WORLD RETAIL BANKING REPORT

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The World Retail Banking Report (WRBR) has provided insights into the challenges of the Retail Banking industry for over ten years

Customer Experience Index (CEI)

•  17,000 customers •  32 countries across

six regions

Feature on Social Media

•  Current state of social media banking use

•  The market opportunity vis-à-vis social media banking

•  Recommended banking approaches to social media

Previous speakers focused on stakeholders’ perception. This presentation will share the satisfaction and expectations of the customers with banking services. Satisfaction is also influenced by the expectations,

which can be managed by the banks.

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Capgemini’s Customer Experience Index provides a granular and multi dimensional understanding of what drives positive customer experience

Dimensions of Capgemini’s Banking Customer Experience Index (CEI)

Channels / Networks

CEI

!  Information Gathering

!  Transacting

!  Problem Resolution

!  Account Status & History

!  Branch

!  Internet

!  Mobile

!  Current, Depository Accounts & Payments

!  Credit Cards !  Loans !  Mortgages

!  Phone

!  ATM

CEI is different from a usual customer satisfaction study

because it…

" Analyses 80 different retail banking touch points spanning the full range of products, lifecycles and channels

" Surveyed 17,000 customers from 32 countries across 6 regions were surveyed

" Describes how customers feel about those interactions, taking into account their perceptions and expectations

" Identifies the factor most important to customer and measures satisfaction only on those factors

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Since its launch in 2011, the banking CEI decreased for the first time in 2014 (by 0.7% points)

This decline in customer experience index may indicate an inflection point in the experience customers have vis-à-vis their banking services.

Note: The numbers for countries denote overall CEI score on a scale of 100 Source: Capgemini Financial Services Analysis, 2014; 2013, 2014 Retail Banking Voice of the Customer Survey, Capgemini Global Financial Services

Canada 80.9 80.7

1

Argentina 75.1 75.1

9

S. Africa 76.0 77.1

5

U.K. 76.0 76.3

6

Netherlands 75.7 71.1

7

Germany 74.5 75.8

10

Australia 76.5 77.8

4

CEI 2014 CEI 2013

U.S. 79.0 79.5

2

Portugal 75.2 75.7

8

Czech Republic

76.6 74.0

3 Global average for positive

customer experiences

72.9

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North America leads the pack while the bottom placed countries are mostly from the Asia-Pacific region

Canada US Czech Republic Australia South Africa UK Argentina 2.52% # 8.12% # 3.04% # 0.87% # 3.08% # 0.88% #

60.0% 54.6% 50.7% 48.5% 47.7% 47.0% 45.8% 60.8% 57.0% 42.5% 51.5% 48.6% 50.1% 44.9%

0.80% #

Top 7 Countries in Customer Experience

Norway UAE Spain Turkey Singapore Japan Hong Kong 11.01% # 10.69% # 7.22% # 1.44% # 1.61% #

31.0% 29.0% 28.5% 27.7% 27.1% 23.4% 16.6% 43.3% 40.0% 34.4% 38.4% 34.4% 21.9% 15.0%

12.34% #

Bottom 7 Countries in Customer Experience 24 25 26 27 28 29 30

5.89% #

25% Countries Showed a Decrease in Positive Customer Experience of +10%

2014

2013

2014

2013

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Positive experience has a strong impact on customer retention - a critical element of bank’s profitability, a similar impact has been observed on referrals

Likelihood of Customers with Positive, Neutral, and Negative Experiences to Stay with Their Primary Bank in the Next Six Months (%), 2014

Only moving customers from a negative to a neutral experience, on average, could, in some regions, doubles the banks’ chances of retaining their customers

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Gen Y customers typically have higher expectation which is reflected in the lower positive experience they have compared to other age groups

Positive Customer Experience Evolution for Gen Y Customers vs. Others by Region, 2014

Considering the share of Gen Y customers as a part of world population, banks need to focus on this segment to improve their overall banking experience.

(21.7%) (7.2%) (9.8%) (8.8%) (7.5%) (7.5%) Percentage Point Difference

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With the proliferation of smart phones and mobile applications, the importance and experience of mobile channel for Gen Y has increased

With the increasing prominence of the mobile channel, there has been a decrease in the usage and importance ascribed to the traditional channels leading to changing roles of channels.

Importancea vs Positive Experienceb with Channel for Gen Y Customers and Others, 2011–2014

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Due to the changing roles of various channels, the priority of the banks should be to integrate branch and digital channels in a holistic manner

Improved Customer

Experience

Integrating Channels !  Banks need to focus on integrating both the

digital and branch channels !  Shift needs to be made from siloed and multi-

channel environment to an Omni channel environment

Improving Core Banking !  In order to improve the back-end

infrastructure, banks need to focus on increasing the capabilities of their core banking systems

Building Relationships !  Banks need to focus on developing

relationship as the interactions shift towards digital formats

!  Value-add needs to be clearly communicated to the customers and proper expectation setting should be done to improve the overall experience

Leveraging Data !  With the increase availability of data, banks

need to leverage transactional, digital, and social data to deliver customized customer experience and develop customized products offering competitive pricing

Holistic Approach to Improve Overall Customer Experience

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!  In 2014, the banking CEI decreased for 1st year (0.7 percentage points) since we launched the CEI in 2011, and may represent an inflection point in changing customer experience.

!  This decline in experience is notable as our research found that delivering a positive customer experience has a significant impact on profitability as customers with a positive experience are 3x more likely to stay/refer/buy another product vs. those with a negative experience.

!  However, it is important to note that Digital innovation has not always resulted in increasing positive customer experience.

!  Gen Y is having a huge influence on driving expectations on the banking industry and lead way to future.

!  With the changing roles of channels and increasing commoditization there is a need for banks to focus on operational efficiency and balancing branch and digital channels.

Customer Experience Key Findings Summary

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Today’s Session on Social Media

#WRBR14

@aenault

@Efma_News

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Technology Adoption Rates Are Accelerating

31 28

15

10

3,5

Radio TV Mobile Broadband Internet

Social Media

Number of Years to Reach 50% User Adoption

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Emerging Markets and Gen Y Are the Highest Users of Social Media, but Other Demographics Are Also Relatively Active Users

% of Customers Spending More than One Hour Per Day on Social Media Sites vs. % of Customers with Social Media Accounts (%), 2014

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10% of Banking Customers Already Are Interacting with Their Banks via Social Media at Least Once Per Week

Customers Interacting with Different Banking Channels at Least Once per Week (%), 2013-2014

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Our Report Focused Specifically on Actual Customer-Facing Functionalities Banks Are Providing Today or Plan to Provide in the Future

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Most Bank Efforts To-Date Have Been on Building a Presence, but ~50% of Banks Have Rolled Out Only Information Gathering and Servicing functionalities

Banks’ Current Status in Implementing Social Media Banking Functionalities, 2014

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Barriers to implementing social media banking:

!  Concerns over specific social media platforms future viability

!  Privacy and security concerns

!  Poor back-end infrastructure

!  Low adoption of social media in some segments

!  Lack of clarity around regulations and evolving social media landscape

!  Difficulties with technology architectures to provide a seamless experience

!  Unclear ROI

In Our Interviews, Executives Noted a Number of Reasons for Slow Adoption

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We Identified a Significant Gap in Where Customers’ Place Importance vs. What Banks Plan on Offering in the Future

Importance Ascribed by Customers and Banks to Social Media Banking Functionalities, 2013

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However, the Pace of Social Banking Capability Roll Outs Is Increasing

Bank of America Launches

Customer servicing on Twitter

ASB Bank Launches

Virtual Banking on Facebook

Deutsche Bank Launches Customer Servicing on Twitter

and Facebook

RBC Launches Money

Transfer on Facebook

BBVA Launches A/C

Opening and Money Transfer on Facebook

ICICI Launches Facebook

Payments via Pockets App

Caixa Bank Launches A/C

Information and Payments on Facebook

Commonwealth Bank of Australia

Launches Facebook Payments via Kaching App

ING Direct Launches

Crowdfunding Platform on Facebook

Denizbank Launches Facebook

Payments App

Feb, ‘09

Sep, ‘10

2009 2010 2011 2012

Jan, ‘12

Nov, ‘12

2013

Mar, ‘13

Mar, ‘13 Dec, ‘13

Sep, ‘13

2014

Mar, ‘14

May, ‘14

Examples of Social Banking Functionality Roll-Outs, 2009 - 2014

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!  Customers are demanding the same set of functionalities in social media as other channels, largely driven but not exclusively, by younger demographics.

!  A gap exists between customer needs and the functionalities being provided by banks, with customers attributing more importance on transacting and account info

!  Concerns around privacy/security, lack of clearly defined regulations, and poor infrastructure are all inhibiting the large scale roll out of social media banking.

!  Banks need to be agile in their social media approach and should avoid getting tied to a single platform as well as have mechanisms to ensure data privacy and security.

!  A robust governance model and clearly defined social media strategy which clearly lays out objectives and approach is critical

!  The key opportunity of social media banking lies in utilizing it for providing services beyond what is currently able to be offered by branches, ATMs, and online.

!  It’s important to understand the true future/value of Social Media Banking is the concept of “Social” banking and increased convenience, not a specific tool or app

Key Take-Aways

WORLD RETAIL BANKING REPORT