Key Areas of Financial Services Remain Digitally Disconnected With Consumers

LONDON -

- New Study Reveals That Consumers are Leading the Digital Revolution!

There is a rapidly increasing awareness that the digital revolution is fully underway. The challenge given by Martha Lane Fox (the UK Government’s Digital Champion) to “get as many of the 17 million currently without access to the net online by the time of the Olympics in 2012″, and the recent report ‘Digital Britain’ from Lord Carter, confirms that serious political attention is now being paid to the digitalisation of households throughout the UK.

There have been winners and losers even in these early days of what’s now being called the ‘Digital Economy’. The Revolution in Self-Service Channels in the Financial Services Sector report (selfservicereport.businessdecision.co.uk/) analyses the growth of consumer self-service channels in key areas of the Financial Services market and looks at who is winning and who could lose out. This new report examines the recent emergence of new operating models and highlights the transformation of more established business models in those parts of the Financial Markets most affected (e.g. general insurance, wealth management and retail banking). The report investigates the drivers and inhibitors of the market, the broad demographic spread of demand and the challenges to established players in financial services and assesses the impact of future changes that may occur in this emerging digital marketplace.

Consumerisation of IT

Consumers are now armed with new and established technologies; they are testing the very capability of many ‘traditional’ businesses to communicate digitally, whether they are at work, at home, abroad or just travelling. Businesses that lack the means to connect digitally with consumers, those with aged business operating models that seek to ‘box’ the consumer into an ‘arthritic’ framework and those unable to provide products and services that use ubiquitous and supportive technologies will find themselves left behind by this burgeoning consumer demand for digitally-based products and services.

“Digitalisation is gathering pace and is likely to sweep aside any organisation that cannot respond to this digital ‘tsunami,” warns Ian Marshall co-author of the report, Business & Decision.

These are some of the findings from the new report ‘The Revolution in Self-Service Channels in the Financial Services Sector’ published by Business & Decision (www.businessdecision.co.uk/), an international consultancy and systems integrator and the Industrial Statistics Research Unit at Newcastle University.

Intelligent Digital Connectivity

As users begin to root themselves in web-based consumerism, so the pressure grows on businesses to deliver sites that meet their needs in terms of design, colouration, ease of navigation and content management.

Of course, even if a business is digitally savvy and is able to hold onto the consumer for longer than 8 seconds (the maximum time window that an organisation has to convince a consumer to stay on site), gaining the confidence of consumers is paramount to achieving a level of sustainability to success. An organisation must be able to create ‘intelligent’ digital connectivity between itself and the consumer. This can be achieved through developing an understanding of the consumer (almost a tacit awareness of consumer behaviour) by creating and retaining ‘memories’ of previous transactions, queries and connections, and combining this with non-intrusive profiling.

“.. Increased availability of powerful, accessible visual data mining tools has democratised the exploration of consumer behaviour. There is now no excuse for any business to ignore the messages that can be readily extracted from the information soup surrounding them…” says Shirley Coleman co-author, Industrial Statistics Research Unit.

Those businesses unable to profit from this digital connectivity will undoubtedly see market share declining, either to new market entrants, innovative businesses or those with transformed business models all of which are able to intelligently connect with the consumer.

Demographics and Digitalisation

The demographic spread of demand for digital connectivity involves all age groups, with a distinct correlation between age groups and various waves of social networking media. For example, research published by comScore (global source of digital market intelligence) reveals that in the Facebook world, there are 260 million users, of whom 52% are over the age of 35, 12% over 55. Meanwhile, in the land of Twitter the majority of the 40 million users are over 35 years old (with 20% of them aged over 55).

The demographic spread, with older groupings of the population readily visible in the use of Social Networking sites, suggests that the digital revolution is well underway.

Dis-intermediation and Re-intermediation

For some of the Financial Services sector areas, such as General Insurance (GI), there are seismic changes being experienced as the traditional direct connection between consumer and the provider of GI products (e.g. motor, home, travel insurance cover) becomes fractured. This connection between Insurance supplier and consumer is being heavily disrupted by ‘Product Aggregators’ such as Moneysupermarket.com, Confused.com, etc.

When these aggregators first appeared they were essentially providing comparison product/price search capabilities, but now a number of them are expanding their services and are found to be ‘re-intermediating’ themselves between consumer and product provider, offering a comprehensive product purchase proposition. Within the GI space, this re-intermediation comes only a few years after a number of major GI insurers dis-intermediated their tied High Street brokers from the marketplace and established a direct connection between themselves and the consumer.

Who’s in Charge?

Thus, for many large organisations there are many challenges. For some, there remains confusion as to which business function within the organisation is responsible for driving it towards implementing a self-service strategy - namely, who articulates it, who is accountable and who delivers it? For others there is a suggestion that to meet the demand of the consumer digital world, they have to create a ‘green field’ entry point outside of their large and unwieldy business models in order to access this digital consumer world and deliver the services and products that such a world expects. And finally, in those parts of the sector where consumer choice remains restricted, there are organisations that believe the consumer can still be ‘boxed’ in by forcing the consumer to use aged and arthritic business operating models.

Who survives?

Only time will tell how many of our existing large and well-known business brands will exist in 10 or 20 years time when the digital revolution is past and digitalisation is an everyday feature of our lives. What has been shown is that through all major industrial changes, businesses that are adaptable and responsive, that rise to meet the challenges and understand the fundamental shifts taking place, can and do survive albeit sometimes in a very different form. For those unable to do that, the industrial wastelands in Britain are visible examples of what can happen.

A copy of this research report entitled, ‘The Revolution in Self-Service Channels in the Financial Services Sector’, with full details of the findings and conclusions can be requested from selfservicereport.businessdecision.co.uk/.

About Business & Decision

Business & Decision is an international Consulting and Systems Integration (CSI) company. It is a leader in Business Intelligence (BI) and Customer Relationship Management (CRM), and a major player in e-Business, Enterprise Information Management (EIM), Enterprise Solutions as well as Management Consulting. Business & Decision contributes to the success of customer projects by driving maximum business performance. The company has a reputation for functional and technological expertise and has forged partnerships with all of the key technology vendors.

Located in 19 countries, Business & Decision currently employs more than 2700 people worldwide.

Additional information is available at www.businessdecision.com.

A copy of the report is available on request.

About Newcastle University’s Industrial Statistics Research Unit

Newcastle University’s Industrial Statistics Research Unit (ISRU) has been delivering consulting, learning programmes, coaching, and research services since 1984. ISRU offer a diverse range of skills bridging the gap between applied target driven performance and sound academic practice. Many well-known financial, service, manufacturing and healthcare organisations have improved business performance through applying ISRU services. The methods that ISRU employ and embed in organisations are aimed at improving services, processes and products; in terms of efficiency, quality, speed, cost and complexity.

For further details please contact +44(0)191-222-5750 or isruenquiries@ncl.ac.uk

Also, please see ISRU’s website at www.isru.ncl.ac.uk

Source: Business & Decisions

Press Contact: Huzmah Ahmed, Business & Decision, Tel: +44(0)161-886-8500, Fax: +44(0)161-886-8501, hahmed at businessdecision.co.uk