Alfa-Bank

          a staged transformation

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Client Profile:

Alfa-Bank is the largest privately owned bank in Russia based on total assets, total capital and deposits (as of January, 2012), with 465 locations, including a subsidiary bank in the Netherlands  and offices in the USA, the UK and Cyprus. Alfa-Bank has over 18,000 employees, 56,000 corporate clients, and 6.3 million retail customers.

 

Case Introduction:

After the initial and unsuccessful launch of “Alfa-Bank Express”, resulting in substantial economic losses to the bank’s retail business, the bank’s shareholders and the new management decided to carry out a total business transformation using all five elements of Senteo’s methodology.

This transformational project was broken into several stages over a period of two years, with each stage of the transformation designed to stimulate the next stage of development. This approach has helped Alfa-Bank to confidently gain strength, develop a sustainable business model, and ultimately become a market leader among retail banks in Russia.

 

Project Scope & Goal:

The ultimate goal of the project was to make Alfa-Bank’s retail business once again profitable, a task that touched upon many areas of the business, starting from the overall retail strategy to the last small operational detail inside Alfa-Bank’s bank branches.

The vast scope of this transformation included  management model and organizational structure enhancements, the reallignment customer segmentation approach, product offering re-design and launch, sales and service culture development, staff training, new service standards, operational process improvements inside the branches for throughput capacity optimization,  re-structuring and re-formatting of the retail network, including new re-designed retail branches, development of new alternative channels,  customer loyalty program development, partnerships and alliances, restructuring and launching new style of marketing and communications, brand re-positioning, and much more.

One of the conditions posed by the management and the shareholders was to avoid spending any more funds than already budgeted. Therefore, the transformation required a staged approach with self-financing and budget optimization. Cost-cutting made in areas that were found to be inneffective funded new developments. This, obviously presented a serious challenge, but one that resulted in a phenomenal turn-around in the overall health of the organization.

 

Results (after 18 months):

  • 162% increase in new to bank customers
  • 71% decrease in customer attrition
  • 404% increase in overall demand deposit balances
  • 171% increase in monthly commision income
  • 117% increase in tariff plan customers
  • 281% increase in monthly tariff plan sales
  • 20% increase in sales of the two most expensive tariff plans
  • 168% increase in cross-sales of tariff plans
  • 267% increase in total credit card customers
  • 397% increase in monthly credit card sales
  • 27% increase in monthly sales of Gold and Platinum credit cards
  • 596% increase of average monthly credit card sales
  • 100% increase in cross-sell ratio (average of 2.5 products per customer)
  • 60% share of total new assets under management (investment products) generated through retail branches, representing 10% of total commission income received by the bank’s retail division
  • 30% of all banking products are sold in a bundle with an insurance policy
  • 238% increase in new customer acquisition per 1 branch location
  • 53% increase in average number of customers served per day, per branch
  • 52% reduction of average wait time
  • 98% increase of number of customers using alternative channels
  • 85% customer satisfaction
  • 82% employee satisfaction
  • 57% reduction of customer complaints
  • 70% reduction of staff turnover

Besides these dramatic improvements, Alfa-Bank’s re-positioned brand generated a substantial appeal  to customers, stimulating sales despite significantly lower advertising costs.

Alfa-Bank’s new distribution strategy put branches where customers needed them, increasing client aquisition at the same time as raising service standards well beyond its competitors.

Senteo resumed collaboration with Alfa-Bank in 2011 & 2012 and carried out a number of additional initiatives aimed to help Alfa-Bank in its next wave of growth and development. Under the new scope Senteo delivered the following project work.

  • Strategy Diagnostic
  • Segment-oriented strategy
  • New Distribution model
  • Concept for re-designed retail branches
  • Over 60 members of the management team certified by Senteo as Customer Experience Specialists

The year of 2012 was marked as another bright spot in Alfa-Bank’s history. The bank’s retail division registered record results across the board, including:

  • 25% growth in retail customer base (to 8,9 million people)
  • 55.4% growth in its retail loan portfolio (to 156 billion Rubles)
  • 103.9% increase in the credit card volume
  • 25% growth in deposit balances (to 291.4 billion Rubles)
  • 26.43% growth in current account balances (6.5% market share nationwide)
  • 28.5% growth in commission income (to 11.4 billion Rubles)
  • 500,000 new online banking users (in total: 2.3 million online users)
  • 30 new retail branches opened

We wish our colleagues and friends Alfa-Bank continued success and stand ready to support them again in the future.

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