News

The year ahead in Financial Services

31 December 2012

With 2013 just around the corner, the team at Total Systems plc have offered their predictions for the world of Financial Services.

'Big data' will drive innovation. The amount of data in the world has been exploding - and these large data sets, so called 'big data' are held by many to be the secret to driving efficiency and quality. The Finance and Insurance sectors can undoubtedly drive up margins by using sophisticated analytics on the terabits of data they hold to improve decision making. The trick will be having the right technology in place to collect the right data to produce meaningful information to deliver conclusions and actions. The winners next year will be the companies that use their data to gain insight into how to deliver innovation that will help them stand out from the competition. The losers will be those who get caught up in the process of data collection and analytics but then take no action. Too much information can also result in inertia.

Profitability under focus. 2012 has seen job cuts hit the headlines as major Banks and Insurers reduce costs and focus on efficiency. Many have long used 'outsourcing' or partnerships as a way to manage cash flow and as economic pressures remain in 2013, we predict that relationships will be based on 'payment by result' or a share of any increase to the 'bottom line'. This offers real opportunity to improve delivery for the customer as all parties focus on successful outcomes, but it will be dependant on driving cultural changes that may just not be possible. This will be the year of those companies best able to adapt and deliver.

2013 will be the year of improved 'risk assessment'. Since the term 'credit crunch' became common place, there has been a 'flight to safety' by product manufacturers. Competition has grown increasingly fierce for perceived low risk customers. We have increasingly seen the most attractive mortgage products aimed at high deposit, high earning, strong credit profile customers; insurance products are keenly priced for customers who never claim - and the application process for life assurance is quick and easy if you are fit and healthy - but woe betide if you have any medical history. Unfortunately a huge number of people fall outside these parameters. Risk assessment is essential - but the pendulum has swung too far. Next year will see the companies that can adjust their risk profiling more effectively away from 'black and white' win market share. Technology allows sophistication and we will see the players that embrace this capability rise to the top.

Brand over substance. We would like to predict that 2013 will be the year of the customer. All recent rhetoric has been about 'putting the customer first', but will this be put into practice? Probably not. Unfortunately, too often it will be the year of 'The Brand'. As this year comes to a close, the consumer group Which? reported that Staff at HSBC, Royal Bank of Scotland, Lloyds Banking Group, Barclays and Santander said that sales targets encouraged product sales that were not appropriate for customers. However leaders of these same Organisations are talking about putting customers first. Ashok Vaswani, new head of Barclays'' retail empire, has scrapped all sales commission for front-line staff selling to the public. He admits Barclays "still makes mistakes" - but he genuinely seems to want to make a difference. Our caution to customers for the coming year is therefore to understand the difference between the Brand 'sound bite' and the genuine delivery of customer focused pricing and process. Loyalty and trust will only be won over years and that is not always in line with the need to satisfy shareholders in the short term.

Mobile is the way forward. Research underlines the fact that 'smartphones' are becoming the preferred device for customers on the move, whilst the popularity of the 'tablet' within the home is doubtless accelerating. Alongside this transformation comes the focus on 'social media' delivered via digital mobile devices. There is no doubt therefore that the Financial Service market needs to be smarter with their mobile customer strategies to maximise the sales, marketing and service opportunities that exist and not get left behind.

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