3 steps for surviving as a financial service company in the 21st century
January 21, 2014. admin.
What makes a financial service company survive and prosper for the long term (100+ years)?
In hindsight you could be looking at companies like JP Morgan, Morgan Stanley, SEB, Avanza, Nordnet etc. and try to model them for the future. However, the financial markets are changing together with consumer behaviour and I would bet that you cannot look back at these great institutions and think that the same things will work going forward.
The Internet sure isn’t everything but it is a whole lot! Consumers are getting more informed and we are getting more ways to compare and judge services and products. Within the financial services industry there are a lot of commodities being sold and with this I don’t just mean things like gold and silver! I am talking about commodities like savings accounts, commission driven execution services and so on.
What can you do as a small financial service firm to separate yourself from the commoditised markets and truly offer something great?
To start with I have come up with three beginning steps for this post and they are:
- Don’t sell bad products
- Use technology as tools for delivering great products
- Remember that customers do not care about you, they care about themselves
Don’t sell bad products
This is much harder than it sounds. However, you cannot think for one moment that you can get away with selling an interest based product to a customer which generates 1 % per year with expiration in 5 years while charging a 5 % up front fee and another 0.5 % per year. They will not let you get away with it, not even if the stock market went down for 5 years and you could say that they would have lost more money in the market had they bought funds instead of paying your fees!
No, your mission is to use all the knowledge and technology available to you in order to create customised value for your customers and not let short term greed take over. Yes, Gordon Gekko said greed was good and Jordan Belfort (The Wolf of Wall Street) said greed was bad, who is right? Well, you probably have to make up your own mind about that.
Use technology as tools for delivering great products
Even though this is coming from a tech crazed person like myself I have to admit it, technology is basically just tools for accomplishing a lot of things in a more efficient and elegant manner than would otherwise be possible. View technology for what it is and make sure that it accomplishes what you desire to achieve.
Yes, at Bricknode we are trying to build a great tool for our financial service companies to use and I would love for you to become a client of ours. However, it does not matter if you are using Bricknode, Advent, SimCorp or whatever financial system is out there, just make sure that you use the right hammer to drive in the nail!
Remember that customers do not care about you, they care about themselves
The customers are not actively looking to find you, there are a number of companies out there offering similar products so you need to think about how you can present the greatest value for your existing and future customers.
Obviously if you are targeting high frequency professional traders you are targeting a much more feature driven customer than I am talking about here. To reach the mass market of general investors you have to offer something that makes their lives easier. For example last weeks Business Week had an article about how Chinese savers were using an app to move their money around according to where they got the best interest. The same thing should apply the other way around where you could help borrowers find the lowest interest available.
My point is that the great number of customers which you should be targeting do not care about being able to draw a special line on a stock chart, they care about not having to think about their finances and in the end find that there is at lest something left when they are ready to retire!
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