Monetizing Mobile: How to deliver value from improved customer experience Mark Schofield Partner, Toronto Bain and Company
Monetizing Mobile:How to deliver value
from improved customer experience
Mark SchofieldPartner, Toronto
Bain and Company
2
Housekeeping
©2015 QUALTRICS
LLC.
The recording and slides for today’s presentation will be made available on cxweek.com along with other content and webinars from throughout the week
Please use the chat window to submit questions throughout the webinar, we will have time designated at the end for Q & A
Join the conversation on Twitter by tweeting @Qualtrics using #cxweek
IntroductionMark SchofieldPartner, Toronto, Bain and Company
•15+ years of experience in consulting
•Co-lead on Bain’s Retail Bank of the Future perspectives
•Extensive work on retail bank customer experience
•Led Retail Bank engagements in Canada, USA, Australia, South East Asia and UK
Objectives for today’s discussion
•How are banks adapting?
•How can banks accelerate the pace atwhich they capture the digital dividend?
•How are customer behaviors changing and how is this creating a digital dividend?
• Customers are rapidly embracing mobile• This creates a digital dividend - lower costs, higher sales, better loyalty
Retail banking is changing
fastThree actions to drive great experiences and bottom line successRequires a
newway of
working
Key themes for today
• Success requires changing the old bank, while building the new• Leading banks focused on three actions
- Migrate high cost service: Eliminate ‘bad and avoidable volumes’ in branch/call centers- Digitize sales experiences: Deploy exceptional mobile sales experiences - Adapt traditional channels: Transform the physical network
• The difference between winners and losers is in the ‘how’ not the ‘what’ – it’s a change management issue
• Requires new ways of working in “Hothouses” with customers and employees to develop Rapid, Radical and Repeatable solutions
Our perspectives rely on proprietary research with customers and banks
Voice of the Customer Voice of the Bank
Loyalty in Retail Banking (NPS) Survey
• Annual proprietary research on customer loyalty with ~200K retail banking consumers in 25-30 countries
Retail Bank of Future (RBoF) Survey
• Bi-annual benchmarking research on internal digital capabilities; ~100 banks participating
10
20
30
40
50
60%
10 15 20 25 30 35 40 45 50 55%
Online interactions as a percentage of total interactions
Mobile interactions as a percentage of total interactions, 2013 and 2015
The retail bank landscape is changing fast; mobile is now the most prevalent channel
Mobile exceeds online
Onlineexceeds mobile
South Korea Netherlands
China
Mexico
Hong Kong IndiaSingapore
AustraliaUSAUK
France
Japan
Poland
Germany
Canada
2015
2013
Spain
Source: Bain/Research Now NPS surveys, 2013 and 2015; Bain/GMI NPS surveys, 2013
0
4
8
12%0 24 28 32%
Six interactions
in last
quarter
Percentage of US respondents, 2015
Online routine
Six interactions
in last
quarter
Mobile app
routine
ATM
Mobile browser routine
Branch routine
Online sales/service
Mobile sales/service
PhoneBranch
sales/service Chat/video
In the US, mobile is consistently more likely to delight
Increasing likelihood to delight
Decreasinglikelihood to annoy
MobileOnlineATMBranchPhone
Notes: Responses on a scale from -5 to 5 for “To what extent did the interaction increase or decrease your likelihood to recommend your bank?”; Likelihood to delight = percentage of respondents answering ≥4; Likelihood to annoy = percentage of respondents answering ≤-1Source: Bain/Research Now US NPS survey, 2015
Delightful banking experiences are easy
“What’s the primary reason [this mobile] increased your likelihood to recommend your bank?”
Source: Bain Retail Banking NPS and Interaction NPS Survey (2015); USA - N=4641
Everyday banking experiences are core to NPS
0
20
40
60
80
100%
Interaction frequency
Reported change on likelihood to recommend bank, by interaction (percent of respondents)
Pay bill Deposit money
Tran
sfer
to
FF
Sale
s
Srvc
s
24 2 424 4Frequency in past year:
Significantly increasedSlightly increased
Significantly decreased
Slightlydecreased
Did not change
Change in likelihood to recommend bank:
Source: Bain Retail Banking NPS and Interaction NPS Survey (2015); USA - N=4641
0
10
20
30
0 1 2 3 4 5
Avg. # of branch interactions
Avg.
# o
f m
obile
inte
ract
ions
Germany
SwedenFrance
UK
Netherlands
Australia Canada
USA
Average number of mobile and branch interactions (average of individual banks) per respondent per quarter, 2015¹
As a result, banks are migrating customers from branch to mobile
All countries are moving away from
branch transactions to exponentially more mobile transactions
¹ Sweden data is based on survey conducted in Q1 2016, Germany mobile interaction includes onlineSource: Bain/Research Now NPS surveys, 2015
Getting it right is valuable, for both profitability and loyalty30-40% REDUCTION IN COSTS… … AND A MATERIAL LIFT IN LOYALTY
0.0
0.2
0.4
0.6
0.8
$1.0B
Traditional bank distribution cost base in US $B, 2015
Cost today
1.0
Avg. costs after transformation
0.6-0.7
~1,000 ~600Branches today:
0
10
20
30
40%
Traditional bank Net Promoter Score in US, 2015
Avg. Bank NPS
25
Avg. NPS after transformation
35-40
~15% ~10%% branch only users:
Source: Bain analysis
Clear end state emerging, but the approach to deliver is critical
30-50% reduced costs in branch & contact
centre
30-50% of sales through a mobile
30-50% fewer; smaller and different branches
MIGRATE HIGH COST SERVICE
DIGITIZE SALES EXPERIENCE
ADAPT TRADITIONAL CHANNELS
“HOTHOUSE” APPROACH FOR AGILE CHANGE TO ACCELERATE ADOPTION
60-70% OF BRANCH TRANSACTIONS ARE BAD AND AVOIDABLE
70-80% OF CONTACT CENTRE TRANSACTIONS ARE BAD AND AVOIDABLE
0
20
40
60
80
100%
Branch transactions
Branch transactions
Bad and avoidable
transactions
High value transactions
0
20
40
60
80
100%
Contact centre transactions
Call centre transactions
Bad and avoidable
transactions
High value transactions
Service: 60-80% of transactions are bad and avoidable
Source: Bain analysis
MIGRATE HIGH COST SERVICE
Service: There is a proven playbook for service migration
Migrate simple transactions
Streamline business cash management
Simplify the cash ecosystem
Optimize internal processes
Optimize workforce scheduling
Prevent calls
Enhance self service and routing
Improve front line capabilities
Optimize workforce
11
2
3
4
5
2
3
4
CHAPTER CHAPTER
Service: Radical digitization requires changing customer behaviors
“Mobile first”• Make everyday banking
“one touch” easy on mobile & other digital channels
• Systematically eliminate friction end-to-end across policy, communication, process, product, etc.
• Use Agile principles for the overall effort (not just tech development)
“Front-line led”• Teach customers how
to use the digital capabilities
• Focus on making it easy for consumers and saving them time
• Hothouses perform rapid experiments with customers to learn what works and roll it out
NPS + CostLeadership
Service: Results can be delivered fast
0
50
100
150%
Over the counter transactions
Time 0
100
Target
70-80
0
50
100
150%
ATM transactions
Time 0
100
Target
110-120
0
50
100
150%
Digital signups
Time 0
100
Target
130-150
0
50
100
150%
Branch sales
Time 0
100
Target
100
NORTH AMERICA EXAMPLE
5-10% lift in employee engagement through Hothouse process
Stable customer satisfaction through transition
End state target of ~20-30% over the counter reduction
End state target of ~10-20% increase in ATM usage
End state target of ~30-50% increase in Digital Signups
Objective is to maintain branch sales levels despite fewer tellers
Source: Bain experience
0
20
40
60%
30%
Nethe
rland
s
57
UK
55
Swed
en¹
52
Japan
46
Polan
d
43
India
42
China
42
Germ
any
42
Hong K
ong
40
Singa
pore
38
Sout
h Kor
ea
34
US
33
Spain
32
Austra
lia
31
Canad
a
29
Braz
il
28
Franc
e
20
Mexico
13
Percentage of purchasers using mobile & online channel for purchase, 2015
30%
Digital Sales: ~30-60% of sales are now done outside of the branch
Mobile
Online
¹ Sweden data is based on survey conducted in Q1 2016Source: Bain/Research Now NPS surveys, 2015
Digital Sales: Digital sales are set for explosive growthILLUSTRATIVE
100%
50
03-10 years 5-15 years 5-20 years (until obsolete)
US Banking 2013(6-8%)
Airline tickets (72%)
2013 US Data
Books (72%)
Music (91%)
Newspapers (46%)
Apparel (19%)
Retail overall (11%)
US Banking 2015 (30-35%)
Digital sales penetration
Time
INTRODUCTION GROWTH MATURITY
Source: Euromonitor, Federal Reserve, Recording Industry Association of America, company annual reports, Research Now, Bain analysis
Digital Sales: Customers prefer topurchase via digital channels
0
20
40
60
80
100%
Actual Preferred
Channels for opening account used vs. preferred
0
20
40
60
80
100%
Actual Preferred
Channels for opening account used vs. preferred
0
20
40
60
80
100%
Channels for opening account used vs. preferred
Actual Preferred0
20
40
60
80
100%
Actual Preferred
Channels for opening account used vs. preferred
CANADA US AUSTRALIA UK
OPENING TRANSACTION ACCOUNT
Online OtherPhoneATMMobile/Tablet Branch Mail
Source: Bain Retail Banking NPS and Interaction NPS Survey (2015); USA - N=4641, Canada N=3004, UK N=3964, Australia N=3203
SuperiorCustomer
Experience
Branding & positioning
• Creation of overall brand awareness both inside and outside of the branch
• Innovation center for the bank
1
Customerrelationship management
• Convenience, "feel good" andtrust development
5 Consultation for complex customer needs
• Mortgage loans • Security advisory services• Insurance
2
Customer enabling for online & mobile banking services
• Availability and functionalities of online and mobile banking applications
• Technical issue resolution
Live assistance
• Physical (in-person) support on transaction kiosk handling
• Transaction issue resolution (of online/mobile banking services)
Network: Role of physical network evolving
34
Network: Number of branches decreasing in major markets
-40
-20
0
20
40%
Change in branch numbers 2010-14 (2010 as 100%)
Netherlands Spain
-26
Germany
-11
Italy
-9
Sweden
-6
US
-4
UK
-4
France
-3
Australia
1
Canada
4
-35
Source: ECB; British Bankers Association; Haver; Datastream
Network: Formats design evolving to support customer experience
Products and services Process and technology
People and behavior Design and construction
Data and insight
Network: Physical network portfolio evolving to hub and spoke
0
20
40
60
80
100%
Pres. Future Pres. Future Pres. Future Pres. Future
"How many branches of each format do you currently have, and how do you see its number evolving during the next 3-5 years? " (% by branch type)
Global average
APAC EMEA Americas
Full service
Kiosk/ATM
Satellite
Flagship
Small/medium business
Advisory
NETWORK OPTIMIZATION PLANNED IN EMEABRANCH FORMATS
Flagship stores in high traffic locations increase perceptual scale
Flagship store
Consumer oriented branches focused on basic product sales
Satellite branch
Transaction kiosk fully automated and with only limited offering
Self-service kiosk
Specialist advisory branches focused on critical segments (business/affluent)
Advisory shop
Source: Bain Retail Bank of the Future Benchmarking
Success demands a different way of workingCUSTOMER
“BACK” APPROACH
FRONTLINELED
DESIGN
HOTHOUSE ENABLED
• Listen to customers and respond through feedback loops
• Frontline teams designing the change to create pull within the organization
• Create an environment to “prototype at scale” and then rapidly deploy successes system wide
1
3
2
ACCELERATED RESULTS
• Teams anticipate risks and focus on critical few actions to resolve while also developing execution plans alongside initiative design
5
AGILE METHODOLOGY
• Agile approach, supported by central teams, drives continual design, test and learn
4
A “hothouse” can provide the conditions for success
SETUP FOR SUCCESS
Design, mobilize and launch Radical new ideas in Hothouse regions
Launch quick wins to build momentum in the organization
Bundle initiatives and rollout nationally
Test, learn and refine actions, codify best practices and create change experts
Conduct diagnostic, align on goalsand vision, setup team, and generate ideas
RAPID ACTIONS
RADICAL ACTIONS
REPEATABLE CAPABILITY
ROLLOUT NATIONALLY
CREATE AN ENVIRONMENT FOR RADICAL TESTING AT PILOT SCALE:
Idea Generationworkshop
Rapid designacceleration process
Radical‘hothouse’ pilots
Test & RefineToolkit
National rolloutmanagement
Recap - Key themes for today• Customers are rapidly embracing mobile• This creates a digital dividend - lower costs, higher sales, better loyalty
Retail banking is changing
fastThree actions to drive great experiences and bottom line successRequires a
newway of
working
• Success requires changing the old bank, while building the new• Leading banks focused on three actions
- Migrate high cost service: Eliminate ‘bad and avoidable volumes’ in branch/call centers- Digitize sales experiences: Deploy exceptional mobile sales experiences - Adapt traditional channels: Transform the physical network
• The difference between winners and losers is in the ‘how’ not the ‘what’ – it’s a change management issue
• Requires new ways of working in “Hothouses” with customers and employees to develop Rapid, Radical and Repeatable solutions
Q&A
Thank You!