“Culture eats strategy for breakfast.” No matter how good your strategy, if you haven’t got the right culture in the organization, you will struggle to deliver on that strategy. Our recent state-of-the-market survey on the financial services market also looked at the cultural maturity of financial service companies. And although some companies are more advanced in their ecosystem thinking and spend their budgets accordingly, most companies share the same ambition. Only the pace of change differs.
A commissioned study conducted by Forrester Research on behalf of TrustBuilder in March 2021 showed a clear distinction between financial services companies that are already actively engaged in building digital ecosystems and companies that are more hesitant to get started. This is also reflected in the maturity model that TrustBuilder developed for this industry.
How to create customer value in Financial Services
The study splits the respondents into four categories, Leaders, Customer-centric Intermediates, Strategist Intermediates and Novices, based on their customer focus and value creation, on the one hand, and their strategy and innovation on the other. As the graphic shows, the bulk of respondents can still be considered novices. But don’t think that term ‘novices’ is a bad thing. It actually shows that there’s a lot more value for them to unlock. Sixteen percent of firms came out as leaders, these are people that are both strong in strategy and customer centricity. They’re acing both sides of the coin.
The study found that companies react differently to the trend that consumers are increasingly using digital channels for their financial dealings. Four out of five companies are focusing on improving their digital products and services and creating better customer experiences. They’re shoring up the advances they’re made as a result of COVID-19 and the mass rapid digital digitization. But around two thirds of respondents are also looking to launch new business models and expand into adjacent markets. The study differentiates between traditional thinking and marketplace thinking.
Leaders in Financial Services are outward looking
Traditional thinking is mainly focused on gaining market share, while marketplace thinking prioritizes on maximizing the value of their ecosystem.
- focuses on direct customer engagement
- focuses on growth
- focuses on brand loyalty
- Prefers to develop new offerings and services
- Is product-centric
- Has an inside-out approach
- Prioritizes control
Marketplace thinking, on the other hand:
- focuses on third-party introductions
- focuses on network effects
- focuses on multihoming
- harnesses third-party resources for new offerings and services
- is platform-centric
- has an outside-in approach
- prioritizes trust
This difference in the way of looking at the market is also reflected in the budget spend of companies. Marketplace thinkers are pouring money and investment into all digital aspects that we asked people about in the study. A novice, on the other hand, is far more focused on improving digital products and digital services, and also the digital experiences of their customers. It’s obvious that there is a difference between the leaders who are more outward looking with regards to digital ecosystems.
Changing investment priorities in Financial Services
However, it is only a question of time before the novices will change their investment priorities. The study shows that companies in the novice sector are still interested in the future, just less so in terms of executing on it just yet. Just over half (54%) of the novices are considering building their own marketplace, and almost six out of ten (58%) want to enable better and deeper integration between their own services and third-party providers’ solutions. It’s clear that they’re not lacking ambition, they’re just not quite as far ahead in terms of executing on that ambition. They still have ecosystems on the roadmap, it just hasn’t yet got as much emphasis as it has in the leading organizations.
Whether people are already investing in ecosystems, or they plan to, they see a clear benefit around customer loyalty, and customer experience. That drives satisfaction. Of course, that then translates into other benefits that they’re anticipating around things like revenue growth and increased customer trust.
The good news from all this is that all financial services companies have their customer top of mind. The main difference lies in what services they are delivering to them already, and at what pace they will start offering third-party services to build more complete solutions for their customers.