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1 | D IGITAL TRANSFORMATION IN 10 BUILDING BLOCKS
Frequency of visits to branch
Daily Never
Payments only
8%
3%
Branch lovers
47%
20%
Self-directed
41%
73%
Multi-channel
4%
4%
Use of digital
ATM only
Full Digital
Size of segment across Europe Size of segment Northern Europe
…
…
Channel usage
None
Low
High
ATM Branch Tele- phony
Online
EXHIBIT 1 – DISTRIBUTION INTERACTION ARCHETYPES
■ AcrossEurope,customersarerapidlyadoptingdigitalapplicationsfortheirdailyuse.However,bankshavefailedtokeeppaceandmustnowactdecisivelytodevelopmultichannelsolutionsthatreflectnewwaysofliving.
DITIGAL TRANSFORMATI0N IN 10 BUILDING BLOCKS TO BOOST CUSTOMER EXPERIENCE AND ROE
October 2012
McKinsey undertook rigorous primary research in 10 European countries, polling more than 17,000 respondents on their expectations and priorities for retail banking over the coming decade. The results are enlightening and provocative, and we believe to be able to provide retail banking executives with a definitive architecture for managing the digital transformation over the coming decade.
DIGITAL TRANSFORMATION IN 10 BUILDING BLOCKS | 2
summar y
Enablers 8. Outsource commodity technology and upgrade core systems (e.g., CRM) 9. Build digital marketing and sales skills (Big data, pricing, SEO, etc.) 10. Familiarize and educate employees and clients on digital banking; address security issues
Transforming to a Digital Bank
Offering 1. Launch new digital
services and products 2. Make current product
offer digital proof (rationalize portfolio, digital pricing)
3. Seamlessly integrate external applications and products with core offering (i.e., insurance)
Channel 4. Transform branch
footprint and performance
5. Invest in mobile and social media channels and expand functionalities of existing digital channels)
Process 6. Enable multi-channel
sales, transactions and services
7. Enable Remote advise and troubleshooting
EXHIBIT 2 – BUILDING BLOCKS FOR A DIGITAL TRANSFORMATION
■ Wehaveidentifiedfourdistinctcustomersegments:self-directed,multichannelusers,branchlovers,andATM/cardusers.(Exhibit1).
■ Althoughbranchloversarecurrentlythelargestsegment(47percentofsample),itisexpectedthattheself-directedsegment,whichismostadaptedtotheonlineworld,willaccountfor80percentofcustomersin10years.InNorthernEurope,theyalreadydoso.
■ Theriseoftheself-directedcustomersegmentcreatesauniqueopportunity forbankstoimproveeconomics
(20to40percentlesscostand2to5percentmarketsharegainforfirstmovers),allowingbankstoreducetheircost/incomeratiobyupto20p.p.
■ However,adigitaltransformationofcustomerexperiencesandbusinessmodelsisnecessary,requiringbankstooverhaultheirbusinessmodels.Thosethatsucceedwillreaprichrewards.
■ Basedonsegmentpreferencesandtheirimpactonbankeconomics,wehaveidentified10journeysthatbanksmustundertaketocapturevalueandboostearnings.(Exhibit2).
Makingthedigitaltransformationarealityrequiresathree-stepapproach,accompaniedbyactionstoensuresmoothimplementationandsustainedimpact.
■ Step1.Setyourmultichannelambition:banksmustbaselinecustomers’currentbehavior,identifycostreductionpotential,andprioritizetransformationjourneys.
■ Step2.Launch10digitaltransformationjourneystoboostcustomerexperienceandretailbankingeconomicsandputenablersinplaceforasuccessfultransformationjourney.
■ Step3.Monitordigitalbehaviorsandbepreparedtochangegearsswiftly.
Copyright © 2012
NopartofthispublicationmaybecopiedorredistributedinanyformwithoutthepriorwrittenconsentofEFMAand/orMcKinsey&Company.
Efmawww.efma.com
McKinsey & Companywww.mckinsey.com
Please contact the authors for access to more detailed consumer research, case examples for the building blocks, and/or to let us have your comments and feedback
VitoGiudici,Director,Milan [email protected]
RadboudVlaar,Principal,Amsterdam [email protected]
RemcoVlemmix,Principal,Amsterdam [email protected]
PhilippSiebelt,AssociatePrincipal,Cologne [email protected]
EwoutvanJarwaarde,EngagementManager,Amsterdam [email protected]