Postbank Germany intends to focus more strongly on customers
Postbank intends to further expand its position on the German banking market with its further developed strategy. To this end, the Bank has launched a program called "Next Step" that includes all of its units. The aim of the program is to make Postbank number one for liquidity and finance management by focusing more strongly on customers. Dr. Wolfgang Klein, Chairman of the Board of Management, emphasized before journalists in Bonn on Thursday that Postbank had successfully developed in all respects since its IPO in 2004 and had bucked the market trend in its divisions. "However, we must also take the next step to be able to challenge the competition in retail banking and meet the requirements of customers, the capital market and our employees in a few years," said Klein.
With "Next Step", Postbank also combines further above-average growth with strict cost discipline. In this way, the Bank intends to make itself one of the most profitable German banks in the long term. "Our restructuring and the ambitious goals associated with this will be reflected in our income statement and will also convince the capital market," added Klein.
Retail banking: a step ahead of the competition
Postbank primarily intends to improve its retention of existing private clients. "We are still striving for a high numbers of new customers," said Klein. "However, in the future we will be taking better care of our regular customers." 4.6 million people – and thus just under one third of its 14.5 million customers – already bank mainly with Postbank. They account for 75% of the income in retail banking. "In the long-term, people should feel that being one of our customers is worthwhile," commented Klein. The Head of Postbank intends to achieve this through improved assignment of the Bank"s advisors, of which there are around 6,000, to this clientele in both mobile sales and its branches, through an improved product range for frequent customers and additional service. Postbank intends to boost the number of its regular customers to 5.2 million by 2010. Klein believes that there is potential for this among the 10 million customers that do not yet consider Postbank as their main bank: "We are open to the broad majority of customers and will work on making these people more loyal to us." This should also be helped by the fact that Postbank intends to increase the number of its mobile advisors to 5,000 by 2010 through organic and external growth.
Klein intends to bind all of Postbank to this new customer focus. "Customer satisfaction is not only decided by an employee that is both competent and friendly or an employee at the branch. It is just as important that the processes behind it are correct at least and that the customer experiences the same good quality at every level." Postbank specifically intends to tackle the issue of waiting times at its branches. For this purpose, it has launched an initiative program to this effect with Deutsche Post.
Klein also announced that he intended to see to improved access to cash for customers at home and abroad. This includes both the number of ATMs and of its partners such as the CashGroup as well as embarking upon new paths together with retail.
The Bank intends to be judged by this claim, making clear performance promises with regard to the speed at which it fulfils a customer wish, for instance. Process innovations should also make the benefits clear for customer, e.g. through simple direct product completion and best-in-class customer processes as in the case of the market leaders among online shops. However, Klein also asked customers to be patient at the same time. He expects that it will take one to two years before the further developed strategy displays its full effect and the entire organization is able to fulfill the new standards at all levels.
Klein also intends to make Postbank the leader in the innovation of key products and processes. The Head of Postbank particularly wants to set new trends in home loan and savings and building/construction finance. "We intend to show that we are one step ahead of the competition with new types of ranges for private and corporate clients," he said. To this end, Postbank has also drawn up a project as an innovation driver under the leadership of Financial Markets that bundles the Bank"s competencies and is set to score points in standardized investments for private clients.
Corporate clients: protecting old strengths and building up new ones Postbank also intends to pursue a similar strategy in its second key segment – business with its 30,000 corporate clients. In this case, it intends to further develop into a core bank for German SMEs. In the course of "Next Step", the quality of the sales and risk units will now be strengthened while the product range will be gradually extended to include innovative solutions. Commercial real estate finance that focuses on Europe is also set to be further expanded.
In the future, Postbank intends to offer its corporate clients more customized solutions, such as company pension plans. It also intends to try to win the asset management business of its corporate clients in the future. In this way, Postbank intends to gain more new and interesting customers. It also intends to boost the number of its core bank customers from the current 1,000 to 3,000.
Transaction banking: an eye on Europe
According to Wolfgang Klein, transaction banking needs to expand into the European market to tap new growth potential. This requires high investments; Postbank is seeking partnerships to finance these. "This procedure secures entry to attractive markets. The most important countries in Europe offer an income pool of around "10 billion a year," said Klein. With a leading position in Germany and a market share of 5% at European level, the Head of Postbank considers this to be a good springboard for his bank.
In the first half of 2008, Postbank intends to round out its product portfolio in transaction banking and finish setting up its multiple-user enabled platform conforming to the SEPA standard. In the second half of 2008, Postbank then intends to start setting up a joint European offering with one or more partners, also with the aim of gaining leeway for new investments. In Klein"s words, Postbank will not rule out joint ventures in its Transaction Banking segment, nor would it refuse investments in companies or mergers.
New medium-term financial targets
Postbank intends to significantly boost its profit before tax from EUR941 million in 2006 to between EUR1.40 billion and EUR1.45 billion by 2010. Profit after tax is set to grow to between EUR980 million and EUR1,015 million. The cost/income ratio in the traditional banking business is set to improve to just under 58% by 2010.
For 2008, Postbank is still striving for return on equity before tax of more than 20% and a cost/income ratio (in the traditional banking business) of just under 63%. The Bank still hopes to report profit before tax at the implied target amount of EUR1.22 billion. Due to the increasingly fierce competition in the German retail market, the continuously flat yield curve and other effects with negative impacts, Postbank expects profit before tax of EUR1.10 to EUR1.20 billion in the operating business.
