Designing tomorrow's cp bank shakesteer study printing version by cibp

March 2015

DESIGNING

TOMORROW’S

COOPERATIVE & POPULAR BANK CIBP members’ thought-provoking look at the emerging future & a strategic trajectory for C&P banking. By: Dr. Fotis Filippopoulos

Shakesteer

An international study performed with the participation of CIBP members

Designing Tomorrow’s Cooperative & Popular Bank

Shakesteer Industry Publication Author, Researcher & Strategic Dialogue facilitator: Dr. Fotis Filippopoulos Art Direction, Design & Illustrations: Dr. Fotis Filippopoulos Project Team: Umberto Di Pasquo (CIBP) Dr. Fotis Filippopoulos (Shakesteer) This study is based on an International SWOT Assessment Survey (ISWOT14) and Strategic Dialogue on Value Innovation (ISDVI15), both executed by Shakesteer company (Dr. Fotis Filippopoulos) and with the participation of CIBP members. The Total Value Innovation (TVI) methodology applied in this study was developed by Shakesteer and more information can be be found in this publication. This study was commissioned by CIBP for the 29th (19 and 20 October 2015) CIBP Congress in Rio de Janeiro on "Innovation for Strengthening Popular and Cooperative Banks”. This publication, in whole or in part, may not be reproduced or copied in any form or by any means without the prior written permission of Shakesteer, Dr. Fotis Filippopoulos and / or CIBP. This publication is to be disseminated to the congress participants free of any charge. To send comments or request electronic copies, e-mail us at insights@shakesteer.com or u.dipasquo@cibp.eu. Copyright © Shakesteer 2014-2015. All rights reserved. http://shakesteer.com Stock Vector Illustrations: Colourful Polygonal Mosaic Background, Vector illustration, Creative Business Design Templates. Image ID: 240436465 Copyright: sumaetho

Abbreviations BM: Business Model BS: Brand Strategy CAC: Collective Ambition Compass C&P Bank: Cooperative and Popular Bank ΙοΤ: Under IPv6 (Internet Protocol version 6), an infinite number of devices and censors can be connected to the Internet and to other devices creating an interlinked intelligent ecosystem that is referred to as “The Internet of Things” or IoT. ISDVI15: International Strategic Dialogue on Value Innovation (2015) ISWOT14: International SWOT Assessment Survey (2014) SWOT: Strengths, Weaknesses, Opportunities and Threats MVP: Minimum Viable Product PCPsy: Personal Construct Psychology SPF: Single Point of Failure TVI: Total Value Innovation UVP: Unique Value Proposition VI: Value Innovation VP: Value Proposition

About the Author Fotis Filippopoulos is the co-founder of Shakesteer, a London and Thessaloniki based Value Innovation and business intelligence consultancy. He holds a Ph.D on Perception Dynamics and his expertise lies in the cross roads of Innovation & Strategy, Personal Construct Psychology and Behavioural Economics. Through an international business portfolio that includes both large organisations & SME's he has developed a global perspective across B2B and B2C markets. He teaches Innovation, Consumer Behaviour and Psychology / Semantics in various business schools and is an external expert on Innovation at the European Commission. Prior to Shakesteer, he was running Delphi one of the first European Neuromarketing Research Labs. © Shakesteer 2014 - 2015

ISDVI15

International Strategic Dialogue on Value Innovation

“ MANTRA OF TOMORROW’S C&P BANK

“AS A COOPERATIVE BANK WE EMPOWER MEMBERS, CUSTOMERS & REGIONAL ECONOMIES”

“

Designing Tomorrow’s Cooperative & Popular Bank

GENERAL SECRETARY’S FOREWORD

ver the past decade banks have been forced to look for novel revenue streams as new business models, technological innovations and non-traditional competition have transformed the banking landscape. Moreover, regulatory changes for Cooperative and Popular Banks and mounting competitive pressure are also great challenges that banks need to address. Amidst all these shifts, a new generation of customers and possible members has come knocking on banks’ doors. They belong in the age group of 18 to 30 years old and often referred to as generation Y or Millennials.

“Traditionally we stand out for our proximity and network cohesion. We have now the chance to capitalise on our values and transfer this strength to the digitalised world.” By identifying all those factors as “catalysts of change”, CIBP used its platform to bring together its Member Banks’ representatives in a collective attempt to shape the future of the “Tomorrows’ Cooperative and Popular Bank”. With this publication we intend to provide participants of the 29 th CIBP Congress entitled “Innovation strengthening Cooperative and Popular Banks” (Rio de Janeiro, Brazil – 18, 19 and 20 October 2015) with insights on a wide range of critical issues, as well as a strategic scenario to generate constructive dialogue on the future of the sector. We are grateful to all the Cooperative and Popular Banks’ representatives who have participated in this research and generously shared their experience, knowledge and insights. On the whole, 99 representatives of 27 Cooperative and Popular Banks around the world have participated in the study (ISWOT14) by completing a highly technical online questionnaire. Moreover, 12 selected industry experts representing the CIBP members were recruited to participate in a two-day strategic dialogue on Value Innovation (ISDVI15), I hope that the framework we came up with during the strategic dialogue and based on Dr. Filippopoulos “TVI” (Total Value Innovation) methodology and this prototype of what could be a new approach for a globalised cooperative business model, will inspire and motivate you to reassess, self-criticize, rethink, defend or reposition your institution in this evolving financial services landscape.

Bernard Huberdeau General Secretary of CIBP Confédération Internationale des Banques Populaires

iii

ISDVI15

International Strategic Dialogue on Value Innovation

AUTHOR’S FOREWORD

“Tomorrow’s C&P bank” is designed to lead in the emerging future whilst undergoing constant internal and external transformation.”

his report offers a wealth of insights, thoughts, as well as an overview of how a game-changing Cooperative and Popular (C&P) bank might look like 5 to 10 years from now. Additionally, it aims to provide inspiration and a framework to innovate in a deliberate and creative manner. Since July 2014, we embarked on a major international research effort, to better understand how C&P banks work, explore opportunities, address weaknesses and threats and overall to assess the efficacy and resilience of their current business model in a fast changing world and under the “TVI (Total Value Innovation)” lens of analysis. To ensure that we created a realistic and useful framework we conducted an International SWOT Assessment survey (ISWOT14) in Fall 2014, and hosted a two-day International Strategic Dialogue on Value Innovation (ISDVI15) amongst 12 senior executives, members and strategic partners from 7 counties, in February 2015. This study entitled “Designing Tomorrow ’s Cooperative and Popular Banks” was conducted to: • craft a novel Business Model prototype to inspire, provoke disruptive thinking and be a starting point for dialogue on the emerging future of C&P banks. • identify the challenges and core capabilities of C&P banks. • provide a set of practical and actionable insights to help managers make better-informed decisions as the future unfolds. • Introduce breakthrough concepts and successfully drive innovation throughout the organisation by aligning purpose, performance and people. • highlight a path to creating and capturing new markets and discovering new sources of profitability. • outline a vision for the future and assess what is needed to enable C&P banks to continue to empower customers, members and regional economies in the digital age. • C&P banks to use the resulting framework of this study to attack them-selves with it.

We are grateful to all individuals who participated in ISWOT14 and ISDVI15 for the insights, ideas, experience and knowledge that they shared with us. With their participation, great insights have emerged that were essential for our study that will be presented during the 29th CIBP Congress on "Innovation for Strengthening Popular and Cooperative Banks" due to take place on 19 and 20 October 2015 in Rio de Janeiro. Thank you for helping us find that voice and identify that narrative. We hope that you find the enclosed insights, framework and perspectives inspiring and helpful as you chart your own course towards the emerging future.

Dr. Fotis Filippopoulos Director ﬀ@shakesteer.com

CO NT EN

Designing Tomorrow’s Cooperative & Popular Bank

Tomorrow’s C&P bank in a Nutshell

Methodology

This section includes the Value Profile, Value Propositions, Customer / Member Segments, the Innovation portfolio, the Credo and Brand Essence.

Spanning four sections this chapter includes details about the research strategy, the ISWOT14 and ISDVI15 and the elicitation procedures.

Key Findings and Trends

SWOT Assessment

Value Profiling Process

This section provides a wealth of insights To better understand how the External & deriving from our research (ISWOT14) as well as Internal forces influence C&P banking, we from a background analysis on market trends extensively assessed in a detailed component and latest developments. level its business model dimensions.

Spanning two sections, the Value Profiling Process, includes an Assessment of the Basis of Competition, and the identification of the Single Point of Failure.

Unique Value Proposition Generation

Tomorrow’s C&P bank BM

Brand Strategy

In conjunction with Business Model generation, this stage is vital in capturing the systemic nature of the way C&P banks can create and deliver value and satisfy new or hidden customer needs.

The business model describes the rationale and processes related to the way “Tomorrow’s C&P Bank” creates, captures and delivers value.

Under TVI’s lens of analysis “Tomorrow’s C&P bank” Brand strategy connects the dots between the Value Propositions, the Business Model and Purpose.

Collective Ambition Compass

Reflection

Appendices

To harness the power of Collective Ambition, workshop participants were also asked to populate the Collective Ambition Compass.

This study proposes a conceptual framework based on both inward and outward looking Value Propositions, by applying the novel method of “Total Value Innovation”.

The appendices include the Risk Assessment Questionnaire and the complete International SWOT Assessment survey (ISWOT14).

ISDVI15

International Strategic Dialogue on Value Innovation

1. TOTAL VALUE INNOVATION IN A NUTSHELL Designing a smarter, more empowering and integrated C&P ecosystem

Relative Offering Level

“To be” Value Profile “As is” Value Profile

; Price

Proximity

Governance Consumer Needs Talent (HR)

VALUE PROPOSITIONS

6VPS • • • • • •

Brand

Channels Protection SchemeRegulation

“Value Propositions constitute the heart of the TVI process and refers to the translation of the service and product mix (section 5.2.8), into the “type” of Value that this “mix” creates for the users. VPs also constitute the basis of Business Modelling and Brand Architecture.”

Proactive banking (IoT-related platform) - (Inward and Outward looking) Inventing new form of “proximity” (IoT-related platform) - (Outward looking) Source of personal, social and local development - (Outward looking) Strategic product and service design - (Inward and Outward looking) Agility in handling individual cases - (Outward looking) C&P bank as a talent factory (talent development program) - (Inward looking)

2.56

CURRENT BM SWOT SCORE (ISWOT14) “The SWOT score is an indication of the overall “current position” of C&P banking BM” Analysis produced a near zero (2.56) overall SWOT score across the four S W OT e l e m e n t s i n d i c a t i n g t h a t participants perceive the “current status” of C&P banking Business Model as being neither Strong or Weak and with a limited capacity to exploit the plethora of Opportunities in the market.

1. Innovators 2. Achievers 3. Traditionals 4. Active Seniors 5. Experiencers 6. Believers 7. Young Cosmopolitan 8. Strugglers 9. Achieving SME’s & Exporting SME’s 10.Striving SME’s 11.Start Ups “Tomorrow’s C&P bank” Customer / Member Segments are the derivative of a dynamic selforganising mosaic of psychographic, behavioural and finance centric variables.”

CUSTOMER & MEMBER SEGMENTS 1

Agility

Empowerment Proactivity

PRODUCTS & SERVICES

11BUNDLES

“The challenge for workshop participants (ISDVI15), during the identification of a future possible product and service portfolio, was to combine market insights (ISWOT14) with creative thinking, whilst overcoming the natural cognitive biases against risk, breaking free from resource dependencies, mid and long term planning and delayed payoffs.” • Typical products and services including deposits and loans. • Internet banking. • Mobile baking. • Exchange of networks among C&P banks. • Platform based integrated services and life planning applications* (multi-channel). • IoT based data mining / management and predictive analytics (Dynamic customer / member profiling). • IoT based promotional and advertising services. • Cross-selling. • Provision of financial and business education. • Member to member services. • Member to project donations (Social dividends for the long-term).

Designing Tomorrow’s Cooperative & Popular Bank

Bending the Beam of Observation Choosing the Trajectory Chosen Trajectory

2.METHODOLOGY

Plausible Future of C&P banking

2.1 Charting the Course Empirical Data (ISWOT14 & Industry Trends)

“Scenarios deal with two worlds; the world of facts and the world of perceptions. They explore for facts but they aim at perceptions inside the heads of decision-makers. Their purpose is to gather and transform information of strategic significance into fresh perceptions.”

Unknown Disruptive Factors

NonForeseeable Future

Pierre Wack (1985)

Present This study axiomatises that an opportunity for C&P banks lies in the redefinition of the “space” transcending preconceived notions of today’s current players, and in the re-construction of the market’s boundaries. Assessing the eﬃcacy of C&P Banking Business Model on a detailed component level, can reveal or highlight interesting trajectories towards value innovation and to capture the systemic nature of the way C&P banks could develop, communicate and deliver superior, sustainable and competitive value to their customers and members. As such the objective of this study e n t i t l e d “ D e s i g n i n g To m o r r o w ’s Cooperative and Popular Banks” is twofold: a) to provide a strategic trajectory (scenario) for C&P banks within the changing financial services industry and regulatory environment and b) to attempt to innovate on the basis of Value and by crafting a novel Business Model prototype to inspire, provoke disruptive thinking and be an excellent starting point for dialogue on the future of C&P banks. Based on the very foundations of the centuries old Cooperative movement, as well as on the present and the future, “we set the study’s time horizon at 5 years (2020) from now and spanning for an extra 5 years (2020 – 2025), this means that the strategic trajectory relates strongly to the current status of C&P banking without sacrificing the need to consider messages coming from the emerging future.” .

Future The resulting insights of the study are set forth on this publication and will be presented during the 29th CIBP Congress on “Innovation Strengthening Popular and Cooperative Banks” that will take place on 19 and 20 October 2015 in Rio de Janeiro. It represents the collective eﬀort of industry experts, strategic partners and members of CIBP that analysed key trends, insights, and perspectives on how C&P banking is changing and the way it could create and capture new markets, enhance organisational eﬀectiveness and turn C&P banks into talent factories. Spanning five sections: a) International SWOT Assessment Survey (ISWOT14), b) Value Innovation Profiling, c) Unique Value Proposition (UVP) Generation, d) Business Model (BM) Generation and e) Brand Strategy Development, all sections combined provide a holistic and wellrounded practical and actionable framework for Total Value Innovation (TVI) that solves the problem of the currently fragmented Value Innovation thinking, by uniting and aligning the Development, Communication and Delivery of Unique Value Propositions (UVP generation) with the Business Model and Brand.

ISDVI15

International Strategic Dialogue on Value Innovation

In search for answers, we explored and considered a vast number of parameters and combined empirical research (ISWOT14) with the topic specific International Strategic Dialogue on Value Innovation (ISDVI15). Consequently, we unravelled a wide spectrum of future opportunities for C&P banks and on that basis a strategic trajectory has been identified and modelled. Specifically, the areas covered in the study include: 1) Total Value Innovation (TVI), 2) Value Proposition Generation, 3) Business Model Innovation, 4) Design-Driven Innovation, 5) Leadership, 6) Information Technology and Internet of Things, 7) Talent Acquisition and Management, 8) Knowledge Management, 9) Process Improvement, 10) Decision Eﬀectiveness, 11) Change Management, 12) SWOT analysis, 13) Collective Ambition, 14) industry trends and insights and 15) Brand Strategy. It should be pointed out:

“this study is NOT about providing a definite picture or predicting the future of C&P banking. It is about providing a strategic framework based on a “structured collective perception” or “construct system” as a starting point for dialogue as well as of “a” way for C&P banks to think about the future by exploring its uncertainties through the identification of the current strengths, weaknesses, opportunities, threats as well as trends and their conjoint effect on the dynamics and relationships between industry forces.” It has been stressed (Mintzberg, 1994a) that “successful strategies cannot be analytically planned but rather emerge in a process that involves creativity, intuition and learning”. In this context, we combined the TVI methodology (section 2.3) with market insights (ISWOT14 – Section 4) to provide an internally consistent verbal and visual picture of the phenomenon of “change” in the financial services landscape, based on various assumptions and factors (variables) both empirically (ISWOT14) and creatively (collectively) generated (ISDVI15). “The challenge here was to balance the weight of empirical data and of creative thinking in order to avoid falling pray to a “market pull” strategy that would inevitably point the team towards “Designing Tomorrow’s Red Ocean”.

Designing Tomorrow’s Cooperative & Popular Bank

2.2 International SWOT Assessment survey (ISWOT14)

Participants (%) coming from 11 Countries.

To put the scenario on an empirical footing the study has been divided into two interrelated stages, where both a quantitative expert survey (Stage 1 – ISWOT14) and a strategic dialogue (Stage 2 – ISDVI15) has been carried out. This is so to engage as many people as possible and to build on the “collective international” experience, knowledge and ideas of experts, members and strategic partners in the field of C&P banking. The overall objective is to develop a strategic scenario and on that basis to craft a novel Business Model prototype to inspire, provoke disruptive thinking and be a starting point for dialogue on the future of C&P banks.

Argentina 4% Austria 9% Belgium 12% Brazil 5% Canada 4% France 14% Germany 9% Italy 25% Morocco 14% Netherlands 3% USA 1%

Specifically, the first stage consisted of an International SWOT Assessment survey (ISWOT14 - Appendix 2) in order to assess in a detailed component level, as well as on a quantified and qualitative basis the existing body of knowledge concerning the internal and external environment of C&P banks, to identify some of the key issues of the sector and to provide a basis of understanding on which variables required further in-depth exploration during the strategic dialogue (ISDVI15). A selected group (Purposive Sample - Appendix 2.1) of 500 professionals and members of the sector that conformed the criteria set by the researcher and CIBP, have been asked to complete a highly technical on-line questionnaire consisting of 88 items / questions corresponding to 7 diﬀerent dimensions / assessments, related to specific to the Business Model and Value Innovation building blocks, namely: a) Basis of Competition, b) Value Proposition, c) Cost / Revenue, d) Infrastructure, e) Customer / Member Interface, f ) Threats and g) Opportunities.

Participants from 27 Banks & Institutions. • • • • • • • • • • • • • • • • • • • • • • • • • • •

The structured SWOT Assessment of the Cooperative and Popular Banking Business Model yielded two results: a) it provided a snapshot of where C&P banks currently stand (Strengths and Weaknesses) and b) it suggested and/or highlighted future trajectories (Opportunities and Threats). SWOT analysis was thus a significant part for the process of developing a strategic scenario for the C&P bank of tomorrow. The insights and the resulting framework presented in this study indicate that the “emerging future” as participants perceive it and see it unfolding, has the potential to obtrude the very foundations of C&P banking and the goal is to make explicit the critical factors for growth, stagnation or failure that have been developed around and became attached to C&P banks. Participation in the survey was voluntary; it was conducted in compliance with the ICC/ESOMAR International Code on Market and Social Research and took approximately 25 minutes to complete. All responses were treated as strictly confidential and reported only in the aggregate. In total, from the 500 targeted professionals, members and customers, 99 responses were received from C&P bank representatives and individual participants, in 5 diﬀerent organisational positions and / or roles, across 27 banks and institutions from 11 countries. This number corresponds to a response rate of 20% that is well above the expected rate of 10% to 15% for an external on-line study with no incentives. The survey’s results are subject to a margin of error of ±8.83% at a 95% confidence level, and the significance level (alpha - a) has been pre-set at 0.05.

ADG Assopopolari & Italian Popular Banks Banca Etruria Banca Popolare di Cividale Banca Popolare del Frusinate Banca Popolare di Puglia Basilicata Banca Valsabbina Banco Credicoop Bancoob - Sicoob Banque Centrale Populaire du Maroc Banque Populaire de Marrakech BPCE CIBP CPH Banque Creval Group [Gruppo Credito Valtellinese] Desjardins DZ BANK AG FNBP ICBPI Informatique Banques Populaires NewB Nova Scotia Credit Unions Oklahoma Credit Union Rabobank UBI Banca Volksbank WGZ BANK

Participants’ Roles. 7% Customers

13% Members

16% Board Members

45% Employees

19% Elected Managers

ISDVI15

International Strategic Dialogue on Value Innovation



Value Innovation Profiling A diagnostic tool and an action framework for Capturing, Understanding and Changing the current state of play in the known market space.



Unique Value Proposition (UVP) Generation A structured and detailed framework based on 9 building blocks for Developing Value Propositions that could also be unique (UVP).



Business Model Innovation & UVP Alignment A structured and detailed framework based on 10 building blocks that cover the entire spectrum of any business and describe how Value is Created, Modelled and Delivered.



Brand Strategy & BM Alignment

2.3 International Strategic Dialogue on Value Innovation (ISDVI15) Collaborative Value Architecture with TVI methodology. The ability to introduce new or diﬀerent value is key to the survival and relevance of modern organisations. Value Innovation is at the heart of business literature from Total Quality Management in the 1980s, Lean Thinking in the 1990s, and Blue Ocean Strategy in 2005 (Kim and Mauborgne, 2005). Mapping the current business model and the key components of the business can trigger great insights into value and where to invest energy. Total Value Innovation or TVI is a novel more inclusive and deeper business value innovation design prototype method that expands the traditional perspective to integrate and connect previously isolated elements into an approach that tries to balance completeness with abstraction. TVI is a practical and actionable framework for innovators applied during “group strategy sessions” that surpasses the current fragmented approaches to Value Innovation thinking, by integrating its elements into a holistic and linear methodology for “Total Value Innovation” (TVI). “Total Value Innovation” is both a novel method and term that describes the outcome of the Development, Communication, Delivery and Alignment of Unique Value Proposition generation with Business Model Innovation and Brand Strategy. It provides an overarching logic that integrates techniques into something holistic. TVI’s approach is integrated and has a driving process toward eliciting the emergent knowledge of everyone in the room. This study axiomatises that the process of disruptive strategy development, should not be based solely on empirical data. Instead, it should also incorporate creative thinking and collaborative value architecture. To develop the strategic scenario and Business Model prototype in stage 2 (ISDVI15), a small group of 12 selected industry experts and practitioners, as well as key strategic partners were recruited to participate in a two-day strategic dialogue in a attempt to design tomorrow’s C&P banks by innovating on the basis of value and by crafting a novel Business Model Prototype, whilst considering the results and findings of the SWOT assessment (ISWOT14) from stage 1. The process (TVI) consisted of a linear and sequential 4-step procedure (“Canvas based“ methodology) with 37 corresponding building blocks (Dimensions) that are specifically designed to liberate critical and innovative thinking, whilst taping innovation & management theory, psychology, neuroscience and collaborative value architecture to discover C&P banks’ full potential, develop Unique Value Propositions, enable product / service re-design and align these with Brand Engineering.

A vehicle for communicating and delivering the Value Propositions to the users and for Connecting the brand to sensory awareness.

Designing Tomorrow’s Cooperative & Popular Bank

2.4 Facilitation and Elicitation procedures Connecting and aligning the business, brand and customer perspectives is a guiding principle for the entire TVI process. A number of techniques and tools from the world of Psychology and Design that could help us build a smarter and more innovative business model and brand have been applied, including: Consumer Insights, Construing, Visual thinking, Stor y telling and Brainstorming. Our job as a group was to extend the boundaries of thought, challenge the status quo and generate new gamechanging value. This required the ability to collectively imagine, that “which does not exist”, and later to frame it and model it. However, the fundamental problem with eliciting individual diﬀerences in thought is that there are too many of them.

PCPsy (Kelly, 1955) is an explicit theory of human understanding that is based on “constructive alternativism” used to explore the subjective meanings that people attach to their personal world and stresses that reality is based on constructs (mental representations, events, concepts etc.) rather than absolutes. It is through the application of PCPsy that participants’ personal constructs representing their knowledge and experience were elicited, categorised and reported as TVI elements. In eﬀect, to establish a link between innovation thinking and participants’ personal constructs related to TVI, the theoretical, practical and actionable base of Value Innovation had to be expanded to allow more complex thoughts beyond what current approaches can handle.







Topic & Qualifying Phrase

Elicitation Methods

Elicited Constructs

Over the years, we have witnessed a constant reshaping of the boundaries of innovation thinking by new mathematical, psychological and research methods, eventually causing a shift from the search of universals to the search of variability that has unraveled a more complex business ecosystem. Likewise our surge to tap into participants’ experiences and collective knowledge, emerged largely from the replacement of the “fragmented and rational” innovation process of the past by a more “explainable and actionable” innovation framework (TVI) that tr ies to balance completeness with abstraction, with Personal Construct Psychology (PCPsy) (Kelly, 1955) during the facilitation and elicitation process, being the missing piece of the puzzle.



 Idea Generation

PCPsy as part of TVI facilitation process is a powerful and scientific tool for acquiring a reliable battery of personal constructs associated to the dimensions and building blocks of TVI and providing valuable implicit knowledge on participants' ideas, views and insights towards possible future trajectories, disruptive strategies, products/services and their actual synthesis.

Operationalising PCPsy. To operationalise PCPsy during TVI a 4-stage elicitation process was applied to explore, analyze and record or reject participants’ subjective dimensions of meaning. Specifically the process included: (1) a topic and a qualifying phrase in the form of questions corresponding to specific dimensions of TVI, (2) a full construct abstraction consisting of three elicitation methods adopted by most researchers, namely Triading, Pyramiding and Laddering.

To reach consensus on key issues, participants were asked to group their ideas, which were most similar by specifying the attributes they have in common and to isolate those which were most diﬀerent on specific attributes, thus to identify the contrasting pole with questions like “how”, “what do you mean” and in “what way”. The points of distinctions over multiple Triads formed the dimensions upon which all ideas were evaluated, screened and recorded or rejected, in stage 3. The second method, called Laddering involved the elicitation of the core values that characterise participants’ personal constructs with questions aiming to explore “why” each of the bipolar constructs are important or not to the emerging disruptive strategy. This enabled a series of new and increasingly fundamental constructs to be generated from all the original constructs. The third method, called Pyramiding, aimed at eliciting participants’ sub-ordinate constructs by repeating the “why” and “what” questions, concerning the characteristics of the newly elicited bipolar constructs identified during t h e L a d d e r i n g p ro c e d u re a n d we re considered as super-ordinate. In the final stage (4) “it is through comparing, coding and labelling participants’ ideas and contrasting these with relevant theory that patterns and new concepts emerged as part o f T V I b u i l d i n g b l o c k s.” I n t h e R e constructionist world there is no prior hypothesis, no standard templates, no RedOcean rules to follow. This process was repeated throughout the ISDVI15.

ISDVI15

International Strategic Dialogue on Value Innovation

“ 3.KEY FINDINGS & TRENDS WIDENING THE BEAM OF OBSERVATION: LEARNING FROM THE PRESENT & THE EMERGING FUTURE

“

hat will the financial services competitive landscape be like in the future? How will people obtain and use information? How will they interact amongst themselves and with financial institutions? In what way, will novel innovative business models and technological advancements alter peoples’ behaviour and perception of what exceptional customer experience feels like? How would we hypothesise the dependencies underpinning the future success of Cooperative (C) and Popular (P) banks in the emerging future? What will then be the single point of failure f ro m t h e b u s i n e s s, u s e r a n d b r a n d perspective? We live in an age of profound disruption in the financial services industry. In essence, what is emerging; is a future that requires financial institutions to connect with the deeper levels of their value system, to break free of their restraints, to re-discover “who” they really are and “what” they want to become or should become in the future. Two major findings have characterised the post 2008 research on C&P banking: a) it has entered a new era of slower growth with increased competition coming from traditional as well as new players and b) C&P Banks are in a transition phase through a period of deep transformation that will eventually impact all types of financial services institutions and with cost efficiency being key to their long-term success. These major fi n d i n g s h a d a p r o f o u n d e ff e c t o n “management thought” and rendered the assessment of the efficacy and resilience of the C&P Banking business model as one of the most crucial topics in the sector.

The interlinked dynamics between existing competition, new entrances from formidable “non-bank” players, regulatory environment, changes in the fabric of societies, behavioural shifts, globalisation and unprecedented technological advances are some of the parameters transforming the way we live, communicate, stay informed, make decisions and ultimately the way we interact with financial institutions. These forces compel all players to foster innovation and agility.

In contrast to classical SWOT analysis that is based on largely subjective techniques that fail to quantify the level / status of the “current position” of a given “system” and for each of the four elements [(S) Strengths, ( W ) Weaknesses, (O) Opportunities and ( T ) Threats], here units of measurement were obtained primarily from a Likert-type 10-point scale with fixed choice response formats, corresponding to the level of agreement or disagreement with the supplied statements

“Smart C&P banks know they have to reassess, self-criticize, rethink, defend and reposition themselves in this evolving financial services landscape. They also do know that to continue to provide superior value to their customers and members and eventually carry their success in the “age of information”, they have to be constantly ahead of the curve and that the only way to achieve stability is through movement.” It has been reported (Habberfield and McCarroll, 2012) that cooperative models vary both in terms of structure and market concentration, largely prohibiting the sector from having a unified and consistent picture across banks and countries. This finding is also evident in our segmentation analysis by “country” as well as “role”, in appendix 2.12.

[from (1) low to (10) high]. The “position” refers to the present SWOT status of the C&P banking business model (appendix 2.3).

On this basis and in an attempt to consolidate and assess the dimensions related to the C&P bank ing business model, our SW OT assessment survey (ISWOT14) combined quantitative and qualitative insights mainly for three reasons: a) to better understand what is the “current position” or status of C&P banking business model, b) to identify any capability and/or opportunity gaps and c) to provide a detailed account / assessment of the Basis of Competition, Value Propositions, Costs and Revenues, Infrastructure, Customer / Member Interface, Threats and Opportunities.

Surprisingly, analysis produced a near zero (2.56) overall SWOT score (out of an unrealistically maximum score of 20), across the four elements indicating that participants do not perceive the “current status” of C&P banking business model as being neither Strong or Weak. A low SWOT score (2.56) may also indicate that the “current” business model as this is perceived, provides a limited capacity to C&P banks to exploit the plethora of Opportunities (8.16) in the market (appendix 2.10).

To calculate the “Current Position” (ΦS) the following formula was applied: ΦS = (S – W) + (O – T).

Designing Tomorrow’s Cooperative & Popular Bank

Moreover, although the Strengths (7.46) outweigh the Weaknesses (6.33), that is an indicator of a “Capability surplus” also shown in the relatively high Infrastructure assessment (7.32) and Customer / Member Interface (7.77) scores, however, the near equal distance between Strengths and Opportunities (0.7) and Strengths and Threats (0.73) is also an indication of “a business model that does not provide high levels of competitiveness and protection from the competition and especially from new non-bank entrants with innovative business models and Value Propositions that could attack the system from below and inevitably change the industry and in their favour.”

Calculating the Current Position. ΦS = (S – W) + (O – T)

Opportunity surplus

Capability surplus Capability surplus

Given this “Current Position” (ΦS) and in relation to our detailed at a “component level” SWOT assessment (ISWOT14), we see several Strengths and Opportunities for C&P banks as well as Weaknesses, Threats and Challenges that lay ahead and can be useful steers for the wider C&P banking community (appendix 2.2). Our analysis of the internal (Major Strengths and Weaknesses) and external (Opportunities and Threats) environment of C&P banks, produced a detailed account of the key areas (items that scored above or below the threshold levels) reflecting the Value Propositions, Costs and Revenue, Infrastructure and Customer / Member Interface. Specifically, the major Strengths (>8), Weaknesses (<6.9), Opportunities (>8) and Threats (>8) of the C&P banking business model can be summarised as in the following key points:

Major Strengths (>8) • • • • • • • • • • •

Value Propositions (VPs) are well aligned with customer/member needs. VPs have strong network effects. C&P banks have predictable costs. They are focused and work with partners when necessary. They enjoy good working relationships with Key Partners. The rate of customers/members who cut ties with the services and or bank is low. C&P banks continuously acquire new customers and/or members. Channel reach is strong among customers / members. Customers / members can easily see the channels. They enjoy strong Customer/Member relationships. C&P banks have a strong brand.

Major Weaknesses (<6.9) • • • • • • • • • •

C&P banks do not benefit from strong margins. They generally do not collect revenues before expenses are incurred. Pricing mechanisms do not capture full willingness to pay. Operations are not cost efficient. The Cost Structure is not correctly matched to the business model. Key Resources are not difficult for competitors to replicate. Key Activities are not difficult to copy. Balance of in-house versus outsourced execution is not ideal. Key Resources are not deployed in right amount at the right time. Relationships do not bind customers/members through high switching costs.

Strenghts SD: 2.59

Weaknesses SD: 2.83

Opportunities SD: 2.69

Threats SD: 2.77

7.46

6.33

8.16

6.73

Major Opportunities (>8) • Partners could complement the VPs. • They could generate recurring revenues by introducing novel services. • C&P banks could achieve better integration of services. • They could replace the one-time transaction revenues with recurring revenues. • Cross-selling opportunities exist either internally or with partners. • C&P banks could standardise some of their Key Activities • Greater collaboration with partners could help C&P banks focus more on core business. • Novel or existing partner Channels could help C&P banks better reach customers / members. • C&P banks could achieve better integration of Channels. • They could better align Channels with customer / member segments. • Customers / members could be better served through finer segmentation. • There is potential to improve customer / member follow up.

Major Threats (>8) • • • • • • • • •

There are substitute products & services available. Competitors threaten the margins. Competitors are threatening the market share. The quality of resources is threatened. The quality of activities is threatened. Competitors threaten the channels. Current channels are in danger of becoming irrelevant to customers / members. Some customer relationships are in danger of deteriorating. Relationships do not bind customers / members through high switching costs.

ISDVI15

International Strategic Dialogue on Value Innovation

Capturing and assessing the current state of play (SWOT analysis) is important to better understand the known market space, but also looking at trends that have the capacity to transform the banking industry is crucial in crafting a business model prototype and strategic trajectory, based on the many ways the landscape of financial services expands and evolves. There is a range of trends already impacting the financial services industry and gradually causing radical changes on the way we think about money. However, we argue that the following five trends are among those that will transform the banking industry in the immediate emerging future: a) Evolving Banking Regulation (i.e. Basel III) and currently unresolved regulatory details and their conjoint impact on capital equity level requirements and Return on Equity (ROE), conduct, culture and risk management, data and reporting and on the overall bank structure and governance.

“in larger part there are changes caused by subtle and unspoken dynamics in society that require a radical change in meaning and status quo that is demanded by users and enabled by the emergence of largely familiar technologies in totally new contexts that transform their lives and interpretation of what exceptional financial service is, inevitably affecting peoples’ relationships with financial institutions.” In part the changes imposed by regulation are indeed directly aﬀecting the future of banking with the hope of making it more robust and stable. “But in larger part there are changes caused by subtle and unspoken dynamics in society that require a radical change in meaning and status quo that is demanded by users and enabled by the emergence of largely familiar technologies in totally new contexts that transform their lives and interpretation of what exceptional financial service is, inevitably aﬀecting peoples’ relationships with financial institutions.” [based on Verganti’s (2009) axiom on Design Driven Innovation]. b) The expansion and evolution of disruptive digital platform models. Digital platform models are not new. Over the past two decades, we have witnessed the birth of numerous smart digital platforms (i.e. iTunes, lulu.com, Kick starter, Indiegogo, ebay, Lending club, Amazon, Facebook, ING Direct etc.), that enable individuals and groups to interact, exchange, cocreate, share, promote, connect, publish, raise capital, save, lend, buy and sell in real time. In 2013, almost half of the top 30 global brands by market capitalisation were platform-oriented companies. Today and in the immediate future, platform competition will intensify as social media; mobile devices, the cloud and the evolution of the Internet on the whole are already changing the face of financial services.

Jibun Bank a joint venture between Bank of TokyoM itsubishi UFJ and KDDI I nformation and Communications company, is one of these examples. Launched in 2008, as the world’s first bank using the “mobile” as their primary channel, Jibun Bank in essence rolled out a Gen-Y engagement plan to deliver enhanced mobile-only commercial banking services. In line with the increasing needs for speed, ease of use and security Jibun bank managed to acquire 500,000 customer accounts within the first 8 months of operation. Undoubtedly, the power and potential of digital platform modelling as a mean to create and capture new markets could divert the discussion towards the very nature of “proximity”. Proximity is and will continue to constitute one of the key characteristics and competitive advantages of C&P banking. However, discussions around the way that C&P banks could manage to balance the need for proximity (network), with cost efficiency and value creation (innovation), is inevitably pointing towards the reinvention of the typical bank branch. c) Formidable new nonbank players (Google, Peer to Peer lending platforms, Apple and Samsung Pay, PayPal) with innovative business models, strong internet presence and advanced data mining / analytics capabilities have already started offering traditional banking services like lending and transferring money. For example, Google rolled out an integrated Google Wallet (payments service that competes against PayPal and Apple Pay) – Gmail money – Gmail service that lets users 'attach' money to emails (money transfer application). In particular, this feature enables Gmail users to quickly and securely request, send money, receive money for free or transfer money to their bank account simply by ‘attaching’ the amount to a standard email. Peer-to-Peer lending on the other hand is another example of disruption in the financial services industry by non-bank players that offer people an alternative way to borrow money. By comparison, these cost efficient Internet based platforms, match lenders directly to borrowers and facilitate lower cost loans between the parties and increased return (8% 10%) to investors. This is due to the reduced overheads, caused by the absence of branch networks and layers of bureaucracy experienced in traditional banks. Peer-to-Peer lending platforms are on the ascendant and proliferating across the world (i.e. Zopa, Lending club, ThinCats, Funding Circle, Market Invoice, Funding Knight, Assetz, Lending Works, Lend Invest to name a few).

Designing Tomorrow’s Cooperative & Popular Bank

Already a decade old and characterised as a “crack in the foundation” of financial services by previous research in the field (Parayre, 2006), these platforms took oﬀ after the 2008 financial crisis when banks limited lending and people started to seek alternative channels (mainly online) and / or solutions for financial services.

IoT also has considerable implications to city management from waste management (Smart Belly trash use real-time data collection and alerts municipal services when to empty the bin) to parking space management (installed sensors, mobile apps, and real-time data analytics like Streetline’s ParkSight service, help people find available park spaces).

d) Intergenerational dynamics is another force that will also change the face of the financial services industry. Tech-savvy, social mindful, well-connected, financial freshmen and most globally oriented generation, the Gen-Y or the widely referred to as “Millennials”, those born between 1981 and 2000 are already driving the shift from a PC-centric to a mobile-first world (Lella, 2014). According to US Census Bureau (2014) international data, this age group represents the 43% of the global population aged between 15 and 93. Influenced by their well-rounded experience in the digital world, they have developed a novel idea or sense of what a superior financial service should be like, including customised and bundled products, fast, convenient and easy to use innovative services, special interest rates and no fee transactions.

On the other hand, industrial IoT enabled applications help companies optimise operations and boost productivity. For example, real-time sensor data from soil moisture levels, to weather conditions and pesticide usage (OnFarm application) enables farmers to remotely monitor the farm’s resource usage levels and increase eﬃciency. For banks, the emergence of IoT not only foretells the rise of cashless economy, but it also means that very soon, discussions around the future of Internet, mobile-banking and multichannel user experience will move away from devices, channels, applications and platforms, as “Predictive Analytics” is highly likely to become the basis of “Proactive Banking”, a term that was coined during our strategic dialogue (ISDVI15). For C&P banks “Proactive banking” means that “data acquisition and management” and not “money” will be the epicentre of operations eventually transforming banks into “data centres”. In this data driven ecosystem, where money is data and data is money, we could witness banks gradually being transformed into IoT capability-driven organisations, with the potential to possess a central stage in customers’ and members’ lives with real-time information, communication, insights, advice, oﬀers, promotions and financial solutions on an any-sector, any-market, anytime and anywhere basis.

e) The emergence of IoT (Internet of things) capability-driven banks. By 2020 “Augmented Reality” will be more real than ever. It has been reported (Webster, 2014) that there will be 50 billion intelligent devices connected to the Internet and with one another. This number corresponds to 6.58 connected devices per person and to an economic footprint that is projected to range anywhere between US$2 trillion and US$14 trillion. It also means that the world will be augmented, at such degree that the “environment” will respond to human presence with relevant, personalised, predictive - proactive, proximity based information. Under IPv6 (Internet Protocol version 6), an infinite number of devices and censors can be connected to the Internet and to other devices creating an interlinked intelligent ecosystem that is referred to as “The Internet of Things” or IoT. There is already a plethora of examples (postscapes.com) coming from nearly every sector of the economy that allow us a glimpse of the potential of IoT. For example, for medical and health purposes, sensors and devices are connected to help people follow their prescription regimen, doctor coordination (GlowCaps) or to monitor ones daily fitness routine by using a smartphone’s sensors and applications (Apple Health, Nike plus, etc.). Similarly, IoT enabled devices allow the remote home monitoring and management for convenience and energy eﬃciency reasons, by integrating real-time weather forecasts, usage sensors and home activity (Nest smart thermostat) or even synced ambient data displays (Phillip's Hue light bulb) through colour variations, dimming, flashing, pulsing, to inform, change moods, save energy and protect home.

ISDVI15

International Strategic Dialogue on Value Innovation

4. SWOT ASSESSMENT

o better understand how the External & Internal forces influence C&P banking, we quantitatively and qualitatively assessed (ISWOT14) in a detailed component level 6 diﬀerent business model dimensions, including: Value Propositions, b) Cost / Revenue, c) Infrastructure, d) Customer / Member Interface, e) Opportunities and f ) Threats. In part, the ISWOT14 questionnaire is based on Osterwalder’s and Pigneur's (2010), proposed set of non-exhaustive SWOT Assessment items, as well as on specific to the TVI elements..

“Overall, the SWOT analysis results indicate that the industry operates in a Red Ocean and that there is a justified need for C&P banks to pursue Value Innovation and renewal.” Weaknesses 10 / Entirely Agree Major >8 Strengths Minor >7 Strengths

5 / Neither Agree or Disagree

1 / Entirely Disagree

The results provide a wealth of insights concerning the eﬃcacy and resilience of C&P banking business model as well as evidence of strong unifying themes in participants’ responses. All in all, these results and despite the overall positively low score in the SWOT dimension of Threats, indicate that the industry operates in a Red Ocean and that there is a justified need for C&P banks to pursue Value Innovation and renewal.

Value Proposition assessment The assessment of Value Propositions (VP) refers to the service and product mix that creates Value for the customers and members of C&P banks. This assessment consists of 3 key items related to a) the level of alignment of the Value Propositions (VP) with customer / Member needs (Q.10), b) The network effects of the VPs offered (Q.11) and c) The synergies between the service mix (Q.12). Analysis produced an overall score of 7.88 indicating that C&P banking offers high levels of Value to the customers / members that is well aligned with their needs and with strong network effects but with moderate synergies within the service mix. To better understand what is driving the summary results, the trends and patterns and how the key (categorical) variables are related to each other and the significance of their association, Cross-tabulations (CT) were performed throughout ISWOT14. On that basis only the Chi-square values (alpha) that were statistically significant at p < 0,05 ("cutoff" point) are included in the report. Specifically, here CT was applied to see if there is a relationship between the level of alignment of VPs with Customer / Member needs (Q.10) and the level of alignment of the Brand with the Business Model (BM) and VPs (Q.48). The CT analysis indicated that with a p-Value of 0,0032 [Chi-square values (alpha) were statistically significant at 0.05] there is a significant association between these two variables.

Thus, the null hypothesis, that there is no link between VP, Brand and BM alignment in the current state of the C&P banks BM, is rejected. Additionally, the two categories of: a) the existence of strong synergies between the services (Q.12) and b) the opportunity to generate recurring revenues by introducing novel services (Q.67) were also found to be strongly correlated (p-Value: 0,0004), reinforcing the evidence provided by the research that further integration of services and the introduction of new ones constitute major opportunities for growth in C&P banking.

SD: 2.3 Min: 3

SD: 2.8 Min: 1

SD: 2.5 Min: 2

8.14

8.1

7.4

Q10. Our VPs are well aligned with customer / member needs.

Q11. Our Value Propositions have strong network effects.

Q12. There are strong synergies between our services.

Designing Tomorrow’s Cooperative & Popular Bank

Cost / Revenue assessment The Cost / Revenue assessment describes the Strengths and Weaknesses related to the Cost structure referring to the costs incurred to operate the current C&P banking business model and the Revenue structure referring to the way C&P banks capture value in relation to customers’ / members’ willingness to pay for the Value oﬀered. Analysis produced an overall low score of 6.87, indicating that the current Cost / Revenue structure is not competitive, with low margins (5.7), limited ability to collect revenues before any expenses are incurred (6.0), pricing mechanisms that do not capture full willingness to pay (6.9), a Cost structure that is not correctly matched to the business model (6.2) and operations that could be more cost eﬃcient (6.4). The analysis also showed that the only major strength in this category is the predictably of costs (8.0).

Infrastructure assessment The Infrastructure assessment includes the Resources, Activities and Partnerships (network) required to deliver the Value Propositions to the Customers / Members, whilst achieving operational eﬃciency. With a relatively high score (7.32) the “current” position of the C&P banking business model appears to be “operations centric” with special emphasis on execution quality (7.7), focus on the core business (8.2) and in maintaining good working relationships with the key partners (8.7). However, analysis showed that in this dimension the current C&P business model is not able to protect the banks from Resource (6.9) and Activity (6.2) replication by the competitors.

Customer / Member interface The Customer / Member interface appears to be one of the key Strengths (7.77) of the current C&P banking business model, with low churn rates (8.2), continuous new customer acquisition (8.4), exceptionally strong brand (9.3) and strong channel reach (8.0), channel visibility (8.0) and relationships (9.1) with customers / members, being amongst the key major strengths. However, one of the key findings of ISWOT14 is the major Weakness as well as Threat of the inability of the current relationship framework to bind customers / members with high switching costs (5.76). Moreover, Cross Tabulation was used to investigate the significance of association among key variables in this category. Specifically analysis showed that three strongly correlated areas include: a) level of Channel integration (Q.41) and competitors threatening the Channels (Q.64) (p-Value: 0,0003), b) Channel eﬀectiveness (Q.38) and danger of Channels becoming irrelevant to Customers / Members (Q.65) (p-Value: 0,0056) and c) level of Channel integration (Q.41) and danger of Channels becoming irrelevant to Customers / Members (Q.65) (p- Value: 0,0298).

Cost / Revenue Weaknesses

5.7 6.0 6.9 6.2 6.4

Q13. We benefit from strong margins. Min: 1 | SD: 2.9 Q18. We collect revenues before we incur expenses. Min: 1 | SD: 2.8 Q20. Our pricing mechanisms capture full willingness to pay. Min: 2 | SD: 2.5 Q22. Our Cost Structure is correctly matched to our business model. Min: 2 | SD: 3 Q23. Our operations are cost efficient. Min: 1 | SD: 2.8

Infrastructure Weaknesses

6.9 6.6 6.2 6.5

Q25. Our Key Resources are difficult for competitors to replicate. Min: 2 | SD: 3.2 Q27. We deploy Key Resources in right amount at the right time. Min: 2 | SD: 2.7 Q29. Our Key Activities are difficult to copy. Min: 1 | SD: 3.2 Q34. Balance of in-house versus outsourced execution is ideal. Min: 2 | SD: 2.6

Customer / Member Weaknesses

5.76

Q46. Our Relationships bind customers / members through high switching costs. Min: 1 | SD: 2.8

ISDVI15

International Strategic Dialogue on Value Innovation

Major Opportunities

8.52 8.7 8.1 8.0

Assessment of Opportunities

Q67. We could generate recurring revenues by introducing novel services.

The assessment of Opportunities also looks at specific to the business model innovation building blocks, as these will were included in the TVI process during the strategic dialogue on Value Innovation (ISDVI15). It appears clear that there is a plethora of Opportunities (8.16) that C&P banks could exploit and also provide a source of inspiration for Value Innovation, improvement and renewal. Major Opportunities include the generation of recurring revenues by the introduction of novel services (8.52), the standardisation of some key activities (8.7), the greater collaboration with partners (8.1) and better customer / member service through a finer segmentation (8.0).

Min: 1 | SD: 2.6 Q69. We could standardise some Key Activities. Min: 1 | SD: 2.5 Q70. Greater collaboration with partners could help us focus on our core business. Min: 1 | SD: 2.7 Q71. We could better serve our customers / members through finer segmentation. Min: 1 | SD: 2.9 90%

86.3%

81%

2.5% 11.2%

10.1% 8.9%

10%

Yes Don't Know Yes Don't Know Q80. Could we better align Q81. Is there potential Channels with customer/ to improve customer / member segments? member follow up? 97.5%

Yes Don't Know Q76. Could partner Channels help us better reach customers / members? 88.9%

54.3% 29.6% 16.1%

2.5% Yes

Don't Know

Q72. Could we better integrate our services?

Yes

Don't Know

10.1% 10.1%

Q77. Could partners complement our Value Proposition? © Shakesteer 2014 - 2015

Don't Know

86.1%

79.8%

Don't Know

Yes

Q73. Can we replace one - Q74. Do we have cross time transaction revenues selling opportunities either with recurring revenues? internally or with partners? 92.4%

Yes

2.5% 8.6%

2.5% 11.4%

2.5% 5.1% Yes

Don't Know

Q78. Could we integrate our Channels better?

Yes

Don't Know

Q79. Could we find new complementary partner Channels?

In suggesting ways to improve channel efficiency or effectiveness (Q.86), participants produced 50 responses (ideas) corresponding to a large number of categories (7) related to Technology, Communication, Operations, Data and Relationship Management. Key emergent subdimensions include: a) Investments in new relative technologies (10 or 20% of responses), b) Better communication (5), c) Finer market segmentation (4), d) Channel integration and synergies among services (4), e) Faster, more Efficient / Effective Operations & Process Optimisation Management (4), f ) Elimination of silos and integration of more corporate services (3) and g) Data analytics and database management (big data) (3). Moreover, participants also produced a wealth of ideas (74) related to the Satisfaction of additional Customer / Member needs (Q.87), located in 7 key areas (44 or 59,4% of 74 responses), reflecting in descending order: a) Technology support / Electronic banking / mobile / internet services / Live chat room and Omni-channel (14 of 44 responses), b) Provision of a better partner network amongst members and on a worldwide basis / Reinforcement of the relation between bank / customer / member (8), c) Satisfaction of Start-up needs (5), d) Personal and business financial consulting (5), e) Use of data to support / manage SMEs assurances (4), f ) Data protection and security (4) and g) Satisfaction of seniors' needs and retirement services (4). Finally, suggestions referring to “ways” of further tightening relationships with Customers / Members (Q.88) include the majority of responses (86), corresponding to 6 key elements (58 or 67,4% of 86 responses) in the areas of Communication, Relationship Management, Brand Strategy, Technology and Database management, reflecting: a) Proximity and Close contact with the customers / intimacy and follow up (12 or 20,6% of 58 responses in this category), b) Integration, Personalisation & Diversification of Products / Services & Systems / Private scheme ser vice (12), c) Protection and better Communication of Brand Values / Make members / customers / partners part of the "story" (10), d) Finer Relationship & Knowledge Management / Improve data mining (CRM tools) (9), e) Better generic communication (8) and f ) utilisation of social media tools and Web 2.0 (7).

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Assessment of Threats This dimension of ISWOT14 looked at Threats specific to the business model innovation building blocks, as these were included in the TVI process during the strategic dialogue on Value Innovation (ISDVI15). Specifically, analysis showed that on the whole, Threats with a low score of 6.72 are perceived the lesser part of the problem with major Threats mainly coming from substitute products and services (8.4) and competitors threatening the margins (8.5), market share (8.1) and channels (79.3% agree). In identifying key potential Bottlenecks (Q.82) in the system, 7 main dimensions (51 or 79,6% of 64 responses) emerged that are related to Finance and Credit Risk, Customer / Member Service, Governance and Technology, reflecting in descending order: a) Credit decision making process / Loans (18 or 35,2% of 51 responses in this category), b) IT / Information systems / Digital capabilities (8), c) Credit Risk Assessment (including SME’s (7), d) Responsiveness to client needs (6), e) Governance / Decision making & strategy implementation (4), f ) Retail Business (4) and g) International / domestic Money Transfers (4).

Major Threats

8.4 8.5 8.1

Q49. There are substitute products & services available. Min: 1 | SD: 2.8 Q51. Competitors threaten our margins. Min: 2 | SD: 2.8 Q59. Competitors are threatening our market share. Min: 2 | SD: 2.7 41.3%

Yes

33.7%

25%

Don't Know

Q62. Is the quality of our resources threatened in any way? 51.3%

Yes

33.3%

Don't Know 15.4%

Moving on, the assessment of Revenue Stream sustainability (Q.83) included 50 responses, related to 5 key elements (23 or 46% of 50 responses) in the areas of Fees / Revenues and Margins under threat of extinction, namely a) Transaction fees (5), b) Account fees (5), c) Interests margin (5), d) Revenue from payment services (5) and e) Commission fees (3).

Q63. Is the quality of our activities threatened in any way? 79.3%

Yes No 19.5% Don't Know 1.2%

Q64. Do competitors threaten our channels?

When participants were asked to identify the Costs that threaten to become unpredictable (Q.84) 68 responses corresponding to 6 main emergent sub-categories (39 or 57,3% of 68 responses) reflected: a) Information systems / Investments in Technology (9), b) Rules and regulations compliance costs (7), c) Branches and real estate cost of “network" (6), d) Taxation (6), e) Credit Risk associated costs (6) and f ) Costs for legal advice (5). Finally, the potential disruption of Key Activities (Q.85), included 59 responses, consisting of 5 main emergent sub-categories (26 or 44% of 59 responses) in the areas of: a) Receipts / Payment services and handling (9), b) Services in branches / branch network (8), c) Battle for talent / Human capital (3), d) SMEs financing (3) and e) Outsourcing of activities like administration, accounting & IT (3).

48.8%

Yes

37.8%

No Don't Know 13.4%

Q65. Are our Channels in danger of becoming irrelevant to customers / members? 53.7%

Yes No

32.9%

Don't Know 13.4%

Q66. Are any of Customer Relationships in danger of deteriorating?

ISDVI15

International Strategic Dialogue on Value Innovation

CHAPTER 5

DESIGNING TOMORROW’S C&P BANK VALUE PROFILING PROCESS “Value innovation is more than innovation. It is about strategy that embraces the entire system of a company’s activities.” (Porter, 1996)

5.1 Assessing the Basis of Competition

1) Customer / Member Acquisition & Relationship Management (75 or 25,5% of responses in this question), 2) Locality / Proximity and Branch network (55 or 18,7%), 3) Brand & Brand Values (Trust, Transparency, Honesty, Solidarity) (45 or 15,3%), 4) Decision Eﬀectiveness when it comes to Democratic Governance (39 or 13,3%), 5) Product / Service Mix & Quality Management (24 or 8,1%), 6) Information Technology & New Technologies (18 or 6,1%), 7) Price of Products & Services (10 or 3,4%) and 8) Talent Development & HR Management (8 or 2,7%).

vidence provided by the ISWOT14 concerning the Assessment of the Basis of Competition (appendix 2.4 - 2.11), suggests that the rich texture of responses towards the key areas of the C&P banking business model, possesses strong unifying themes that can be clustered and consolidated around 38 distinct key elements (dimensions) with 562 qualified corresponding items or responses (core categorisation procedure) that were analysed in terms of frequency of occurrence. The points of distinctions over multiple responses formed the dimensions of each of these key areas and their sub-components / dimensions, upon which the elements / statements were evaluated and responses were generated. The resulting data was placed in a C x E matrix, where C equals the number of constructs or rows and E equals the number of elements.

The second assessment, referring to the 3 key elements that participants think that must change immediately in the sector (Q.2) generated 41 responses, corresponding to 4 key elements that include 26 responses (63.4% of 41 responses) in the areas of Operations Management, Service mix, Governance and Human Resources, reflecting: a) Faster, more Efficient / Effective Operations & Process Optimisation Management (8), b) Integration, Personalisation & Diversification of Products / Services & Systems (8), c) Improvement of decision effectiveness & Governance (5) and d) Talent Development, HR Management & opportunities for better education in Finance (5).

Specifically, to assess the “Basis of Competition” of C&B banking, as part of the Value Profiling Process in the first stage of TVI, 9 open-ended questions / assessments were employed to generate a total of 830 responses (constructs), from the 99 participants in the study. Specifically, these areas include: a) an assessment of the Basis of Competition (Q.1), b) insights regarding the elements that participants think must change immediately in the sector (Q.2), c) the identification of the “Single Point of Failure” (Q.3, Q.4 & Q.5), d) the key Problems (Q.6) and e) key Cost elements of the sector (Q.7), f ) the identification of the Key Factors for Success (Q.8) and finally g) insights on relevant, adjacent or entirely diﬀerent to C&P banking industries / applications (Q.9) that could provide inspiration on possible future trajectories during the strategic dialogue (ISDVI15).

The third assessment, concerning the identification of the “Single Point of Failure” or SPF (Q.3, Q.4 and Q.5), generated 155 responses, corresponding to 8 main emergent subcategories (87 or 56,1% of 155 responses) that relate to the part of the system that, if it fails, will stop the entire system from working, from the business / user / member and brand combined perspectives. The SPF is a new concept and an integral part of the Total Value Innovation (TVI) methodology that helps participants identify, understand and develop protective measures against the combination of parameters that could lead to a systemic critical failure. To provide a holistic SPF analysis the business / user / member and brand perspectives should be considered and combined. The more integrated an SPF element is across the 3 perspectives the more important it is.

In particular, in Q.1 participants were asked to identify the 8 key competitive factors that “currently” characterise C&P banking in order to include these as such in the Value Profiling process during the strategic dialogue (ISDVI15). Analysis showed that the following competitive factors are considered as the most important in descending order, namely:

Designing Tomorrow’s Cooperative & Popular Bank

SPF ANALYSIS

THE SINGLE POINT OF FAILURE 





IT / Technology

Liquidity

Customer / Member Relationships



Trust & Credibility





Proximity

Loss of the values, ethics, reputation & brand

Granting Credit

The fourth assessment related to the 3 biggest problems that C&P banks face (Q.6) includes 132 responses reflecting 4 key emergent subcategories (50 or 37,8% of 132 responses) in the areas of: a) Competition on a large scale and from non-bank players (16 or 32% of 50 responses), b) strict regulations and misunderstanding of the cooperative sector (especially by the government) (12 or 24%), c) lack of innovation in Products, Services & Business Model (11 or 22%) and d) Challenges deriving from Information and technology progress and digitalisation (11 or 22%).

Member Perspective

Service Quality & Expertise



Specifically, results showed that among other fundamental SPFs in the C&P banking system, like IT / Technology (10 or 11,4% of 87 responses), Liquidity (5), Customer / Member Relationships (5), Proximity (9) and Credit provision (7), the loss of Trust and Credibility (20 or 22,9% of responses), the loss of Values, ethics, reputation and Brand (16 or 18,3%) and a decline in Service Quality and Expertise (15 or 17,2%) where found to be the most integrated (overlapping) SPFs across all 3 perspectives, thereby the most important ones.



Business Perspective

Moving on, in the fifth assessment (Q.7), participants also identified the 3 key elements of the business that contribute the most to the overall Cost structure (96 responses) related to Human Capital, Technology and Network. These 3 key cost-generation elements (53 or 55,2% of 96 responses) correspond to: a) Human resources (21 or 39,6% of 53 responses in this category), b) Information systems and Technology costs (17 or 32%) and c) Local presence / Proximity / Branch network costs (15 or 28,3%). In suggesting ideas / concepts on what shall be the basis of future success for C&P banks (Q.8 - sixth assessment), participants produced 72 ideas corresponding to 4 main categories or dimensions (39 of 72 responses) related to Technology, Corporate Values, Service Quality, and Relationship Management. Specifically, these key sub-dimensions include: a) Customer / Member Acquisition, Relationship & Knowledge Management / Proximity & Close contact (20 of 39 responses), b) Preservation of cooperative values (7), c) Service quality (6) and d) Investment in Information Technology and other new related technologies (6).

Brand Perspective

Finally, the seventh assessment of the “Basis of Competition”, related to suggestions on noncompetitive or non-directly related industries whose value oﬀerings; Business Model and competitive parameters could be used as a source of inspiration by the ISDVI15 team to develop entirely novel Value Propositions for the C&P banking sector (Q.9) includes 41 responses. These span from: a) Google’s and social media (Facebook, twitter) business models (17 of 33 responses), b) Micro financing model and Crowd funding / Crowd sourcing Model (10) and c) Apple “like” (Platform provision, i.e. Apple Pay services with NFC technology) (6).

ISDVI15

International Strategic Dialogue on Value Innovation

ASSESSING & CHANGING THE BASIS OF COMPETITION 5.2 Designing a smarter, more empowering and integrated C&P ecosystem

otal Value Innovation (TVI), is the outcome of the Development, Communication, Delivery and Alignment of Unique Value Proposition generation with Business Model Innovation and Brand Strategy.It is the region where cost eﬃciency meets higher buyer / user value, business modelling and brand engineering. Value Innovation (VI) Profiling initiated the TVI process in stage 1 and was intersected by the Unique Value Proposition (UVP) Generation process in stage 2. VI Profiling is a diagnostic tool and an action framework for Capturing, Understanding, Changing and Visualising the current state of play in the known market space and in the form of a value profile or curve. It consists of four building blocks that involve: a) the identification of the Single Point of Failure (SPF), b) the assessment of the basis of competition, c) the four action framework as this is described in the “Blue Ocean Strategy” framework (Kim and Mauborgne, 2005) and d) the Value Propositions generated in stage 2 (UVP Generation process). Specifically, the VI Profiling process began with the identification of the key competitive factors in C&P banking. Here, the key “competitive factors” and not the factors that influence consumer choice are included in VI Profiling process. This is so, because TVI is largely a “value based as well as performance oriented” methodology that focuses on the identification and development of those critical capabilities (that “can” also include factors aﬀecting consumer choice) necessary for building, leading and sustaining an innovative organisation. Thereby, TVI is deliberately widening the beam of observation to include both internal to the organisation and external to the industry competitive factors. In particular, our research (ISWOT14) determined that the following competitive factors characterise the basis of competition in C&P banking: • Relationship Management • Locality / Proximity & Branch network • Brand & Brand Values • Decision Effectiveness (When it comes to Democratic Governance) • Product / Service Mix & Quality Management • Information Technology & New Technologies • Price of Products & Services • Talent Development & HR Management In line with our research, workshop attendees during the strategic dialogue (ISDVI15) also identified and extra set of four key competitive parameters including: Regulation, Protection Scheme, Consumer needs and Multi-channel management.

With key competitive parameters identified, participants then replied to questions and discussed issues related to the “basis of competition”, in order to draw the industry’s “as is” value profile, including, “What is the current relative offering or performance level of each of the following key competitive parameters?”, “Can you think of any non-competitive or non-industry related case whose value profile, offerings and competitive parameters could help us develop an entirely novel industry profile?” and ”What is “ours” and “our competitors’” relative offering or performance level on each of the competitive parameters?”. After the completion of all building blocks in stage 2 (Unique Value Proposition (UVP) generation) and the identification of the novel Portfolio of Products / Services and set of Value Propositions, participants were asked to draw the “novel” or “to be” value profile with questions referring to the basis of competition, value innovation, single point of failure and paradigm shifts, including “What is the novel relative offering or targeted performance level on each of the following key competitive parameters?”, “Has our new value profile caused a shift in the basis of competition?”, “Have we managed to change the single point of failure? And if yes “in what way?” and “Does our new strategy and value profile substantiate the main hypothesis on the dependencies underpinning the future success of our business?”. Insights from our SWOT assessment (ISWOT14) that represent the ratings and views of many professionals, customers / members and executives in C&P banking from eleven countries assisted the workshop attendees (ISDVI15) in drawing the “as is” and “to be” value profile of “Tomorrow’s C&P bank”. Specifically, the process involved the placement of the key competitive parameters, identified during the ISWOT14 and ISDVI15 in order, from the lowest to the highest value [1 (low) to 10 (high)] with price being the first element and adding the generated value propositions in the end (Re-inventing Agility, Empowerment and Proactive Banking), whilst answering the following four key questions: • What competitive factors could and should we raise above industry standards? • What competitive factors could and should we set below (reduce) industry standards? • What competitive factors could and should we eliminate entirely? • What new competitive factors do our VPs create?

“Surprisingly, the “as is” value profile of C&P banks indicates that the current strategy is not clear, with inconsistencies and varying relative offerings and performance levels amongst key competitive factors, ultimately creating a fluctuating value profile that appears more like a cardiograph.”

“ VALUE PROFILE

Designing Tomorrow’s Cooperative & Popular Bank

DESIGNING A SMARTER, MORE EMPOWERING AND INTEGRATED C&P ECOSYSTEM

“

Relative Offering Level

“To be” Value Profile

;

“As is” Value Profile Price

Proximity

Governance Consumer Needs Talent (HR)

Brand

Cost savings are made by eliminating and reducing the factors that the industry competes on and buyer / user value is lifted by raising and creating elements the industry has never oﬀered (Kim and Mauborgne, 2005). On that basis we decided which factors to raise, reduce, eliminate and create thereby to reconstruct the market’s boundaries and draw a novel value profile for Tomorrow’s C&P bank. The result is the following “as is” (red) and “to be” (blue) value profiles that encapsulate the entire spectrum of a C&P bank business model.

Agility

Empowerment

Proactivity

Instead, what the novel value profile (blue) indicates; is a more refined strategy with an increased proportion of major (and riskier) innovations but with higher mid and long-term reward projects (section 5.2.9). It also reveals a link between the present classic financial services and the future consisting of “Big Innovation” projects that point towards C&P banking on an “anywhere, anytime, anything” basis. Our strategic trajectory is in line with Christensen’s et. al (2004) axiom that innovation also involves the entry to markets where current regulations do not apply, stressing that when it comes to reform and regulation companies have two choices “the first is to expend significant resources developing strong lobbying capabilities in hopes of turning regulation in their favour. The second is to see regulation as an opportunity to enter a market’s fringe. An old adage comes in handy. Companies have been given lemons. They can protest. They can complain. They can try to return the lemons. They can hurl the lemons away in angry fit. Or they can make lemonade.”

“Surprisingly, the “as is” value profile of C&P banks indicates that the current strategy is not clear, with inconsistencies and varying relative oﬀerings and performance levels amongst key competitive factors, ultimately creating a fluctuating value profile that appears more like a cardiograph.” Considering the generated novel value propositions and the corresponding product / service portfolio (from stage 2), to design a smarter, more empowering and integrated C&P banking ecosystem the workshop attendees decided to raise all competitive factors and to create a new type of Agility (section 5.2.10), Empowerment of members, customers and regional economies and Proactive Banking (section 5.2.10). By expanding the product / service portfolio (section 5.2.8) in novel areas like life planning applications, exchange of networks among co-ops, real-time intelligence provision to customers / members, financial and business education, predictive analytics, targeted promotional / advertising services and member to member (M-to-M) services, “Tomorrow’s C&P bank” managed to reduce dependency on regulation and to limit its influence to the deceptively low risk classic financial services that will no longer dominate the product / service portfolio, thus strangling growth. © Shakesteer 2014 - 2015

Channels Protection Scheme Regulation

Finally, the fact that VI profiling may also involve “elimination” of competitive parameters, that does not necessarily mean that you can point towards C&P banking basis of competition and simply say “eliminate” without changing the structure, purpose or very essence of a Cooperative entity. Having that in mind, the proposed value profile (trajectory) bridges today’s C&P banking with that of tomorrow’s and with “applicability”, “realism” and “reliable commercialisation” being the motto of the strategic dialogue (ISDVI15). .

Designing Tomorrow’s Cooperative & Popular Bank

The Data Mosaic of Segments 1. Innovators Successful individuals with many resources. They are open to change, very well informed, very demanding and hyper-connected. They request real-time information and personalised services, offers and advice through the channel of their choice. Members of this group may be part of the top 20% of the current customer / member base. 2. Achievers Career oriented individuals; they value the sense of security and prefer stability and predictability to risk. Members of this group may be part of the top 20% of the current customer / member base. 3. Traditionals Middle class conservative individuals (aged 51 to 69) with average income and loyal to their C&P bank. 4. Active Seniors People aged 51 to 69, belonging to either middle or upper class with upper educational level and involved with active ageing (health & wealth preservation & safety/security). 5. Experiencers Impulsive and young (aged 18 to 34) they enjoy and look for risky experiences. They are trendy and price sensitive (looking for the best offer) with low to average income but with high potential. The challenge for “Tomorrow’s C&P bank” is to become appealing to this currently designated as “least loyal” group often referred to as “Cherry pickers”. 6. Believers Individuals that belong to Generation Y (aged 18 to 34) and/or Generation X (aged 35 to 50) and favour purpose-driven and principles-led brands. They look for businesses with proven ethical behaviour (Ecological, ethical bank, Social responsibility etc.). This group may also include individuals belonging to Innovators, Experiencers and Young Cosmopolitan segments. 7. Young Cosmopolitan - Erasmus Generation Modern, multilingual and very well educated individuals that belong to Generation Y (aged 18 to 34) and/or Generation X (aged 35 to 50) with medium to high income. Constantly traveling from city to city and country to country in pursuit of an international career, they have developed a truly cosmopolitan personality characterised by openness to diversity and to change. Like the Innovators, this group is also very well informed, very demanding (accessibility, convenience, choice of channel) and hyper-connected. Through their international experience they have developed a refined and precise sense of what exceptional financial services feel like. 8. Strugglers This segment consists of individuals with very limited or no resources, mainly trying to satisfy their daily needs with basic goods. Currently, this financially weakest segment may consist of individuals of all ages that are unemployed as well as immigrants. 9. Start Ups Innovation centric start-ups with minimal or no resources in need of advice, customised service and specialised offers that will empower them to achieve successful commercialisation of their products / services and growth. The challenge for “Tomorrow’s C&P bank” is to help these Startups to enter the achieving and/or exporting SMEs segment. 10. Striving SMEs Similar to achieving and/or exporting SMEs but with fewer resources in need to finance their growth or a specific project. Members of this group may be part of the top 20% of the current customer / member base. 11. Achieving & Exporting SMEs Established SMEs in the phase of managing growth or in need to finance a specific project. Members of this group of businesses may be part of the top 20% of the current customer / member base.

ISDVI15

International Strategic Dialogue on Value Innovation

In fact, the challenge here for “Tomorrow’s C&P bank” was to balance the targeted segments, with a product / service constellation, that allows product complementarity (emotional, social, technological and symbolic compatibility), whilst avoiding the mainstream for those products and services that are part of the “innovation portfolio”. This is so, in order to avoid negative disruption in the attempt of “Tomorrow’s C&P bank” to innovate on a “product / service portfolio” basis.

5.2.2 Novel Value Proposition (VP) Generation Collaborative value proposition architecture The choice of Customer Segments that “Tomorrow’s C&P bank” might want to serve using the novel business model, was the first step of the UVP Generation process. To develop a novel Product and Service portfolio and ultimately to generate Unique Value Propositions, participants went through a sequential and interrelated five-stage process, consisting of building blocks specifically designed to elicit collective insights in the areas of: a) Behaviours and Activities referring to the problems that the customer / member segments are currently trying to solve, their expectations, their emotional, social, functional and economic needs and desires.

As Christensen, et al. (2004) put it “when a firm develops the germ of a disruptive idea, it often falls pray to the temptation to cram that opportunity to its mainstream market. The momentum behind the widely practiced mantra “serve our customers” is often nearly impossible to overcome. The mainstream market tends to reject the innovation. Frustrated managers and engineers leave, form a new company and discover a new market where the innovation has value”.

The second building block of b) Friction Points and Relationship Breakers included items aiming in identifying and better understanding of what currently frustrates the customers / members the most and what makes them lose their piece of mind. Also the risks, difficulties and pains they face or are afraid of facing, and finally those parameters that they consider as either friction points or relationship breakers. Moving on, through the c) Gains and Expectations building block in the third stage, workshop participants identified which value offerings could excite and delight the “to be” Customer Segments of “Tomorrow’s C&P bank”, how their expectations, needs, wants and desires could be met, what would they consider as a friction free interaction and on the whole how we could enrich the bond with high functional, emotional and economic switching costs. The fourth stage of d) Gain Creators that largely involves the consolidation and operationalisation of the insights elicited in the previous (b and c) building blocks, participants generated an unscreened set of products and services that could delight the targeted segments and make their dreams and aspirations come true. These ideas were later filtered e) Through the Eyes of the Competition in the fifth stage by considering not only the traditional competitors of C&P banks offering classic financial services, but also the emerging non-bank competitors (Google, Peer to Peer lending, co-creation, crowd-sourcing, micro funding platforms etc.) with unique value propositions and innovative business models. Thus, deliberately widening the beam of observation and raising the bar for the workshop attendees.

Designing Tomorrow’s Cooperative & Popular Bank

THE PATH TO VP GENERATION 5.2.3 Behaviours and Activities

5.2.6 Gain creators

• • • • • • • • • • • • • • • •

• Better price (least expect). • Personalised advice. • Anticipation of needs (predictive analytics). • Live voting. • e-governance and digital platform for cooperative democratic participation. • Mobile and Internet banking. • Member interaction through IoT enabled platform. • Creativity, reactivity, eﬃciency. • Decision eﬀectiveness measures. • Provision of financial and business education. • Customised service. • Open cross-selling network across all members (platform). • Consulting for SME’s and start ups. • Support and guidance for loan applications.

Good service. Problem solving. Private service (consulting). Personalised advice. Oﬀer bundle of products. Open account. Easy access. Credit card. Financial advice. Be a trusted partner. Shorter and simplified processes. House loan, business loan, and consumer loan. Convenient, simple, easy, fast service. Payment tools. Security. Transparency.

5.2.4 Friction points and relationship breakers • Too conservative risk policy. • Slowness and bureaucracy. • Misaligned purpose, performance and people. • Lack of care. • Lack of information. • Lack of identity (employees don’t know enough about the Cooperative values). • Too expensive services. • Money centric environment. • Fear of rejection (loans for projects). • Wrong perception. • Boring and conservative bank. • Lack of internationalisation. • Better communication of the virtues, values that diﬀerentiate C&P banking. • Not enough innovative products.

5.2.7 Through the eyes of the competition • Channel eﬀectiveness and globally scalable businesses. • Ownership of the digital world. • Cross selling and promotions and advanced analytics. • Mobile banking and services. • Trendsetters. • Sexy services (simple, modern, easy, innovative, unexpected and convenient i.e. money transfer through Gmail). • Internet benchmarking platforms. • Superior experience through unified platforms.

5.2.5 Gains and expectations • • • • • • • • •

Sense of security. Be part of a community. Superior customer service (responsiveness). Saving money. Experience solutions. Better, faster, more secure service. Achieve project success. Extra benefits. C&P banking to exceed expectations.

ISDVI15

International Strategic Dialogue on Value Innovation

Innovation Portfolio 5.2.8 Innovation Product & Service portfolio Although, workshop participants produced a wealth of ideas that could form the basis of “Tomorrow’s C&P bank” innovation portfolio, few of these survived our rigid evaluation and screening process. Specifically, having considered all the afore mentioned parameters, when participants were asked to list a set of products and services that could be considered as the basis of our Value Propositions, also as ground breaking in C&P banking, and finally not subject to performance oversupply, the following product and service portfolio was elicited: • • • • • • • • • • •

Typical products and services including deposits and loans. Internet banking. Mobile baking. Exchange of networks among C&P banks and other Coops. Platform based integrated services and life planning applications* (multi-channel). IoT based data mining / management and predictive analytics (Dynamic customer / member profiling). IoT based promotional and advertising services. Cross-selling. Provision of financial and business education. Member to member services. Member to project donations (Social dividends for the long-term).

“What this innovation portfolio actually means is that under the chosen trajectory “Tomorrow’s C&P bank” is in essence an IoT platform provider (see section 5.2.10) that enables “Proactive Banking” through the delivery of realtime integrated services and life planning applications to customers and members.” Specifically, the “platform” that will form the basis of operations enables the bank to: 1) match member needs with services, 2) enable exchanging among members, 3) social networking, 4) real-time intelligence, 5) placement of oﬀers, 6) connect C&P banks, 7) live evoting and governance, 8) Member to member services, 9) Customer / Member follow up, 10) co-browsing and 11) Life planning applications* including personalised advice for major purchases [(i.e. buying a house - real time house price evaluation (IoT platform enabled data mining and analytics)].

Designing Tomorrow’s Cooperative & Popular Bank Designing Tomorrow’s Cooperative & Popular Bank PROBABILITY OF FAILURE

NEW TO THE 35 COMPANY

Product / Technology (Y-axis coordinate)5

45%-60%

60%-75%

25 ADJACENT TO CURRENT 20 OFFERINGS

75%-95%

40%-50%

4 2

SAME AS CURRENT OFFERINGS

25%-40%

 15

SAME AS PRESENT Intended Market (X-axis coordinate)5

5.2.9 Portfolio Risk Assessment 5.2.9 Portfolio Risk Assessment It has been stressed (Day, 2007) that small, It has been stressed (Day, 2007) that small, safer and mainly incremental innovations safer and mainly incremental innovations dominate companies’ innovation portfolios dominate companies’ innovation portfolios (85% to 90%), in contrast to the bigger and (85% to 90%), in contrast to the bigger and riskier, new to the company and/or the market riskier, new to the company and/or the market (customers / members) portfolios. However, (customers / members) portfolios. However, small and safer innovation portfolios might be small and safer innovation portfolios might be less risky, but they rarely produce competitive less risky, but they rarely produce competitive advantage and opportunities for future high advantage and opportunities for future high growth. To balance the novel innovation growth. To balance the novel innovation por tfolio and to bridge today ’s and por tfolio and to bridge today ’s and tomorrow’s “C&P bank”, we needed a clear tomorrow’s “C&P bank”, we needed a clear picture of how it performs on the spectrum of picture of how it performs on the spectrum of risk. On the whole, the objective of the risk risk. On the whole, the objective of the risk assessment is to create a visual starting point assessment is to create a visual starting point for ongoing dialogue about “Tomorrow’s C&P for ongoing dialogue about “Tomorrow’s C&P bank” product and service mix. bank” product and service mix. The direct application of Day’s (2007) “Risk The direct application of Day’s (2007) “Risk Matrix” an innovation portfolio risk assessment Matrix” an innovation portfolio risk assessment tool (Appendix 1), showed that “Tomorrow’s” tool (Appendix 1), showed that “Tomorrow’s” portfolio of products and services is not portfolio of products and services is not dominated by relatively and deceivingly “low dominated by relatively and deceivingly “low risk” classic financial services and thereby low risk” classic financial services and thereby low reward projects. It also reveals that a healthy reward projects. It also reveals that a healthy balance between the present typical balance between the present typical product / service portfolio and the future product / service portfolio and the future bigger and more innovative portfolio is bigger and more innovative portfolio is achieved. achieved. © Shakesteer 2014 - 2015 © Shakesteer 2014 - 2015

ADJACENT TO PRESENT

The challenge for workshop participants The challenge for workshop participants (ISDVI15), during the identification of a future (ISDVI15), during the identification of a future possible product and service portfolio, was to possible product and service portfolio, was to combine market insights (ISWOT14) with combine market insights (ISWOT14) with creative thinking, whilst overcoming the creative thinking, whilst overcoming the natural cognitive biases against risk, breaking natural cognitive biases against risk, breaking free from resource dependencies, the “novel”, free from resource dependencies, the “novel”, the “unknown”, mid and long term planning the “unknown”, mid and long term planning and delayed payoﬀs. and delayed payoﬀs. By conducting a detailed product / service By conducting a detailed product / service review, participants rated each bundle of review, participants rated each bundle of products and services independently (risk products and services independently (risk assessment questionnaire*) and the resulting assessment questionnaire*) and the resulting scores served as coordinates on the risk scores served as coordinates on the risk matrix, which consists of two dimensions: a) matrix, which consists of two dimensions: a) the familiarity of the intended market to the the familiarity of the intended market to the “bank” (x-axis) and b) the familiarity of the “bank” (x-axis) and b) the familiarity of the product / service or technology (y-axis). Here, product / service or technology (y-axis). Here, the main bundles of products and services is the main bundles of products and services is represented as a dot on the risk matrix and its represented as a dot on the risk matrix and its size is proportional to the relative estimated size is proportional to the relative estimated level of importance for “Tomorrow’s C&P bank”. level of importance for “Tomorrow’s C&P bank”. To manage the transition (change) from today To manage the transition (change) from today to tomorrow, participants agreed that to tomorrow, participants agreed that “Tomorrow’s C&P bank” should deploy the full “Tomorrow’s C&P bank” should deploy the full bundle of products and services in stages, bundle of products and services in stages, whilst navigating through this transformation whilst navigating through this transformation phase (see MVP graph). phase (see MVP graph).

24 24

NEW TO THE COMPANY Source: Day, G.. (2007)

To increase the likelihood of the novel To increase the likelihood of the novel innovation portfolio being applicable, innovation portfolio being applicable, manageable and successful, workshop manageable and successful, workshop participants were also asked to identify the participants were also asked to identify the minimum viable product or MVP, as well as minimum viable product or MVP, as well as the stages of the full deployment of the novel the stages of the full deployment of the novel innovation portfolio. A minimum viable innovation portfolio. A minimum viable product can be defined as the set of “core” product can be defined as the set of “core” only features that allow the product or service only features that allow the product or service to be deployed, whilst maintaining the to be deployed, whilst maintaining the strategic trajectory and alignment with the strategic trajectory and alignment with the value propositions. value propositions. The MVP is targeted to innovators and early The MVP is targeted to innovators and early adopters and is a process that involves adopters and is a process that involves ideation, prototyping, data mining / analysis ideation, prototyping, data mining / analysis and management of the adaptation and and management of the adaptation and diﬀusion of the innovation portfolio, as market diﬀusion of the innovation portfolio, as market knowledge competence increases along with knowledge competence increases along with the investments in developing the critical the investments in developing the critical capabilities and ecosystem that will drive capabilities and ecosystem that will drive “Tomorrow’s C&P bank”. “Tomorrow’s C&P bank”. 1. Dynamic customer profiling 1. Dynamic customer profiling 2. Financial education 2. Financial education 3. IoT related Platform 3. IoT related Platform 4. Personalised advices 4. Personalised advices 5. Classic financial services 5. Classic financial services

ISDVI15

International Strategic Dialogue on Value Innovation

“ MINIMUM VIABLE PRODUCT

MANAGING THE TRANSITION FROM TODAY TO TOMORROW THROUGH A STAGED EXPANSION

“

Stage 1

Classic financial services

Internet of Things Start development of IoT related Platform



Personalised Advices

Financial and Business Education Services

Internet of Things

Stage 2

2nd Stage of Platform development

Member Matching and Real time Intelligence Internet of Things

Stage 3

Dynamic Customer Profiling Data mining / management & predictive analytics

Designing Tomorrow’s Cooperative & Popular Bank

VALUE PROPOSITION GENERATION 5.2.10 “TOMORROW’S C&P BANK” VALUE PROPOSITIONS

“Tomorrow’s C&P bank could exploit a plethora of opportunities to provide a basis for Value Innovation, improvement, renewal and to become a central player in customers’ and members’ lives.”

From a strategic point of view, these Value Propositions allow “Tomorrow’s C&P bank” to build on asymmetric motivation by doing things that other banks may not want to do (like “Proactive banking” that includes Dynamic Customer Profiling and Financial education services amongst other services and applications), as well as asymmetric skills by developing specific to the novel business model capabilities, like the IoT related Platform development and management.

he generation of Value Propositions constitutes the heart of the TVI process and refers to the translation of the service and product mix (section 5.2.8), into the “type” of Value that this “mix” creates for the users. But what makes the Value Propositions a fundamental element of TVI is that they also constitute the basis of Business Modelling and Brand Architecture. “To determine how will “Tomorrow’s C&P bank” develop, communicate and deliver value in the emerging future, first we need to understand the physics of its business today, the critical capabilities it should and can develop for tomorrow and the need to re-invent or re-commit to the values that made C&P banking successful in the first place.”

“These asymmetric parameters provide protection from imitation, as competition now needs to copy the entire system (section 5.3) instead of one, two or more product features.” Additionally, by relying on the very foundations of the centuries old co-operative movement and by keeping the innovation portfolio deliberately short, “Tomorrow’s C&P bank” reduces the risk of being simultaneously pulled towards too many directions and consequently having to compete against better and more distinctively positioned banks or non-banks most likely, with more enhanced capabilities in niche markets.

In essence, the SWOT assessment findings point out the cynicism that accompanies value creation in C&P banking is to capture, enhance and elevate what was already there. It is clear that there is a plethora of opportunities that “Tomorrow’s C&P bank” could exploit to provide a basis for Value Innovation, improvement, renewal and to become a central player in customers’ and members’ lives. Particularly, the assessment of the Value Propositions and Opportunities (ISWOT14) produced three key findings: a) that despite oﬀering high levels of Value to the customers and members, C&P banks could b) better integrate and align customer / member segments, services and partner channels, and c) enhance the currently moderate synergies within the product and service mix.

By and large, this set of inward and outward looking Value Propositions, transforms traditional C&P banking into a “hybrid C&P bank” that provides predictive and proactive banking (IoT-related platform) and proximity based services. Upon customers’ and members’ permission, the IoTrelated platform, mines, analyses and integrates customer and member data, to enable Dynamic Customer / Member Profiling in real-time. This will allow “Tomorrow’s C&P bank”, to better understand their needs, desires and behaviour, whilst improving the agility in handling and delivering superior personalised service through the channel(s) of their choice.

The combination of SWOT assessment insights and workshop participants’ (ISDVI15) approach to Value Proposition generation that was driven by the requirement to balance customers’ and members’ need for aﬃliation, relevance, empowerment and uniqueness with the internal need for alignment of purpose, performance and people, produced the following set of six inward and outward looking Value Propositions: • • • • • •

However, the generation of this novel integrated intelligence ecosystem requires “Tomorrow’s C&P bank” to go beyond data analytics, technology and channel management. It requires the “bank” to attract, develop and retain top talent that will make the delivery of a superior customer / member experience a reality. Therefore, to counterbalance the Proactive banking (IoT-related platform) - (Inward and Outward looking) outward looking Value Propositions, Inventing new form of “proximity” (IoT-related platform) - (Outward looking) workshop participants also viewed Source of personal, social and local development - (Outward looking) “Tomorrow’s C&P bank” as a Talent Strategic product and service design - (Inward and Outward looking) factory, constantly operating talent Agility in handling individual cases - (Outward looking) C&P bank as a talent factory (talent development program) - (Inward looking) acquisition and development programs.

ISDVI15

International Strategic Dialogue on Value Innovation

BUSINESS MODELLING (BM) 5.3. “Tomorrow’s C&P bank” Business Model A business model describes the rationale and processes related to the way a business creates, captures and delivers value. Spanning, ten building blocks and based on the previous Value Proposition Generation stage, the TVI business model generation covers the entire spectrum of any business. On the whole, the SWOT assessment findings and the generated Value Propositions, point towards the development of a novel superior C&P bank business model that establishes a link between the present and the emerging future of “Internet of Things” or IoT. More specifically, “Tomorrow’s C&P bank” integrates itself, its members / customers and partners* with the value chain of a multi-layered IoT related intelligence ecosystem, to provide proactive banking and proximity based services, through a dedicated platform and a limited network of branches that are now turned into financial hubs.”

“Tomorrow’s C&P bank” integrates itself, its members / customers and partners* with the value chain of a multi-layered IoT related intelligence ecosystem, to provide proactive banking and proximity based services, through a dedicated platform and a limited network of branches that are now turned into financial hubs.” Driven by the novel credo and mission “As a Cooperative bank we empower members, customers and regional economies” tomorrow’s C&P bank remains the trusted regional and local bank (proximity) with its cooperative statute. However, by going beyond major technology industry trends, such as mobile banking and cloud computing and moving towards the development of an integrated ecosystem, its role is enhanced by becoming a personal advisor, connector, facilitator, promoter, advertiser educator and a financial hub. In this liberal integrated ecosystem, members, other Co-ops and partners are empowered to develop and introduce novel, additional or complementary value-added services, under a “collectively developed” platform that is designed to join all parties (customers, members, partners and bank) with a combination of services, oﬀers, information and applications that span beyond “bank owned” channels, with a single user interface and in real-time. To make this ecosystem viable, “Tomorrow’s C&P bank” business model attempts to increase independence from regulators and focuses on the development of those critical capabilities that will enable data mining and analysis and to co-deliver with partners and members a truly multi-channel personalised superior service, to all targeted segments (outer layer of the model) as well as additional and novel revenue streams. The elements of the novel business model can be organised around the perimeter of a multidimensional circumplex model. This model provides a visualisation of the way our novel Value Propositions are delivered to the customers / members and the Revenue Streams resulting from the successful delivery of these.

Partners* (also include other Coops)

Financial Hubs* - “People and wifi” Tomorrow’s branch is much more than a typical branch. It is a financial Hub. A financial Hub is a space where customers and members gather together, to connect and engage with both financial and non-financial activities as well as with the democratic governance of the institution. Contrary to conventional wisdom that conceives the “branch of the future” as a place stuffed with lots of different types of technologies; instead our view of Tomorrow’s branch is of a “cashless space” designed for human interaction that is in essence a “space with people and wifi”. Aligned with the value propositions and “proactive banking” the financial Hub provides opportunities for members to connect in person, with a meeting lobby, educational facilities and co-working spaces. The Hub is also a business incubator for local innovative startups and a testing facility were the bank could test ideas, evaluate the innovation portfolio and develop talent. In this highly interactive environment the bank also offers business consulting and personal advice, carries out events, promotes members’ businesses and organises its members’ governance gatherings.

Designing Tomorrow’s Cooperative & Popular Bank

TOMORROW’S VALUE ECOSYSTEM:

ORGANISING THE ELEMENTS OF THE NOVEL BM AROUND THE PERIMETER OF A MULTIDIMENSIONAL CIRCUMPLEX MODEL “This model provides a visualisation of the way our novel Value Propositions are delivered to the customers / members and the Revenue Streams resulting from the successful delivery of these.” Innovators



Proactive Banking



Multichannel Personalised Products & Services Agility

Striving SMEs

 Strategic Product Design

 Strugglers

Customer & Member engagement & Governance









Revenue Streams from Classic Financial Services & 12 novel Revenue Streams

w 



C&P BANK

MEMBERS





Talent Factory

Traditionals

 Novel Proximity

Internet of Things IoT related Platform

Exchange of networks Cross-selling Member to member services





PARTNERS

CUSTOMERS



 

“Empowering members, customers & regional economies”

Agility

+  Young

Source of development

Cosmopolitan © Shakesteer 2014 - 2015





Financial Hubs Start Ups





Real time Intelligence & Predictive Analytics



Achievers

Data Mining & Dynamic Profiling

Achieving & Exporting SMEs

+ Believers

Experiencers

Active Seniors

ISDVI15

International Strategic Dialogue on Value Innovation

BUSINESS MODEL KEY POINTS 5.3.1 Credo and mission

5.3.5 UVP contact points and user relationships

“As a Cooperative bank we empower members, customers and regional economies”

• Customers: simple, eﬃcient, creative, transparent, personalised, close, open, trustful. • Person to person. • Member to member. • Multi-channel and Omni-channel.

5.3.2 Activities and operations • Talent management mechanism (i.e. Human capital committee). • Cybernetics and systems thinking scheme to improve decision eﬀectiveness. • Change management scheme to manage the transition from to day to tomorrow. • Install technology and/or provide technology to members (equip members). • Member management through the platform. • Introduction of additional Key Performance Indicators (i.e. brand gravity, Net promoter score). • Information Technology infrastructure and maintenance. • Platform design, operation and Cyber Security. • Classical financial services. • Spark, promote and enable transactions among members. • Business Intelligence mechanism and link with IoT capability build up. • Crowd sourcing - collective intelligence and empowerment. • Connect the platform with member and promotional / advertising services. • Turn branches into financial Hubs*.

5.3.6 UVP channels • Multi-channel and Omni-channel basis. • Financial Hubs*. • Member to member. • Platform. • Mobile banking • Internet banking. • Co-browsing channel (Skype type: people to be able to see the same info simultaneously).

5.3.7 Cost structure and Revenue streams The Cost structure refers to the costs incurred to operate the current C&P banking business model and the Revenue streams refer to the way C&P banks capture value in relation to customers’ / members’ willingness to pay for the Value oﬀered. Due to the particularity of this study that aimed at innovating on the basis of value for a fictional “C&P bank” and 5 to 10 years from now, any cost structure prediction would have been at least unrealistic.

5.3.3 Partners and value ecosystem

Thus, this particular section has been left deliberately empty. However, our research (ISWOT14) produced three key findings concerning the current Cost / Revenue structure: a) that it is not competitive, with low margins, b) pricing mechanisms do not capture full willingness to pay and c) the overall Cost structure is not correctly matched to the business model.

• IT providers. • Artificial Intelligence and Business Intelligence programmers for platform. • APIs (Interfaces Applicative Programming). • IoT enablers (apple and Samsung pay, Google etc.). • Members. • Other financial and non-financial Co-ops. • Universities, schools and academies. • Politicians and community institutions (Authorities).

Revenue streams derive from: • Classic financial services. • Internet banking. • Mobile baking. • Financial and Business educational services fees. • Dynamic Customer Profiling – (Platform based) eg: matches member needs, behaviours and services. • Members: Advertisement and promotional fees – (Platform based). • Employment services fees – (Platform based). • Money transfer fees – (Platform based). • Cross-selling fees. • Social dividends (free) - (Member to project donation). • Member to member services fees. • Personalised advice for major purchases (eg: buying a house) – charging a fee to the real estate agents.

5.3.4 UVP resource dependencies • Leader and talent development program. • Corporate culture (accept failure). • Gradually build IoT capabilities. • Multi-level marketing mechanism. • Investment in the platform. • Change management scheme to manage the transition from to day to tomorrow. • Communication tools. • HR talent management and development mechanism. • Employ higher skilled personnel. • Interconnected regional exchange of member networks (database). • Big data platform can be a subsidiary of the central institution (collective and mutual eﬀort for platform).

Designing Tomorrow’s Cooperative & Popular Bank

BRAND STRATEGY & BM ALIGNMENT 5.4 Brand Strategy A brand is the vehicle for communicating and delivering the Value Propositions to the users and for creating gravity towards the business. Under TVI’s lens of analysis “Tomorrow’s C&P bank” Brand strategy connects the dots between the value propositions, the business model and the credo and mission. It consists of four main building blocks: a) the Brand Essence, reflecting what the brand stands for, b) the Brand Attributes or the key characteristics of the brand, c) the Brand Promise(s) and d) the Brand Proofs referring to what the customers and members can experience, by interacting with the brand and can be applied across channels. By aligning the value propositions, with the business model and the value system of the coop movement, workshop participants designed the brand around the notion of “Empowerment, facilitation and partnerships for customers and members” that in our view encapsulates the brand essence of “Tomorrow’s C&P bank”, as this has been conceived during the strategic dialogue.

“Empowerment, facilitation and partnerships for customers and members”

Empowerment, facilitation and partnerships for customers and members.

5.4.2 Brand attributes • • • • • • • • •

Innovative. Proactive. Reliable. Transparent. Trustworthy. Re-inventing proximity. Close to people and SME’s. Value based and principles led. We speak the same language.

5.4.3 Brand promise

Characterised by an innovative mind set, creativeness and transparency, the bank is close to people and SMEs and speaks the same language. Via the IoT related platform and financial Hubs (branches) it re-invents proximity and promises to customers and members ownership, mutual benefit, help to realise their project and a “cool” and “sexy” membership in a private financial institution. Brand proofs predominantly include a multilevel content marketing and story telling that aims in cultivating the feeling of “trust”, “transparency” and “mutual gain” through customer / member success stories (visual story telling, i.e. videos, photos – where the money goes and what was achieved), member promotion events and an updated code of ethics.

5.5 Aligning purpose, performance and people A key common characteristic of innovative organisations is the ability to build, lead and sustain the momentum of innovation. From a managerial and leadership point of view, this requires an organisation to have a clear and well-defined Collective Ambition that aligns purpose, performance and people (Ready, D. A. and Truelove, E. 2011). To harness the power of Collective Ambition, and to design “Tomorrow’s C&P bank” as a gamechanging organisation, workshop participants were also asked to populate the Collective Ambition Compass, a tool developed by Ready, D. A. and Truelove, E. (2011), that encapsulates an organisation’s key elements (i.e. purpose, vision, targets and milestones, strategic priorities, brand promise, core values and leader behaviours). The overall objective for shaping a Collective Ambition for “Tomorrow’s C&P bank” is to strengthen the organisational Glue (that binds people together) and provide operational Grease (key performance related elements). On that basis to bind employees, members and partners and to strengthen the organisational glue, workshop participants populated the Collective Ambition Compass as illustrated in graph.

5.4.1 Brand essence

• We promise ownership. • Mutual benefit. • Be part of a community. • Join us and be the boss. • Club membership: make membership “cool” and “sexy” in a private financial institution. • We help members realise their project. • Trust, fairness, respect, cooperation & mutual gain. • Shared values and beliefs.

5.4.4 Brand proofs • Platform. • C&P bank code of ethics. • Financial Hubs. • Customer success stories (visual story telling – videos) – transparency, where the money goes and what was achieved. • Member promotion events – new type of content marketing. • Internet marketing. • Speaking with the local language.

ISDVI15

International Strategic Dialogue on Value Innovation

“ COLLECTIVE AMBITION COMPASS

ALIGNING PURPOSE, PERFORMANCE & PEOPLE

“

N O I

S I V

Proactive banking (IoT-related platform) Invent new form of “proximity” (IoT-related platform) Source of personal, social and local development Strategic product and service design Agility in handling individual cases C&P bank as a talent factory

s rt ea ds s H in ad M Le nd a

D ev an el d O op s th Se er lf s

VISION

BRAND PROMISE

Be part of a community Join us and be the boss “cool” & “sexy” membership in a private financial institution

We help members realise their project

PURPOSE

To empower members, customers and regional economies

Trust Fairness Respect Cooperation Mutual benefit Empowerment

D N A BR

Shared values & beliefs

Align purpose, performance and people Resource acquisition

s ips ild sh Bu ion t la

Operationalise the novel Business Model

STRATEGIC PRIORITIES

Source: Ready, D. A. and Truelove, E. (2011) © Shakesteer 2014 - 2015

D e Re liv su er lts s

Start developing the platform

VALUES / PRINCIPLES

We promise ownership

Designing Tomorrow’s Cooperative & Popular Bank

REFLECTION

esigned to lead in the emerging future “Tomorrow’s Cooperative (C) & Popular (P) bank” is faced with the challenge to integrate itself with the value chain of a multi-layered intelligence (cooperative & collaborative based) ecosystem whilst undergoing constant internal and external transformation. Only with the right leadership, talent, skills, technology and collective ambition it will build a lasting novel and superior value system, till the need for the next round of value innovation emerges. This study explored and examined the extent to which an imaginary “Tomorrow’s C&P bank” could innovate on the basis of value and through an International SWOT Assessment (ISWOT14) survey and Strategic Dialogue (ISDVI15) it oﬀers a wealth of insights, thoughts, as well as a holistic overview of how a game-changing C&P bank might look like 5 to 10 years from now. We developed and proposed a conceptual framework based on both inward and outward looking value propositions, by applying the novel method of “Total Value Innovation” that provides an overarching logic for the Development, Communication, Delivery and Alignment of Unique Value Proposition generation with Business Modelling and Brand Strategy. In spite of the fact that the foundation of this study is empirical, we believe that our conceptual framework is a starting point toward highlighting a path to creating and capturing new markets and crafting a novel Business Model prototype. We do hope that these insights will inspire professionals and members within the sector and provoke constructive dialogue on the alternative emerging futures of C&P banking. By and large, this study has demonstrated the strengths, weaknesses, opportunities, threats and challenges as well as the intergenerational, technological and competitive dynamics. It stems from a frame of mind that emphasises on the importance of building those critical capabilities that would allow tomorrow’s C&P bank, to foster innovation, agility and proximity, through a mentality that embraces “change” as a great opportunity for reinvention. In the emerging future, to position “Tomorrow’s C&P bank” eﬀectively in the minds and hearts of customers and members and to capitalise from “change”, requires C&P banks to (re)connect with the deeper levels of their centuries old value system, to better understand their role in the future. Undoubtedly, traditional business models are prime for a rethink and it is time to start embracing approaches that have the potential to develop novel value.

What appears clear is that C&P banks can indeed benefit from the exploration of many alternative strategic trajectories, as well as of technological and psychosocial dynamics, although it is an immensely complex problem to understand how the future will eventually unfold. As the landscape of financial services expands and evolves, it is faced with the challenge, to break free of its restraints and to push change in the following ten areas: 1) Develop the critical capabilities and infrastructure required for IoT related data mining and predictive analytics. 2) Go beyond data analytics, technology and channel management by transforming “Tomorrow’s C&P bank” into a talent factory that attracts, develops and retains top talent, as part of the wider strategy to deliver superior customer / member experience. 3) Develop an innovative product and service portfolio that enables full-banking services on an anywhere, anytime, anything basis (IoT related). 4) Re-invent / modernise and better communicate the values and principles of the C&P banking movement to the customers, members and employees. 5) Consider that the essence of C&P banking might lie in the empowerment of members, customers and regional economies. 6) Generate recurring revenues by introducing novel ser vices and align these with relationship management to bind customers and members through high switching costs. 7) Engage and empower partners to complement the Value Propositions. 8) Better integration of services and channels and identification of any cross-selling opportunities either internally or with partners. 9) Novel or existing partner Channels could help C&P banks better reach customers / members. 10) C&P banks could provide better service to customers and members through finer segmentation.

ISDVI15

International Strategic Dialogue on Value Innovation

9. REFERENCES

1. Christensen, C.M., Anthony, S. D. and Roth E. A. (2004) “Seeing What's Next: Using the Theories of Innovation to Predict Industry Change”, Harvard Business School Press. 2. Day, G.. (2007) “Is It Real? Can We Win? Is It Worth Doing?: Managing Risk and Reward in an Innovation Portfolio”, Harvard Business Review, December Issue. 3. Habberfield, S. and McCarroll, V. (2012) “The outlook for co-operative banking in Europe 2012: Banking on values, building on agility”, Oliver Wyman. 4. Huber, M., Pallas, M., Scharioth, J. and Schulz, K. (2005) “Horizons 2020: A thought-provoking look at the future” TNS Infratest, Munich. 5. Internet of Things: Example of Applications http://postscapes.com/internet-of-things-examples/ 6. Kelly, G.(1963), “A theory of personality. The psychology of personal constructs.” Norton, New York (Chapters. 1-3 from Kelly, 1955). 7. Kim, W. C. and Mauborgne, R. (2005) “Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant”, Harvard Business School Press. 8. Lella, A. (February 7, 2014) “Why are Millennials So Mobile?” comScore, Inc. 9. McKinsey editorial team (2012) “McKinsey on Cooperatives” McKinsey & Company. 10. Mintzberg, H. (1994) “The rise and fall of strategic planning”, The Free Press. 11. Osterwalder, A. and Pigneur, Y. (2010), “Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers”, Wiley. 12. Parayre, R. (2006) “How blue is your ocean? Value Innovation and credit union strategy development” The Filene Research Institute. 13. Porter, M. E (1996), “What Is Strategy?” Harvard Business Review 74, November Issue. 14. Ready, D.A. and Truelove, E. (2001) “The Power of Collective Ambition”, Harvard Business Review, December Issue. 15. Solomon. M. R. (2011) “Consumer Behaviour: Buying, Having, and Being” Ninth Edition, Prentice Hall. 16. U.S. Census Bureau (2014) “Population Division International Data Base (IDB)” 17. Verganti, R. (2009) “Design Driven Innovation”, Harvard Business Press. 18. Wack, P. (1985) “The Gentle Art of Re-perceiving”, Harvard Business Review, September – October Issue. 19. Webster I, (2014) “The bank of things: How the Internet of Things will transform financial services”, Accenture.

AP PE ND IC © Shakesteer 2014 - 2015

Designing Tomorrow’s Cooperative & Popular Bank

Risk Assessment Questionnaire

SWOT Assessment Survey

To assess how the novel innovation portfolio performs on the spectrum of risk. we applied Day’s (2007) “Risk Matrix” an innovation portfolio risk assessment tool.

This section contains the results of the International SWOT Assessment Survey (ISWOT14) that assisted the ISDVI15 team of experts during the Strategic Dialogue.

Appendix 1

Appendix 2

ISDVI15

International Strategic Dialogue on Value Innovation

Appendix 1

RISK ASSESSMENT QUESTIONNAIRE Assessing Risk Across the Innovation Portfolio Intended Market ….. be the same as in our present market

….. partially overlap with our present market

Innovation Portfolio (Product & Service) ….. be entirely different from our present market or are unknown

1. Customers’ / Members' behaviour & decision-making processes will …..

2. Our distribution & sales activities will …..

3. The competitive set (incumbents or potential entrants) will …..

….. highly relevant

….. somewhat relevant

2. Our current customer / member relationships are …..

3. Our knowledge of competitors’ behaviour and intentions is …..

TOTAL (X-axis coordinate)

Product / Technology ….. is fully applicable 1. Our current development capability ….. 2. Our technology competency ….. 3. Our intellectual property protection ….. 4. Our manufacturing and/or service delivery system …..

1. The required knowledge and science bases ….. 2. The necessary product and service functions ….. 3. The expected quality standards …..

TOTAL (Y-axis coordinate)

P5 7

P2 7

P3 7

P4 7

P5 7

….. completely differ from those of our current offerings

P4 7

20.9 18.3 20.3 17.1 13.9

P1 7

….. is not applicable

….. are identical to those of our current offerings

P3 7

Innovation Portfolio (Product & Service)

….. overlap somewhat with those of our current offerings

P2 7

….. not at all relevant

1. Our brand promise is …..

….. will require significant adaptation

P1 7

25.8 19.7 23.8 21.6 12.1

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.1

 CONFIDENCE LEVEL

95%

S. ERROR: ±8.83% RESPONSES: 99 TARGET GROUP: 500 RESPONSE RATE: 20% ITEMS / QUESTIONS

ASSESSMENTS

COMPETITION VALUE PROPOSITION COST / REVENUE INFRASTRUCTURE RELATIONSHIPS OPPORTUNITIES THREATS

ISWOT14 Assessment Survey The Sample. Participants’ Origin Institution & Roles. In total, 500 individuals that conformed the criteria set by the researcher and CIBP (purposive sample), have been targeted and contacted to participate in the study (ISWOT14). In part, the ISWOT14 questionnaire is based on Osterwalder’s and Pigneur's (2010), proposed set of non-exhaustive SWOT assessment items, as well as on specific to the TVI elements.. Overall, 99 responses were received from C&P bank representatives and individual participants in 5 diﬀerent organisational positions and / or roles, across 27 banks and institutions from 11 countries. The survey’s results are subject to a margin of error of ±8.83% at a 95% confidence level, and the significance level (alpha - a) has been pre-set at 0.05.

Argentina 4% Austria 9% Belgium 12% Brazil 5% Canada 4% France 14% Germany 9% Italy 25% Morocco 14% Netherlands 3% USA 1%

27 Banks & Institutions. • • • • • • • • • • • • • • • • • • • • • • • • • • •

11 Countries.

Participants’ Roles.

Customers

13%

Members

45%

Employees

 19%

Elected Managers

16%

Board Members

ISWOT14 International SWOT Assessment Survey Appendix 2.2

 STAR RATING

3.51 SD: 2.53 DIMENSION 1

Column Variables < 0.05, correlated

SWOT Assessment Key Findings. Internal Environment Major Strengths (>8)

Internal Environment Major Weaknesses (<6.9)

Classification

Description

Classification

Description

Value Propositions

• Value Propositions (VPs) are well aligned with customer/member needs. • VPs have strong network effects.

Value Propositions

• NA

Costs & Revenue Infrastructure

Costs & Revenue

• Predictable costs. • Focused & work with partners when necessary. • Good working relationships with Key Partners.

Customer / Member • The rate of customers/members who cut Interface ties with the services & or bank is low. • Continuous acquisition of new customers / members. • Channel reach is strong among customers / members. • Customers / members can easily see the channels. • Strong Customer/Member relationships. • Strong brand.

• C&P banks do not benefit from strong margins. • C&P banks generally do not collect revenues before expenses are incurred. • Pricing mechanisms do not capture full willingness to pay • Operations are not cost efficient. • The Cost Structure is not correctly matched to the business model. Infrastructure • Key Resources are not difficult for competitors to replicate. • Key Activities are not difficult to copy. • Balance of in-house versus outsourced execution is not ideal. • Key Resources are not deployed in right amount at the right time. Customer / Member • Relationships do not bind customers/ Interface members through high switching costs.

MEAN: 2.99 SD: 0.85

MEAN: 3.74 SD: 0.86



External Environment Major Opportunities (>8) Classification Value Propositions Costs & Revenue

Infrastructure

S.W.O.T

Description • Partners could complement the VPs. • Generation of recurring revenues by introducing novel services. • Better integration of services. • Replacement of one-time transaction revenues with recurring revenues. • Cross-selling opportunities either internally or with partners. • Standardisation of some Key Activities • Greater collaboration with partners could help C&P banks focus more on core business. • Novel or existing partner Channels could help C&P banks better reach customers / members. • Better integration of Channels. • C&P banks could better align Channels with customer / member segments.

Customer / Member • Customers /members could be better Interface served through finer segmentation. • Potential to improve customer / member follow up. MEAN: 3.87 SD: 0.95 © Shakesteer 2014 - 2015

External Environment Major Threats (>8)

Classification

Description

Value Propositions

• There are substitute products & services available.

Costs & Revenue

• Competitors threaten the margins. • Competitors are threatening the market share.

Infrastructure

• The quality of resources is threatened. • The quality of activities is threatened. • Competitors threaten the channels. • Channels are in danger of becoming irrelevant to customers / members.

Customer / Member • Some customer relationships are in Interface danger of deteriorating. • Relationships do not bind customers / members through high switching costs. MEAN: 3.45 SD: 1.03

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.3

 WEIGHTED SWOT SCORE

2.56 SD: 2.72

SWOT Overall Score Capability Gaps. Calculating the Current Position. ΦS = (S – W) + (O – T) In this section, all items and dimensions included in ISWOT14 are consolidated and quantified to produce practical and actionable data related to the assessments of the Basis of Competition, Value Propositions, Costs / Revenues, Infrastructure, Customer / Member Inter face, Threats and Opportunities. Through Diﬀerential Analysis an overall SWOT score is produced, deriving from the quantification of (S) Strengths, (W) Weaknesses, (O) Opportunities and (T) Threats, in order to identify and measure the “Current Position” and capability gaps of C&P banks Business Model.

Moreover, although the Strengths (7.46) outweigh the Weaknesses (6.33), that is an indicator of a “Capability surplus” also shown in the relatively high Infrastructure assessment (7.32) and Customer / Member Interface (7.77) scores, however, the near equal distance between Strengths and Opportunities (0.7) and Strengths and Threats (0.73) is also an indication of a Business Model that does not provide high levels of competitiveness and protection from the competition and especially from new non-bank entrants with innovative Business Models and Value Propositions to could attack the system from below and inevitably change the industry and in their favour.

In contrast to classical SWOT analysis that is based on largely subjective techniques that fail to quantify the level / status of the “current position” of a given “system” and for each of the four elements, here units of measurement were obtained from a Likert-type 10point scale with fixed choice response formats, corresponding to the level of agreement or disagreement with the supplied statements [from (1) low to (10) high]. The “position” refers to the present SWOT status of the C&P banking Business Model. To calculate the “Current Position” (ΦS) the following formula was applied:

ΦS = (S – W) + (O – T).

Capability surplus

Surprisingly, analysis produced a near zero (2.56) overall SWOT score (out of an unrealistically maximum score of 20), across the four elements indicating that participants do not perceive the “current status” of C&P banking Business Model as being neither Strong or Weak. A low SWOT score (2.56) may also indicate that the “current” Business Model provides a limited capacity to C&P banks to exploit the plethora of Opportunities (8.16) in the market.

Opportunity surplus

Capability surplus

Strenghts SD: 2.59

Weaknesses SD: 2.83

Opportunities SD: 2.69

Threats SD: 2.77

7.46

6.33

8.16

6.73

ISWOT14 International SWOT Assessment Survey Appendix 2.4

 TOTAL RESPONSES

830 KEY AREAS

KEY ITEMS

562

Assessing the Basis of Competition. Generic Content & Open Text Analysis. Apart from the fixed choice response formats, the ISWOT14 also included a set of open ended / text questions with the intent to provide qualitative insights related to key areas / elements of the C&P banking business model. In this section to assess the Basis of Competition of C&B banking 9 open ended questions / dimensions were employed to generate a total of 830 responses (constructs), from the 99 participants in the study. Specifically, these areas include: a) an assessment of the Basis of Competition (Q.1), b) insights regarding the elements that participants think must change immediately in the sector (Q.2), c) the identification of the “Single Point of Failure” (Q.3, Q.4 & Q.5), d) the key Problems (Q.6) and e) key Cost elements (Q.7), f ) the identification of the Key Factors for Success (Q.8) and finally g) insights on relevant, adjacent or entirely diﬀerent to C&P banking industries / applications (Q. 9) that could provide inspiration on possible future trajectories during the strategic dialogue (ISDVI15). The points of distinctions over multiple responses formed the dimensions of each of these key areas and their sub-components / dimensions, upon which the elements / statements were evaluated and responses were generated. The resulting data was placed in a C x E matrix, where C equals the number of constructs or rows and E equals the number of elements. The results provide evidence of strong unifying themes in participants’ responses that were analysed in terms of frequency of occurrence. More specifically, the core categorisation procedure of the responses in this section, resulted in 38 distinct and key elements with 562 corresponding items or responses.

Specifically, in Q.1 participants were asked to identify the 8 key competitive factors that “currently” characterise C&P banking in order to include these as such in the Value Profiling process during the strategic dialogue (ISDVI15). Analysis showed that the following competitive factors are considered as the most important in descending order, namely: 1) Customer / Member Acquisition & Relationship Management (75 or 25,5% of responses in this question), 2) Locality / Proximity and Branch network (55 or 18,7%), 3) Brand & Brand Values (Trust, Transparency, Honesty, Solidarity) (45 or 15,3%), 4) Decision Effectiveness & Democratic Governance (39 or 13,3%), 5) Product / Service Mix & Quality Management (24 or 8,1%), 6) Information Technology & New Technologies (18 or 6,1%), 7) Price of Products & Services (10 or 3,4%) and 8) Talent Development & HR Management (8 or 2,7%). The second dimension, referring to the 3 key elements that participants think that must change immediately in the sector (Q.2) generated 41 responses, corresponding to 4 key elements that include 26 responses (63.4% of 41 responses) in the areas of Operations Management, Service mix, Governance and Human Resources, reflecting: a) Faster, more Efficient / Effective Operations & Process Optimisation Management (8), b) Integration, Personalisation & Diversification of Products / Services & Systems (8), c) Improvement of decision effectiveness & Governance (5) and d) Talent Development, HR Management & opportunities for better education in Finance (5).

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.4. Continued

Assessing the Basis of Competition. Generic Content & Open Text Analysis. The third dimension, referring to the identification of the “Single Point of Failure” (Q.3, Q.4 and Q.5) or SPF, generated 155 responses, corresponding to 8 main emergent sub-categories (87 or 56,1% of 155 responses) that relate to the part of the system that, if it fails, will stop the entire system from working, from the business / user / member and brand combined perspectives. Results showed that among other fundamental SPFs in the C&P banking system, like IT / Technology (10 or 11,4% of 87 responses), Liquidity (5), Customer / Member Relationships (5), Proximity (9) and Credit provision (7), the loss of Trust and Credibility (20 or 22,9% of responses), the loss of Values, ethics, reputation and Brand (16 or 18,3%) and a decline in Service Quality and Expertise (15 or 17,2%) where found to be the most integrated (overlapping) SPFs across all 3 perspectives, thereby the most important ones.

These 3 key cost-generation elements (53 or 55,2% of 96 responses) correspond to: a) Human resources (21 or 39,6% of 53 responses in this category), b) Information systems and Technology costs (17 or 32%) and c) Local presence / Proximity / Branch network costs (15 or 28,3%). In suggesting ideas / concepts on what shall be the basis of future success for C&P banks (Q.8 - sixth dimension), participants produced 72 ideas corresponding to 4 main categories or dimensions (39 of 72 responses) related to Technology, Corporate Values, Service Quality, and Relationship Management. Specifically, the key subdimensions include: a) Customer / Member Acquisition, Relationship & Knowledge Management / Proximity & Close contact (20 of 39 responses), b) Preservation of cooperative values (7), c) Service quality (6) and d) Investment in Information Technology & other new related technologies (6).

The fourth dimension related to the 3 biggest problems that Cooperative and Popular Banking faces (Q.6) includes 132 responses reflecting 4 key emergent sub-categories (50 or 37,8% of 132 responses) in the areas of: a) Competition on a large scale and from non-bank players (16 or 32% of 50 responses), b) strict regulations & misunderstanding of the cooperative sector (especially by the government) (12 or 24%), c) lack of innovation in Products, Services & Business Model (11 or 22%) and d) Challenges deriving from Information and technology progress and digitalisation (11 or 22%).

Finally, the seventh dimension, referring to the assessment of the “Basis of Competition”, related to suggestions about non-competitive or non-directly related industries whose value oﬀerings; Business Model and competitive parameters could be used as a source of inspiration by the ISDVI15 team to develop entirely novel Value Propositions for the C&P banking sector (Q.9) includes 41 responses, reflecting 3 related and non-related industries (33 responses) in the areas of Information Technology & New Technologies, Crowd sourcing and various Platform providers like: a) Google’s and social media (Facebook, twitter) business models (17 of 33 responses), b) Micro financing model and Crowdfunding / Crowd sourcing Model (10) and c) Apple “like” (Platform provision, i.e Apple Pay services NFC) (6).

Moving on, in the fifth dimension (Q.7), participants also identified the 3 key elements of the business that contribute the most to the overall Cost structure(96 responses) related to Human Capital, Technology and Network.

ISWOT14 International SWOT Assessment Survey Appendix 2.4. Continued

Assessing the Basis of Competition. Key Competitive Factors in C&P Banking.

What Participants Think Must Change Immediately.

Q1. In your view, what are the 8 key competitive factors in Cooperative and Popular Banking?

Q2. When it comes to Cooperative and Popular Banking what are the 3 key elements of the sector, you think must change immediately?

Category

Frequency

Category

Customer / Member Acquisition, Relationship & Knowledge Management

Locality / Proximity & Branch network

Brand & Brand Values

Faster, more Efficient / Effective Operations & Process Optimisation Management

Integration, Personalisation & Diversification of Products / Services & Systems

Improve decision effectiveness & Governance

Talent Development, HR Management & Finance Education

Need for stronger marketing / brand strategy (Communication about differentiators)

Greater adaptation of Information Technology & New Technologies

Greater collaboration amongst members

Greater & more efficient use of social media

New regulation for cooperatives (eu-law for cooperatives)

More focus on sustainable practices

Develop & Deliver Values that are more appealing to younger people

Increase local initiatives

Stop imitating capitalist banks

Adapting the rules taylor made for joint stock companies to a cooperative environment

Constant Comparison & Market monitoring

OmniChannel development

Not to relocate activities

Invest in transparency

Branch network

General conditions of loans

Strengthen the international network to support the corporate customers

Decision Effectiveness & Democratic Governance

Frequency

Product / Service Mix & Quality Management

Information Technology & New Technologies Price of Products & Services Talent Development & HR Management

Channel Management

Credit Monitoring & Risk Management Regulations Total

293

Total

ÂŠ Shakesteer 2014 - 2015

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.4. Continued

Assessing the Basis of Competition.









IT / Technology

Liquidity

Customer / Member Relationships

 Trust & Credibility

 Service Quality & Expertise







Proximity

Loss of the values, ethics, reputation & brand

Granting Credit

Identifying the Single Point of Failure. The “Single Point of Failure” or SPF is a new concept and an integral part of the TVI methodology that was applied during the ISDVI15. The SPF is the part of the system that, if it fails, will stop the entire system from working. The SPF helps participants to identify, understand and develop protective measures against the combination of parameters that could lead to a systemic critical failure. To provide a holistic SPF analysis the business / user / member and brand perspectives should be considered and combined. The more integrated an SPF element is across the 3 perspectives the more important it is.

RESPONSES

155 Business Perspective Member Perspective Brand Perspective

Q3. From the business perspective, which part of the system, if it fails, will stop the entire system from working?

Q4. From the user / member perspective, which part of the system, if it fails, will stop the entire system from working?

Q5. From the brand’s perspective, which part of the system, if it fails, will stop the entire system from working?

Category

Frequency

Loss of the values, ethics, reputation and brand

Trust and Credibility

Service Quality and expertise

Trust and Credibility

Keep Promises

Customer Satisfaction and Loyatly

loss of confidence

Performance

Financing SME needs

Brand differentiation

Proximity

Loss of Autonomy (albeit partial

Loss of authenticity

IT / Technology

Service Quality and expertise

Liquidity

Proximity

The values, reputation / brand

Granting Credit

Relationships with Members

Trust

Governance / Loosing the democracy

Customer deposits

Retail banking

Attraction of new financial resources

Frequency

Information systems / Technology

The values, ethics and brand of the institution

Confidence

Speculation and lack of reinvestment

interest rate mechanism

law and regulation

Non-innovative products and lack of competitiveness

Confidentiality

High Prices

Brand inconsistency

Loss of Expertise

lack of strategic vision of cooperatives

Loss of Proximity

Accessibility

Big corporate credit risks and default of government bonds.

Lack of territorial strategy Notoriety

Recession hitting the real economy

Popularity

Brand Update

Partnerships

Not updated IT / Technology

Confidentiality Democratic participation in decision making process

Management of savings

Decay of families

Cost structure

Self Responsibility

Associated growth

Payment Services

Total

ISWOT14 International SWOT Assessment Survey Appendix 2.4. Continued

Assessing the Basis of Competition. Identifying the Problems that C&P banks Face.

Identifying the Key Cost Elements.

Q6. What are the 3 biggest problems that Cooperative and Popular Banking faces?

Q7. What 3 elements of the business contribute the most to the overall cost?

Category

Frequency

Competition on a large scale and non-bank players Strict Regulations & misunderstanding of the cooperative sector (especially by the government) Lack of Innovation ( Products / Services / Business Model) Information and technology progress / Digitalisation

Operational costs vs. efficiency (Cost Structure)

Demographic development affecting customer base

Recovery of the confidence and trust of the client

Governance and Resistance to change

Limited investment in marketing

International presence and NPLs

Information systems / Technology costs

Local presence / Proximity / Branch network

Corporate / infrastructure costs

Regulation compliance costs

Network maintenance and management costs

Channel costs

Cost of Risk

Cost of Resources

Logistical costs

Taxation

Free customer one to one services

Dying members

Cost of money

Back office operations for regulatory reporting

Compliance costs and supervisory costs

Investments

Marketing offers

Refinancing costs

Losses

Bureaucracy

Bank Levies

Adjustments to loans

Access to capital

Lack of Knowledge on C&P Banking Business Model

Low margins

Membersâ&#x20AC;&#x2122; declining participation

3 3 3 2

Management of growth and development

Loss of identity

Reorganise the business on the retail market

Intermediary certification

Notoriety

Access to new and / or younger customer groups

Loss of focus on core business

High Taxation

Declining member influence

Lack of differentiation

Increasing willingness to change bank by customers

Brand Update

Oversised foreign investment banks

Management of impaired loans

Globalisation

Talent Development & HR Management

Distribution channels

Pricing

Difficulty in the corrections of high credits

Monitoring of investments abroad

1 Total

ÂŠ Shakesteer 2014 - 2015

Human resources

The incapacity to communicate the advantages of our business model Corporate Culture and Staff adherence to the values of the cooperative Lack of responsiveness and inability to follow new customer needs

Frequency

132

Total

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.4. Continued

Assessing the Basis of Competition. Identifying the Key Factors for Success.

Drawing Inspiration from other Industries.

Q8. What do you believe the future success of our business is going to be based on?

Q9. Name one (or more) non-competitive or non-directly related industry whose value offerings; Business Model and competitive parameters could help us develop entirely novel Value Propositions for the Cooperative and Popular Banking sector.

Category

Frequency

Customer / Member Acquisition, Relationship & Knowledge Management / Proximity & Close contact

Preservation of cooperative values

Service quality

Frequency

Information Technology & New Technologies (Google, and social media (Facebook, twitter) model

Investment in Information Technology & New Technologies

Micro financing model and Crowdfunding / Crowd sourcing Model

Integration, Personalisation & Diversification of Products / Services & Systems

Apple (Platform provider - Apple Pay services NFC)

Faster, more Efficient / Effective Operations & Process Optimisation Management

Paypal

Innovation of Products / Services / Business Model

Amazon

Strategic Differentiation

Starbucks Coffee with atractive meeting-point for his customers

Membership programs (especially from airlines!)

Restoration of public confidence and trust

Multichannels

Services for internationalisation of SMEs

Netflix

Democratic governance and change management

Telecommunications

Involvement in sustainability

Focus on SME Customers

Digital Bank

Regulator’s support and understanding

Flexibility

Partners

Strong Marketing

Talent Development & HR Management

1 Total

Category

Total

ISWOT14 International SWOT Assessment Survey Appendix 2.5

 WEIGHTED MEAN

7.88 SD: 2.53 DIMENSION 1

Major Strengths Minor Strengths 10 / Entirely Agree Major >8 Strengths Minor >7 Strengths

5 / Neither Agree or Disagree

1 / Entirely Disagree

Value Proposition (VP) Assessment. The Value Offered to the Customers & Members. The assessment of Value Propositions refers to the service and product mix that creates Value for the customers and members of C&P banks. This assessment consists of 3 key items related to a) the level of alignment of the Value Propositions (VP) with customer / Member needs (Q.10), b) The network effects of the VPs offered (Q.11) and c) The synergies between the service mix (Q.12). Analysis produced an overall score of 7.88 indicating that C&P banking offers high levels of Value to the customers / members that is well aligned with their needs and with strong network effects but with moderate synergies within the service mix.

To better understand what is driving the summary results, the trends and patterns and how the key (categorical) variables are related to each other and the significance of their association, Cross-tabulations (CT ) were performed throughout ISWOT14. On that basis only the Chi-square values (alpha) that were statistically significant at p < 0,05 ("cutoﬀ" point) are included in the report. Specifically, here CT was applied to see if there is a relationship between the level of alignment of VPs with Customer / Member needs (Q.10) and the level of alignment of the Brand with the Business Model (BM) and VPs (Q.48). The CT analysis indicated that with a p-Value of 0,0032 [Chi-square values (alpha) were statistically significant at 0.05] there is a significant association between these two variables.

SD: 2.3 Min: 3

SD: 2.8 Min: 1

SD: 2.5 Min: 2

8.14

8.1

7.4

Q10. Our VPs are well aligned with customer / member needs.

Q11. Our Value Propositions have strong network effects.

Q12. There are strong synergies between our services.

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.6

Cost / Revenue Assessment. 5.7 7.1 7.4 7.2 7.4 6.0 7.2 6.9 8.0 6.2 6.4 7.0

Margins, Pricing Mechanisms Costs & Predicability.

Q13. We benefit from strong margins. Min: 1 | SD: 2.9 Q14. Our revenues are predictable.

The Cost / Revenue assessment describes the Strengths and Weaknesses related to the Cost structure referring to the costs incurred to operate the current C&P banking business model and the Revenue structure referring to the way C&P banks capture value in relation to customers’ / members’ willingness to pay for the Value oﬀered.

Min: 2 | SD: 2.7 Q15. We have recurring Revenue Streams & frequent repeat purchases / transactions. Min: 1 | SD: 2.5

Analysis produced an overall low score of 6.87, indicating that the current Cost / Revenue structure is not competitive, with low margins (5.7), limited ability to collect revenues before any expenses are incurred (6.0), pricing mechanisms that do not capture full willingness to pay (6.9), a Cost structure that is not correctly matched to the business model (6.2) and operations that could be more cost eﬃcient (6.4). The analysis also showed that the only major strength in this category is the predictably of costs (8.0).

Q16. Our Revenue Streams are diversified. Min: 2 | SD: 2.9 Q17. Our Revenue Streams are sustainable. Min: 2 | SD: 2.9 Q18. We collect revenues before we incur expenses. Min: 1 | SD: 2.8 Q19. We charge for what customers / members are really willing to pay for.

WEIGHTED MEAN

6.87 

Min: 2 | SD: 3 Q20. Our pricing mechanisms capture full willingness to pay.

SD: 2.77 DIMENSION 2

Min: 2 | SD: 2.5

Major Strengths Minor Strengths

Q21. Our costs are predictable.

Weaknesses

Min: 2 | SD: 2.5 Q22. Our Cost Structure is correctly matched to our business model.

10 / Entirely Agree Major >8 Strengths Minor >7 Strengths

5 / Neither Agree or Disagree

Min: 2 | SD: 3 Q23. Our operations are cost efficient. 1 / Entirely Disagree

Min: 1 | SD: 2.8 Q24. We benefit from economies of scale. Min: 2 | SD: 2.8

ISWOT14 International SWOT Assessment Survey Appendix 2.7

 WEIGHTED MEAN

7.32 SD: 2.61 DIMENSION 3

Major Strengths Minor Strengths Weaknesses & Threats 10 / Entirely Agree Major >8 Strengths >7

Minor Strengths

5 / Neither Agree or Disagree

Infrastructure Assessment. Resources, Activities Operations & Partners.

6.9

The Infrastructure assessment includes the Resources, Activities and Partnerships (network) required to deliver the Value Propositions to the Customers / Members, whilst achieving operational eﬃciency. With a relatively high score (7.32) the “current” position of the C&P banking business model appears to be “operations centric” with special emphasis on execution quality (7.7), focus on the core business (8.2) and in maintaining good working relationships with the key partners (8.7). However, analysis showed that in this dimension the current C&P business model is not able to protect the banks from Resource (6.9) and Activity (6.2) replication by the competitors.

1 / Entirely Disagree

7.8 6.6 7.3 6.2 7.0 7.6 7.4 7.7 6.5 8.2 8.7

Q25. Our Key Resources are difficult for competitors to replicate. Min: 2 | SD: 3.2 Q26. Our Resource needs are predictable. Min: 2 | SD: 2.5 Q27. We deploy Key Resources in right amount at the right time. Min: 2 | SD: 2.7 Q28. We efficiently execute Key Activities. Min: 2 | SD: 2.6 Q29. Our Key Activities are difficult to copy. Min: 1 | SD: 3.2 Q30. Our key activities and operations are interconnected and supportive of each other. Min: 2 | SD: 2.3 Q31. Our key activities and operations are scalable. Min: 1 | SD: 2.3 Q32. Our Activities and Operations are in line with the growth needs and size of our business. Min: 2 | SD: 2.4 Q33. Execution quality is high. Min: 2 | SD: 2.4 Q34. Balance of in-house versus outsourced execution is ideal. Min: 2 | SD: 2.6 Q35. We are focused and work with partners when necessary. Min: 2 | SD: 2.6 Q36. We enjoy good working relationships with our Key Partners. Min: 1 | SD: 2.6

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.8

Customer / Member Interface Assessment.  WEIGHTED MEAN

7.77 SD: 2.58 DIMENSION 4

Major Strengths Minor Strengths Weaknesses 10 / Entirely Agree Major >8 Strengths Minor >7 Strengths

SD: 2.9 Min: 2

SD: 2.8 Min: 2

SD: 2.9 Min: 2

8.2

7.5

8.4

29. The rate of customers / members who cut ties with our service and / or bank is low.

7.1 7.6 8.0 8.0 7.2 7.3

30. Our customer / member base is well segmented.

5 / Neither Agree or Disagree

31. We are 1 / Entirely continuously Disagree acquiring new customers/members.

Q37. Our Channels are very efficient.

7.5

Min: 2 | SD: 2.8 Q38. Our Channels are very effective.

9.1

Min: 3 | SD: 2.6 Q39. Channel reach is strong among customers /members.

7.9

Min: 3 | SD: 2.6 Q40. Customers / members can easily see our channels.

5.76

Min: 2 | SD: 2.6 Q41. Channels are strongly integrated.

9.3

Min: 1 | SD: 2.8 Q42. Channels provide economies of scope.

7.8

Min: 2 | SD: 2.6

Channels, Relationships & Brand Strength. The Customer / Member interface appears to be one of the key Strengths (7.77) of the current C&P banking business model, with low churn rates (8.2), continuous new customer acquisition (8.4), exceptionally strong brand (9.3) and strong channel reach (8.0), channel visibility (8.0) and relationships (9.1) with customers / members, being amongst the key major strengths. However, one of the key findings of ISWOT14 is the major Weakness as well as Threat of the inability of the current relationship framework to bind customers / members with high switching costs (5.76). Moreover, Cross Tabulation was used to investigate the significance of association among key variables in this category. Specifically analysis showed that three strongly correlated areas include: a) level of Channel integration (Q.41) and competitors threatening the Channels (Q.64) (pValue: 0,0003), b) Channel eﬀectiveness (Q.38) and danger of Channels becoming irrelevant to Customers / Members (Q.65) (p- Value: 0,0056) and c) level of Channel integration (Q.41) and danger of Channels becoming irrelevant to Customers / Members (Q.65) (p- Value: 0,0298).

Q43. Channels are well matched to Customer / Member segments. Min: 3 | SD: 2.6 Q44. We enjoy strong Customer / Member relationships. Min: 1 | SD: 2.6 Q45. Relationship quality correctly matches Customer / Member Segments. Min: 1 | SD: 2.6 Q46. Our Relationships bind customers / members through high switching costs. Min: 1 | SD: 2.8 Q47. Our brand is strong. Min: 2 | SD: 2.6 Q48. Our brand is well aligned with our Business Model and Value Propositions. Min: 2 | SD: 2.7

ISWOT14 International SWOT Assessment Survey Appendix 2.9

Assessment of Threats.

î&#x20AC;˝

How the External Forces Influence C&P Banking.

WEIGHTED MEAN

6.72

This dimension of ISWOT14 looks at Threats specific to the business model innovation building blocks as these were included in the TVI process during the strategic dialogue on Value Innovation (ISDVI15). Specifically, analysis showed that on the whole, Threats with a low score of 6.72 are perceived the lesser part of the problem with major Threats mainly coming from substitute products and services (8.4) and competitors threatening the margins (8.5), market share (8.1) and channels (79.3% agree). All in all, these results and despite the overall positively low score, indicate that the industry operates in a Red Ocean and that there is a justified need for C&P banks to pursue Value and Business Model Innovation.

SD: 2.77 DIMENSION 5

Major Threats Minor Threats Strengths & Opportunities 10 / Entirely Agree Major >8 Threats >7

8.4

Minor Threats

Strengths & <7 Opportunities 5 / Neither Agree or Disagree

6.86 8.5 7.3 6.7 6.0

1 / Entirely Disagree

5.1 41.3%

Yes

33.7%

25%

Don't Know

6.6

33.3%

Don't Know 15.4%

Q62. Is the quality of our resources threatened in any way?

Q63. Is the quality of our activities threatened in any way?

79.3%

Yes

51.3%

Yes

No 19.5%

5.6 7.5

48.8% 37.8%

Don't Know 1.2%

Don't Know 13.4%

Q64. Do competitors threaten our channels?

Q65. Are our Channels in danger of becoming irrelevant to customers / members?

8.1 5.8

53.7%

Yes No

5.0

32.9%

Don't Know 13.4%

Q66. Are any of Customer Relationships in danger of deteriorating? ÂŠ Shakesteer 2014 - 2015

Q49. There are substitute products & services available. Min: 1 | SD: 2.8 Q50. Competitors are likely to offer better price or value. Min: 1 | SD: 2.9 Q51. Competitors threaten our margins. Min: 2 | SD: 2.8 Q52. Technology threatens our margins. Min: 1 | SD: 3.3 Q53. We depend excessively on one or more Revenue Streams. Min: 1 | SD: 2.9 Q54. We could face a disruption in the supply of certain resources. Min: 1 | SD: 2.2 Q55. We are in danger of losing any partners. Min: 1 | SD: 2.6 Q56. Our partners might collaborate with competitors. Min: 1 | SD: 2.7 Q57. We are highly dependent on certain partners. Min: 1 | SD: 2.5 Q58. Our market could become even more saturated in the near future. Min: 1 | SD: 3.2 Q59. Competitors are threatening our market share. Min: 2 | SD: 2.7 Q60. How likely are customers/members to defect? Min: 1 | SD: 2.5 Q61. How quickly will competition in our market intensify? Min: 1 | SD: 2.9

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.10

Assessment of Opportunities.  8.52 7.5 8.7 8.1 8.0

Q67. We could generate recurring revenues by introducing novel services.

How the External Forces Influence C&P Banking.

WEIGHTED MEAN

8.16

Min: 1 | SD: 2.6 Q68. We could use less costly resources to achieve the same result.

The assessment of Opportunities also looks at specific to the business model innovation building blocks as these were included in the TVI process during the strategic dialogue on Value Innovation (ISDVI15). It appears clear that there is a plethora of Opportunities (8.16) that C&P banks could exploit and also provide a source of inspiration for Value Innovation, improvement and renewal. Major Opportunities include the generation of recurring revenues by the introduction of novel services (8.52), the standardisation of some key activities (8.7), the greater collaboration with partners (8.1) and better customer / member service through a finer segmentation (8.0).

SD: 2.69 DIMENSION 6

Min: 1 | SD: 2.8

Major Opp/ties Minor Opp/ties

Q69. We could standardise some Key Activities.

10 / Entirely Agree Major >8 Strengths

Min: 1 | SD: 2.5 Q70. Greater collaboration with partners could help us focus on our core business.

Min: 1 | SD: 2.7 Q71. We could better serve our customers / members through finer segmentation.

Minor Strengths

5 / Neither Agree or Disagree

Min: 1 | SD: 2.9

1 / Entirely Disagree

97.5%

88.9%

81%

54.3% 41.3% 42.5% 29.6% 16.1%

2.5% Yes

No Don't Know

Q72. Could we better integrate our services?

Yes

2.5%

No Don't Know

Q73. Can we replace one time transaction revenues with recurring revenues?

92.4%

Yes

No Don't Know

Q77. Could partners complement our Value Proposition?

2.5% Yes

8.6%

No Don't Know

Q74. Do we have cross selling opportunities either internally or with partners?

Q78. Could we integrate our Channels better?

Yes

No Don't Know

Q75. Can we increase prices for our services?

2.5% 11.4%

5.1%

No Don't Know

Yes

No Don't Know

Q79. Could we find new complementary partner Channels?

10.1% 8.9% Yes

Q76. Could partner Channels help us better reach customers / members?

2.5% 11.2% Yes

No Don't Know

90%

86.3%

86.1%

79.8%

10.1% 10.1%

Yes

16.2%

No Don't Know

Q80. Could we better align Channels with customer/ member segments?

10% Yes

No Don't Know

Q81. Is there potential to improve customer / member follow up?

ISWOT14 International SWOT Assessment Survey Appendix 2.11

 TOTAL RESPONSES

451 KEY AREAS

KEY ITEMS

Open Text Analysis. Generic Content & Diﬀerential Analysis. In this section, 7 open ended questions were employed to generate a total of 451 responses (constructs), from the 99 participants in the study. Specifically, these areas include: a) Identification of potential Bottlenecks (Q.82), b) Revenue Stream sustainability (Q.83), c) Predictability of Costs (Q.84), d) Potential disruption of Key Activities (Q.85), e) Ways to improve Channel Eﬃciency (Q.86), f ) Satisfaction of additional Customer / Member needs (Q.87), and g) Ways to tighten relationships with Customers / Members (Q.88). The results provide evidence of strong unifying themes in participants’ responses that were analysed in terms of frequency of occurrence. More specifically, the core categorisation procedure of the responses resulted in 43 distinct and key elements and 274 corresponding items or responses. In particular, the first dimension, referring to the identification of key potential Bottlenecks (Q.82) in the system, includes 64 responses, consisting of 7 main emergent sub-categories (51 or 79,6% of 64 responses) related to Finance and Credit Risk, Customer/ Member Service, Governance and Technology, reflecting in descending order: a) Credit decision making process / Loans (18 or 35,2% of 51 responses in this category), b) IT / Information systems / Digital capabilities (8), c) Credit Risk Assessment (including SME’s (7), d) Responsiveness to client needs (6), e) Governance / Decision making & strategy implementation (4), f ) Retail Business (4) and g) International / domestic Money Transfers (4).

The second dimension, referring to Revenue Stream sustainability (Q.83) includes 50 responses, related to 5 key elements (23 or 46% of 50 responses) in the areas of Fees / Revenues and Margins under threat of extinction, namely a) Transaction fees (5), b) Account fees (5), c) Interests margin (5), d) Revenue from payment services (5) and e) Commission fees (3). The third dimension referring to the Costs that threaten to become unpredictable (Q.84) includes 68 responses corresponding to 6 main emergent subcategories (39 or 57,3% of 68 responses) reflecting: a) Information systems / Investments in Technology (9), b) Rules and regulations compliance costs (7), c) Branches and real estate cost of “network" (6), d) Taxation (6), e) Credit Risk associated costs (6) and f ) Costs for legal advice (5). Moving on, the fourth dimension, referring to the potential disruption of Key Activities (Q.85), includes 59 responses, consisting of 5 main emergent subcategories (26 or 44% of 59 responses) related to Finance, Services, Human Resource Management and key Activities, reflecting in descending order: a) Receipts / Payment services and handling (9), b) Services in branches / branch network (8), c) Battle for talent / Human capital (3), d) SMEs financing (3) and e) Outsourcing of activities like administration, accounting & IT (3).

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.11. Continued

Open Text Analysis. Generic Content & Differential Analysis. In suggesting ways to improve channel efficiency or effectiveness (Q.86 - fifth dimension), participants produced 50 responses (ideas) corresponding to a large number of categories (7) related to Technology, Communication, Operations, Data and Relationship Management. Key emergent sub-dimensions include: a) Investments in new relative technologies (10 or 20% of responses), b) Better communication (5), c) Finer market segmentation (4), d) Channel integration and synergies among services (4), e) Faster, more Efficient / Effective Operations & Process Optimisation Management (4), f ) Elimination of silos and integration of more corporate services (3) and g) Data analytics and database management (big data) (3). Moreover, in the sixth dimension (Q.87), participants also produced a wealth of ideas (74) related to the Satisfaction of additional Customer / Member needs located in 7 key areas (44 or 59,4% of 74 responses), reflecting in descending order: a) Technology support / Electronic banking / mobile / internet services / Live chat room and Omni-channel (14 of 44 responses), b) Provision of a better partner network amongst members and on a worldwide basis / Reinforcement of the relation between bank / customer / member (8), c) Satisfaction of Start-up needs (5), d) Personal and business financial consulting (5), e) Use of data to support / manage SMEs assurances (4), f ) Data protection and security (4) and g) Satisfaction of seniors' needs and retirement services (4).

Finally, the seventh dimension, referring to suggestion of “Ways” to further tighten relationships with Customers / Members (Q.88) includes the majority of responses (86), corresponding to 6 key elements (58 or 67,4% of 86 responses) in the areas of Communication, Relationship Management, Brand Strategy, Technology and Database management, reflecting: a) Proximity and Close contact with the customers / intimacy and follow up (12 or 20,6% of 58 responses in this category), b) Integration, Personalisation & Diversification of Products / Services & Systems / Private scheme service (12), c) Protection and better Communication of Brand Values / Make members / customers / partners part of the "story" (10), d) Finer Relationship & Knowledge Management / Improve data mining (CRM tools) (9), e) Better generic communication (8) and f ) utilisation of social media tools and Web 2.0 (7).

ISWOT14 International SWOT Assessment Survey Appendix 2.11. Continued

Open Text Analysis The Responses. Identification of potential Bottlenecks.

Revenue Stream sustainability.

Q82. Are some of our key processes, activities and operations faster than others? If yes which ones are these?

Q83. Which Revenue Streams are likely to disappear in the future?

Category

Frequency

Credit decision making process / Loans

IT / Information systems / Digital capabilities

Credit Risk Assessment (including SMEâ&#x20AC;&#x2122;s)

Responsiveness to client needs

Governance / Decision making & strategy implementation

Retail Business

International / domestic Money Transfers

Account opening

Signing contracts

Development support

Cash Transactions

Credit Cards

Trade operations

Deposit collection

Securities

Mortgages

Cross border retail operations

Total

ÂŠ Shakesteer 2014 - 2015

Frequency

Transaction fees

Account fees

Interests margin

Revenue from payment services

Commission fees

Up front fees

Customers operational commissions

ATM charges

Strong Reduction of Net Interest Income

Service costs

None

Provisions for insurance products and advisory services

Binding or Constraint fees

Financial logistics

National and International Payments

Capital market trading

Short term financing fees - other competitors outside of the regulatory framework (amazon / google) will be able to offer much cheaper alternatives

Resources for the diaspora

Contracting services fees

Traditional deposit-lending activities

Brick and mortar branches

Deposit book

Brokerage margins

Retail commissions

Bank rates

Provision-based services

1 Total

Designing Tomorrowâ&#x20AC;&#x2122;s Cooperative & Popular Bank

Appendix 2.11. Continued

Open Text Analysis The Responses. Predictability of Costs.

Potential disruption of Key Activities.

Q84. Which costs threaten to become unpredictable?

Q85. What Key Activities might be disrupted?

Category

Frequency

Information systems / Investments in Technology

Rules and regulations compliance costs

Receipts / Payment services and handling

Services in branches / branch network

Battle for talent / Human capital

SMEs financing

Branches and real estate cost "network"

Taxation

Outsourcing of activities like administration, accounting, IT.

Credit Risk associated costs

No disruption

Costs for legal advice - the regulatory framework is exploding in number, scope and complexity

Agencies due to a mobile banking system

Delivery channels

Credit portfolio

Property finance / mortgage

Cash handling

Cost of resources (i.e deposits)

Operations costs

Infrastructure costs

Payment services

Control of the agricultural sector

Human ressources

Landing activities

Market making activities

Prosecution

Digitalisation

Financial logistics

Loan losses linked to global economy evolution

Service costs

Implementation of Basel III and other international standards IFRS

Banks Levies

Legal activities

Access to capital depending on credit rating

Savings deposit

Product lines

Transaction activities

Business in securities

Specific assets management services

Area Support activities

Consumer protection measures

Innovation practises costs

Foreign exchange rates

Refinancing costs

Interest rate margins

Accessibility in the Regions

Depreciation

Electronic transactions

International services

Money transfers

Flow of savings

Conventional banking vs Islamic banking credit granting

Financial crisis type 2008 costs

Security in electronic transactions

Accounting costs

1 Total

ÂŠ Shakesteer 2014 - 2015

Frequency

Total

ISWOT14 International SWOT Assessment Survey Appendix 2.11. Continued

Open Text Analysis The Responses. Ways to improve Channel EďŹ&#x192;ciency.

Satisfaction of additional Customer / Member needs.

Q86. How could we improve channel efficiency or effectiveness?

Q87. Which additional customer / member needs could we satisfy?

Category

Frequency

Invest in new relative technologies / mobile

Better communication

Finer market segmentation

Frequency

Technology support / Electronic banking / mobile / internet services / Live chat room (Omnichannel) Provide a better partner network amongst members and on a worldwide basis / Reinforce the relation between bank / customer / member

14 8

Start-up needs

Personal and business financial consulting

Use of data to support / manage SMEs assurances

Channel integration and synergies

Faster, more Efficient / Effective Operations & Process Optimisation Management

Data protection and security

Break silos and integrate more corporate services

Seniors' needs and retirement services

Search for finance (other than banking) / Crowd funding services

SME support

Savings products / services

Insurance services

Faster and reliable payment systems

Data analytics and database management (big data) Use of social media

Training of personell and talent management

Competitive pricing

Direct more budgets into online channels

Consulting on real estate investments

Partnership with foreign banks for worldwide services

Younger age group needs

Administrative services

Council tax and legal services

Fee based models instead of provision based models

Special services for wealthy members

Stronger collaboration

Outsourcing

Self service

Better management of (human, technical and financial) resources

Finding solutions for issues affecting many members at the same time in co-making

Exchange of "Best practices" amongst Members

Protection / transfer of assets

Partnership with local companies for domestic money transfer putting incentives at a group level

Invent new ways of financing

Strong focus on simplicity

Co-operative corporate "all inn service" - integrated advisors (the legal structure as a co-operative, the basic financing, guaranteeing other external investors or at least give them a professional certificate to ease their decision to invest with the customer

Financial education

Efficient credit process

Simplification of processes

Guarantee of trade on both directions

1 Total

ÂŠ Shakesteer 2014 - 2015

Category

Total

Designing Tomorrowâ&#x20AC;&#x2122;s Cooperative & Popular Bank

Appendix 2.11. Continued

Open Text Analysis The Responses. Ways to tighten relationships with Customers / Members. Q88. How could we tighten our relationships with customers / members? Category

Frequency

Proximity and Close contact with the customers / intimacy and follow up

Integration, Personalisation & Diversification of Products / Services & Systems / Private scheme service

Safeguard and Communicate the Brand Values / Make members / customers / partners part of the "story"

Finer Relationship & Knowledge Management / Improve data mining (CRM tools)

Better communication

Implementing social media tools and Web 2.0

Invest in greater service quality

Improve agility and speed / Responsiveness

Transparency

Competitive price-performance-ratio

Provide training on taxes / investment / corporate foundation and administration

Reduce costs

Improved and simplified on-boarding process

Professional conferences and workgroups

Cross selling opportunities

Discount system based on contribution

With more animation of our networks at the higher level

Create intergenerational links

Don't be completely depended on risk models and systems

Focus on real clients

Greater involvement in a democratic governance

Provide life-time planning and value

Provide opportunities for greater participation and contribution to the life of the bank

Attract customers as members

1 Total

ÂŠ Shakesteer 2014 - 2015

ISWOT14 International SWOT Assessment Survey Appendix 2.12

Segmentation Analysis by Country & Role. SD: 2.3 WEIGHTED MEAN

8.14

Our Value Propositions are well aligned with customer / member needs. By Country.

By Role. Elected Manager

9.2

Member

9.3

Board Member

9.2 7.5

Customer

8.7

Employee

Overall Argentina Austria Belgium Brasil Canada France Germany Italy Morocco Holland USA SD: 2.3 SD: 0.5 SD: 2.1 SD: 2.2 SD: 1.5 SD: 3.9 SD: 2.8 SD: 2.2 SD: 2.1 SD: 2.2 SD: 0.0 SD: 0.0

8.14 8.25 8.4 9.1 7.4 8.8 9.3 9.3 8.5 8.57 5.0 7.0 SD: 3.0 WEIGHTED MEAN

6.86

Competitors are likely to oﬀer better price or value. By Country.

By Role. Elected Manager Member

7.5

Board Member

7.2

Customer Employee

Overall Argentina Austria Belgium Brasil Canada France Germany Italy Morocco Holland USA SD: 3.0 SD: 1.0 SD: 4.3 SD: 2.2 SD: 3.6 SD: 1.7 SD: 2.6 SD: 3.1 SD: 2.4 SD: 3.3 SD: 2.8 SD: 0.0

6.3

5.7 7

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.12. Continued

Segmentation Analysis. Key Areas SD: 2.9 WEIGHTED MEAN

5.7

We benefit from strong margins. By Country.

By Role. Elected Manager

5.9

Member

Board Member

7.2 8.3

Customer Employee

5.4

Overall Argentina Austria Belgium Brasil Canada France Germany Italy Morocco Holland USA SD: 2.9 SD: 0.0 SD: 3.1 SD: 3.2 SD: 2.3 SD: 2.6 SD: 2.5 SD: 1.6 SD: 3.0 SD: 2.6 SD: 1.4 SD: 0.0

5.7 1.0 6.7 5.8 6.2 3.5 6.4 4.6 5.8 7.1 3.0 3.0 SD: 2.8 WEIGHTED MEAN

5.76

Our Relationships bind customers / members through high switching costs. By Country.

By Role. Elected Manager

5.8 7

Member

Overall Argentina Austria Belgium Brasil Canada France Germany Italy Morocco Holland USA SD: 2.8 SD: 2.3 SD: 3.5 SD: 2.7 SD: 2.9 SD: 2.7 SD: 2.5 SD: 2.3 SD: 2.5 SD: 1.9 SD: 2.1 SD: 0.0

Board Member

6.6

Customer

6.8

Employee

ISWOT14 International SWOT Assessment Survey Appendix 2.12. Continued

Segmentation Analysis.

Key Areas SD: 2.6 WEIGHTED MEAN

8.52

We could generate recurring revenues by introducing novel services. By Country.

By Role. 8.6

Elected Manager Member

9.5

Board Member

9.6 7.8

Customer

8.8

Employee

Overall Argentina Austria Belgium Brasil Canada France Germany Italy Morocco Holland USA SD: 2.6 SD: 2.9 SD: 4.6 SD: 2.3 SD: 0.8 SD: 2.5 SD: 2.5 SD: 3.0 SD: 2.6 SD: 1.8 SD: 3.5 SD: 0.0

8.52 9.5 7.3 8.3 9.0 8.3 8.9 9.1 9.2 8.72 7.5 8.0 SD: 2.9 WEIGHTED MEAN

8.0

We could better serve our customers / members through finer segmentation. By Country.

By Role. 9.4

Elected Manager

8.3

Member

8.9

Board Member Customer Employee

Overall Argentina Austria Belgium Brasil Canada France Germany Italy Morocco Holland USA SD: 2.9 SD: 1.0 SD: 3.5 SD: 2.5 SD: 1.2 SD: 1.4 SD: 2.4 SD: 3.6 SD: 2.6 SD: 2.1 SD: 0.7 SD: 0.0

8.0 9.5 5.0 8.3 8.6 9.6 7.6 7.5 9.0 8.5 4.5 10 ÂŠ Shakesteer 2014 - 2015

6.3 8.3

Designing Tomorrow’s Cooperative & Popular Bank

Appendix 2.12. Continued

Segmentation Analysis. Key Areas SD: 3.0 WEIGHTED MEAN

6.2

Our Cost structure is correctly matched to our Business Model. By Country.

By Role. 7.9

Elected Manager Member

7.2 8.7

Board Member Customer

6.3

Employee

6.1

Overall Argentina Austria Belgium Brasil Canada France Germany Italy Morocco Holland USA SD: 3.0 SD: 1.2 SD: 1.8 SD: 3.2 SD: 4.0 SD: 2.1 SD: 2.1 SD: 3.3 SD: 3.1 SD: 2.9 SD: 0.7 SD: 0.0

6.2 9.0 5.3 6.2 6.2 6.5 7.2 6.7 6.9 8.8 3.5 2.0 SD: 2.7 WEIGHTED MEAN

7.8

Our Brand is well aligned with our Business Model and Value Propositions. By Country.

By Role. Elected Manager Member Board Member Customer Employee

Overall Argentina Austria Belgium Brasil Canada France Germany Italy Morocco Holland USA SD: 2.7 SD: 0 SD: 3.2 SD: 2.5 SD: 0.5 SD: 1.9 SD: 2.3 SD: 1.6 SD: 2.7 SD: 0.7 SD: 1.4 SD: 0.0

7.8

10 7.0 8.0 8.75 9.5 8.5 8.77 9.0 9.3 3.0 4.0

9.2 9.8 8.6 9.2 8.7

ÂŠ Shakesteer 2014 - 2015

Shakesteer