The Future of Distribution: Consumer-Driven Channel Management

The Future of Distribution: Consumer-Driven Channel Management published by Datamonitor in January, 2009. This report price starts from US $ 2795.

Introduction

Abstract

Overview

Introduction

The distribution of financial products is increasingly dynamic and banks need to adapt to changing consumer preferences especially within the current environment.

Scope

Analyzes how an enhanced focus on profitability will play an important part for the future of banking channels. Provides insight on why and how some channels are expected to grow or decline according to changing consumer needs. Uses Datamonitor' s Consumer Megatrends framework to highlight consumers' changing attitudes in communicating with financial institutions. Assesses new technological advancements and how these might influence the distribution of financial products in the future.

Report Highlights

Banks are moving away from the traditional transactional teller model to offering an advice-led approach in branches in order to stimulate cross-sales.

Datamonitor predicts that most banks will increasingly offer customers safe and simple ways to apply for a complex financial product online.

Mobile phones, especially smart phones, will have a very important part to play in the future of bank distribution. Most of the innovation in this space will come from financial institutions in developing countries where newer and more agile core systems allow greater adaptability to technological change.

Reasons to Purchase

• Provides thought-provoking ideas and arguments as to how new and existing channels will develop in the future.
• Offers the reader insight as to how consumer attitudes will vary in the future.
• Presents global analysis relevant for any bank wanting to assess how other markets are adapting to change.

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • There will be a shift in distribution towards low cost consumer friendly channels
    • Consumers want to access financial products via simple and convenient channels
      • Consumers would prefer to use channels that offer comfort and safety
      • Customers want to use the most convenient channels for their banking
    • Banks are going to cut costs in light of the credit crunch
      • Banks will make products more channel specific
      • Multi-channel offerings were previously assumed to be the best strategy for banks to maximize revenue
      • Global online banking technology will see continued investment despite a projected dip in 2009
  • Therefore, traditional channels are going to remain important for selling complex products
    • Branches will remain popular channels because of the simple and safe service they provide
      • Only one-fifth of consumers use branches exclusively for transactions
      • To improve customer relationships, branches will become more advice-based
    • In line with customer preferences both call centers and direct mail will change in purpose
      • Call centers will become more service and enquiry based but they will still remain useful for cross-selling
      • Direct mail distribution will diminish as this channel will solely be used for marketing and cross-selling
  • Technologically advanced channels are experiencing surging demand
    • Online distribution channels are becoming more personalized
      • Internet banking penetration is becoming widespread in developing countries
      • Online product agreements will grow in popularity
      • Intermediaries will focus on the online channel for the distribution of products
      • Internet-based advisors are experiencing greater traffic as a result of increased financial uncertainty
      • Security will remain a prevailing issue for the online platform
      • Direct virtual banks offer consumers the possibility of fully compatible internet banking
    • Mobile phones offer portable banking services without the requirement to visit a branch
      • Similar to the online platform, mobile phone banking is subject to security concerns
      • The extensive use of mobile phones in developing regions will continue to drive growth
      • Lloyds TSB and Citibank have led the way so far for mobile banking services
      • Consumers will utilize SMS services for balance maintenance rather than product applications
    • If security concerns are overcome, ATMs could become popular channels of distribution
    • TV banking will disappear as a distribution channel but games consoles offer some potential for banking
  • APPENDIX
  • Supplementary data
  • Definitions
    • ATM
    • Intermediary channels
    • Mobile phone banking
    • Non-standard channel
    • Remote channels
    • Smart Phone
    • TV banking
    • Virtual banks
    • Web 2.0
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
• List of Tables
  • Table 1: Sub-regional online IT expenditure, 2008
  • Table 2: How initial contact was made to open a current account, 2007
  • Table 3: Bank branch usage for transactions, 2007
  • Table 4: Number of reported phishing incidents targeted against UK banks and building societies, H1 2005--H1 2008
• List of Figures
  • Figure 1: 80% of customers use branches to open a current account, 2007
  • Figure 2: All regions will experience a dip of expenditure into online channels, 2008
  • Figure 3: 18% of customers do not use branches for transactions, 2007
  • Figure 4: More than three quarters of customers are worried about staying within their overdraft limit, which explains why they are visiting bank branches more for advice, 2008
  • Figure 5: RBS' s chat now with a loan advisor icon is made available to anyone accessing the website
  • Figure 6: Number of reported phishing incidents targeted against UK banks and building societies H1 2006-H1 2008
  • Figure 7: ICICI' s B2 Branch-Free Banking website

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