subsidiary of Europe’s largest insurer, Allianz, is rolling out a
wide-ranging direct banking service in its domestic market with the
aim of growing online customer numbers by 50 percent to three
million within the next three years – and has the
six-million-strong German customer base of ING Direct firmly in its
sights. The launch follows disappointing first quarter
results from Dresdner: an overall net loss of €513 million ($794
million), including €845 million in bad loan write-offs, and an
eye-watering cost-income ratio for the quarter of 160 percent. It
also comes at a time when Allianz has announced it is to split
Dresdner’s retail and investment banking arms into two separate
units.
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Dresdner’s launch of Direct24 – offering seven online products,
including savings and term deposit accounts, a current account,
personal loans and a prepaid card offering – is a bold attempt to
raise the bank’s cross-sell statistics by targeting Allianz’s
insurance clients. The bank says it can attract clients from the
likes of ING Direct by leveraging both Allianz and Dresdner’s
physical networks to offer face-to-face advice, combining the
accessibility of the online channel with Allianz’s 10,000 sales
outlets and Dresdner’s 900 branches.
It’s all about good financial advice
Jörg Grünwald, Dresdner’s head of market management, consumer
banking, told RBI: “Customers realise it pays off to
invest time and money in receiving good advice when it comes to
more complex financial services such as private pension provision,
investments in securities, financing their home purchase. People
want to pay a good price for basic banking and have the option of
using the internet or visiting branches for personal advice.
“We launched Bank Direct24 in
order to complement our strong advisory banking offer with the
growing customer demand for lean but attractively priced basic
banking offers… Second, we wanted an online based platform for a
true multi-channel distribution including the massive potential we
have through Allianz’s tied agents. Direct24 is scalable and it is
easy to sell for all of the more than 10,000 Allianz agents in
Germany.”
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By GlobalDataGrünwald said that while comparable approaches exist in
Scandinavia, Direct24 was a first in the German banking
market.
“While direct banking is already popular in Germany, so far no bank
has pursued a truly integrated strategy. To date, direct banking
here has meant either an independent new institution or a legally
separated entity of incumbent bricks and mortar banks.
“Deutsche Bank has chosen to go for a separate discount bank under
the Norisbank brand, quite the opposite of our integrated direct
line approach… [Deutsche] Postbank is comparable to some extent.
They have a solid direct offer and have physical distribution, too,
and they were doing well with that in recent years. Postbank
however is not strong on advice – there Dresdner Bank plays in
another league.”
Grünwald highlighted the account opening process in Germany as one
area where Direct24 can give Dresdner a competitive advantage.
“What used to be an administrative burden now is an asset for us.
In Germany you have to identify a new customer in person before you
open an account. Traditional direct banks without branches have to
use post offices for this identification process, but we can send
Direct24 customers to Dresdner branches or Allianz agencies for a
more convenient identification.”
The customer’s branch visit to open the account will, says
Grünwald, provide further sales opportunities.
“It is a chance for us to start a long-term relationship with the
customer that covers more than basic banking needs. We have a
systematic process to conduct a needs profile for every new
Direct24 customer. It makes sense to provide individual advice and
to offer additional non-Direct24 solutions. Most customers have
needs on top of what you can cover with standardised direct offers,
be it private pension provision, wealth management, mortgages and
so on.”
StarterKits for new customers
According to Grünwald, the account opening procedure, which
previously could take a number of days to complete, will now work
in a matter of seconds. “New customers will be given a StaterKit
after an identification procedure in one of our branches. As these
kits contain pre-manufactured products, the new accounts are
immediately active after the customer’s identity is approved – the
StarterKit contains everything a customer needs to use the products
online.”
As for Dresdner rivals, Grünwald identified ING’s
hugely successful German operation, which currently contributes the
bulk of the Dutch unit’s banking profits (see RBI 587).
“ING has been a successful challenger for German banks until
recently. However, as a pure direct bank it cannot solve customers’
needs for personal advice. We are convinced our integrated direct
offer will attract some of ING current customers as well as those
of the other direct banks.”
Dresdner is also looking to win market share from its traditional
domestic rivals, including the network of savings banks or
Sparkassen. The Sparkassen have been under attack
from direct banks for the past couple of years, but their dense
branch networks and physical proximity to customers have helped
them to defend their position – so far.
“Direct banking offers and 24/7 accessibility via the internet will
continue to put pressure on the savings banks. To make substantial
inroads into the Sparkassen business, I am convinced you
must combine attractively prices offers with physical distribution
on top,” said Grünwald.
Allianz’s distribution network has also been boosted in the past
year with the establishment of a 120-strong network of banking
agencies, staffed by Dresdner banking and Allianz insurance sales
staff, in an attempt to shore-up its bancassurance model, subject
to critical comment by analysts since the insurer’s 2001 purchase
of Dresdner.
“The banking agencies we have opened already are doing well. First
of all the reputation of the insurance agent greatly improves once
he also has a real bank in his agency. Second, we get physical
distribution in places that previously were dominated by savings
and union banks. So banking agencies help boost insurance sales as
well as sales of our banking products.”
As for sales figures to date, Grünwald was upbeat. “Allianz agents
and bank-agencies in fact generated a bit more than 300,000 new
customers for Dresdner Bank in 2007 and this comes on top of the
customers acquired by traditional branches.”
An integrated brand-building exercise
The Direct24 roll-out is being flagged up by an integrated brand
building exercise, incorporating TV and radio advertising as well
as direct-response marketing via the internet. “But the first and
most important step has involved placing a lot of emphasis on
promoting Direct24 in-house to our branch sales force,” said
Grünwald.
“With our integrated approach it is crucial that they understand it
is not a competing channel but a complementary product line. To
some extent we had to implement a paradigm shift that customers
need in-depth advice – but not for everything.”
The Direct24 initiative follows a renewed push, added Grünwald, “to
improve and push our established business, with a special emphasis
currently on an advisory initiative to prepare our customers for
the upcoming change in investment taxation in Germany
(Abgeltungssteuer).
Additionally, we have a specialised target group initiative aimed
at the medical profession and a big effort also to target business
from the Mittelstand in Germany, the country’s
entrepreneurial companies.”
Douglas Blakey
