The document discusses building change that customers will notice in the banking industry. It notes that while some phrases don't change, their meanings have evolved over time. Customer preferences for channels have also shifted, with in-person interactions still preferred for opening accounts but online and mobile growing significantly. Younger customers and wealthier segments prefer more digital options. The document advocates understanding customer data and channel preferences to provide a consistent experience across applications and locations. Building agility requires organizing channels together, taking action on insights continuously, and reviewing processes for extension to other channels.

1. October 12, 2011
Can You See Me Now?
Building Change That Customers Will Notice
Nicole Sturgill
Research Director
Retail Banking & Cards
© 2010 The Tower Group, Inc. May not be reproduced by any means without express permission. All rights reserved.

2. Agenda
Welcome and introductions
Building change that customers will notice
 What has changed?
 Data, data, data on consumer preferences
 The need for agility and how to build it
 Break for lunch
 Panel discussion
 Building agility
 Q&A
© 2010 The Tower Group, Inc. 1

3. What has changed?
© 2010 The Tower Group, Inc. 2

4. Some phrases don’t change, but they take
on a different meaning
1991 2015
1. Maintaining Profitability 1. Service Quality
2. Credit Portfolio Management 2. Maintaining Profitability
3. Service Quality 3. Market / Customer Focus
4. Regional Economy 4. Operations / Systems / Technology
5. Cost Management 5. Credit Portfolio Management
. .
.
?
.
38. Electronic Banking 38. Expanded Securities / Insurance
39. Expanded Securities / Insurance 39. Industry Overcapacity
40. Inflation 40. Off-balance Sheet Regulation
41. New Sources of Capital 41. Geographic Expansion
42. Antitrust Backlash to Consolidation 42. Industry Consolidation
43. Economic Globalization 43. Nationwide Interstate Branching
44. International Banking 44. Antitrust Backlash to Consolidation
Source: Bank Marketing, 1991
© 2010 The Tower Group, Inc. 3

5. Everything is Additive
1951 1981
© 2010 The Tower Group, Inc. 4

6. To Today, When Channel Proliferation is Dizzying
© 2010 The Tower Group, Inc. 5

7. Tea Leaves: How do we know what to
build next?
© 2010 The Tower Group, Inc. 6

8. The Branch Is Still Preferred, At Least for
Opening Accounts
Preference to learn about financial products and services
Australia 35 44 2 5 4 10
Canada 42 40 1 5 6 6
Mexico 44 44 2 5 2 3
UK 26 55 22 7 8
USA 40 35 2 5 10 8
Malaysia 27 49 5 5 4 9
Singapore 35 40 5 3 8 9
0% 20% 40% 60% 80% 100%
Preference to purchase financial products and services
Australia 55 24 2 5 1 13
Canada 61 22 1 5 1 10
Mexico 62 24 3 5 1 6
UK 41 39 2 5 3 10
USA 61 19 2 4 3 11
Malaysia 47 27 7 6 3 10
Singapore 51 26 6 2 5 9
0% 20% 40% 60% 80% 100%
In person, face-to-face Online (Web site) Mobile app Phone Mail Unsure
Source: CEB Financial Services Customer Experience Survey, 2010
© 2010 The Tower Group, Inc. 7

9. The Role That Age Plays
Preference to learn about financial products and services in the United States
18-34 30 45 4 6 6 8
35-54 42 37 1 4 8 8
55+ 47 24 1 4 15 9
0% 20% 40% 60% 80% 100%
Preference to purchase financial products and services in the United States
18-34 48 30 3 6 5 9
35-54 63 18 2 4 1 11
55+ 73 10 3 3 12
0% 20% 40% 60% 80% 100%
In person, face-to-face Online (Web site) Mobile app Phone Mail Unsure
Source: CEB Financial Services Customer Experience Survey, 2010
© 2010 The Tower Group, Inc. 8

10. Channel Preference by Wealth Segment
Learn about financial products and services
Mass Market¹ Mass Affluent¹
4% 13%
10%
3% 6% 1%
In person 37%
43% Online
Mobile
Phone
Mail
38%
45%
Note: Mass Market = less than $100,000 in investable assets; Mass Affluent = $100,000 + in investable assets
Source: CEB/TowerGroup Customer Experience Survey, 2010
© 2010 The Tower Group, Inc. 9

11. Channel Preference by Wealth Segment
Make purchases of new financial products and services
Mass Market¹ Mass Affluent¹
1%
3% 2%
2% 4% 5%
In person
21% Online 26%
Mobile
Phone
Mail
70% 66%
Note: Mass Market = less than $100,000 in investable assets; Mass Affluent = $100,000 + in investable assets
Source: CEB/TowerGroup Customer Experience Survey, 2010
© 2010 The Tower Group, Inc. 10

12. Contact Preferences for Addressing Issues (2010)
Phone
In-person: Staff
7% 4% In-person: Manager
2%
4% 31%
E-mail
8%
Website
21% Write a letter
22%
Satisfaction survey
None of the above
Unsure
Source: CEB Financial Services Customer Experience Survey, 2010
© 2010 The Tower Group, Inc. 11

13. Reasons for Attrition at US Financial
Institutions
Moved to new location
Delivery issues Poor customer service
Limited access
5%
17% 24% Excessive or hidden fees
6% Another FI's offer more
12% attractive
13% Inferior offerings
5%
16% Wanted FI with better
reputation
None of the above
Prefer not to say
Source: CEB Financial Services Customer Experience Survey, 2010
© 2010 The Tower Group, Inc. 12

14. Building Agility
© 2010 The Tower Group, Inc. 13

15. US Banking Delivery Transactions by Type
(2008–13P)
Transactions (in Billions)
100
14.0 Mobile
9.4 (CAGR = 116%)
80 3.0 5.6
1.2 Online
33.3 35.0 (CAGR = 8.5%)
60 26.8 30.0
23.3
Call Center
40 (CAGR = 3.1%)
17.0 17.8 18.5 19.3 19.8
Branch
20 14.7 14.7 14.1 13.7 13.3 (CAGR = .07%)
14.6 14.7 14.8 15.0 15.1 ATM
0 (CAGR = .61%)
2009 2010P 2011P 2012P 2013P
Source: TowerGroup
© 2010 The Tower Group, Inc. 14

16. Linking Financial Products to Customer
Utility
Account Opening
Complex Services Check Cashing
Financial Advice
Balance Inquiries
Transaction Services
Payments
Withdrawals
Transaction (Cash) Services
Deposits
CONSUMERS Account Inquiries
Complex/Transaction Bill Payment
Account Opening
Account Inquiries
Complex/Transaction Problem Resolution
Account Opening
Source: TowerGroup
© 2010 The Tower Group, Inc. 15

17. Example: The Bank Product Sales Cycle
 Consumer request
 Teller/agent
recommendation
Identify
Prospects
 Complete forms  Teller referral
 Enter application  Platform
data discussion
 Provide
Open account Make contact
 Online outreach
compliance
documentation
 Discuss concerns  Ask
Answer
 Provide electronic Qualify lead questions/online
questions help tools
means of
communication  Establish
creditworthiness
Present offer  Determine account
type
Source: TowerGroup  Explain benefits
© 2010 The Tower Group, Inc. 16

18. Delivery Challenges
 Branch rationalization
- Keep or remove?
- Redesign or stick with tradition?
 Shifting demographics
 Resource availability and prioritization
 Competing priorities:
- Lower cost of self-service vs. cross-sales and loyalty
generated by face-to-face interactions
 Rationalization of internal cost and revenue structures
 Siloed channel management
© 2010 The Tower Group, Inc. 17

19. Connecting Channels and Products to Provide
a Consistent Experience
Channel Applications
Getting There From Here Deposit products
•Customer Insights
Branch
•Preferred channels
•Existing products
Mortgage loan
•Demographics
•Credit Quality Credit cards
ATM Mobile •Enabling any channel, anytime, any
place access
•Business Process Management Consumer loans
•Account origination, problem
resolution, customer requests
Wealth
Online Contact
Center
management
Source: TowerGroup
© 2010 The Tower Group, Inc. 18

20. Solutions and Next Steps
Understand the customer
 Data is useless if you don’t know what to do with it
 Play to the customer – Know the preferred channel(s)
 Know what the customer expects from you; compare existing demographics vs.
desired demographics
Organize
 Plan for agility — determine the vision and lay out how to get there
 Rationalize competing goals: utilization and financial
 Bring channel management under one roof
Take action
 Make customer insights an everyday process, not a point in time analysis
 Review existing channel-specific processes to see what can be extended to other
channels
 Don’t forget the back office
© 2010 The Tower Group, Inc. 19

21. Smarter Banking for your business
What is Customer Care & Insight?
Influence
and Drive
Insights
Predict & Act
Sense & Respond Interactions
Face-to-Face, Direct Voice, Self Service
Analyze &
Derive Information
Pervasive & Quick Access to Trusted Data
Capture
& Notice
Any entry point, continuous cycle, continuous discovery and refinement
20 IBM Confidential © 2011 IBM Corporation

22. Smarter Banking for your business
Influence
and Drive
Example: Example:
Customer Analytics
Insights Multi-channel Transformation
Predict & Act
Sense & Respond Interactions
Face-to-Face, Direct Voice, Self Service
Analyze &
Derive Information
Pervasive & Quick Access to Trusted Data
Capture
Example:
& Notice
Single View of Person
Any entry point, continuous cycle, continuous discovery and refinement
21 IBM Confidential © 2011 IBM Corporation

23. Backed by Cisco’s Integrated Architecture for Retail Banking
© 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 22

24. Questions
nsturgill@towergroup.com
© 2010 The Tower Group, Inc. 23