Banking Experience

The Future of Branches

2009-05-18T21:02:00.000-07:00

View more presentations from Jeffry Pilcher.

“The Future of Branches” is another presentation by Jeffry Pilcher, Publisher of The Financial Brand and President/ICONiQ. It takes a look at trends in retail branch design, and examines the best practices for engineering a branded financial environment. The presentation features 50 photos and dozens of examples.

Here’s a summary of the main points.
- With your next branch, be deliberate, strategic and intentional.
- Don’t just do “what you’ve always done.”
- You need to build your branch around interactions, not transactions.
- Think like a retailer. Move from “fortresses” to “stores.”
- Cross-sell your financial products and services.
- Think in terms of retail zones. Create retail destinations.
- Create brand theater.
- Have a retail street presence.
- You can create a secure environment without compromising your retail focus… and without turning into Fort Knox.
- Make it enjoyable.
- Make it memorable.
- Differentiate.

The Idea is merely not about designing the brick yet also the social interaction of Customers get by going into branches. Staff are also the most important aspect of the in-branch experience (see slide 11).

The presentation was focused on design, as promised in the presentation’s title, “The Future of Branches - Trends in Retail Financial Branch Design.” And there were a number of tips in the presentation about how to use branch design to maximize sales. It was also pointed out that the examples included in the presentation aren’t necessarily recommendations. They are used for illustrative purposes only. Many are included simply to show extremes. And some are examples of what not to do (such as UNCB’s Starbucks-style “Gold Cafe”).

The presentation was never designed to be an all-encompassing exploration of branches. The Author, packed what he could into this webinar (which was intentionally built to be visually-based).

Stay tuned for Issues concerning staff and the strategic role/purpose of branches, which hopefully shall be considered by the Author for future “Future of Branches” presentations.

Source : http://thefinancialbrand.com/2009/05/14/the-future-of-branches/

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GLOBAL FINANCE WORLD'S 50 SAFEST BANKS

2009-03-19T21:20:00.001-07:00

New York, February 25, 2009

Such has been the turmoil in the world's banking industry that, for the first time, Global Finance magazine is publishing a mid-year update of its muchrespected Safest Banks listing. A full report on the list will appear in the April issue of Global Finance. The "World's 50 Safest Banks" 2009 were selected through a comparison of the long-term credit ratings and total assets of the 500 largest banks around the world. Ratings from Moody's, Standard & Poor's and Fitch were used.

Global Finance has published its "World's Safest Banks" listing for 17 years and this ranking has become a recognized and trusted standard of creditworthiness for the entire financial world. "The rating agencies have determined these banks have demonstrated a more prudent and sustainable approach to risk than their peers," says Global Finance publisher Joseph D. Giarraputo. "More than ever customers all around the world are viewing long term creditworthiness as the key feature of the banks with which they do business."

Global FInance, which celebrates its 22nd year of publishing in 2009, has 50,000 subscribers and more than 180,000 readers in over 158 countries. This audience includes chairmen, presidents, CEOs, CFOs, treasurers, and other financial officers responsible for making investments and strategic business decisions for large global companies and financial institutions. Global Finance also targets the 8,000 key portfolio investors who control over 80% of all assets under professional management.

For editorial information please contact:

Dan Keeler, Editor, phone: +1 212 447 7900 ext 232, email: dan@gfmag.com

GLOBAL FINANCE WORLD'S 50 SAFEST BANKS

KfW - Germany
Caisse des Depots et Consignations (CDC)- France
Bank Nederlands Gemeenten (BNG)- Netherlands
Landwirtschaftliche Rentenbank - Germany
Rabobank - Netherlands
Landeskreditbank Baden-Wuerttemberg-Foerderbank - Germany
NRW. Bank - Germany
BNP Paribas - France
Banco Santander - Spain
Royal Bank of Canada - Canada
National Australia Bank - Australia
Commonwealth Bank of Australia - Australia
Banco Bilbao Vizcaya Argentaria (BBVA) - Spain
Toronto-Dominion Bank - Canada
Australia & New Zealand Banking Group - Australia
Westpac Banking Corporation - Australia
Banco Espanol de Credito S.A. (Banesto) - Spain
ASB Bank Limited - New Zealand
HSBC - United Kingdom
Credit Agricole - France
Wells Fargo - United States
Nordea Bank - Sweden
Scotiabank - Canada
La Caixa - Spain
Svenska Handelsbanken - Sweden
US Bancorp - United States
Banco Popular Espanol - Spain
DBS Bank - Singapore
Pohjola Bank - Finland
Deutsche Bank - Germany
Société Générale - France
Intesa Sanpaolo - Italy
Bank of Montreal - Canada
DnB NOR Bank - Norway
The Bank of New York Mellon - United States
Caixa Geral de Depositos - Portugal
United Overseas Bank - Singapore
OCBC - Singapore
Axa Bank Europe - Belgium
Credit Suisse Group - Switzerland
Landesbank Baden-Wuerttemberg - Germany
Nationwide Building Society - United Kingdom
CIBC - Canada
National Bank Of Kuwait - Kuwait
Barclays - United Kingdom
UBS - Switzerland
JPMorgan Chase - United States
Bank of Tokyo-Mitsubishi UFJ - Japan
Banque Federative du Credit Mutuel (BFCM) - France
Credit Industriel et Commercial (CIC) - France

Source : Global Finance magazine February 25, 2009

Operational risk management — How banks can manage the unknown

2009-01-21T19:30:00.000-08:00

Srinivas Srikantha

WHAT if suddenly ATMs stopped vending crisp notes, bank branches closed for few days, the data centre of major banks shut down, busy operations in dealing rooms of major banks come to a halt and banking personnel don't reach their offices.

This is not a doomsday scenario but what actually happened during the Mumbai floods. Uncertainty has crept into our lives. In technical parlance, we can call the risk involved in running daily operations "operational risk", or op-risk, for short.

In the banking industry, op-risk is as old as banking itself. The banking landscape has undergone a sea change and is becoming more complex in terms of volume of business, product innovation, financial engineering, new market practices, fast and rapid technology innovation, deregulation, consolidation of banks and increasing competition among banks.

This has increased probability of failure or mistakes from the operations point of view; it has increased the focus on managing op-risk.

The new BIS guidelines, generally known as "Basel II Accord", recognises this and places increased emphasis on op-risk management. The Basel committee defines op-risk as the risk "of loss resulting from inadequate or failed internal processes, people and systems or from external events". This definition includes legal risk, but excludes strategic and reputation risk. As banks move towards implementing Basel II norms, they need to evolve an internal framework for effective management of op-risk.

Depending on the size, complexity and organisational structure of bank, a five-step approach can be used for building a robust op-risk framework:

Identification of operational risk through event framework
Analysing the causes of events
Risk mapping
Risk measurement and control
Management of operational risk and, thereby, capital management

To start with, banks, as part of identification, should classify and capture all operational losses in the form of "events". Events are nothing but "occurrences" or "happenings". Banks should start accumulating data on events that have occurred in the past and also identify potential events.
All events should be defined with attributes, such as, frequency of event, severity, loss amount, reason for loss, date of discovery of loss and date of occurrence.

Banks can adopt the seven type of events suggested by Risk Management Group (RMG) of Basel committee for one of their quantitative studies (QIS-2) which includes internal fraud, external fraud, employment practices and work safety, client products and business services, damages to physical assets, business disruption and system failures and execution delivery.

The second step involves doing a causal analysis to understand the exact cause for the above events and estimate the actual loss as well as potential loss in case the events are repeated. This analysis on cause of events can make the bank understand the level of exposure and the op-risk management strategy it needs to adopt.

Once banks have developed an event database and done the causal analysis, they can start risk mapping. Risk mapping is a tool wherein banks can map the above risk events and losses to any specified set of business lines.

Basel has come out with eight set of business lines — corporate finance, trading and sales, retail banking, commercial banking, payment and settlement, agency and custody services, asset management and retail brokerage — to which the events collected by bank can be mapped.
Op-risk measurement is still evolving in terms of tools and techniques that can be used for effective measurement and management. Banks can follow either or both of qualitative risk measurement or quantitative risk measurement:

The generic ways of measuring op-risk include qualitative risk measurement techniques such as critical assessment method, which involves questionnaire format and interviews with all line managers to identify the op-risk events.

Another widely used approach, which is a combination of qualitative as well as quantitative approaches, is the Key Risk Indicators (KRI) approach, which involves identifying indicators, which convey good idea about the scope of business and thereby the risk involved.

For instance, portfolio size, volume of transactions traded, volume of deals routed through payment and settlement systems, etc., form one set of predictive indicators. KRI is more a predictive model than a cause-and-event approach.

A common quantitative approach used is Loss Distribution Approach (LDA), which involves arriving at a right fit distribution of historical loss events and, thereby, at quantitative results like expected loss and finally operational value at risk.

Another forward-looking scenario generation approach for op-risk measurement is Loss Scenario Modelling, which involves generating simulations for loss scenarios based on the events and losses captured in the first step.

Basel II norms suggest three approaches for measurement of op-risk. The simplest approach, best suited for less sophisticated and small balance-sheet banks, is the Basic Indicator Approach (BIA). BIA requires banks to allocate capital based on a single indicator of operational risk, which in this case will be average gross income of past three years multiplied by factor called alpha, which is set at 15 per cent.

The second approach is the Standardised Approach (SA), which involves mapping the bank's business lines to the set of eight business lines and use multiplier (Beta) of average gross income to compute capital charge.

Also, there is the Alternative Standardised Approach (ASA), which uses loans and advances, instead of gross income, for retail banking and commercial banking business lines multiplied by fixed factor which results in capital charge to be set aside.

The most sophisticated approach suggested is advanced measurement approach (AMA). Under the AMA, the regulatory capital requirement will equal the risk measures generated by the bank's internal operational risk measurement system using quantitative and qualitative criteria for the AMA. Internal data used must be based on a minimum historical observation period of five years. However, when a bank first moves to AMA, a three-year period is acceptable.

Banks need to employ the quantitative approaches like Internal Measurement Approach (IMA) or Loss distribution Approach (LDA) or Balance Scorecard Approach (BSA) for adopting AMA. All AMA approaches compute the expected and unexpected loss. The most significant aspect for a bank to graduate from Basic Indicator Approach (BIA) to Advanced Measurement Approach (AMA) is the potential benefit of less capital allocation for operational risk.

As op-risk involves failures during operations in daily business, the key steps in op-risk management involve improving internal control environment, designing and developing procedures to implementing the risk management processes and employing risk transfer techniques, such as insurance, to mitigate the loss arising from operational risk. Credit rating agencies have started rating banks based on their risk control and management frameworks. Investor awareness has also increased to the extent that banks with robust risk management frameworks are able to attract strategic investments with less effort.

Given the known benefits of implementing the provisions of the Basel II accord, banks should prioritise their strategy towards op-risk management. A constructive approach in this direction could be to automate the suggested five-step approach and, as a first step, to start developing a loss event database.

(The author is a senior consultant with Misys Banking Systems, Bangalore. The views are personal.)

Source : http://www.thehindubusinessline.com/2006/01/19/stories/2006011900991000.htm

ING Direct Expands its 'Banking Barista' Model

2008-11-26T20:36:00.000-08:00

Interseting concept. Coffee Bar is where people usually meet up for business meeting as well as casual talk for business person. A segmented customer who are care and have interest on Financial Services.
Considering the gadget and infrastructure they have to invest, it is quiet a costly concept. Yet it brings a Financial Services a new look, and definitely attracting for those who wants to have a new banking experience.

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ING Direct Expands its 'Banking Barista' Model
-By Mike Beirne

Call them banking baristas. ING Direct is using coffee cafes to peddle its virtual banking experience.

Modeled after its high-tech cafes in Chicago and St. Cloud, Minn., the financial institution is opening a new midtown New York location as well as a Honolulu operation by year's end.

The Chicago experience lures pedestrians inside with seven 32-inch LCD screens hanging in the window. The brand's signature lion and orange ball flash on the units along with "pursuit of happiness" and a convertible car that drives from one screen to the next.

Inside the cafe, there is a spherical dome with touch screens that visitors interact with to play content about financial products on three plasma screens. There are "amphitheaters" where patrons can attend financial seminars, surf the Web and buy pastries, Pete's coffee and branded merchandise from servers who also answer questions about mortgages and interest rates.

"It's a very high energy, upbeat experience, unlike any bank branch anyone has ever been in," said Brian Myres, head of sales for ING Direct USA, Wilmington, Del. "It's not meant to look or feel like a bank branch; it's meant to be a brand experience and that's what it is."

ING also has cafes in Los Angeles, Philadelphia and Wilmington. While ING Direct isn't about to build a huge stable of cafes across the country, it sees the cafes as a way to deliver a high-tech message to its target audience in major markets.

"They're all performing very nicely. From a banking perspective, they're all generating more business than a traditional branch would," said Myres. "I've been a banker for many years and I'd be very pleased with the business they generate. But the big thing is they really solidify the brand in major markets where people are wondering who is the ING Direct."

Rise Vision, Toronto, provides the software and content for four of the ING cafes.

The ING Direct cafes are another example of the growing popularity of digital signage. Out-of-home video advertising network spending in the U.S. reached $1.28 billion during 2007 and is projected to reach $3.22 billion by 2011, per the Digital Signage Expo.

?? Wall Street = Monkey Business ??

2008-11-25T00:36:00.000-08:00

If you have difficulty understanding the current world financial situation, the following should help...

Once upon a time in a village in India , a man announced to the villagers that he would buy monkeys for $10.The villagers seeing there were many monkeys around, went out to the forest and started catching them. The man bought thousands at $10, but, as the supply started to diminish, the villagers stopped their efforts.

The man further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.Soon the supply diminished even further and people started going back to their farms. The offer rate increased to $25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now act as buyer, on his behalf.

In the absence of the man, the assistant told the villagers: 'Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when he returns from the city, you can sell them back to him for $50.'The villagers squeezed together their savings and bought all the monkeys.

Then they never saw the man or his assistant again, only monkeys everywhere! Welcome to WALL STREET!

A taste of new-age banking at ABN-Amro

2008-11-20T03:18:00.000-08:00

Are we ready for the next step of Banking Evolution ??

Source: http://www.thehindubusinessline.com/2002/04/05/stories/2002040500610900.htm
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ABM-Amro Bank, in alliance with Barista Coffee Co, has launched the `cafe in a bank' concept through `Bancafes' at its branches.

"This will let customers relax while they explore their finances without being rushed," according to Mr Romesh Sobti, Executive Vice-President and Country Representative, ABM-Amro Bank India. During evening banking hours (7.30 p.m. to 11 p.m.), the bank's customers can relax over a cup of gourmet Barista coffee as they "browse through investment options, conduct banking transactions through the Internet or view information on the bank's products and services over a specially-designed user-friendly technology interface," Mr Sobti said, launching the first Bancafe here on Thursday.

ABN-Amro branches all over the country will soon offer the Bancafe experience. The bank has a network of 48 ATMs and 11 branches in eight cities: Mumbai, New Delhi, Chennai, Kolkata, Pune, Baroda, Hyderabad and Bangalore.

Bancafe offers not only the coffee experience but will also serve as a platform for promotions and informational seminars to be organised during evening banking hours, according to the bank.

ABN-Amro, with a strong consumer and commercial focus offers a range of loans, savings and term deposit accounts and investment products to its customers. Barista Coffee Co operates through a chain of 70 Barista Espresso bars across the metros and large cities in India.