MIAMI, FL--(Marketwired - Feb 19, 2015) - Cisco (
Cisco today announced the Brazil and Mexico findings from a new global study of more than 7,200 banking customers in 12 countries. The study reveals a "value gap" between the expectations of digital consumers and what banks are currently delivering. Customers are getting less value from their banks than they expect, and trust and brand equity have eroded. New disruptors are exploiting the value gap between banks and their customers. To help banks regain customer relevance, Cisco tested five IoE-enabled banking concepts and learned that by focusing on advice and mobile solutions, banks have an immediate opportunity to re-engage customers and experience profitability gains.
Despite their vast stores of customer and transaction data, many banks have failed to turn that data into actionable customer insight to provide contextual and convenient service. We tested consumer interest in five banking concepts enabled by the Internet of Everything (IoE) that closely align to banks' core strengths: their physical branches, financial expertise, and rich customer data. The test concepts focus on ways to deliver better advice (virtual financial advice, virtual mortgage advice, automated investment advice) and more valuable mobile services (branch recognition, mobile payments).
By implementing these concepts in concert with fully digitizing business processes, Cisco found that a typical bank in Brazil with $5 billion in annual revenues has the opportunity to gain a $254 million annual profit increase, equivalent to a 7.4 percent rise in profits. For a typical bank in Mexico with $5 billion in annual revenues there is an opportunity to gain a $372 million annual profit increase, equivalent to a 10.9 percent rise in profits.
Financial services institutions have an enormous opportunity for growth when they become just as digitized as their customers, whether in the branch or far beyond. By adopting scalable IoE concepts, banks create valuable interactions with more customers, at more times and places, than ever before.
Banks Are Not Meeting the Needs of Their Digital Customers
Customers Will Choose Banks with IoE-Enabled Offerings That Provide High Quality, Contextual Advice, and Convenient, Mobile Capabilities:
Innovative, Seamless Security Can Be a Competitive Advantage for Banks
A Win-Win for Banks and Customers
Digital transformation in retail banks is a win-win. Digitizing to serve customers with context-aware, relevant advice and services yields substantial revenue uplift to banks. In its Internet of Everything Value Index study, Cisco estimated $1.3 trillion in IoE-related Value at Stake for the financial services industry in the next 10 years. In the financial services sector specifically, 39.5 percent of that value is going unrealized. Yet banks can begin to capture that value today by implementing IoE-enabled technologies to connect people, process, data and things.
Based on analysis for a typical Brazilian financial institution with $5B in revenue, implementing the following technologies could increase profits in the millions of dollars:
Based on analysis for a typical Mexican financial institution with $5B in revenue, implementing the following technologies could increase profits in the millions of dollars:
The majority of these benefits accrued (72 percent in Brazil and 82 percent in Mexico) result from increased PBT, while operating cost reduction accounts for 28 percent in Brazil and 18 percent in Mexico. In addition to revenue upside, Financial Services institutions can achieve significant operating efficiencies through automation, technology adoption, improved employee efficiency, and lower customer acquisition costs, for a total of 2.3 percent overall cost savings in Brazil and 2.2 percent overall cost savings in Mexico. By adopting an agile model, Brazilian firms can further save approximately 7.2 percent on IT costs while Mexican firms can further save approximately 7.7 percent on IT costs.
The Internet of Everything for Financial Services survey (conducted by Cisco® Consulting Services) includes results from a global survey of 7,200 smartphone users and banking customers (ages 18 and up) in 12 countries (Australia, India, China, Japan, United States, Canada, Mexico, Brazil, United Kingdom, France, Germany, and Russia).
The margin of error for all survey questions is +/- 5 percent.
Supporting Quotes
Paul Jameson, managing director of global industries, Cisco:
"The Internet of Everything is rapidly changing the expectations of today's consumers, and banking is not immune to those shifting preferences. Retail banks have a great opportunity to shift their business models and deploy solutions that deliver these services to increase customer satisfaction across all age demographics as well as increase their wallet-share."
Supporting Resources:
Technorati Tags: Cisco, Financial Services, Retail Banking, banking, IoE, Internet of Everything, Wealth Management, advice, Remote Expert, video, mobile, mobile payments, smartwatch, augmented reality, digital, customer experience
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