Banking for Generations «Y», «Z» and beyond

Welche Bank wünscht sich die nächste Kundengeneration?

Dr. Andrej Vckovski, CEO, Netcetera

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Motivation, Objectives & Definition

Generation Y Expectations

Remaining Challenges

Agenda

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Motivation & Objectives

1. What are the expectations of

tomorrow’s banking customers

2. Match the findings against the

current state of affairs

3

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Motivation & Objectives

Things

change. (for example)

John Naisbitt’s 1982 Megatrends

Industrial Society to Informational

Society:

Forced Technology to

High-tech/High-touch

National Economy to

World Economy

Short-term to Long-term:

Centralization to Decentralization

Representative Democracy to Participatory Democracy

Hierarchies to Networking

Institutional Help to Self-help

North to South:

Either/Or to Multiple Option:

Netcetera | 5 (Source: http://wikipedia.org)

Motivation, Objectives & Definitions

• Born after baby boomer generation,1960s up to 1980s.

Generation «X»

• Millennial Generation, Generation Next, Net Generation, Echo Boomers, 1980s to 1990s

Generation «Y»

• also known as Digital Natives. mid 1990s to now.

Generation «Z»

• alpha, …

… and beyond

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Motivation, Objectives & Definitions

1. What are the expectations of

tomorrow’s banking customers

2. Match the findings against the

current state of affairs

6

customers, employees,

business partners

including HNWI!

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What is a bank?

Motivation, Objectives & Definitions

Retail Bank Private Bank Business

Bank Investment

Bank

Changes in the environment relates to all types of banking

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Online is comprehensive

General expectations

A branch is nice-to-have. Online is not “only” a channel for self-servicing. It is the main

interface of the bank to the client

Online Banking is a channel (like ATM) for self-service

1990s Online banking is the main access to full-service

2010s

+ advisory

+ financial workbench

+ interactive (instant messaging,

video chat, co-browsing)

Online = mobile is comprehensive

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Online is 24x7x365

Example

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Online is integrated

General expectations

The customer does not care about the bank’s internal organization

Accounts Payments Loans Retirement Planning

My small business

+ integrated servicing

+ “one-stop” shop

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Relationship is more than the transaction

General expectations

The transaction is only the “end” of a process

My personal finances

My current assets

cashflow history & forecast

My loans

Goals & financial plans

Saving goals

Retirement planning

Family stuff

Long-term investments intended

Current money matters

Invoices to pay

Stock market activities

Loans I need

Eventually:

Actual

transaction

+ personal financial management

+ track scenarios, goals

+ integrated “virtual” and “physical” advisory

+ establish relationship beyond “inform and transact”

Goals and Plans

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Transparent and Open

Selected expectations

• Provide data links to other if I allow so (e.g., other bank to have a consolidated view, external personal financial management tool)

“open bank data”

• Customer has same information about herself/himself as the client advisor

I see what you see

• Today, Customer might know more than the bank. Be open, responsible.

Be aware of information asymmetry

Be at eye level with your customer!

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Fast and Agile

Selected expectations

Traditional life-cycle

• Waterfall model

• Two releases per year

• Long time-to-market

• No customer involvement

Fast and agile

• Constant improvement

• Embracing fast new developments

• Launch fast and fail fast

• Constant “Beta”

While

maintaining

security &

stability

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Remaining Challenges

Security Trust

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What about “social media”?

((image by Aduvvuru)

Remaining Challenges

Is my social graph generating trust?

Will Facebook and Google be better banks?

Will person-to-person lending become relevant?

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Will disintermediation be a threat?

Remaining Challenges

The networked infosociety allows services without an orchestrating

(and financially participating) intermediary.

For example

taxi reservations without a taxi call center

Person-to-person lending

Person-to-person payments with some mobile payment schemes

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Will new entrants be a threat?

Remaining Challenges

New intermediaries that fill “service gaps” (e.g., PayPal for online payments without

credit card and escrow)

General service providers with existing customer relationship

New payment schemes (e.g. using mobile phone as plastic-replacement for

presence payment, using mobile phones as POS-terminals)

What will chase the customer away?

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Interest Spread

Transaction Fees

Service Fees

Consulting

Fees

Will there be new

business models?

Remaining Challenges

Megatrend Internet did create

new business models in

various industries.

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Where goes

my IT budget?

Remaining Challenges

Get rid of

legacy core

banking

Be more cost

effective

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Summary: Key drivers for the next generation

(online) bank

100% online Integrated,

Comprehensive & Convenient

Fast to the market and agile

Open & Transparent