Purpose-Driven
Banking
Looking beyond COVID-19
JUNE 2020
OUTMANEUVER UNCERTAINTY
NOW
NEXT
CONTENTS
2
01
Introduction
02
Banks tackle COVID-19 with focus and innovation
03
Will the new digital models endure beyond the crisis?
04
The challenge of rebuilding customer trust
05
The pillars of purpose-driven banking
06
Give your customers reasons to believe
When we published our Purpose-Driven Banking report1 in early
March this year, few people foresaw that COVID-19 would
become a global pandemic or that its impact would go so far
beyond the health and lives of those who contracted the disease.
01
Introduction
We certainly don’t claim to be more prescient than others, but
COVID-19 has not only validated the key premise of our report, it
has also magnified the need for the changes we recommended
and compressed the time frame in which banks need to execute
those changes. These are difficult times for banks, but they could
also be the first days of a different, more sustainable future in
which they authentically support their customers and help them
develop their financial resilience.
Our research showed that while most customers trust their banks
to look after their data and manage their transactions correctly,
far fewer trust them to put their best interests first and look after
their long-term financial well-being. As a result, only about 1 in 7
turn to their banks for advice on managing their money.
We found that on average 5 percent of banks’ retail revenue,
worldwide, is at risk as a result of this trust gap. Much of that
revenue is the fees and charges banks earn from customers’
financial missteps – things like overdrawing their account. These
are revenue streams that have been targeted by both challenger
banks and regulators.
3
Our analysis also revealed the opportunity for banks to increase retail revenue by 9 percent
by introducing a range of innovative advisory services. To succeed, however, it was essential
that banks restore the trust of their customers. And to do that, we argued, they needed to
rediscover their original purpose: to help customers better manage their finances, even if
doing so generates no immediate benefit for themselves.
COVID-19 has turned an intense spotlight on the banking industry. The fate of many millions
of customers – especially consumers and small and mid-sized enterprises (SMEs) – depends
on how banks respond to this crisis. In many countries, the success of government relief
programs lies in their hands too. The decisions and actions that banks take today will be
remembered by their customers for many years to come.
This is a pivotal point for the banking industry. While carefully safeguarding their own
businesses, banks need to adopt novel measures to help their customers stay afloat – in
many cases, overhauling their operations far more rapidly than they had intended. But the
tale of the pandemic is not an entirely negative one for banks. Forced as they are to change
the way they operate, it’s also an opportunity for banks to consider what kind of organization
they would like to be when the dust settles. What kind of relationship do they want to have
with their customers? What new capabilities and attributes would they like to possess?
In this follow-up to our earlier report, we examine how COVID-19 – and banks’ actions to date
– have affected our earlier analysis. Our conclusion? While continuing to prioritize their
immediate imperatives, banks have a great deal to gain by using this crisis to reset priorities.
There is certainly regret that they were not already more digital, more data-driven, more in
the cloud, and less constrained by their legacy technology. But there is also a recognition
that COVID-19 is impelling them in this direction, while forcing them to be more proactive in
protecting the interests of their customers.
Most importantly, we believe, the COVID-19 crisis is the ideal time for banks to start
establishing more collaborative, trust-based, win-win relationships with their customers. This
is an opportunity for them to be heroes rather than villains, and a chance to lay important
foundations for future success.
4
Alan McIntyre
Senior Managing Director –
Banking, Accenture
Julian Skan
Senior Managing Director –
Accenture Strategy, Banking
02
Banks tackle
COVID-19 with
focus and
innovation
* Unless specified otherwise, all findings mentioned in this report are from Accenture’s
Purpose-Driven Banking Survey (second wave, post-COVID-19), April 2020.
5
The consumer survey for Accenture’s global PurposeDriven Banking report, completed at the end of 2019,
found that even pre-COVID-19, and despite the generally
buoyant macroeconomic conditions, many consumers
were struggling financially.
Only 29 percent earned more than they spent every
month, and 75 percent lacked sufficient savings to cover
six months of living expenses.1 SMEs too were constrained
– more than 70 percent reported that they were unable to
meet their needs by borrowing from traditional banks.2
COVID-19 has made the situation much worse for many people and businesses. Our latest Purpose-Driven Banking Survey, conducted in April,
found that the impact on both consumers and small businesses has been severe (Figures 1 and 2). In a May 2020 survey by the Society for
Human Resource Management in the US, more than half of the SME respondents said they expect to be out of business by October.3
Figure 1. The impact of COVID-19 on consumers’ finances
Q. How, if at all, has the pandemic affected your personal financial health?
Figure 2. The impact of COVID-19 on SMEs’ finances
Q. How, if at all, has the pandemic affected your business’s sales?
Size of enterprise
Positively impacted
Neither positively nor
negatively impacted
Negatively impacted
12%
Sales have increased
46%
42%
Source: Accenture Purpose-Driven Banking Survey, second post-COVID-19 wave, April 2020.
6
Sales have decreased
slightly, but the effects
are manageable
Sales have decreased
significantly or the business
has had to shut down
Sole proprietors
Small enterprises
13%
11%
34%
55%
Medium enterprises
18%
31%
56%
Source: Accenture Purpose-Driven Banking Survey, second post-COVID-19 wave, April 2020.
40%
42%
Banks have played a vital role in helping customers deal with the immediate impact of the crisis, maintaining operations with
remote workforces, easing financial demands on struggling customers, and facilitating the distribution of government relief
funds. Many banks – incumbents as well as challengers – have risen to the challenge of COVID-19, showing customers what the
industry can do for them on its best day.
Innovative banks show customers
their best side
Lloyds sent tablets to 2,000 senior customers who lacked suitable devices for online banking and partnered with a digital
training provider to help them get started and offer dedicated phone support.
Alipay is opening up its platform to support the digital transformation of 40 million merchants throughout China, allowing
many of them to sell their products online for the first time.
DBS in Singapore has partnered with Chubb to offer all its customers one month’s free insurance against COVID-19-related
ailments.
ING is helping its Polish small-business clients transform their sales models through ecommerce sites and has suspended
fees for three months for the use of its payment gateway.
NuBank is supporting customers in various ways, from sponsoring telehealth consultations to facilitating the delivery of pet
supplies.
7
This crisis has also forced banks to change the way they work, moving as many of their
operations online as possible. They have had little choice but to become more transparent
and more agile, and to accelerate their digital transformation.
One mostly unintended consequence of these measures has been to negate, to a degree, the
competitive advantage that has helped challenger banks around the world acquire millions of
new customers. These newcomers have used innovative digital products and financial
management tools to help customers improve their financial proficiency, keeping customers’
best interests at heart.
The challenge posed by these digital banks is also being weakened by two other factors:
incumbents’ current fee leniency, which undermines the cost advantage of the digital banks;
and the natural instinct of customers, in times such as these, to seek safety in size and
stability. However, the question is whether this will prove to be just a temporary setback for
the challengers, or whether COVID-19 will be the inflexion point at which incumbents learned
what was needed to combat the rise of their digital rivals.
When the crisis abates and business returns to a semblance of normality, banks will face a
stark choice: do they revert to business as usual, or do they seek to combine the strengths of
the traditional and the challenger models? Do they recreate their organization by retaining
and building on the best of the capabilities, practices, and attributes adopted during this
pandemic?
8
When the crisis abates
and business returns to a
semblance of normality,
banks will face a stark choice:
do they revert to business as
usual, or do they seek to
combine the strengths of
the traditional and the
challenger models?
03
Will the new
digital models
endure beyond
the crisis?
9
In our Purpose-Driven Banking report we make the case for
banks to rediscover their true, original purpose. We cite the
example of George Bailey’s emblematic bank in the 1947
film It’s a Wonderful Life, which stood by its hard-pressed
customers whom it knew personally and sympathized with.
As they grapple with the challenges of COVID-19, most
banks are doing everything they can to keep their
customers afloat. They are in a precarious situation,
however, and insufficient insight into the risks they are
taking on could jeopardize their solvency.
Hancock Bank’s ‘money laundering’
rescued Katrina victims
It requires a delicate balancing act. But what do they do when the pandemic is under
control, businesses re-open, and most people return to work? On the one hand, it
would be tempting to restore all the old fees and charges in an effort to recoup the
revenue they forfeited, to revert to their traditional practices, and to take the foot off
the accelerator that is driving them toward their digital future.
This may be their natural instinct. But it would disappoint many of their customers,
who probably expect that their bank’s new ways of working will endure beyond the
crisis, and who will have acquired new digital habits in managing their finances. It
would also restore the gap that the challenger banks exploited to establish their
foothold in the industry and re-energize the regulators who seem determined to
suppress banks’ ‘bad revenues’ (see sidebar overleaf).
10
When Hurricane Katrina hit New Orleans in
2005, an HBR article4 relates, cash was in
desperately short supply due to flooded
bank branches and damaged ATMs.
Employees of Hancock Bank scoured the
waterlogged vaults at all of its city branches
and recovered as many of the soggy,
muddy banknotes as they could find.
After carefully washing, drying and handironing them they set up tables outside the
branches, offering the ‘laundered’ money to
anyone who needed it. A total of $42 million
was lent, with most borrowers – only some
of whom were customers – providing just
their names, addresses and Social Security
numbers to the bank’s staff, who recorded
the details on scraps of paper.
In the months that followed, Hancock
recovered 99.5 percent of the money
loaned. Twelve months after the hurricane
the number of new accounts had risen
significantly, and deposits had increased by
$1.5 billion. Since Katrina, Hancock Bank’s
‘last to close, first to open’ philosophy has
become core to its brand identity.
BAD REVENUE: 5% OF BANKS’ RETAIL INCOME AT RISK
In the markets we analyzed, an average 5 percent of traditional banks’
total retail revenue is at risk because of a lack of trust (Figure 3). This
comprises the ‘bad revenue’ derived from services that have hidden or
opaque fees, or that result directly from customers’ poor financial
habits and decisions. The amount is potentially higher in certain
countries if local threats materialize but could also be lower if banks
increase their transparency and simplify their fee structures and
products.
Figure 3. An average 5% of retail banking revenues are at risk
Number in %
Due to:
The revenue threat also comes from the actions of regulators who have
been prompted, by recent banking scandals in a variety of markets, to
insist on the simplification of some fees. Their aim is to protect
vulnerable customers who find themselves paying unnecessarily high
rates of interest. These ‘gotcha’ moments reinforce the perception of
customers that banking is a win-lose relationship in which their
interests invariably come second to those of bank shareholders.
In the US alone, these fees amount to billions of dollars for each of the
leading banks. A recent HBR article5 cites a survey that found a strong
correlation between the level of hardship of a bank’s customers and
the fees earned from overdrafts – in some cases rising to almost 20
percent of the bank’s total revenue. Not surprisingly, only 20 percent
of the 100 largest banks in the US offer overdraft fee assistance.
11
Potential improvements in customers’
financial habits (borrowing and saving)
Regulatory and competitive pressures
Source: Accenture Research analysis
Banks have a rare opportunity to make a virtue out of necessity. As their ‘bad
revenue’ will be difficult to sustain, they could self-cannibalize it in the interest of
their customers. On top of that, they could commit to always giving their
customers best advice, even if it does not generate any immediate benefit for
themselves. And in a similar vein, they could continue to invest in the digital tools
and services that help customers manage their finances more effectively and
improve their financial expertise.
Figure 4. Trusted companies achieve higher
revenue growth rates
Annual revenue growth rates (%, 2018 vs. 2017)
All B2C Companies
Banks
This would demand a significant strategic and cultural shift for most banks. But
with the pressure from customers and regulators, and the recognition of
shareholders that drastic action is called for, there could hardly be a better
moment for them to make this pivot. The benefits would be far-reaching, and
would include:
• Increased brand value, oriented around the bank’s purpose, enabling market
differentiation to grow share of wallet and customer acquisition;
• Improved operational metrics, such as lower NPL risk (now more important than
ever), better capital-to-risk-weighted assets, cheaper funding sources, and
reduced compliance risk due to less mis-selling;
• Enhanced ability to attract talent. Our research shows that 75 percent of
millennials would take a pay cut to work for a socially responsible company.6
Most importantly, it would lay the foundation for improved customer trust. A key
finding of our recent analysis was that the most trusted banks achieve revenue
growth that is on average, one-third greater than that of their peers (Figure 4). In
other words: trust pays, and it does so handsomely.
12
7.5
8.4
Most-trusted companies*
5.5
6.2
All other companies
* Companies within the top 25 percent of the Arabesque S-Ray
Trust score.
Note: Analysis of 3,800 banks and other B2C companies based in
12 countries. The Trust score is calculated as the average of the
quarterly Trust scores between 2016 and 2017. Companies with
bottom and top 10 percent revenue growth values were excluded
from the analysis.
Source: Accenture Research analysis of S&P Capital IQ data and
Arabesque’s S-Ray Trust score.
Trust is also critical if banks are to
capitalize on one of their most promising
opportunities for revenue growth: new
digitally-enabled advisory services that
help customers optimize their daily spend,
rationalize their product portfolio, or take
advantage of tailored life-planning or
business advice. Our analysis indicates
that these could generate an average 9
percent retail revenue uplift for incumbent
banks (Figure 5).
Figure 5. Trust-based propositions can boost incumbent banks’ revenue by an average 9%
Revenue increase for an average retail bank per market—change over 5 years
Pillar 1: Protect and Grow
Number in %
12-15
13
Trust-Kicker Effect
12-14
10-12
The opportunity is greater in markets that
are underserved by advice and have
greater concentrations of innovationseeking customers, such as in the UK and
Spain. In contrast, it is smaller in France
and Sweden, which have relatively more
skeptical, conservative customers.7
Banks that rebuild advisory trust will
generate an added bonus: a trust kicker.
This is the potential revenue uplift that
accrues to the most trusted players in their
respective marketplaces. The potential is
greatest in Italy and Germany, whose
banks currently have low trust scores.7
Pillar 2: New Trust-Based Revenue Streams
10-12
10-12
9-11
8-10
Average = 9%
7-9
6-8
5-6
5-6
3-4
UK
Spain
Germany Hong Kong Brazil
SAR of China
Source: Accenture Research analysis.
Australia
USA
Japan
Italy
Canada
France
Sweden
04
The challenge
of rebuilding
customer trust
14
Restoring trust will not be easy. Many banks have invested
heavily in innovative banking services intended to increase
customer engagement. Most have been successful –
mobile tools have generally caused customers to transact
more frequently. However, transactional engagement does
not necessarily build emotional connections and establish
the type of trust that banks need to foster advisory
relationships with customers.
Figure 6. Consumer and small-business trust in banks
SMEs
CONSUMERS
Q. To what extent do you agree with these
statements about your bank?
A. Strongly agree + Tend to agree
I trust my bank with my data
I trust my bank to provide fast and reliable services
I trust my bank with my long-term financial
well-being
I trust my bank to help me look after the financial
success of my business
54%
45%
Main bank
Note: Aggregated results for Italy, UK, US and Brazil
Source: Accenture Global Financial Services Consumer
Survey, 2019.
15
Q. To what extent do you agree with these
statements about your business’s bank?
A. Strongly agree + Tend to agree
70%
51%
Main bank
Note: Aggregated results for Italy, UK, US and Brazil
Source: Accenture Purpose-Driven Banking Survey,
second wave post-COVID-19, April 2020.
There are different kinds of trust. Most
customers are confident that their banks
will protect their data and correctly
manage their transactions. However, that
doesn’t translate into trust that their bank
will also look after their long-term financial
well-being. The gap is especially evident
among small businesses (Figure 6).
Customer actions demonstrate the lack of
trust in banks as true financial advisors. Of
those consumers who, in the past five
years, experienced a major life event with
serious financial consequences, only 14
percent turned to their bank for help
(Figure 7).
Figure 7. Consumers and small businesses typically do not turn to their banks for advice
This points to a significant opportunity for
advisory services, especially in countries
like Italy and Brazil, where our research
found a high proportion of SMEs would
welcome a more comprehensive business
relationship with their banks.
16
Q. To whom do you typically go for advice about
your business’s finances?
Q. Did you seek help in dealing with the financial implications
of a major life event? If so, to whom did you turn?
56%
Friends / family
Similarly, many SMEs depend more on
professional advisors for help with their
business finances than their bank.
Their reasons may be different from those
of consumers – “I’m too small to get my
bank’s attention”, “they don’t understand
the peculiarities of my industry”, “they
give me ‘canned’ advice that’s not really
relevant” – but they boil down to the same
thing: a perception that banks are unable
or insufficiently interested to promote
their customers’ financial well-being.
SMEs
CONSUMERS
Sought help
Online (e.g.
forums, blogs,
social media etc.)
Work colleagues
5%
Don’t know
Did not
seek help
28%
My bank
51%
44%
25%
21%
A financial advisor
19%
An independent
expert other than a
financial advisor
19%
Clubs / communities
Other
All respondents who went
through at least one
financially impactful life
event in the past 5 years
Source: Accenture Purpose-Driven Banking Survey, first wave
pre-COVID-19, December 2019.
15%
11%
External professional services
(e.g. accountants, consultants,
lawyers etc.)
58%
35%
My business bank
Business associates
(whether or not they
are part of my business)
26%
Online sources (e.g. forums,
blogs, social media etc.)
26%
My business’s trade
industry organization
17%
I don’t go to anyone for advice
about by business’s finances
16%
Other
4%
Source: Accenture Purpose-Driven Banking
Survey, second wave post-COVID-19, April 2020.
Figure 8. COVID-19 has resulted in a shift in consumers’ and SMEs’ trust in their banks
CONSUMERS
SMEs
Q. Has the COVID-19 pandemic affected the extent
to which you trust your main bank to help look
after your financial well-being?
Q. Has the COVID-19 pandemic affected the extent to
which you trust your main bank to help look after
the financial success of your business?
I trust my
bank more
16%
9%
6%
21%
I trust my
bank more
28%
9%
25%
39%
57%
57%
48%
42%
16%
24%
US
UK
I trust my
bank the
same
68%
83%
70%
63%
I trust my
bank the
same
I trust my
bank less
15%
8%
24%
18%
I trust my
bank less
US
UK
Italy
Brazil
27% 18%
Italy
Brazil
For most customers, the pandemic has not impacted trust in their banks. A reasonable portion did say
they trust their bank more today than they did before the crisis, but those positives are offset by a
similar decline in trust for other customers – resulting in a zero net impact. When we narrow the focus
to consumers who are struggling financially, the picture is more negative: 11 percent trust their banks
more, but 32 percent have lost trust.
Source: Accenture Purpose-Driven Banking Survey, second wave post-COVID-19, April 2020.
17
If customers’ confidence in banks as an
advisor was weak prior to COVID-19, their
handling of the crisis hasn’t moved the dial
in the banks’ favor. Our new survey shows
that, while banks’ actions during the crisis
have caused meaningful shifts in customer
trust, the overall impact is neutral (Figure
8).
Our research found that many customers
seem to be less satisfied than before with
the services banks are offering them. Much
of banks’ good work in extremely trying
times has been undermined by some
customers’ failure to secure loans, by
overloaded call centers, and by allegations
that some banks have skewed the
distribution of government benefits in favor
of larger, more influential clients. These
issues are complex and difficult to refute,
and are more likely to attract media
attention than the good that banks do; as a
result, they have a disproportionate effect
on customer perceptions.
The upshot is that while there is a clear
opportunity for banks to convert the trauma
of the COVID-19 crisis into closer, more
trusting relationships with their customers,
most have yet to capitalize on it.
05
The pillars of
purpose-driven
banking
18
We believe the solution is purpose-driven banking. We
discussed this in some detail in our earlier report, and we
believe the rationale for it has become even more
compelling since the outbreak of COVID-19.
The current crisis, and the actions that most banks have
taken in response to it, are a crucial opportunity for them
to reposition themselves for growth in a digital future.
To adopt an authentic win-win model
that puts customers’ interests first,
banks need a strategic plan that is based
on both the realities of the current crisis
and a new vision of their future role. It
should recognize that the economic
crisis has caused customers’ needs to
become more disparate than before,
placing a higher premium on the ability
to understand these needs, segment
markets with a sharper focus, and
customize offerings.
Faced with shrinking investment
capacity, banks will be challenged to
maintain a holistic strategy: drive cost
savings through digitalization while
simultaneously enhancing their offerings
and their overall customer experience.
This plan should comprise a set of
practical actions which, in our view, can
be aggregated under two key pillars
(Figure 9).
19
Figure 9. Actions banks should consider to build a foundation for customer trust
Two strategic pillars, operating in parallel, to future-proof both banks and their customers
Pillar 1
Take immediate steps to improve operational efficiency
and transparency to protect and grow market share.
Self-cannibalize at-risk ‘bad revenue’ to show increased
commitment to customers’ interests and gain trust.
Accelerate digitalization to become more agile, more
data-driven and more automated, and less constrained by
legacy technology. Transform the core business to not
only help retain but also attract new customers.
These measures – which we originally suggested could be
implemented within a time span of two to three years –
have now become more urgent and completion should be
targeted within 12 to 24 months. Many banks have already
waived overdraft fees and minimized ‘bad revenues’ to
help customers through the COVID-19 disruption. Now is
the time to question whether those fees should be
reinstated or whether there are better alternatives.
This pillar encompasses the steps banks can take now to
improve their understanding of how to enhance
customers’ management of their finances. It includes
offering more tailored propositions that help individuals
spend more wisely, manage their debt, and save money;
and that help businesses improve their cashflow and gain
a better understanding of their credit options.
20
Cases in point: Retail banking
Discovery Bank uses its Vitality platform to reward customers who adopt
and maintain the five key behaviors it claims are essential for financial
health. It tracks these behaviors and provides frequent reinforcement and
advice.
Commonwealth Bank of Australia’s redesigned banking app uses
machine learning, data analytics and behavioral science, analyzing 157
billion data points in real time, to offer personalized content for each
customer. For example, it sends smart alerts to advise customers when
their credit card payments are due, or if they are in overdraft. It helps them
minimize banking fees and encourages them to save.
Cases in point: SME banking
Credit Agricole has created an advanced digital multiservice cash register
for small retailers, offering a suite of value-added services such as
automated stock management, reporting dashboards, and loyalty program
management.
Royal Bank of Canada has built a customizable mobile dashboard for SMEs
that summarizes their current cash position in a single view and includes
push notifications of business insights based on cashflow analysis.
Standard Bank in South Africa offers an all-in-one e-commerce package
dedicated to SME clients that want to start an e-commerce operation. It
provides tools to build a web store, accept in-app payments, manage
invoicing, and prevent fraud.
Banks can implement Pillar 1 initiatives by leveraging predictive analytics to understand
which customer segments to target and how to serve them profitably.
Use behavioral analytics to better
understand customers and engage in
individually relevant interactions, with
transparent data and insights. Measures
like highlighting their necessary vs.
discretionary spending will improve their
financial proficiency, enhance the way
they manage their money, and
encourage them to take actions like
setting saving goals.
62%
of retail customers said they would
be eager to receive insights that
would support their financial wellbeing.8
Offer engagement tools to enhance
customers’ financial management,
such as an app that allows SMEs to run
their day-to-day operations more
effectively. Leveraging real-time
prescriptive analytics, the app could be
layered on top of the bank’s existing
infrastructure.
67%
of SMEs would welcome a
solution to help them with
liquidity forecasting and
optimization. 8
Deploy a multi-disciplinary team to compile
holistic solutions that strengthen the
customer value proposition. Use AI and digital
channels to make it affordable, and partner
with third-party providers to serve customers’
needs from different angles. For consumers,
banks could partner with insurers to provide
medical coverage, whereas for businesses,
they could facilitate access to government
and third-party services.
66%
of SME executives said they
already had, or would like, access
to a digital relationship manager. 8
By starting with such actions, banks can build trust and control the speed at which threatened revenues are lost. However, executing Pillar 1
initiatives is likely to enable the bank to do little more, economically, than tread water. To capture the upside of purpose-driven banking it
should develop and scale new trust-based revenue streams.
21
PILLAR 2
PILLAR 2
Start to plan a steady shift to expand the scope of financial advice. The focus should be on addressing retail and SME customers’ unmet needs
and creating new revenue streams. Full maturity can be achieved within three to four years.
While much of Pillar 1 aims to save struggling customers from drowning financially, Pillar 2 provides the advice that benefits those who are in a
stronger position, have the potential to improve, and both appreciate and can afford advice – the ‘neglected middle’. The demand is beyond
dispute: 55 percent of the consumers we polled said they would be willing to pay for additional bank services that were of value to them.1
Among the SME executives we polled, more than 60 percent were interested in such services.8
True trust-based advice models need to redefine the practice and become broader than most current offerings. They should be:
• Stand-alone and impartial, without necessarily leading to product sales;
• Able to identify what is best for customers, even if it means recommending another provider’s products;
• Strong enough to challenge the classic banking orthodoxy that advice cannot be profitable when provided to all customers.
We believe banks can explore and offer a number of distinct advisory propositions when making this shift. For retail customers, the
list of advisory propositions might include:
01
02
A Digital Financial Helper that
improves customers’ financial
literacy and decision-making. Tools
like AI assistants can enable banks
to make sense of the abundance of
available information to answer
customers’ queries effectively in
plain human language.
An Online Advisor that provides
regular or constant personalized
recommendations. Possibly
subscription-based, this service would
give customers full access to their data
and maintain a dialog with them about
their needs and goals.
22
03
A Financial Wellness Visit to conduct financial ‘health
checks’ and advise clients based on their circumstances.
The human-led engagements would be repeated a few
times a year, provided affordably and at scale. Several
players are testing this with a mix of robo-advice and a
stripped-down independent financial advisor model. But it
has yet to be confirmed that it can retain the right balance
of technology-driven advice and personalized human
interaction at a price that most customers can afford.
At a time when supply chains are disrupted and small and mid-sized businesses are forced to
reconsider how they operate, valuable advisory propositions might include:
01
02
03
A Digital SME Helper would function
like the Digital Financial Helper for
consumers, using AI to tailor insights
to the client’s industry and
marketplace. It would collect,
aggregate and make sense of the vast
pool of available information to
provide, for example, simple
explanations and recommendations
relating to trade laws and tax.
A Business Advisor could offer an array of
hybrid in-person and digital services that
address the SME’s financial and broader
business needs. It could help the SME digitize
its business model, including payments
services within its financial solutions and
making finance available to both the business
and, potentially, its customers. It could also
generate personalized insights and
recommendations across a spectrum of
operational areas. Our research indicates that
almost 70 percent of SMEs would be
interested in this type of proposition.8
Small-Business Introductions,
recognizing the growing importance of
ecosystems, would help small businesses
with the challenge of finding, selecting
and working with new partners. More than
62 percent of SMEs told our researchers
they were interested in services such as
these. 8
Market testing is critical to determine the effectiveness of these propositions from all key perspectives: financial,
technical, regulatory and client receptiveness. Banks should experiment with the scope of the intended advisory
services, and then test the demand for the advisory proposition that they want to explore.
23
Tackling both pillars
together
24
Banks that aspire to being purpose-driven should start to
implement Pillar 1 with minimum delay, to help customers
manage their debts and begin their journey back toward
financial stability. Simultaneously, they should invest time and
resources in planning for Pillar 2.
The former will reinforce their advisory trust, but its effect will
plateau and won’t be enough, on its own, to enable them to
deliver the sustained organic revenue growth their shareholders
expect. Hence, there is a strong case for banks to also
implement the somewhat riskier but higher-return Pillar 2
initiatives. Together they offer a promising path to recapturing
customer intimacy and creating win-win partnerships that will
endure over time.
06
Give your
customers
reasons
to believe
25
Now, in the midst of the COVID-19 pandemic, is the ideal
time for banks to give their customers good reason to
believe they are putting their best interests first.
Customers have seldom needed it more, shareholders are
more accepting of the need for change, and a strategic
shift to purpose-driven banking is likely to yield benefits
that will endure long after the current crisis has passed.
Banks cannot fake this if they want to succeed
Banks need to create a digital-first environment where changes are
implemented to propositions, channels, front- and back-office staff, the
customer experience and many other areas. A behavior-influencing digital
experience, empowered with data and intelligent technologies, is essential.
The right technology partners will be invaluable in helping banks accelerate
the introduction of innovative products and services. And the change needs to
reach and transform everyone in the organization, with a broader set of
personal KPIs and corporate objectives and a core cultural shift that
overcomes siloes.
The strategy must be holistic, and the change deep, authentic, and consistent.
Embracing this opportunity requires bold leaders who are willing to play the
long game. They will balance the drive for increased efficiency with a
commitment to creating innovative new digital experiences. They will adopt a
data-driven approach to prove our hypotheses in their specific markets and
context, and then bring their many capabilities to bear under a common
purpose. We believe these organizations, if they execute effectively, will be
rewarded with bountiful gains in customer trust and economic value.
We would welcome the opportunity to work with these leaders, to transform
their organizations and redefine banking for the good of all. If you’re one of
them, give us a call.
26
About the research
The first of our Purpose-Driven Banking reports, published in March 2020, was
based on two research studies. The first was a quantitative customer survey of
14,900 banking customers in 12 markets: Australia, Brazil, Canada, France,
Germany, Hong Kong SAR of China, Japan, Italy, Sweden, Spain, the UK and the
US. Conducted in November and December 2019, it asked respondents about
their preferences and attitudes on a variety of issues: their relationship with their
main bank, money management, their financial habits, their readiness to deal with
the financial impact of key life events, and their willingness to pay for new value
propositions. The second study was a quantitative analysis of the retail banking
revenue pools which, in each of the 12 markets surveyed, might be defined as
“under threat” due to pressure from digital challengers and regulators, and
improvements in customers’ financial habits. We also analyzed the potential
revenue uplift which we expect will result from the initiatives that we describe in
the Pillars of Purpose-Driven Banking section of this report.
Following the onset of the COVID-19 pandemic, in April 2020 we conducted a
second wave of our Purpose-Driven Banking Survey. The aim was to evaluate the
impact of the pandemic on customers’ relationships with their main bank, their
financial health, and their willingness to pay for new value propositions. This
survey included small and medium-sized enterprises in its scope: the relationship
of SMEs with their business bank, their expectations when dealing with them, and
how the COVID-19 pandemic has changed these. This second wave of research
involved more than 5,500 customers and 1,300 SMEs in four countries: the UK,
US, Italy and Brazil.
27
References
1. Purpose-Driven Banking Survey (First Wave, Pre-COVID-19), Accenture, 2020.
2. Small Business Loan Approval Rates Plummet in March 2020, Biz2Credit Small Business Lending Index, March
2020. https://cdn.biz2credit.com/appfiles/biz2credit/pdf/report-march-2020.pdf
3. Navigating COVID-19 – The Impact of the Pandemic on Small Businesses, Society for Human Resource
Management, May 2020. https://shrm.org/hr-today/trends-and-forecasting/research-andsurveys/Documents/SHRM%20CV19%20SBO%20Research%20Presentation%20v1.1.pdf
4. How Bad Times Bring Out the Best in People, Harvard Business Review, March 20, 2020.
https://hbr.org/2020/03/how-bad-times-bring-out-the-best-in-people
5. Should U.S. Policymakers Force Banks to Waive Overdraft Fees During the Crisis?, Harvard Business Review, May
2020. https://hbr.org/2020/05/should-u-s-policymakers-force-banks-to-waive-overdraft-fees-during-the-crisis
6. Global Consumer Pulse Research, Accenture Strategy, 2016.
7. Global Financial Services Consumer Study, Accenture, 2019.
8. Purpose-Driven Banking Survey (Second Wave, Post-COVID-19), Accenture, 2020.
28
Contact the Authors
Alan McIntyre
Julian Skan
Senior Managing Director – Banking
a.mcintyre@accenture.com
Senior Managing Director – Banking, Europe
julian.skan@accenture.com
Managing Director – Accenture Strategy, Banking
kim.kim.oon@accenture.com
Cécile André Leruste
Francesca Caminiti
Mauro Centonze
Managing Director – Banking, Europe
cecile.andre.leruste@accenture.com
Director – Accenture Research, Banking
francesca.caminiti@accenture.com
Contributors: Dariusz Orynek, Manager – Accenture Research, Banking
Emily Burns, Manager – Accenture Strategy, Banking
29
Kim Kim Oon
Manager – Accenture Research, Banking
mauro.centonze@accenture.com
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