australian business & michael hawker · extend the enterprise and create new businesses 4...
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Michael HawkerMichael HawkerGroup Executive
Australian Business &Personal Banking
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Agenda• Strategic context• Customer acquisition• Market influences• Building blocks• Differentiation - it’s in the execution• Measurement of success• Sources of future growth
Extracting value through cross-Extracting value through cross-sellingselling
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1 Organise around where & how we createvalue
2 Optimise the ‘old’ production functions
3 Extend the enterprise and create newbusinesses
4 Deepen & broaden customer relationships
5 Build the capabilities & culture to succeed
5-Point strategic plan5-Point strategic plan
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Corporate strategyCorporate strategy
Capture the significant valueembedded in our franchise through:
- a customer centric focus,
- delivering individualised financialsolutions,
- via a fully e-enabled, multi-channelplatform.
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Aligned to customer needsAligned to customer needs
PrivateBanking
PriorityBanking
Personal MiddleMarkets
BusinessDirect
AustralianBusiness & Personal Banking
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• Challenge Bank - December 1995~ 400,000 customers
• Trust Bank, NZ - May 1996~ 850,000 customers
• Bank of Melbourne - November1997~ 1.1 million customers
Customer acquisitionCustomer acquisition
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• The integration task is nowcomplete
• Westpac has over 7.5 millioncustomers in Australia, NewZealand and the Pacific Region
• The focus today is on the 4.5million Australian consumercustomers
Customer baseCustomer base
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“Up to 40% of ourcustomers
are still havingmost of their financial needsmet by our competitors…”
David MorganManaging Director & CEO1999 Annual Report
Competitive realityCompetitive reality
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Customer needs and behaviourCustomer needs and behaviourchangingchanging
• Customers are bewildered bychoices
• They are generally time ‘poor’• Are looking for clarity,‘leadership’, &• A trusted adviser, who values as well
as providing value• Operating in a 24/7 world• Looking for ‘wealth creation’
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Customer in controlCustomer in control
• The changing face of competitionmeans we must be better atunderstanding- customer’s financial goals- drivers of customer value
• Focal point is in providing financialsolutions
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Our challengeOur challenge
• To hold customers
- while they have the ability to shopworldwide
- when they can end a bankingrelationship with just a click of abutton
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Five fundamental building blocksFive fundamental building blocksunderpin wealth creationunderpin wealth creation
TRANSACTIONS
LOANS
ADVICE
INVESTMENTS
RISKMANAGEMENT
- cross-selling is the- cross-selling is theprocess of drawingprocess of drawing
on the moston the mostappropriate buildingappropriate building
blocks to meetblocks to meet customer customer
needs needs
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From our perspective housingFrom our perspective housingloans are a cornerstone toloans are a cornerstone tomaximising valuemaximising value• Westpac housing loans
- Approx $50 billion of possible $255 billion- Grew 16.7% in Australia in 12 mos to 31/3- ‘W’ market share new lending - owner
occupied 26.7%* of major banks, 22.4%*all lenders
- An ‘anchor’ product in terms of customerretention and cross selling
* APRA data adjusted for securitisation
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From the customers’ perspectiveFrom the customers’ perspective
• Housing loans decision is
- difficult and emotional- often the biggest single investment most
will make- difficult to compare loans, pricing and
benefits
• Most prefer to have face-to-face/personalcontact at least at the ‘decision’ phase- a key cross sell opportunity point
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ValueMeasurement
Cultural &behavioural
changeTeamwork &Incentives
Salesprocesses
Informationtools
Products &packagingLead referral
Contactmanagement
So what?...So what?...
The realdifferentiationis in
the execution
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Cultural changeCultural change
• One goal - double the number ofvaluable customers
• Communication, communication,communication
• Happy staff leads to happycustomers, leads to happyshareholders
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Behavioural changeBehavioural change
• From reactive (product based) topro-active (needs based)- closer management structure- customer analytics behavioural training- opportunity spotting- lateral thinking- use of specialists- accreditation
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Information (Information (CRMCRM) tools) tools
• Seibel Technology & LotusNotes
• Priority customer recognitionat all touch points
• Customer analytics• ‘Next’ sales program• Message enablement• Automated workflow capability
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Information management -Information management -targeted tacticstargeted tactics
• The right CRM tools will deliver
- the right value proposition- to the right customer- at the right time- through all/any touch points
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Products and packagingProducts and packaging
• Extensive and flexible awardwinning product range
• Targeted packages eg.‘Professional’ package
• New investment products• Better product performance• Leveraging Olympic sponsorship
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Product fulfilmentProduct fulfilment
• Self-service/straight throughprocessing
• On time, first time, every time
• 7/24
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Sales processesSales processes
• Review programs to grow andretain valuable customers
• Re-engineering/innovation• Web enablement• Multi-channel strategy
-24/7, face-to-face/phone/onlinebanking & broking
• Alliances & partnerships eg. f2
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Contact ManagementContact Management
• Better coordination andconsistency of priority customerexperience across channels- customer life stage contact plans- increased effectiveness/alignment of
market and sales approaches
• Standardised reporting• Utilise refined contact lists
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Lead referralLead referral
• Referral process powerhouse- from all ‘W’ outlets- specific targets- high conversion rates
• Use of third party originators- follow-up process to capture opportunities
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Value measurementValue measurement• Recognition and reward
- ‘Thank you’ benefits program - newcustomers
- Priority benefits program
• Focus on improving customersatisfaction - throughout thelifecycle
• Internally by customer, productand segment - ‘CUBE’
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Teamwork & incentivesTeamwork & incentives
• Aligned sales forces
• Joint responsibility
• Economic value basedincentives
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Measurements of successMeasurements of success
• Volume• Market share• Valuable customers• Portfolio dynamics• Economic profit
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43%
37%
11%
25%
17%
0% 10% 20% 30% 40% 50%
General insurance sales
Life risk sales
Funds under management
Credit card outstandings*
Home mortgages*
Volume growth in core productsVolume growth in core products
Growth(%) 1H 1999 to 1H 2000
* Australia only
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Total New LendingOwner Occupied Housing
Strong core product market shareStrong core product market shareStrong core product market share
%
1416182022242628
Apr-99 Jun-99 Aug-99 Oct-99 Dec-99 Feb-00
Banks All lenders
%
14
16
18
20
22
24
Oct-98 Feb-99 Jun-99 Oct-99 Feb-00
Market Share: Credit CardsTotal amount Spent
1 in every 4
1 in every 5
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Priority customer focus -Priority customer focus -numbers up 20% since Sept 1999numbers up 20% since Sept 1999
000’s
Num
ber o
f Prio
rity
Cus
tom
ers
350
450
550
650
750
850
Sep-98 Mar-99 Sep-99 Mar-00 Sep-00
Target Actual
Target to doublepriority customers
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Customer value and channel migrationCustomer value and channel migrationstrategies are deliveringstrategies are delivering
1500
1600
1700
1800
1900
2000
2100
2200
A-99 M-99 J-99 J-99 A-99 S-99 O-99 N-99 D-99 J-00 F-00 M-00
Consumer - Low valuecustomers
1.5
1.6
1.7
1.8
1.9
2
A-99 M-99 J-99 J-99 A-99 S-99 O-99 N-99 D-99 J-00 F-00 M-002.4
2.5
2.5
2.6
2.6
2.7
All consumer (LHS) Priority (RHS)
Consumer - Products per customer
(000
s)
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0
5
10
15
20
25
Customer Value Segments
% in segment June 1999 % in segment Feb 2000
Positive shift in consumerPositive shift in consumercustomer * valuecustomer * value
Low High
%
Perc
enta
ge in
Seg
men
t
Value Shift
*Australian consumer customers
Value diluting Value creating
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Economic profit *Economic profit *
281
397
314 272333
493
0
100
200
300
400
500
1H99 2H99 1H00
ARFS Westpac Group
$M
* Excess of adjusted net profit over min. required rate of return on equity invested.
Impacted by non franking of dividend
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Transactionaccount or
Credit card
Transactionaccount
Transactionaccount
Transactionaccount
Housingloan or
Credit card
Housingloan
Housingloan
Credit card
Credit card
Investments/risk
products
Singleproduct
Twoproducts
Threeproducts
Fourproducts
Only 40% of high value customershave more than 2 products...Only 40% of high value customersOnly 40% of high value customershave more than 2 products...have more than 2 products...
30%
30%
30%10%
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• By product- Loans - housing
- Transactions -credit cards
- Advice - FNAs
- Investments
- Risk management - General insurance - Life insurance
Sources of future growthSources of future growth
• By segment
- Private banking
- Priority customers
- Business banking -middle marketcustomers
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“If the 40%* of customers whohave only one product with us,decided to entrust us with just
one more piece of theirbusiness …
…this could add around $500million of revenue each year.”
David MorganManaging Director & CEO1999 Annual Report
Cross selling imperativeCross selling imperative
* All Australian consumer customers
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Michael HawkerMichael HawkerGroup Executive
Australian Business &Personal Banking