Changes in distribution
With distribution channels evolving so frequently to meet the needs of customers, we gain the insight of four senior level bankers who will be speaking at the upcoming Efma Congress and learn what issues they plan to address in their respective presentations at the event
The panel -
Phillipe Laulanie, director of Distribution, BNP Paribas
Jose Olalla, global head of Multichannel Strategy, BBVA
Raymond Pettitt, managing director of Community Banking, Barclays Bank
Desmond Crowley, chief executive officer, Bank of Ireland UK
What will be the biggest changes in distribution in the coming years?
Laulanie: Majors trends are impacting the financial services industries and thus banking distribution. Of these, four majors trends inspired the evolution of our future distribution model:
- Customer in control - Having the customer more and more in control, implying development of self care but also customisation, personalisation, and real time contextualisation
- Simplicity - Simplification of customer experience, of digital processes, and improved ease of use
- Mobile and digital - Usage of smartphone, impact of geolocalisation, real time, and the integration of visio and chat
- Social - The choice of the customer oriented by peers, an increase in co-creation.
These customer trends will naturally have an impact on distribution platforms and enable the integration of more digital, real time and seamless experiences, as well as more open and new technologies, such as big data, the cloud and customer relationship management.
Olalla: When it comes to the future of distribution, I think the influence and the power of the customer in shaping that transformation is crucial, and how digital channels are not only a growing sales machine but also a determinant influencer in all channels. In this ’age of the customer’ context, retailers and bankers should start by knowing the customer in a different way and delivering real time value to customers through great experiences. This experience should definitely be easy, enjoyable and omnichannel - that is ’anywhere’ banking, with full channel choice, seamless journeys and consistent experiences. Digital channels will be at the core of this transformation, with a growing importance of native applications, especially in smartphones and the creation of digital ecosystems covering all financial needs.
Pettitt: Through the ongoing rapid development of technology, changing customer preferences and behaviours, we need to ensure that we have the capability to interact with customers when and where they want, in a seamless and easy way. Reducing the cost of transactions remains a priority, balanced against ensuring we are there for customers when they really need us and being proactive through the customers’ channels of choice.
Crowley: A move to face-to-face - be that physical or virtual - for advice-based product sales will be pronounced, with the likely role of independent financial advisors (IFA) and virtual advisors and brokers increasing. There will also be a move in service and execution to mobile channels. The closures of branches by big banks could lead to possible advantages for those with outlets in low intensity banking towns.
How can banks prepare for these changes?
Laulanie: Banks face three specific challenges when looking to make these changes:
- Adopting channel distribution to meet the new behaviours of clients by rationalising branch network distribution and enhancing digital capacities, and even developing purely digital one line players
- Developing a purely customer-centric approach that will enable not only the sharing of all information and behaviours of the customer across all channels, but will also cover a seamless experience in client process, enabling an omnichannel approach
- Enlarge the traditional scope in terms of interaction into a larger ecosystem, helping improve acquisition capacities
Olalla: While banks view an omnichannel approach as important, most are in the early stages of development. The real challenge is not the ’arriving’ at a world in which customers are mainly digital and branches are rarely visited. The challenge is the roadmap, the course taken to arriving there.
Banks should pursue:
- Real omnichannel connected products and services that combine to meet customer needs
- Digitise end-to-end customer journeys
- Design products and services as digital first experiences
- Evolve physical channels.
Pettitt: Understanding customer behaviour is key. Building technical and digital capabilities is one thing, but ensuring colleagues’ roles are aligned is vital. Building colleague capability and gaining their buy-in to the company vision is critical.
Crowley: Banks need to have real clarity on distribution strategy, channels and who their target customers are and how they will be engaged. Banks also need to be willing to engage and experience effective engagement. Banks without IFAs or broker capabilities will suffer.
We’re delighted that you’ll be attending the Efma Congress. What do you think are the main benefits of this event? What do you hope to get out of it?
Olalla: The Efma congress is a place to gain expertise and be aware of the banking transformation landscape. I hope to achieve real time insights and also the opportunity to share ideas and thinking with other members of the banking industry.
Pettitt: It’s great to connect with people with similar challenges; share the energy, learning and best practices. I hope to be able to add value to people through my insight, alongside taking away some ideas and contacts to support the development and delivery of our vision.
Crowley: The event brings together the leading thinkers in the industry, and is an excellent opportunity to take part in discussions and to network.
Can you tell us what you will be focusing your speech on?
Laulanie: My speech will focus on BNP Paribas’ distribution strategy, specifically its development over the years and our 2020 strategy. BNP Paribas’ multichannel strategy has had a very stable and sustainable approach since the late 1990s. With 15 years of investment, the group is able to share a common distribution platform. This distribution platform is now working in 15 countries covering more than 90% of retail client bases. Our distribution platform enables business alignment everywhere according to one principle: to develop contact and a level of service that generates sales, revenues and satisfaction which is proven across different geographies. The platform is maintained and developed through a pan-European approach. The platform is still solid and can still be optimised during the 2014-2016 period with the organisation of the convergence of all entities on the same version for efficiency purposes, and the optimisation of the business usage in all countries with the identification of levers of value creation.
We are preparing a new distribution platform with the aim of releasing it in 2020. This new multi-domestic distribution platform will be entirely based on the existing platform but will be transformed from multichannel to omnichannel by making it more offensive, more digital, and more seamless in real time. This new distribution platform will be progressively constructed and rolled out over the next five years.
Olalla: I will speak about omnichannel distribution and how BBVA is achieving what we call ’real omnichannel’. This will include BBVA’s ’anywhere banking’ vision, metrics and goals for transformation, projects and global disciplines, and organisational alignment around the new digital banking unit.
Pettitt: My speech will be about building an omnichannel capability and engaging colleagues through unprecedented industry change as we work towards our vision for the future. I will update on our plans to create omnichannel capability; what we have delivered, our success and our learning so far.
Crowley: My speech will focus on:
- Challenger banks and how to take on the big incumbents
- Acquiring and retaining customers (distribution reach)
- Economics of the market and how to balance
- Risk and regulatory developments that create opportunity and structural market changes.