In retail banking, digital technologies are eroding traditional advantages and opening the door to new competitors. Our retail banking consulting teams help clients master the skills vital for competing in this charged environment—against both their peers and newcomers—and for remaining relevant to their customers.
Retail banking players were already struggling with unsustainable cost structures and eroding revenues when the COVID-19 pandemic struck. The crisis intensified these challenges and accelerated the need for more comprehensive change. With customers moving to digital channels more rapidly than ever, and both online and mobile banking use soaring, banks must meet ever-evolving customer needs with a new sense of urgency.
The disruptions catalyzed by the pandemic will likely prove permanent, weakening retail banks’ position as the go-to provider of financial services. As nonbank insurgents make deeper inroads in distribution, traditional banks must act.
To safeguard their relevance, retail banks must redesign their solutions and operations to produce the results that customers want. BCG helps its retail banking clients meet this imperative and achieve impressive results.
BCG’s banking consulting experts bring a proprietary suite of proven solutions and powerful tools to every engagement, including the following offerings:
Front-to-Back Digitization
We help our retail banking clients define and execute a cohesive set of digitization initiatives aimed at improving the customer experience, overall efficiency, and the effectiveness of controls. This offering addresses both the customer journey and the bank functions that design and deliver that journey. It combines customer-engagement, channel, and product improvements with technology and operational measures—all utilizing cross-functional, agile ways of working. Banks deploying this solution have reduced costs by 20% to 30% while simultaneously lifting their net promoter scores by 20 to 30 points and enhancing revenues by 5% to 10%.
Retail Analytics
Our retail banking consulting teams partner with banks to capture customer loyalty and cross-selling opportunities, as well as to overcome challenges such as decreasing use of branches and increasing customer churn. The offering uses analytics to identify precise signals from customer data. Banks can then craft messages that target specific customer needs, build a marketing operations engine to manage and deliver multichannel messaging, and manage ROI. Banks using our analytics offering have boosted sales through next-best solutions by 30% and reduced customer churn by 5% to 10%.
Digital Bank Accelerator
Multidisciplinary BCG teams help our retail banking clients build a digital bank to better meet their customers’ needs; for example, by providing more personalized and instant services. We combine retail banks’ traditional strengths—such as trust, security, and a wide product range—with the advantages of digital technology, including easy-to-use, convenient, and constantly upgraded services. Our clients have improved their cost-to-income ratio from 50% to 30%, boosted digital customer acquisition and sales from 30% to 90%, and increased straight-through processing from 40% to 80%.
Bionic Distribution
Our retail banking consulting teams help clients optimize their branch networks to reflect new realities, including the rise of hybrid customer journeys, which combine face-to-face and remote elements as well as branch staff working both within and beyond the walls of the branch itself. Drawing on tools such as our network footprint optimizer, we help clients determine how many branches to operate, as well as where to locate them and in which formats, including which relationship-manager shifts should be virtual versus physical. This disciplined approach has yielded pre-tax profit improvements of up to 40%.
BCG’s retail banking consulting experts operate around the globe. With each engagement, they bring long-time experience and deep knowledge of topics including retail banking strategy, digital disruption in retail banking, operational resilience, retail analytics, AI at scale, and radical cost management.
Managing Director & Senior Partner
Düsseldorf
A retail banking client asked BCG to help implement a digital transformation program aimed at enhancing the customer journey and reducing costs. Deploying our proven methodology, we addressed customer-experience and cost-base challenges in three customer journeys—consumer onboarding, credit cards, and home ownership—which helped the bank accelerate the opening of new accounts across channels, decrease end-to-end costs by 20%, reduce credit-card-related complaints by 10%, and deliver new features to customers two to three times faster than before.
Sustainability is moving up the priority list for all retail bank stakeholders. What does a “sustainable” bank look like?
The pandemic has accelerated the inevitable; the AI revolution is overtaking banking as we knew it. Banks that don’t transform stand to lose market share to faster, nimbler tech players.
