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 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. In the next normal, the percentage of basic banking needs handled in-branch could be as low as 5 percent. 16 Explore options to re-architect decisions for speed by simplifying processes; for example, shifting from sequential consultations with multiple stakeholders to fewer, parallel consultations involving only required leaders. 11 A granular, country-by-country analysis of revenue per retail banking customer, for example, reveals significant differences in product opportunities (Exhibit 2). Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. In the December 2007 to December 2011 downturn, programmatic acquirers (> 2 small/midsized deals/year, with meaningful total market cap acquired [median of 15 percent]) generated a median excess TRS of 1.10 percent vs. 0.89 percent for selective acquirers (≤2 deals/year, where cumulative value of deals is >2 percent of acquirer market cap), -0.04 percent for organic growers (≤ 1 deal every 3 years, where cumulative value of deals is <2 percent of acquirer market cap), and -4.55 percent for large deal acquirers (≥1 deal where target market cap was ≥ 30 percent of acquirer market cap). Source: Capital IQ. We use cookies essential for this site to function well. Use minimal essential Retail banking has already become a digital business, spurred by the rapid spread of broadband access and affordable smart mobile devices. In Italy, Spain, and the US, 15 to 20 percent of customers surveyed expect to increase their use of digital channels once the crisis has passed; in other markets that percentage ranged from 5 to 13 percent. The latter are moving ahead to streamline back-office systems for processing investment transactions after the trade is made. Through these actions, banks can also anticipate peaks in monitoring and collections activity projected for the second half of 2020. projects a drop of 16 to 44 percent for Western Europe. Targeted proactive investments, including plays that offer scale, talent, and complementary assets, can strengthen retail banks’ position going into the next normal. Flip the odds. In reinventing their approach to credit risk, it is important for banks to adopt a sector-specific view for SMEs in particular, given COVID-19’s varied impact on specific verticals. Customer preferences spur retail banking channel evolution. McKinsey & Co published an article analyzing retail banking’s cautious approach to blockchain, especially in comparison to investment banks. As an example, contacting digital-first customers through their preferred channel has been shown to boost installment payment upticks by more than 10 percent, according to a 2018 McKinsey survey. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Use minimal essential M&A can prove an efficient means to deliver such offerings rapidly to market. Many banks have yet to see this mindset shift translate into actual user behavior, McKinsey’s modeling of COVID-19’s impact Retail banks must keep pace with their customers. 2. Roles will expand and shift, necessitating the re-skilling of talent. tab. Autoren: Philipp Koch, Max Flötotto, Ursula Weigl, Benjamin Köck, Dina Seilern … Examples of economic and social stewardship include helping customers understand their financial situation, rethinking credit strategies to ensure appropriate lending, creating dedicated financing lines to help business solvency, and remaining thoughtful about collections. “Until a few year ago, U.S. regional banks enjoyed a comfortable incumbency in their regional markets,” McKinsey noted in a report. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. The COVID-19 health crisis has reshaped the global economy and society. 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. Flip the odds. Learn about Never miss an insight. If you would like information about this content we will be happy to work with you. Transformation. 6 We strive to provide individuals with disabilities equal access to our website. Digital banking was already on the upswing before the pandemic: 60% of customers under the age of 70 used digital banking tools in 2019, according to a survey from consulting firm McKinsey … Pre-COVID-19 Finalta research indicates that 48 percent of incoming US contact center calls could be re-routed for digital resolution (e.g., transaction, balance and billing inquiries and peer-to-peer fund transfers). Kevin Sneader and Shubham Singhal, “Beyond coronavirus: The path to the next normal,” March 2020, McKinsey.com. 11. Customer Loyalty in Retail Banking | Bain & Company, Inc. The future of retail banking starts with the customer. 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. This creates a rare, mutually beneficial opportunity for banks to rejuvenate their trust-based relationship with society. Among UK SMEs, roughly half express greater urgency to provide online payment options, according to a McKinsey SME Pulse Survey conducted in April 2020. 4 Retail Banking in Asia, McKinsey & Company 5 European Banking Barometer, EY (2016) 6 Retail Banking 2020: Evolution or Revolution, PwC (2014) 7 European Banking Barometer. 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. With a handful of leading retail banks being able to handle 50 percent of all complex needs via remote, we believe 35 percent can serve as a fair mid-term target, with wide variances across markets. The authors wish to thank Ashwin Adarkar, Eva Beekman, Nuno Ferreira, Vito Giudici, Paul Jenkins, Debasish Patnaik, Marcus Sieberer, David Tan, and Marco Vettori for their contributions to this article. 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. And Stephanie Hauser and Zubin Taraporevala are senior partners, all in McKinsey ’ s modeling of COVID-19 s. Willingness to use new channels would like information about this content we will be challenged to strengthen customer relationships will! Shift the customer projects a drop of 16 to 44 percent for Western.. 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