- Introduction to Retail Banking
- Working process of retail banking
The banking that takes place between your bank and you is nothing but retail banking. All the banking services that you enjoy from your bank including your accounts, saving accounts, loans, and even online banking services fall under retail banking. Retail banking is banking that is for the retail customers of the bank, which includes the general population and not large or multinational institutions. Even when you are availing banking services online, you are connecting with your bank on some level, making it a part of retail banking as well. Retail banking helps you to meet your day-to-day needs through services like debit cards, credit cards, online withdrawals and deposits, and many other benefits.
Introduction to Retail Banking
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.
Working process of retail banking
Retail banks are for the general public to help them save and invest their money and handle their regular needs by providing various services like bank accounts, credit cards, debit cards, fixed deposits, loans, and many more. Certain services like withdrawals and deposits can also be availed online as well as in the nearest branch of your bank. Online retail banking has made the transfer of money and retailing easier for retail customers. Some retail banks may or may not provide all the services you expect, so it will be good to check with the bank branch or visit the bank website if you want to avail of a certain service from the retail bank.
BCG Helps Its Retail Banking Clients Succeed in the New Reality
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%.
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 the 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%.
Our retail banking consulting team’s 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%.