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Aparna Mittal FORE

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ING Hunt for Lions

Text of Aparna Mittal FORE

  • 1. APARANA MITTALFORE School of ManagementHunt for the Lions The ING way

2. Digital Banking OutlookConsumer Survey and SWOTRoad MapObjectivesAnalysisInsightsRecommendationsTo study the digital banking industry, growth drivers, trends and challengesDigital banking is registering a steady growth but the adoption rate is still poorGrowth Drivers Rise in young population, high internet and smart phone penetration.To understand the demographics of digital banking users and non- users and segment them. The average age of digital banking users is fairly young and security tops the concerns of non-usersLarge number of respondents are still not using digital banking channels, it is advisable to target them. Tablets are seen to be emerging.To suggest a suitable roadmap for the enterprise as well as product offerings.Cross-channel collaboration and use of analytics to predict consumer preferences is an area of interest.Bank-end CRM systems have to be in place to integrate data from various channels. Market ING as the safest bank to work with.Advisable to educate the branch visitors and alleviate their security concerns and get them to adopt digital banking channels.Work towards cross channel optimization strategy. 3. 3534304644582001201120212026Youth Population (in millions)By 2020, the average age of India will be 29 years .64% will be in the working age group68.599130.413714115856.580108116120136Jun-11Jun-12Jun-13Oct-13Dec-13 (est)Jun-14 (Est)Overall Internet Users (in millions)ClaimedActiveWhat does young India want?Real time online informationConvenienceEase of engagementDigital Banking Growth DriversPenetration rate = 17%4891110130349Jun-12Jun-13Oct-13Dec-13Jul-14Social Media Apps11%Youtube16%Game Apps11%Location based Apps5%Banking or Finance Apps7%Others50%Smart Phone UsageMobile Phone Penetration 28%Smart Phone Penetration 13%Mobile Phone Users (in millions) 4. Internet Banking -Growing3517.510352011PublicDomestic PrivateForeignIncrease in registered users in %20122013323190686910PublicDomestic PrivateForeignInternet Banking -Active v Inactive Users in % ActiveInactiveBut the active users are still very less.95.23.80.50.582.713.90.92.597.81.80.40.1Branch BankingOnline BankingMobile BankingPhone BankingAverage daily number of requests services in %All banksPrivatePublicAs per industry researches the key reasons cited for low adoption rates are :Deep rooted faith in paper transactionsBelief that branch is where all banking happensFear of transacting online. There exists a significant opportunity to migrate more customers to the digital banking channel. 5. DemographicGender62% Males, 38% FemalesAverage household Income Rs 6.5 LPAAverage Age 22.5 yearsEmployment Status 50% employed, 50% studentsEducation Level75% Graduate, 25% High School Top 3 uses of digital banking#1 Account balances tracking (48%)#2 Transaction history (23%)#3 Funds transfer (14%)Importance of security feature712342Highly ImportantImportantSomewhat ImportantNot ImportantSecurity of digital transactions is a major concern among banking customers.Deterrents to Digital Banking UsageLower Transaction Fee for other payment option3%Lack of Knowledge7%Interface not user friendly15%Security of Transaction25%Prefer other options such as debit card/credit card50% Tablet v Smart phones42% -Tablet32% -Smart phones 6. Disinclined ConservativesAspiring BloomersLiberal UsersArdent AffluentsCautious SeniorHighLowIncome-levelRelative-usage of digital bankingHighLowAspiringBloomers:Digitallyinclined,usedigitalbankingatleastamonth,willingtotryandadoptadvancedfeatureslikee-walletArdentAffluents:Highlyengagedwithmobiledevices,seekvalue-addedservicessuchasspendingpatternanalysis,rewards/points.Thissegmentwillrespondstronglytotab-banking.LiberalUsers:Theyusedigitalbankingbutnotextensively.CautiousSenior:Valueseekers,interestedinproductsofferingtangiblerewards,highlysensitivetosecurityconcernsDisinclinedConservative:Seriousconcernsaboutsafetyandsecurity.Relymoreonbranchbanking,bankscangainfrominformingthemaboutthebenefitsofmobilebankingandalleviatingtheirsecurityconcerns.Thiscouldencouragethissegmenttotrymobilebanking.Who to target ? (Highlighted in Red) Size of the circle denotes the number of respondents identified to be from that segment 7. StrengthsOnline-No limit about time and domain (89% of the respondents prefer 24*7 fulfillment of their banking needs)-Reach Globally-Economies of ScaleBranch-Strong Management-Higher salesWeaknessOnline-Technologically efficient staff shortage.-Lack of Security (64% of those who do not use digital banking cited security as the biggest concern)Branch-Lack of scaleOpportunityDigital-Use of social networking sites (77% of respondents would like to use social networking portal to carry out banking activities) -Tabbanking (64% respondents said they prefer using tabs to mobile) -Increased demand for financial products (72 % Customers use Internet as the source of information about financial products) Branch-Expanding value added servicesThreats Digital-Law is not sufficient-Lack of follow up supervision-Foreign Banks hitBranch-Political RiskOnline v Digital 8. Marketing and SalesCustomer On boarding and account openingServicingCross-channel collaboration and sales force enablementCross-channel customer, 360-degree, lead and insight capture and deliveryCross-channel marketing and sales enablementInsight driven organizationStatus-tracking, status- reporting and customer communicationsCross-channel application managementPersonalization and self serviceCustomer experience managementCross channel service managementCross channel Process, Case and Data ManagementMulti-mode channel listenersAnalytics modeling and insight deliveryReporting and DashboardingA cornerstone channel optimization strategy is critical as it will create :Seamless, integrated customer experiencesING should leverage analytics for changing customer behavior across all touch points.Fortify ING brand and reinforce Safest Bankerand Top 5 trusted brandimage 9. Key Partners :1.Digital Partners2.Merchants3.Payment Networks4.Telcos5.Technology Partners6.Logistic PartnersKey Activities:1.Payments2.Lending3.DepositsKey Resources :1.Capital2.Sales Channel3.Branches4.Employees5.Sales brokers (Lending)Cost Structure1.Credit pricing/Lower credit volumes2.Cost of compliance3.Cost of capital (lower interest rates so lower deposit volumes)4.Broker FeesValue Proposition:1.Convenience2.Self-service3.Trust4.LiquidityCustomer Relationship1.Customer lifetime value2.Improved customer engagement3.Loyalty4.Repeat transactionsChannel Value to BankSales ServiceBranch H LWeb HHMobile HHChatLLSocial H LATM H LCustomer Segment1.Convenience2.Self-service3.Trust4.LiquidityRevenue Structure1.Subscription (Annual Fee)2.Bait and hook (free checking, debit card- based payments, transactions using checks)3.Free channel services promoting bill pay, etc.4.Merchant-funded offers.Digital Banking Multi dimensional Attributes for INGH=High, L=Low 10. OnlineMobileSMSPhoneSocial MediaWhy should ING leverage the digital channels? Digital Banking will offer the best of two worldsFair price with transparency and comparabilityImmediate high quality interactionFast and secure processingRich Spectrum of Products and ServicesLean channel and organization structureStreamlined Governance and agile cultureIntegrate IT infrastructureEnhanced revenue modelBest of Both WorldsOutside New Customer ExperienceInside Efficient and effective operating model11% of total population is using social media platforms.Facebookis the most frequently used platform.Integrate the data with bank- end CRM systemsTablet 11. ProductCurrentSituationProposedChanneltobeleveragedOtherCommentsPreferredBankingReliesuponthebranchstaff RelationshipManagers(RMs)UseofSkype/FacetimetogetintouchwiththeRM.ThroughDecisionSupportSystems,INGcanusepurchasedecisionsofpeerstohelpcustomersmakeadecisions,giveautomatedproductrecommendations, etc.Adddemostohelpineasieraccess.Internetbycreatingadedicatedplatform.Mobile throughINGMobileApp78%ofthesurveyedpeoplepreferselfserviceratherthansomebodyattheirdisposalallthetime.ForexSolutions6currencies 1cardTCValidityboundSinglemerchantpartner(VISA)Increasenumberofcurrenciesofthecard(AED, SGD,SEK,CHF)UnlimitedTCvalidity.Partnerwithmastercard.Makethecardvirtual, createaworlde-walletserviceofthe23currencynotestomakepaymentsworldwide.MobileAddForexSolutionstotheINGMobileApp.Giverewardpointsformakingapurchaseabroadthroughe-wallet.62%ofthesurveyedpeopleprefertousemobilephonesfornetbankingwhentravellingabroad. 12. ProductCurrentSituationProposedChanneltobeleveragedOtherCommentsFDDigitalizedthroughSMSandphone.AddBookFDoptiontotheINGmobileApp.NominationfacilitythroughNetBanking,MobileApp.Bothinternetandmobile--BillPayment150+BillersRemindersCanaddregisteredbillsMakeasuiteofbill-managementactivities.Providecapabilitiestoorganizebillsasadashboard,INGAppwillwarncustomersofunusuallylargebillsorinsufficientfunds.Thesuitetobemadecompatiblewithcomputers, tabletaswellasmobile.32%oftherespondentsusedigitalbankingtopaytheirbills.Contd..OtherSuggestions:LinkAccounts:Completecontrolandseamlessaccesstoloan,dematandcreditcardaccountsheldwithINGBankbylinkingthemwiththeoneaccountaccessibleviamobileandinternetplatform.CreateanAppwhichspecificallyusesfacebookcredentialstologinandofferscustomerstheconvenienceofbankingthroughfacebook.Tablet-specificAppsshouldbemade. 13. INGVysyaBankservices2millioncustomersonaPANIndiabasis(Source:INGInvestorPresentation) Outofthese7%arealreadyusingnetbanking.(StudybyMcKinsey&Company,http://www.business- standard.com/article/finance/7-account-holders-in-india-use-net-banking-study-111072000193_1.html) Asareferencepointwebeginwith140,000customersalreadyusingdigitalbankingatINGVysyaBankAdoptionrate=Assuming10%ofthenon-onlinecustomersbecomeonlinecustomerseveryyearwegetInIndia,Costofservicingatthebranch=Re.1Costofservicingthroughinternet=10pCostofservici

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