KBC Bank Ireland Market Position

introduction

In this assignment, I hope to give a summary of the KBC Banks market positioning in the Irish banking sector. I have completed a SWOT analysis and a Pestle Audit on what I think are the relevant issues and objectives of KBC Bank Ireland.

SWOT Analysis

Strengths:

Technology

Innovation

Backed by Parent Bank

Customer Orientated

KBC Bank has many strengths in the technological area and has invested in banking apps that have won awards at a national level, this year they won gold for Best Technology/Innovation Campaign at the An Post Smart Marketing Awards for their “‘instant account opening app in five steps in five minutes”. This forward-thinking marketing plan is a must in the digital era and helps to engage customers at a younger age and help develop brand loyalty. Innovations in banking apps which make switching banks and mortgage providers easier allow KBC Bank to improve its market share and profits, as there is a positive trend upwards in people shopping around for better rates as per the BPFI market data in August 2017. KBC Bank is owned by a Belgian bank-insurer group called KBC Group N.V, they are the 18^th largest bank in Europe and in 2017 they reaffirmed their interest and investment in the Irish market by making Ireland a core market of business for them.

 “KBC Bank Ireland will be the customer-centric bank of the future where digitalization will support a great customer experience…We believe Ireland is a sound and attractive market which presents opportunities and in which we wish to play a more active role. It provides diversification to our operations in Western and Central Europe. Johan Thijs, KBC Group CEO, February 2017 ❝

Weakness:

Low Market Share

Lack of Traditional Banking Infrastructure

KBC Bank has to compete with the 2 pillars of the Irish banking system Allied Irish Bank (AIB) and Bank of Ireland (BOI) which have 60% of the market share whereas KBC Bank holds a 12% share in the new mortgage market in Ireland and a 13% share of new current accounts. Lack of traditional banking infrastructure limits how KBC Bank interacts with potential customers who are not digital savvy, as most of the wealth in Ireland is owned by the more mature generation this is an issue that needs to be looked at.

Threats:

Brexit

Brexit is a major threat to all sections of the Irish market and the possibility of a “no deal Brexit” has many consumers nervous. Irish consumer sentiment dropped sharply in Sept 2017 when political upheaval and deadlines in negotiations were particularly tense in Europe, combined with consumers recent negative outlook on household finances, which has been linked to an increase in consumer spending on items such as electricity and rent, the threat from Brexit cannot be ignored. Future marketing campaigns should be geared towards stability and positive future outlooks.

Opportunities:

Expansion into SMEs

Student Accounts and Apps

When KBC Bank reaffirmed their investment in Ireland in 2017 they decided to target SMEs and shift focus from their traditional retail lending to “appealing propositions” for micro businesses in Ireland and to use this base to test new digital applications. As Ireland has a large technology sector this makes it the perfect angle to try to increase its penetration into the Irish market. Organizing “pop-up” student hubs in colleges around the country also helps to expand their current account portfolio and allows the opportunity to sign up customers at a younger age and hopefully build brand loyalty for later larger life investments.

Pestle Audit

Political, Economic and Legislative:

Keeping Irelands low corporation tax rate of 12.5% has been a long-standing promise that all Irish governments have vowed to uphold regardless of political or legislative pressure from Europe. It is one of the cornerstones of Ireland’s marketing plan and as an Irish bank KBC Bank can utilize this as an asset in acquiring new business. The economic upturn in the Irish economy in recent years is also a good opportunity for the growth of KBC Banks market share here. A move to simplify conveyance in the Irish legal system is also a positive step for KBC Bank and will reduce costs and time associated with moving mortgages between banks, moving some parts of conveyance online is also an important step for a bank such as KBC Bank as it is primarily a completely online bank in the Irish market. Brexit and new tax legislation from America under President Trump in his approach to moving American companies tax bases back to America are new and emerging threats to Ireland and the EU as a whole. New GDPR legislation has also helped to increase consumer protection in banking and all other sectors, as KBC Bank is an online bank, this has been of particular importance to them.

Technological and Environmental:

KBC Bank has utilized the fact that Ireland has a young population that is digitally savvy and highly educated. They have targeted SMEs and Entrepreneurs as future investments and are marketing themselves as technological innovators willing to work on a one-to-one basis with consumers to build the perfect banking experience. KBC Bank has also initiated a “Home Experience” programme to help improve financial literacy in some of the banking sectors more complex areas such as purchasing a home. Being an online bank has allowed KBC Bank to dramatically cut its environmental impact in all areas, no paper statements, no building infrastructure etc so lower carbon footprint in all day to day activities. They achieved the ISO14001 standard for environmental management which is a framework designed to minimize environmental footprint, diminish the risk of pollution incidents, ensure compliance with relevant government legislation and develop their business in a sustainable manner.

Social/Cultural:

Companies have realized that consumers are much more engaged and selective in their shopping habits and whereas before banks were seen as large uniform institutions they have now had to move forward with this shift in perception. Companies such as KBC Bank have realized that consumers want more than just a banking experience but also to feel like that they can connect on a personal level with these companies and KBC Bank has implemented policies to match this requirement such as selecting a charity partner that they fundraise for, last year in 2017 The Alzheimer Society of Ireland received €130,000 in fundraising. They also became the sponsor of Irelands only health, fitness and wellness festival, Wellfest. All these help to improve brand KBC Bank on the consumer.

Market Segmentation

Two of the largest influences on KBC Banks marketing segmentation is demographic and geographic. They have set themselves up as “The Bank of You” and employed this as their main marketing catchphrase to entice new business.

Demographically they have specifically targeted young people in the use of their digital online banking system and invested heavily in adverts on social media to reach this target audience. They have also targeted SMEs with a marketing plan to create a unique banking system tailored to individual needs and wants, they have awarded funding to innovative new startups such as Mobility Mojo which is an app developed to provide accurate up-to-date information on the accessibility of hotels, transport, and attractions to those with mobility access requirements. They also introduced the “Tap-to-Give” digital devices into their hubs as a quick and easy way to donate to charities.

Geographically KBC Banks parent company recently upgraded its Irish market to a “Core Market” within the KBC Group, with this upgrade Ireland can expect more investment from it parenting bank to help improve its market share. It will also increase foreign investment in KBC Bank as investors see the upgrade a positive step in regards to the expected stability of Ireland’s economic outlook. With the exit of the United Kingdom from the EU next year, Ireland becomes the only market in the EU where English is its first national language, with London losing its status as the financial center of European banking the IFSC has the opportunity to increase its portfolio and as a working partner in the banking sector this will also bring new opportunities to the KBC Bank. 

discussion of statement

“Positioning is the act of designing the company offering so that it occupies a meaningful and distinct position in the target consumers mind”

KBC Banks company offering is currently aimed towards younger people and SMEs, they are very active on social media and in college campuses around the country. Their advertising campaign “The Bank of You” focuses on interactive, user-friendly online banking. They have made the move away from traditional banking setups and times and now offer 24/7 online banking support. They have adverts running on radio and target shows such as 2fms Matt Cooper show to capitalize on reaching the maximum number of their target audience, young educated working people on their commute home. They are also working to simplify conveyance in the legal system and streamline a lot of the costs and complexity involved in buying a house. They are aware of the continuing upward trend of people willing to switch mortgage providers and are working towards increasing their market share by attracting these customers to their bank. They have established themselves as an anti-establishment, nontraditional bank and this has helped win consumer business and trust, which the 2 pillar banks AIB and BOI struggled with after the economic crash. This has led to KBC Bank being seen as a forward-thinking innovative banking option to the Irish consumer.

bibliography

• KBC.ie https://www.kbc.ie
• The Irish Times https://www.irishtimes.com/business/financial-services/focus-on-professionals-as-kbc-ireland-targets-micro-smes-1.31276
• Irish Consumer Sentiment Blog-KBC-The Bank of https://www.kbc.ie/blog/consumer-sentiment-surveys
• CBI Consultation – Enhance Mortgage Measureshttps://www.centralbank.ie/docs/default-source/publications/Consultation-Papers/cp112/cp112-enhanced-mortgage-measures
• Rodrigo Scatolin MBA Finance 2018 – Barriers to the Adoption of Online Banking in Ireland https://esource.dbs.ie/bitstream/handle/10788/3508/mba_scatolin_r_2018.pdf?sequence=1&isAllowed=y