Businesses that lack the means to connect digitally with consumers, will find themselves left behind by the burgeoning consumer demand for digitally-based products and services, warns a new report.
'The Revolution in Self-Service Channels in the Financial Services Sector' report analyses the growth of consumer self-service channels in key areas of the Financial Services market and looks at who is winning and who could lose out.
It examines the recent emergence of new operating models and highlights the transformation of more established business models in those parts of the Financial Markets most affected (e.g. general insurance, wealth management and retail banking).
It also investigates the drivers and inhibitors of the market, the broad demographic spread of demand and the challenges to established players in financial services and assesses the impact of future changes that may occur in this emerging digital marketplace.
"Digitalisation is gathering pace and is likely to sweep aside any organisation that cannot respond to this digital 'tsunami," said Ian Marshall co-author of the report from Business & Decision.
An organisation must be able to create 'intelligent' digital connectivity between itself and the consumer, the report warns.
This can be achieved through developing an understanding of the consumer (almost a tacit awareness of consumer behaviour) by creating and retaining 'memories' of previous transactions, queries and connections, and combining this with non-intrusive profiling.
"Increased availability of powerful, accessible visual data mining tools has democratised the exploration of consumer behaviour. There is now no excuse for any business to ignore the messages that can be readily extracted from the information soup surrounding them," added Shirley Coleman co-author, from the Industrial Statistics Research Unit at Newcastle University.
Those businesses unable to profit from this digital connectivity will undoubtedly see market share declining, either to new market entrants, innovative businesses or those with transformed business models all of which are able to intelligently connect with the consumer.
The demographic spread of demand for digital connectivity involves all age groups, with a distinct correlation between age groups and various waves of social networking media.
For some of the Financial Services sector areas, such as General Insurance (GI), there are seismic changes being experienced as the traditional direct connection between consumer and the provider of GI products (e.g. motor, home, travel insurance cover) becomes fractured.
This connection between Insurance supplier and consumer is being heavily disrupted by 'Product Aggregators' such as Moneysupermarket.com, Confused.com, etc.
When these aggregators first appeared they were essentially providing comparison product/price search capabilities, but now a number of them are expanding their services and are found to be 're-intermediating' themselves between consumer and product provider, offering a comprehensive product purchase proposition.
“Only time will tell how many of our existing large and well-known business brands will exist in 10 or 20 years time when the digital revolution is past and digitalisation is an everyday feature of our lives” the report concludes.
“What has been shown is that through all major industrial changes, businesses that are adaptable and responsive, that rise to meet the challenges and understand the fundamental shifts taking place, can and do survive albeit sometimes in a very different form.
“For those unable to do that, the industrial wastelands in Britain are visible examples of what can happen.”
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