CAIB 34th Conference

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CAIB 34th Conference

• Defining the Market Space

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Defining the Market Space

• Theme of this conference Defining the Market
  Space
• Parochial, Regional or Global?
• Sub themes
• Day 1 The Platform for Regional Growth
  Expansion
• Day 2 Beyond CSME Carving out our space in the
  Global Financial Services Market
• This presentation Regionally Connected Payment
  systems that talk to each other

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From the Indigenous Banks Perspective

• Where are we coming from?
• Where are we now?
• Where are we going?
• Competition
• Product Development Innovation
• Technology
• Customer Service/needs

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Where are we coming from?COMPETITION

• Regional landscape dominated by
• RBTT, BNS, First Caribbean
• Republic NCB
• OECS Eastern Caribbean member states
• Indigenous Banks
• Credit Unions
• Money Market Brokers

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Where are we coming from?COMPETITION Contd

• Branch Networks Bricks and Mortar DOMINATE
• Advantages
• Face to Face
• Seemingly personalized service know the
  manager
• Cultural satisfaction No need to change

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Where are we coming from?COMPETITION Contd

• Disadvantages of Physical Delivery Channel
• Ineffective for every day banking Long line-ups
• Inconvenient Customers physically travel to
  branch
• Inefficient Expensive for day to day services
• Discourages Electronic Channel Migration

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Where are we coming from?Product Development

• INSIDE OUT APPROACH!
• Little innovation Loans, Mortgages, Deposits
• Wealth management delivered separately and under
  developed
• Insurance separated
• Money Market Brokers separated

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Where are we coming from?Technology

• Minimal investment
• Disparate applications and architecture
• Undeveloped networks
• Electronic Banking non existent except for ABMs
  extension of branch network
• Local clearing systems Jets (Ja.), Linx (TT),
  Cariss (Bar.)
• 7-14 days clearing
• Poor cash management products Overdraft
  facilities to manage cash flow Expensive

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Where are we coming from?Customer Service

• Decentralized - Branch only
• Call centre acts as a telephone operator
  transfer call to branch
• Customer complained but no choice same level of
  service
• No reason to evaluate customer needs
  Take what is offered, not offer what is needed

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Where are we today?

• Big changes in the last 5 years
• Offering 1st world banking products
• Outside in Focus - Focus on customer needs
• BOJ implemented ACH2
• Convert paper cheques to electronic
• Next step cheque truncation
• Only the image returned to banks and customers

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Where are we today?Competition

• Canadian banks return to the Region
• RBC, CIBC, BNS (never left but now ramped up
  services)
• Heavy investment in integrated technology
• Focused on regional/international expansion
• Raise the bar high

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Where are we today?Competition Contd.

• Republic NCB need to concentrate on their
  expansion strategy
• Is there still time to expand regionally?
• How? Acquisition, Mergers, Collaboration (White
  label)
• Do they have the technology? ?
• Do they have the will and leadership?
• OECS, Indigenous Banks, Credit Unions
• Merge, Collaborate, Partners ( Non-Bank)
• Potential Capital Adequacy re CB supervision due
  to Patriot Act.

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Where are we today?Product Development

• Electronic Banking and Channel Migration is KEY
• Funds Flow Management for B-B, B-G, B-C, G-G,
  G-C, C-C
• Funds Flow is the lifeblood of the GDP and hence
  Banking
• Every payment drives a receivable
• Supply Chain Collection Systems
• Innovative Products (Corporate drives Retail)
• Corporate payroll leads to Payroll loans, Bill
  payments, Investments, Savings, Cards Dr., Cr.,
  Loyalty

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Where are we today?Product Development Contd.

• Wealth Management as part of Cash Management
• Merchant loans lend future receivables
• The channel becomes the driver of product
  innovation
• Government collections and payment products
• Mitigate fraud and increase efficiency

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Where are we today?Technology

• Banks and near banks upgrading applications and
  architecture
• Governments automating clearing systems
• Same day clearing
• No more float for banks
• Local switches are in advance stages of
  development but still disparate

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Where are we today?Technology Contd.

• Touch points are ubiquitous and shared
• ABM for cash. But why? Expensive
• POS dominating touch points Merchants and
  card-holders
• Wireless POS Restaurants, distributors and
  increase security
• Call centre Electronic activation and resolve
  queries
• IVR View balance and bill payments

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Where are we today?Technology Contd.

• Sophisticated Card Applications with switch built
  in
• Common standard - Open standards technology for
  easy connectivity
• Still no one switch on top of Local switches
• Opportunity!

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Where are we today?Customer Service

• Call Centre is the hub for all channels daily
  activities
• Branches deliver added value services Mortgages,
  Wealth Management, Insurance
• Understanding customer complaints lead to needs
• CEO chairs customer complaint committee
• Bundle products around cards Dr., Cr., Loyalty,
  Affinity, Gift Co-branded cards
• Use bundled pricing to drive channel migration

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Where are we going?

• Industry Consolidation
• Economies of scale Market share cost
  efficiencies
• Self Service 24/7
• End to end electronic technology
• Customize Products for strategic customers
• Funds Flow management dominates
• SME closer cultural association
• Remittances high share of GDP
• Government relationship technology dependent
• Bank the cash society 40-100 of GDP

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Where are we going?Competition

• International Players Canadian Banks
• Who will bank the Government?
• New banks emerging from the Wealth Management
  side JMMB/Intercommercial Bank
• Credit Unions Indigenous banks
• Sell products and manage store front only
• Outsource back office (IT Ops.) to managed
  service provider
• Non regulated entities that provide value add
• Telecom Digicel, CW
• Network Providers Cirrus Plus
• Technology Companies
• Global Brands Visa, MasterCard

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Where are we going?Product Development

• All products developed around cards Dr., Cr.,
  Loyalty, etc
• Fungible products to suit needs B-B, B-G, B-C,
  G-G, G-C, C-C
• Enticement pricing
• Bring investment get X off loans
• Bring mortgage or car loan get insurance coverage
• Life Cycle Banking
• Young educated upward mobile
• SME
• White Label products
• Own the customer storefront by providing the
  brand

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Where are we going?Technology

• Not a barrier anymore
• Key is to ensure openness and not proprietary
• Ensure global technology standards for
• Touch points, Networks, Applications, Data Base
  and Security
• More banks deploying managed services by
  outsourcing their IT and Operations departments
• The CELL PHONE becomes the convergence of all
  touch points in the hand of every individual
• There are more cell phones than there are POS
  ABMs
• Cash society all have cell phones

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Where are we going?Customer Service

• Customers Real Kings and Queens
• Cell phones simplify the delivery channel
  authentication, settlement, convenience and
  flexibility
• Cards and cell phones become the personalized
  market intelligence tools
• Skills in analysing market needs
• Debit/cash market
• SMEs
• Remittances
• Existing long term relationships

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What are the alternatives for Indigenous Banks
and Credit Unions?

• Much more collaboration
• Separate storefronts to protect brand
• Innovative product development is KEY
• Know your customer needs
• Share IT and back office processes outsourced to
  common provider
• Control the DEBIT market regionally and
  internationally for all your customers
• Canadian banks cannot do this by themselves
  through Visa
• Hire skill set with sales, marketing and
  psychology
• The behavioural science

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What are the alternatives for Indigenous Banks
and Credit Unions?

• Follow your customers where they go
• Regionally Travel ( Pleasure and Business )
• Internationally Travel, Remittances,
• Link with network provider or Telecommunications
  company
• Share database so as to provide unique products
• Link with Visa or MasterCard for Credit
• Share revenue with middlemen
• Form Technology company to implement a Regional
  Switch that links all local switches

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Closing Message

• The Caribbean Landscape is closing fast
• Do your analysis
• Be decisive
• Smaller institutions cannot go it alone
• Build a people culture of managing continuous
  change
• Focus on the cash society
• Focus on controlling electronic payments
• Provide fee base income

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The Winners

• Those institutions who are astute at managing
  change, day by day, hour by hour
• Those institutions that place more value on their
  Human Capital than on processes and technology
• Need a CHAMPION!
• The CEO, MD
• Sanctioned by the board

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Are you ready?

• WE ARE!

HIPNET Inc.
THANK YOU FOR YOUR ATTENTION