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Digital Transformation of a Retail Bank: A Case Study

• Retail Banking

Digital Transformation of a Retail Bank – A Case Study

Most bank customers are willing to try a financial product from a non-banking provider, particularly the Fintechs and the tech giants (like Amazon, Google, et al.).  The percentages increase among the younger citizenry that grew up as digital natives.

The digital transformation of retail banking is not a quick fix or putting on a band-aid.  Typically, an outside-in and inside-out transformation requires a multipronged approach and starts with the commitment of the C-Suite and involves changes at culture, strategy, operating model, business models, talent, processes, and execution.

Also, there are structural imbalances. A new generation of Fintechs does not have legacy landscape, and many are circumventing the complex licensing and regulatory protocols by partnering.

Hence, a digital transformation of a retail bank is a fundamental remaking or a reincarnation, if you will.  Let’s examine by taking a fictitious case study of a bank to showcase how a retail bank can rethink, re-imagine, re-engineer, re-platform and renew themselves for the digital age.

The fictitious bank is BankMe, a sizeable multiline bank with operations across the United States, but a significant portion of the branch footprint on both coasts.  BankMe serves over 20 million customers.  It offers general banking products and services – deposits, loans, mortgages, commercial lending, life insurance, and essential brokerage services.

BankMe’s chairman, and CEO is Ryan Paul, and he is a veteran of banking with experience across the banking value chain and has built BankMe over the years through both organic growth and acquisitions.

As with most legacy banks, BankMe is a retail banking operation replete with convoluted processes, arcane governance norms, antiquated systems landscape, and employees from different eras. Change is slow, the culture is rooted in resistance to change, and everything takes an enormously long time.

Inflection Point:

The perfect storm of a new wave of startups, the eroding trust and value among the customer base, and the potential emergence of giant technology companies into the banking realm was the impetus for embarking on a digital transformation of the bank.

Transformation Vision for Retail Banking:

In conjunction with the board and a strategic transformation team, Paul and company have come up with an overarching theme for a multi-year and comprehensive transformation of the bank. The transformation program – MADE , which stands for Mobile and Digital Everywhere – has been a catalyst for an invasive and intensive change across the spectrum of the bank.  The company’s tagline “Desirable bank for the Digerati” has galvanized the team.

Retail Banking Digital Strategy Pillars:

Paul and team have come up with six vital strategic pillars to drive the transformation program and built a roadmap anchored to these guiding principles.

• Digital First, Mobile First, and Cloud First approach
• Rapid innovation matters – Do it and iterate
• Buy where you can, Partner when you must, Build only as a last resort
• Sacrifice short-term profits for long-term customer centric gains
• Provide APIs based access and build an open banking platform
• Make or Break things; the status quo is not acceptable

The Budget:

The board approved a special transformation budget of $5 billion over 2-years, which is over and above the business as usual spend.  The governance of the transformation budget was simple – funding will only be given to projects that have 90% digital quotient. The digital quotient is a measure of meeting specific criteria – cloud-based, API-enabled, open architecture, experience-driven and unlocking the value from data.  These five guiding principles funded projects big and small across the bank’s value chain and in a multitude of capability areas.

BankMe leadership also has instituted a key value driver – that the digital transformation projects will have the right of way and will be prioritized over business as usual programs.

Cultural Change:

As the saying goes, culture eats strategy for breakfast. So, a shift in culture, psyche, and mindset is an essential ingredient for success. Furthermore, in most transformation programs, change management is often an afterthought and typically under-funded and launched too late in the cycle to make any material difference.

BankMe leadership realized the importance of culture and change management to compete effectively against the digital natives. The banking transformation team has prioritized both the cultural aspects and the change management aspects into a holistic change program.

In addition to the business side, the technology teams had embraced the concept of creating an IT Strategy for the digital age.

The change management framework and the change management plan went a long way in fostering a new ethos and approach to doing, thinking, and being.

BankMe digital transformation team has come up with a roadmap that is across the board and involved capabilities, people, process, technology, and experience.

The transformation team has created the following key deliverables:

• A digital capabilities model to understand the depth, variety, and nuance of digital capabilities
• A banking capabilities model that spans the critical areas of the value chain
• Customer Journey Maps to capture the current state of stakeholder workflows
• A data model that will serve as a lynchpin in unlocking the value from data
• A Target State Conceptual Architecture
• Rationalized Requirements Anchored to Business Capabilities
• Effort Estimation
• Digital Transformation Roadmap
• Implementation Sequencing and Incremental Delivery of Capabilities
• A Rollout Plan

• For every bank or non-technologist, hire two technologists
• Focus on hiring technologists who know banking or bankers who understood technology
• Acqui-hires are not an asset acquisition play or an M&A strategy per se but a talent building strategy.

With this strategy, BankMe has been able to recruit data scientists, technical architects, and software programmers and increase the technology workforce by 20%.

Core Banking Transformation :

Account opening:.

Account opening is the gateway experience for a new client or existing client opening a new account. BankMe revamped the account opening process and created customer journey maps to understand the nuances of how a customer feels.  Account opening transformation was a key enabler.

Deposits are the lifeline of any bank and BankMe is no exception.  BankMe digital transformation efforts focused on the following in this core banking area.

BankMe introduced an app to help clients ladder savings in different vehicles to balance liquidity and yield.  For example, emergency funds in checking, short-term liquidity needs by term deposits and savings accounts, and rainy-day funds into various brokerage accounts, and nest egg into IRAs and other retirement accounts. By doing so, BankMe has expanded the footprint of clients into seldom used short-term instruments and gain the loyalty of the clientele a simple but essential piece of advice.

BankMe partnered with a Fintech to help customers round off purchases and save the dollars.

Also, the mobile check capture, online payroll deposit sign up, and access to a low-cost pay advance startup are some of the steps that BankMe has taken to advance the digital agenda.

Personal Loans, mortgages, car loans are critical to the success of BankMe and other retail banks.  Innovations in the loans space have been few and far between.  Now, as a part of its transformation of core banking services, BankMe has introduced a slew of changes and modified loan offerings thanks to improved user experience and more holistic underwriting.

Non-traditional Underwriting : With the advent of big data and machine learning, lenders are no longer limited to using traditional credit bureau scoring. Instead, a more holistic profile of the clients – using their social, demographic, financial and employment data to make instant credit decisions has allowed BankMe to speed up the underwriting process and make lending decisions on the fly. Also, scouring through the client data has permitted BankMe to prepopulate the loan amount and the terms to many clients upon login and through outreach.

Also, BankMe has changed the way it collects information online and channels the workflow. Many fields are pre-filled, particularly for existing customers, and others through data aggregation technologies.

BankMe also partnered with a microloans platform to underwrite loans based on a predetermined set of rules to fund the “unbanked” customers.

Commercial Lending:

The commercial banking team has introduced several changes to make the entire loan process smooth and easy.  Leveraging machine learning and text analytics, BankMe has introduced the spreading of financial statements automatically. Similarly, using credit card data, business receipts, and expense data, BankMe has been able to determine the viability and amount of working capital a particular business needs and offer the terms online for immediate action by the client.

Also, BankMe partnered with an ML-based lending platform and has joined a few marketplaces to be a part of an emerging ecosystem.

Payments and Transfers:

This is the journey of BankMe, a legacy bank with friction, inertia, complexity, and cost built into every part of the business. However, with the right leadership and appropriate changes to the culture and ethos, BankMe has been able to cross a chasm and digitally transform the core banking services.

How does your job compare to the experience of BankMe? Has your bank went through digitalization and transformation using digital and cognitive technologies? Please share your banking digital transformation journey with us.

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3 CDP case studies that generate real value for retail banks

Accelerated digital transformation  .

For more than a decade, retail banks around the world have been on a journey towards digitalization, seeking new ways to retain existing customers and gain new ones. Facing increasing competition from tech-savvy fintech disruptors as well as the evolving consumer behavior, traditional retail banks were already under serious pressure to evolve.  

The COVID-19 pandemic only accelerated the ongoing digital transformation processes, forcing banks to close their physical branches overnight and to shift both their marketing and customer services to digital channels. According to a World Retail Banking Report 2021, “the post-COVID-19 era will be defined by fierce competition, pushing banks to review priorities and realign investments in growth areas to meet higher customer expectations.” According to the study, banks can secure growth by adopting a data-driven approach and leverage their first-party data to hyper-personalize the customer experience. 

Plus, with the impending last removal of third-party cookies by Google Chrome in 2024, the need for highly-regulated financial firms to invest in collecting and organizing their customer data has never been more paramount to ensure they can not only continue to provide stellar customer experiences but also maintain the acquisition of new customers in a compliant way. Across many millions of customers, the need to map out their digital journeys to understand and maintain consent for digital advertising is a difficult process, but also impossible without good first-party data.

To help marketers in financial organizations on their journey towards data-driven marketing, we’re sharing three successful case studies, created by one of our retail bank customers:

• Hyper-personalizing the customer experience
• Driving qualified leads at a lower cost
• Improving digital self-service customer experience and reducing call-center volumes  

Ambition: Personalized customer journeys  

This multinational bank’s mission is to empower customers at all times—from the moment they open an account, through their entire customer lifecycle. 

Similar to many traditional retail banks, the customer was working with a large marketing stack and was dealing with legacy systems. For the marketing team, this meant that they had to find an effective way to synchronize all marketing channels (owned, paid media), and connect the internal customer systems.  

They reached out to Relay42 with the goal to overcome these technical challenges and help the marketing team create personalized, data-driven customer journeys across channels.   

Case study #1: Hyper-personalizing the customer experience   

Improve the customer experience on the bank’s website by personalizing the content, based on the characteristics and preferences of each individual visitor.  

Target audience 

Existing and new customers who are exploring specific products and services on the bank’s website. 

The first step was to connect the bank’s website and CRM system to the Relay42 Platform . Through a combination of on-site behavior data and CRM data, the marketing team defined four audiences and mapped their customer journeys.   

For instance, if a visitor is looking into getting a mortgage, the bank would recognize whether this visitor is an existing customer or a prospect and whether they already have a mortgage with the bank. Based on these insights, the website would recommend the next relevant information for this particular visitor.   

By personalizing the on-site customer experience, the marketing team was able to increase the CTR of the recommended content by more than 10%.

Case study #2: Driving qualified leads at a lower cost 

The main goal of the case study was to increase the relevancy of the mortgage products while decreasing the online cost per lead (CPL). 

  Target audience 

Existing and new customers who have shown interest in a mortgage product or are identified by the bank as potential homebuyers based on CRM characteristics. 

The marketing team looked at the whole customer journey of a potential homebuyer from the initial interest in a mortgage until a person books an appointment with a bank’s mortgage advisor.

Using data from the CRM, the marketing team identified characteristics of a first-time homebuyer (e.g. age, marital status).  Within the Relay42 platform, the team defined the rules that would indicate a visitor’s interest in a mortgage.

Then, the marketing team created a two-step customer journey approach: 1) one to drive leads to their online mortgage calculator tool, and 2) to encourage appointments with one of the bank’s mortgage advisors. 

The journey begins when a customer either meets the predefined CRM-based criteria or if they indicate interest on the website. When a person enters the journey, the Relay42 platform personalizes parts of the website and triggers a sequence of personalized banner ads, matching the profile of the customer. The goal is to encourage the visitors to calculate their potential mortgage using the bank’s free online calculator tool. As a second step, the marketing team created a journey for the people who had already calculated their potential mortgage. The marketing team would use the information they gathered from the online calculator and merge it with what they already knew about these customers to target their communications through several highly personalized streams. Then they could tweak the homepage messaging (and push communications) in real time, depending on whether prospects were looking to buy together or alone, or if it was their first or second home. In their communication, the marketing team would offer relevant tips for homebuyers and invite them to have a video orientation call.  

Intelligent Journey Orchestration enabled the marketing team to automatically include (or exclude) customer profiles from retargeting in real time, based on the phase of their customer journey. 

As a result, the team was able to decrease the cost per lead by more than 40% , increase the leads via search by 9% , and increase the leads for mortgage appointments via the website by more than 4% . 

Bonus result

The customer journey is always on and runs automatically, which allows the marketing team to focus on their strategy and developing new customer journeys. 

Case study #3: Improving digital self-service customer experience and reducing call-center volumes  

Help website visitors find the information they need on the bank’s website quickly and efficiently while reducing the calls towards the customer service center. 

Existing and new customers who are exploring the bank’s contact page and are about to get in touch with the call center. 

The marketing team started by exploring the most popular topics that call center agents were asked about. Based on this information, the team created a list of the most popular topics and marched this list to the relevant information pages on the website. If there were gaps in the available content on the website, the marketing team would create articles on these topics.

Next, the team started capturing the search behavior on the website and mapped it so that they would understand the steps that website visitors take before reaching out to the call center.

On the contact page, the team created a dynamic field that was filled with relevant information for each visitor, based on their latest search interaction and website behavior. This information was shown just before the website visitors would navigate to the phone numbers page, encouraging the website visitor to click on the call-to-action shown in the dynamic field.

By personalizing the website based on visitor’s search behavior, the bank was able to reduce the clicks to the phone number page by 8% and reduce calls to the customer service agents by 5%. 

Ready to learn more about how a CDP can deliver real value to traditional retail banks?

Request a demo with one of our experts and see first-hand how the Relay42 platform can help your business turn fragmented data into meaningful customer relationships.

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Evi shares 5 lessons in data-driven marketing for the finance industry

TymeBank Case Study: The Customer Impact of Inclusive Digital Banking

Full report.

This publication is also available in French  and Spanish .

Executive Summary

This case study presents insights from customer research with TymeBank clients that bolsters CGAP’s hypotheses around how digital banks can support the mission of financial inclusion. As a fully digital South African bank that disproportionately serves low-income rural customers, TymeBank has created a suite of basic products that cater to the essential financial needs of those customers, namely a low-cost transactional account and a high-yield savings account. Judging from product uptake and client testimonials, these products add to a compelling value proposition that not only resonates with customers but improves their lives.

TymeBank’s distribution network, which is based on its partnerships with the nationwide Boxer and Pick n Pay (PnP) grocery store chains, helps to keep operational costs low and passes cost savings onto customers in the form of more affordable services. A clear majority of the bank’s customers cite affordability as a key source of value and the reason they opened a TymeBank account. The distribution network also extends the bank’s reach to areas that are underserved by traditional players. The affordability and accessibility likely explain why underserved segments, such as low-income women and rural customers, are over-represented in TymeBank’s (active) customer base as compared to the overall banked population in South Africa.

Despite having access to other banking options, TymeBank customers overwhelmingly see no compelling alternatives in the market. Crucially, the value customers see in the bank appears to be inversely related to income, with poorer customers reporting higher levels of satisfaction.   

In today’s high-tech financial services landscape, which is often dominated by headlines about fintech startups and tech giants, it is easy to overlook the role banks can play in advancing financial inclusion. The high cost of running brick-and-mortar branch networks has traditionally inhibited banks from serving less profitable client segments, including the low-income groups that are the focus of financial inclusion. Banks have also been slow to adapt the digital innovations that have helped some newcomers reach these segments at lower cost. It is no surprise that some observers have questioned whether banks are even relevant to financial inclusion.

However, there are reasons to believe that banks can play an important role in financial inclusion if they overcome the challenges of their legacy systems and processes and digitize operations. In fact, banks have advantages over other types of financial services providers (FSPs) that may allow them to have an outsized impact on financial inclusion – if they are willing to expand down- market. Most importantly, banks do not face the same regulatory constraints as other providers. Whereas mobile money providers and fintechs generally cannot provide a wide array of financial products (ranging from savings to credit), banks can. License to intermediate retail deposits further plays to a bank’s advantage in the arena of digital credit. Banks can fund their lending portfolios with retail deposits that are typically cheaper than the other funding sources pure lenders use, which further reduces the cost of reaching low-income customers with credit.

CGAP previously presented three emerging business models in banking that we consider to be particularly promising for financial inclusion (Jeník and Zetterli 2020). These models are fully digital retail banks, marketplace banks, and Banking-as-a-Service (BaaS) (see Box 1). We conclude that they have the potential to deepen financial inclusion by:

• Lowering the cost of financial services; 
• Improving access to a greater variety of services;
• Creating services that better meet the needs of various customer segments; and 
• Improving the customer experience. 1

We analyzed several fully digital retail banks in a series of detailed case studies (Jeník, Flaming, and Salman 2020). One of these cases focused on TymeBank in South Africa. TymeBank is a fully digital retail bank founded with financial inclusion as a core business objective. Since its 2018 launch, the bank has onboarded over 4 million customers.

TymeBank offers low-income customers simple products at low prices, such as checking accounts, savings accounts, and debit cards – all through a distribution network that combines online and offline customer interaction based on partnerships with grocery store chains Boxer and PnP. In the area of credit products, TymeBank only offers a “buy now, pay later” option called MoreTyme. This case study provides a compelling example of how challenger banks can leverage digital technology to reach excluded customer segments with more affordable and useful products.

This paper builds on the TymeBank case study by examining the impact the bank’s services have had on low-income customers. By combining a quantitative analysis of TymeBank customer data with a phone-based survey of a randomly selected sample of low-income customers, the paper addresses the following questions:

• Does TymeBank serve low-income customers?
• Are its products relevant to low-income customers?
• What impact do the bank’s products have on low-income customers’ lives, in their own words?

The aim of this research is to shed light on the potential of digital banks to deepen financial inclusion in a way that improves the lives of low-income customers. CGAP is conducting additional research with other providers to better understand the impact of new financial services business models on customers. 2

TymeBank’s main value proposition consists of (i) simple, affordable, and accessible products; (ii) fast and automated onboarding; and (iii) incentive programs that appeal to target segments (e.g., the SmartShopper loyalty program). These are the qualities we would expect customers to point out when talking about the benefits of using TymeBank.

They are also important features that respond to three frequently cited barriers to financial inclusion: (i) expensive services, (ii) limited access points, and (iii) prohibitive know-your-customer (KYC) requirements. 3

Product affordability relies on TymeBank’s ability to maintain low operational costs and proportionally reduce them further as the bank grows. Current cost efficiency is due to the bank’s technology and microservice architecture (Flaming and Jeník 2020), its branchless model, and digitally facilitated onboarding. TymeBank onboards approximately 110,000 customers per month: about 93,500 through kiosks at an estimated cost of US$3 per customer, and about 16,500 via web at approximately US$0.60 per customer. 4

SOUTH AFRICA 5

South Africa enjoys relatively high levels of financial inclusion, including a banked adult population of approximately 85 percent in a market dominated by the country’s well-established commercial banks. However, many customers only use their bank account to receive government benefits; other use cases lag. There is little to no use of non-bank mobile money wallets.

Across demographic, socioeconomic, and geographic factors, financial inclusion levels positively corelate with higher age (people aged 18–29 are among those least included), urban areas, income level and regularity. Only 38 percent of individuals who reported having no income are banked, while 31 percent are entirely excluded.

METHODOLOGY

For the qualitative analysis based on customer interviews, 1,162 customers were screened from an overall sample of 10,000. The aim was to reach those TymeBank customers living in poverty (i.e., 70 percent or more likely to be living on less than US$5.50). Ultimately, 278 customers were identified for in-depth interviews. The screener surveys were conducted partly through interactive voice response (IVR) surveys and partly through live phone calls.

The quantitative analysis used customer data from TymeBank to assess the potential impact of the bank’s offering on its customer base, particularly individuals from groups that generally exhibit lower levels of financial inclusion. The data examined spanned a nine-month period from July 2020 to March 2021. The analyzed data correlated to active EveryDay account customers, defined as those who had performed a transaction within the past 30 days. Various sets of proxies were applied to estimate income level (e.g., onboarding location, outstanding balance, frequency of transactions, average size of transactions).

The analysis considered several important caveats:

a) We recognize that TymeBank is not representative of all fully digital retail banks in South Africa or elsewhere. The findings presented in this paper should not be interpreted as automatically applicable to other digital banks without careful consideration.

b) The research was conducted during the COVID-19 pandemic; some findings were or could be affected (e.g., as customer behavior changes in response to the pandemic).

c) Despite our best efforts to exclusively focus the analysis on low-income segments, we were unable to identify customers based on their stated income levels since TymeBank does not collect that information. Customer segmentation was performed through the previously mentioned set of proxies for the customer data analysis and through the screening questionnaire for the customer interviews. 6

d) The quantitative analysis focused on active customers with at least one transaction performed over the past 30 days, unless otherwise noted.

e) Where customers stated they had been financially excluded before opening a TymeBank account, we did not identify the underlying cause(s) of financial exclusion.

Key Findings

Does tymebank serve low-income customers.

Our research showed that TymeBank serves a higher proportion of low-income customers than the typical bank in South Africa, and a significantly higher portion of the most financially excluded segment.

Low-income customers in South Africa are relatively highly banked, although they are under-represented. South Africans earning US$200 per month or less constitute 47 percent of the population but only 41 percent of the banked population. 7 However, we estimate that this segment represents 48 percent of TymeBank’s active user base. 8

Among the three-quarters of TymeBank customers for whom data are available, 58 percent live in metropolitan areas and 42 percent in rural areas. This compares to South Africa’s rural population of 35 percent (as of 2016); we estimated this share to be even lower in 2021 (approximately 30 percent). 9 Hence, rural customers appeared to be noticeably overrepresented in the TymeBank user base.

Young, rural, low-income women comprise the most financially excluded and underserved segment in South Africa. This group forms 2.3 percent of South Africa’s banked population but 7 percent of TymeBank’s active base – nearly three times as much. 10 Finally, 13 percent of TymeBank’s active customers are first-time bank customers. 11

From a more general perspective, women in the low-income segment represent a higher-than- average share of the bank’s overall customer base sample (65 percent versus 57 percent),12 which suggests that low-income women particularly benefit from TymeBank’s services.

These findings lead us to conclude that TymeBank customers disproportionately seem to come from traditionally unbanked and underserved segments. In fact, the evidence suggests that the bank’s customer base may particularly skew toward the most underserved segments.

DOES TYMEBANK OFFER PRODUCTS THAT ARE RELEVANT TO LOW-INCOME CUSTOMERS?

Customers find TymeBank’s products useful and act upon features designed to promote certain behaviors.

The bank’s customers particularly value the low cost of its services and the convenience of access and usage. The lower their income, the more value customers seem to derive from its services. While the vast majority of TymeBank customers have previously held bank accounts, 67 percent say they see no good alternative to TymeBank (Figure 4). This response is despite the fact that, as of the time the research was conducted, the bank still only had a relatively modest payments and savings offering and had yet to launch credit products. (TymeBank has since launched MoreTyme, a “buy now, pay later” consumer credit product.) Customer endorsement seems driven by the strength of the bank’s value proposition and the low cost of its services. When asked, customers specifically appreciate the low fees (48 percent) and the high-yield savings account (38 percent).

Importantly, women make up a larger share of the total number of GoalSave (savings account) users compared to their representation in the overall customer base (3 percentage points higher). This finding suggests that female customers find value in the product, although they had slightly lower savings per user than men (US$58 versus US$59). The number of their deposits exceeds the number of withdrawals.

We did not find any significant differences in usage and product lifecycle patterns across income groups (aside from the frequency and size of transactions that correlate with income level), which suggests that TymeBank covers its customers’ essential needs across segments. The similarities in lifecycle (behavior patterns across products, such as most frequently performed type of transaction and their change over time) indicate that customers across income levels increase their engagement as they grow confident with the products.

However, important nuances do exist. For instance, the most excluded segment uses till machines for cash-in and cash-out transactions that are free-of-charge (and perhaps more accessible in certain areas), compared to the ATMs other segments prefer. This may be explained by price sensitivity that drives the preference for free till point withdrawals compared to ATM withdrawals, which are charged at US$0.61 per part of US$70.

The value generated for low(er) income customers will hopefully further expand as TymeBank expands its product offering (e.g., insurance and diverse credit products).

WHAT IMPACT DOES TYMEBANK HAVE ON CUSTOMERS’ LIVES?

Most customers report positive life changes due to their use of TymeBank. Importantly, levels of customer satisfaction increase as customer income decreases. This suggests that the TymeBank value proposition tailored to lower-income customers resonates well.

We relied on the actual voices of customers from the demand survey to gauge the impact the TymeBank offering had on its users. When asked, 73 percent of customers reported a positive change in quality of life attributable to TymeBank. The change could be associated with multiple factors. For instance, 80 percent of interviewed customers reported a decrease in the amount spent on bank fees, which is crucial for low-income segments that have historically experienced cost as one of the biggest barriers to financial inclusion. Nearly a third (31 percent) of customers who reported life improvement said that their access to financial services had expanded thanks to TymeBank. Customers also reported an improved ability to digitally transact and receive money (51 percent and 55 percent of all interviewees, respectively).

One of the most important findings concerned the ability to save. Seventy-three percent of interviewed customers reported an increase in their savings balance due to TymeBank. Savings likely drove customers’ ability to achieve their financial goals (68 percent) and improve financial resilience (32 percent).

These findings support our overall hypothesis that digital banks are well placed to deepen financial inclusion with cheaper, better products that reach beyond payments and are relevant to improving the lives of low-income customers.

It is critical to note that the high-interest yield on the GoalSave savings account was among the reasons most prominently cited by customers as driving them toward TymeBank. Our finding that female and young TymeBank customers were more likely to save using the bank service compared to what nationwide averages suggest was also important. While the national numbers show a 9 percentage point gap in formal savings between men and women (35 percent versus 26 percent), the gap among TymeBank customers favored women by 10 percentage points (45 percent versus 55 percent).

Our findings also revealed areas for improvement. Perhaps not surprisingly, TymeBank customers have not been spared the surge of fraud in South Africa. Ten percent of customers reported challenges concerning security and protection of funds. Six percent of respondents mentioned delays in service delivery and nearly the same share complained of issues related to digital access. Complaints were related to system downtime, clearing time (TymeBank is planning to offer real-time clearing), and the general concerns first-time users may have about their funds.

When asked about potential improvements, the presence of physical branches scored the highest (11 percent), followed by improved security (9 percent) related to the challenges mentioned in the previous paragraph and improved digital services (5 percent).

While these findings are encouraging, more research is needed before conclusive statements can be made about the broader role of digital banks in advancing financial inclusion. We encourage other experts to undertake similar research and add to the emerging evidence on the impact of digital banks on financial inclusion.

Acknowledgments

This case study features insights from research commissioned by CGAP and conducted by 60 Decibels and Genesis Analytics under the leadership of Ivo Jeník.

The author thanks CGAP colleagues Gayatri Vikram Murthy and Mehmet Kerse for reviewing this paper, and Gcinisizwe Andrew Mdluli for contributions and insights. Peter Zetterli and Xavier Faz oversaw the effort. Andrew Johnson led the editorial work.

This paper would not have been possible without the time and dedication of the team from TymeBank and TymeGlobal.

Flaming, Mark, and Ivo Jeník. 2020. “ How Does Tech Make a Difference in Digital Banking ?” CGAP blog post, 11 November.

Jeník, Ivo, Mark Flaming, and Arisha Salman. 2020. “ Inclusive Digital Banking: Emerging Markets Case Studies .” Working Paper. Washington, D.C.: CGAP.

Jeník, Ivo, and Peter Zetterli. 2020. “ Digital Banks: How Can They Deepen Financial Inclusion? ” Slide deck. Washington, D.C.: CGAP.

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1 To assess bank inclusivity, we developed and implemented a four-dimensional framework focused on cost, access, fit, and experience (CAFE). See Jeník and Zetterli (2020), page 42. In a business-to business (B2B) model, BaaS providers have other FSPs as their customers. Thus, their impact on end users is indirect.

2 see collection of cgap research on fintech and new financial services business models: www.cgap.org/fintech, 3 world bank global findex database (2017)., 4 atm-like machines placed in partner grocery stores – mainly pnp and boxer – allow for automated customer onboarding in less than five minutes., 5 this section is based on data from the finmark trust finscope (south africa) 2018 database., 6 the quantitative analysis used the average monthly inflows of customers originated at pnp value stores (us$271) and boxer stores (us$224) to estimate income level. the qualitative analysis estimated that 35 percent of tymebank’s customers live on less than us$5.50 per day, based on the screener survey findings., 7 the finmark trust finscope (south africa) 2018 database., 8 using place of origination (pnp value and boxer stores) as a proxy for low income., 9 south africa gateway .  , 10 the finmark trust finscope (south africa) 2018 database., 11 n = 1,162., 12 comparing screened customers (n = 1,162) and interviewed customers (n = 278)., related resources, inclusive digital banking: emerging markets case studies, digital banks: how can they deepen financial inclusion, related research, 8 billion reasons: inclusive finance as a catalyst for climate action, open finance self-assessment tool and development roadmap, global landscape: data trails of digitally included poor (dip) people.

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Case Study 7: The Digital Transformation of Banking—An Industry Changing Beyond Recognition

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• Hubert Tardieu 6 ,
• David Daly 7 ,
• José Esteban-Lauzán 8 ,
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Partly as a result of the rise of FinTechs, banking is a sector that is facing significant disruption. In this case study, we identify some of the innovations that are being made both by young start-ups and long-established banks. We explore emerging opportunities in terms of business models, as well as how new operating models will boost customer-centricity and optimize costs through intelligent automation. The challenges of strategy, leadership, and attracting and retaining digital talent are analyzed. Finally, we conclude with a discussion of how platforms will enable new ecosystems of partners to work together to create and capture customer value.

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EY. (2018, June). How convergence in banking could be an opportunity for growth . https://consulting.ey.com/convergence-banking-opportunity-growth/ . Accessed October 26, 2019.

EY. (2016). Global consumer banking survey . https://eyfinancialservicesthoughtgallery.ie/wp-content/uploads/2016/10/ey-the-relevance-challenge-2016.pdf . Accessed October 26, 2019.

IDC. (2018, March). The business value of the stripe payments platform . https://stripe.com/files/payments/IDC_Business_Value_of_Stripe_Platform_Full%20Study.pdf

KPMG. (2019, July). The future of digital banking: Banking in 2030. https://home.kpmg/au/en/home/insights/2019/07/future-of-digital-banking-in-2030.html . Accessed October 26, 2019.

McKinsey. (2018, August). The lending revolution: How digital credit is changing banks from the inside . https://www.mckinsey.com/business-functions/risk/our-insights/the-lending-revolution-how-digital-credit-is-changing-banks-from-the-inside . Accessed October 26, 2019.

OnDeck. (2019). https://www.ondeck.com/home5-lendstart . Accessed October 26, 2019.

Quartz. (2019, August). Digital banks are racking up users, but will they ever make money ? https://qz.com/1679197/when-will-digital-banks-like-n26-and-revolut-start-making-money/ . Accessed october 26, 2019.

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Tardieu, H., Daly, D., Esteban-Lauzán, J., Hall, J., Miller, G. (2020). Case Study 7: The Digital Transformation of Banking—An Industry Changing Beyond Recognition. In: Deliberately Digital. Future of Business and Finance. Springer, Cham. https://doi.org/10.1007/978-3-030-37955-1_28

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Rewriting the rules in retail banking

Retail banks have long competed on distribution, realizing economies of scale through network effects and investments in brand and infrastructure. But even those scale economies had limits above a certain size. As a result, in most retail-banking markets, a few large institutions, operating at similar efficiency ratios, dominate market share. Changes to the retail-banking business model have mostly come in response to regulatory shifts, as opposed to a purposeful reimagining of what the winning bank of the future will look like.

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Retail banks have also not kept pace with the improvements in customer experience seen in other consumer industries. Few banks stand out for innovation in customer interaction models or branch formats. Marketing investments have traditionally focused on brand building and increasing loyalty: a reputable brand stood for trust and security and became a moat, providing protection against new entrants to the sector.

Today, the moats that banks have built are more likely to restrict their own progress than protect them from attackers. Four shifts are reshaping the global retail-banking landscape to the point where banks need to fundamentally rethink what it takes to compete and win. This should be an urgent priority for banks. The pace of change will likely accelerate, with a select set of large-scale winners emerging in the next three to five years that will gain share in their core markets and begin to compete across borders, leaving many subscale institutions scrambling for relevance.

Four shifts are reshaping retail banking

Over the next three to five years, we expect a few players to emerge from the competitive scrum to gain dominant share in their core markets and possibly beyond. These firms will have taken bold and decisive actions to capitalize on the following shifts that are reshaping the industry. In some cases, these winners will be incumbents that build on an already significant share; in others, they will be institutions newer to the banking industry, which use their agility, strategic aggressiveness, and sharp execution to attract customers.

1. The traditional distribution-led growth formula no longer applies

Until the financial crisis in 2007, a retail bank’s total share of deposits was tightly linked to the size of its branch network. Over the past decade, this relationship between deposit growth and branch density has weakened. Deposits at the 25 largest US retail banks have doubled over the past decade, while their combined branch footprint shrank by 15 percent over the same period. This reverse correlation is even sharper for the top five US banks—while reducing branches by 15 percent, they increased deposits by 2.6 times (Exhibit 1). While there have been previous periods of branch contraction, they were clearly tied to economic downturns; this most recent wave of retrenchment has persisted through a period of robust economic growth.

Retail-banking branch networks are contracting across Europe, North America, and the United Kingdom (Exhibit 2), although the pace of change varies considerably between regions. Those that are ahead of the curve have reduced branches by as much as 71 percent (Netherlands). Banks in North America and Southern Europe are reducing branches and growing digital sales at a more gradual rate.

The rate of branch reduction is often tied to customer willingness to purchase banking products online or on mobile devices. Eighty to 90 percent of banking customers in the Nordics, for example, are open to digital product purchases for most financial products, compared to 50 to 60 percent in North America and Southern Europe. While customer willingness to purchase products via digital channels varies, however, the common thread is that in all markets this readiness is far ahead of actual digital sales and will require banks to catch up to consumer needs and expectations. Within any specific market, of course, there are banks that have acted swiftly to adopt digital and remote as their main channel for interactions; these banks are pulling away from the pack and have taken decisive actions on several fronts:

• Set a bold aspiration for sales/service channel mix. Banks must do more than react to shifts in consumer preferences—they need to set aspirational targets for sales and service across channels. Some customers will self-select into digital channels, but banks can do more to encourage less motivated customers to make the shift. Banks in markets like the Nordics and the United Kingdom have reduced the number of customers using branches by up to 60 percent by focusing on how to serve the heaviest branch users effectively through other channels.
• Use advanced analytics to reshape the physical footprint. Optimizing the branch network requires a deep understanding of consumer preferences in every micromarket, and of the economics of making changes at the branch level. Leading institutions are using combinatorial optimization algorithms to optimize the net present value (NPV) of the network based on granular customer data on characteristics such as digital propensity, willingness to travel, needs based on transaction patterns and branch usage, and the size and space/format of branches.
• Develop cutting-edge digital sales capabilities. Achieving meaningfully higher levels of digital sales requires sophisticated digital marketing and an understanding of how to optimize each stage of the funnel. Most consumers already seek information on financial products on digital channels, but few institutions are highly effective at converting these inquiries into digital sales. Leading banks use first- and third-party data (for example, geospatial, browsing behavior), a robust marketing technology stack (such as 360-degree view of customer, omnichannel campaigns), and an agile operating model (for example, cross-functional marketing war rooms). With these elements in place, progress can be rapid; a North American institution tripled annual online product sales in 12 months.

Leading a consumer bank through the coronavirus pandemic

2. customer experience is beginning to generate meaningful separation in growth.

Across all retail businesses—including banks—customers now expect interactions to be simple, intuitive, and seamlessly connected across physical and digital touchpoints. Banks are investing in meeting these expectations but have struggled to keep pace. Many are hampered by legacy IT infrastructures and siloed data. As a result, few banks are true leaders in terms of customer experience. Even for institutions ahead of the curve, typically only one-half to two-thirds of customers rate their experience as excellent.

The impact of this less-than-stellar performance is measurable. For example, McKinsey analysis shows that in the United States, top-quartile banks in terms of experience have had meaningfully higher deposit growth over the past three years (Exhibit 3). The few “experience leaders” emerging in retail banking are generating higher growth than their peers by attracting new customers and deepening relationships with their existing customer base. Highly satisfied customers are two and a half times more likely to open new accounts/products with their existing bank than those who are merely satisfied.

These experience leaders are adopting tactics pioneered by digital-native companies in other sectors such as e-commerce, travel, and entertainment: setting a “North Star” based on proven markers of differentiated experience (for example, user-experience design, carrying context across channels), redesigning journeys that matter most for digital-first customers and not just digital-only customers, and establishing integrated real-time measurement that cuts across products, channels, and employees. These banks know that customer experience is not just about the front-end look and feel, but that it requires discipline, focus, and investment in the following actions:

• Focus on the journeys and subjourneys that matter. The relative contribution of subjourneys (such as app downloading; activating account) in determining overall customer experience varies considerably. In fact, ten to 15 subjourneys have the biggest customer-satisfaction impact for most products and should thus be the first priority. For instance, when opening a new deposit account, the researching options subjourney has eight times the impact on customer satisfaction than other account-opening subjourneys, on average. For banks, the key is to prioritize these high-impact subjourneys and systematically redesign them from scratch—a process that can take about three to four months and result in at least a 15 to 20 percent lift in customer satisfaction.
• Change the way you engage with customers. Experience leaders understand that digitization is not just about creating a cutting-edge online and mobile experience, and that satisfaction is shaped by customer experience across channels . The experience should be seamless, especially on journeys that are more likely to take place over multiple channels, such as new account opening, financial advice, or issue resolution . One wealth manager equipped its frontline relationship managers (RMs) with robo-advice algorithms that are in sync with what customers see on the self-directed channel—and provided the RMs with daily and weekly next-best-action recommendations to nudge their clients. Banks need to deploy these tools broadly and empower their frontline staff to play a more consultative role that blends human and digital recommendations. They will also need to revisit how these employees are incentivized, shifting to a longer-term view of relationships and profitability rather than just product sales.
• Translate data into personalized products and real-time offers. The amount of data available on individual customers or prospects has exploded in recent years. The challenge is to convert these data into actionable nudges and highly relevant offers for customers that are delivered at the right moment. Credit-card companies have long offered discounts on specific spending categories or with specific retailers. Today, they can improve loyalty and share of spending by providing location-specific offers right when a customer enters a coffee shop, movie theater, or car dealership. South Africa’s Discovery, as an example, is launching a bank with product features that are informed by behavioral science and incentive-design research.

3. Productivity gains and returns to scale are back

Larger retail banks have historically been more efficient than their smaller competitors, benefiting from distribution network effects and shared overhead for IT, infrastructure, and other shared services. Our analysis of over 3,000 banks around the globe shows that while there is variation across countries, larger institutions tend to be more efficient both in terms of cost-to-asset and cost-to-income ratios. However, beyond a certain point, even larger institutions struggle to eke out efficiencies or realize benefits from scale.

We expect this paradigm to change over the next few years, as structural improvements in efficiency ratios and increasing returns to scale enable some large banks to become even more efficient. The reason is twofold: first, advances in technologies such as robotic-process automation, machine learning, and cognitive artificial intelligence—many of which are now mainstream and commercially viable—are unleashing a new wave of productivity improvements for financial institutions. Deployed effectively, these tools can reduce costs by as much as 30 to 40 percent in customer-facing, middle-, and back-office activities, and fundamentally change how work is done. Dramatic change has already taken place in banking sectors such as capital markets , where algorithmic trading and automation are radically changing the talent profile.

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The second factor leading to a wave of productivity improvement in retail banking is the shift from physical to digital channels for customer acquisition. Banks with scale—and skills in leveraging that advantage—will achieve customer-acquisition costs of up to two to three times lower than their smaller peers. Their outsized volumes of customer data will lead to better targeting and funnel conversion. As investments shift toward digital channels, the productivity gap between large and small banks will widen.

This dynamic has played out in more digitally mature industries, with firms like Amazon and Priceline acquiring customers at a significantly lower cost than competitors. As in these industries, eventually a limited number of dominant firms will emerge, squeezing out undifferentiated midsize and smaller competitors. There are early signs of this trend: undifferentiated smaller community banks in the US have lost a significant share of deposits over the last two to three years, while the three largest banks have gained share. Of course, scale is not everything. Banks that succeed in this new wave of productivity will also have taken the following actions:

• Use cutting-edge technology to automate. Over the next few years, banks will increase their use of technologies such as natural language processing and artificial intelligence to automate customer-facing interactions and complex internal tasks.
• Build and reinforce the brand. With rising digital sales consumers have more choice than ever in selecting a financial-services provider. However, our research shows that across most categories, consumers actively consider only two to three products before deciding on a purchase. So it remains as important as ever for a bank to be part of the initial consideration set. Brands with superior awareness and recognition are not only more likely to be part of the initial consideration set but also achieve higher conversion rates than lesser-known brands when they are considered. A leading credit-card provider in the United Kingdom that invested heavily in brand awareness is now twice as likely to be actively considered—by 17 percent of consumers versus 7 to 10 percent for other brands—and experiences 50 percent higher conversion when considered compared to lesser-known brands.

4. The unbundling and ‘rebundling’ of retail banking

The tight one-on-one retail-banking relationships of old are unbundling. Forty percent of US households today hold a deposit account with more than one institution. It is common to have a mortgage with one bank, an unsecured loan with a different lender, and separate deposit and investment accounts. The banking relationship is fragmenting even faster in countries with higher digital adoption.

This decline of customer loyalty provides a perfect context for firms seeking to enter banking in a selective way— focusing on the most profitable segments . Some attackers have demonstrated that while they cannot compete with incumbent banks’ broad access to customer data, they can compete effectively on customer experience coupled with aggressive pricing.

New entrants in financial services typically begin by focusing on a niche—making either a product- or segment-focused play. Their ambition, however, is often to own the full banking relationship of this segment over time—providing cards, mortgage products, and broader banking services.

The Open Banking movement , heralded by Europe’s second Payments Service Directive and the United Kingdom’s Open Banking Standards, has the potential to accelerate the unbundling of banking in the regions where it applies, leading to increasingly intense competition over the next few years. The requirement for banks to share data and provide access to consumer and small-business accounts through a common framework of application programming interfaces is likely to fuel a wave of innovation and level the playing field for fintechs and technology providers seeking entry through payments or consumer financing.

The trend toward unbundling in financial services is well under way, but where it will lead is still an open question. In industries such as music, television, e-commerce, and transportation, digital distribution led to unbundling that destroyed value for incumbents in the short term; over time, consumers tend to converge on a single provider—often an attacker. In this context, firms that effectively orchestrate platform or ecosystem environments tend to eventually emerge as winners.

The balancing act: Omnichannel excellence in retail banking

The history of the music industry over the last 20 years provides a possible model for how things will go in banking. Until the 1990s, music distribution was dominated by stores selling tracks that record companies “bundled” onto albums. In the early 2000s, digital distribution, especially via iTunes, radically reduced distribution costs. Consumers could now “unbundle” albums by purchasing individual tracks online; not surprisingly, many record stores went out of business. Over the past few years, however, we have seen a “rebundling” in the form of the streaming playlist. Streaming services are now the dominant distribution channel, with a few large players such as Spotify and Apple emerging as winners. The success of these platforms is based on their ability to create highly personalized bundles based on consumer needs and preferences, and a superior interface without the friction of purchasing tracks individually. Leaders have created significant value for consumers by using customer data and insights to deliver a superior experience, rather than by manufacturing the underlying product.

If we apply this scenario to banking, winning firms will be those that leverage superior access to customer data to provide truly differentiated and cutting-edge experiences—potentially extending beyond financial products and services. To do this effectively, banks will need to retain privileged access to information about consumers’ sources and use of funds, especially through payments and transaction activity. Banks that rebundle effectively will use this data to deliver compelling and integrated experiences that provide seamless funding, investment, payments, and money-movement capabilities. The bottom line is that in order to reverse the unbundling of financial services, banks need to make it worthwhile for consumers to have a relationship with one institution; they need to deliver not only simplicity and convenience, but also superior value. Only a few banks in each market are likely to be able to succeed with this strategy.

Already, large technology firms such as Amazon are extending into parts of the financial-services value chain, starting with areas where they have a data advantage such as payments, short-term financing for purchases, and working-capital loans for merchants on their platform. To counter the unbundling of their most profitable products, banks need to develop capabilities that few currently possess, and follow the lead of successful technology platforms:

• Retain superior access to data on transactions and financial behavior. As vast amounts of data are captured by tech firms on consumers’ behavior and preferences, one of the last bastions of valuable information is data on transactions and financial behavior. To retain unparalleled access to this data, banks will need to continue to own the transaction layer, giving them a full view of inbound and outbound activity, to form a complete picture of consumer balance sheets. Historically, this required a bank to be a customer’s primary checking-account provider; over time, we expect that institutions could do this without necessarily owning the checking-account relationship. In some cases, payments or transaction providers could see a significant share of customers’ spend volume. Financial aggregators may also be in a position to capture a broad spectrum of customer activity and use it to build an analytics advantage.
• Leverage insights to develop innovative products and features. The traditional suite of products that financial institutions offer has remained largely unchanged over the past few decades and is often structurally hard to change given how banks are organized. More nimble firms will be able to leverage insights to create unique offerings—for example, cash in a checking account could automatically be optimized for return based on financial behaviors and spend patterns without needing to ring-fence and transfer it to a separate high-yield deposit or brokerage account.
• Extend beyond purely financial services and products over time. There are a couple of clear benefits that financial institutions are likely to have relative to ecosystems being created by large tech firms. Superior access to financial information enables them to create faster and more precise offers for big-ticket products that have financing needs associated with them (such as homes or cars). For these types of products, banks could be well positioned to own the full customer journey, including the browsing experience and the transaction. One Northern European bank has developed a mobile app that integrates house searches, booking viewings, budgeting, transactions, and help with setting up a new home (for example, utilities, appliances, and renovation).

Retail banking is at an inflection point, and we expect the pace of change to accelerate significantly over the next three to five years. Success will require clarity in direction, and speed and agility in execution. Retail banks that capitalize on current shifts in the market will emerge with a winning position in their core markets and begin to compete across borders.

This article is an edited extract from the full report,   Rewriting the rules: Succeeding in the new retail banking landscape (PDF–680KB).

Vaibhav Gujral is a partner in McKinsey’s New York office, where Nick Malik is a senior partner; Zubin Taraporevala is a senior partner in the London office.

The authors wish to thank Ashwin Adarkar, Jacob Dahl, Filippo Delzi, Miklos Dietz, Dave Elzinga, Darius Imregun, Somesh Khanna, Marc Levesque, Alejandro Martinez, and Robert Schiff for their contributions to this article.

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Driving Consistent and Efficient Development Cycles Through Infrastructure Automation on AWS

Don’t just keep up: stay ahead of the curve through automation.

Today, consumers can address most banking tasks in a streamlined and frictionless manner. With just the click of a button, consumers can, for example, transfer money between accounts, deposit checks, and freeze a lost or stolen debit card. To keep up with customer expectations and interaction preferences, retail banks need to quickly launch reliable environments in which to develop consistently, iterate quickly, and shorten the feedback loop for customers and developers.

A large global retail bank recognized how manual development and deployment processes caused inefficiencies for its developers. The company turned to the experts at Stelligent, who excel at helping customers achieve complete automation of their environments, to learn how it could automate its infrastructure and application deployment processes on Amazon Web Services (AWS).

Manual Processes: Less Time Spent Innovating and More Time Spent Frustrated

Having already deployed business-critical applications on AWS, the bank understood AWS was integral to the company’s ability to digitally transform and drive customer success. A key motivation for using AWS was to enable developers to deploy testing and production environments rapidly. But the company’s intentions didn’t line up with its approach, as AWS resources were provisioned manually and inconsistently.

Developers were often kept waiting for weeks to retain a fully provisioned AWS environment ready for testing and development. Rather than submit a new environment request, teams often resorted to retaining environments from previous testing and development for net-new development work. Further, the company’s development and production environments were both manually configured and were thus inconsistent in look and design. Developers would test on development environments and when they’d move code to production environments, they would encounter errors and environment inconsistencies such as different configurations and different packages being used. Developers lost time, cycles, and patience simply working to correct environment issues and couldn’t devote as much effort to application testing, development, and deployment.

The result? Higher costs, longer development cycles, slower feedback loops, and lost opportunities to drive additional value for customers.

How Stelligent Created Company-Wide Automation Using Chef on AWS

By embedding with the company’s development team and working side-by-side, Stelligent became intimately familiar with the challenges the developers faced and made many recommendations for how the company could achieve a fully managed, fully automated environment.

Stelligent designed an entire networking infrastructure for the customer and codified development environments to launch with a click of a button. The team also created a massive enterprise-grade Chef infrastructure deployment platform capable of managing upwards of 10,000 nodes. The Chef platform manages the customer’s entire AWS infrastructure, including development, testing, staging, and production environments; everything is managed by the Chef server. All the configuration on the servers are configured by Chef. Many AWS services are used in the automation process, including:

• Amazon Elastic Compute Cloud (Amazon EC2) provides the company compute power and instances on which they run their environments
• AWS CloudFormation manages and provisions AWS resources in a consistent and predictable fashion. A developer uses AWS CloudFormation to specify the size and type of Amazon EC2 instance they’d like to use and then Chef defines the EC2 instance internal configuration and executes scripts to install components onto the Amazon EC2 instance
• Amazon Simple Storage Service (Amazon S3) provides large-scale file storage
• AWS Identity and Access Management (IAM) securely controls user access to various AWS resources
• Amazon Virtual Private Cloud (VPC) provisions a logically isolated section of AWS enabling the company to have complete control over its virtual networking environment. All VPCs, associated subnets, and route tables are defined in code that is checked in and committed to a central version control repository. Any changes to be made have to go through code, committed to the repository, and then executed through an automated process

Ruby is used for general purpose scripting and orchestration-layer implementation, and Hudson, an open source continuous integration tool written in Java, runs self-service components implemented by Stelligent. Hudson provides users a single pane of glass to execute automated tasks, such as pushing new Chef cookbook changes to Chef Server, launching new development environments, and running Continuous Integration builds for the various Chef cookbooks and libraries.

Delighting Internal Teams and Customers Through Rapid Deployment Cycles

Thanks to Stelligent’s automation of its entire environment, the bank began to fully realize the benefits of using AWS and drove significant improvements for the business, including:

• Reducing the lead time to launch an environment from 720 hours to 2 hours
• Significantly shortening coding, testing, developing, and deployment cycles and bringing products to market faster
• Eliminating manual developer tasks to allow more focus on developing value-added features to drive customer satisfaction and engagement
• Improving infrastructure governance and limiting risk by designing automation while adhering to AWS best practices and prohibiting developers from making manual changes to network components
• Providing instant ability to scale up environments to meet market demands and scale down environments to eliminate idle resources and reduce costs
• Designing for high availability and eliminating any single point of failure within the architecture
• Shortening customer feedback loops to be able to rapidly improve the company’s products and services
• Improving end-customers’ experiences by ensuring applications are thoroughly tested in the right environments prior to deployment and eliminating application errors

The bank can now confidently focus on being at the forefront of digital innovation on behalf of customers rather than struggling to keep up with industry trends.

Retail Banking Case Study

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RETAIL BANKING IMPORTANT CASE STUDIES

Important case studies on retail banking.

In this article, we’ll provide you with retail banking case studies from 2024 Study material available for CAIIB DEC Exams.

A popular course at IIBF is CAIIB (Certified Associate of India Institute of Bankers) (INDIAN INSTITUTE OF BANKING & FINANCE). After clearing the JAIIB exam, which is a flagship course offered by the Indian Institute of Banking and Finance, candidates can take the Certified Associate of Indian Institute of Bankers (CAIIB) exam. The CAIIB aims to help people make better decisions by offering cutting-edge information in industries such as international banking, balance sheet management, credit management, risk management, and economic analysis.

The case studies below are provided to test the bankers’ understanding of risk management which is one of the elective exams under CAIIB as they prepare for the CAIIB NOVEMBER 2024 attempt.

It would be simple for you to complete these case studies if you had already gone over the syllabus.

CAIIB RETAIL BANKING CASE STUDY NOV 2024

Civic areas were the focus of the” casing for All by 2024″ action, which included the following factors and options for States, Union homes, and metropolises. Slum recuperation of slum residents with the help of private inventors using land as a resource; Promotion of affordable casing for weaker sections through credit-linked subvention; Affordable casing in cooperation with Public & Private sectors; and. subvention for devisee-led individual house construction or improvement.

Read Also: CAIIB NOVEMBER EXAM 2024 | SCHEDULE OF LIVE CLASSES

Respond to the following queries.

• The slum recuperation program will offer an average central entitlement of Rs. per house.
• Amounts 1 lakh

2) What interest subvention on home loans taken out up to a 15- time term will be given to EWS/ LIG orders under the Credit Linked Interest subvention element?

• 5.6 percent
• 6.5 percent
• 5.8 percent
• 8.5 percent

3) For both orders, what will be the subvention pay- eschewal per house under the Credit Linked Interest subvention element?

4) Under the Affordable Housing in the Partnership program, how much central aid will be given per dwelling for the EWS category?

• Amounts: 1 lakh

5) How much central assistance will be offered under the Affordable Housing in Beneficiary-led Individual House Construction or Improvement Program for EWS Category houses?

• a: One lakh rupees
• b: 6.5 percent
• c: 2.3 lakhs rupees
• b: 1.5 lakhs rupees

CREDIT CARD RETAIL BANKING CASE STUDY

Credit Card Case Study in Retail Banking

Mr. X has been loaning his ABC Bank credit card. The bank has set an Rs. 2000,000,000 spending cap on his card. He purchased Rs. 150000 in July 2016 and paid Rs. 120000, which was a portion of the outstanding sum of Rs. 150000, on the due date (10 August 2016). He made an additional Rs. 70,000 buy on August 11th, 2016. The bank charges a monthly interest rate of 2%.

Respond to the following inquiries.

•  What would be the monthly minimum payment amount for credit card bills?
• 3% of the balance owing
• 5% of the amount due
• 8% of the amount due
• 10% of the amount due

2) Given that the bank charges interest at a rate of 2% per month, what is the user’s annual effective rate?

3) Daily interest will be charged starting on August 11, 2016, on any unpaid balance.

4) The total interest charged on 10 September 2016 will be-

5) How much would Mr. A need to pay off all of his debts by the deadline of September 10th, 2016?

1-b A minimum payment of 5% is required.

Effective interest rate=(1+r)^n-1

= (1+0.02)^12-1

= 1.26824-1

Daily interest charged= Due outstanding*12/365*r

=(30000+70000)*12/365*0.02

=100000*12*.02/365

Total interest paid = number of days with an outstanding balance * Daily interest

From July 11, 2016, to August 10, 2016, there were 30 days.

*65.75\s=1973

30000+70000+1973 = 101973 for the 5-day outstanding amount plus further purchase and interest.

Read Also: RETAIL ASSET PRODUCTS | EDUCATIONAL LOANS

CASE STUDY ON QR CODE

Bharat QR: A QR code is a pattern of black squares on a white backdrop that may be read by a camera or other image device.

The item to which the QR is associated has information on it.

Please respond to the following inquiries about Bharat QR.

• Bharat QR is a……mobile payment system-
• P2P (Person to Person)
• P2M (Person to Merchant)
• M2P (Merchant to Person)
• M2M (Merchant to Merchant)

2) The Bharat QR payment network is derived from other payment networks. the NPCI, Visa, and Mastercard

• Only (i) and (ii)
• Only (i) and (iii)
• Only (ii) and (iii)
• (i), (ii), and (iii)

3) What fees are associated with utilizing Bharat QR?

• No additional fees are incurred when using the Bharat QR.
• Depends on the Bank
• Depends on the App
• Depends on the Transaction Amount

4) Is it possible to link multiple bank cards to one app?

• No. A single app does not allow the linking of many cards.
• A single app allows you to link several cards from different banks.
• Yes. A single app allows for the linking of multiple cards from the same bank.
• none of the preceding

5) MPIN is the first factor of 2FA for Bharat QR when logging into a mobile application. The second component is considered to be….

(i) MPIN, (ii) OTP, (iii) ATM pin

• Only (i) or (ii)
• Only (i) or (iii)
• Only (ii) or (iii)
• (i) or (ii) or (iii)

6) How many transactions per day are permitted?

• Set at the bank’s end

7) The maximum number of Bharat QR transactions per day?

• There is no cap on the number of transactions
• There is no transaction limit.
• There is no transaction limit but your debit/credit cards may have daily transaction dollar limits.
• Set at bank’s end

1-b, 2-d, 3-a, 4-c, 5-d, 6-d, 7-c

CASE STUDY ON PMJJBY

Answer the following inquiries for PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA (PMJJBY)

• a. Min-18, Max-40
• b. Min-18, Max-50
• c. Min-18, Max-60
• d. Min. 18; max. 70 days

2) What is the payable premium?

• Rs 12 per month
• Rs. 12 per annum
• Rs. 330 per week
• Rs. 330 per year

3) How much would be due in the event of a subscriber’s death from any cause?

• One lakh rupees
• two lakh rupees
• three lakh rupees
• five lakh rupees

4) What would be the insurance premium to be paid to LIC or another insurance company?

• Rs. 330 per member per year
• Rs. 289 per member per year
• Rs. 30 per member per year
• Rs. 11 per member per year

5) What premium would be allocated for the agent, BC, Micro, or corporate reimbursement of expenses?

6) How much of the premium would go toward paying the participating banks’ administrative costs?

1-b, 2-d, 3-b, 4-b, 5-c, 6-d

Read Also: CAIIB RETAIL BANKING LATEST SYLLABUS 2024

STUDY MATERIAL FOR RETAIL BANKING 2024

Candidates for the CAIIB are provided with various resources and tools by the IIBF LEARNING CENTER to help them pass the tests. To learn concepts, use these CAIIB study tools and brief notes. These notes will help you swiftly study the whole CAIIB EXAM 2024 syllabus while making the topics more understandable. The ePDFs of the notes you’ll receive is based on the CAIIB SYLLABUS 2024.

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