Turkish Retail Banking

63
Delivering on the Promise Benchmarking Turkish Banks Performance: EMEA Retail Banking Study 2005 Richard Lowrie Director Banking Strategy SAP AG December 15 th , 2005 Istanbul Trends in Retail Banking

description

 

Transcript of Turkish Retail Banking

Page 1: Turkish Retail Banking

Delivering on the PromiseBenchmarking Turkish Banks Performance:EMEA Retail Banking Study 2005

Richard Lowrie

Director Banking Strategy

SAP AG

December 15th, 2005Istanbul

Trends in Retail Banking

Page 2: Turkish Retail Banking

2

Agenda

Observations

Key Findings EFMA/SAP Retail Banking Study with focus on Turkey

A glimpse of 2010

Conclusion

Page 3: Turkish Retail Banking

3

Observations - Turkish Bank websites:

“The bank in your mind…at every step of the way”

“Our technology, your freedom!”

Page 4: Turkish Retail Banking

4

Business Drivers Today

PRODUCTIVITYDIFFERENTIATION

Sustainable competitive differentiation through process innovation

Speed of innovation and time-to-market

Increased productivity

Regulatory requirements

Outsourcing

Customer retention

Page 5: Turkish Retail Banking

5

Banking: From Differentiation to Productivity

PRODUCTIVITYDIFFERENTIATION

Courtesy to G. Moore’s “Living on the fault line”

INNOVATION STANDARD-IZATION

COMMODI-TIZATIONINVENTION

Mis

sion-

Cri

tica

lA

ctiv

itie

s

Enablin

gA

ctiv

itie

s

IT OutsourcingIT Outsourcing

Legacy-Legacy-

integrated,integrated,

Core Banking, Core Banking,

Back-Office Back-Office

systemssystems

Front EndFront End

MarketingMarketing

CORE CONTEXT

Page 6: Turkish Retail Banking

6

The Seamless Customer-Centric Banking Lifecycle

Sales& Offer

Forecasting & Marketing

Contract Closure

Service & Reporting

Customer- Centric Banking

Customer- Centric Banking

Reporting / AccountStatements:Customer

Helpdesk and Self Services

Acquisition and Cross-Selling

Customer Advisory andContract Closure

Forecasting &Analytics on Customer,

Financial Productsand Services Marketing and

Campaign management

1

2

3

4

5

6

Customer Operationsand Service

Page 7: Turkish Retail Banking

7

Actual Situation in Many Banks: Blocked Loop

Sales& Offer

Forecasting & Marketing

Contract Closure

Service & Reporting

Customer- Centric Banking

Customer- Centric Banking

Reporting / AccountStatements:Customer

Helpdesk and Self Services

Acquisition and Cross-Selling

Customer Advisory andContract Closure

Forecasting &Analytics on Customer,

Financial Productsand Services Marketing and

Campaign management

1

2

3

4

5

6

Customer Operationsand Service

Sales& Offer

Forecasting & Marketing

Contract Closure

Service & Reporting

Customer- Centric Banking

Customer- Centric Banking

Page 8: Turkish Retail Banking

8

IT Challenges In Meeting Business Needs

IT support

Business strategy

IT flexibilityInvestment protection

(CIO)

Implementation gap

Growth and agility (CEO)Compliance (CFO)

Vicious circle

Cost pressure

Quick fixes

Complexity

Increased TCO

Little scope for innovation and investment

in future-oriented IT architecture

State-of-the-art IT systems are not focused towards business needs

Page 9: Turkish Retail Banking

9

Research Objectives

There are many studies taking place in the banking marketplace but few, if any, focus on core banking capability within the context of Customer Management. The objectives of this ongoing research is to:

Conduct an assessment of the current state of the EMEA Banking industry in terms of Core Banking and Customer Relationship Management and provide a ‘state of the nation’ view.

Identify the strengths and gaps of EMEA banks in implementing state of the art "customer centric“ processes

Page 10: Turkish Retail Banking

10

Agenda

Observations

Key Findings EFMA/SAP Retail Banking Study with focus on Turkey

A glimpse of 2010

Conclusion

Page 11: Turkish Retail Banking

11

Participation by Top International Banks

Austria (1)Belgium (4)Belarus (4) Croatia (1)France (2)Georgia (1)Germany (3)Hungary (2)India (3)Ireland (1)Italy (5)Kazakhstan (1) Malaysia (1)Netherlands (1)Nigeria (1)Poland (1)Romania (3)Russia (1)Serbia (4)Slovenia (2)South Africa (3)Spain (2)Sweden (2)Switzerland (1)Turkey (6)UK (5)

Choice criteria: Large international Banks

Source: E

ME

A R

etail Banking S

tudy 2005

20%22%

28% 27%

3%

< 500' 500' - 1 mill. 1-5 mill. 5-10 mill. > 10 mill.

N = 61

Page 12: Turkish Retail Banking

12

People & Organisation (27-30)

Information Technology & Application Systems (Q31-33)

Business Intelligence & Controlling (Q7-12)

Strategy (Q5, 6)

Acquisition(Q15-17)

Advisory(Q18)

Processing (Q19-24)

Service(Q25, 26)

Product & Service

Development(Q13, 14)

Multi-Channel Customer Management

Banking Assessment Topography

Profile / Statistics: Q1-4

Page 13: Turkish Retail Banking

13

0

10

20

30

40

50

60

70

80

90

100

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61

Current and Future Ranking

The graph for the future ranking is getting flat largely i.e. the bank’s performance is expected to converge within the next three years.

Overall score per Bank [%]

Order of Banks (n=61)Current State Expected State (+3 Years)

Source: E

ME

A R

etail Banking S

tudy 2005

Page 14: Turkish Retail Banking

14

Efficiency Ratio

Q2: What is the current cost income ratio of the bank?

30%

23%

28%

11%8%

< 50 % 51 - 60 % 61 - 70 % 71 - 80 % > 80 %

N = 59

Q2: What is the expected improve of cost income ratio?

N = 59

5%

10%

27%

38%

20%

0%

1 to <3 %

3 to <5 %

5 - 10 %

> 10 %

Source: E

ME

A R

etail Banking S

tudy 2005

About one third of the surveyed banks in EMEA plan to improve their cost income ratio by 5 to 10% within the next three years.

Page 15: Turkish Retail Banking

15

14%

34% 34%

18%

6%

40%38%

16%

0%

20%

40% 40%

0%

50%

17%

33%

0-5% 6-10% 11-15% >15% 0-5% 6-10% 11-15% >15%

IT Investment

Q4: What percentage of your overall Retail Banking costs do you spend on information technology (ongoing & investments)?

Participating Turkish banks spent a higher percentage of their overall Retail banking costs for IT. Different from EMEA this trend is getting stronger.

N = 6

Current State Expected State (+3 Years)

EMEA

Source: EMEA Retail Banking Study 2005

N = 55

Page 16: Turkish Retail Banking

16

0%

20%

40%

60%

80%

100%Strategy

Business Intelligence & Controlling

Product & Service Development

Acquisition

AdvisoryProcessing

Service

People & Organisation

Information Technology & ApplicationSystems

Current State EMEA Future Expected State EMEA

Results per Section – Current & Future Expected State

Participating Turkish banks are ahead of the EMEA group concerning the current state as well as the future expectations.

Source: E

ME

A R

etail Banking S

tudy 2005

Current State Turkey

Future State Turkey

Page 17: Turkish Retail Banking

17

Primary Business Strategy - EMEA

Q5: What is your bank's primary business strategy?

Growth strategy Cost cutting strategy83%

17%

9%

43%48%

22%

33%

12%

0%

33%

Primarilydriven bygrowthstrategy

Externalgrowth bymerger &

acquisition

Newcustomer

acquisition

Cross-sellingproducts &services to

existingcustomers

Primarilydriven by cost

cuttingstrategy

Incrementalprocess

improvement

Broaderlarge-scalebusiness

process re-engineering

Head countreductions

Outsourcing/shared

services

Elimination ofunprofitablecustomers

N = 61

Source: E

ME

A R

etail Banking S

tudy 2005

Most banks in EMEA focus on a growth strategy - mainly achieved by cross selling to existing customers.

EMEA

Page 18: Turkish Retail Banking

18

Primary Business Strategy – Turkish Banks

Q5: What is your bank's primary business strategy?

Growth strategy Cost cutting strategy

83%

17%

0%

60%

40%

0% 0%

100%

0% 0%

Primarilydriven bygrowthstrategy

Externalgrowth bymerger &

acquisition

Newcustomer

acquisition

Cross-sellingproducts &services to

existingcustomers

Primarilydriven by cost

cuttingstrategy

Incrementalprocess

improvement

Broaderlarge-scalebusiness

process re-engineering

Head countreductions

Outsourcing/shared

services

Elimination ofunprofitablecustomers

N = 6

Source: E

ME

A R

etail Banking S

tudy 2005

Participating Turkish banks focus on growth strategy too, but mainly achieved through “New customer acquisition”.

Page 19: Turkish Retail Banking

19

Cross-selling Ratio in Retail Banking

Participating Turkish banks intend to increase the cross-selling ratio by one product per customer within the next three years.

20%

33%

2%

26%

18%

38%

0%

60%

20%

0%0% 0% 0%

83%

17%16% 15% 16%16%20%

Less than 2 2- 2.5 2.6-3 3.1-3.5 More than 3.5 Less than 2 2-2.5 2.6-3 3.1-3.5 More than 3.5

Source: EMEA Retail Banking Study 2005

N = 6

Current State Expected State (+3 Years)

EMEA

Q3: Typically how many of your products do your customers use?

N = 60

Page 20: Turkish Retail Banking

20

Strategic Value of IT

Q6: What is the strategic value added by your current IT systems?

10%

28%

41%

21%

0%2%

51%47%

0%

50%

17%

33%

0% 0%

33%

67%

Strategicdisadvantage

Constrains ourability to deliveron our strategic

promise

Sufficientlysupports our

businessstrategy

Strategiccompetitiveadvantage

Strategicdisadvantage

Constrains ourability to deliveron our strategic

promise

Sufficientlysupports our

businessstrategy

Strategiccompetitiveadvantage

N = 61

Current State Expected State (+3 Years)

Participating Turkish banks feel more constraint by the current IT systems but plan stronger improvement in comparison to EMEA banks.

N = 6

EMEA

Source: EMEA Retail Banking Study 2005

Page 21: Turkish Retail Banking

21

Business Intelligence & Controlling

EMEA Current State EMEA Future Expected State

0%

20%

40%

60%

80%

100%Strategy

Business Intelligence & Controlling

Product & Service Development

Acquisition

AdvisoryProcessing

Service

People & Organisation

Information Technology & ApplicationSystems

Page 22: Turkish Retail Banking

22

13%

54%

8%

49%

38%

0%

33% 33%

100%

25%

10%3%

33%

0%0%0%

None Partial Substantial Complete None Partial Substantial Complete

Customer Information Plan (CIP)

Participating Turkish banks are ahead of the EMEA group andstrongly commit to the implementation of a CIP

N = 6

Current State Expected State (+3 Years)

EMEA

Q8: Do you have a comprehensive and accessible Customer Information Plan covering information value; acquisition priorities;information management and usage?

N = 61

Page 23: Turkish Retail Banking

23

Customer Segment Planning

18% 17%

26%

8%2% 3%

41%44%

0%

17% 17%

33%

0% 0% 0%

83%

31%

10%

33%

17%

Product levelplans only

Customerplans butvalue not

considered

Partially Substantially Completely Product levelplans only

Customerplans butvalue not

considered

Partially Substantially Completely

Participating Turkish banks are slightly ahead of EMEA banks and plan to apply segment planning almost completely within the next three years

Source: EMEA Retail Banking Study 2005

N = 6

Current State Expected State (+3 Years)

EMEA

Q7: Do you create plans that explicitly define strategies for the customer segments you wish to acquire, those you wish to retain and those you wish to develop based on their estimated value to the bank?

N = 61

Page 24: Turkish Retail Banking

24

Transaction & Research Data Availability

11%

23%

34%

22%

10%

3% 2%5%

40%

50%

0%

33% 33% 34%

0%0% 0% 0%

50% 50%

Limited salestransaction data

only

Comprehensivetransactionaldata but no

research data

Gaps inresearch and/or

transactionaldata sets

Easy access toseparate

comprehensiveresearch &

transactionaldata sets

Easy access tocomprehensive

combinedtransaction &research data

Limited sales transaction data only

Comprehensivetransactionaldata but no

research data

Gaps inresearch and/or

transactionaldata sets

Easy access toseparate

comprehensiveresearch &

transactionaldata sets

Easy access tocomprehensive

combinedtransaction &research data

Improved availability of customer relevant data has a high relevancefor all banks in EMEA as well as in Turkey

Q9: Do you have easily accessible customer transaction data and attitude/satisfaction data?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 25: Turkish Retail Banking

25

Customer Data Analysis

3%

31%

22%26%

2%5%

60%

0%

17%

33%

0% 0%

17%18%22%

11%

33%

17%

0%

83%

Customerdata notanalysed

Ad-hoc basicanalysis

Regular,structured

basicanalysis

Regular basicanalysis withad-hoc data

mining

Regular &consistentprocess of

data mining

Customerdata notanalysed

Ad-hoc basicanalysis

Regular,structured

basicanalysis

Regular basicanalysis withad-hoc data

mining

Regular &consistentprocess of

data mining

Regular Data Mining will become a common instrument for customer data analysis in the whole EMEA region

Source: EMEA Retail Banking Study 2005

N = 6

Current State Expected State (+3 Years)

EMEA

Q10: To what degree do you analyze or mine customer data?

N = 62

Page 26: Turkish Retail Banking

26

14%

29%

2%2% 2%

21%

44%

31%

83%

0% 0%0%

33% 33%

17%

34%

21%17%

0%

17%

Unsegmented& not alignedto moments

of truth

Segmentedbut not

aligned tomoments of

truth

Covers keymoments oftruth but notsegmented

For eachsegmentcoveringsome

moments oftruth

Fully for eachsegmentacross all

key momentsof truth

Unsegmented& not alignedto moments

of truth

Segmentedbut not

aligned tomoments of

truth

Covers keymoments oftruth but notsegmented

For eachsegmentcoveringsome

moments oftruth

Fully for eachsegmentacross all

key momentsof truth

Understanding Moments of Truth

Participating Turkish banks intend to catch up with regard to understanding the moments of truth

Q11: To what degree does your market research provide understanding of different customers' satisfaction at each moment of truth?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 27: Turkish Retail Banking

27

18%

25% 23%

31%

48%

33%

50%

0%

17%

66%

16%18%

8%8%5%

17%

0%0%

17%

0%

No customermeasures

exist

Developmentunderway butno measures

yetimplemented

Top-levelmeasures

only

Top-levelmeasures

cascade tosome staff

REAPmeasures

used to drivethe business

No customermeasures

exist

Developmentunderway butno measures

yetimplemented

Top-levelmeasures

only

Top-levelmeasures

cascade tosome staff

REAPmeasures

used to drivethe business

REAP Measures

A cascade of customer management relevant objectives into the organization is desired by the majority of the banks

Source: EMEA Retail Banking Study 2005

Q12: Do you have a clear top-level set of measures that define Customer Management performance for your organization in terms Retention, Efficiency, Acquisition and Penetration (REAP) that cascade to form objectives for departments and individual employees

N = 6

Current State Expected State (+3 Years)

EMEA

N = 61

Page 28: Turkish Retail Banking

28

Product & Service Development

0%

20%

40%

60%

80%

100%Strategy

Business Intelligence & Controlling

Product & Service Development

Acquisition

AdvisoryProcessing

Service

People & Organisation

Information Technology & ApplicationSystems

EMEA Current State EMEA Future Expected State

Page 29: Turkish Retail Banking

29

Customer propositions

67%

33%

0%0%0% 0%

17%

50%

17%17%

64%

3%5%2%

18%

31%31%

12%8%

26%

Completely tocreate

differentiatedproduct &service

propositions

To createdifferentiated

product &undifferentiated

servicepropositions

To createdifferentiated

productpropositions

only

To createundifferentiated

productpropositions

only

Customer needsnot validated

Completely tocreate

differentiatedproduct &service

propositions

To createdifferentiated

product &undifferentiated

servicepropositions

To createdifferentiated

productpropositions

only

To createundifferentiated

productpropositions

only

Customer needsnot validated

There is a strong trend towards the creation of differentiated customer propositions based on validated customer needs.

Source: EMEA Retail Banking Study 2005

N =6

Current State Expected State (+3 Years)

EMEA

Q13: To what degree are validated customer needs used to create differentiated propositions for each customer segment?

N = 61

Page 30: Turkish Retail Banking

30

Banks Infrastructure Capability

10%

24%

47%

6%2%

8%

39% 38%

0%

50%

17%

0% 0% 0%

50% 50%

13%13%16%17%

Little or nocustomisation

Capabilitybeeing

developed

Somecustomisation

only

Full capabilitybut mixed usage

Full capabilityused

consistently

Little or nocustomisation

Capabilitybeeing

developed

Somecustomisation

only

Full capabilitybut mixed usage

Full capabilityused

consistently

Participating Turkish banks seem slightly behind EMEA banks but they intend to catch up within the next three years.

Q14: To what extent can the bank's infrastructure support the efficient creation of customer relevant product bundles?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 31: Turkish Retail Banking

31

Acquisition

0%

20%

40%

60%

80%

100%Strategy

Business Intelligence & Controlling

Product & Service Development

Acquisition

AdvisoryProcessing

Service

People & Organisation

Information Technology & ApplicationSystems

EMEA Current State EMEA Future Expected State

Page 32: Turkish Retail Banking

32

Targeting of Prospects

8%

15%

47%

24%

6%2% 3%

11%

40%44%

0%

50%

33%

17%

0%0% 0%

17%

50%

33%

Little/nocapability totarget non-customers

Capability beingdeveloped

Some capabilityexists

Comprehensive- but onlysometimes

alw ays base onsegmented

profiles of non-customers

Comprehensive- alw ays baseon segmentedprofiles of non-

customers

Little/nocapability totarget non-customers

Capability beingdeveloped

Some capabilityexists

Comprehensive- but onlysometimes

alw ays base onsegmented

profiles of non-customers

Comprehensive- alw ays baseon segmentedprofiles of non-

customers

Participating Turkish banks are about to develop the required capabilities and intend to get closer to the EMEA sample

Source: EMEA Retail Banking Study 2005

Q15: What ability does your bank have to generate campaigns and target these at the customers you wish to acquire?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 33: Turkish Retail Banking

33

18%

31% 31%

20%

7% 8%

20%

65%

17%

0%

50%

33%

0% 0%

17%

83%

More than 12weeks

8-12 weeks 4-8 weeks Less than 4weeks

More than 12weeks

8-12 weeks 4-8 weeks Less than 4weeks

Campaign development timescale

Participating Turkish banks as well follow the trend to target a campaign development timescale of less than 4 weeks

Source: EMEA Retail Banking Study 2005

Q16: How long does it take to deliver a major TIME CRITICAL direct marketing campaign?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 61

Page 34: Turkish Retail Banking

34

Leveraging IT on Inbound Contacts

8%

18%

47%

2%0%

7% 8%

29%

56%

0%

17%

50%

0% 0% 0%

50% 50%

25%

16%17%

Little or nocapability

Capabilitybeing

developed

Somecapability

only

Full capabilitybut mixed

usage

Full capabilityused

consistently

Little or nocapability

Capabilitybeing

developed

Somecapability

only

Full capabilitybut mixed

usage

Full capabilityused

consistently

The expectation is to better exploit the sales potential of inbound contacts within the next three years in the whole EMEA region

Source: EMEA Retail Banking Study 2005

Q17: To what extent do front line staff have Information Technology support to initiate appropriate sales opportunities versus simply responding tocustomer requests?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 61

Page 35: Turkish Retail Banking

35

Advisory

0%

20%

40%

60%

80%

100%Strategy

Business Intelligence & Controlling

Product & Service Development

Acquisition

AdvisoryProcessing

Service

People & Organisation

Information Technology & ApplicationSystems

EMEA Current State EMEA Future Expected State

Page 36: Turkish Retail Banking

36

Product/Service Expertise

6%11%

23%

52%

8%2% 3% 2%

53%

0% 0%

33%

50%

17%

0% 0% 0% 0%

100%

40%

Not at all Insufficientautomation

Inconsistentautomation

Partiallyautomated

Fullyautomated

Not at all Insufficientautomation

Inconsistentautomation

Partiallyautomated

Fullyautomated

Participating Turkish banks fully commit to automated support for front line employees as much as possible

Q18: To what extent do your front line employees have the automated tools to provide personalized service or advice across all Retail Banking products?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 37: Turkish Retail Banking

37

Processing

0%

20%

40%

60%

80%

100%Strategy

Business Intelligence & Controlling

Product & Service Development

Acquisition

AdvisoryProcessing

Service

People & Organisation

Information Technology & ApplicationSystems

EMEA Current State EMEA Future Expected State

Page 38: Turkish Retail Banking

38

Timeliness in Delivering Account Products

11%

3%

19%

39%

28%

3%0%

5%

21%

71%

0% 0%

17%

33%

50%

0% 0% 0%

17%

83%

Variessignificantlyby channel

Over 5 daysin all cases

2-3 days onaverage

Within 24hours

irrespective ofchannel

Immediately(real time) in

multi-channels

Variessignificantlyby channel

Over 5 daysin all cases

2-3 days onaverage

Within 24hours

irrespective ofchannel

Immediately(real time) in

multi-channels

Real time account initiation will be the future standard for whole EMEA

Source: EMEA Retail Banking Study 2005

Q19: What is your ability to deliver current & deposit or savings account products from the time of initial customer inquiry to account initiation?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 39: Turkish Retail Banking

39

Timeliness in Delivering Mortgage Products

18%

11%

3%5%

34%

14%

0%

17%

83%

0% 0%0% 0%

67%

0%

26%

42%

21%26%

33%

Variessignificantlyby channel

Over 5 daysin all cases

2-3 days onaverage

Within 24hours

irrespective ofchannel

Immediately(real time) in

multi-channels

Variessignificantlyby channel

Over 5 daysin all cases

2-3 days onaverage

Within 24hours

irrespective ofchannel

Immediately(real time) in

multi-channels

Significant time to approval reductions aimed within thenext three years in EMEA in general

Source: EMEA Retail Banking Study 2005

Q20: What is your ability to deliver mortgage products from the time of initial customer inquiry to approval?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 40: Turkish Retail Banking

40

Timeliness in delivering Credit Card products

8%

44%

12%5%5%

47%

18%

0%

83%

17%

0% 0%0%

33%

50%

0%

31%

10%

20% 17%

Variessignificantlyby channel

Over 5 daysin all cases

2-3 days onaverage

Within 24hours

irrespective ofchannel

Immediately(real time) in

multi-channels

Variessignificantlyby channel

Over 5 daysin all cases

2-3 days onaverage

Within 24hours

irrespective ofchannel

Immediately(real time) in

multi-channels

Participating Turkish banks do not intend to offer credit card productsin real time, but almost a fifth of the EMEA banks plans to do

Source: EMEA Retail Banking Study 2005

Q21: What is your ability to deliver Credit Card products from the time of initial customer enquiry to approval?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 61

Page 41: Turkish Retail Banking

41

7%15%

54%

2%7%

17%

74%

0%

33%

17%

50%

0% 0% 0%

100%

24%

No commonprocess & no

plans to develop

Recognise need& implementation

underway

Yes - Euro Zoneonly

Yes - allcountries

No commonprocess & no

plans to develop

Recognise need& implementation

underway

Yes - Euro Zoneonly

Yes - allcountries

Payment handling processes

The results for participating Turkish banks are quite similar to the EMEA group

Source: EMEA Retail Banking Study 2005

Q22: Does your organization have common processes for handling domestic & international payments?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 59

Page 42: Turkish Retail Banking

42

Exception Handling for Current Accounts

8%

17%

39%

20%16%

2% 3%

28%

42%

0%

67%

16%

0%0% 0%

33%

50%

25%

17% 17%

Processtotally

manual

Largelymanual

intervention

Someautomation &

overridecapability

Fullyautomatedbut mixed

usage

Fullyautomated &

usedconsistently

Processtotally

manual

Largelymanual

intervention

Someautomation &

overridecapability

Fullyautomatedbut mixed

usage

Fullyautomated &

usedconsistently

Banks expect significant improvements in closing enquiries at first contact

Source: EMEA Retail Banking Study 2005

Q23: How automated is the process for handling exceptions for Current Accounts?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 61

Page 43: Turkish Retail Banking

43

8%

20%

44%

15% 13%

2%5%

38%33%

0% 0%

83%

18%

0%0% 0%

33%

50%

22%17%

Processtotally

manual

Largelymanual

intervention

Someautomation &

overridecapability

Fullyautomatedbut mixed

usage

Fullyautomated &

usedconsistently

Processtotally

manual

Largelymanual

intervention

Someautomation &

overridecapability

Fullyautomatedbut mixed

usage

Fullyautomated &

usedconsistently

Exception Handling for Lines of Credit

Half of the participating Turkish banks intend to consistently use fully automated support in comparison to only one third of the EMEA group

Source: EMEA Retail Banking Study 2005

Q24: How automated is the process for handling exceptions for Lines of Credit?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 60

Page 44: Turkish Retail Banking

44

Service

0%

20%

40%

60%

80%

100%Strategy

Business Intelligence & Controlling

Product & Service Development

Acquisition

AdvisoryProcessing

Service

People & Organisation

Information Technology & ApplicationSystems

EMEA Current State EMEA Future Expected State

Page 45: Turkish Retail Banking

45

11%16%

25%

33%

15%

2%

8%

47%

0% 0%

50% 50%

0%0% 0% 0%

67%

33%28%

15%

None orhardly any

Less than25%

25-50% 50-80% Over 80% None orhardly any

Less than25%

25-50% 50-80% Over 80%

Handling Customer Enquiries

Participating Turkish banks mainly target at a closing rate between 50–80% while almost half of the EMEA banks plan a rate >80%

Source: EMEA Retail Banking Study 2005

Q25: What proportion of customer enquiries, transactions and complaints do your call centre/banking help desk handle & close at first contact?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 61

Page 46: Turkish Retail Banking

46

6%

24% 23%29%

18%

0%

8%

56%

0%

16% 17%

50%

0% 0% 0%

83%

23%

13%17% 17%

No integratedaccountstatus visible

Someproducts/ services insome channels

All products/ services in

some channels

Someproducts/

services in all channels

Yes - for allproducts/

services in allchannels

No integratedaccountstatus visible

Someproducts/ services in

somechannels

All products/ services in

somechannels

Someproducts/

services in allchannels

Yes - for allproducts/ services in all

channels

Real Time Customer View

Participating Turkish banks are ahead of the EMEA banks with regardto real time and channel independent information delivery

Q26: To what degree can customers access a real time, channelindependent view of their portfolio?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 47: Turkish Retail Banking

47

People & Organisation

0%

20%

40%

60%

80%

100%Strategy

Business Intelligence & Controlling

Product & Service Development

Acquisition

AdvisoryProcessing

Service

People & Organisation

Information Technology & ApplicationSystems

EMEA Current State EMEA Future Expected State

Page 48: Turkish Retail Banking

48

Q27: What is the predominant organization model for your retail institution?

11%

26%

5%

37%

21%

2% 3%

50%

32%

0%

17% 17%

33% 33%

0% 0% 0% 0%

100%

13%

Pre- dominantly by Product

Groups

Mix of Product

Groups &Channels

Pre- dominantly by Channel

Mix of Customer

Segments &Channels

Pre- dominantly by CustomerSegments

Pre- dominantly by Product

Groups

Mix of Product

Groups &Channels

Pre- dominantly by Channel

Mix ofCustomer

Segments &Channels

Pre- dominantly by CustomerSegments

Operating Model

Participating Turkish banks strongly commit to apply an organisation model based on customer segments within the next three years

Source: EMEA Retail Banking Study 2005

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 49: Turkish Retail Banking

49

10%

35%

27%

13% 15%

0%

8%

22%

0%

33% 33%

0% 0%

24%

46%

17%17% 16%17%

67%

Known issueswith functionalsilo structure

Relies on co-operation offunctional

heads

Crossfunctional co-

operationsupported

with sharedobjectives/incentives

Crossfunctional

middlemanagement

owner ofCustomer

Management

Crossfunctionalowner of

CustomerManagementat board level

Known issueswith functionalsilo structure

Relies on co-operation offunctional

heads

Crossfunctional co-

operationsupported

with sharedobjectives/incentives

Crossfunctional

middlemanagement

owner ofCustomer

Management

Crossfunctionalowner of

CustomerManagementat board level

Organisation Support for Customer Management

The majority of banks in EMEA intend to support the Customer Management approach by cross functional middle management topic owner

Source: EMEA Retail Banking Study 2005

Q28: To what degree does the organizational structure support the implementation of Customer Management strategy?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 60

Page 50: Turkish Retail Banking

50

8%

37%33%

15%

7%4% 5%

39%37%

17%

33% 33%

17%

0%0% 0%

33%

50%

15%17%

CustomerManagementcompetency

requirementsnot identified

Competencyrequirements

beingidentified

Competencyrequirements

identified &implemen-

tation started

Identified &implemented

for allcustomer

facing roles

Identified &implementedin all relevant

functions

CustomerManagementcompetency

requirementsnot identified

Competencyrequirements

beingidentified

Competencyrequirements

identified &implemen-

tation started

Identified &implemented

for allcustomer

facing roles

Identified &implementedin all relevant

functions

Customer Management Competencies

Participating Turkish banks have higher ambitions to close the gap between customer propositions and job competencies within three years

Source: EMEA Retail Banking Study 2005

Q29: To what degree are job competencies consistent with delivering customer propositions?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 60

Page 51: Turkish Retail Banking

51

32% 32%

24%

7% 5%0%

19%

27% 29%25%

17%

50%

33%

0% 0%0% 0%

17%

83%

0%

Only formallyidentif ied a few

CustomerManagementprocesses

All processesidentif ied - some

SLAs beingimplemented

SLAsimplemented for

all keyprocesses

All processesmeasured

against SLAs

The regularmeasurement of

all processesagainst SLAsused to drive

continualimprovement

Only formallyidentif ied a few

CustomerManagementprocesses

All processesidentif ied - some

SLAs beingimplemented

SLAsimplemented for

all keyprocesses

All processesmeasured

against SLAs

The regularmeasurement of

all processesagainst SLAsused to drive

continualimprovement

Customer Management Processes

Participating Turkish banks do not plan regular measurements against SLAs, while a quarter of the EMEA group is planning that step

Source: EMEA Retail Banking Study 2005

Q30: To what degree are customer based processes identified & managed?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 52: Turkish Retail Banking

52

Information Technology & Application Systems

0%

20%

40%

60%

80%

100%Strategy

Business Intelligence & Controlling

Product & Service Development

Acquisition

AdvisoryProcessing

Service

People & Organisation

Information Technology & ApplicationSystems

EMEA Current State EMEA Future Expected State

Page 53: Turkish Retail Banking

53

Q31: How would you characterize your current infrastructure for Core Banking?

IT Landscape

11%

27%

55%

7%

0%2%

30%

5%

17%

67%

0% 0%0%

50%

0%

47%

16% 16%

33%

17%

Completelydeveloped in-

house

Pre- dominantly

developed in-house

Mixed in-house

development& standardsoftware

Pre- dominantlystandardsoftware

Completelystandardsoftware

Completelydeveloped in-

house

Pre- dominantly

developed in-house

Mixed in-house

development& standardsoftware

Pre- dominantlystandardsoftware

Completelystandardsoftware

There is a clear trend towards standard software in EMEA which is significantly stronger for the participating Turkish banks

Source: EMEA Retail Banking Study 2005

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 54: Turkish Retail Banking

54

Customer Data Capture

7%13%

40%

11%

0% 2%

55%

0%

17% 17%

60%

16%

0% 0% 0% 0%

100%

29%

13%

30%

Little or nocapability

Capabilitybeing

developed

Somecapability

only

Fullcapability butmixed usage

Fullcapability

usedconsistently

Little or nocapability

Capabilitybeing

developed

Somecapability

only

Fullcapability butmixed usage

Fullcapability

usedconsistently

Participating Turkish banks are ahead of the EMEA group significantly and intend to improve their position to the maximum extent

Source: EMEA Retail Banking Study 2005

Q32: How capable are your IT systems in the collection, storage and effective retrieval of customer data?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 55: Turkish Retail Banking

55

Customer Information Updating

15%

29%

16%

24%

16%

2% 3%

34%

48%

0%

17% 17%

33% 33%

0% 0% 0%

83%

13%17%

Greater than1 day for

somechannels

24 hours onaverage

Within hours- all channels

Real time -most

channels

Real time -all channels

Greater than1 day for

somechannels

24 hours onaverage

Within hours- all channels

Real time -most

channels

Real time -all channels

Participating Turkish banks are ahead of the EMEA group and intend to strongly improve their position further

Source: EMEA Retail Banking Study 2005

Q33: How promptly is customer data or information updated across all channels?

N = 6

Current State Expected State (+3 Years)

EMEA

N = 62

Page 56: Turkish Retail Banking

56

Agenda

Observations

Key Findings EFMA/SAP Retail Banking Study with focus on Turkey

A glimpse of 2010

Conclusion

Page 57: Turkish Retail Banking

57

The EIU-SAP Survey: Business 2010

Telephone and online survey, conducted in November-December 2004

577 C-level executives (46%) and senior managers (54%)

50% from Europe, 36% from APAC, 14% from the Americas

Mix of small/mid-size & large enterprises; 60% with >$350m in revenue

Part of a global survey of 4,018 executives in 20+ sectors

Survey complemented by interviews with selected executives

Page 58: Turkish Retail Banking

58

Consolidation will force financial services providers to seek new ways to compete with larger rivals

The ability to adapt strategy and business models quickly will be a critical source of competitive advantage

Firms will focus increasingly on speed of innovation and customer retention to create long-term value

IT will be integral to firms’ ability to boost competitive advantage, not just cost efficiency

In 2010:

The Industry’s View on Future Business Needs

Page 59: Turkish Retail Banking

59

How the Role of IT will Change

IT is viewed as central to organisations’ future ability to adapt business models, and increasingly as a source of competitive advantage

84% of financial industry executives view IT as critical to firms’ ability to change how they operate over the next five years

59% view IT as becoming more of a competitive tool than simply a driver of cost efficiency; a substantial majority of APAC and US executives (65% and 61%, respectively) hold this view, while European respondents are more equivocal (53%)

Do you agree: “Technology will be critical to organisations’ ability to adapt business model and implement strategy?”

Yes84%

Don't know5%

No11%

Page 60: Turkish Retail Banking

60

How the role of IT will Change – Delivering on the Customer Service Promise

Within the financial services firm, IT’s role will be most critical in helping to improve customer knowledge and servicing

The areas of business in which IT will be most critical in 2010 (Top three responses)

1. Getting me the right information at the right time (63%)

2. Ensuring access to information anywhere (22%)

3. Getting instant alerts on things going wrong (15%)

1. Getting me the right information at the right time (63%)

2. Ensuring access to information anywhere (22%)

3. Getting instant alerts on things going wrong (15%)

What executives feel IT should improve upon most to help them make decisionsWhat executives feel IT should improve upon most to help them make decisions

14%

14%

14%

17%

27%

28%

30%

40%

71%

Corporate security

Managing the workplace

Partner & supplier relationships

Team-based working

Sales and marketing

Distribution channels

Finance

New product/service development

Customer relationships/ customer service

Page 61: Turkish Retail Banking

61

Agenda

Observations

Key Findings EFMA/SAP Retail Banking Study with focus on Turkey

A glimpse of 2010

Conclusion

Page 62: Turkish Retail Banking

62

Our Vision

Page 63: Turkish Retail Banking

63

Contacts

 Kay PatzwaldSenior Business ConsultantSAP Business Consulting EMEA

SAP Deutschland AG & Co. KG

T +49-6227-7-47052M +49-160-90822957E [email protected]

If you require further information please contact:

 Richard LowrieDirector Banking StrategyIBU Banking

SAP AG

T +44 208 917-6708M +44 7966-975708E [email protected]