Copyright © 2005 Accenture. All rights reserved. Next Generation Mobile and Internet Banking Copenhagen, November 17th 2005
Copyright © 2005 Accenture. All rights reserved.
Next GenerationMobile and Internet Banking
Copenhagen, November 17th 2005
Copyright © 2005 Accenture. All rights reserved. 2
Next Generation Internet BankingNext Generation Internet BankingNext Generation Mobile Financial ServicesNext Generation Mobile Financial Services
Copyright © 2005 Accenture. All rights reserved. 3
What happened?
1995 2000 2005
Internet Bankingspendings (banks)
forecast
forecastNumber of
Internet Banking
user
• In the late 1990s Internet Banking was thought to signal a revolution in banking distribution. Banks invested heavily in the development of the Internet channels.
• During dotcom fallout, it became apparent that Internet Banking was not the panacea banks had thought it to be. Between 2001 and 2004 Internet Banking investment growth experienced a significant slowdown.
• Nevertheless the customer base for Internet Banking was growing stadily over the last 5 years
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In 2007 Internet and Mobile will be the dominant channels besides the branch
Primary Retail Banking Channel 2007
Branch 61%
Internet 24%
Don't know 3%
Self Service Terminals 3%
Mobile 9%
• Managing a bank account is the most popular online banking activity
• Internet Channel is the bankaccess to their most profitable clients
• Several banks in Europe and US are already highly effective offering Next Generation Internet Banking solutions with sales and earnings increasing up to 80%last year
Source: Forrester Research
European Internet banking customers numbers will increase at a compound annual growth rate of 9.1 per cent between 2003 and 2007
0
20000
40000
60000
80000
100000
2003 2004 2005 2006 2007
Inte
rnet
ban
king
cus
tom
ers,
'000
s
Source: DataMonitor:eBanking Strategies in Europe
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Banks key pain points and opportunities regarding Internet Banking
Internet Banking user experience & functionality not comprehensive
Consumer confidence in security starts to reduce
Enhancing Internet Banking to become a sales channel
Internet Banking can be a driving part of an integrated channel mix
„Fixing“ existing problems Realizing existing opportunities
Internet Banking processes not realized as STP
Internet Banking solution not stable/scalable/flexible enough
Develop products and services customized to the Internet channel
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Even leading Internet Banks are not in the top range in all functional categories
Accenture 2005 benchmark of banks with leading Internet Banking offerings shows these banks offer a comprehensive set if functionalities but differ in the various categories.
Product Fulfillmentfunctionality 1 62 3 4 5
Bank W
Bank S
Bank H
Bank P
Legend (achievement grade of functionality):Grade 1: 0%Grade 2: 20%Grade 3: 40%Grade 4: 60%Grade 5: 80%Grade 6: 100%
Bank N
Account Management
Source: Accenture Web Banking benchmark 2005
Bills and payments
Loans
Cards
Trading
Portfolio Management
Markets
Insurance
Personalization
Bank U
Alert Messages
Collaboration
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When comparing authentication methods 3 different dimensions need to be analyzed: Security level, total costs and usability
• Authentication is the most visible security element to the customer and needs to be treated very thoroughly.
• Banks need to select their authentication methods according to the local market and their client needs• Selected authentication methods need to be continuous analyzed if they still fit the current situation.
Source: Celent, Accenture
Low High
Low
High
Total costs
Secu
rity
leve
l
UsernamePassword
TAN List
Challenge response(paper based)
Mobile deviceToken
MobileTAN/OTP
TAN List+ BEN Software PKI
HW Token
HW PKI
Low High
Low
High
Usability
Secu
rity
leve
l
UsernamePassword
TAN List
Challenge response(paper based)
Mobile deviceToken Mobile
TAN/OTP
TAN List+ BEN
Software PKI
HW Token
HW PKI
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Example: Mobile Token
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Internet Banking solutions with a state-of-the-art architecture can be implemented rapidly
• State-of-the-art IB solutions fulfill at least four criteria
• Based on international standards
• Model Driven Architecture
• Build according the SOA architecture stack
• The architecture itself has been tuned for high performance (both throughput and scalability)
• Todays Internet Banking solutions need to build on a component approach
• The abstraction of the design and build allows the underlying architecture to evolve without impacting the application
• Single components can be used to enhance or update the solution without replacing the entire platform
• Segment based differentiation and multi-branding for Internet Banking
• Standardized Internet banking offering – solution acquired not developed
• Adopted out-of-the box approach
• Started implementing Meridea packages in the beginning of August, 2005
• Piloted from 1st of September 2005
• Live on 27th of October 2005 in Singapore
• Total Effort < 1000 Mandays
Example of out-of-the-box Internet Banking installation
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Improving the Internet Banking to a sales channel is one of the key concerns and opportunities of banks today
2. Advisory
3. Online contract closing
4. Needs driven offering
1. High usage frequency
5. Straight Through Processing
• Dialog with the customer
• Even if channel is anonym, customer information can be gathered
• Allow user to purchase as many bank products as possible online without physical paper involved
• limited by local regulations
• User needs to accept the Internet Banking offering as a state-of-the-art and easy-to-use offering
• The more daily Banking tasks the user executes via Internet Banking, the more he is approachable via Internet Banking to purchase banking products
• Fast response to client requests is key to high rate of completed sales processes
• STP is the base for quick and cost saving processing
• Users expect to get offers which consider his personal need
• offers do not necessarily include bank products only
• Use process integration of different channels to increase overall sales
• With proactive and reactive support of Internet clients via other channels sales rates can be increased
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Channel mix will change in the future
• Average European Retail Bank- Simple online bank with low Online
banking penetration- The costly service channels are forced to
serve customers even for the simplest products
- Lot of manual transactions and processes
• Future Retail Bank- Rich online banking functionality with
high user penetration- Online bank can handle all simple
transactions but also expanding to management of more complex products
- Growing use of mobile channel- Service channels concentrate on
complex interactions and/or products- STP ratio for all transactions very high
Web
Simple
Com
plex
, Tim
e co
nsum
ing
Sim
ple,
Qui
ck
Complex
Call Center
ATM
Branch
Product Complexity
Inte
ract
ion
Com
plex
ity
Current Accounts Savings Credit Cards P&C Insurance Consumer Loans Mortgages Pensions
Web
Simple
Com
plex
, Tim
e co
nsum
ing
Sim
ple,
Qui
ck
Complex
Call Center
ATM
Branch
Product Complexity
Inte
ract
ion
Com
plex
ity
Current Accounts Savings Credit Cards P&C Insurance Consumer Loans Mortgages Pensions
Mobile
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Northern Europe is leading in usage of Internet Banking
Usage of Internet Banking and Brokerage in selected European countries 2004. Percentage of population between the age of 16 to 74 years.
World class banks in terms of Internet Banking offerings
Source: Eurostat
7%
8%
9%
10%
12%
18%
22%
26%
35%
35%
40%
45%
50%
Lithuania
Portugal
Slowenia
Ireland
Lativa
Austria
UK
Germany
Estonia
Luxemburg
Sweden
Denmark
Finland • Sampo- Most successful Internet Banking
provider in terms of self-service-ratio. 3rd largest bank in Finland.
• Nordea- Biggest Internet Banking provider in
Nordic
• Wachovia- Leading Internet Banking provider in
the US
• Bank of America
- Successful Internet Banking provider in the US
• HSBC- Leading Internet Banking provider in
the UK
• Postbank- German Internet Banking provider
award winnerSource: Accenture
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Next Generation Internet Banking
Next Generation Mobile Financial ServicesNext Generation Mobile Financial Services
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How do we structure Mobile Financial Services?
Mobile Financial Services
Mobile banking services regarding accounts (transactions based)
Mobile banking services regarding depots (transaction based)
Mobile information services (no transactions)
MobileBanking/
Accounting
MobileBrokerage
MobileInfo services
P2P(People to People)
P2B(People to Business)
Payment at the Point of sales (POS)
Payment at a machine (e.g. ticket machine)
• Micro-payments
• Macro-payments
Mobile BankingProcessing of banking services where the bank customer uses a mobile device like a mobile phone or a PDA
Payment between two (private-) person
P2O(People to Online)
Mobile PaymentProcessing of payment transactions where at least the payee is using a mobile device for initiating, authorization and realization of payment
P2M(People to machine)
Payment of online-or mobile services
Message based (e.g. SMS)
Protocol based (Online browser for WAP, HTML)
Application based (e.g. Smart Client, application on SIM card)
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Mobile Banking channels
Messaging
Simple to handle SMS to be used for bank or investment alerts
WAP Push for sending links to browsing services (included in message)
MMS for high quality marketing
Browsing
Online banking and investment services
More functionality, better user interface, services based on newest network and browser technology
Extends web functionality to be used on mobile phones
Smart Clients
On- and offline usage of banking and investment services
Extended functionality for end user
Local storage of personal and bank related information
Rich graphical capabilities to be used for branding purposes
High potential for innovative services
Basic phones
Enhancedphones
Smartphones
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Consumers use value added services on their mobile phones
20042005
20062007
20082009
$0
$5 000
$10 000
$15 000
$20 000
$25 000
MEA S America N America Europe Asia-Pacific
Regional Mobile Content Revenues ($m), 2004-2009
Source: ARC Group, Mobile Transactions, March 2005
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Mobile Banking today offers a full range of benefits for financial institutions
Improve Market Position and Brand Image• Strengthen brand positioning as innovative and future-oriented• Actively build the journey from eBanking to mBanking, ahead of competitors
Increase Customer Retention• Offer state-of-the-art services• Offer customers another channel communicating with the bank
• Create a status symbol
Acquire New Customers• Target customer which value mobility and real-time-control of their financials
• Target young customers
Grow Revenues and Profits• Exploit cross-sell potential within the customer base
• Recognize customers’ willingness to pay for mobile services
Save costs in reduced call center usage• Migrate customer from using the call center to using mobile banking
• Already a small percentage of migrated customer can save a lot money
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Different mobile channels offer different advantages and need tobe customized to different user groups and functionalities – in general we see the future in combining SMS and SmartClient
• Low security level• Limited functionality• Enhanced usability via a
thin Java applet possible
• Ideal for basic functionality with low security requirements (alerts, account balance, stock price, etc.)
• Online & Offline capability• Low data traffic - low costs• Highest level of functionality• Secure HTTP Connection• Secure local storage of data• Personalised and branded
end user experiences• Over The Air (OTA)
installation and automatic updates
• Ideal for innovative & complex requirements requiring a high level of security
• Feature potential covers all aspects of Internet Banking
• Security level correlates to the configuration of the browser
• Functionality constrained by the limitations of the browser
• Performance usually be poor
• Online mode only
• Acceptable for basic functionality
• Provides maximum reach to customers as most phone have browsing capabilities already
SMS Banking Smart Client Mobile Browsing
+ +
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Take aways
1. Banks need to include their Internet Banking into a strategic channel mix with clear channel roles and objectives
2. Banks need to enhance the Internet Banking to a sales channel leveraging its full potential
3. As a solid foundation banks need to first fix their existing problems and issues with their current Internet Banking solution
4. Mobile Banking will grow to a complementary channel for low complex services and will be successful based on the SmartClient technology
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Backup
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Most countries are still in an early stage regarding the mobile Payment life cycle
20%
40%
60%
80%
100%
USA FranceCanada
Czech RepublicHong Kong
Sweden, UK
Germany
Switzerland,The Netherlands
China
Italy
Finland,Japan
Spain
Austria,Norway,Singapore,Korea
mPaymentmaturity(relative)
0%
Embyonic Early Stage Developing Advanced Mature
Market maturity stageSource:Accenture 2005
ADL 2004
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Categorizing mPayment into 4 different Use Cases
We only consider P2x user cases, which means that the payment sender is always a person and not a business. B2x user scenarios (payment sender is „mobile Business“) are no subject of this consideration.
Use Case Explanation Example Comp. Payment Methods
P2P (Person to Person) Payment interaction between two person predominantly in a private environment
• Portion on restaurant bill• Portion of present• Coffee cash box• Pocket money
• Cash• Money transfer
P2B (Person to Business)
Payment interaction between a customer and a business partner „face-to-face“
• Payment in a shop• Taxi
• Cash• ec/Credit Card• money transfer
P2M (Person to Machine)
Payment interaction between a customer and a machine (e.g. vending machine) with which the customer gets in contact directly
• Cigarette machine• Stamp machine• Ticket machine• Vending machine
• Cash• ec/Credit Card
P2O (Person to Online) Payment interaction between a customer and an online (Internet) or mobile trading platform
• Concert tickets• Ring tones• Video clips
• ec/Credit Card• money transfer• ePayment
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Win-Win situations for all stake holders
• Looking for sales drivers in the form of new services such as mobile payment, in order to promote sales of devices or to open up new revenue streams
• Mobile payment will add to the value of mobile phones, and will position them even more firmly at the heart of everyday life.
MobileOperator
DeviceManufacturer
• Looking to realise contactless payments by using suitable chips, partly in response to increasing marginalisation by the card issuers.
• In this way, they are simplifying the payment process on the basis of the cashless payment procedures currently in use - card-based solutions and electronic payment networks
Credit CardAssociations
• Strongly promoting cashless payment transactions, using precisely such commonly-found technologies as mobile phones, in a bid to save on costs.
• Cash logistics costs can be reduced by up to 10%.
• In the UK alone, this would represent annual savings of several hundred millions of pounds
Banks
• Are attracted by the further reduction in costs per payment transaction offered by a mobile payment system.
• The key is that their businesses do not incur any more sizeable costs for the POS infrastructure.
Retailers
Co-operation is fundamental for success• Banks, credit card companies, handset manufacturers and telecommunications companies in Europe could achieve
sweeping success with the right innovative co-operation model• One-industry approaches fail (e.g. SIMPAY)• We can learn from Asia how to successful co-operate in this fieldVERY BUSY – WHAT IS THE SHORT MESSAGE HERE ?
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Banks need to focus their Multichannel integration on the process level
Plattform
Data Process
• Data are shared between different channels
• E.g. call center agent can see what client is doing or did in the Internet channel
• One plattform (architecture, applications) for all channels
• Client processes can be performed via different channels
• E.g. loans application can be started in the Internet channel, adviced in the branch and closed via the call center
Implementing Multi Channel Integration on a process level:
• Provide better and consistent customer experience when using different channels for the same service/process (e.g. loan application)
• Realize long-term cost savings
• Share content and knowledge between different channels
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The costs of serving the customer
- How many calls does your call center receive monthly? - How many of the calls are about routine queries (provision of services,
balance of next bill…) and could be handled through mobile self-service?Estimated saving / interaction: $xx
- How many paper-based bills are sent monthly?- How many of these could be replaced by mobile bill?
Estimated saving / bill: $xx
Time
In Europe a typical inbound call to contact centers
costs $5,50 *)
Cost per
Personal selling and service
Call center€ 5
€ 2
contact
€ 5
Pocket the PotentialSmartClientTechnology
*) source: Gartner
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• A conclusion is needed.
• Furthermore a slide with a question mark