EXUS Collections & Recovery Blog

3 Trends In Retail Banking You Can’t Afford To Miss

Posted by Manos Margaritis on Mon, Dec 08, 2014 @ 10:00 AM

retail banking trendsRetail banks are transforming to seize new opportunities, navigate serious pitfalls and generate more revenue in tough markets.

Who better than the biggest names in retail banking to show your organization how to profit amid the perils of today’s financial conditions? These industry experts convened at October 2014’s Middle East Retail Banking Summit, an event sponsored by EXUS, to do just that.

At the event, they outlined three major retail banking trends that your organization can’t miss if it wants to survive and thrive in a post-crisis world. 

Your Organization Is Missing A Key Revenue Opportunity

Non-performing loans are on the rise, especially in Europe. That means more distressed portfolios than ever. Many banks miss out on the opportunity to capture more revenue from these portfolios because they improperly manage customers in them.

Event sponsor EXUS outlined how, amidst changing customer profiles and preferences, collections and recovery departments need to change for the future. That includes the following process and technology transformations:

  • Consider new collections approaches. Aggressive collection is not working. Banks need to make the right offer to customers at the right time through increased account analytics, portfolio segmentation and robust software tools.
  • Adopt an early warning system. These systems consist of risk scoring and sophisticated risk models that prevent delinquencies and mitigate the effects of distressed accounts—before they become distressed in the first place.

To learn more about these trends, view the entire presentation here.

A Major Digital Storm Is Coming

Eva Maria Rodriguez Garcia at Santander Bank showed how banks must adapt—or lose customers to better prepared rivals. Santander Bank in Spain is immersed in the transformation process of its distribution model that requires the involvement of the whole organization.

Multichannel is a key axis in this process. Through the transformation process Santander is:

  • Implicating the network in the promotion of use of remote channels
  • Modernizing online channels with quality and adapting the role of branches in harmony
  • Setting a multichannel model by customer segment

The transformation plan is having impacts on the distribution model because Santander has:

  • More online customers, more remote business and more sales of core products
  • More self-service of basic operations
  • More online commercial capabilities and remote managers to complement branch services offered to customers

Santander estimated ~87% of banking interactions could be carried out through digital and remote channels in 2020 in Spain. Consequently, the number of branches in Spain is expected to decrease. This means that the model is going to have to be reshaped and that branches will need to have a different role. Currently Santander Spain has 32% of online penetration but they expect to reach 60% in 2020.

Differentiation Is Harder Than Ever

The sweeping changes in retail banking are quickly making one thing clear, Hans van der Horst at ING pointed out: the only way to differentiate your bank is through customer service. 

He demonstrated how self-directed customers, the rise of direct and mobile channels, and specialists like Mint and Kickstarter entering the market mean banks must differentiate on service. They can no longer rely on specialized information (the internet has taken care of that) or price.

In short, the path to future profits is through exceptional customer experiences across channels. Digitazition of processes is one of the keys for that.

Is your bank up for the challenges and opportunities ahead? Tell us about the retail banking trends you’re seeing in the comments.

Learn More Best Practices From The Experts

The Collections and Recovery Best Practices Manual is packed with tips and strategies to improve your collections and recovery operations, step-by-step through each phase of the credit cycle. Download this free guide today to learn how your organization can generate more revenue from C&R operations.

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Manos Margaritis

Written by Manos Margaritis

Topics: Retail Banking, Collection and Recovery Operations