Financial Services 2.0: Using Web 2.0 to change the way we deliver financial services (Working Title) August 11, 2009

Web 2.0 is changing the way business is done on the internet, the Internet winners are platform based and provide collaborative interfaces that connect networks of people

While the capability is there with Web2.0 to develop rich online based relationships with our customers we must be careful not to cannibalise existing sales, but rather target a different previously untapped market, seeing the Internet as a complement to our existing strong business rather then a substitute.

Based on well-founded demographics research by Bernard Salt & McCrindle, 40% of the Adult population is Gen X & Y and they are our future market, the boomers are no longer in the wealth accumulation period of their lives in contrast they are moving into the wealth consumption period of their financial lives.

A blue ocean opportunity exists in the market place to provide high quality, low transaction cost advice by employing Web 2.0 approaches and engaging with customers in ways that this new Gen X & Gen Y market are more comfortable with and connected to.

In addition to this market of untapped non-customers the industry forces are moving us to fee for advice models, self managed accounts and funds choice legislation. These can all be delivered cost effectively via Internet based technology but how?

In keeping with Web 2.0 Philosophy my thoughts are that there are two possible ways the industry can go:

1. The Financial Product Companies themselves build webfronts that allow customers to open accounts and receive low cost web based advice via the website and through non-evasive channels such as telephone conversations, emails and directly through the website. As these customers build there portfolio’s over time we use these accounts as a sales lead for our advisers to provide a more comprehensive level of advice.
2. The second proposition is to build a platform for advisers to easily develop their own individual online presence. The larger Financial organisations have the economy of scale to develop a tool rich platform for Advisers that enables them to deliver their services to customers online. In this way the Wealth Companies continue to act as a Business Development Manager and provide our Advice Network with a collaborative platform that they can build & customise their own online presence with.

( Dave’s Commentary: My concern with the first approach is that individual organisations may be hesitant to take this approach as the existing Adviser channel may feel as though they are being cut out of the deal, they may then vote with their feet and move to competing organisations.)

In closing, this paper is to be written as a call to action. The ‘new’ market is shouting for services that they are comfortable with, and that provides them with the same level of service they have come to expect from many industries. By investing in these technologies we are investing in our own future.

One last comment as some food for thought. How can we as an industry expect the X & Y generations to invest in their financial future with us, if we are not willing to invest our long-term future in them?

Yours Faithfully,

D

The IFSA / Deloittes Future Leaders Question: Technology July 20, 2009

Below I have attached the question I have to address as part of the Future Leaders Competition. If you have any thoughts please, please leave a comment, any ideas or suggestions at tackling this subject would be welcomed with open arms.

Yours Faithfully, D

1. Leveraging technology

The Australian superannuation, funds management and life insurance industries have come under occasional criticism for not fully exploiting available and new technologies to improve consumer engagement, efficiency and transparency in the delivery of financial products, advice and services. What are some of our ‘best practice’ features? What are the barriers to greater efficiency and what are the priority opportunities?

Background

Australia’s financial services sector is reputed to be one of the most sophisticated in the world, with a superannuation system that provides investment and life insurance services to most Australian workers.

• What are some of the best examples of the industry’s use of front office and back office technology in the delivery of its products, services and advice? Examples might include automated underwriting systems for life insurance, unit pricing, online adviser systems etc.

• Consider what lessons can be learned from these examples and how these learnings might be applied more broadly throughout the industry.

• Consider areas where technology may not have been used to its full potential in improving efficiencies and engaging with customers. Why is this the case – are the barriers related to investment, coverage or regulation?

• Consider the opportunities that currently exist or may be coming on-stream for the industry to further generate efficiencies and engagement from use of technologies. Are there any lessons we can learn from overseas or from other industries?

Can we apply technology to reach the Fin Services market? July 20, 2009

My theme for the IFSA/Deloittes Future Leaders Competition paper is technology and its application to the Financial Services Industry.

In attempting to discover new ways to apply todays technology I felt it first necessary to understand who exactly we are attempting to reach, who exactly is the typical Financial Services customer.

Straight forward analysis of the product lines of most major financial services companies reveals that the main products being sold are Superannuation (i.e. 401k), Life Insurance, Income Protection and Funds Management.

From here it is a simple job of  determining the most obvious market for each product. Doing this analysis it was fair enough for me to say that the typical financial services target market can be broken into 3 main segments:

1. The Baby Boomers, who at the moment are close to retirement

2. The Family Bread-winners, concerned with the ongoing support of their family, and

3. The High Net worth, clients looking to invest significant amounts of money into a managed fund.

Below you will find a link to a recent AMP (a large Australian Fin Services Co) advertisement which subtly conveys it’s message of the importance of protecting your family and taking care of your money during retirement, reinforcing my thoughts above.

AMP Ad

http://www.youtube.com/watch?v=o57hvoA6h2k&feature=PlayList&p=DA1B009E4F35487C&playnext=1&playnext_from=PL&index=34

I think this is all pretty straight forward stuff, but important nonetheless, the customer should be at the center of all product development and knowing that customer well is the first step in understanding what will and won’t work out there in the market.

I’d love to hear your thoughts on what you believe the target market of the general Financial Services company is. Do we have a specific target market, or do we just direct it at the masses with our marketing messages and our products? Can technology help us to more precisely target our market segment and how?

Please leave a comment below, appreciate your thoughts as always!

Yours Faithfully,  D

Fire & Ice: The Internet and Financial Services in Australia July 16, 2009

The Fire: Web 2.0

Everyday more and more internet technology lines the virtual shelf, the Internet is just about 5000 days old and look at all this great stuff we have for free. I mean 5 years ago who would have thought we would have instant access to satellite images of the whole earth, a body of general knowledge 25 times as large as the Encyclopedia Britannica, the ability to find and reconnect with long lost childhood friends in a matter of minutes and all of it as free as the air you breathe. This technology is quickly becoming more and more mainstream, the once product differentiating online store, is rapidly sliding down the Kano model into the realm of basic unspoken needs, faster then we’ve ever witnessed before.

The Ice: Financial Services Industry in Australia

Despite all these advancements there are still too few examples of Australian organisations, let alone Financial Services organisations, that have successfully employed the Internet in a way that has revolutionised their industry. Most industries have applied the internet as primarily a Promotion and Sales channel, attempting to push a product message through advertising or to capture sales via online storefronts. These approaches, successful in their own right  have improved operational efficiencies and have enabled organisations to reach their target segments with more precision then ever before.

However, they have not done much more then to move existing customers that were previously serviced by mass media and physical storefronts, to online mediums and e-storefronts. Further on this point, now that these sorts of services have become market entry requirements in our industry for our customers, is it really making a dramatic difference to our bottom line when we compare it to traditional methods of doing business?

I believe we are yet to see the revolutionary power of the Internet melt away the coldness of our financial services industry.

Do you agree? Do you disagree?  If you have some thoughts please leave me your comments, I’m still developing my overall thoughts for my paper and I would love to hear your input.

As Always Yours Faithfully, D