Future Banking: Symposium at WincorWorld 2006
Future Banking: Symposium at WincorWorld 2006
In the coming years, banks will certainly be continuing to tighten up their branch organizations and exploit selling potential more effectively. But they will also have to use genuine innovations representing logical complements to established areas of business in order to respond to changed customer behavior and what are increasingly non-homogenous customer markets. It was precisely on matters such as these that the “Innovative Banking” symposium at WincorWorld 2006 put the spotlight on some important food for thought.
Community Banking (from selling bread rolls in village branches to after-work parties in citycenter locations), Life Assistance Banking (complementing pure financing planning advice with expert advice and guidance on social and domestic matters), High-Tech Banking (fullyequipped branches acting as multimedia communications centers) – these are some of the many conceivable possibilities for addressing additional banking customers by means of new services or new combinations of services.
Another possibility is “intelligent co-branding” — collaboration between banks and businesses with strong local or national brand identities to develop and market innovative services. “So don’t just think rationalization, also give serious consideration to these kinds of innovation,” was the challenge from Prof. Dr. Dieter Spath, Labor and Organization Manager at the Fraunhofer Institute, to banking delegates at the event.
Research carried out by Spath’s institute does, however, show that only around one-third of German banks can at this point demonstrate adequate internal organizational structures capable of initiating real innovation processes and producing well-founded innovation decisions.
“Often you have to be prepared to kiss a lot of frogs to find the prince,” Spath said. He encouraged bankers to develop “the capability to create true added-value.”
One idea is to use “high excitement” to get more customers through the door. The opposite idea is “mobile banking” – indeed WincorWorld also featured a fully-equipped bank branch on (in this case) six wheels, capable of maintaining a full-coverage presence, even when branch density has to be slimmed down.
How more mobility and greater flexibility can actually be used to grow banking services in rural areas was demonstrated by Holger Mai, a vice president at Taunus Savings Bank.
Located just outside Frankfurt, Germany, the borough of Main-Taunus has no dominant focal point, but rather a variety of small towns. In order to provide comprehensive, expert service to its customers through small branches, the bank has started using mobile advisors who travel between these locations in a high-profile, bright red Mini Cooper. The car is equipped with a notebook computer, printer and Blackberry for e-mails.
Customer appointments are booked and coordinated by branch staff and an outbound call center. In conjunction with special customer propositions (including an in-house-developed financial check and a written service guarantee), this mobile customer-service initiative has been a complete success.
“We’ve been able to reactivate a lot of unserviced customers and also gain a large number of new ones,” Holger Mai said.
Another innovation on the card side of the business – in Germany at least – is “revolving credit,” a special form of credit card functionality that is now fairly widespread in the United States.
In contrast to pure debit or charge cards, which are linked to a current account, this card comes with its own line of credit, giving customers more financial room at a comparably attractive rate of interest. The revolving credit card also allows customers to make flexible decisions regarding repayment.
For banks, revolving credit is less complex than fixed-repayment-plan loans. It also can open up extra revenue potential for banks.
With this in mind, Carlos Gomez-Saez, head of marketing at payment systems specialist Gesellschaft für Zahlungssysteme, said revolving cards have opportunities for success in Germany, as consumer credit volumes (currently around € 232,000 million) are expected to rise by 10% to 15% over the coming years.
Innovations also are possible and necessary in the traditional loans segment. “Banks must set clear internal standards and create slim internal processes to be able to offer demanding customers easy access to a highly flexible service with attractive rates of interest,” Gomez- Saez said of revolving credit.