european consumer finance survey - eurofinas - home berger/roland berger... · march 2015 european...

March 2015

European consumer finance survey

Participant questionnaire

Company name:

Contact name:

Contact details (e-mail/phone):

Country:

http://www.eurofinas.org/index.php?page=home

2 RB _Consumer Finance Survey_Eurofinas Final_vF2.pptx

This document shall be treated as confidential. It has been compiled for the exclusive, internal use by our client and is not complete without the underlying detail analyses and the oral presentation. It may

not be passed on and/or may not be made available to third parties without prior written consent from Roland Berger Strategy Consultants. RBSC does not assume any responsibility for the completeness

and accuracy of the statements made in this document.

© Roland Berger Strategy Consultants

Contents Page

A. Introduction 3

B. Participants business model 9

C. Market outlook 2015-2018 20

D. Threats 27

E. Key success factors and required business capabilities 33

E. Annexes 42

F. Glossary

A. Introduction 3

B. Participants business model 7

C. Market outlook 2015-2018 16

D. Threats 23

E. Key success factors and required business capabilities 29

E. Annexes 38

F. Glossary 40

Introduction A

Market outlook 2014-2018 C

Threats D

Participants business model B

Key success factors and required business capabilities E

Glossary F



A. Introduction




Context of the Consumer Finance survey

Success in today's highly regulated consumer finance environment, still

requires the ability to master traditional key success factors such as

excellence in face to face selling, impeccable dealer service, risk control,

sophisticated pricing.

At the same time, consumer finance leaders need to reckon with trends

that are reshaping the way people make their purchasing decisions and

challenge the traditional business models: social networks and sharing

economy, big data, P2P, omni channel customer customer behavior,

demotorization, …

The first Eurofinas/Roland Berger Future of Consumer Finance survey

provides top industry executives with an opportunity to compare opinions

with their peers from different geographies on market outlook, consumer

trends, external threats and future requirements to succeed in this

challenging environment. It will also be an opportunity to share views on

impact of regulation and priorities for concerted industry action.

A Introduction



Presentation of the survey

Gather and compare the views of Consumer Finance leaders across different geographies and business models

> on the future of Consumer Finance Business (growth, opportunities, threats, profitability,)

> on key success factors and initiatives to prosper in this context

Understand how the European Association and national associations/ federations can help foster a more positive environment for Consumer

Finance

Objectives

INDUSTRY SCOPE Consumer Finance (including consumer leasing) and connected businesses (insurance, basic banking products

distributed by Consumer Finance players)

DELIVERABLES Final results will be available in September 2015 and will be presented at the Eurofinas annual convention. Preliminary

key findings will be available for survey participants before the summer (May-June 2015)

DEADLINE Participants are asked to return a completed survey to Roland Berger Strategy Consultants by May 1st

PRICING The survey results are free of charge for participants

CONFIDENTIALITY We adopt a very strict policy regarding client information. All information gathered in this survey will be treated

confidentially by Roland Berger Strategy Consultants and shared with participants only on aggregated or anonymous

basis

A Introduction



For any questions or need of support, please do not hesitate to reach out to our survey support team lead by Edoardo Demarchi, based in our Milan office, and Axel Böhlke, based in our Brussels office, who are coordinating this initiative. Questions can be addressed through one of the following channels:

> Email: [email protected]

> Phone:

– Edoardo Demarchi: +39 335 7696954

– Axel Böhlke: +32 478979713

A Introduction

Instructions

How to participate in the survey?

To participate, please fill in the web version of the survey using the following link: http://surveys-rolandberger.fr/european-consumer-finance 1)

Alternatively, you may also print the survey, fill it on paper and send it back to us via one of the following channels:

> Email: [email protected]

> Mail: Axel Bohlke c/o Roland Berger Strategy Consultants, 100 boulevard du Souverain – 1170 Brussels, Belgium

Questions and support

1) Please note that if you interrupt the online survey before completion, you can finish it later as long as you access it from the same computer and web browser within 24hrs


mailto:[email protected]

http://surveys-rolandberger.fr/european-consumer-finance









mailto:[email protected]


This survey encompasses 4 different types of questions:

Survey guide (1/2)

Description Example

Range & category questions

Survey participants are asked to select the category or range that best describes their Consumer Finance business unit/company from a set of pre-defined category or range of options

Source: Roland Berger

A Introduction – Survey Guide

1. Range & category questions

2. (Best) estimate questions

3. Open questions

4. Ranking questions

B.2 What was the total approximate value of your Consumer Finance outstandings at the end of 2014?

< 1 bn 1 - 4.99 bn 5 - 9.99 bn 10 - 20 bn > 20 bn

Total Consumer Finance loans outstanding in EUR

(Best) estimate questions

Survey participants are asked to provide their best estimate of a specific value or proportion for a characteristic or metric of their Consumer Finance business unit/company

B.8 Motor loans – In 2014, how were your new business volumes split between corporate and private clients?

Σ = 100 %

% corporate clients

%

% private clients

%



Survey guide (2/2)

Description Example

Open

questions

Survey participants are asked to share their views & comment on a particular topic (typically, a maximum number of words is foreseen)

Source: Roland Berger

A Introduction – Survey Guide

Ranking questions

Survey participants are asked to rank a list of different elements

C.1.3 What do you expect to be the main factors impacting new volumes and margins for the market as a whole and for your company in particular?

E.4.1 Looking at your change initiatives in the next three years - please rank the following value chain elements in terms of urgency and importance of transformation/ optimization: 1–Highest urgency/ importance, 8–Lowest urgency/ importance

a. Credit / Risk

b. Funding and organizational structure

c. Marketing & pricing

e. After sales

d. Distribution channel strategy

f. Collection and NPL* management

h. Other, please specify

g. IT and operations

Ranking by importance to you



B. Participants business model




Note: The main terms and concepts that are used throughout the present questionnaire are defined in the glossary section; they are marked with an asterisk

We distinguish 6 typical Consumer Finance business models based on breadth of product portfolio and type of distribution channels

B.1 Which of the following business models best describes your Consumer Finance business unit/company? (Please tick one box only)

The purpose of the first section is to cluster participants according to their business model to get more insightful findings of the survey

B Participants business model

Business model explanation

Consumer

finance specialists Niche players Retail banks

Automotive

captives Retail captives

Players offering wide range of Consumer Finance solutions distributed via own branches and direct channels (call center, internet), [and/or] agents, brokers and dealers/ retailers; separate legal entity within their Group

Players focused on specific client segments (e.g. near prime) or channels (e.g. motor dealers, phone/ internet) or product (e.g. cards, salary guaranteed loans,..)

Players offering wide range of Consumer Finance solutions distributed both via the group's bank channels and other channels including a mix of via own branches and direct channels (call center, internet), agents, brokers and dealers/ retailers

Financial services arms of Automotive OEMs - dedicated mainly to financing auto / motor sales

Retailers offering Consumer Finance solutions to their clients - mainly purpose loans and cards - through specialized entities

Santander Consumer, Cetelem, Sofinco, Compass,…

Provident, Blackhorse, Barclaycard,…

Deutsche Bank, ING, Santander,…

Volkswagen Bank, Mercedes-Benz Bank, PSA Finance,…

Carrefour Banque, Shop Direct, Tesco Bank,…

Examples

Credit broker/

intermediary

Agent or broker with own sales force or online presence and client base distributing personal loans, revolving loans or purpose loans of one or more banks/ specialist credit institutions

BancoPosta, Money,…



B.2 What was the total approximate value of your Consumer Finance outstandings at the end of 2014?

< 1 bn 1 - 4.99 bn 5 - 9.99 bn 10 - 20 bn > 20 bn

Total Consumer Finance loans outstanding in EUR

B Participants business model – Size and performance

B.3 What was the total approximate number of your active Consumer Finance clients at the end of 2014?

< 250,000 250,000 – 0.99 m 1 – 4.99 m 5 – 10 m > 10 m

Number of clients

New business volumes in EUR

B.4 What was the total approximate value of new business volumes in your company or Consumer Finance business unit in 2014?

< 50 m 50 m – 249.99 m 250 m – 0.99 bn 1 - 5 bn > 5 bn

B.5 What was your cost income ratio* in 2014? <30% 30%-34.99% 35%-39.99% 40%-45% > 45%

Cost income ratio

B.6 What was your cost of risk ratio* in 2014? <1% 1%-1.99% 2%-3.99% 4%-5% > 5%

Cost of risk ratio

The purpose of this section is to cluster Consumer Finance business units according to their size and performance (1/2)

For each of the following 5 questions, please select the most suitable range

*) See definition included in the questionnaire glossary



B.7 What proportion of your Consumer Finance new business volumes were in the following categories in 2014?

B

a. Motor loans (cars and other vehicles)

b. Other purpose loans (furniture, consumer durables, services..) via dealers/retailers

c. Personal loans

d. Revolving credit

e. Other, please specify

< 5% 5%-24.99% 25%-49.99% 50%-75%

Product mix per option

>75%

Please provide a rough estimate of how your new business volumes were split in 2014 (base 100)

B.8 Motor loans – In 2014, how were your new business volumes split between corporate and private clients? How were your new business volumes split between new and used vehicles?

The purpose of this section is to cluster Consumer Finance business units according to their size and performance (2/2)

Participants business model – Size and performance

For each of the following business volumes, please select the most suitable range

Σ = 100 %

% new vehicles

%

% used vehicles

%

Σ = 100 %

% corporate clients

%

% private clients

%



Participants business model – Distribution mix

For the following categories compare the share of new business volumes by business channel in 2014 vs. Expectations for 2018

B.9 Motor loans, 2014

a. At dealers points of sale, from request to contract

b. First contact via web/ mobile-app, contract closed at the dealer or in a physical point of sale

c. Entirely online via e-commerce site

d. Branch/direct


<2% 2%-4.99% 5%-9.99% 10%-29.99%

2014 channel mix per business channel

30%-49.99% >50%

B.10 Motor loans, 2018?

a. At dealers points of sale, from request to contract

b. First contact via web/ mobile, contract closed at the dealer or in a physical point of sale


d. Branch/direct


<2% 2%-4.99% 5%-9.99% 10%-29.99%

2018 channel mix per business channel

30%-49.99% >50%

The purpose of this section is to assess your firm’s distribution mix and its expected evolution to 2018 (1/6)

B





B.11 Other purpose loans - What was the share of 2014 new business volumes per sales channel?

<2% 2%-4.99% 5%-9.99% 10%-29.99%

2014 channel mix per sales channel

30%-49.99% >50%

B.12 Other purpose loans - What sales channel distribution do you expect in 2018?

B

<2% 2%-4.99% 5%-9.99% 10%-29.99%


30%-49.99% >50%

a. At dealers/retailers points of sale, from request to contract

b. First contact via web/ mobile, contract closed at the dealer/retailers or in a physical point of sale


d. Branch/direct


a. At dealers/retailers points of sale, from request to contract

b. First contact via web/ mobile, contract closed at the dealer/retailer or in a physical point of sale


d. Branch/direct






B.13 Personal loans - What was the share of 2014 new business volumes per sales channel?


<2% 2%-4.99% 5%-9.99% 10%-29.99% 30%-49.99% >50%


B

a. Entirely through physical network (branch, agent outlet, broker) from first contact to contract

b. First contact via phone, sale closed in a branch, agent outlet or broker agent

c. First contact by phone, sale closed without any visit to physical network

d. First contact via web, sale closed on the phone, in a branch, agent outlet or broker agent

f. Other, please specify

e. Entirely online from first contact to contract





B.14 Personal loans - What sales channel distribution do you expect in 2018 for new business volumes? a. Entirely through physical network (branch, agent

outlet, broker) from first contact to contract




< 5% 5-9.99% 10-24.99% 25-49.99% 50-74.99% >75%




B






B.15 Revolving credit - What was the share of 2014 new business volumes per sales channel?


<2% 2%-4.99% 5%-9.99% 10%-29.99% 30%-49.99% >50%


B











B.16 Revolving credit - What sales channel distribution do you expect in 2018 for new business volumes?





< 5% 5-9.99% 10-24.99% 25-49.99% 50-74.99% >75%




B





Participants business model – Digitization

B.17 What percentage of total contracts in 2014 was fully digitized?

0 - 9.99% 10 - 19.99% 20 - 39.99% 40 - 59.99% > 60%

Percentage of total digitized contracts

Percentage of total digitized contracts

B.18 What percentage do you expect to be fully digitized in 2018?

0 - 9.99% 10 - 19.99% 20 - 39.99% 40 - 59.99% > 60%

The purpose of these questions is to assess the current digitization rate and its expected evolution to 2018

B

For each of the following 2 questions, please select the most suitable range



C. Market outlook 2014-2018




C Market outlook 2014-2018 – Size & growth of your national consumer finance market

C.1.1 What growth do you expect in Consumer Finance new business volumes in your country for the total market [CAGR* 2014-2018]? Per product line?

a. Car and motor loans

b. Other purpose loans (furniture, consumer durables, services..)

c. Personal loans


d. Revolving credit

The purpose of this section is to analyze expected evolution of the Consumer Finance industry on a 2014-2018 time horizon (1/4)


-10% - 4.99% -5% - -.99% 0% - 4.99% 5% - 10% >10%

TOTAL

< -10%

For each of the following business channels compare the growth in new business volumes in 2014 vs. Expectations for 2018

Expected value growth rate per product



C.1.3 What do you expect to be the main factors impacting new volumes and margins for the market as a whole and for your company in particular?

C.1.2 What is the expected evolution in financial margin [pre cost of risk] per product in 2018 versus 2014?

TOTAL

a. Car and motor loans

b. Other purpose loans (furniture, consumer durables, services..)

c. Personal loans


< -150bp -150 bp –

-50.01 bp

-50 bp –

-0.01 bp

0 bp – +49.99p

Expected value growth rate per product

+50bp –

+150 bp

> +150 bp

d. Revolving credit


C

Please answer the following open question in maximum 250 words

For each of the following products please select the most suitable range

Market outlook 2014-2018 – Size & growth of your national consumer finance market



C.1.4 Rank these business models in terms of how you expect them to perform relative to each other in the next 3 years [1-best, 6-worst]

b. Niche players

c. Retail banks

e. Retailer captive

d. Automotive captive


C.1.5 Please explain your answer for C.1.4 in the comment box below

C

Ranking of business models



a. Consumer Finance specialists

f. Credit broker/ intermediary




C.1.7 In 2018, what percentage of personal loans do you expect to be taken out through online broker and comparator websites?

Percentage of broker/comparator personal loans

C.1.6 In 2018, what percentage of personal loans do you expect to be sold through P2P* platforms?

Percentage of P2P personal loans

C

%

Please provide additional comments in the box below

%

Please provide a percentage for the expected loans in 2018, if you have additional comments please state them in the designated box in maximum 250 words

Please provide additional comments in the box below





The purpose of this section is to analyze expectations of the Consumer Finance market structure on a 2014-2018 time horizon (1/2)

Market outlook 2014-2018 – Market structure

C.2.1 What is the likelihood that your national Consumer Finance market will consolidate in the next 3 years?

Very unlikely Unlikely Likely Very likely

Likelihood of consolidation

C.2.2 If consolidation is likely or very likely

b) Is this consolidation mainly driven by local or foreign owned players? Local Foreign

Consolidation drivers

C

Consumer Finance specialists

Niche players Retail banks Automotive captive

Retailer captive

For each of the following please select the most suitable answer

Important role in consolidation

a) Which type of players will be involved in

consolidation



The purpose of this section is to analyze expectations of the Consumer Finance market structure on a 2014-2018 time horizon (2/2)

Market outlook 2014-2018 – Market structure C

For each of the following improvement areas please select the most suitable option


C.2.3 In which of the following areas do you see the need for further coordinated action among market players at European level over 2014-2018?

No need Necessary Critical

Improvement area necessity

a. Education of public on Consumer Finance do's and don'ts

b. Communication on over-indebtedness policies

c. Credit bureau / credit information

d. Establishment/Improvement of sales standards/transparency in Customer Protection Insurance (CPI)* cross selling approach

f. Sales standards for Revolving / instalment card product features regulation

e. Sales standards for Revolving / instalment card sales channel approach



D. Threats




The purpose of this section is to investigate the impact of competition, regulatory changes and socio-economic trends (1/5)

Threats – Socio-Economic D

For each of the following categories please select the most suitable option

D.1.1 How important do you see the impact of the following trends on consumer credit in your country in the next three years?

Importance of trend

a. EU integration

b. Population aging

c. Youth unemployment

d. Immigration

Not important Somewhat important Important

Very Important

e. Urbanization

f. Changing income distribution

D.1.2 How important do you see the impact of the following innovations on consumer credit in your market in the next three years?

Importance of technology/innovation

a. P2P lending

b. Digitization

c. Big Data

d. Sharing economy


Very Important

g. Other, please specify


e. Internet of Things




Threats – Competition D

D.2.1 For each of the following products, please select the range with the approximate amount of competitors in 2014

Number of competitors per product

a. Motor loans via dealers

b. Other purpose loans (furniture, consumer durables, services..) via dealers/retailers

c. Personal loans

d. Revolving credit


<5 5-9 10-24 25-50 >50



D.2.2 For each of the following products, please select the range with the approximate expected evolution of the number of competitors in the next three years



Expected evolution of the number of competitors between 2014 & 2018

Large

decrease

Small

decrease

No change Small increase

Large increase

a. Motor loans via dealers

b. Other purpose loans (furniture, consumer durables, services..) via dealers

c. Personal loans

d. Revolving credit




D.2.3 For each of the following competitors, please select the most suitable expected threat

g. Other, please specify


Expected threat per competitor

a. Online brokers/ comparators

b. P2P platforms

d. Retail or universal banks

e. Online banks

f. Internet players (e.g. Google, Paypal, …)

c. Card specialists

No threat Somewhat a

threat Threat High threat




Threats – Regulations D

D.3.1 For each of the following regulatory topic, please select the most suitable expected impact


a. Interest rate restrictions/rate caps

b. Privacy and credit bureau restrictions

c. Insurance cross selling regulation

d. Price and commission transparency

e. Capital and liquidity requirements

Very negative Negative No change/ no impact Positive Very positive

f. ECB* and other central banks' regulations

g. Fiscal incentives to consumer spending


D.3.2 With regard to regulation, which particular topics should consumer credit associations play a role in regarding promotion, lobbying, information, mediation, and how?

Impact of regulation





E. Key success factors and required business capabilities




The purpose of this section is to assess what distinguishes winners and which are the new capabilities required to succeed (1/6)

Key success factors and required business capabilities – Marketing and sales E

E.1.1 How important will the following capabilities be to succeed in business intermediated by dealers/ retailers in the next three years?

Importance of business capability for success

a. Competitive time from application to approval in e-commerce channel

b. Competitive time from application to approval in the Point of Sale (POS) channel

c. Web/ mobile marketing support to dealers/ partners

d. Omni channel customer journey management


Very Important

e. Range of complementary products for end customer (e.g. insurance, shopping guides, deals,..)

f. Range of complementary products for dealer (e.g retailer financing)

g. Pricing and commissioning segmentation by end customer value


For each of the following capabilities please select the most suitable option





E.1.2 What degree of improvement is needed in the following capabilities for you to succeed in business intermediated by dealers/ retailers in the next three years?


a. Competitive time from application to approval in e-commerce channel

b. Competitive time from application to approval in the Point of Sale (POS) channel

c. Web/ mobile marketing support to dealers/ partners

d. Omni channel customer journey management

e. Range of complementary products for end customer (e.g. insurance, shopping guides, deals,..)

f. Range of complementary products for dealer (e.g retailer financing)

g. Pricing and commissioning segmentation by end customer value



No

improvement

necessary Some

improvement Significant

Improvement

Very significant

improvement




E.2.1 How important will the following capabilities be to succeed in business generated without intermediation of dealers / retailers (B2C) in the next three years?

a. Multi channel direct marketing excellence (e.g. mail, e-mail, app notifications,..)

b. Leveraging 'Big Data' for targeted client offers

c. Social networks for sales enhancement

d. Social networks as after sales tool


Very Important

e. Real time/ fast cycle Customer Relationship Management*

f. Omni channel customer journey management

g. Competitive time from application to approval

h. Pricing segmentation

i. Diversity of non-credit services (e.g. banking and insurance products)


j. Excellence in physical network sales

k. Excellence in call center capabilities

l. 100% self care*

m. Other, please specify



*) See definitions included in the questionnaire glossary



E

E.2.2 What degree of improvement is needed in the following capabilities for you to succeed in business generated without intermediation of dealers/ retailers ?

a. Multi channel direct marketing excellence (e.g. mail, e-mail, app notifications,..)

b. Leveraging 'Big Data' for targeted client offers

c. Social networks for sales enhancement

d. Social networks as after sales tool

e. Real time/ fast cycle Customer Relationship Management

f. Omni channel customer journey management

g. Competitive time from application to approval

h. Pricing segmentation

i. Diversity of non-credit services (e.g. banking and insurance products)


j. Excellence in physical network sales

k. Excellence in call center capabilities

l. 100% self care

m. Other, please specify

Improvement needed per capability

No

improvement

necessary Some

improvement Significant

Improvement

Very significant

improvement

For each of the following capabilities please select the most suitable expected importance

Key success factors and required business capabilities – Marketing and sales




Key success factors and required business capabilities – Funding E

E.3.1 How will the importance of the following sources of funding change between today and 2018?

Change in importance of funding source

a. Securitizations

b. Banking/Interbanking facilities (including intra-group)

c. Non-bank parent funding (e.g. manufacturer; retailer)

d. Debt capital markets

Decline No change Increase

e. ECB /National Central Bank and other Institutional refinancing programs


For each of the following funding sources please select the most suitable expected change




Key success factors and required business capabilities – Value chain E

E.4.1 Looking at your change initiatives in the next three years - please rank the following value chain elements in terms of urgency and importance of transformation/ optimization: 1–Highest urgency/ importance, 8–Lowest urgency/ importance

a. Credit / Risk

b. Funding and organizational structure

c. Marketing & pricing

e. After sales

d. Distribution channel strategy

f. Collection and NPL* management


g. IT and operations

Ranking by importance to you strategic initiatives




F. Glossary




Glossary

Cost income ratio Operating expenses (administrative and fixed costs, such as salaries and property expenses, but not bad debts that have been written off) divided by operating income. The ratio gives a clear view of how efficiently the firm is being run – the lower it is, the more profitable the bank will be.

Cost of risk ratio The cost of risk ratio measures the proportion of a financial institution's total loans that have been lost due to bad and non-performing loans. It is calculated as the average of all companies' annualized loan loss provision as a percentage of average interest generating loans over the period.

Customer relationship management (CRM)

System for managing a company’s interactions with current and future customers.

100% self care Self care solutions refer to applications & functionalities enabling the customer to have a centralized access point to bank-wide solutions in a simple, user-friendly set-up, empowering clients to trigger the execution of transactions or activation of functionalities themselves.

Property and casualty (P&C) insurance

Represents insurances that protect against property losses to your business, home or car and/or against legal liability that may result from injury or damage to the property of others.

European Central Bank (ECB)

The central bank for the Eurozone of the European Union and administrator of the monetary policy of the Eurozone.

Non-performing loan (NPL) A loan that is in default or close to being in default. Many loans become non-performing after being in default for 90 days, but this can depend on the contract terms

Source: Roland Berger, investopedia

F Glossary

Customer Protection Insurance (CPI)

Insurance taken out by the borrower to ensure the repayment of the loan in the event that the borrower passes away or is unable to earn an income due to illness or disability.

Symbols m : million bn : billion

Compound annual growth rate [CAGR]

The year-over-year growth rate of an investment over a specified period of time. The compound annual growth rate is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered.

Peer-to-peer [P2P]

Peer-to-peer (P2P) lending is a growing trend and describes a lending process where investors bypass intermediaries (such as banks) and lend directly to borrowers, often through online (peer-to-peer )lending platforms.


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