Before fixing our objectives and implementing our marketing strategy to reach them it is very important to analyse the market and its health as well as the position of the company therein. Furthermore it is also very important to make an objective and insightful analysis about the context and the health of the company.

For this matter, the marketing diagnostic contains an external and an internal point of view, which will allow us to get a better understanding of the followings:

• The general environment with its opportunities and threats.

• The market through the demand from customers and the offers from competitors.

• The marketing robustness of the company by showing its strengths and weaknesses, its competitiveness, etc.

Demographic environment:

The Belgian population is both ageing and growing. At the same time financial wealth is also rocketing. All these factors represent an opportunity because they expand the potential market for the Private Banking and especially in our case of Personal Banking.

Geographical environment:

As we can see there is a geographical asymmetry in the distribution of banking branches in Belgium. Wallonia is very poorly covered, which causes a lack of proximity. Unfortunately, we must note that Nagelmackers face the same problem. However, this gap can be filled using other communication channels.

Financial environment:

Since June 5th 2015, the ECB has lowered

its interest rates to -0.4%. It directly means

that the money placed in the ECB is costly for banks. Due to this fact, banks will probably also decrease both their interest and fidelity rates at the same level.

According to the Echo’s study, which investigated on the Belgians’ reactions to these rates, 66% of the savers would withdraw their savings. Then 30% of them would invest the money in securities. If we consider that the total amount of savings in Belgium is around €260 billions, this opportunity represents roughly €52 billions that must be added to the potential market of Private Banking.

Legislative environment:

 1. Bâle III:

With the introduction of the Bâle III regulation, the banking sector becomes more and more regulated. Banks must respect some restrictive criteria such as a solvency ratio, a minimum of equity, etc.

The regulation and control in the banking sector are clearly a threat!

 2. Fiscal tightening:

Europe, and especially Belgium, have tried for some years to tighten their fiscal policy to limit tax evasion or untaxed returns. The latest example is the tax shift from the Michel government introduced in October 2015. We can mention two proposals that go in the direction of the Belgian government:

• The "Caïman" tax: This tax imposes Belgian resident who placed their private assets in legal constructions abroad.

• The tax on "speculation": This tax imposes (33%) the gain realized on the sale within 6 months of traded assets.

These changes in taxation have such an effect that the private banker needed to adapt and change his way of doing business. "We went successively from the concept of selling products, including the defense of the private sphere, to a service approach and a more comprehensive approach about patrimony," says Marc Ambroisien, former CEO of “Banque Privée Edmond de Rothschild Europe”.

According to Mr. Ambroisien, wealth management does not only mean investing, but also means the establishment of a structure that will maximize investments from a tax point of view, taking into account succession matters.

In conclusion, most of the time, legislation is a threat for the sector due to the regulation, but it also creates some opportunities.

Technological environment:

The declining attendance of banking agencies is proved. For example, in France, 17% of French went more than once a month in branches in 2012 against 62% in 2007, and they are likely to say that in the future they will pass on further.

This decline is often attributed to the development of new customers’ habits and to the Internet and mobile role. However, we cannot only blame the online banking to divert customers... The explanation seems far more trivial: people work more and more away from their residence and very few branches opening hours are adapted to that.

It means that 15% of branches are no longer profitable because they still represent 60% of the cost of retail banking. But simply closing branches do not respond to their future role... Because banking branches keep competitive advantages, especially if they are able to transform themselves. Indeed, a branch is rather a loyalty instrument than a commercial conquest tool: wickets support the brand and guarantee the service. But above all, proximity is essential and the need to support and advise the customer for some financial transactions is essential. Customers like to have a dedicated consultant and the opportunity to receive personalized advices in case of more engaging operations. Moreover, only 2% are fully using online banking.

The branch will therefore have to fit within a multi-channel sales system wherein the different channels complement each other rather than exclude themselves.

Some banks transform themselves using their size, while others do it from the segmentation. It will be interesting to adapt the distribution in the marketing mix Nagelmackers.

In conclusion, the challenge is not to arbitrate between channels available to customers, but to make them work in harmony to reach the targeted customer segments. Branches will have a crucial role to play as relationship and proximity instrument.