Europe’s largest bank by branches, Crédit Agricole, has finally unveiled its long-awaited business strategy. Duygu Tavan attended the strategy presentation in Italy and initially found that while the bank was strong on targets it was weak on detail – but a trip to the bank’s innovation centre in Paris revealed more insight.
“These targets are ambitious, I know, but they are here to stay and we will stick to them,” insisted Crédit Agricole’s CEO Jean-Paul Chifflet at the launch of the bank’s new retail banking strategy.
Under Commitment 2014, the bank is targeting a 17% increase in group net banking income to more than €40bn ($57.6bn) by 2014. The ambitious plan also includes a 60% increase in customer deposits to over €30bn from international retail banking operations in three years’ time, and a 20% increase in the international retail customer base to five million.
While its Italian and French operations will be more innovation-driven, the bank is betting on traditional banking services in Greece and Poland.
In Milan, RBI spoke to Bruno de Laage, deputy CEO in charge of retail banking and specialised financial services, and found the bank initially vague on details.
But a later visit to the bank’s TechnoLab and branch innovation project in Paris helped unearth more specific details.
The conclusion: there is no shortage of innovative ideas and ambition, but the bank is cautious about aggressive launches for the sake of grabbing headlines.
At home, the bank expects savings of €150m per year with the consolidation of its five regional IT systems (a project called NICE) by 2013, which will later pave the way for international consolidation of the system.
Crédit Agricole’s new retail strategy will initially be applied in Italy, its second-largest market with 963 branches, 1.9m customers and €84bn in deposits.
The strategy targets are bullish, but the bank fared relatively well in the sluggish 2010 Italian banking environment (see chart, top right). It is investing €325m in Italy now, €120m of it in multichannels to help attract 90,000 new young customers and spur digital channel usage by 50%.
Transforming the bank’s debt-struck Greek subsidiary Emporiki into a profitable unit, also outlined in Commitment 2014, may prove a more onerous task.
Emporiki has been cutting staff numbers, from 6,000 in 2006 to 4,650 last year, including 300 new hires. Although reluctant to disclose exact sales per staff or per branch, de Laage said the target is a 20% rise in Emporiki sales by 2014 and a reduction in the cost-income ratio from 71% to under 55%. The bank plans to close a net 10 Emporiki branches in 2011-12 to concentrate on areas with high sales potential.
This will leave a network of 337 branches with a new brand identity in the pipeline, but de Laage remains silent about the details. Commitment 2014 advances both the operation and the ‘look and feel’ of the branch, securing faster and more personalised customer service and more efficient branch operations on a daily basis.
In Poland, the bank is “starting from scratch” to transform its consumer finance subsidiary Lukas into a full retail bank, starting with traditional products and services.
Chifflet’s insistence on sticking to targets is no blind ambition. Crédit Agricole is a conservative colossus. It will focus on traditional products in Poland and, obviously, its priority in Greece is to break even. Nonetheless, while it says it wants to be innovative, it is in no hurry to and is unlikely to be held up as representing best global practice by this measure. Innovation is tested in Crédit Agricole’s domestic French market, where consumers adopted direct channel banking long ago. Each of the bank’s French caisses regionales conducts its own experiments. A new service or product is only introduced to the whole network if interest is assured.
In Paris, the bank has revealed how its ‘Alpha Project’ branches are developing. They boast six different approaches to customer relationship management:
- video conferencing terminals to book appointment with advisers;
- high-level desktops for side-by-side advice;
- ‘sound showers’ that play music when a client stands directly underneath a particular spot (for potential deployment when long queues develop);
- a videophone corner;
- a comments board which scans onto a computer and can be uploaded on the branch’s Facebook page; and
- infrared technology to count visitors (“500 per week”, according to Laurent Fromageau, the regional director for Paris).
Fromageau emphasised these branches are for testing purposes only until 2013, when they will be reviewed.
So far, the bank has attracted 400 volunteers to test and discuss the new approaches. The target is 1,000. The TechnoLab has been open for just over a year and consists of three zones where consumers’ relationship with their bank is tested: one zone is dedicated to branch banking, one for at-home and another for the ‘in-store experience’.
At the lab, staff can test new developments and devices, such as the Microsoft tables (branch zone), the avatar technology-based website (for the home experience) or the different payment methods in branch.
Now the bank is taking on industry heavy- weights such as PayPal with its payments service kwixo.
The kwixo service was developed by the bank’s IT subsidiary FIA-NET and enables payments via all smartphones and the internet. Consumers will not have to switch banks.
The market focus is on 20-24 year-olds, and the company expects between four and five million users by 2014. The service will go live in Luxembourg, where FIA-NET has its HQ, by year-end and in other countries in 2012 – and the service will not be limited to Crédit Agricole’s network.
“We want to move from Gen Y to Gen M [mobile],” FIA-NET CEO Christophe Nepveux emphasised.
e-wallet services, contactless technology and withdrawal functionality via ATMs without a card are considerations for kwixo version II, he said, adding there were ongoing negotiations with “two major retail banks” in France.