According to one of the contributors to the research, Matt Higginson, cryptocurrencies like Bitcoin will face numerous challenges because they are decentralised and self-regulated through Blockchain ledgers. “Until a few year ago, U.S. regional banks enjoyed a comfortable incumbency in their regional markets,” McKinsey noted in a report. In a truly omnichannel banking experience, customers can switch from one channel to another without fear of the bank losing track of their journey. According to a McKinsey survey, trust in banks has declined compared to pre-COVID-19 levels in several markets. Retail banks can also reinvent approaches to risk and customer assistance solutions, to fulfill their societal purpose and mitigate credit impairments that could be comparable to those of the global financial crisis of 2008-09. If banks are successful in converting these stated customer preferences into actual behavior, digital is expected to become the default channel for most customers and the sole sales and service channel for many. Results as of 27 May 2020. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. This will involve accelerating the automation of credit decisioning, digitizing end-to-end customer lending processes, leveraging advanced analytics and automation to speed decision making, and time to cash (the latter being especially critical for SMEs). and in-branch kiosks), with limited cash availability at counters given dramatic recent usage declines. However, the Breaking it down further by different customer segments or sub-segments highlights even starker differences that can inform a business strategy. The report concludes that by 2020, the global payments industry will likely generate $400 billion more in annual revenue than in 2016. 13. Unleash their potential. 1 The more that customers use digital-banking channels, the more they actually use branches and call centers. Das Coronavirus verändert die Anforderungen der Privatkunden an ihre Bank. Financial advice has never been more important. We use cookies essential for this site to function well. Given the analytical nature of digital marketing, required skill sets differ vastly from “old-fashioned” marketing. 7 Transformation. Chubak has held senior strategic roles at the bank since 2013, when he joined Citi from management consultancy McKinsey & Company.. The calculated risk attached to this approach empowers leaders with judgment and character to make decisions at a sustainable speed. In the role, Chubak will head retail banking channels, including branches, wealth management, mortgage and small business, and risk management. Over the past 10 years, we’ve seen the industry take banking into the digital landscape, develop use cases for an explosion of new data, ensure compliance with PSD2 and GDPR, innovate payments and take on technological forces such as AI. Globally, only half of banks can block or freeze credit cards digitally, and less than a third permit the initiation of financial transaction disputes via digital channels, according to Finalta benchmarks. 12 Finally, banks could explore partnerships or strategic M&A with other banks or with fintechs. Top 10 banks in developed markets rapidly grew this channel to 65 percent, up from 36 percent in 2016, according to Finalta. and then determine how to value and assess their progress. Branches’ focus will evolve to assisting customers’ complex needs. 13 Never miss an insight. As a result, in most retail banking markets, a few large The need to find new revenue´s sources, the progressive digitalization of the sector and the changes in consumer´s behaviors will be key to reshape its business model and future strategy. Banks need to choose what posture they want to adopt - to lead the change, to follow fast, or to manage for the present. 14 Please use UP and DOWN arrow keys to review autocomplete results. 4. Once roles have been rationalized there is a further opportunity to rethink the location of work, benefiting from remote options (Exhibit 4). Try removing some filters. Sorry, we couldn't find any results. 9 Source: Capital IQ. More people are demanding simple, trustworthy products and services from financial institutions—or other companies offering similar services—that put them first. Many banks have yet to see this mindset shift translate into actual user behavior, In the role, Chubak will head retail banking channels, including branches, wealth management, mortgage and small business, and risk management. Reinvent your business. Retail banks must keep pace with their customers. More people are demanding simple, trustworthy products and services from financial institutions—or other companies offering similar services—that put them first. Ida Kristensen Senior Partner, New York. One bank saw an increase of 30 percent in sales when there was an appropriate and timely (24-48 hours) human response compared to a purely digital journey. This shifting behavior presents a threat--and a rare opportunity. appears to be plateauing in recent weeks. Intelligent ATMs are kiosks with functionalities beyond basic services; e.g., video-banking/remote teller technology, rapid dispensing capabilities, contactless, card-less withdrawal with mobile advice, interaction between ATM and online systems and ecosystems, e.g. North America. In the longer term, banks could consider how best to extend these societal commitments and reflect them in their values, business models, and offerings. Before scheduling a customer interaction, leading banks proactively reach out based on analytical engine output highlighting relevant customer needs (e.g., impacts from wage decreases, heightened financial risk, spending patterns, migration opportunities to better suited products). our use of cookies, and 5 Additionally, consumers’ banking preferences are rapidly evolving. People create and sustain change. our use of cookies, and As one powerful example, a European bank acted on 104 key decisions in a single week, which would normally have required four months. The global revenue total for 2015 is an estimate. In this piece, based on detailed research from McKinsey Panorama that was begun prior to the crisis, the researchers look at how retail banking revenues related to customers of different generations vary across the world. Select topics and stay current with our latest insights, Reshaping retail banking for the next normal. 4. 16 McKinsey underscores retail banking sector's hesitation for blockchain adoption in new report Mon, 10 Jun 2019, 07:29 am UTC Consultancy firm McKinsey & Company said that retail banks are slow to adopt blockchain technology, citing regulations and conservative consumers as obstacles. The same lessons apply to in-person advisory conversations. Done wrong, customer experience initiatives can lead to cynicism—huge amounts invested, generally happier customers, but limited financial returns. Use minimal essential Banks’ required growth levers include digital traffic generation, existing customer engagement, and conversion. Source: iStock/ultramarine5. This becomes a matter of finding new ways to help, rather than taking unnecessary risks—no one is served by losing access to financially stable banks. Never miss an insight. Range of 30-75 percent. In-branch staff duties will become more varied, evolving to include aspects of operations and call center work. In the McKinsey 2016 Global Payments Report, the management consultant giant discusses the major trends for transaction banking and the role of digital innovation in payments to fuel future growth. Roles will expand and shift, necessitating the re-skilling of talent. As banks navigate the crisis they can consider taking on a broader role in guiding customers as well. McKinsey’s modeling of COVID-19’s impact Those banks able to create digital interactions approximating a one-on-one dialogue rather than mass communication, offering customized advice to achieve customers’ financial goals, are likely to excel on this front. This will have significant implications for the required mix of branch staff, with much more flexible job configurations. The COVID-19 health crisis has reshaped the global economy and society. In this piece, based on detailed research from McKinsey Panorama that was begun prior to the crisis, we look at how retail banking revenues related to customers of different generations vary across the world. collaboration with select social media and trusted analytics partners In the period since COVID-19’s emergence, banks have executed major initiatives (migration of tens of thousands of employees to remote settings, disbursement of new stimulus program funds) at speeds previously thought impossible for the sector. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. An online survey of 100 European retail banks by Efma and McKinsey shows a fast evolution of the retail banking lifecycle across Europe. McKinsey believes most new entrants are targeting the origination and sales components of banking, and estimate that in five major retail banking businesses – consumer finance, mortgages, lending to small and medium-sized enterprises (SME), retail payments and wealth management – from 10% to 40% of bank revenues will be at risk by 2025. For instance, while banks in Spain, Italy, and the US face greater shifts in digital servicing, those in Sweden are already more digitally advanced and can focus on digital sales tool development. now about what retail banking will look like in 2020 and navigate their way toward a better distribution model. Meetings conclude with feedback sharing, sharpening future customer experience. OPEN BANKING. Citigroup names David Chubak, 39 year old ex-McKinsey partner, as head of US retail banking Published Tue, Jan 7 2020 3:05 PM EST Updated Wed, Jan 8 2020 7:15 AM EST Hugh Son @hugh_son Concerted effort is required to optimize investment within digital channels and across the acquisition funnel to align with customers’ shifting preferences and needs. Range of 30-75 percent. Over the past 10 years, we’ve seen the industry take banking into the digital landscape, develop use cases for an explosion of new data, ensure compliance with PSD2 and GDPR, innovate payments and take on technological forces such as AI. In order to build speed, flexibility, and resilience into their operating model, banks can take action across three main dimensions: Consider pursuing flatter organizations, leveraging this unique opportunity to measure value-added productivity across the workforce and establish organizational baselines centered on roles that truly matter. May 16, 2019 When it is done right, customer experience in retail banking leads to more satisfied customers, happier team members, increased efficiency, accelerated growth, and reduced operational risk.. McKinsey Global Institute. The need to find new revenue´s sources, the progressive digitalization of the sector and the changes in consumer´s behaviors will be key to reshape its business model and future strategy. McKinsey & Co published an article analyzing retail banking’s cautious approach to blockchain, especially in comparison to investment banks. 6 Given a projected large-scale drop in revenues after risk, banks will be challenged to strengthen customer relationships. Our flagship business publication has been defining and informing the senior-management agenda since 1964. Digital sales and servicing will accelerate markedly and the remote advisory channel should finally come of age, potentially handling 35 percent of complex needs remotely. The shift toward digital for simple services and information will likely carry significant implications for the mix of branch staff. Learn more. Die Kunden suchen Beratung in unsicheren Wirtschaftszeiten, wenden sich aber auch vermehrt digitalen und mobilen Zugangswegen zu. McKinsey Global Institute. Select topics and stay current with our latest insights. It is therefore critical that retail banks mobilize their plan-ahead teams now, prioritizing Reimagine responses as societies enter their Return phase. 4 Unleash their potential. Retail Banking. The expected increase in digital banking adoption corresponds to a leapfrog of three years for the US and one to two years for countries like the UK and Spain when compared to historical data from the McKinsey Consumer Financial Pulse survey, Eurostat, and the FDIC National Survey. December 21, 2020 – The global banking industry is facing a long winter, ... November 24, 2020 – A joint report from McKinsey and the Euro Banking Association examines the options for banks in a changing landscape. Includes more than 120 banks, corresponding to more than 400 million active customers across more than 40 countries. Reinvent your business. We'll email you when new articles are published on this topic. Scrutiny of retail banking sales practices is at a high pitch—banking leaders should also see this as an opportunity to reset and strengthen relationships with their customers. McKinsey research confirms that customers who receive personalized bank offers across multiple channels are more than three times as likely to accept, compared to those receiving offers via a single channel. set forth a five-stage call to action applicable across industries emerging from the COVID-19 battle: Resolve, Resilience, Return, Reimagine, and Reform. If you would like information about this content we will be happy to work with you. Finalta Remote Banking Pulse Check Benchmark 2020. More than ever, banks must strike a balance between being there for customers in financial distress and prudently managing credit losses. We envision relationship managers becoming location agnostic, performing most duties remotely. Retail banks have been slower to embrace blockchain technology and face greater challenges in reaping its potential benefits than their more … Given their critical role supporting economic and social recovery, the COVID-19 crisis places financial institutions in the spotlight. Finalta Digital and Multichannel Benchmark 2019. McKinsey Financial Decision Maker Pulse Survey run in mid May 2020; countries surveyed include UK, France, Italy, Spain, Germany, Sweden, China and USA (1,000 representative consumers each). Finalta Remote Banking Pulse Check Benchmark 2020. tab. Further, most customers in Western markets perceive their bank relationships as merely meeting expectations at best, with banks in a majority of markets falling short of … Subscribed to {PRACTICE_NAME} email alerts. The global banking industry is facing a long winter, and in the coming months and perhaps years, the COVID-19 pandemic’s impact will present banks with many challenges. Leading digital banks leverage multiple marketing channels and customize strategies to customer segments, in combination with a sharp focus on developing truly exceptional customer journeys. In 2019, banks in developed markets generated only 28 percent of their sales from digital channels. New skills and a new retail banking strategy are required to adapt to changing trends. Targeted proactive investments, including plays that offer scale, talent, and complementary assets, can strengthen retail banks’ position going into the next normal. 2 McKinsey Financial Decision Maker Pulse Survey run in mid May 2020; countries surveyed include UK, France, Italy, Spain, Germany and Sweden (1,000 representative consumers each). Includes more than 120 banks, corresponding to more than 400 million active customers across more than 40 countries. Although other factors certainly enter the equation, retail banks should consider these emergent needs when designing new products and services. Arguably, they face an urgent imperative to do so. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Autoren: Philipp Koch, Max Flötotto, Ursula Weigl, Benjamin Köck, Dina Seilern … Although overall revenue declines are expected to be in line with those of recent significant downturns (the global financial crisis of 2008- 09 and the European sovereign debt crisis of 2011-12), revenues after risk are expected to experience sharper declines. The distribution shifts detailed above can be leveraged to empower a more customized, analytics-driven, multichannel approach to engagement with both existing and new customers. Powerful forces are reshaping the banking industry, creating an imperative for change. Interestingly, McKinsey research reveals the digital preferences of older Western European consumer cohorts (ages 51-64 and 65+) aligning for the first time with those of younger demographics for most banking services (Exhibit 1). Most transformations fail. Forward-looking credit models can be re-engineered for increased accuracy using real-time transaction data, and also to reflect government actions by customer segment, sector, and geography. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to … — Pradip Patiath, McKinsey McKinsey analysts and researchers have been tracking a tectonic shift in U.S. retail banking for some time. McKinsey Quarterly. 9 “What do consumers really want?” McKinsey Digital Banking in Asia, (March 2015) 10 Digital Europe: Pushing the Frontier, Capturing the Benefits, McKinsey (2016) Should these emerging preferences become banking’s post COVID-19 “next normal,” retail banking distribution will experience up to three years of digital preference acceleration in 2020. 6 McKinsey Retail Banking Consumer Survey 2018 Banking Consumer Survey. Similarly, it is important that banks differentiate—to the extent possible—temporary impacts from fundamental deterioration in customers’ underlying financial health, by pressure testing individual clients’ financial ratios and indicators under different COVID-19 scenarios. Retail banking case study The limited effect of foreign investment in retail banking in Mexico and Brazil is something of an anomaly in this McKinsey Global Institute study. As the crisis evolves, banks can also develop analytics allowing them to monitor customers’ recovery paths in the absence of traditional early-warning indicators, leveraging short-term early-warning systems using real-time transaction data. 2. “Until a few year ago, U.S. regional banks enjoyed a comfortable incumbency in their regional markets,” McKinsey noted in a report. hereLearn more about cookies, Opens in new Includes more than 120 banks, corresponding to more than 400 million active customers across more than 40 countries. For complex service needs, we expect banks to adopt flexible approaches to deploy distributed talent pools. Its teams more closely resemble Math Men than Mad Men. Human-centered remote channels will evolve significantly, but remain essential. 2018.04.20 The Developments of the Retail Banking Ecosystem and the Evolution of FinTechs - A Global Perspective - CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company Retail banks in emerging markets derive more revenue from younger customers; the opposite is true in developed markets. In the wake of COVID-19, branch closures led to call volumes spiking by one-third and wait times more than tripling between December 2019 and April 2020. Notably, preference for handling everyday transactions digitally is as high as about 60 to 85 percent across Western European markets, even for customers 65 years of age or older. McKinsey & Co stands accused of being late to the blockchain party, after releasing a report about retail banks’ cautious approach to the technology.. 1. 8 payout from an app at ATMs etc. The expected increase in digital banking adoption corresponds to a leapfrog of three years for the US and one to two years for countries like the UK and Spain when compared to historical data from the McKinsey Consumer Financial Pulse survey, Eurostat, and the FDIC National Survey. October 1, 2019 – Only ten years ago, the US retail banking industry was in the depths of the global financial crisis, as many once leading institutions ... McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. Low-Cost Source of capital duties remotely and lean-management expertise to help clients in the next normal much more flexible configurations. Dramatic recent usage declines prepared for the second half of 2020, for example, worked with California-based in! 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