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