World Retail Banking Report 2006
15 March 2006
Local Prices for Banking Services Decline 1.5%
Regulation drives pricing convergence in eurozone banking but biggest cuts seen in highly competitive US marketplace
March 15, 2006 - Prices for banking services fell 1.5% for active users worldwide during the past year with the average price for active users of banking services now €76, down from last year’s figure of €78. These are among the key findings from the third edition of the World Banking Report from Capgemini, ING and the European Financial Management and Marketing Association (EFMA), which presents an annual index of pricing for basic consumer banking services across national markets. This year the report covers 142 banks in 20 countries and includes Ireland for the first time.
A key finding from this year’s Spotlight study, a feature of the annual report, shows retail bankers are looking seriously at the potential for internet and other remote channels with 41 leading banks saying they expect to make a third of sales outside their traditional high street branches by 2010.
The segmentation of customers into three categories of usage patterns is a new feature for The 2006 World Retail Banking Report and highlights tremendous variations in how much those customer groups pay for banking services, particularly in mature and competitive markets such as the US. The three categories are typically spread across the customer base of a bank as follows: less-active (20% of the customer base), active (60%) and very-active (20%).
Bertrand Lavayssière, managing director, Global Financial Services at Capgemini, comments: “A number of trends continue in this year’s report, including the decline of prices in the US that is driven by a highly competitive marketplace. Meanwhile regulation such as the Single Euro Payments Area (SEPA) initiative continues to encourage convergence of pricing in the eurozone. Banks in European countries outside the eurozone - including the UK - are more in line with the ‘tailored’ approach to pricing adopted in the US, compared with the ‘one-size fits all’ approach that is common in the eurozone.”
Prices in the eurozone vary the least between customer categories where least-active users paid a multiple of 2.1 more compared with very-active users. This compares to to multiples of 4.3 in the US and 4.6 in Asia Pacific.
The price for services paid by “very-active users” fell more than 3% on a worldwide average. For very-active users prices in non-eurozone European countries fell by 4.1% between 2005 and 2006 compared with a fall of 3.9% in eurozone countries, but the annual weighted price of core services by geographic area was €84 in non-eurozone countries compared with €73 in the eurozone.
The biggest lever for cheaper banking services in the eurozone was a sharp cut in the price of online banking (-28%). In the US, a reduction of 27% in means of payment was driven by a cut in fees for direct debits.
In Asia-Pacific, an overall rise of 3.4% in local profile prices for active users was driven by an increase in account management fees. In particular, China began to charge for online banking.
Despite those regional differences, the report shows significant reductions in multiple channels and payment methods including direct debits (-12%), call centres (-20%) and online banking (-23%). The biggest increases were for services such as stop payment services (up 22% for cheques and 16% for debit cards).
These findings are underlined by a parallel Spotlight study into remote channels carried out by Capgemini with executives in 41 leading retail banks across the globe. The Spotlight study found that retail customers worldwide increasingly buy products and services through remote channels rather than in branches. Banks now expect to make 33% of sales through remote channels by 2010 – compared with just 6% in 2000. The trend holds true for all products, from simple current accounts through to more complex mortgage and insurance products.
Bertrand Lavayssière comments: “This demonstrates excellent conditions for flexibility in customer service and multiple channel approaches. Some banks are visibly trying to redefine their interactions with customers, directing them towards automated channels for common operations and reserving branches for more advanced services. A new customer relationship model is emerging, which means that bankers must re-think and re-affirm their global distribution model around three key points: continue to develop competitive remote sales and service offerings; craft outbound operations with greater precision while leveraging inbound customer contacts; and adapt branches to deliver key ‘account moments’ and enhance relationships.”
Hans Verkoren, Global Head of ING Direct and Member of the Executive Board of ING Group said: “With more countries surveyed and a breakdown of customers based on usage patterns, the 2006 World Retail Banking Report offers an even more detailed view of the prices of basic banking services. As a global financial services company, ING is pleased to be involved in this in-depth study of retail banking across national markets.”
Click here to download World Retail Banking Report 2006
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About Capgemini
Capgemini, one of the world’s foremost providers of Consulting, Technology and Outsourcing services, has a unique way of working with its clients, which it calls the Collaborative Business Experience. Through commitment to mutual success and the achievement of tangible value, Capgemini helps businesses implement growth strategies, leverage technology, and thrive through the power of collaboration. Capgemini employs approximately 61,000 people worldwide and reported 2005 global revenues of 6,954 million euros.
For thirty years, Capgemini has been solving financial services challenges to achieve better, faster, more sustainable results for our clients. With more than 5000 professionals worldwide, deep industry expertise and unparalleled delivery, we are uniquely positioned to serve the financial services industry. Over 50% of Financial Services companies listed on the Global Fortune 500 trust us to move their businesses forward with proven solutions in consulting, technology and outsourcing. More information about our banking, insurance, wealth management, payments, risk and compliance capabilities is available at www.capgemini.com/financialservices.
ING
ING is a global financial services company of Dutch origin with 150 years of experience, providing a wide array of banking, insurance and asset management services in over 50 countries. Our 115,000 employees work daily to satisfy a broad customer base of individuals, families, small businesses, large corporations, institutions and governments. Based on market capitalisation, ING is one of the 15 largest financial institutions worldwide and in the top 10 in Europe.
ING is a major financial services company in the Benelux home market. ING services its retail clients in these markets with a wide range of retail banking, insurance and asset management products. In our wholesale banking activities we operate worldwide, but with a primary focus on the Benelux countries. In the United States, ING is a top 10 provider of retirement services based on sales and assets under management. In Canada, we are the top property and casualty insurer based on direct written premium. ING Direct is a leading direct bank with 15 million customers in nine countries. In the growth markets of Asia, Central Europe and Latin America we provide life insurance. We are also a large asset manager with assets under management of more than EUR 500 billion. ING Real Estate is the largest property company in the world based on its total business portfolio. Visit www.ing.com for more information.
The European Financial Management & Marketing Association
The European Financial Management & Marketing Association is a not-for-profit association with a membership uniquely composed of banking and financial services organisations in Europe. EFMA seeks to promote innovation in the banking and financial communities by fostering debate and discussion in a setting removed from the pressures of commercial competition. Through meetings and an open exchange of information, EFMA facilitates dialogue and collaboration among its members, creating a forum for the recognition and study of best practice.
EFMA is funded by membership fees and income earned from events and services. The fees paid by members finance an array of services strictly reserved for members. The income earned from supporting activities enables the association to reduce these fees. This original arrangement maintains EFMA’s neutrality, protecting programs and activities from commercial pressures and ensuring a standard of program quality that is highly valued by members. The loyalty of EFMA members, representing over three quarters of the largest banking organisations in Europe, is a testament to its effectiveness in performing this mission. Visit www.efma.com for more information.
ING Group press contact:
Mark Goedbloed
Tel: +31 20 541 5469
EFMA press contact:
Patrick Desmares
Tel: +33 1 47 42 69 76
Capgemini press contacts:
Sarah Rowan, Citigate, Dewe, Rogerson
Tel. +44 20 7 282 1049
Karen Cohen, Capgemini
+1-631-757-5895
