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Agenda. . . . Agenda: Business driversInternet banking for SMEsRelationship strategiesQuestions and answers. BusinessDrivers. . . Global Deregulation Result: Consolidation, Disaggregation,
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1. Bank Products and Services for SMEs Presented by:
Guillermo Kopp
Director, Emerging Technology Solutions
4. Global Deregulation Result: Consolidation, Disaggregation, & Convergence Deregulation will reduce barriers between banking, securities, and insurance products
Happened in the UK in 1987 — in the US in 1999
Convergence allowed in some European countries, more on the way
Euro deregulation underway. . . BIG TIME
Big Bang transforming Japan
Emerging markets gradually privatizing financial sector
As the largest single market in the world HR10 represents a significant event. Foreshadowed by Travelers / Citibank merger it will increase the level of competition over the next 3 - 5 years
Similar events have occurred in other countries with important results
The UK is one of the most competitive consumer FSI markets which is continuing to change and attracting new competitors from the general retail space.
Some countries in Europe have had deregulated markets for a number of years. EURO will open these markets further and allows cross border competition.
Significant changes within countries have happened over the past 2-3 years.
Cross border events starting to happen.
US style disaggregation starting
Japan is currently in the midst of a deregulation caused credit problems
Finally emerging markets are stabilizing and privatizing. This is unleashing private investment and investment from international banks: Spanish banks in Latin AmericaAs the largest single market in the world HR10 represents a significant event. Foreshadowed by Travelers / Citibank merger it will increase the level of competition over the next 3 - 5 years
Similar events have occurred in other countries with important results
The UK is one of the most competitive consumer FSI markets which is continuing to change and attracting new competitors from the general retail space.
Some countries in Europe have had deregulated markets for a number of years. EURO will open these markets further and allows cross border competition.
Significant changes within countries have happened over the past 2-3 years.
Cross border events starting to happen.
US style disaggregation starting
Japan is currently in the midst of a deregulation caused credit problems
Finally emerging markets are stabilizing and privatizing. This is unleashing private investment and investment from international banks: Spanish banks in Latin America
5. Drivers for Change Deregulation & convergence create competitors:
From other FSI segments with established customer relationships
From other consumer-oriented industries
From global service providers
Outsourcing neutralizes technology barriers
Low cost and incremental pricing models
Leading-edge technology
Internet
Creates vehicle for new business models
Reduces traditional cost barriers
6. Largest financial firms in the world
7. New revenue mix: Moving from net interest income to fee-based income The banking industry increasingly depends on transactional, fee-based income stream
Fee-based revenue (non-interest) is growing faster than net interest revenue
8. FSI Competitors in Emerging Markets
9. Margin squeeze due to market convergence Pressure on margins
Competition based on price
New entrants
Regulation
10. Banks focus on creating shareholder value
11. The changing landscape of financial services distribution
12. FSIs must select optimum combination of customer, business, process, & technology
13. 3 Gold Mines of Opportunity
14. Moving toward self-directed interaction
15. SME business operations adopting the Internet Typical SME uses:
Financial services
Market research
Customer acquisition
Streamline business processes
Internet and Web Services leveling the playing field for Small Business:
Altering the way SMEs interact with their banks
Reducing barriers to entry and transaction cost
16. SME Internet usage by firm size
17. SME business functions via Internet
18. Types of purchases SMEs make via Internet
19. SME usage of online banking
20. Larger institutions lead in online banking Midsized and smaller banks are keeping up in basic functionality, but their packages are lagging behind
Many sites are geared more toward “brochureware” marketing than toward actual functionality
Few sites offer true, value-added features that are important to small businesses.
Many sites lack effective product or online banking applications demonstrations (demos)
Most sites do not offer tiered account access and control capabilities for multiple users, which small businesses continually list as one of the most important functions.
21. Web Services driving FSI connectivity
22. Extending within and across FSI boundaries
23. Networked Financial Services Institution Ease of use
Cost savings
Convenience
Save time
Operational efficiency
25. Drivers for change Competition in credit markets will intensify
Credit scoring has commoditized access to credit
Commercial lending analysis capabilities
Relationship management
Competition for SME customers will intensify
NIB income from DDA accounts
Fees from DDA products and services
Electronic bill presentment and payment (EBPP)
Single Sign-On for business and owner account
Financial management software (QuickBooks)
26. Customer Relationship Management
27. FSIs focusing on client needs
28. SME loans are complex to originate High risk and small value per loan
Credit bureau interfaces
Automated document preparation
Personal credit and assets offered as collateral
Personal financial statements
Company income statement and tax information
Company balance sheet and cash flow statement
Workflow management
Multi-channel delivery
Real-time decisions
29. Multi-channel customer interaction model for Banking Ideally, multi-Channel delivery ... how a bank or other financial institution can ... effectively deliver ... all it’s products and services across ... all it’s delivery channels.Ideally, multi-Channel delivery ... how a bank or other financial institution can ... effectively deliver ... all it’s products and services across ... all it’s delivery channels.
30. FSIs must choose a strategy
31. Wealth Management is the ultimate customer relationship
32. Internet technology is changing cost structure and delivery channel usage
33. Align people, processes, & technology Customer data consistent, accurate, and standardized
Information systems adapted to support relationship oriented sales and service culture
Contact personnel fully empowered by enterprise relationship views
Operations, policies, and procedures reward CustomerCentricity
34. Trusted relationship managers are essential People with strong sales culture
Focused on client needs
Credit discipline & risk management
Consistent financial performance and service
Relationship broadening (cross-sell) and deepening (share-of-wallet)
Responsiveness and quality of service
Use technology for product integration and innovation
35. Relationship building strategies differentiate Adopt service excellence to exploit activity created by “sticky” payment products
Utilize high tech for high touch
Leverage the customer knowledge advantage
Appropriate sales & service strategies
Customer profitability
Offer innovative products
Packaged offerings
Loyalty pricing
Create relationship building products
36. Products to strengthen the SME relationship
37. Questions…