Austrian retail bankers: how much retailer is there in retail banking?

Eysink Smeets Retail Business Consultants

Retail bankers Austria.What can retail bankers learn from retail?

November 4, 2015, Wien

What are these slides?My slides of the FMVÖ meeting in Vienna.

- I spoke at the BAWAG/PSK HQ in Wien on November 4, 2015.

- We had some hours of inspiring speeches and discussions.

- Here are most of the slides, but I took out some slides, that are not for publication.

- Please let me know what you think of it,- Kind regards,

Hans Eysink Smeets hans@eysinksmeets.com

Sie haben mich gefragt die folgende Frage zu beantworten:

Wieviel Retail steckt im Banking?

Darüber haben wir nachgedacht

in den letzten Wochen.

Einige andere Fragen kamen dazu:

Wie viel Retail könnte im Banking stecken?

Warum steckt nicht viel mehr Retail

im Banking?

First: why do I tell you this?

Bosses of very large companies in the retail worldphone us to help them kick-start their retail strategies.

Those big-shots have made us workin 39 countries in the past 30 years.

Basically our clients ask us to change todays situation.Just a few clients schlepp themselves to their stores.

Retailer

And those ladies leave their shops unsatisfiedand with too few articles in their bags.

Retailer

What our clients would just love,is many, many consumers are running to their stores...

Retailer

...and when they leave, their many bags are filled to capacity. Retailer

...when you fear new competitors will create this situation. Retailer

Retailer

Our e-retail clients have basically the same question:How can you change from just a few unmotivated visitors...

...to many buying clients.

Retailer

Retail bankers ask almost the same

questions.

Retail bank

Retail banking business still looks okay,but how can we prevent that we go from this situation...

..to a rapid decline because of new competitors like global banks, internet, Google, Fintech, etc.?

Retail bank

What lessons could banking learn from retail to guarantee the future,

Okay, some lessons from Retail

Lessons from retail: Develop an assortment

that satisfies basics to fit individual needs.

Standardized products? That is a matter of repackaging.

Look at how you can make one photo relevantto very very different targetgroups.Girls-with-glasses.com Girls-with-dark-hair.com Girls-with-pig-tails.com Girls-with-pig-tails.com

Here Manner in Vienna.

Assortiment

Lessons from retail: Design customer journeys

exactly.

Old-school thinking:

- Selling a loan is a job for a trained and experienced humans.

- It comes down to knowing the client, understanding his feelings, reading through the lines…

- All variables to be filled in order to make a decent product.

But then let’s look at kitchens, a retail sector where they sell even more complicated products.

- A kitchen has thousands of variables.

- Color, wood, cabinet fronts, handles, oven type.

- And then there’s the edges and corners of the space it needs to get build into.

Old school kitchen sellers did believe you needed a person to design and sell a kitchen.

- Some guy like this. - Who sat down with you, gave

you coffee, and talked about your life.

The whole sector was convinced that you need a person to design and sell your kitchen.

But then came IKEA.

- And they did it did it differentely.

- You design and buy your kitchen yourself.

- With just a bit of help in designated steps in the customer journey.

You can design your kitchen at home.

But then came IKEA. And they did it did it differentely.

Measure and plan exactly.

Shows you 3D visuals of the new reality.

And lots of suggestions.

Ikea only adds people for three reasons:

- 1. To assist you in your process

- 2. To do a final check.- 3. To put a nice hand on your

shoulder when you’re about to spend 10K on a kitchen.

They are not kitchen experts. They’re not salesmen.

- They’re definitely not amazing compliance wizards. - But they are good at working the software and being a nice human being.

IKEA is now selling 1 in every 3 kitchens in many European countries.

Lessons from retail: Define channel-mix from the products and clients.

Here Interspar in Vienna.

©eysink smeets business consultants bv, amsterdam, 1998-2006

Es gibt viele einfache Konzepten die im

Retailbanking gestochen werden können.

Das ist nicht die wesentliche Frage.

Die viel wichtiger Frage ist:

Wie kann Retailbanking dieser hard-core Retailkonzepten verwirklichen?

Lessons from retail: If retail is important,

reflect that in your organigram.

Of course, you here are the exceptions, but common retail sense is a rare commodity in banks, where retail is fragmented.

In most universal banks nobody has the real & final retail responsibility: “Well, yes, I do retail, but the branches? No, that is…eh… what’s his name…?”

“Me? Yes, I do the branches, but the IT is…” Etc., etc., etc...

Most banks say that retail-banking is important to them.But most don’t reflect that in the top of the management-pyramid.

Ein Retailbank muss von Kopf bis Fuss

auf Retail eingestellt sein.

Lessons from retail:Throw out old IT now.

You can dream on, but steam & cast-iron IT systems of existing bankskeep on strangling every innovative initiative.

With stacks of priorities fighting for prominence, with innovation inevitably sinking to the bottom every time, overruled by compliance, maintenance and the like

Newcomers enter with brand new lean & mean IT.It gives them low costs and, - even more important - incredible agility and speed.

Lessons from retail: Stop thinking

from the channel of the past.

Mountains of costly and obsolete branches delay innovation, prevent looking for real solutions.

Daily improvisation in a branch can solve many system-faults, thereby

hiding real problems

Newcomers have this basic idea about branches.They are internet-based. With or without face-to-face channels.

Re-inventing retail-formats is very topical in all retail sectors.Huge movements in size/location/amount of branches.

Hypermarkets are becoming ancient dinosaurs in many countries. The shift towards close-by supermarkets, or even smaller r convenience store is resulting in a new mix, where on-line

increases in importance.

Lessons from retail:Retailers do everything

to be attractive to retail-talent.

I experience time and again that for the best young talentbanks enjoy a dangerously fast fading career-attraction.

Lessons from retail:Stop fooling yourselves

about what really goes on in the client-contact.

Herr ... entgegnete, dass Banken nicht umhinkommen werden sich neu aufzustellen, perfekten Service und kompetente Beratung zu liefern sowie die digitalen Marktplätze kompetent zu besetzen.

Perfekten Service und kompetente Berating ist

unmöglichin das heutige Businessmodel.

Das meiste ist Selbstbedienung.

Nur limitierte Bedienung.

Bedienung kost Geld und macht Schlangen.

Eine kurze Geschichte aus einige Projekten:

Let’s just say we have 35 account managersfor a SME client group of 10.000.

We miss about 20% of the account managers because of holiday, illness, training ,etcThat leaves us 28 account managers.

About 70% of the time is absorbed by compliance & admin: 19,6 persons gone. Leaves us with 8,4 persons for 10.000 clients.

The branche is open for 50 hours per week. One FTE is 36 hours.Leaves us with 6 persons.

Those 6 have 36 hours FTE, which leaves us with 11.000 hours for clients.Divided by 10.000 clients, we can spend just over an hour per client per year.

Recent compliance requires 1 man-week per file, of which we have 250. Per person we have 40 man-weeks; 250/4=6,25 man. We have 0,25 persons negative.

Every of these SME clients has about 0,04% of an account managerWith that he must maintain the relationship and know the client’s company.

The account manager was hired on 20% admin and 80% client.

the reality of the account manager is almost reversed.70% admin en 30% clients.

Lessons from retail:Never believe in fairy-tales.

The fairy tale of banks andthe emperor’s new clothes.

We all join in and pretend that the bank is dressed in beautiful clothes.

Personal contact!

Close-by!

Knowing the client!

A real relationship!

Kunst & cultuur steunen!

Putting the interest of the client first!CRM!

Your own account manager!

Improving the world!

Part of the society!

Mutual trust!

Tailormade advice!

Hey, look there! The emperor has no

clothes on!

Because clients are dependent on their account manager they pretend that they really believes in an open, mutual-trust relationship.

Close-by!

You know us, the clients!

We have a real relationship!

You put our interests first!

Mutual trust! Tailormade advice!

We love to pay a bit more!

We love the personal contact!

We tell you our deepest secrets!

Lessons from retail: Accept that national giants

are easily wiped out byglobal competitors.

You are not fully realizing the ability of non-banks to diversify.Also into financials. Without compromising their PMC.

Is Apple iBank far away? Would they choose to call it a bank?Probably not, but the threat isn’t less real.

These newcomers won’t necessarily say they are a bank.But just take on the next territory, which is very normal to them.

Lessons from retail: Never play down

newcomers.

Downplaying non-bankers in fin-tech or others isn’t smart.Neglecting them is even dangerous.

Lessons from retail: The days that you could rely

on buying your way out of trouble,

are over.

‘We will just wait and buy the winner’That good old escape-route doesn’t work anymore.

Lesson from retail:Create a symmetric

relationship.

Mrs. Consumer does not have a separate mind for banks.She enjoys a symmetric relationship everywhere, but for the banks.

Lesson from retail:Organize with

consumer at the centre.

I had a hard time putting issues of the day into some order.It seemed the machine of banks looks like this:

Whereas real retailers are consumer-centric by nature.Consumer at the centre, with the machine designed around her.

Lesson from retail:Don’t mix

wholesale and retail.

That restricts how many PMC*’s you can handle.It brings ‘universal versus retail’ -bank discussion to an end.

*PMC: Product Market Combination

The synergy claims of universal banks are just so much bullshit.The law of friction-cost and -time applies anywhere. Also to banks.

On all points where the lines of the matrix connect big fights erupt.

Normally the ones with the biggest mouth and the most power-seats wins. Not necessarily the ones with common

sense.Recognize it?

Lessons from retail: Think mono-channel.

And stop thinking multi-channel.

There is a lot of talk about multi-channel.

Internet

Face-to-face advice

Branches

Mobile

Call-centre

But basically the large retail-bank are still very much mono-channel In their thinking. Not in reality though.

with advisors in them, and a call-centre to regulate the phone-calls to the advisors

...and of course, you can do your internet-banking with us as well.

Branches Digital

Don’t go against the trend: a bank is 100% information.So be mono-channel: digital plus some supporting channels.

Advisors Digital

Lessons from retail: Package solutions.

Leveling out the financial waves of income and costs in a life.That is why banks exist; that is the core-job of any bank.

The real problems for the farmer are the financial impact of the flu. His income and costs waves will become seriously un-leveled.

Translate these fears, dreams, ambitions into real banking solutions.Restrict yourself to that. And that only.

The real innovation is in packaging those client’s fear, desires, etc.Package that set of solutions for that client-group: create a PMC.

This usually doesn’t require much innovation on your products.Treat them as components of the real product.

Product

Component

People

Component

Lessons from retail: Consider non-value

positioning.

Everybody is looking for High Value/High Price in banking.Why not try the Low Value / Low Price corner instead?

1. This is where the normal life-cycle of most companies starts. Starting as challenger,

with price as the main weapon of attack.

High ValueLow Value

Low Price

High Price

2. The dominant years is when you are in the NoCompromise corner. Mrs. Consumer doesn’t have to accept a compromise; neither on value, nor on price.

3. Then the lazy fat years are entered. Offering High Value, but demanding from Mrs. Consumer

the compromise of High Price.

4. The end of the game, the company has been pushed into the Double Compromise corner,

and is on the way out.

Zum Abschluß:

Steckt viel Retail im Retailbanking?

Es gibt nicht viel Retail im Banking.

Retailbanking würdeviel besser sein

mit viel mehr Retail drin.

Das wird nicht passieren wenn Retailkonzepten

nur als oberflächige Kosmetik benutzt werden.

Ein Retailbank muss von Kopf bis Fuss

auf Retail eingestellt sein.

Noch Fragen?

Smeets...we change retail

Business Consultants bv

World wide retail

business consultants

www.eysinksmeets.com

Singel 26

1015 AA Amsterdam

The Netherlands

Phone +31 20 6265573

hans@eysinksmeets.com

Austrian retail bankers: how much retailer is there in retail banking?

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