RBI spoke to Bruno de Laage, deputy CEO in charge of retail banking and specialised financial services, on the sidelines of Crédit Agricoles investor day in Milan.
Q: What is the thinking behind your strategy?
A: France is not the frontier of our ambitions. We are very proud of our banking model and success in France, but we want to be more present in countries such as Italy and southern Europe because there are proximities between our French model and the success we think we can have in those other countries.
Q: These are some of Europes economically worse-off countries -why are you targeting growth there in particular?
A: We have already invested in those countries years before the financial crisis. We do not try to leave there, because we are long-term driven. Despite the difficulties now, one day they will be out of trouble. Greece is the most difficult country for us, but we do not plan to quit.
Q: What is the biggest challenge for you in regards to Emporiki and how do you tackle it?
A: We are investing a bit in the IT system of Emporiki. But our focus is on human resources – the main problem is the productivity of the human resources there; [Sales] are very low and we are not satisfied with the sales figures, be it per day, per week or per month. We want to improve that.
Q: How will you achieve that?
A: We are decreasing staff numbers. The new Greek retirement law facilitated these objectives because more people wanted to leave before the new law was enacted. There is no forced redundancy, however.
We are also investing in recruiting and training staff according to our French banking standards to meet individual sales targets.
Q: Could you elaborate on that, please?
A: In France, cash operations are handled via ATMs, not by staff. In France, maybe about 10% of cash related transactions are handled by staff, whereas in Greece this ratio is between 80-90%.
It is no use to employ and train highly educated staff just to have them handle cash. We are training them to migrate customers to ATMs for cash handling.
In France, we began migrating customers to direct channels ten years ago and it lasted 3 to 4 years to change the customer behaviour. But it was easier there because all banks did it at the same time. The French government cut weekly working hours from 40 to 35, so had to migrate customers to ATMs. We have now begun this in Greece already and are going to start it in Italy as well.
If all banks did the same in Italy and Greece, the migration would be a lot easier.
Q: Besides Italy and Greece, which other market are you focusing on in particular?
A: Poland. Poland is very cash oriented [like Italy]. We are trying to build a full retail bank from scratch through our consumer finance company Lukas. We hope to attract some of Lukass 2 million customers to the full retail bank.
Q: How do you approach the Polish market?
A: We have had a campaign called mission Chopin after the Polish-French composer. We took Polish advisors to our French banks and French advisors to our Polish banks to see how we manage customer relationships in each market.
Our Polish advisors to our French banks, they discovered that they could indeed ask customers about their personal financial projects. Before, the Polish advisors had thought such questions would be indiscreet [and they would wait for the consumer to approach them]. But they found that consumers actually liked being approach about their personal financial projects and asked how the advisor could help them achieve their targets.
Q: How many full retail banking customers do you have now in Poland?
A: There are 400,000, of which we acquired 150,000 last year but we do not have any retail bank branches, only consumer finance branches.
We have no urgent need top grow rapidly, but we focus instead on the existing two million customers first.
Q: Many Polish banks have begun trials to test new technology such as NCR and mobile bankingdo you have any plans to roll such a service as your kwixo out in Poland?
A: No. In Poland, we are going for plain, basic products e.g. mortgages, savings, credit cards and the like. We are not going to market complicated, technological products. We actually think we have to sell products in Poland that worked in France years ago.
Q: Are you not worried about losing out on competition if you go into the market with traditional products?
A: We do not want to be too early consumers may not always like that – and do not want to be too late either. What we will do to set us apart from competition is approach the customers in a different better – way. We want the market to know us as a customer-oriented bank.
Q: Looking ahead, what are your forecasts for direct channels and the branches/ how will the relationship between these look like in the future?
A: We have no ambitions to replace the branch with the online bank. We are only ready to go as fast as customers want to. But online banking is growing steadily and one key focus for us here is that we will migrate non-value operations to the online channels.
We want to operate branches in a more sales-oriented manner and also leave more complex and high-value issues to the branch channels.
I guess that in ten years, 80% of common operations, such as cash transactions, will be made via the online or other direct channels.
For sales, I think online will account for a quarter of all sales and the branch for 75%.
Q: What about branch investments, designs do you have any particular plans to change the look of your design?
A: We do not know what the branch of the future will look like. We have not found the right model yet. It is difficult to determine which kind of branch will be the [right]one in the future. I should be able to give you an answer on this, but I frankly, we havent found it yet. We are still exploring and testing different kinds of branches one in each of our casse regionnale in France.
But frankly, there is no importance of the design of the branch. What is important is the customer relationship [management]. We have absolutely no plans for a branch redesign right now, but we are not complacent either.
There are a lot of discussions going on, always, at Crédit Agricole, nothing is decided lightly.
Q: How will branch-based customer-advisor interactions look like in the future?
A: They will not be face-to-face, but rather, customers and advisors will sit next to each other and they will both look at a screen or another IT solution and discuss possible options for customers.