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THE OFFICE OF THE FUTURE CHANGES THE FACE OF BANKING IN RUSSIA

Yaroslav Popov

Moscow-based interactive marketing agency Engage (www.iengage.ru), a member of Digitas network, works with Russia’s Sberbank to modernise everyday banking. Yaroslav Popov, the company’s Managing Director, explains how advanced interactive technology improves customer experience and the perception of the brand.Yaroslav Popov

With 25,000 branches, nearly 300,000 staff and 70 million customers (this equals to half of the Russian population), Sberbank is the biggest bank in Russia and one of the biggest in the world. It’s now also the country’s most popular bank, although this hasn’t always been the case.

Historically, the Russians didn’t trust banks. In the last two decades, we had several banking and financial crises, when people lost their savings every single time. Most, therefore, didn’t keep their money in a bank for any length of time – they would simply go to an ATM as soon as their salary arrived, take the money out and keep it somewhere in their homes. On top of that, even though the Sberbank branches could be found anywhere and everywhere, they were ramshackle, with long queues, rude staff and bureaucratic processes. For most Russians, going to the bank was like going to the doctor – you only went when you had to.

The bank started to modernise in 2008 and, after three years, they reduced the queues by 38%, became the lead card issuer in Europe and invested in new, high-tech branches. Some branches featured 3D face scanning at ATM machines and, in terms of such new technologies, two years ago Sberbank were already way ahead of Europe and perhaps the rest of the world, too. But, although the bank now turns around 80% of all Russian money, the revolution isn’t over and both the bank and the government are continuing to try and position Sberbank as the most modern institution of the Russian economy. To achieve this, further work is required on remodelling the consumer behaviour and improving the customer experience at branch level.

The Office of the Future on Russky Island
By employing the latest in digital technologies, we’ve helped the bank design and create a thoroughly modern branch. Officially called The Office of the Future, it opened in September 2012 on Russky Island in Vladivostok, the largest Russian port on the Pacific Ocean. At the time the city was hosting the 24th Summit of the Asia-Pacific Economic Cooperation (APEC) forum and the heads of the international delegations, including the United States’ Secretary of State Hillary Clinton, visited the branch before it opened to customers.

The whole concept is based around the customer ‘journey’ (how the customer acts and moves within the branch depending on their needs – for example, the ‘steps’ they ‘take’ when they come in to open an account differ from the steps they take when they just want to make a money transfer), and implements interactive technology to make this ‘journey’ easier and better.

At the beginning of their ‘journey’, what the customer sees even before they walk inside the branch, is a high-resolution interactive video wall displaying Russia’s landscapes of lakes, hills and snow-capped mountains, different time zones and the weather. Against this backdrop, infographics present financial information such as the Central Bank’s exchange rate, the MICEX stock prices and the precious metals rate chart, and the customer can get more detailed information by touching on any of the charts.

When they enter the bank, they are greeted by a touch-screen robot assistant. It’s a terminal that looks a bit like Wall-E from the movie Wall-E: it has eyes, it smiles and shows emotions. Customers can do simple internet banking at this terminal or, for more complex transactions, they get allocated a number in an electronic queue and move to the waiting area.

While waiting, they can sit at interactive multi-touch tables, with an Internet browser, access to Sberbank online and specially created games pointing to a catalogue of Sberbank’s products. For example, there’s a game that takes you travelling and, of course, you will need a credit card, card protection and travel insurance – all these products are integrated into the game, which helps facilitate cross-selling.

When the waiting area screen shows it’s their turn, the customer is directed to another terminal, this one with two interlinked screens. On one screen they carry out transactions, on the other they can see a human assistant who helps them by answering their questions or by showing them remotely which buttons to push. This bank clerk can be based in a call centre anywhere in the world. If this terminal doesn’t fulfil the customer’s needs, they can see a bank clerk within the branch, but the emphasis is on meeting most of their needs with clever, yet still user-friendly, technology.

Happy customers and more cross-selling
By implementing these latest interactive technologies, Sberbank has updated its once-conservative and stuffy image, and brought the customer experience well into the 21st century. Its customers now interact with the bank more openly and more frequently, and have fun doing it. They also buy more financial products from Sberbank, which was the second objective of this exercise – when you already have 70 million customers, it’s not so much about attracting new ones but about increasing cross-selling to the existing ones.

We are now discussing with Sberbank how to roll out the technologies implemented on Russky Island on a larger scale across Russia. Obviously, the investment into this showcase branch was considerable and may not be repeated elsewhere, but we can scale the technologies down to serve the same task: encouraging customer interaction and cross-selling.

Finally, are the Russky Island’s customers happy? The bank certainly thinks so. After all, some of the cameras installed measure their happiness levels.

Yaroslav Popov is MD at Engage (www.iengage.ru), an interactive marketing agency. Founded in 2010 in Moscow, Russia, and affiliated with the leading international network Digitas, the agency provides a mixture of digital creative, strategy and technology. Its current clients include Nissan, Sberbank, Bayer, Amway and Sanofi Aventis.

 

 

 

 

Banking

What does the future hold for accessing earnings? Introducing the world’s first Earnings on Demand payment and debit card

What does the future hold for accessing earnings? Introducing the world’s first Earnings on Demand payment and debit card 1

By James Herbert, CEO & founder, Hastee

Let’s begin by looking at how our brains are wired. Think about the hunter-gatherer mindset: when we expend effort, we expect an immediate reward.

It’s therefore no surprise that over time, different areas in society have adapted to our nature as humans. Almost everything we want, we can get on-demand. Whether it’s instantly streaming movies on Netflix, online shopping from Amazon, or fast-food delivery from the likes of Just Eat. And, because of such technological innovations our expectations have accelerated when it comes to the pace of delivery. This isn’t individual to us as consumers in our day-to-day lives, it’s also reflected in the workplace. We ultimately want work to work for us.

Part of this of course comes down to accessing wages. Workers should be able to access a portion of their earned wages whenever they need it, in advance of the monthly pay cycle – whether to help during challenging times or in day-to-day life. We solved this solutionBut, to take this up a level, ready for the future, we introduced the world’s first Earnings on Demand contactless debit card, powered by Visa – giving users access to their accrued earnings in real-time, with the card’s balance dynamically increasing every day they work.

So what is the card, and how will it change how we access earnings in the future?

The basis is very much the concept of Earnings on Demand. At university I set up a company called Brightsparks to connect students with work opportunities so they could earn money. Yet I noticed a common trend. With students often having to wait for the monthly pay cycle to get their earnings, many were having to turn down work simply because they couldn’t afford the travel day-by-day. It became very apparent that not having £20 today could stop them earning £200 tomorrow.

It struck me that payday itself doesn’t have to be a rigid construct that people have to wait for. But this isn’t specific to students. Liquidity is a widespread issue faced by people in all industries and of all ages, and according to our most recent Workplace Wellbeing Study, 82 per cent of people turn to high-cost methods of financing to tide them over when needed.

The Hastee Card effectively makes wages directly accessible: it simply lets people spend a portion of  what they’ve already earned.

Some people might wonder why they’d want to step away from the standard monthly pay cycle. But consider this: the monthly payroll (via a cheque) only came about in the 1960s as an Act of Parliament. Before this, most people were paid weekly in cash. The first major firm that shifted to monthly payments did it for cost-cutting. It worked for the employer more than the employee. In fact, that firm’s employees had rejected their employer’s change of payment type when it was first trialled a decade before (look up ‘Pye Radio’). So the way that workers and organisations interact around pay is not set in stone – it changes as technology and society shifts.

The way we perceive and use money keeps evolving. Apple Pay, Monzo, and PayPal have completely changed the way payments can happen, yet payroll still remains largely unchanged. It’s only a matter of time before disruption becomes more widespread.

Looking at it from the employer side, it has its benefits too. Before the climate changed, businesses were accommodating enhanced workplace benefits such as no-desk policies, flexible or remote working. In all cases by businesses offering more, they tend to see a more engaged, happier and less financially stressed workforce – leading to increased productivity.

Earnings on Demand is ultimately a perk that presents an ethical alternative to high-cost credit options such as payday loans, credit cards and overdrafts. And existing solutions offer zero impact on payroll processes, zero impact on the cashflow of the business and are designed for quick, simple integration.

The Hastee Card is an evolution of this all – preparing for the future. It builds upon and enhances the user experience by reducing friction and offering immediate spending power as well as a path to greater benefits such as cashback and rewards in the not-to-distant future.

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Banking

Going branchless: How banks can keep customers coming through the virtual doors 

Going branchless: How banks can keep customers coming through the virtual doors  2

By Richard Kelsey, Head of Software Sales at Backbase

Though you might be familiar with the popular seaside town of Newquay, you may not be familiar with its historic financial district aptly named, Bank Street. Dozens of banks and building societies have dominated this area since the late 1800s. However, the street hit the headlines recently as, 120 years after the first bank opened its doors, the last bank closed them.

This is not new. Bank closures have been part of the news agenda for years, and now, COVID-19 has further accelerated the physical turning into the digital. Across the globe, banks have had to close or limit the operating hours of their in-person locations, forcing banks to digitise at speed. Keeping the pipeline of digital sales flowing for new clients, increasing digital product origination and facilitating those cross-sell journeys to customers is key to survival.

Digital take up

Delivering seamless digital customer journeys was already a fast-growing priority for banking and wealth management organizations pre-pandemic. Research shows that 38% of customers stated UX as the most important factor when choosing a digital bank. In response, banks have been investing in digital technology and collaborating with third-party providers as they strive to offer a superior customer experience and stay competitive. But the global lockdowns – which have restricted people to banking digitally – have turbocharged these trends. Growing demand for digital onboarding, and digitized services to support the ongoing customer journey, must be matched by effective capabilities though.

Plugging the leaks

Conversion leakage is a particular problem during the digital client acquisition process. With branches shuttered during the coronavirus lockdowns, and subsequent openings and customer footfall likely to be severely limited for the foreseeable future, this leakage presents a major, and costly, challenge as institutions seek to convert digital sales and boost their return on investment.

The key is understanding why leakage happens in the first place and time and time again, there are three main trends that cause the most problems:

  1. Switching from a customer’s current provider is too difficult (for example, in transferring bill payments and direct debits).
  2. The digital process is too cumbersome (particularly where existing offline processes are simply put online).
  3. Customers lack human touchpoints and advice when they need it (especially for more complex products).

Combating these levels of leakage requires firms to take an outside-in approach, to see the process from the customer’s perspective. From this viewpoint, they can design a more customer-friendly experience that streamlines the job at hand.

One way to simplify the acquisition journey is to incorporate human/AI advisor interventions at points of friction, where customers may become stuck. Another is to adopt retargeting strategies that address customers who abandon the application process partway – for example, by storing their details in a CRM system and sending them notifications to complete the application, or referring them to an outbound call centre employee who can pick up the process by phone. Such approaches can boost completion rates by 40%, delivering substantial benefits to the bank.

Stronger digital growth

Banks’ return on tangible equity has plateaued globally at approximately 10.5% over the past decade, and the lower-for-longer interest rate environment will add to the pressure. Addressing cost-income ratios has become a matter of urgency.

Firms now face a strategic inflection point. Continuing with old business-as-usual practices will leave institutions struggling to attract new (especially younger) clients, while grappling with an exodus of existing customers and an overburdened cost base. But by digitising processes to enhance the client experience, banks and other financial institutions can increase their revenues and reduce costs, and have a loyal customer base who don’t feel the impact of the branchless bank.

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Banking

Shawbrook Bank “cautiously optimistic” as it Publishes Half Year Report for 2020

Shawbrook Bank “cautiously optimistic” as it Publishes Half Year Report for 2020 3
  • Financial performance impacted by the pandemic
    • Expected credit loss (ECL) charges of £45.8 million recognised on loans and advances to customers
    • Profit before tax (PBT) was impacted by the adverse effects of COVID-19 and the subsequent provisions set aside, reducing by 89% to £5.9 million
    • Customer deposits rose by 25% to £7.6 billion while capital remained strong with a CET1 ratio of 12.3%
    • A total of 15.9k payment holidays granted across the Group
  • The specialist bank continued to operate effectively through COVID-19
    • 98% of employees moved to remote working within days and no staff furloughed
    • Successfully achieved accreditation under UK Government’s CBILS
    • Continued investment in technology to digitalise the business
  • Shawbrook “cautiously optimistic” as momentum begins to return to certain specialist sectors

Shawbrook Bank has today (Monday 10 August 2020) published its half year financial results for the period ending 30 June 2020.

The specialist bank confirmed it had set aside £45.8 million of provisions to provide for potential future loan impairments caused by COVID-19. The bank reported it had also granted a total of 15.9k payment holidays to support its customers through the pandemic, of which 10.8k remained in force at 30 July 2020.

As a result of such provisions, the bank’s profitability was impacted with a reduction in PBT by 89% to £5.9 million.

Despite the challenging market conditions, the bank retained its active position in the UK savings market, increasing its retail savings deposit base by 25% to £7.6 billion. During the period, Shawbrook also successfully completed a £75 million Tier 2 re-financing to further optimise its capital structure.

Ian Cowie, Shawbrook Bank’s Chief Executive Officer, said that COVID-19 has had a clear impact on the bank’s financial performance, but Shawbrook remained in a position of strength.

He commented: “Prior to COVID-19, the Group had continued to make good financial progress, starting 2020 with a strong balance sheet and prudently positioned capital and liquidity base.

“To further optimise the Group’s capital structure, during H1 2020 we initiated a Tier 2 refinancing and, despite the challenging market conditions, successfully completed the £75 million issuance in July.

“We have also maintained our active position in the UK savings market. However, the longer-term economic impacts of the pandemic remain hard to predict and as a result we have recognised expected credit loss charges in the period on loans and advances to customers of £45.8 million and on loan commitments of £1.5 million.

“While this has clearly had an impact on profitability, our capital strength positions us well to support our customers and grow our business in line with appetite as we enter the second half of the year.”

Throughout COVID-19, Shawbrook maintained full operational functionality, with no staff furloughed and 98% of employees transferred to remote working within days of the UK lockdown being announced.

The bank adopted a series of concession opportunities across its product range to help alleviate the financial impacts of COVID-19 on its customers. During this time, Shawbrook also successfully achieved accreditation to the UK Government’s Coronavirus Business Interruption Loan Scheme (CBILS) to provide further funding support to its SME clients.

Mr Cowie added: “Since the outbreak of COVID-19, our focus has remained on supporting our staff, customers and partners while at the same time safeguarding the long-term sustainability of our business.

“When the UK lockdown was announced in March 2020, we acted with speed and agility, moving to an almost entirely remote operation within days. Led by a stable and experienced management team and with the support of new and existing technology, we have continued to operate effectively throughout this period.”

Throughout the first half of the year, the bank also continued to identify investment opportunities to further digitalise its proposition, with a core focus on its SME offering.

Mr. Cowie added: “Notwithstanding the pandemic, we have continued to invest in our business to help drive our strategic ambition to become the UK’s Specialist SME Lender of Choice. As well as the ongoing deployment of targeted digital solutions across the Property, Consumer lending and Savings businesses, our investment in the development of a new growth platform in our Business Finance franchise will serve to further modernise our offering, delivering an enhanced customer journey as well as significant operational efficiencies.”

Looking to the future he continued: “Although significant uncertainties regarding the broader macroeconomic impact and pace of recovery remain, we are cautiously optimistic in our outlook as we start to see signs of momentum returning to certain of our specialist sectors.

“Our management expertise and prudent approach to credit decisioning, combined with investment in our digital propositions, means we are well positioned to adapt and respond to opportunities as they arise throughout the second half of the year.”

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