for each market segment.
Most banks however rely on these pillars to support very similar strategies: namely to build trust relationship with their clients in order to sell them a large number of financial products.
We believe that tougher regulations, more flexible technology, more demanding clients and new competitors will radically change retail banking
We simulated the effect of these structural changes on retail banking in 8 major European markets
Banks could lose 36% of their projected net income (and more than 50% in certain markets) within 10 years
To cope with this new environment, successful banks can use three distribution strategies to grow beyond the traditional retail banking business models
“Better sell”, to better fit diverse clients’ needs
“Larger offer”, extending the offering to non-financial products and services
“Indirect business”, selling through other distributors
WRBR08_ CONVENTION_EFMA_ENGLISH
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Leading banks have well performed on their retail domestic operations over the last 5 years
Operating Costs Growth CAGR 02-06
0% 5% 10% 15%- 5%-10%-15%
Rev
enue
Gro
wth
CA
GR
02-
06
0%
5%
10%
15%
20%
- 5%
WRBR08_ CONVENTION_EFMA_ENGLISH
20
Leading banks have well performed on their retail domestic operations over the last 5 years
Operating Costs Growth CAGR 02-06
0% 5% 10% 15%- 5%-10%-15%
Rev
enue
Gro
wth
CA
GR
02-
06
0%
5%
10%
15%
20%
- 5%
WRBR08_ CONVENTION_EFMA_ENGLISH
21
Leading banks have well performed on their retail domestic operations over the last 5 years
Operating Costs Growth CAGR 02-06
0% 5% 10% 15%- 5%-10%-15%
Rev
enue
Gro
wth
CA
GR
02-
06
0%
5%
10%
15%
20%
- 5%
Resona
Citigroup
Mizuho
SumitomoMitsui
Bank Of America
Wachovia
Wells Fargo
+ JapanUSA
WRBR08_ CONVENTION_EFMA_ENGLISH
22
Leading banks have well performed on their retail domestic operations over the last 5 years
Operating Costs Growth CAGR 02-06
0% 5% 10% 15%- 5%-10%-15%
Rev
enue
Gro
wth
CA
GR
02-
06
0%
5%
10%
15%
20%
- 5%
Unicredit Sanpaolo
BBVA
DeutscheBank
Resona
Citigroup
Mizuho
BancaIntesa
DresdnerBank
La Caixa
SumitomoMitsui
Bank Of America
Wachovia
Caja MadridWells Fargo
Santander
+ Spain+ Italy
WRBR08_ CONVENTION_EFMA_ENGLISH
23
Leading banks have well performed on their retail domestic operations over the last 5 years
Operating Costs Growth CAGR 02-06
0% 5% 10% 15%- 5%-10%-15%
Rev
enue
Gro
wth
CA
GR
02-
06
0%
5%
10%
15%
20%
- 5%
Unicredit Sanpaolo
BBVAHVB
DeutscheBank
Resona
Citigroup
Mizuho
BancaIntesa
DresdnerBank
La Caixa
SumitomoMitsui
Bank Of America
Wachovia
Banques Populaires
CM-CICCaja Madrid
Wells FargoSantander
Caisses d’Epargne
BNPP
SocGen
LCL
Crédit Agricole
+ France+ Germany
WRBR08_ CONVENTION_EFMA_ENGLISH
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ABNAMRO
Barclays
Leading banks have well performed on their retail domestic operations over the last 5 years
Operating Costs Growth CAGR 02-06
0% 5% 10% 15%- 5%-10%-15%
Rev
enue
Gro
wth
CA
GR
02-
06
0%
5%
10%
15%
20%
- 5%
Dexia
Unicredit Sanpaolo
BBVAHVB
DeutscheBank
Resona
Citigroup
Mizuho
BancaIntesa
DresdnerBank
La Caixa
SumitomoMitsui
Bank Of America
Wachovia
HBOS
ING
Rabobank
Banques Populaires
CM-CIC RBSCaja Madrid
Wells FargoSantander
Caisses d’Epargne
BNPP
SocGen
LCL
Crédit Agricole
+ UK+ Netherlands
WRBR08_ CONVENTION_EFMA_ENGLISH
25
ABNAMRO
Barclays
Leading banks have well performed on their retail domestic operations over the last 5 years
Operating Costs Growth CAGR 02-06
0% 5% 10% 15%- 5%-10%-15%
Rev
enue
Gro
wth
CA
GR
02-
06
0%
5%
10%
15%
20%
- 5%
Dexia
KBC
Unicredit Sanpaolo
BBVA
CBA
HVB
DeutscheBank
Resona
Citigroup
Mizuho
BancaIntesa
DresdnerBank
Fortis
La Caixa
SumitomoMitsui
Bank Of America
Wachovia
HBOS
ING
Rabobank
Banques Populaires
CM-CIC ANZ RBSCaja Madrid
Wells FargoSantander
Caisses d’Epargne
Westpac
BNPP
SocGen
LCL
Crédit Agricole
+ Australia+ Belgium
WRBR08_ CONVENTION_EFMA_ENGLISH
26
ABNAMRO
Barclays
4 best performers on their domestic markets have been identified
Operating Costs Growth CAGR 02-06
0% 5% 10% 15%- 5%-10%-15%
Rev
enue
Gro
wth
CA
GR
02-
06
0%
5%
10%
15%
20%
- 5%
Dexia
KBC
Unicredit Sanpaolo
BBVA
CBA
HVB
DeutscheBank
Resona
Citigroup
Mizuho
BancaIntesa
DresdnerBank
Fortis
La Caixa
SumitomoMitsui
Bank Of America
Wachovia
HBOS
ING
Nordea
Rabobank
Banques Populaires
CM-CIC ANZ RBSCaja Madrid
Wells FargoSantander
Caisses d’Epargne
Westpac
BNPP
SocGen
LCL
Crédit Agricole
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Pillar 1: Fast time to market, innovation and local client intimacyCrédit Mutuel - CIC in France
Source: Capgemini analysis, 2008.
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Pillar 2: Ensuring full multi-channel integration and optimisation: ING in the Netherlands
Source: CBS (Dutch market) and company data (Postbank).
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Pillar 3: Increasing sales productivity through dynamic branch managementLa Caixa in Spain
Source: La Caixa annual report, 2006.
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Pillar 4: Leveraging a multi-brand portfolio to create attractive value propositions for each market segmentHBOS in UK
Source: Presentation at HBOS Retail Investors' Seminar, 2003.
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Conjectural and structural changes in the market are putting banks revenue at risk and compelling them to adapt their strategies
Conjectural changes:
No longer financial market bubble
No longer real estate bubble
Slow economic growth in mature countries
Structural changes:
More constraining regulations
High leverage technologies
New customers’ behavior (risk averse, delegators…)
New entrants
More competitive marketsHarmonised national environmentsDown pressures on pricesMarket saturation to traditional value propositions
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0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
Belgium France Germany Italy Netherlands Nordic Spain UK
Simulation of the effect of this competitive pressure : Banks could loose 36% of NBI before 2017
Source: Capgemini analysis, 2008.
- 55%
- 30%
- 57%
- 55% - 17%
- 50%
- 54%
+ 32%
A global 36% drop
NBI 2017F
Prices harmonization impact
Interest rate margin impact
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Identification of three distribution strategies to go beyond the most rewarding traditional model
BET
TER
SEL
LLA
RG
ERO
FFER
IND
IREC
TB
USI
NES
S
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Identification of three distribution strategies to go beyond the most rewarding traditional model
BET
TER
SEL
LFinancial Advisor for
Mass Affluent Customer
Community Bank
Discount Bank
Taking care of the customer’sfinancial life as a financial advisor
Specialised service provider to aspecific community
The most economic withoutminimising security or quality
HSBC Premier
USAA
Société GénéraleBoursorama
LAR
GER
OFF
ERIN
DIR
ECT
BU
SIN
ESS
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Identification of three distribution strategies to go beyond the most rewarding traditional model
BET
TER
SEL
LLA
RG
ERO
FFER
Financial Advisor for Mass Affluent Customer
Community Bank
Discount Bank
Trust Operator
Taking care of the customer’sfinancial life as a financial advisor
Specialised service provider to aspecific community
The most economic withoutminimising security or quality
One-stop shopping forcustomers, including all kindsof personal or family services
HSBC Premier
USAA
Société GénéraleBoursorama
Deutsche Bank Q110 branches
IND
IREC
TB
USI
NES
S
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Identification of three distribution strategies to go beyond the most rewarding traditional model
BET
TER
SEL
LLA
RG
ERO
FFER
IND
IREC
TB
USI
NES
S
Financial Advisor for Mass Affluent Customer
Community Bank
Discount Bank
Open Source Bank
General Broker
Trust Operator
Taking care of the customer’sfinancial life as a financial advisor
Specialised service provider to aspecific community
The most economic withoutminimising security or quality
One-stop shopping forcustomers, including all kindsof personal or family services
Easy access and time savingof highly automated operations
through the Internet,
The best products on the market,and independent advisory
Services to fit clients’ needs
HSBC Premier
USAA
Société GénéraleBoursorama
Deutsche Bank Q110 branches
Zopa
Virgin Money
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Most impacting for the retail banking industry
1
23
Discount Bank
General Broker
Open Source
Banker rated models according to their perceived likeliness and impact
Most likely to appearbefore 2010
123
Trust Operator
Discount BankGeneral
Broker
The future will be likely a combination of several models
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The next challenge for retail bankers: re-assembling the building blocks to support a new retail banking business model of their own
New Banking Model
New
Relationship
Model
Larger Offer
Evolutive ta
rifs
Multichannel
Integration
New Branch
Flexible Production
Low Costs Structure
Innovation Brands
Strategy
Economic
ModelJob Culture Web 2.0 etSOAClients & communities
Competencies
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World Retail Banking Report – Spotlight Key Messages Summarized
Leading banks have well performed on their retail domestic operations over the last 5 years, steadily growing their revenue faster than their costs
Four pillars have supported their efforts to achieve profitable organic growth in their domestic markets
1. Combining fast time to market, innovation, and local client intimacy
2. Full multi-channel integration and optimisation
3. Increasing sales productivity through dynamic branch management
4. Leveraging a multi-brand portfolio to create attractive value propositions for each market segment.
Most banks however rely on these pillars to support very similar strategies: namely to build trust relationship with their clients in order to sell them a large number of financial products.
We believe that tougher regulations, more flexible technology, more demanding clients and new competitors will radically change retail banking
We simulated the effect of these structural changes on retail banking in 8 major European markets
Banks could lose 36% of their projected net income (and more than 50% in certain markets) within 10 years
To cope with this new environment, successful banks can use three distribution strategies to grow beyond the traditional retail banking business models
“Better sell”, to better fit diverse clients’ needs
“Larger offer”, extending the offering to non-financial products and services
“Indirect business”, selling through other distributors
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Agenda
Presentation of the World Retail Banking Report
Pricing Indexes – Key Findings
Organic Growth in Domestic Markets – Key Findings
Questions & Answers
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Agenda
Presentation of the World Retail Banking Report
Pricing Indexes – Key Findings
Organic Growth in Domestic Markets – Key Findings
Questions & Answers