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HOW SHOULD RETAIL BANKS SUCCEED WITH THE MIGRANTS MARKET?

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EFMA Migrants

In light of new initiatives concerning the Migrants Market launched over Europe in the past 3 years, Kurt Salmon and the Efma decided to launch a new study dedicated to this market.

Figures speak for themselves! With more than $400 billion remittances in 2013, +8.8% per year expected on 2013-2015, barely impacted by North countries moribund economic situation, exchange rates variation or oil prices, the potential of this market is no longer to be demonstrated.

HOW SHOULD RETAIL BANKS SUCCEED WITH THE MIGRANTS MARKET? 3

And if we are to consider the conclusions of our previous study, the financial potential of this market goes far beyond money transfer.

If we take a look at the market in 2013, it seems that several European banks, including very big ones, fully realized the potential of this market.

Thus, the first part of the study presents recent evolutions of the market. It is based on our extended research capacity, permanent watch and solid benchmarks we use for our daily delivery.

For the second chapter, through interviews with sales and marketing managers, we decided to focus on three successful European players with extreme positioning towards Migrants but complementary approaches to provide a big-picture view of the sector.

  • BNP Paribas, which addressed this market to build synergies across its entities, bring value to its retail customers and encourage cross-selling.
  • Deutsche Bank, which launched a complete affinity offering for the Turkish community in Germany, considering it as a full segment.
  • Extrabanca, the first pure player in Europe dedicated to Migrants, which proposes a model that aims at serving all foreign communities living in Italy, both families and businesses.

As well supported by our market watch and through interviews with experts, the Kurt Salmon Point of View provides banks with some key points to succeed in targeting this kind of market:

  • Rethink how they have to address the migrants market. Each community wants to preserve its own culture, its own identity, but at the same time, they want to be integrated into the host country. Then, it is important to gain their trust: not only adopt a specific marketing and distribution approach to push your banking services but also understand and highlight their values and their distinctive codes are the best way to succeed in this market.
  • From selling to counselling: educate the clients, coach them, and support them. Among the three innovative initiatives detailed in the article, everything is different but all of them choose to focus on the same values: transparency, proximity and trust.

Banks will have to establish a counsellor / counselee relation to reinforce their mutual engagement. Be more present, explain them what they are buying to build trust and keep customers’ loyalty.

  • Migrants’ market analysis teaches us some lessons to successfully address another market: the mass-retail segment. Migrants market is only one window on business opportunities to understand customers’ behaviour towards banking services. Among Migrant market, some segments have similar characteristics to mass-retail one. Mass-retail customers expect overall their bank to answer their essential needs first, without any complexity or over cost: sharing values with them like proximity and give them a warm welcome is a significant first step…
  • “The smaller the target, the higher the profit per customer!  New analytics techniques now provide promising perspectives towards micro-segmentation strategy. Retail banks are putting the migrant market on their top priority agenda, given the growing potential and innovative segmentation tools we now dispose of. Customer need particular attention: providing him tailor-made services is the best way to improve his satisfaction and thus loyalty said Aude Arkam, Manager at Kurt Salmon.  Nowadays, segmentation is more subtle, affinity marketing gets sharper. Then, it is obvious that banks need to redefine their micro-segmentation strategy around new distribution and marketing approaches.
  • “This segment was under considered until now.  But the migrant market is wide: once you have shaped your target, there is room for several simultaneous approaches whether you deliver tailor-made value proposition to a niche with high ROI potential or standard “light banking” services to boost basic client acquisition.” said Patrick Desmares, General Secretary at EFMA

As a conclusion, Kurt Salmon article explains why the Migrants market has climbed from a neglected customer base to the top-5 priority in the retail banks marketing roadmaps. In less than 4 years, marketing tools have drastically matured, to efficiently address this segment:

  • Access to huge quantity of data now enables to explore micro segments with the help of niche experts.
  • “Light banking” model is strongly relevant when you address a new segment, known to be reluctant to complex and engaging banking relationship
  • Dedicated branch or boutique, clusters strategy and digital banking are perfectly adapted to drive Customer experience in branch and remotely, especially when the target is travelling between host and origin country.

This set of marketing trends now put the Migrant segment at the heart of Retail banks marketing, in perfect consistency with initiatives such as cross border offers, “one clic” banking, or “Bottom of Pyramid” approaches.

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 4

(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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Banking

European shares end higher on strong earnings, positive data

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European shares end higher on strong earnings, positive data 5

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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Banking

ECB plans closer scrutiny of bank boards

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ECB plans closer scrutiny of bank boards 6

FRANKFURT (Reuters) – The European Central Bank plans to increase scrutiny of bank board directors and will take look more closely at diversity within management bodies, ECB supervisor Edouard Fernandez-Bollo said on Friday.

The ECB already examines the suitability of board candidates in a so-called fit and proper assessment, but rules across the 19 euro zone members vary, so the quality of these checks can be inconsistent.

The ECB plans to ask banks to undertake a suitability assessment before making appointments, and they will put greater emphasis on the candidates’ previous positions and the bank’s specific needs, Fernandez-Bollo said in a speech.

The supervisor also plans more detailed rules on how it will reassess board members once new information emerges, particularly in case of breaches related to anti-money laundering and financing of terrorism, Fernandez-Bollo added.

Fernandez-Bollo did not talk about enforcing diversity quotas, but he argued that diversity, including diversity in gender, backgrounds and experiences, improves efficiency and was thus crucial.

“Supervisors will consider furthermore all of the diversity-related aspects that are most relevant to enhancing the individual and collective leadership of boards,” he said.

“Diversity within a management body is therefore crucial … there is a lot of room for improvement in this area in European banks,” he said.

(Reporting by Balazs Koranyi, editing by Larry King)

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