Survival of the fittest - the swiftest to adapt and use tools and information to their advantage - is just as true in financial services as it is in the wild. In the next few years, these attributes will be vital for banks to remain competitive, according to a study conducted by London-based Economist Intelligence Unit (EIU). The report, sponsored by SAP (Walldorf, Germany), states that to transition to a more fluid operating environment, banks will have to adopt strategies and technology that allow for flexibility and speedy change.
Among the study's key results, relates Denis McCauley, the EIU's director of global technology research, is banks' emphasis on new business models. Sixty percent of financial services executives surveyed say new business models will provide a greater source of competitive advantage than developing new products or services.
"There is a lot less scope in differentiating oneself with new products in financial services today because of standardization," says McCauley. Banks "realize the way they do things - how they deliver and maintain services - is just as important, if not more important, than the services themselves."
At the heart of those new business models is the customer relationship. When asked what customers will find most important in 2010 - quality, personalization or price - nearly as many respondents selected personalization (43 percent) as quality (46 percent). "This cuts to the business model question. It's not so much quality but the way the services are delivered - your ability to know your customers, tailor individual offers to them - that are more prominent in financial services," McCauley notes.
And that is where technology is likely to have the biggest impact, McCauley points out. Forty-five percent of executives surveyed identified "changes in customer behavior and needs" as the No. 1 innovation challenge. Accordingly, 71 percent pointed to customer relationships as the area of the business in which IT will be most critical.
The study, "Business 2010: Financial Services," surveyed 577 senior financial services executives.