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FUTURE BRANCH STRATEGIES: ENABLING THE DIGITALLY DRIVEN SERVICE MODEL

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Banking

Virginie Hollebecque, Head of Enterprise and Public Sector, EMEA, at Ciena

Disruptive technologies and a drive towards digitally driven services haven’t left many industries untouched, and retail banking is no exception. Today, the banking model is being shaped by customers’expectationsof other retail and online experiences.The result isBranch 2.0, a new generation of retail banking that places an emphasis on ‘service creativity’ andimproving customer interactions with technology. This shift is also influenced by new regulations, the Banking Reform Actin the UK, for example, has opened up competition between institutions, creating more flexibility and better options for consumers[1]. In other words, banks will need to step up and compete to remain relevant.

Digital reality

In this increasingly competitive and digital world, retail banks cannot afford to miss out on any opportunity to make the most of every customer engagement. However, a bank’s primary point of contact with the customer is no longer at the retail branch – branch visits to RBS and NatWest alone have reduced by 30% in the last four years[2] and the British Bankers’ Association (BBA) reported that about 1,800 transactions take place each minute on smartphones[3]. Customers no longer expect a strictly transactionalinteraction; they now require an ‘Apple store experience’ where value-added consultation is delivered in-store, supplemented with online, mobile and phone support. We are seeing evidence of this already: Barclays is moving 6,500 traditional cashiers to roles more focused on customer advice[4], making headway with video, announcing new one-to-one video services for premier account holders[5] and trialling cheque deposits by phone by allowing customers tosubmit images of the cheques via a mobile banking app[6].

As a result the in-branch experience will be reserved for significant milestones, such as applying for a mortgage, but also largely enabling convenience, guidance and dealing with complaints that will dependon instantly accessible services beyond simply referencing customer data. There will be heavy use of video for telepresence consultation or training seminars, apps and access to the bank’s websites, all of which will lead to a greater dependence on online and digital services. Customers will also need a high degree of security, delivered through an assured network infrastructure and offered as a valued reason to conduct business at the branch. In addition, branches will need to ensure resiliency, disaster recoveryand high availability, at all times at all points of contact -in-branch, online or at ATM’s.

Future network strategies

Branch 2.0 sets to deliver greater benefits to retail banks with improved customer service byintegrating multiple resources into one, seamless in-store experience. The network is a crucial component of this ecosystem; supporting voice, video and data, scaling for small local branches and large head offices, ensuring consistent data centre connectivity, and enabling advanced business applications such as surface computing, information and transaction terminals, interactive media and multifunctional ATMs. The network also needs to be flexible and scalableenough to accommodate peaks in demand, say the lunchtime rush.

It is crucial that the network can deliver these services with improved profitability and productivity. This will mean improving agility by removing technology hurdles imposed by legacy circuits andbest-effort IP networks, and move instead to Carrier Ethernet services. Carrier Ethernet enables the speed, security, price and flexibility ‘Branch 2.0’ requires. Flexiblenetwork services mean banks can deliver new on-demand services and bring them to market faster to ensure a competitive advantage.Carrier Ethernet also enables banks to minimise costs and ensure business processes can scale effectively, while maintaining security and control over critical network functions. New applications can be quickly introduced without network redesigns and a single, familiar Ethernet interface enables convergence of all services over a common network infrastructure, simplifying operations. Sophisticated Ethernet-based architectures can transform the abilities of the network to effectively, efficiently and safely connect branches to branches, branches to customers and customers to content.

Future strategies will see this evolve to another level, with the introduction of network function virtualisation (NFV).NFV is the concept of replacing proprietary, single-purpose hardware appliances – such as encryption and firewalls – with software-based versions that run on low-cost server hardware and can be flexibly chained together to form unique services. This promises to enable branches to serve business and customer needs more quickly and cost-effectively and mitigate application performance and information security concerns.Overall, NFV will simplify the infrastructure needs at the branch, lowering operating costs while enabling the introduction of new applications and sources of revenue. Integrating these technologies into Branch 2.0 will be a crucial part of keeping the local branch relevant for customers.

Standing up to the pressure

Retail banks are facing immense pressure to transform their traditional, full-service retail branches while simultaneously offering online digital services to maintain a competitive edge with today’s consumers. To successfully deploy both initiatives, banks will need to invest in branch infrastructure to ensure their networks can support the plethora of new services.

While investment in networks remains steady for the majority of the industry, the investment in branch networks has to be in the right pace to ensure the network supports the bank’s move towards Branch 2.0. With the stakes this high, failure to invest in the right network architecture could result in our recognisable high-street institutions falling by the wayside as innovative, nimble banks take their place. Focusing on agile, flexible, yet secure network resources is the key to delivering the digitally driven service model.

[1]https://www.gov.uk/government/policies/creating-stronger-and-safer-banks

[2]http://www.telegraph.co.uk/finance/personalfinance/bank-accounts/10733432/Banking-technology-brings-seismic-decline-in-branch-transactions.html

[3]https://www.bba.org.uk/news/bba-brief/bba-brief-31-march-2014/#.VGTmnXZFCCg

[4]http://www.newsroom.barclays.com/Press-releases/6-500-Barclays-branch-staff-promoted-to-reflect-changing-nature-of-banking-b93.aspx

[5]http://www.bbc.co.uk/news/business-30260765Customers

[6]http://www.barclays.co.uk/MobileBankingservices/MobileChequeDeposit/P1242668620764

Banking

Commerzbank to lose 1.7 million clients by 2024 – Welt am Sonntag

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Commerzbank to lose 1.7 million clients by 2024 - Welt am Sonntag 1

FRANKFURT (Reuters) – Commerzbank expects to lose 1.7 million customers by 2024 as part of its current restructuring, resulting in a 300 million euro ($364 million) hit to revenue, weekly Welt am Sonntag reported, citing sources close to the bank.

The lender hopes to offset the drop by growing its loan business as well as by expanding its business with corporate and very wealthy clients, the report said, without giving any further detail of why customer numbers were expected to decline.

It also didn’t say if any specific category of client was most likely to be lost.

Commerzbank declined to comment.

According to the bank’s website it serves around 11.6 million private and small-business customers in Germany and more than 70,000 corporate and other institutional clients worldwide, so the reported loss of customers would suggest a drop of around 15%.

The bank earlier this month reported a $3.3 billion fourth-quarter loss, sinking further into the red as it continued a major restructuring and dealt with the fallout of the COVID-19 pandemic.

The bank’s restructuring plan involves cutting 10,000 jobs and closing hundreds of branches in the hope it can remain independent.

($1 = 0.8253 euros)

(Reporting by Christoph Steitz and Tom Sims; Editing by David Holmes)

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Banking

Citigroup considering divestiture of some foreign consumer units – Bloomberg Law

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Citigroup considering divestiture of some foreign consumer units - Bloomberg Law 2

(Reuters) – Citigroup Inc is considering divesting some international consumer units, Bloomberg Law reported on Friday, citing people familiar with the matter.

The discussions are around divesting units across retail banking in the Asia-Pacific region, the report https://bit.ly/3pD57WP said.

“As our incoming CEO Jane Fraser said in January, we are undertaking a dispassionate and thorough review of our strategy,” a Citigroup spokesperson told Reuters.

“Many different options are being considered and we will take the right amount of time before making any decisions.”

The move, part of Fraser’s attempt to simplify the bank, can see units in South Korea, Thailand, the Philippines and Australia being divested, the Bloomberg report said.

However, no decision has been made, according to the report.

Revenue from Citi’s consumer banking business in Asia declined 15% to $1.55 billion in the fourth quarter of 2020.

The divestitures could be spaced out over time or the bank could end up keeping all of its existing units, the Bloomberg report said.

The firm is also reviewing consumer operations in Mexico, though a sale there is less likely, the report said, citing one of the people.

Last month, New York-based Citigroup beat profit estimates but issued a gloomy forecast for expenses. Finance head Mark Mason said the lender’s expenses could rise in 2021 in the range of 2% to 3%, weighing on its operating margins. (https://reut.rs/2ZwXRB1)

(Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)

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European shares end higher on strong earnings, positive data

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European shares end higher on strong earnings, positive data 3

By Sagarika Jaisinghani and Ambar Warrick

(Reuters) – Euro zone shares rose on Friday, marking a third week of gains, as data showed factory activity in February jumped to a three-year high, while upbeat quarterly earnings boosted confidence in a broader economic recovery.

The euro zone index was up 0.9%, with strong earnings from companies such as Acciona and Hermes brewing some optimism over an eventual economic recovery.

The pan-European STOXX 600 index rose 0.5%, as regional factory activity was seen reaching a three-year high on strong demand for manufactured goods at home and overseas.

Another reading showed the euro zone’s current account surplus widened in December on a rise in trade surplus and a narrower deficit in secondary income.

Still, the STOXX 600 marked small gains for the week, having dropped for the past three sessions as investor concern grew over rising inflation and a rocky COVID-19 vaccine rollout.

But basic resources stocks outpaced their peers this week with a 7% jump, as improving industrial activity across the globe drove up commodity prices.

“This week’s slightly adverse price action has all the hallmarks of a loss of momentum temporarily and not a structural turn,” said Jeffrey Halley, senior market analyst at OANDA.

“There is not a major central bank in the world thinking about taking their foot off the monetary spigot, except perhaps China. (Markets) will remain awash in zero percent central bank money through all of 2021 (and) a lot of that will head to the equity market.”

Minutes of the European Central Bank’s January meeting, released on Thursday, showed policymakers expressed fresh concerns over the euro’s strength but appeared relaxed over the recent rise in government bond yields.

The bank’s relaxed stance was justified by the euro zone economy requiring continued monetary and fiscal support, as evidenced by a contraction in the bloc’s dominant services industry in February.

The STOXX 600 has rebounded more than 50% since crashing to multi-year lows in March 2020, with hopes of a global economic rebound this year sparking demand for sectors such as energy, mining, banks and industrial goods.

London’s FTSE 100 lagged regional bourses on Friday due to a slump in January retail sales and as the pound jumped to its highest against the dollar in nearly three years. [.L] [GBP/]

French carmaker Renault tumbled more than 4% after posting a record annual loss of 8 billion euros ($9.68 billion), while food group Danone and German insurer Allianz rose following upbeat trading forecasts.

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Sriraj Kalluvila and Shailesh Kuber)

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