Digital customer journey, gamification and loyalty in ... · Digital customer journey, gamification and loyalty in Retail Banking Business models London, 19th April 2018 Jens Baumgarten

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Simon-Kucher Banking Strategy Forum | London

Digital customer journey, gamification and loyalty in Retail Banking Business models

London, 19th April 2018

Jens BaumgartenSenior Partner

Frankfurt office

Bockenheimer Landstr. 33 60325 Frankfurt/Main, GermanyTel. +49 69 905010 602

[email protected]

Agenda

Five current challenges

Digital relationship banking

Creating product ecosystems

Jens Baumgarten - Pricing and sales success in a digital environment - April 2018_vf 2

Source: Simon-Kucher & Partners.

Challenge: Be digital!

PSDII disintermediates the customer relationship, forces

banks to open up their “data treasure box”

(New) digitalchallengers

End customer

API

Third party

1 2

Bank

3 4

Three strategic questions

1. How to differentiate on (digital) value?

2. How to fight commoditization in the digital space?

3. How to cope with new API risks and oppor-tunities from PSD II?

1.


Fotos: COLOURBOX/Sergey Nivens, COLOURBOX/nopporn, Simon-Kucher & Partners.

Challenge: Be slim!

Average number of marketed products

Average number of used products

>150 2

Management Board:

"Should I remove 130 products?“

"How can I deepen relationships?"


1. How to reduce portfolio complexity?

2. How to increase cross-and up-selling?

3. How to combine ‘personal’ and ‘digital’?

2.


Source: Simon-Kucher & Partners EONIA* money market annual average interest rate in the European Union and EFTA countries

Challenge: Be profitable!

Negative interest rates


1. How to increase fee income to compensate declining net interest income?

2. How to price more granular in lending (mortgages / consumer loans / business loans)?

3. How to better monetize existing customer relationships via new digital services?

3.

▪ PSD II

▪ MiFID II

▪ Directive 95/46/EC (DSGVO)

▪ Core capital requirements

▪ Etc.-0,35%

-0,32%

-0,11%

0,01%0,09%

0,23%

0,87%

0,44%

2013 2014 2016 201720152011 20122010


Challenge: Be simple!

75 x 25 = ?

The thinking of “system 1” is…

▪ Intuitive and without effort

▪ Fast

▪ Emotional

The thinking of “system 2” is…

▪ Effortful

▪ Slow and limited

▪ Rational

Source: Simon-Kucher & Partners

4.


Fotos: COLOURBOX/Sergey Nivens, COLOURBOX/nopporn, Simon-Kucher & Partners.

Challenge: Be engaging!

Anchor effect Power of sortingCompromise

effect

Panini effect Framing effectParadox of

choice

Separation effectPrice tresholdsEndowment

effect

Prospect theory

System I vs II

Price fairness


1. How to quickly improve the offering without long IT lead times?

2. How to remove barriers to buy?

3. How to leverage behavioral economics?

5.


Agenda






Digital relationship banking addresses these challenges

SolutionChallenges

Digital, responsive tools across products (payments, lending, invest-ments) & channels (web, mobile, POS)

Be digital!

Price increases paired with cross-selling rewards on anchor products (e.g. loans/cards/current accounts)

Be profitable!

Individual status, rewards and gamification

Be engaging!

Be simple!Consistent, intuitive and high value communication across all channels

Clear 3-tier structure, harmonized across for all product categories

Be slim!

1.

2.

3.

4.

5.


Level 3:Products(e.g. card A, B, C; Account 1, 2, 3)

Level 2:Service families(accounts & cards

Quelle: Simon-Kucher & Partners.

Digital relationship banking: 3-level structure

Level 1:Financial needs(e.g. liquidity)

Methods

▪ Panini-/Puzzle-Effect

▪ Gamification

▪ Needs discovery

▪ Basic and quick orientation

▪ Panini-Effect(within a category)

▪ Orientation along an intuitive "story"

▪ Individual configuarionof products

▪ Up-“buying“ into highervalue product versions(e.g. premium cards)

▪ Proudct purchase

Goal

Cross-Sellingby category

Cross-Sellingby product

Selection andSales



Digital relationship banking: Tool demo

Attention directed to missing elements to cover all relevant financial needs!

Status and financial rewards as additional amplifiers!

Impact

System1: simple story

Simple incentive for cross-selling

Status & rewards

Thought leadership

Link to individual product configurators

Integration of professional advice



Project case (1/2): Relationship banking for retail customers

Advantages

Holistic approach

Puzzle logic

Product categories known to customers

Sales platform

Modular extendable with product finders for different product categories



Project case (2/2): Relationship banking for business customers

Advantages

Increased cross-selling between product categories

Increased up-selling within categories

Holistic approach for corporate customers

Sales story for sales force


Agenda





TOP-Performers

Apple Microsoft

Mercedes

C-Class

Elegance Avantgarde AMG

Source: Simon-Kucher & Partners, Websites from Apple, Microsoft and Mercedes-Benz.

Best practice "product ecosystems"



Consistent product ecosystems

Digitalization

Retail clients SME clients

Financing

Current accounts

Deposits

Securities

Credit lines

Securities account

Mortgages

Deposits Investments

Relationship banking



Goal▪ Incentivizing customers

to take up higher value current accounts

Approach▪ Analysis, expert

interviews and a customer revenue forecasting tool to estimate price elasticity

▪ Usage-based customer segmentation and tailoring of account offerings

Project example: Retail current accounts



Project example: SME current accounts

Goal

▪ Deepen SME client relationships

▪ Increase number of payment transactions

▪ Incentivize consolidation of business customers' payment accounts

▪ Reduce comparability of current account offering

Approach

▪ Non-linear pricing through introduction of a two-part pricing scheme

Ave

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Number of transaction

Level of discount on transaction

prices


Source: Simon-Kucher, Sparkasse (Homepage)

Project example: mortgages

Results

▪ Increase in interest spread of 20+ bps

▪ Upselling: 40-50% of clients take at least one additional module on top of the basic mortgage

▪ Cross-selling: 30% of clients buy additional insurance products(compared to only 10% before)

▪ Increase in mortgage volume of 10%

The right product for risk-averse customers: The security module with its various insurances guarantees them that they can keep their property in any case.

The right product for price-sensitive customers: They get a pure mortgage for a competitive interest rate.

The right product for customers who want to have a premium package including all features.

The right product for customers with a higher willingness to pay, who want to have more flexibility.


Source: Simon-Kucher, Volksbank.

Project example: securities accounts

Results

Differentiation

Expansion of target group

Growth platform

Consideration of MiFID II


Source: Simon-Kucher, Volksbank

Project example: credit lines

Results

Transparency

Granular pricing

Innovative two-part pricing scheme

Implementation power/ sales excellence


谢谢

ありがとう

Photo: COLOURBOX/-


Documents

Digital customer journey, gamification and loyalty in ... · Digital customer journey, gamification and loyalty in Retail Banking Business models London, 19th April 2018 Jens Baumgarten