Fi#ng  Mobile  and  Consumer  RDC  Into  your  Bank's  Retail  Strategy  

   Mike  Packer,  TransCentra  

About  TransCentra  

•  Key  Facts  –  ~  $170M  in  annual  revenue  –  12  offices  across  North  America  –  Processes  over  640  million  payments  annually  

•  History  –  J&B  SoJware,  established  in  1985  –  Regulus  Group,  established  in  1996    –  In  June  2011  Cerberus  acquired  J&B  SoJware  and  Regulus  and  formed  TransCentra,  an  independent,  standalone  porWolio  company  

Today’s  Agenda  

•  Retail  Banking  and  Consumer/Mobile  RDC  –  Is  there  a  need  for  Consumer  RDC?  –  Customer  Reten[on  –  Customer  Acquisi[on  – Which  customers  are  profitable  – Demographics  by  age,  income  – Mul[-­‐channel  –  Rate  of  change  

Why  Consumer  RDC?      Who    SBll  Deposits  Checks?  

•  >  95%    received  payroll  by  Direct  Deposit  •  Source:    Wincor  Nixdorf  Inc.,  Nov.  2011  

0  checks  38%  

1  -­‐  5  checks  61%  

6  or  more  checks  1%  

Checks  per  Month  

Why  Consumer  RDC?      How  to  Deposit  a  Check?  

•  Go  to  a  branch/ATM  •  Drop  it  in  the  mail  •  Consumer/Mobile  RDC  

Financial  InsBtuBon  Challenges  

Customer  Reten[on  

Customer  Acquisi[on  

Mobile  Strategy  

Increasing  Deposits  

Capital  Requirements  

Bringing  New  Products  to  Market  

Focusing  on  Core  Services  

Maintaining  Legacy  Systems  

Integra[on   Consolida[on   Regulatory  Requirements  

ROI  of  New  Investments  

Financial  InsBtuBon  Challenges  

Customer  Reten[on  

Customer  Acquisi[on  

Mobile  Strategy  

Increasing  Deposits  

Capital  Requirements  

Bringing  New  Products  to  Market  

Focusing  on  Core  Services  

Maintaining  Legacy  Systems  

Integra[on   Consolida[on   Regulatory  Requirements  

ROI  of  New  Investments  

Customer  Reten[on  

Customer  RetenBon  and  AcquisiBon  Issues  

•  Cost  to  acquire  new  customer  is  5x  cost  to  retain  exis[ng  customer*  

•  8.7%  switched  banks  in  2011**  Other  es[mates  at  12.5%  

 

*  The  Cost  of  Churn,  Chris[ne  Durkin,  Financial  Publishing  Services  hfp://www.marke[ngexecu[ves.biz/The-­‐Cost-­‐of-­‐Customer-­‐Churn    **  J.D.  Power  and  Associates,  March  1,  2011,  N=4,791,  hfp://www.pntmarke[ngservices.com/newsfeed/ar[cle/More_customers_switching_banks,_survey_finds-­‐800436896.html  

Customer  RetenBon  Issues  2009  vs.  2011  

3%  

59%  

34%  

34%  

63%  

6%  

0%   10%   20%   30%   40%   50%   60%   70%   80%   90%   100%  

Shopping  around  

Customer  loyalty  

Decreased  Stayed  the  same  Increased  

Source:    Accenture,  Customer  2012,  Accenture  Global  Customer  Behavior  Study,  2009    

Customer  RetenBon  Issues  

•  Customers  with  mul[ple  accounts  more  loyal  •  Customers  with  mul[ple  products  more  loyal  •  Some  products  make  customers  “S[ckier”      – On-­‐line  Bill  Pay  is  especially  s[cky  • Hard  to  switch  •  12%  less  likely  to  switch*  

– Consumer/Mobile  Deposit  creates  s[cky  customers  

   *  Kirk  Gripenstraw,  Aspen  Marke[ng  Services    Emmef  Higdon,  Forrester  Research,  E-­‐Bill's  True  ROI  –  The  Impact  of  Online  Bill  Presentment  and  Payment  on  Reten[on  and  Profitability  

Top  Reasons  People  Switch  F.I.?  

 

•  Life  Circumstances  –28%    •  Fees/Rates  –  17%  •  Way  down  the  list  …  •  Promo[onal  Item  –  4%  •  Branch  closed  –  2%  

*  J.D.  Power  &  Associates  2011  US  Retail  Bank  New  Account  Study  

Life  Circumstance  #1  -­‐  Moving  

•  12.5%*  of  Americans  move  annually  •  OJen,  move  corresponds  with  other  life  changes  •  Ideal  [me  for  the  FI  to  help  

•  69%  that  move  stay  in  the  same  county  •  So  each  year  ~  9%  move  within  same  county  •  Deposit  of  checks  is  primary  reason  people  go  to  branch  •  How  far  will  they  go  for  a  branch?  •  Would  Consumer/Mobile  RDC  retain  some  that  leave?      

*  U.S.  2010  Census  Bureau,  hfp://www.census.gov/newsroom/releases/archives/mobility_of_the_popula[on/cb11-­‐91.html  

Life  Circumstance  #2  -­‐  Inheritance  

•  Parents  die  •  Adult  Children  inherit  $$  •  Children  don’t  have  account  same  F.I.  •  Children  don’t  value  personal  mee[ngs  with  financial  

advisor  •  Money  leaves  F.I.  quickly  

•  Or  …    •  Adult  Children  inherit  $$  •  Children  have  same  F.I.,  because  they  like  Mobile  Apps  

               Will  the  Money  stay  with  the  F.I.?          

Customer  RetenBon  Summary  

•  More  expensive  to  get  a  new  customer  vs.  retain  exis[ng  customer  

•  Consumers  are  less  loyal  to  FI’s  •  Addi[onal  products  increase  customer  loyalty  •  Consumer/Mobile  RDC  increases  customer    loyalty  

•  Life  circumstances  puts  FI  rela[onship  at  risk      

Customer  Acquisi[on  and  Profitability    

All  Customers  Are  Not  Created  Equal    

•  75%  no  material  impact  on  profits,  5%  extremely  unprofitable*  

•  Consumer  Mobile  RDC  can  afract,  retain  the  20%  that  are  profitable  

   

*BRENT  J.  BAHNUB,  Customer  Profitability  Tune-­‐up,  Dec  8,  2010,  hfp://www.bai.org/bankingstrategies/marke[ng-­‐and-­‐sales/segmenta[on/customer-­‐profitability-­‐tune-­‐up  

Factors  in  A_racBng  Good  Customers  

•  50%  who  switched  banks  said  mobile  played  a  role  in  their  primary  bank-­‐selec[on  decision*  

•  43%  interested  in  mobile  banking  cited  mobile  check  deposit  as  the  most  important  feature  of  mobile  banking  that  would  get  them  to  switch*  

•  59%  who  use  mobile  banking  would  be  likely  to  use  remote  deposit  capture  via  a  mobile  phone  if  it  were  offered  by  their  banks*  

*  Source:  Mercatus  MobileSurvey  2010  

Consumers,  by  Age  Likely  to  Use  Mobile  RDC  

Source:    Javelin  Strategy  &  Research,    March  2011,  n=4,267  

6  

8  

12  

16  

17  

18  

13  

4  

6  

11  

12  

15  

18  

11  

17  

23  

28  

27  

34  

37  

27  

11  

13  

10  

13  

10  

9  

11  

62  

50  

39  

32  

24  

19  

38  

0%   10%   20%   30%   40%   50%   60%   70%   80%   90%   100%  

65+  

55  -­‐  64  

45  -­‐  54  

35  -­‐  44  

25  -­‐  34  

18  -­‐  24  

All  Consumers  

Very  desirable  

Somewhat  desirable  

Not  desirable  at  all  

Smartphone  Ownership    by  Age  

18-­‐24   25-­‐34   35-­‐44   45-­‐54   55-­‐64   65+  

49%  58%  

44%  

28%  22%  

11%  

46%  35%  

45%  

58%  

59%  

45%  

5%   7%   11%   14%  19%  

44%  

No  cell  

Other  Cell  Phone  

SmartPhone  

•  Source:    Pew  Research  Center’s  Internet  &  American  Life  Project,  July  11,  2011,  N=2,277  

Consumers,  by  Income  Likely  to  Use  Mobile  RDC  

Source:    Javelin  Strategy  &  Research,  March  2011,  n=4,267  

10  

9  

10  

10  

12  

14  

15  

20  

11  

11  

8  

8  

10  

12  

13  

13  

35  

23  

28  

28  

30  

25  

27  

25  

7  

12  

8  

10  

13  

9  

13  

14  

37  

44  

46  

44  

35  

39  

32  

29  

0%   10%   20%   30%   40%   50%   60%   70%   80%   90%   100%  

<  $15,000  

$15K-­‐$24,999  

$25K  -­‐  $34,999  

$35K-­‐$49,999  

$50K-­‐$74,999  

$75K-­‐$99,999  

$100K-­‐$150K  

>  $150K  Very  desirable  

Somewhat  desirable  

Not  desirable  at  all  

Smartphone  Ownership  by  Income  

21%   20%  26%  

36%  44%  

38%  

53%   57%  

73%  

53%   57%  54%  

48%  

47%  50%  

44%   38%  

25%  26%   23%   20%   16%  9%   12%  

3%   5%   2%  

No  cell   Other  Cell  Phone   SmartPhone  

Source:    Pew  Research  Center’s  Internet  &  American  Life  Project,  July  11,  2011,  N=2,277  

Customer  AcquisiBon  Profitability  Summary  

•  20%  of  customers  give  you  >80%  profits  •  50%  of  people  switching  FI’s  said  Mobile  played  a  role  

•  >50%  ages  18-­‐44  want  Mobile  RDC  •  >50%  incomes  $50K+  want  Mobile  RDC  •  The  young,  the  affluent  want  Mobile  RDC  •  The  young,  the  affluent  have  Smartphones  

 

MulB-­‐Channel  

•  Consumer/Mobile  RDC  won’t  eliminate  the  branch  –  A  very  few  on-­‐line  only  FI’s  in  the  U.S.  –  RDC  for  those  that  don’t/can’t  go  to  branch  

•  Most  banks  suppor[ng  many  channels  for  Retail  Banking  clients  –  Branches  –  ATM  –  Internet  –  Phone  (voice)  – Mobile  Phone  

 

Should  you  wait?  

June  29,  2007          

   

 

iPhone  1st  day  of  sale          

   

 

Thank  You!