Disruptive Forces in Financial Services
Competition in Financial Services has always been intense amongst industry rivals. Increasingly, firms find themselves competing with Financial Technology (FinTech) start-ups going after a selective slice of the market with a disruptive offer. Many FinTech firms have billion dollar valuations, are flush with cash, and are leveraging low cost, cloud-based delivery models. While incumbent firms have invested heavily over the years in a combination of technology-based infrastructures like ATM networks, branch office makeovers, online services and mobile apps, they still feel vulnerable to the threat of FinTech firms grabbing market share in specific areas like retail payments or online lending.
When clients share these kinds of challenges with Line of Sight Group, our first inclination is to turn our eyes and ears to the external environment and to connect the dots around what is happening, as well as what is likely to happen. Thus informed, threats and opportunities emerge and become discussion points for the formation of strategic plans and subsequent go-to-market initiatives. Financial Services firms have a vast array of levers to pull when it comes to competing successfully. Technology is but one of these levers. Some firms find that their physical locations can be leveraged if they reconfigure them into optimized networks based on the specific needs of their clients. In some cases, they may opt for a smaller branch footprint but implement Interactive Teller Machines that match a specific financial expert with a client virtually. Other Financial Services firms are partnering with FinTech firms by bringing new offers into these networks and blending them into a portfolio of offers. Another tactic is to conduct hundreds of controlled tests annually (AB Testing) designed to gauge and measure consumer preferences and to then create new offers based on the results.
Line of Sight Group Financial Services clients utilize a number of methods to listen to the external environment in which they play. Some firms utilize strategic competitive monitoring on an ongoing basis to gather, sort and analyze value propositions, pricing and customer satisfaction levels. Financial Services clients who position large commercial offers utilize Win/Loss Analysis to understand why they win and lose deals. Firms seeking to enter a new market employ a Competitive Landscape Analysis to gauge the status quo and to look for unmet needs before making the move to invest.
By understanding the external environment on a continual basis, Financial Services firms can better navigate the ever changing mix of consumer preferences, technological advances and business model iterations to make good decisions. Technology is important, but rarely the only factor to consider.