Customers are engaged through their preferred channel and offered flexibility in future interaction, including via convenient remote capabilities. COVID-19 has accelerated longstanding consumer and business shifts away from the branch and toward digital channels. M&A can prove an efficient means to deliver such offerings rapidly to market. Press enter to select and open the results on a new page. Please try again later. Interestingly, given many banks have successfully redirected front-line staff into urgently needed support roles—often working from the same location—this may change the equation on branch closures, enabling banks to keep more marginal branches open than previously considered, assuming advisors can be productively deployed on critical customer-related tasks. Remote access, including advisors working from branches, call centers, and home offices, will become a key component of supporting customer needs not easily migrated to digital. Our flagship business publication has been defining and informing the senior-management agenda since 1964. When choosing my bank, the functionality of the app was a … 4 | INNOVATIVE TRENDS IN RETAIL BANKING IN THE CONTEXT OF THE EFMA AWARDS, LET’S LOOK AT EACH OF THESE TRENDS IN MORE DETAIL. This will involve accelerating the automation of credit decisioning, digitizing end-to-end customer lending processes, leveraging advanced analytics and automation to speed decision making, and time to cash (the latter being especially critical for SMEs). Early evidence suggests that companies that were already embarked on an operating model transformation for speed responded more swiftly to COVID-19 and that there is a strong correlation between the level of agile maturity and rapid response in launching COVID-19-relevant products and services. Never miss an insight. 4 Retail Banking in Asia, McKinsey & Company 5 European Banking Barometer, EY (2016) 6 Retail Banking 2020: Evolution or Revolution, PwC (2014) 7 European Banking Barometer. This shifting behavior presents a threat--and a rare opportunity. Retail-banking revenues in this report include banking receipts from small- and medium-size enterprises but exclude private banking. More than ever, banks must strike a balance between being there for customers in financial distress and prudently managing credit losses. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. Digital upends old models. The COVID-19 health crisis has reshaped the global economy and society. McKinsey Financial Decision Maker Pulse Survey run in mid May 2020; countries surveyed include UK, France, Italy, Spain, Germany, Sweden, China and USA (1,000 representative consumers each). OPEN BANKING. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. The global revenue total for 2015 is an estimate. — Pradip Patiath, McKinsey McKinsey analysts and researchers have been tracking a tectonic shift in U.S. retail banking for some time. More people are demanding simple, trustworthy products and services from financial institutions—or other companies offering similar services—that put them first. 9. Banks can also assist customers in securing insurance, as well as providing longer-term pension planning guidance. COVID-19’s financial impact on consumers and SMEs is profound—35 to 50 percent of consumers in key Western European markets state they will run out of savings by August 2020 if unemployed, according to our Financial Decision Maker Pulse Survey, and one in three small businesses in the UK believe they will be out of business by the same date absent improvement in conditions, according to our SME Pulse Survey. Those responding to these trends with the same agility they adopted during the crisis will emerge better prepared for the future. In the role, Chubak will head retail banking channels, including branches, wealth management, mortgage and small business, and risk management. 4 Distribution 2020 certain product or, at the other extreme, switch banks. Such moves could help fast-track the continuous innovation and data-driven customer engagement necessary for success or enable banks to move into adjacent areas as part of a broader ecosystem play. But even those scale economies had limits above a certain size. In recent weeks banks have proven themselves able to move faster than imagined. Pre-COVID-19 Finalta research indicates that 48 percent of incoming US contact center calls could be re-routed for digital resolution (e.g., transaction, balance and billing inquiries and peer-to-peer fund transfers). Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Please try again later. Unleash their potential. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Marie-Paule Laurent, Olivier Plantefève, Maribel Tejada, and Frédéric van Weyenbergh, “Banking models after COVID-19: Taking model-risk management to the next level,” May 2020, McKinsey.com. Done wrong, customer experience initiatives can lead to cynicism—huge amounts invested, generally happier customers, but limited financial returns. In this context, Western European and US retail banking leaders can reflect on four main questions: To enable their success in the next normal, banks can also consider how to rejuvenate their trust-based relationship with society, pioneering a new social contract in the face of COVID-19. hereLearn more about cookies, Opens in new Digital channels are gaining ground in the distribution of retail-banking products and services, but recent McKinsey research shows that banks are adapting at very different paces. Given the unprecedented nature of the current crisis, banks’ existing credit risk models and approaches are too retrospective and do not sufficiently capture sector implications and government initiatives to provide meaningful guidance.