The Retail Banking Group

Retail Banking Group
Shinsei Analyst Day 2005
October 6, 2005
Table of Contents
CREATING A UNIQUE BANKING EXPERIENCE
-------------------------
2
CUSTOMERS
---------------------------------------------------------------------------
13
CHANNELS
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18
PRODUCTS
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28
STAFF
-------------------------------------------------------------------------------
32
IMAGE
--------------------------------------------------------------------------
34
KEY MEASURES
CONCLUSION
-------------------------------------------------------------------
45
------------------------------------------------------------------------
53
1
CREATING A UNIQUE
BANKING EXPERIENCE
March 2000 – Where We Started
Shinsei Bank is formed when the Long Term Credit Bank (LTCB) is
privatized.
The Old LTCB Individual Banking was:
Funding engine for corporate loan business
Sold debentures
Not defined as a profit-earning business proposition
Had no need to focus on customer service
Customer base:
Concentration of high net worth individuals
65% of customers over age of 50
Image: upscale bank for wealthy individuals to park retirement
money
24 branches across Japan, adjunct to centers of corporate banking,
mainly Tokyo and Osaka
3
Retail Banking in Japan
An under-served market
ATM services are inconvenient and expensive
Most banks do not offer 24hx7days ATM access
Banks may charge up to 210 yen per withdrawal
Cumbersome and difficult – Lots of forms and waiting
in queues
The post office still dominates
Very low penetration of investment products
4
Shinsei Style
A set of values that defines Shinsei in customer terms.
Responsive
Accessible
Always available
Always understands and
when I need it
anticipates my needs
[24hx 7days]
Delivers value
Easy & convenient
Offers the best solution for me
Is easy to deal with
Banking that ‘wows’
Overall theme: Empowerment
(Customers manage and control their banking needs)
5
Accessible – 24hx7days
6
Easy and Convenient
- Extended Hours & Saturdays
7
Responsive
- Instant Account Opening
8
Delivers Value
NO FEE - ATMS & Funds Transfers*
* Customers with a/c balance of ¥10M or more at the end of the previous month are
allowed to make domestic fund transfers through PowerDirect free of charge
(refundable) up to 30 times per month. Otherwise, up to 5 domestic fund transfers
are free (refundable).
9
The story so far
‰ Despite the backdrop of a struggling economy we have
successfully established a unique and thriving retail banking
business:
9 A great brand franchise – with almost limitless potential
9 A tremendous team of people at all levels
9 A proven and flexible “bricks and clicks” business model
9 Robust and constantly improving business processes
9 Technology advantage – the ability to aggregate risk on a real-time basis
9 A fast growing customer base
9 Strong revenue growth
9 A sustainable profit-growth trajectory
10
We have chosen how we want to
position ourselves
A Mega bank?
A Niche bank?
A “New kind of bank”
9 Totally customer centric
¾
¾
¾
¾
Informed
Responsive
Accessible
A trusted business partner
9 Big but not mega
9 A leader not a follower
9 Fast and flexible
11
Vision and Mission
OUR VISION
We are creating a new type of Bank
OUR MISSION
To be the Only One for our Customers
OUR VALUE
We Care!
OUR MOTTO
Our Customers’ success is our success
12
CUSTOMERS
Customers - Key success factors
9 Acquisition momentum - we have a compelling value
proposition
9 Efficient acquisition - remote channels to acquire customers
more efficiently
9 Targeted acquisition – segmentation/relationship potential
based
9 PowerWelcome and Customer Development process - to
optimize customer activity
9 Customer Care – to improve customer loyalty and retention
14
Retail Bank Profile
as of June 2005
Mass Retail
100%
0.3%
90%
16.5%
2.6%
4.4%
0.0%
Mass Affluent
HNW
5.5%
23.5%
80%
70%
63.9%
61.8%
60%
50%
40%
95.6%
67.9%
83.2%
30%
20%
33.5%
32.7%
10%
8.5%
0%
Customers
Assets
Liabilities
15
Off B/S
Revenue
(FY2004)
Customer Segmentation
9 Created 7 demographic segments based upon internal analysis
of the customer base
9 Split by age bands to improve targeting within the segments
9 74 sub-segments in total
9 Going forward we will add a psychographic dimension to the
segments (eg Retirees
Baby Boomers)
9 They will be continuously refined as we learn with the benefit of
external input
16
Customer Current Value
Customer Segmentation
Q1
(Y101K+)
Maintain
Optimize
Optimize
Optimize
Optimize
Q2
(Y51-100K)
Maintain
Optimize
Optimize
Optimize
Optimize
Q3
(Y21-50K)
Maintain
Cultivate
Cultivate
Cultivate
Cultivate
Q4
(Y11-20K)
Cost Manage/
Exit
Cultivate
Cultivate
Cultivate
Cultivate
Q5
(Y0-10K)
Cost Manage/
Exit
Cultivate
Cultivate
Cultivate
Cultivate
Low/
Medium
Medium
Medium/
High
High
Low
Relationship Potential Indicator
17
CHANNELS
Channels – Key success factors
9 “Bricks and Clicks” – the Customer chooses
9 Physical channels
y Creating a “sales culture”
y Strong sales process management
y Focus on consultative sales
9 Remote channels
y
y
y
y
The Internet is “strategic”
Full functionality & capability
Growth in transaction (incl Mutual Funds)
Growth in income
19
Expanding Presence
‡ Financial Centers (SFC)
9 Provide full banking services focusing on consultation to mass affluent customer segment
‰ Platinum Center
9 Develop and enhance relationships with wealthy customers
‰ ATMs
9 deploy in strategic locations to build brand visibility and minimize off-us transactions
‰ BankSpots
9
“mini-branches”, primarily in Tokyo and Osaka, providing both self-service and
consultation
Physical
Distribution
Remote
Distribution
BANKSPOT
ATMs
PowerCall
PowerDirect
20
Financial
Center
Platinum
Center
Current Branch Network
‰
‰
30 Financial Centers provide nationwide coverage of
major metropolitan centers
Carefully selecting new locations with the highest
commercial/business concentration and easy access
from terminal stations
Shinjuku South
Shinsaibashi
Ginza Corridor
GinzaKyobashi
Co-located with Starbucks Cafe
21
Sales Productivity – Revenue
(Annual Revenue/Sales Staff : JPY Million)
60
50
40
30
20
10
0
FY2002
FY2003
22
FY2004
Productivity :
Share of Door - Mutual Funds
Shinsei Bank sales staff are far more productive than competitors
– A common theme across product categories
The Share of Door Index compares Market share with share of branches
Efficiency Index
4
3.35
3
2
1.89
1.3
1
0.63
0.49
0
0
100
200
Shinsei Bank
300
400
BOTM
SMBC
Source: Institute for Financial Affairs Research Center FY2004
23
500
600
UFJ
700
Mizuho
800
# of Branch
Remote Channels
‰ Prior to June 2001, we had no web site, no Internet banking,
and a phone center that operated from 9-5 on weekdays only
‰ Since then, we have largely surpassed the local competition
9 24x7x365 telephone banking
y Product sales
y Balance inquiries
y Customer service
9 PowerDirect Internet Banking
y Real-time balances and transaction data
y Ability to transact almost all products
y Free funds transfer service (up to 5 or 30/month)—best offer in the
market
‰ Remote channels—the Internet and phone—are now primary
channels for customers to open new accounts and do
transactions
24
Customer Contact
Rapid customer growth has been possible essentially through
remote channels.
6,000,000
Web
5,000,000
Call Center
ATM
Branches
4,000,000
3,000,000
2,000,000
1,000,000
0
Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Apr-05 May-05 Jun-05
6 Month Average
25
Monthly Data
Jul-05
Acquisition
450,000
400,000
Remote Channels
Branch
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
FY2001
FY2002
26
FY2003
FY2004
Sales Volumes
(Billion Yen)
1,200
1,000
Remote Channels
Branch
800
600
400
200
0
FY2003
FY2004
27
PRODUCTS
Products – Key success factors
9 Needs based profiling
9 Solutions based
9 Continuous Innovation – eg Powered One Plus/Powered Teiki Plus
9 Speed to market
29
Philosophy
“IDEA-FULL”
Proposals that say, “Why didn’t someone think of this before?”
Simple and easy to use
Customers transact on their own
Covers a wide range of risk and tenor preferences, a mix of
currencies and instruments (e.g. deposits, mutual funds and
annuities)
More complex products are available to sophisticated
customers (e.g. hedge funds, structured products)
A strong sales process backs each offering
30
High
Product Offerings
- Japan Trend Select <Bull>
- Japan Trend Select <Bear>
- Japan Bond Bear
- INVESCO OTC&Develop Open
- HSBC India Open
- Global High Income Stock
- Fidelity Japan Growth
- Daiwa value equity
- 225Index(Nikkou)
- 225Index(T&D)
- W.Pincus
- JF Asia active
- HSBC China
- Platinum Life
- New Adagio
- Emerging Sovereign Open
- High Yield Corporate Bond Open
- Schroders Equity
- Fidelity US-REIT A
- Fidelity US-REIT B
- PowerChance
- Daiwa J-REIT
- Fidelity Balance
- J-World CB
- Life Plan 70
- Life Plan 50
- MSCI Index world portfolio
- Foreign
Currency
Time Deposite
- PowerLink -FX-
- SPJT
- GS US neutral
- GS Japan Neutral
- CITI Australia
- Europian Income
- Nissay /Putnam Income
- Galileo
- Life plan 30
- Global Sovereign
- Sirius Harmony(5)
Middle
- Dual
Currency
Deposit
- Foreign
Currency
Savings
- Upside10
- Manu Solution
- Sirius Harmony(7/10)
- ManuSolution
Low
Risk
- Securities
- Power Pocket Overdraft
- MMF
- Yen SA
- Yen
Savings
Time Deposit
Short <3Years
-
New Adagio
Power Life
Mass freedom
Sonata
- PowerSmart HL
- Powered One Plus
- PowerLink225
- Yen
Time Deposit
3Years<
Medium <
Tenor
31
7Years
7years<
Long
STAFF
“Our People Are The Difference”
Career Excitement Center
Branch Training
90 Player/trainers
Winning the Talent War
Sales Skills daily
“We hire customer focused
people, and train the daylights
out of them”
Innovative Fridays
Internal Communications
Shinsei Business School
Shinsei Daily Celebration
April 2004
Daily Sales Call
Sales Management
Daily “Why Shinsei?”
Management & Leadership
Color Your Life e-letter
Sales Skills
Weekly Power Go
Solutions
National Monthly & Qtr Sales
33
IMAGE
Brand Awareness
In the 4 years since new retail banking business launch, brand awareness on Shinsei
Bank has significantly increased as compared with the other competitors, and reached
97% in June 2005.
2001.11
2002.06
2003.06
2004.07
2004.12
2005.06
100
90
80
70
60
50
40
30
20
10
0
Shinsei Bank
Citibank
Sony Bank
Source: Asatsu-DK Survey
35
BOTM
Brand Image Perception
Findings through Awareness and Image Survey
Shinsei Bank is perceived as unique and innovative, and responsive to
customer needs.
Shinsei
BOTM
97%
99%
81%
92%
Stable Business/ Sound Management
2%
48%
1%
7%
Good/Favorable Image
2%
41%
1%
11%
Innovative
29%
3%
16%
10%
Unique
20%
6%
13%
11%
Advanced Internet Service
22%
10%
4%
9%
8%
3%
2%
3%
8%
5%
3%
3%
(Score as of June 2005)
Brand Awareness
Will choose even if branch located
in the distance
Responsive to Customer Needs
Source: Asatsu-DK Survey
36
Tokyo Star
Citibank
CUSTOMER AND MEDIA RECOGNITION
The Asian Banker
The Asian Banker
‰ Best Retail Banks by Country
9 Japan – Shinsei Bank
9 Hong Kong – HSBC (Hong Kong)
9 Indonesia – Bank Central Asia
9 Singapore – DBS Bank
9 Vietnam – ANZ Bank
‰ Awards for Excellence in Products and Processes
9 Best Retail Banking Branch Innovation Award
– Shinsei Bank
37
CUSTOMER AND MEDIA RECOGNITION
Retail Banker International
Retail Banker International
Benchmark intelligence on consumer financial services
Recognising the best in the world
Published: December 8th, 2004
Issue: Retail Banker International - RBI524
The winners of RBI’s Retail Bank of the Year awards were announced during
the Retail Banking Forum in London on 7 December. In this special feature,
RBI lists the winners of all the awards and profiles the victors in the major
national and sub-regional markets around the world
Country and Sub-Regional Award Winners 。
Retail Bank of the Year – Japan
Shinsei Bank
A year of strong retail banking growth was capped by Shinsei’s acquisition of
Aplus, one of Japan’s leading consumer finance companies. The deal is part
of Shinsei’s strategic plan to actively expand its non-bank business and at the
same time to generate higher returns and profitability in each of its three key
business lines - retail banking, non-bank consumer finance and institutional
banking.As a result of the deal, Aplus - which has a nationwide distribution
network - has become a leading component of Shinsei’s "non-bank" business.
The main task of Aplus has been to enhance the competitiveness of the
group’s shopping credit unit - at the same time, the deal will lead to significant
cost savings when a common IT platform will be implemented using Shinsei’s
technology.Apart from the Aplus acquisition, Shinsei boosted net income by
25.2 percent in fiscal year 2003 (which ended in March 2004) by diversifying
its revenue sources and lowering its reliance on interest income - some 56
percent of total customer funding comes from retail customers - up 6 percent
on fiscal 2002. Net profits were up 5 percent on the previous financial
year.Non-performing loans dropped 58.3 percent, and there was also a
corresponding drop in bad debt provisions. Return on equity for fiscal 2003
stood at 9.4 percent, up from 8.1 percent in fiscal 2002.
38
CUSTOMER AND MEDIA RECOGNITION
Nikkei Survey on Financial Institutions
Nikkei Survey on Financial Institutions
- Consumers in Three Largest Metropolitan areas
(Tokyo・Osaka・ Nagoya）
Shinsei bank 「Ranked first by users’ satisfaction
for the 2 years running」 （2004 / 2005）
The year ２００５
•「Consulting service ・ Teller Counter
service・Business hours」 （1st）
•「Products・Services」
（1st）
•Ranked in the Top 3 in all the items
39
CUSTOMER AND MEDIA RECOGNITION
Survey on Financial Institutions
Ranked first by users’ satisfaction survey (Consumers in Three Largest Metropolitan areas)
20’s
30’s
40’s
50’s
60’s
城南信用金庫
1st
2nd
イーバンク銀行 Sony Bank イーバンク銀行 城南信用金庫
3rd
東京三菱銀行 ｼﾞｬﾊﾟﾝﾈｯﾄ銀行 東京三菱銀行
4th
UFJ銀行
5th
三井住友銀行
イーバンク銀行 ｼﾞｬﾊﾟﾝﾈｯﾄ銀行
東京三菱銀行
城南信用金庫
.The Nikkei Kinyu (The Nihon Keizai Shimbun), September 6&7, 2005
40
東京三菱銀行
東京三菱銀行
CITIBANK
住友信託銀行
郵便貯金
郵便貯金
CUSTOMER AND MEDIA RECOGNITION
Next to Disney Land / Disney Sea!
Ranked Second by ’Users’ “Consumer Relation Index”
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Brand Name
Tokyo Disney Land / Sea
SHINSEI BANK
Tokyu Hands
Mos Burger
Louis Vuitton
Franc franc (Furniture & sundries)
Y okohama Zoological Gardens Zoorasia
Afternoon Tea TEAROOM
Seven-Eleven
The Daiso - 100YEN PLAZA
Singapore Airlines
Japan Post office
Henri Charpentier (Confectionery)
The Imperial Hotel
Hermes
Bvlgari
Coach
Rolex
Starbucks Coffee
MUJI
Score
Rank
87.68
83.26
82.60
81.95
77.72
76.87
76.21
75.99
75.54
73.07
72.38
72.10
71.45
71.21
70.58
70.28
70.08
68.84
68.54
68.19
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Brand Name
Bakery Restaurant Saint-Marc
Freshness Burger
Wacoal
SHOP99
Seijo Ishii (Supermarket)
Burberry
one's (Curtain)
Japan Air Lines (JAL)
DUO (Volkswagen dealer)
Excel Hotel Tokyu
Beard Papa's (Confectionery)
Sony Plaza
All Nippon Airways (ANA)
a.v.v (Apparel)
Kinokuniya (Book store)
ACTUS (Furniture)
Create Super Drugstore
Subaru Store
Tiffany
Triumph (Lingerie)
Research on “Store & Service Brand 500” by Nikkei Research
41
Score
68.03
67.42
67.06
67.03
66.70
66.61
66.46
66.22
66.13
66.09
65.97
65.96
65.92
65.42
65.23
64.74
64.40
64.33
64.19
64.05
Image
42
Color Your Life
SHARE
Information, dreams, worries, aspiration, future…
with our colleagues, customers, families
CARE
Respond flexibly, speedily, hospitably, based on others’ needs
“IDEA-FULL”
Proposals that say, “Why didn’t someone think of this before?”
WAKUWAKU
Exhilarating at every contact.
43
“When I am feeling sad, or things don’t go my
way, I always look up into the sky.
The big sky makes my troubles seem so
small
This encourages me to paint my dreams
across the big blue sky”
44
KEY MEASURES
Customer Database
We have achieved 1.5 Million customer mark.
(Trillion Yen)
# of customers
4.00
1,600,000
Total AUMs
3.50
1,400,000
# of customers
3.00
1,200,000
FY2001
FY2002
FY2003
46
FY2004
June
March
December
September
June
March
0
December
0.00
September
200,000
June
0.50
March
400,000
December
1.00
September
600,000
June
1.50
March
800,000
December
2.00
September
1,000,000
June
2.50
FY2005
AUM Composition
Debentures are being replaced by yen deposits and risk products
Debenture
Yen Deposit
Structured Depo. + FCY + MF + VA/FA
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Apr-98
Apr-97
Apr-00
Apr-99
Mar-02
Apr-01
Sep-02
Jun-02
Mar-03
Dec-02
47
Sep-03
Jun-03
Dec-03
Sep-04
Mar-04
Jun-04
Dec-04
Mar-05
Jun-05
Cross Sell
Through active cross selling we have doubled the number of customers
holding risk products in a year
# of customers
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Apr-03
Jun-03
Sep-03
Dec-03
Mar-04
48
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
PowerSmart Housing Loan
(Billion Yen)
350
14,000
Monthly Fundings (Billion Yen)
300
12,000
# of customers
250
10,000
200
8,000
150
6,000
100
4,000
50
2,000
49
05
n-
5
Ju
M
ar
-0
04
4
De
c-
p0
04
Se
n-
4
Ju
M
ar
-0
03
3
De
c-
p0
Se
03
n-
3
Ju
M
ar
-0
02
2
De
c-
p0
Se
nJu
-0
ar
M
02
0
2
0
Revenue Growth
(Million Yen)
40,000
30,000
20,000
10,000
0
FY2002
FY2003
50
FY2004
Expense Growth
(Million Yen)
40,000
30,000
20,000
10,000
0
FY2002
FY2003
51
FY2004
OBP (Margin) Growth
(Million Yen)
10,000
5,000
0
FY2002
FY2003
(5,000)
(10,000)
52
FY2004
In Conclusion
‰ In just 4 years we have successfully established a “New Kind of
Bank”
‰ Looking forward, market conditions are increasingly positive
‰ Shinsei Retail is ideally positioned for rapid growth:
9 We have a unique and clearly defined business model which cannot be easily
copied by our competition
9 Our brand proposition gives us differentiation and competitive advantage
9 We are centered around the customer in everything we do
9 We will continue to innovate and lead the market
‰ We know what we have to do to be successful and we have clear
strategies for all key aspects of the business:
9
9
9
9
9
Customers
Brand/Marketing
Products
Channels
People
‰ Retail is a key component of the overall Shinsei strategy
‰ Our financial results are strong
‰ Shareholder returns from Retail will continue to grow rapidly
53