Cisco Study: In Brazil and Mexico, Banks Can Close a Value Gap between What Customers Expect and What Banks Are Delivering

Cisco Study: In Brazil and Mexico, Banks Can Close a Value Gap between What Customers Expect and What Banks Are Delivering

Banks Risk Losing Business to Customer Disconnect: 84 percent of Brazilian bank customers and 93 percent of Mexican bank customers would trust a non-traditional banking institution for banking products

Customers Want High-Value Services Anytime, Anywhere: 93 percent of Brazilian bank customers and 95 percent of Mexican bank customers would move their money for Internet of Everything (IoE)-enabled banking experiences

Banks Can Close the Value Gap : With digital transformation, a Brazilian bank can experience a 7.4 percent increase in profitability; Mexican banks can capture a 10.9 percent increase.

Miami, February 19, 2015 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

In Brazil, 52 percent of customers believe their primary bank does not understand them as individuals, compared with 49 percent in Mexico and 43 percent globally.

In Brazil, 27 percent said they would be likely to go outside of their primary bank to open their next account or service, compared with 28 percent in Mexico and 24 percent globally.

In Brazil, 56 percent of respondents "go it alone" with their finances, without any assistance from a professional or bank. In Mexico, that number increases to 59 percent.

Of those who do work with an advisor, in Brazil more than one in four (26 percent) felt that the advice was ineffective. In Mexico nearly a third (32 percent) felt the advice was ineffective.

Eighty-four percent of Brazilian respondents would trust a non-traditional banking institution for banking products, compared with 93 percent in Mexico and 80 percent globally.

In Brazil, PayPal topped the list of trusted non-banks, followed by Google and Apple. For Mexico the most trusted non-banks included PayPal, American Express and micro-financing banks.

Customers Will Choose Banks with IoE-Enabled Offerings That Provide High Quality, Contextual Advice, and Convenient, Mobile Capabilities:

Ninety-three percent of Brazilian respondents and 95 percent of Mexican respondents would "move money" for one or more of the five main concepts tested (virtual mortgage advice, virtual financial advice, automated advice, branch recognition, and mobile payments), compared with 61 percent on average across developed countries.

In Brazil, 62 percent would "probably" or "definitely" opt for a firm offering a fully digitized, virtual mortgage application and approval process. In Mexico, this number jumps to 68 percent and compares with 45 percent globally.

Fifty-seven percent of Brazilian respondents and 56 percent of Mexican respondents would "move money" for a virtual financial advice service, either in the bank or on a personal mobile device (compared with 36 percent globally). The ability to meet instantly, without an appointment, was the top perceived benefit of a virtual financial advice service in both countries.

In both countries, six in 10 (62 percent) would move at least a portion of their savings and investments to a financial services organization offering an automated advice platform, compared with 45 percent globally.

Sixty-nine percent of banking customers in Brazil and 86 percent of banking customers in Mexico (compared with 56 percent globally) would open a new account to access a mobile payment solution. The top-ranked features for both countries were redeeming and consolidating virtual coupons and deals, and the ability to place orders ahead of time, pay, and pick them up, all within the app.

If it was not offered by their primary bank, 69 percent of respondents in both countries (compared with 48 percent globally) would open an account at a different bank to get access to branch recognition. In this service, the customer s mobile phone alerts staff of their ente

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