It has been a year of changes for Standard Chartered. In anticipation of its management meeting happening in Singapore later this year, Retail Banker International’s Sruti Rao spoke to Karen Fawcett to find out what developments are under way in their retail banking division. Report by Xiou Ann Lim

Standard Chartered is having an eventful 2015 so far. With falling profitability, the bank has had to undergo a massive restructuring exercise. As part of former CEO Peter Sands’s aggressive cost-cutting plans, the bank axed around 4,000 jobs worldwide from its retail banking division earlier this year. It also exited its non-core and underperforming global cash equities business and announced that it would close 80-100 of its retail branches. More interestingly, Sands himself exited the bank and was replaced by former J.P. Morgan investment banker Bill Winters.

Winters, who assumed leadership in June, sent out a letter to staff on his first day to outline direction and announce changes. About a month later, he revealed a more straightforward management structure as well as his intention to simplify operations. With a résumé vastly different from his predecessor’s, many wondered if Winters would be steering the bank into a completely different direction.

Thus far, the bank’s plan to streamline its retail division is very much on course. Representing about 33 per cent of group income, the retail business is seen as an important driver of the bank’s growth. Earlier this year, the bank articulated a clear strategy of focusing on affluent and emerging affluent individuals. "We recognise that we cannot be all things to all people," says group head of retail clients Karen Fawcett.

"We want to build deep long-term relationships, so we’re steering away from clients who just want a single personal loan to those who will have a multi-product relationship with us," she says.

In fact, the Asia-focused British bank is looking to grow together with its clients. In a market like Singapore, for example, the bank is tapping the emerging affluent clients in the personal segment and migrating them through to priority banking.

"We spot them young, partner them at different life stages and serve their financial needs as they build their wealth. So, we have a continuum," she explains.

This heightened focus on banking affluent clients is interesting because while this segment currently makes up only one-tenth of the bank’s 9 million retail clients, they account for a third of the division’s income. Done right, and with suitable market conditions, the bank could increase its profits significantly.

In line with this strategy, the bank is also focusing on high-growth cities – where there are high concentrations of affluent individuals seeking international banking solutions and comprehensive wealth solutions and advice. "Our footprint is now on nearly half of the 100 fastest-growing cities in the world," says Fawcett.

"It’s about concentration rather than spreading yourself too thinly," she added.

What does this mean in terms of cost?
"Our costs are a little too high," says Fawcett. Currently at a cost-to-income ratio of nearly 70 per cent, the bank is targeting to bring that down to about 55 per cent.

"What we’d like to do is to keep the momentum going, but at a lower cost," she adds.

The focus on cities also has far-reaching implications on the bank’s distribution. "From a channel point of view, there is a lot of efficiency in being focused. We’re 2.5 times more efficient in strategic cities than outside of them – so we’re very focused on staying in the right cities, where the emerging affluent and affluent clients are," says Fawcett.

She adds that they are also looking at branches in outlying areas with less traffic and relocating them into urban centres, where they can foster much better interaction with the bank’s clients.

What is the digital strategy to complement this move?
According to Fawcett, emerging markets are moving a lot faster in terms of digital and smartphone adoption as compared to more mature markets. She cautioned against the assumption that emerging markets would have to go through the same evolution as seen in Western Europe and the US.

"The markets are leapfrogging. Africa will go from handwritten application forms to fully mobile in one big step – there will be no gentle evolution as per what we’ve previously seen."

That is why the bank is revamping its digital platform – so that clients can do, on their mobile phones and online, everything that they previously would have done in a branch.

Emphasising that the full capabilities of the bank need to be present in all channels, she cites that the strategy follows what clients want – convenience, ease of use and the ability to get banking done whenever and wherever they want.

One project that will be rolled out later this year is the Retail Workbench, a tablet-based sales tool that enables staff to ‘bring’ the bank to clients – wherever they are. Clients will no longer have to fill in and sign multiple forms, as their data will be digitally captured once and processed. As for relationship managers, it means they have the full profile of clients at their fingertips – facilitating the process of offering tailored solutions to meet specific client needs.

As Fawcett says: "It’s not about being multichannel or omnichannel. It’s about being unichannel – it’s the channel clients want. We are client-led, not digital-led."

Does this mean retail branches will become irrelevant?
Fawcett believes that branches are still important as clients require face-to-face interaction. But the bank has quickly realised that people don’t want to go to branches and stand in teller queues.

"Branches can become unused space if you’re not careful," she says.

She adds that branch transactions start to fall as soon as there is a critical mass of smartphone and smartphone apps in the market. Speaking about retail branches, she says: "We certainly don’t need as many and their use will be different."

She notes that clients now call and visit the bank for more high-end problem-solving or sales occasions. "So, this whole idea that we’re building branches for presence is no longer compelling."

Fawcett stresses that the bank is finding opportunities to do things in a more seamless, global and consistent fashion. With an affluent population that is becoming more international in working across borders, multi-market capabilities are becoming increasingly important.

"Think about the businessman who needs cash management solutions across the countries to which he is exporting or the expatriate who is working overseas and investing in his home country or the parent who is funding his child’s overseas education," she says. "People want access to global products and they want global recognition for their banking relationship across countries."

The restructuring of the retail business is showing early signs of success according to the bank’s recently announced first half 2015 results.

Although Standard Chartered saw a 44 per cent dip in its 1H 2015 profits, the retail business operating profit rose by 14 per cent to $680 million. Higher returning Priority and business clients now make up 46 per cent of the division’s income – compared to 40 per cent in the first half of 2014, while costs have come down by 5 per cent. As Fawcett says: "Our strength is in our network. We have what it takes to be the world’s leader in affluent retail banking in Asia, Africa and the Middle East."