Mobile is on the mind of every experience professional. It's not always easy to do this while monetizing the experience as well. Join Mark Schofield as he discusses mobile and how customer behavior is changing, how banks are adapting, and how banks accelerate the pace at which they capture the "digital dividend."

1. Monetizing Mobile:
How to deliver value
from improved
customer experience
Mark Schofield
Partner, Toronto
Bain and Company

2. 2
Housekeeping
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3. Introduction
Mark Schofield
Partner, Toronto, Bain and Company
• 15+ years of experience in consulting
• Co-lead on Bain’s Retail Bank of the Future
perspectives
• Extensive work on retail bank customer
experience
• Led Retail Bank engagements in Canada,
USA, Australia, South East Asia and UK

4. Objectives for today’s discussion
•How are banks adapting?
•How can banks accelerate the pace at
which they capture the digital dividend?
•How are customer behaviors changing and
how is this creating a digital dividend?

5. • Customers are rapidly embracing mobile
• This creates a digital dividend - lower costs, higher sales, better loyalty
Retail banking is changing
fast
Three actions to drive great
experiences and bottom line
success
Requires a new
way of working
Key themes for today
• Success requires changing the old bank, while building the new
• Leading banks focused on three actions
- Migrate high cost service: Eliminate ‘bad and avoidable volumes’ in branch/call centers
- Digitize sales experiences: Deploy exceptional mobile sales experiences
- Adapt traditional channels: Transform the physical network
• The difference between winners and losers is in the ‘how’ not the ‘what’
– it’s a change management issue
• Requires new ways of working in “Hothouses” with customers and
employees to develop Rapid, Radical and Repeatable solutions

6. Our perspectives rely on proprietary research with
customers and banks
Voice of the Customer Voice of the Bank
Loyalty in Retail Banking (NPS) Survey
• Annual proprietary research on customer
loyalty with ~200K retail banking consumers in
25-30 countries
Retail Bank of Future (RBoF) Survey
• Bi-annual benchmarking research on internal
digital capabilities; ~100 banks participating

7. The retail bank landscape is changing fast; mobile is now the
most prevalent channel
Mobile exceeds
online
Online
exceeds mobile
South Korea Netherlands
China
Mexico
Hong Kong
India
Singapore
AustraliaUSA
UK
France
Japan
Poland
Germany
Canada
2015
2013
Spain
Source: Bain/Research Now NPS surveys, 2013 and 2015; Bain/GMI NPS surveys, 2013

8. In the US, mobile is consistently more likely to delight
Increasing likelihood to delight
Decreasing
likelihood
to annoy
Mobile
Online
ATM
Branch
Phone
Notes: Responses on a scale from -5 to 5 for “To what extent did the interaction increase or decrease your likelihood to recommend your bank?”;
Likelihood to delight = percentage of respondents answering ≥4; Likelihood to annoy = percentage of respondents answering ≤-1
Source: Bain/Research Now US NPS survey, 2015

9. Delightful banking experiences are easy
“What’s the
primary reason
[this mobile]
increased your
likelihood to
recommend
your bank?”
Source: Bain Retail Banking NPS and Interaction NPS Survey (2015); USA - N=4641

10. Everyday banking experiences are core to NPS
Significantly
increased
Slightly increased
Significantly
decreased
Slightly
decreased
Did not change
Change in
likelihood to
recommend bank:
Source: Bain Retail Banking NPS and Interaction NPS Survey (2015); USA - N=4641

11. Average number of mobile and branch interactions
(average of individual banks) per respondent per quarter, 2015¹
As a result, banks are migrating customers from branch to
mobile
All countries are
moving away from
branch transactions to
exponentially more
mobile transactions
¹ Sweden data is based on survey conducted in Q1 2016, Germany mobile interaction includes online
Source: Bain/Research Now NPS surveys, 2015

12. Getting it right is valuable, for both profitability and loyalty
30-40% REDUCTION IN COSTS… … AND A MATERIAL LIFT IN LOYALTY
Source: Bain analysis

13. Clear end state emerging, but the approach to deliver is critical
30-50% reduced costs
in branch & contact
centre
30-50% of sales
through a mobile
30-50% fewer; smaller
and different branches
MIGRATE HIGH COST
SERVICE
DIGITIZE SALES
EXPERIENCE
ADAPT TRADITIONAL
CHANNELS
“HOTHOUSE” APPROACH FOR AGILE CHANGE TO ACCELERATE ADOPTION

14. 60-70% OF BRANCH TRANSACTIONS
ARE BAD AND AVOIDABLE
70-80% OF CONTACT CENTRE
TRANSACTIONS ARE BAD AND AVOIDABLE
Service: 60-80% of transactions are bad and avoidable
Source: Bain analysis

15. MIGRATE HIGH
COST SERVICE
Service: There is a proven playbook for service migration
Migrate simple
transactions
Streamline business
cash management
Simplify the cash
ecosystem
Optimize internal
processes
Optimize workforce
scheduling
Prevent calls
Enhance self service
and routing
Improve front line
capabilities
Optimize workforce
11
2
3
4
5
2
3
4
CHAPTER CHAPTER

16. Service: Radical digitization requires changing customer
behaviors
“Mobile first”
• Make everyday banking
“one touch” easy on
mobile & other digital
channels
• Systematically
eliminate friction end-
to-end across policy,
communication, process,
product, etc.
• Use Agile principles for
the overall effort (not
just tech development)
“Front-line led”
• Teach customers how
to use the digital
capabilities
• Focus on making it easy
for consumers and
saving them time
• Hothouses perform
rapid experiments with
customers to learn what
works and roll it out
NPS + Cost
Leadership

17. Service: Results can be delivered fast
NORTH AMERICA EXAMPLE
5-10% lift in employee engagement through Hothouse process
Stable customer satisfaction through transition
End state target of ~20-30%
over the counter reduction
End state target of ~10-20%
increase in ATM usage
End state target of ~30-50%
increase in Digital Signups
Objective is to maintain branch
sales levels despite fewer tellers
Source: Bain experience

18. Digital Sales: ~30-60% of sales are now done outside of the
branch
Mobile
Online
¹ Sweden data is based on survey conducted in Q1 2016
Source: Bain/Research Now NPS surveys, 2015

19. Digital Sales: Digital sales are set for explosive growth
ILLUSTRATIVE
100%
50
0
3-10 years 5-15 years 5-20 years (until obsolete)
US Banking 2013
(6-8%)
Airline tickets (72%)
2013 US Data
Books (72%)
Music (91%)
Newspapers (46%)
Apparel (19%)
Retail overall (11%)
US Banking 2015
(30-35%)
Digital sales penetration
Time
INTRODUCTION GROWTH MATURITY
Source: Euromonitor, Federal Reserve, Recording Industry Association of America, company annual reports, Research Now, Bain analysis

20. Digital Sales: Customers prefer to
purchase via digital channels
CANADA US AUSTRALIA UK
OPENING TRANSACTION ACCOUNT
Online OtherPhoneATMMobile/Tablet Branch Mail
Source: Bain Retail Banking NPS and Interaction NPS Survey (2015); USA - N=4641, Canada N=3004, UK N=3964, Australia N=3203

21. Superior
Customer
Experience
Branding & positioning
• Creation of overall brand
awareness both inside and outside
of the branch
• Innovation center for the bank
1
Customer
relationship management
• Convenience, "feel good" and
trust development
5
Consultation for
complex customer needs
• Mortgage loans
• Security advisory services
• Insurance
2
Customer enabling for online
& mobile banking services
• Availability and functionalities of
online and mobile banking
applications
• Technical issue resolution
Live assistance
• Physical (in-person) support on
transaction kiosk handling
• Transaction issue resolution (of
online/mobile banking services)
Network: Role of physical network evolving
34

22. Network: Number of branches decreasing in major markets
Source: ECB; British Bankers Association; Haver; Datastream

23. Network: Formats design evolving to support customer
experience
Products and services Process and technology
People and behavior Design and construction
Data and insight

24. Network: Physical network portfolio evolving to hub and
spoke
NETWORK OPTIMIZATION PLANNED IN EMEABRANCH FORMATS
Flagship stores in high
traffic locations
increase perceptual
scale
Flagship
store
Consumer oriented
branches focused on
basic product sales
Satellite
branch
Transaction kiosk fully
automated and with
only limited offering
Self-
service
kiosk
Specialist advisory
branches focused on
critical segments
(business/affluent)
Advisory
shop
Source: Bain Retail Bank of the Future Benchmarking

25. Success demands a different way of working
CUSTOMER
“BACK”
APPROACH
FRONTLINE
LED
DESIGN
HOTHOUSE
ENABLED
• Listen to customers and respond through feedback
loops
• Frontline teams designing the change to create pull
within the organization
• Create an environment to “prototype at scale” and
then rapidly deploy successes system wide
1
3
2
ACCELERATED
RESULTS
• Teams anticipate risks and focus on critical few actions
to resolve while also developing execution plans
alongside initiative design
5
AGILE
METHODOLOGY
• Agile approach, supported by central teams, drives
continual design, test and learn
4

26. A “hothouse” can provide the conditions for success
SETUP FOR
SUCCESS
Design, mobilize and
launch Radical new
ideas in Hothouse
regions
Launch quick wins
to build momentum
in the organization
Bundle initiatives
and rollout
nationally
Test, learn and refine
actions, codify best
practices and create
change experts
Conduct diagnostic, align on goals
and vision, setup team, and generate ideas
RAPID
ACTIONS
RADICAL
ACTIONS
REPEATABLE
CAPABILITY
ROLLOUT
NATIONALLY
CREATE AN
ENVIRONMENT
FOR RADICAL
TESTING AT
PILOT SCALE:
Idea Generation
workshop
Rapid design
acceleration process
Radical
‘hothouse’ pilots
Test & Refine
Toolkit
National rollout
management

27. Recap - Key themes for today
• Customers are rapidly embracing mobile
• This creates a digital dividend - lower costs, higher sales, better loyalty
Retail banking is changing
fast
Three actions to drive great
experiences and bottom line
success
Requires a new
way of working
• Success requires changing the old bank, while building the new
• Leading banks focused on three actions
- Migrate high cost service: Eliminate ‘bad and avoidable volumes’ in branch/call centers
- Digitize sales experiences: Deploy exceptional mobile sales experiences
- Adapt traditional channels: Transform the physical network
• The difference between winners and losers is in the ‘how’ not the ‘what’
– it’s a change management issue
• Requires new ways of working in “Hothouses” with customers and
employees to develop Rapid, Radical and Repeatable solutions

28. Q&A

29. Thank You!