Standard Bank Group Limited · JSE:SBK
Standard Bank — Investor Day (June 2003)
174 slides from Standard Bank's investor day presentation, June 2003
Slide 1: Blueprint for growth
blueprint for growth 1
Slide 2: Retail Banking Analysts Day June 2003
Standard Bank Group Retail Banking Analysts Day June 2003 Peter Wharton-Hood
Slide 3: Organogram
Organogram Managing Director Peter Wharton-Hood Mass Market Bancassurance Home Loans Card Banking Products Stannic Charles Chemel Clive Tasker Clive Tasker Craig Bond Peter Schlebusch Dipak Patel SBIS SBSA Transactions Card SBFC Diners Lending Club SET Bluebean Joint Ventures Retail Africa Branch Ne
Slide 4: Retail banking's key focus
Retail banking’s key focus • Customer driven • Service • Continued improvement in market share • Expand mass market offering • Further improve branch and support processes • African retail expansion • Banking Charter • Business Banking integration • Customer focused product delivery 4
Slide 5: Programme for the day
Programme for the day Home Loans Clive Tasker Card Craig Bond Banking Products Peter Schlebusch Stannic Dipak Patel Distribution Operations Alewyn Burger IT Bancassurance Clive Tasker Marketing Sarah-Anne Orphanides Mass Market Retail Banking expansion Peter Wharton-Hood into Africa 5
Slide 6: Retail Banking in Perspective
Retail Banking in Perspective Jörg Fischer
Slide 7: Headline earnings mix
Headline earnings mix Property Finance Business Banking 3% 12% SCMB (3%) (10%) 25% Stanbic Africa (22%) 10% (7%) Liberty 6% (10%) InternationalOperations 8% STANLIB (14%) 1% Retail Banking (1%) 35% (33%) ( ) Dec 2001 7
Slide 8: Trend analysis
Trend analysis 2000 72 1 796 1800 70,1 70 1600 1 441 1400 68 1 170 1200 66 Rm 1000 % 785 64,5 64,5 64 800 600 62,2 62 400 60 200 0 58 1999 2000 2001 2002 Headline earnings Cost-to-income ratio 8
Slide 9: Balance sheet drivers
Balance sheet drivers Assets*¾ Dec ’02 Dec ’01 Dec ’00 Rm Rm Rm Mortgage advances 42,131 35,696 32,164 Stannic (Total) 20,720 17,142 16,184 Loans and advances 10,495 9,783 9,345 Card debtors 3,124 2,665 2,425 *Performing book only Liabilities¾ Dec ’02 Dec ’01 Dec ’00 Rm Rm Rm Investment accounts 28,
Slide 10: NII per major category
NII per major category 5% 18% (6%) (18%) 53% (50%) 24% (26%) Banking Products Mortgage advances Stannic (Total) ( ) Dec 2001 Card 10
Slide 11: NIR per major category
NIR per major category 2,0% 2,5% 3,0% (2,1%) (2,7%) 5,7% (3,0%) 7,6% (5,4%) (7,3%) 56,9% 22,3% (57,5%) (21,9%) Point of representation and electronic banking fees Card based commission Insurance income Financial advisory services Documentation and administration fees International service fees Other
Slide 12: Analysis of operating expenses
Analysis of operating expenses 2,4% 2,7% (2,6%) 13,8% (2,7%) (9,5%) 33,0% (32,1%) 5,2% (5,9%) 6,1% (6,2%) 13,0% (12,9%) 23,9% (28,1%) Staff Operational Information technology Premises Credit processing Communication Depreciation Other ( ) Dec 2001 12
Slide 13: Headcount
Headcount 13,9% (13,2% ) 86,1% (86,8% ) Head office staff Network staff Dec ’02 Dec ’01 % Growth Rm Rm Total Headcount 19 294 19 021 1,4 ( ) Dec 2001 13
Slide 14: Home Loans
Home Loans Clive Tasker Standard Bank | jf Group
Slide 15: Domestic home loan market
Domestic home loan market • Continued growth in residential market • Flight to quality after failure of 2nd tier banks • Ever increasing demand for home loan finance • Home loan market more competitive • Mortgage originators exert greater influence • Consolidation of Estate Agents and Originators •
Slide 16: Strategic imperatives
Strategic imperatives • Build the ‘best quality Home Loan book’ in SA • Manage a ‘multi channel’ origination environment • Importance of branch network • Engage independent originators of choice • Maintain strong incentivised mobile sales force • Leverage technology for ‘end to end’ processing • Inc
Slide 17: Strategic imperatives
Strategic imperatives • Profitability remains a key driver • Product design and ‘risk based pricing’ • Customer segmentation and action plans • Customer acquisition – critical mass and market share • People • Correct profiling • Development • Empowerment • Structured hindsighting 17
Slide 18: 2000/2001 - identification of issues
2000/2001- identification of issues • Need to write desirable business • Need to improve TAT’s (“turn around times”) • Business re-engineering of processes • Put credit at front of process • Increase use of application scorecards • Improve relationships with all channels 18
Slide 19: Productivity
Productivity 1999 2000 2001 2002 No of grants processed 39,251 54,611 60,138 85,723 Grants per operational staff 47 68 77 107 Grants processed (Rm) 6,730 10,408 12,881 22,446 Grants per operational staff 8 13 17 28 (Rm) No of registrations processed 31,054 42,576 50,266 64,001 Registrations per oper
Slide 20: South African market share trends
South African market share trends New business – per Roitec 40% 35% ABSA 30% SBSA 25% Nedcor 20% FirstRand 15% BoE 10% Investec 5% 0% Mar-01 Mar-02 Mar-03 Nov-00 Nov-01 Nov-02 Jul-01 Jul-02 20
Slide 21: South African market share trends
South African market share trends DI 900 market share 40% 35% 30% ABSA 25% SBSA 20% Nedcor 15% BoE 10% FirstRand 5% Investec 0% Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 21
Slide 22: Home loan origination
Home loan origination • Will continue with multi channel strategy • Focus has shifted from volume to quality • Commission formula to reflect this • ‘Hand pick’ independent originators • Branch network and direct will be leveraged • Re-enforce highly incentivised Mobile sales force 22
Slide 23: Home loan origination
Home loan origination % of business registered by origination channel by value 35% Priority Suite 30% Branches 25% Customer Contact 20% Centre 15% Mobile Home Loan Centres 10% Other Internal 5% 0% MSA.Com Jan-02 Jul-02 Nov-02 Sep-02 Mar-02 May-02 Other External 23
Slide 24: Credit management
Credit management • Pre-Legal trends • Centralisation finalised in June 2002 • All staff profiled and up-skilled • Improved management of early delinquency • Cost of collections reduced in real terms year on year • Despite 4% rate increase we were able to maintain our arrear percentage year on year
Slide 25: Value of pre-legal as a percentage of book
Value of pre-legal as a percentage of book 8.00% 7.00% 6.00% 1998 5.00% 1999 4.00% 2000 3.00% 2001 2.00% 2002 1.00% 0.00% Jan Sep Nov Jul Mar May 25
Slide 26: Credit management - legal trends
Credit management • Legal trends • Early identification of loss given default accounts in Pre-Legal • Strong relationships with our service providers focussing on cost and efficiency • Marketing focus prior to Sale in Execution coupled with growth in property value improved our recovery rate • Utili
Slide 27: Value of legal as a percentage of book
Value of legal as a percentage of book 6.00% 5.00% 1998 4.00% 1999 3.00% 2000 2001 2.00% 2002 1.00% 0.00% May Mar Nov Jan Sep Jul 27
Slide 28: Credit management
Credit management • Trends in PIPs • 34% reduction in PIP portfolio during 2002 • 70% reduction in holding cost year on year • 37% of current PIPs fall within the Servcon arrangement • Marketing focus within the legal process reduced the buy-in of properties substantially • PIPs sold at fair value.
Slide 29: Number of PIPs
0 1000 2000 3000 4000 5000 6000 7000 Jan-01 Apr-01 Number of PIPs Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 29
Slide 30: Value of PIPs
Rm 0 100 200 300 400 500 600 Jan-01 Apr-01 Value of PIPs Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 30
Slide 31: Outlook
Outlook • Interest rate outlook will maintain market bouyancy • Focus on implementing and leveraging processing technology • People profiling and development • Lessons from Global Mortgage Round Table • New product development (DreamStart) • Enhance profitability 31
Slide 32: Card Services
Card Services Craig Bond Standard Bank | jf Group
Slide 33: Status quo
Status quo… • EDS take-back process proceeding well (staff, premises, systems applications and some hardware successfully migrated) – final mainframe cut-over 14-16 June on track • Strong, motivated Card business and IT leadership team in place • Good in-house Credit management, scoring, collections
Slide 34: The financial landscape
The financial landscape • Good market share growth - now at 25.8% • Continued record card openings • Improved credit premium costs • NPL’s reducing 27.00 SBSA market share of debit balances 25.82 26.00 Securitisation of 24.94 Edcon book 25.00 24.00 % 23.00 22.09 22.00 21.60 20.94 21.00 20.00 Nov-00
Slide 35: The business model
The business model • Two distinct interdependent businesses (issuing and acquiring) • A differentiated (Multi branded) front end supported by a “common kitchen” • Responsive market facing business • Increase receivables to become primarily a lending business within an acceptable risk profile • Incre
Slide 36: How do we get there
How do we get there… Associates / JVs SBG strategy Competitors (eg. MasterCard, Visa, Global Monolines) 4. Organisation 1. Staff Lending G8 • Lines of authority • Culture •Credit granting CSF3 • Values •Collections improvement and operations • Management process • Job description etc • Training etc
Slide 37: Origination performance year-to-date
Origination performance year-to-date • Growth in card base is due mainly to increased applications and not lower quality • Using branches more effectively • Pre-approval of cards on opening of cheque accounts • Card origination – speed and cross sell • Pre-approved campaigns 37
Slide 38: Credit management
Credit management • Implementation and good performance of new application scorecards • Improved application limits for packaged cards • Improved MIS and data mining skills • Mastercard Electronic (credit nursery) launched • Cash plan launched • Use of bureau scores to target external data bases 38
Slide 39: Average score June - April
Average score June 02 - April 03 920 Implemented 900 new 880 scorecard 860 840 820 800 780 760 740 720 Aug-02 Apr-03 Jun-02 Jul-02 Sep-02 Oct-02 Nov-02 Dec-02 Feb-03 Mar-03 Jan-03 Average Score Score Cut-off 39
Slide 40: Declined applications
Declined applications Declines - Score and Policy 80% Implemented new scorecard 70% # of declined accounts 60% 50% 40% 30% 20% 10% 0% Aug-02 Apr-03 Jun-02 Jul-02 Sep-02 Oct-02 Nov-02 Dec-02 Feb-03 Jan-03 Mar-03 Declined Score Declined Policy 40
Slide 41: Next steps
Next steps… • More aggressive credit granting and extension -but always within an acceptable risk profile • Determine and understand our appetite for balance transfers and how we are going to compete in the store-card space • Potential partnerships with appropriate merchants • Possible further lower
Slide 42: Conclusion
Conclusion • Despite global regulator pressures (ARB, OFT and Walmart cases) on interchange, SBSA initiated Edgar Dunne industry interchange study and SARB sign-off of process and outcomes secures future revenue streams • Africa’s first EMV transaction processed by SBSA and will be ready for full Sm
Slide 43: Banking Products
Banking Products Peter Schlebusch
Slide 44: Strategy
Strategy Origination and sales • Aggressively grow account numbers through focus on: – Understanding customers needs by segment – Staff ethos and behaviour – Better product design – Improved sales processes – Increased share of wallet through cross-sell Fulfilment • Improve the processes related to
Slide 45: Strategy
Strategy Retention and optimisation • Continue to improve the quality and design of credit scorecards to – Manage lending quality – Access new markets • Increase percentage of sales and fulfilment through direct channels • Capitalise on data-mining quantitative predictive analysis, and CRM tactics t
Slide 46: Market share: resources demand
Market share : resources demand (Total market size R126,6bn) 30% 25% ABSA 20% BoE FirstRand 15% Nedcor 10% SBSA 5% Other 0% Jan-01 Sep-01 Jan-02 Sep-02 Jan-03 May-01 May-02 Source: DI returns 46
Slide 47: Market share: resources term
Market share: resources term (Total market size R84,3bn) 35% ABSA 30% BoE 25% FirstRand 20% Investec 15% Nedcor 10% Saambou 5% SBSA Other 0% Jan-01 Sep-01 Jan-02 Sep-02 Jan-03 May-01 May-02 Source: DI returns 47
Slide 48: Market share: advances demand
Market share: advances demand (Total market size R21,8bn) 35% 30% ABSA 25% BoE 20% FirstRand Nedcor 15% Regal 10% SBSA 5% Other 0% Apr-01 Oct-01 Apr-02 Oct-02 Jan-01 Jan-02 Jan-03 Jul-01 Jul-02 Source: DI returns 48
Slide 49: Market share: advances term
Market share: advances term (Total market size R30,5bn) 30% ABSA 25% African Bank 20% BoE First Rand 15% Nedcor 10% Saambou 5% SBSA Other 0% Apr-01 Oct-01 Apr-02 Oct-02 Jan-01 Jan-02 Jan-03 Jul-01 Jul-02 Source: DI returns
Slide 50: Advances: number of accounts - demand
(000s) 350 360 370 380 390 400 410 420 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Advances: number of accounts - demand 50
Slide 51: Advances: number of accounts - term
160 165 170 175 180 (000s) 185 190 195 200 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Advances: number of accounts - term 51
Slide 52: Resources: number of accounts - demand
Resources: number of accounts - demand 980 970 960 (000s) 950 940 930 920 910 900 May-01 May-02 Jul-01 Jul-02 Mar-01 Mar-02 Jan-01 Jan-02 Sep-01 Nov-01 Sep-02 Nov-02 52
Slide 53: Resources: number of accounts - term
(000s) 400 410 420 430 440 450 460 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Resources: number of accounts - term 53
Slide 54: Strategy - pricing
Strategy Pricing • Continue to simplify and implement pricing changes – Which reflect value to the customer – Limit revenue leakage – Manage penalty pricing – Reflect segment strategies 54
Slide 55: Classic - pay as you transact
Classic – pay as you transact SBSA ABSA FNB Nedbank Key Transaction Type Avg Median 2003 2003 2003 2003 Transactions Value ATM Cash withdrawal 4.0 R440 R25.96 R24.00 R23.80 R23.80 EAP 1.0 R450 R5.00 R3.75 R3.00 R4.88 Debit order 3.0 R200 R14.25 R14.25 R18.00 R15.75 Stop order 1.0 R250 R4.00 R6.18 R6
Slide 56: Achiever - pay as you transact
Achiever – pay as you transact Silver FirstCheque Current Acc SBSA ABSA FNB Nedbank Key Transaction Type Avg Median 2003 2003 2003 2003/2004 Transactions Value ATM Cash withdrawal 4.0 R470 R25.98 R24.00 R23.80 R23.80 SASWITCH cash withdrw 1.0 R300 R11.05 R9.20 R9.20 R9.15 EAP 1.0 R550 R5.25 R4.25 R6
Slide 57: Prestige - pay as you transact
Prestige – pay as you transact Gold Status / Current Acc Gold SBSA ABSA FNB Nedbank Key Transaction Type Avg Median 2003 2003 2003 20032004 Transactions Value ATM Cash withdrawal 2.0 R490 R12.83 R12.00 R11.90 R11.90 SASWITCH cash withdrw 1.0 R420 R11.82 R11.00 R11.00 R10.95 EAP 1.0 R960 R7.05 R6.25
Slide 58: Prestige - fixed monthly fee option
Prestige – fixed monthly fee option Fixed Monthly Fee Options SBSA FNB ABSA 2003 2003 2003 Classic 1 R60.00 R70.00 N/A Achiever 2 R80.00 R90.00 N/A Prestige R115.00 R115.00 10 R77.00 transactions Secondary accounts Free R57.50 30 R99.00 31+ R165.00 1 Total of debit transactions1. ABSA do not offer a
Slide 59: SME - mainly cash business
SME – mainly cash business Cash Business Ave No of SBSA ABSA FNB Nedbank Tranacti Transac on Value tions Cash Deposit 3018 8 205.22 253.51 253.61 289.73 ATM Withdrawel 600 2 16.28 13.8 13.7 13.06 Cheque Encashment 3248 2 58.46 52.8 70.63 - Cheque 1000 10 130.00 211.50 180.00 204.4 EAP 1000 5 40.00 2
Slide 60: SME - mainly non-cash business
SME – mainly non-cash business Non-Cash Business Ave No of SBSA ABSA FNB Nedbank Tranacti Transac on Value tions Cash Deposit 3018 0 - - - - ATM Withdrawel 600 2 16.28 13.8 13.70 13.06 Cheque Encashment 3248 0 - - - - Cheque 1500 10 180.00 304.00 180.00 296.90 EAP 1300 5 47.50 21.00 45.00 64.98 Exte
Slide 61: SME - mainly internet customers
SME – mainly internet customers Internet Customer Ave No of SBSA ABSA FNB Nedbank Tranacti Transac on Value tions Cash Deposit 3018 0 - - - - ATM Withdrawel 600 2 16.28 13.8 13.70 13.06 Cheque Encashment 3248 0 - - - - Cheque 1000 0 132.00 50.40 108.00 189.24 EAP 1600 12 37.50 21.00 60.00 78.85 Exte
Slide 62: Key risk areas
Key risk areas • Lacklustre macro economic performance leading to decreasing consumer behaviour • Lower balances and numbers of transactions • Lower number of accounts • Sustained high interest rates limiting lending and increasing bad debts • Onerous legislation and compliance requirements: • Incre
Slide 63: Competitive advantage
Competitive advantage • Size and breadth of customer base allowing access to markets • Reach of single brand • Credit scoring and behavioural scoring systems • Consistent and reliable credit management practices • Extensive distribution network allowing leverage of sales and service • Good momentum
Slide 64: Credit management
Credit management • Reducing cost of credit through extensive use of scorecards • Business and credit working together to refine scorecards to achieve growth in lending within acceptable limits • New lending strategies are done on a test basis with economics clearly understood prior to extensive rol
Slide 65: Value of new NPLs vs. value of performing book
Value of new NPL's vs. value of performing book 120 11,000 100 Performing Book Value(Rm) 80 New.NPL's (Rm) 2001 NPL 9,000 2002 NPL 60 2001 PB 2002 PB 40 7,000 % Cumulative 20 New NPL's to Total Performing Book 5,000 0 Dec 2001 June March November January July September October December April August
Slide 66: Outlook
Outlook • Capture potential revenue in our extensive customer base • Grow middle income market • Systematically refine customer value propositions by segment • Improved customer experience through leveraging technology / infrastrucure • Extend strategic alliances and JV’s – especially transformation
Slide 67: Stannic
Stannic Dipak Patel Standard Bank | ji Group
Slide 68: Repositioning 1998
Repositioning 1998 • Board decision to restructure and reposition Stannic • Questions raised: • Profitability and sustainability prospects • Environment (competition, macro-economic conditions, flat / declining new vehicle sales in a rising rate cycle, declining margins) • Risks of radical repositio
Slide 69: Financial indicators 1995-1998
Financial indicators 1995 - 1998 1995 1996 1997 1998 Payout (Rbn) 7.4 9.4 9.2 7.7 Costs (Rm) 399.4 456.6 566.0 610.6 NPBT (Rm) 409.0 240.4 199.9 37.5 Bad debts (Rm) 104.4 223.9 388.9 288.8 Margin: Prime +1.22% +0.76% +0.55% -0.01% Cost-to-income (%) 40 50 52 65 ROE pre tax (%) 52 24 17 3 Bad debt bo
Slide 70: Strategic options
Strategic options • A mounting financial crisis, unfavourable markets and poor market positioning left Stannic with 3 choices: • Remaining focused on the dealer market • Joint ventures with OEM’s • A direct strategy into customer base 70
Slide 71: Analysis of options
Analysis of options • Motor dealer strategy • Undesirable as core • Cost structure strategy, but necessary as • Competitor positioning supplementary • Associated with the crisis • Includes alliance strategy with select dealer groups • Supportive of business acquisition strategy not affected by brand
Slide 72: Analysis of options
Analysis of options • Direct strategy • Available and accessible customer base • Relative cost competitiveness – Origination costs – Operating costs The only – Customer service workable option leverage • Strength of brand and relationships • Originators had become direct competitors • Alliance strat
Slide 73: Critique of objectives
Critique of objectives •Diversify asset base •Credit and risk Management • Lower costs of • Acquisition • Operations •Effective penetration of the Highly SBSA customer base successful •Retain quality Stannic client •Focused and relationship based Relatively dealer strategy •Emphasis on Fleet busines
Slide 74: Financial indicators 1998-2002
Financial indicators 1998-2002 1998 1999 2000 2001 2002 Payout (Rbn) 7.7 7.6 9.3 11.3 13.9 Costs (Rm) 610.6 574.0 492.9 437.3 489.2 NPBT (Rm) 37.5 135.0 226.2 313.4 498.2 Bad debts (Rm) 288.8 266.8 194.9 151.9 149.2 Margin: Prime -0.01% -0.65% -0.59% -0.73% -0.75% Cost-to-income (%) 65 59 54 48 43 R
Slide 75: Key drivers
Key drivers Costs, Volumes and Margins Core Objectives Strategic Focus Areas Critical Success Factors 1.Further Focus on costs of : • Channel differentiation integration into • Acquisition • Remote Sales Force SBSA channels deployment • Operations 2. Retain the •Technology solutions quality Stannic
Slide 76: Market share
Market share Asset Book Value 35% 30% ABSA 25% CitiBank FirstRand 20% Investec 15% Nedcor Other 10% SBSA 5% Stannic 0% 1999 2000 2001 2002 76
Slide 77: Asset based finance market
Asset based finance market 100% Total Market Stannic 2.1% Agricultural 3.2% 4.0% Aircraft, boats 4.5% 6.4% Other 2.6% 80% 16.2% Industrial, commercial Percentage of Total and office equipment 27.2% 60% 21.3% Commercial vehicles 21.9% 40% 26.4% Used cars 19.1% 20% 23.3% New cars 21.3% 0% 77
Slide 78: Stannic book
Stannic book Corporate / Commercial by asset class and value 100% 90% 80% 70% Other 60% Comm Plant & Eq. 50% Office Equipm. 40% Passenger Vehicles 30% Comm Vehicles 20% 10% 0% 1998 1999 2000 2001 2002 78
Slide 79: Stannic book
Stannic book Retail by asset class and value 100% 90% 80% 70% Other 60% Comm Plant & Eq. 50% Passenger Vehicles 40% Comm Vehicles 30% Agric 20% 10% 0% 1998 1999 2000 2001 2002 79
Slide 80: Customer base
Customer base SBSA vs Non-SBSA – retail book 70% 60% 50% 40% SBSA 30% Non SBSA 20% 10% 0% 2001 2002 80
Slide 81: Customer base
Customer base SBSA vs Non-SBSA - Retail payout 70% 60% 50% 40% SBSA 30% Non SBSA 20% 10% 0% 12/1/03 12/2/03 81
Slide 82: Strategic markets
Strategic markets Asset class focus areas • New and used motor vehicles • Truck and Bus • Aviation • Medical/Yellow Plant and Equipment/Office • Rentals/Structured Finance and Project Finance • Public Sector • Empowerment • Africa 82
Slide 83: Strategic markets
Strategic markets Customer segment choices • Standard Bank customer base • Corporate / Commercial • Affinity • SME • Priority • Consumer market • Non-SBSA market • Business • Personal 83
Slide 84: Outlook
Outlook • Key business drivers for sustainability into the future: • Cost containment and process efficiency • New business volumes Customer focus • New business margins • Risk management and pricing • People • Interest rate environment - growth enhancer 84
Slide 85: Distribution
Distribution Craig Bond / Alewyn Burger
Slide 86: Distribution mandate
Distribution mandate… • “Fire up” the branch network - People - Sales / Market share - Service - Best practice • Watch headcount and expenses like a hawk • Develop an integrated multi-channel (Direct and Physical) distribution strategy by segment (Priority, Affinity, Business, Agriculture, SME and M
Slide 87: Firing up the network
Firing up the network… • The right team • Provincial and area leadership • Central sales, service and strategy specialists • The “new” branch manager • Tough calls • The right culture • Team commandments • Zero tolerance principles • The right to good leadership • Sales / Market share growth • Sales
Slide 88: Firing up the network (continued)
Firing up the network (continued)… • Service • Sales strategy by channel, by segment, by product • CEBS and CUSSATS • Top 50, 100 and 150 branches • Service centres and Autobank E’s • Branch design, configuration, utility and location • Best practice • Project office and central repository • Directo
Slide 89: Multi channel distribution philosophy
Multi channel distribution philosophy • Channels integrated into value proposition for customers • Availability (access), choice and control • Service focus • Common experience • Strategic focus: • Increased focus on customer segment requirements • Increased focus on physical placement • Integrate c
Slide 90: Multi channel distribution philosophy
Multi channel distribution philosophy • Cross channel integration: (now and in the future) • Functions become ubiquitous across all channels • Consistent look, feel and experience • Seamless cross channel management of customer identity • Integrated customer contact management • Integrated sales eff
Slide 91: Physical distribution
Physical distribution Strategic focus • Placement strategy and functional design • Following our customers • Maintenance • Customisation • Branches • Service centre • Autobank centres • Auto E • Business centres • Analysis by geography 91
Slide 92: Physical distribution
Physical distribution Vital Statistics • PORs • 682 branches and service centres • 130 AutoBank E centres • Transactions • 8 million per month, growing at 10% pa • Additions • At least 22 Auto E’s this year • 6 other PORs • 40 other enlarging/revamping projects • New developments • Review of functio
Slide 93: Internet
Internet Strategic focus • Reducing dormancy and de-registrations • Enhancing system availability and speed (improved by 25%). • Improved functionality, adding access to new products and improving usability • Encouraging use of the channel for product applications and account opening Vital statistic
Slide 94: Internet
Internet New developments • Central profile management facility • New look and feel • More wealth management capability • Simplified account opening 94
Slide 95: Telephone banking
Telephone banking Strategic focus • Improve usability through slick navigation and consistent voice interface • Targeted at clients who do not have internet access or while clients are on the move • Huge growth potential on this channel with 20 million telephones in the country Vital statistics • 40
Slide 96: Mobile banking
Mobile banking Strategic focus • Banking on the move • Informed money • Becoming network agnostic and ubiquitous across networks • Potential extension into Africa Vital statistics • Have downloaded applications: 13 500 • Users in a month: 6 000 • 27 000 transactions per month (20% of them were value
Slide 97: ATM channel
ATM channel Strategic focus • Enhancing access for customers- more units of the right type located more conveniently • Improving usability of on screen functions • Upgrading technology • Greater focus on cash and dash Vital statistics • Over 2 600 cash dispensing devices • 500 non-cash devices • 26
Slide 98: Customer contact centre
Customer contact centre Strategic focus • Customer support - managing communications • Channel support - technical help desk • Direct product sales Vital statistics • Operators: 400 • Calls: 200 000 per month • Call answering performance (80% to be within 20 seconds) is 86% • Abandonment rate is les
Slide 99: Operations
Operations Alewyn Burger Standard Bank | jf Group
Slide 100: Business operations
Business operations BUSINESS OPERATIONS BUSINESS CUSTOMER OPERATIONAL SOLUTION SERVICE SERVICES DELIVERY QUALITY RETAIL PROVINCIAL PROVINCIAL SECURITY PROCESSING PRODUCTIVITY LOGISTICS COMPLIANCE OPERATIONS OPERATIONS SERVICES SERVICES SERVICES SERVICES 100
Slide 101: Operations philosophy
Operations philosophy • End-to-end process thinking • Design the optimum process • Provide infrastructure to the business • Partnership with and extension of business • Central standards, de-centralised execution 101
Slide 102: Business operations
Business operations BUSINESS OPERATIONS BUSINESS CUSTOMER OPERATIONAL SOLUTION SERVICE SERVICES DELIVERY QUALITY RETAIL PROVINCIAL PROVINCIAL SECURITY PROCESSING PRODUCTIVITY LOGISTICS COMPLIANCE OPERATIONS OPERATIONS SERVICES SERVICES SERVICES SERVICES 102
Slide 103: Operations strategic focus
Operations strategic focus • Service excellence • Process excellence • Infrastructure excellence • Repeatability across function and geography • Create capacity for growth • Reduce cost 103
Slide 104: Strategic objectives
Strategic objectives • Service • Consistent customer experience • Increased responsiveness • Increased customer face to face time • Reduced complexity and seamless channel options • Increased economies of scale • Further processing consolidation • Standardisation drive • Crime intelligence • Process
Slide 105: Business - key drivers / indicators
Business - key drivers / indicators • Customer satisfaction • Customer ratings (Markinor) improved from 79,1% in November 2000 to 84,3% in April 2003 • Achievements positively impacting cost to income ratio: • Operations year on year cost growth below inflation for the last 5 years – 1998 10% – 1999
Slide 106: Business - key drivers / indicators
Business - key drivers / indicators • Violent crime losses year on year April 2003 vs. 2002 • Number of incidents down 6% (118 to 111) • Value of SBSA losses down 20%, from R14,2m to R11,3m • SBSA share of industry incidents down 12%, from 29% to 25% • SBSA share of industry cash losses down 33%, fr
Slide 107: Operations focus
Operations focus • Process • New teller value system • Common application and fulfilment processes • Centralised processing (Home Loans, Card, Stannic, etc) • End to end cash optimisation • Re-engineering of processes to substantially reduce paper usage and storage • Alignment of processes in Retail
Slide 108: Operations focus continued
Operations focus continued • Infrastructure • Physical premises projects • Single source of customer data • Industry cheque processing rationalisation and drive industry initiative for cheque image exchange and truncation • Cash end-to-end process re-engineering, automation and rationalisation • Imp
Slide 109: Group IT
Group IT Alewyn Burger Standard Bank | jf Group
Slide 110: Strategy: strong alignment between business and IT
Strategy Strong alignment between business and IT • Aligning IT activity to business strategy via “Programmes of Work” • Developing integrated business and IT architectures • Aligning IT organisation seamlessly with the business organisation Globalisation Emergent technologies • Enterprise architect
Slide 111: Key Drivers and Indicators
Key Drivers and Indicators Governance Business Retail Executive Committee Strategy Programmes Programme of Work Committee of Work IT Executive Project Sponsor Meetings Budget Investigation Definition Design Construction Rollout Blue Process 111
Slide 112: Project Solomon
Project Retail Stanbic Stanlib SCMB International Solomon Africa Domestic Retail IT Africa IT Stanlib IT SCMB IT SBI IT Strategy Architecture Application Development Information Risk Management 1st Line Desktop/ Application Supp Strategy and Innovation Project governance Procurement / Architecture a
Slide 113: User satisfaction ratings
User satisfaction ratings 100 99.5 2001 99 2002 98.5 2003 Target 2002 98 Target 2003 97.5 97 Oct Apr Nov Dec Sept Feb Jun Jul Aug Jan Mar May 113
Slide 114: System availability (SASWITCH)
System availability (SASWITCH) 2002 100.1 100 99.9 99.8 SBSA 99.7 ABSA 99.6 Nedcor 99.5 FNB 99.4 99.3 99.2 Oct Apr June July Nov Dec Sept Jan Feb Aug Marc May Source: Saswich 114
Slide 115: Volumes
Volumes Internet Banking 7,000,000 6,500,000 6,000,000 5,500,000 ATM’s 5,000,000 24,000,000 23,000,000 4,500,000 22,000,000 4,000,000 21,000,000 20,000,000 19,000,000 18,000,000 Branch Processing 1 3 5 7 9 11 13 15 10% 115
Slide 116: Major IT focus areas
Major IT focus areas Distribution • New Delivery System - Teller MIS • Business Banking CRM • Enterprise Information Warehouse • Smart Card • Marketing Knowledge Repository • Private Bank CRM • Card MIS • Offshore internet Banking • Credit MIS • Home Loans MIS Maintenance and Support Processes • Re-
Slide 117: Competitive advantage
Competitive advantage Solution Delivery - QPEP International Benchmark FdI (fp) 2002 $/fp SI (fp) fp/staff-month Effort overrun Elapsed months Time slippage QPEP International Ranking M1 errors All testing errors PEP measure Total Banks only PEP member Minimum Median Top quartile Sample size 60 13 2
Slide 118: Operational cost efficiency - Compass and Gartner
Operational cost efficiency - Compass and Gartner International reference groups Component Cost Value Legend Mainframe 32% R67m pa Better than benchmark Unix 75% R99m pa MS desktop support 6% OS2 client/server 20% Wide area network 17% OS2 client/server 20% 118
Slide 119: IT operations capability
IT operations capability 2001 2002 2003 (Year End) Operational Disaster Recovery Mainframe Capacity 4721 5738 7103 5400 (MIPS) Storage Capacity 28 34 38 30 (Terabytes) Unix Machines 200 220 260 DR NT Machines 350 450 500 Included 119
Slide 120: Future
Future FRONT- FRONT-END / CHANNEL ENTERPRISE COMMON FRONT- FRONT-END CENTRALISED ENTERPRISE ENTERPRISE COMMON BACK- BACK-END PROCESSES ENTERPRISE SYSTEM PROCESSES MANAGEMENT SYSTEMS CENTRE/ / CHANNEL MANAGEMENT INFORMATION ENTERPRISE SYSTEMS ATM MANAGEMENT MANAGEMENT (EMS e.g. SAP) ENTERPRISE MANAGE
Slide 121: Bancassurance
Bancassurance Clive Tasker Standard Bank | jf Group
Slide 122: Bancassurance business
Bancassurance business Bancassurance Embedded Intermediated Bought Sold Product Seller "Integrity" "Integrity" via via Existing distribution Specialised distribution 122
Slide 123: Strategy - embedded
Strategy - embedded • “Bought” products • Product “integrity” • Distributed via existing distribution channel (i.e. no additional cost) • High volume / low cost • Penetration and cross-sell 123
Slide 124: Strategy - intermediated
Strategy - intermediated • “Sold” products • Seller “integrity” • Distributed via specialised distribution channels • Liberty Joint Venture • Penetration / cross-sell 124
Slide 125: Key drivers and indicators
Key drivers and indicators 1999 2000 2001 2002 Embedded Penetration Funeral 8.4% 13.1% 15.3% HLP 6.9% 10.3% 13.1% PLP 20.4% 24.8% 28.8% Policies Funeral 61,280 204,802 332,135 476,503 HLP 7,543 19,389 29,972 40,945 PLP 163,360 238,869 279,815 327,351 Intermediated Liberty Placement 55% 65% 85% 125
Slide 126: Key risk areas
Key risk areas Embedded • Unknown impact of Aids • Increased legislation impacting compliance ability (FAIS and PPR) Intermediated • Liberty performance • Asset performance • Sales force management • Increased legislation impacting compliance ability (FAIS, PPR and FICA) 126
Slide 127: Competitive advantages
Competitive advantages Embedded • Extensive customer base and distribution reach • System capability to handle volumes • Competitive products • Good customer service Intermediated • Extensive customer base and distribution reach • Focus on core competencies • SBSA – Distribution • Liberty – Sales ma
Slide 128: Future
Future Embedded • Capitalise on system capability • Increase penetration • Expand product offerings e.g. Dependant Care • Expansion into rest of Africa Intermediated • Increase penetration • Specialised distribution force • Expand existing force for target market • Opportunity in Mass/Affinity segme
Slide 129: Marketing
Marketing Sarah-Anne Orphanides
Slide 130: Marketing challenges
Marketing challenges • Managing a unitary brand with diverse customer base • Delivering relevant and differentiated communication • Developing differentiation in a commoditised market (re channel, service and product) • Finding the right profitable centres of gravity in our customer base (segmentati
Slide 131: How do we segment our customers?
How do we segment our customers? Personal Market (70%*) SME (30%) Profit Customer # Market Base Market Base Contribution (11.3m**) (480k***) 10% Priority 1% 33k Medium sized Enterprises 60 000 Turnover R5m Affinity 29% 70% BCI 27% (of SBSA 29% Small BCI) 420 000 enterprises 3.5k BCI 86% Mass 70% (of
Slide 132: Opportunities for growth are evident
Opportunities for growth are evident Penetration over income and turnover categories Personal Market Main Bank Usage – 2002 SME Main Bank Usage – 2002 70 35 32 60 31 30 30 Total Mass Affinity Priority 28 28 27 27 50 49 49 25 ABSA 47 42 22 22 40 21 21 20 36 19 35 % 18 % 35 32 33 31 30 29 15 15 29 Sta
Slide 133: Five key strategies
Five key strategies • Drive acquisition by increasing profitable market share in Affinity and Upper Mass • Drive expansion by leveraging optimal X-sell opportunities, with focus on Affinity and SME • Drive retention by retaining main bank usage share in Mass, Priority and SME • Build service leaders
Slide 134: Why the drive to support the brand?
Why the drive to support the brand? • Customers believe that all banks offer the same products • Customers perceive that no single bank is offering superior products • Product perceptions and selection largely driven by existing bank usage • Key drivers for customer loyalty and satisfaction driven b
Slide 135: Why Simpler. Better. Faster.?
Why Simpler. Better. Faster.? Brand Commitment Drivers Description ler Simplified banking Banking that is simple to use and simple to p m Si understand, or a simple account for all my needs e r Competence Competent and reliable staff that are honest and t t Be trustworthy Unconditional positive rega
Slide 136: Ratings show continuous improvement
Ratings show continuous improvement Customer Opinion and Service Rating over Time 8.50 8.40 8.30 Mean Score out of ten 8.20 8.10 8.00 7.90 7.80 y = 0.0171x + 7.921 7.70 R2 = 0.7569 7.60 October 2000 September 11 2001 April 2003 Agree that SB is SBF Service rating out of 10 … and against competition*
Slide 137: Opportunities exist with non customers
Opportunities exist with non customers Customers Non-customers 100 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 Simplify Competence High customer Leadership Promptness Simplify Competence High customer Leadership Promptness Regard Regard 2000 2001 2002 2000 2001 2002 Proportion of p
Slide 138: Four key themes used to focus marketing
Four key themes used to focus marketing Activities, Integrating Brand, Product and Channel Theme Pride and Nesting Vibe Customer Pride Cocooning relevance Patriotism Home bound Respect Introspective Big 5 Leadership Simplify Customer Regard Customer Regard C D Brand Cricket- message SBF banking, to
Slide 139: Mass
Mass Peter Wharton-Hood Standard Bank | jf Group
Slide 140: Mission
Mission Striving to improve customers’ lives by providing convenient, value-for-money banking services in a secure and caring manner Positive for: • Government relations • Bank / employer relations • SBSA infrastructure • Other segments • Bank economics 140
Slide 141: Mass Market primary needs
Mass Market primary needs Qualifiers Differentiators • Sustainability • Stewardship • Accessibility • Consistency • Affordability • Simplicity • Competence • Enablement • Scale • Leadership • Transferability 141
Slide 142: Mass Market functional needs
Mass Market functional needs Pay Day Cash Purse / Virtual Cheque EFTS Pay Away Cash 3rd Party Payments POS Payments Today Pay Away EFTS Another Day Nupay intermediation Another Day Savings and Protection Micro Loans Investments A Better Way Mortgage Asset Finance Micro Loan 142
Slide 143: The market
The market Characteristics Response • Employer driven deposits • Keep close to employer • Simple account opening • Low average balances • Low interest /high margins • Keep money safe in account • Small # of transactions per account • Promote delayed transactions • Get scale • Keep accounts open long
Slide 144: Offering built around 2 key pillars
Offering built around 2 key pillars Transactional Product = E Plan Self Service Channel = AutoBank E E = Easy, Everyday, Electronic 144
Slide 145: E Plan
E Plan Description Electronic (card-based) day-to-day transactions and small savings account Unique Features Dual purse concept - transactions pocket / savings pocket Embedded value Gateway to credit and protection products Product Attributes Accessible to anyone with R50 and an ID / Passport Extens
Slide 146: AutoBank E
AutoBank E Description Specialized delivery channel with limited product set; consultant area and ATM area Unique Features Non-cash environment - safe and simple Staff from community / speak vernacular Educational assistance - product understanding and ATM use Channel Attributes Extended hours Safe
Slide 147: How are we doing competitively
How are we doing competitively 147
Slide 148: Standard Bank maintains the highest share in the Mass Market
Standard Bank maintains the highest share in the Mass Market, followed by ABSA Weighted data Main bank used 1999 2000 2001 2002 n=1250 n=1255 n=1250 n=1252 Standard Bank 32 32 35 35 ABSA 23 27 26 28 FNB Group (nett) - - - 20 FNB 23 24 21 20 Saambou - 1 - - Nedcor Group (nett) - - - 11 Nedbank 3 2 2
Slide 149: Incidence of strongly holding each point of view
Incidence of “strongly” holding each point of view (amongst users of each bank) Big 5 image analysis Weighted data n=Mass sample SBSA ABSA 2000 2001 2002 2000 2001 2002 n= 214 461 474 202 407 427 % % % % % % High customer regard 73 82 84 82 78 81 Simplify 86 90 92 93 86 91 FNB Peoples 2000 2001 2002
Slide 150: Competitor analysis of 2003 increase
Competitor analysis of 2003 increase Impact of pricng changes on “typical E Plan customer” No Type of Ave Cost Cost % of transactions amount 2002 2003 Increace ABSA FNB Peoples Trx 1 Monthly N/A R5.00 R5.50 10% R4.20 R4.50 R3.70 management 2 Cash Withdrawals R450.00 R7.50 R8.30 11% R11.60 R11.90 R9.
Slide 151: Key E Plan revenue drivers
Key E Plan revenue drivers • % of accounts with electronic salary deposit • Number of non-zero accounts • Total balances • Average balance per non-zero accounts • Number of transactions per account 151
Slide 152: Transactional value drivers
Transactional value drivers E Plan Total number of active accounts greater than nil balance Electronic Salary Deposits 2,550,000 42% 2,500,000 41% 2,450,000 40% 2,400,000 39% Electronic Salary Deposits 2,350,000 38% 2,300,000 37% 2,250,000 36% 2,200,000 Jan- Feb- Mar- Apr-02 May- Jun- Jul-02 Aug- Se
Slide 153: Society Scheme
Society Scheme A group savings account, for three or more members. For funeral assistance, grocery clubs, savings, investment clubs, jazz clubs and school fees. Sharing happens at the end of the year Society Scheme Balances MTD Average 600 500 400 300 Actual 200 100 0 Jan-02 Jul-02 Sep-02 Nov-02 Mar
Slide 154: E Loan
E Loan Mass credit – unsecured, small value, short-term personal loan product for formally employed electronic depositing customers. The product has fixed monthly repayment and no revolving facility. Gross Advances Value of new loans 250 30,000 200 25,000 20,000 150 2002 Gross 15,000 100 advances 20
Slide 155: Funeral Plan dependant care
Funeral Plan dependant care An embedded product that provides funds to cover funeral expenses in the event of the death of the principal or nominated family members. An Optional Dependant CarePlan was also introduced whereby both the member and spouse can be covered with benefits of R2 200 per month
Slide 156: FGL and AHL/DreamStart
FGL AHL/DreamStart A housing loan product, using a pension A mortgage product with the property as a fund guarantee, as security for the loan. primary security for the loan aimed at Funds must be used for housing as per potential home buyers (first time or Pension Fund Act. Collections are done via
Slide 157: Mass Market - product mix
Mass Market - product mix Mass Market contribution E Plan and Society Scheme income 3% 10% 0% 11% 8% 37% 10% 51% 58% 18% 10% E-Plan and SS NII 11% 31% ABIL Saswitch FuneralPlan Internet Cash Deposit FGL Management fee AHL Transaction / Service fee Penalty fee 157
Slide 158: Mass Market critical success factors
Mass Market critical success factors • Passionate and knowledgeable people • Staff skilling • Simplified end-to-end processes • CAO / TVT / BDS/ ICI • Alliance optimisation • ABIL/EDCON/Soccer • Optimised delivery infrastructure • Design/Location/Layout • Customer understanding and education • Radio
Slide 159: Retail Africa
Retail Africa Peter Wharton-Hood
Slide 160: What do we want to achieve
What do we want to achieve • To be Africa’s premier retail banking business …prior to entering retail banking in other emerging markets • Making a real difference to the lives of our customers • Contributing significantly to Stanbic Africa’s bottom line • Number 1/2 in retail in all countries we com
Slide 161: What does Africa look like?
What does Africa look like? Private Banking (0.1m ) SME (0.5m) Affluent (0.9m) Trader (10m - 15m) Salaried (Middle and Lower) (10m) Regularly Paid (8m) Irregular income earners (140m) Sized based on countries in which we are represented (excl. SA) 161
Slide 162: Competitive environment
Competitive environment • At independence multinational banks dominated • 3 types of banks now exist • Multinational banks – Focus on wholesale and retail corporate employees - limited small business banking – Standard product range • Government commercial banks – Serve the lower end of the retail m
Slide 163: What we have
What we have • Countries in different stages of development • Financial services industry • Infrastructural challenges • Payments limitations • Our banks in different stages • Established retail position • Integration of acquisition • Emerging retail position • Weak product/package/brand/sales/servi
Slide 164: Overview of current network and retail account base
Overview of current network and retail account base Country Emphasis on Retail market Number of Number of retail share branches ATMS Lesotho ◕ 60% 23 23 Malawi ◕ 40% 20 9 Swaziland ◕ 45% 14 18 Namibia ◕ 37% 22 72 Uganda ◕ 35% 65 12 Zimbabwe ◑ 5% 14 21 Botswana ◔ 2% 6 8 Zambia ◔ 2% 7 6 Ghana ◔ 1% 3 0
Slide 165: Challenges
Challenges • High circulation of funds outside formal banking system • Informal substitutes have filled traditional banking space • Relatively low percentage of salary earners • Capital locked up • People skills, communications, tech/touch trade-off 165
Slide 166: Priorities - build the basics and drive the bottom line
Priorities - build the basics and drive the bottom line • Leverage our infrastructure/competencies/ partners to get volume • Provide real value for money • Keep costs down and optimise processes • Use capital strategically 166
Slide 167: Leverage our infrastructure, competencies and partners to get volume
Leverage our infrastructure/ competencies/partners to get volume • Enhance the product range • Build service/sales capacity • Group schemes/bulk sales 167
Slide 168: Provide real value for money
Provide real value for money • Product standardisation • Switching/CMA cross-border transactability • Appropriate product solutions • Debit/credit card issuing acquiring solution • Solve 3rd party payments • Loan product range • P2P cross-border account/cash to cash • Segmentation and propositional
Slide 169: Keep costs down and optimise processes
Keep costs down and optimise processes • Getting the basics right • Volume of work, headcount and capacity management • Cash and security • Compliance/Operational losses • Structures • Skilling up for retail (profiling, training, performance management/pay) • Centralisation/Process improvement/Netwo
Slide 170: Key success factors
Key success factors • Achieve scale • In-country, region, Pan-African • Transactional, operational, product management, people system, sales system • IT development/maintenance • Skill up for retail – all about the people • Service, Sales, Product management system • Right people in right places • S
Slide 171: Sequencing activity has been key
Sequencing activity has been key 2001 2002 2003 2004 2005 Laying the ground/quick Pricing, Leakage Customer Insight wins Developing capability/ cost Processes, Premises reduction Building competencies People, Service Enhance revenue Product, Payments, Sales streams Adhoc Operational Service Sales 17
Slide 172: Sequencing
Sequencing Frontline Market Product Sales and The Build the Channel enhancement re con- Migration segmentation service figuration and drivers basics optimisation and VPs introduction optimisation Resource • Business • Removal • Branch • Payroll • Sizing • Standardi- • Target setting allocation proce
Slide 173: Synergy - Retail/Wholesale
Synergy – Retail/Wholesale • Wholesale gives/Retail gets • Access to enterprise customers for retail • Electronic delivery of salaries • Public sector business as basis for retail service • Scale to build on • Wholesale gets /Retail gives • Customers served holistically – lower competitive threat •
Slide 174: Retail banking - the winning formula
Retail banking - the winning formula • People • Strategy • Execution 174