Achieving Customer Growth In Global Financial Services

By M. Isi Eromosele

As today’s financial services organizations strive to retain existing customers and attract new ones, many are introducing new enhanced products and services over the Web.

For such offerings to be successful, companies must structure new applications to provide optimal performance and service, while closely managing the total cost of ownership (TCO).

To do so, many financial services organizations need to implement the practice of service-level management (SLM), a set of management activities that helps companies ensure that online customers receive the best possible experience through e-business applications that perform consistently and outstandingly, while managing critical cost structures.

As they implement the above, financial services companies must strive for the following:

• Protect revenue streams and retain existing customers through Web applications that perform exceptionally every time
• Attract new customers and grow revenue with enhanced performance for innovative, value-added online services, prioritizing those offerings and clients for optimal customer service
• Take advantage of an outsourced service delivery model to prioritize issues that impact the end user, resulting in effective management of operational costs and an increase in shareholder value and the overall bottom line

Centering Operations Around Customer Needs

Financial services companies are expected not only to retain existing customers in order to maintain steady revenue streams, but also to up-sell new services to existing customers and compete vigorously to attract new, high-worth clients away from the competition to grow revenue. Many firms do so by introducing new value-added products and services.

At the same time as financial institutions are offering these new services, they face strong pressures to boost shareholder value and the overall bottom line through the aggressive management of operational costs.

Adding new products and services can require substantial capital investment. Will offering premier online research or new account services succeed in the face of cost-cut-ting initiatives?

Not only is it paramount to structure new applications optimally to provide the right tools and services at the right place and the right time, it is also equally critical to do so without incurring exorbitant infrastructure or staff costs.

Even more importantly, it is critical to ensure that all of this is accomplished while delivering the best possible performance for new and existing Web applications.

Doing so means embracing fresh business models that not only emphasize operational efficiency to yield real, sustainable value, but also perform one critical function: centering the organization around customer needs.

This approach requires focusing on the end-user experience and streamlining underlying operations processes to maximize end-user impact, all while managing TCO. In doing so, financial services organizations can maintain existing customers and revenue streams while unlocking untapped profit potential from new and current customers.

At the heart of this customer-oriented approach is the concept of customer satisfaction via excellent e-business application performance. Consistently high levels of customer satisfaction are critical to protecting an existing customer base from the ever-present competition as well as luring potential new customers away from that same competition.

Foundation For Customer Satisfaction

The concept of customer satisfaction is, by definition, somewhat intangible and therefore difficult to measure. How does a firm know exactly how happy its customers really are? How does it go about increasing their satisfaction? How does it measure its success or failure in pleasing customers?

The above questions can be answered through the implementation of SLM - Service Level Management activities. SLM can be defined as a set of management activities designed to ensure that e-business applications consistently meet or exceed desired levels of customer service.

From an IT perspective, SLM includes creating, tracking and modifying applications, delivery environments as well as supporting operational processes to meet pre-defined service-level objectives. And from all perspectives, SLM emphasizes the optimal management of cost structures.

In short, SLM can provide financial services organizations with a means to ensure that online customers receive the best possible experience through e-business applications that perform consistently and outstandingly, while managing and maintaining critical cost structures.

And because an effective SLM strategy balances cost with customer satisfaction, it can help financial institutions navigate the fine line between aggressively managing cost structures and introducing new value and customer satisfaction.

By orienting themselves around the customer with a single-minded focus on end-user experience, financial institutions can not only protect existing revenue streams, but can unlock great potential returns on new online products and services from existing and new customers.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2012 Oseme Group

Business Process Management In The Global Financial Sector

By M. Isi Eromosele

It is vital for financial services companies to ensure the rapid implementation of new processes to meet speed-to-market, service quality and compliance requirements.

This has to be done against a background of increased complexity. Financial institutions today combine a wide range of product and service offerings, across banking, insurance and asset management.

They operate in global and cross border markets. They have increasingly sophisticated and mobile customer bases. Increased regulatory vigilance and new corporate governance rules have the potential to add new layers of complexity and cost.

For all these reasons, the effective management of complexity and change is a key determinant of future success within the industry. Those who automate and streamline their operations most effectively will gain significant competitive market advantage.

Integrated Approach

Integration is now more than ever the key to efficiency, enabling lower transaction costs and increased sales volumes. This is true for capital markets, for retail financial services and for the corporate sector.

An integrated approach to business processes allows products, processes, systems, data and the applications that underpin them to evolve quickly. Whether it’s providing a loan, setting up an insurance policy or executing an investment instruction, optimizing the sale-to-fulfillment process will always win new business, cement customer loyalty and reduce costs.

Lack of integration across lending, payments and trading, on the other hand, simply presents your competitors who are more efficient with a huge profit opportunity.

Integration and process optimization not only has to extend across the enterprise, but must also embrace third parties who often supply key components of today’s complex, multi-instrument financial products.

A mortgage offer for example, will typically involve underwriters, insurers, the customer’s bank, credit reference agencies and others, as well as internal approval, accounting, collections, credit control, risk management, commission payment, incentive management, and business intelligence processes.

Improve all the connections between all the elements of a transaction and performance automatically improves.

The problem is that established financial organizations still have numerous, disparate, proprietary back-office systems which cannot keep pace. These limit the capabilities of even the most advanced front-end systems. The remodeling and implementation of new processes to meet the demands of dynamic change are severely constrained.

There are three objectives to aim for:

• Driving greater efficiency and value from existing systems and processes
• Managing the risks associated with dynamic change
• Achieving greater visibility and flexibility across complex operations

Implement an integration layer that leverages the power of the latest business process execution tools, enabling business analysts and application developers to bridge the current process execution gap.

This will allow the efficient re-use of existing process components and the applications that support them, to create new, more efficient processes, utilizing a free flow of data and collaboration between all internal and external parties to a transaction.

This will allow far greater operational and marketplace efficiency, while meeting regulatory and governance requirements.

Closing The Business Execution Gap

Closing the business process execution gap that currently exists within financial services companies will be a key determinant of future enterprise success, because it supports the crucial ingredients of business velocity and agility.

There is a need for an accelerated time-frame to move from process design to process execution in order to gain real competitive disadvantage. With current execution set-ups, the execution of some processes sometimes takes months, instead of weeks.

In capital markets, the need to execute a new or adapted instrument can involve process change deadlines of days or even hours. Being able to assemble the building blocks of a new trade by treating processes such as pricing, settlement, reporting, reconciliation as commodities allows a fast-moving trading floor to be even more responsive to the requirements of the market.

So making better connections and closing the process execution gap, is key to every kind of transactions in financial services company.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2012 Oseme Group

Evolution In Global Financial Services Part I

By M. Isi Eromosele

The world of financial services is evolving rapidly. Looking ahead to the end of the decade the shifting centers of gravity in financial markets are likely to have a profound impact on the evolution of the financial services industry.

Building a business with strong foundations in mature markets allied with a fit-for-purpose emerging markets operating model is likely to distinguish leaders from followers.

At Oseme Finance, expect rapid evolutionary progress for the industry. The financial services industry is unlikely to see revolutionary change over the next four or five years, only because it is highly regulated and has high barriers to entry.

Furthermore, the regulatory (re-)enforcements in the early part of this decade such as Sarbanes Oxley, Basel II/Solvency II, International Financial Reporting Standards amongst many – are likely to have raised the barriers further to entry.

Nonetheless, the shifting centers of economic and financial gravity may precipitate some highly significant changes both in the markets that major financial institutions operate in and the challenges management will face over the medium-term.

To be sure, the environment going forward is likely to be shaped by the two major forces of operational efficiency and attention switching to global markets.

It is clear that the battle for international dominance will likely be played out between the top-tier of institutions, each of which knows there may only be a handful of winners. The last five years have seen uneven growth in both asset and market value terms. European financial institutions have their fate in their own hands, accounting for nearly two thirds of global banking assets.

The rise of China has ushered in a new era in global finance and its trajectory will likely be determined by the opening up of the market under World Trade Organization (WTO) rules and the IPOs of the big four Chinese banks.

Secondly, operational efficiency should play an increasingly important role. The need to streamline processes, eradicate paper, reduce headcounts and manage related operational risk will affect all parts of the global financial services industry. The march to reduce the cost-base is already taking hold. In the banking sector, the cost to income ratio has fallen from the high 60s to the low 60s over the last five years.

Given the high barriers to entry and tightly regulated environment, revolutionary changes are unlikely to occur over the next four years. Yet the evolutionary changes that are already underway should have a profound effect on financial services markets in every region of the globe.

Market Drivers

The world’s capital markets are seeing their center of gravity shift toward new types of investments such as PE and hedge funds. Money is pouring into these new asset classes as investors look for higher returns than they can obtain from traditional investments such as stocks, bonds and mutual funds.

This shift from traditional to new asset classes – and the potential imbalances it creates – should significantly reshape the financial services industry between now and 2015. The impact is likely to go beyond these asset classes and may ripple out with the potential to profoundly change the world’s capital markets and its traditional institutions.

Growth of individual hedge funds is expected to slow over the next three years, but will likely still outpace most other types of funds. The United States accounted for 69 percent of the world’s total hedge fund assets, while Europe checked in at 25 percent.

Hedge funds in Asia accounted for only five percent of the worldwide total, but recently surpassed $100 billion in total assets and are expected to outpace funds in other regions over the next few years – in part due to loosening restrictions on short-selling in Taiwan and South Korea.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2012 Oseme Group

Evolution In Global Financial Services Part II

By M. Isi Eromosele

By 2015, the flow of capital into new asset classes is likely to drive dramatic change in the following three areas – investment styles, innovation and consolidation and regulation of financial markets.

The shift of capital to new asset classes is likely to affect every part of the capital markets industry. Mass market offerings such as mutual funds will likely be forced to rethink their products and services. At the same time, exchanges are likely to face shrinking margins and pressure to consolidate, driven by two factors: bulk trading, and the need to gain liquidity.

These trends, along with regulatory changes are expected to drive radical changes in the world’s stock exchanges over the medium-term – with the most visible change likely to be the demise of floor trading.

The balance of regulation may be required to better mirror the shifting flows of capital. In the past, regulatory authorities have tended to focus the majority of their resources on traditional financial institutions involved in capital markets.

Institutions dealing in new asset classes such as hedge funds and PE firms tend to be skinny businesses based on a small number of people – tens rather than hundreds and thousands of staff. These savvy businesses leverage technology and the settlement infrastructure of others to enhance operational efficiency.

The challenge for regulators will likely be to adjust their own resources to focus on these extremely high capital intensive firms.

The major impact of new asset class firms is likely to be on the business models of traditional capital markets players. Typically capital markets have tended not to place a significant focus on business models – especially when markets are doing well. Capital markets players will be driven increasingly to use utilities eradicating duplication that currently exists across many capital market players.

Capital market firms may need to inject more of a funds type thinking into their business – to give investors better risk/reward options. Along with this strategy may come the attendant issues of managing risk. This is likely to involve the incorporation of hedge fund and PE-type thinking into current business models. Managing this transition will likely be a major challenge.

Managing Long-Term Assets

Are financial institutions fully prepared for the challenge and impact of an older population? Yes and no. Today, the financial services industry is largely designed to serve customers who are accumulating and holding assets for the long-term. 

It is not designed to serve retiring baby boomers, who will steadily consume their assets over the next few decades. Although new financial products and services are starting to emerge, more attention and innovation are needed. Major opportunities to turn silver into gold include:

• Over the next few years, capital markets are likely to see a large influx of retirement-related funds as people who have neglected their nest egg try to catch up. Clients will likely be particularly interested in products that offer a chance for higher-than-average returns.
• As the global population get older, they need product offerings that address their greater need for short-term and long-term healthcare.
• As boomers get closer to retirement, they need to manage their retirement assets more closely. Financial institutions could act as advisers, helping pre-retirees plan for the future, shifting asset allocations at the point of retirement, capitalizing on the rollover and inheritance boom, helping with business sales/successions, and consulting with clients who find themselves suddenly wealthy.

• Often assets are tied up in houses or other illiquid assets; financial services organizations should innovate to find new ways to help their aging customers release this wealth for their own consumption, healthcare and children but these products should also be seen to be fair by regulators.

Wealth management businesses are already well positioned to benefit from the aging trend; however, retail bankers and insurers have a lot more work to do. 

Few Financial institutions fully understand how to change their business models and business practices to capitalize on these opportunities, and many may spend the rest of this decade trying to position themselves appropriately.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2012 Oseme Group

Global Financial Services In 2015 Part I

By M. Isi Eromosele

The worldwide market for financial services is evolving rapidly and by 2015 is likely to look very different than it does today. New asset classes such as private equity and hedge funds are attracting a growing number of investors, shifting the center of gravity in the world’s capital markets. 

The payments business – which is a major source of revenue and profit for many financial institutions – is being restructured, changing the fundamental economics of banking. Meanwhile, in many countries, the impending retirement of the baby boom generation is changing the focus of financial services from long-term accumulation to managed consumption.

Emerging markets such as Brazil, Russia, India and China with their rapidly growing middle classes are becoming increasingly important sources of growth, particularly for firms in mature economies. Over the coming years, the financial services markets in Europe and North America should grow modestly versus the rapid growth of Asia, Africa and South America.

Although in Europe consolidation is accelerating as cross border transactions increase, only a few financial services firms currently have the majority of their business outside of their home market – a pattern that is likely to change as the imperative to find new ways to grow increases.

These marketplace drivers are already having a huge impact on the financial services industry, and are likely to be key drivers in determining winners and losers by 2015 and beyond.

At the same time, financial institutions around the world will need to forge the hallmarks of operational excellence in areas such as off-shoring, taxation and financial reporting, service and process innovation, and in internal control. These operational challenges are a major source of headaches for many firms; yet they also present significant opportunities for improved efficiency, service and performance.

Financial institutions intent on being positioned for success in 2015 must start preparing now. An Oseme Finance report identifies the major market drivers and operational challenges financial institutions will likely face over the next three years, and pin-points the strategies and practices recommended to create the hallmarks of success.

Global markets and a business model to match

The financial services industry is likely to become increasingly global as firms in mature markets seek new sources of growth in emerging economies beyond their domestic home market. 

Success will hinge on creating an exportable, low-cost business model specifically designed to serve these new types of customers (low income, high volume), rather than trying to force-fit the model currently used to serve more affluent customers in existing western markets.

The need to scale up will be driven by three factors. First, the need to have a significant balance sheet will be critical in supporting the major corporate clients and in funding future activities.

Second, many financial products are likely to become commoditized meaning margins will likely become thinner and economies of scale more important. Third, the ability to have a multinational market portfolio could only be sustained by major organizations.

Mass efficiency with focused premium service

Shrinking margins are likely to drive an overall trend toward commoditization. Operational improvements will primarily focus on efficiency, self-service and economies of scale. 

Yet there may also be opportunities to reinvest some of those back-office cost savings into premium services for high value market segments – including ‘mass affluent’ segments that may be underserved today.

In the back office this is likely to drive further the move to offshore non-customer facing activities. Beyond 2015, the emergence of industry utilities should become dominant from investment banking to insurance.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2012 Oseme Group

Global Financial Services In 2015 Part II

By M. Isi Eromosele

Financial institutions of every shape and size are likely to face a continuing challenge to grow their top line – even after large acquisitions. Financial markets reward financial institutions achieving the best revenue growth and superior risk adjusted returns on invested capital.

For instance, an Oseme Finance analysis shows that on a worldwide basis, the five banks with the fastest revenue growth saw their stock price soar by an average of 91 percent over a four year period - over four times better than the industry average.

Going forward, there may be reduced headroom for growth in most mature western economies; the strategy would be to solidify existing customer relationships, steal market share and increase share of wallet by relearning the growth habit through innovative practices.

Financial institutions should rethink their growth strategies, eschewing product innovation in favor of process and service improvements. The latter are much harder for competitors to replicate, thus providing a more enduring advantage, both in terms of better customer relationships and revenue growth.

Process and service innovations also tend to reduce complexity and cost, creating a ‘virtuous circle’ of top-line growth and bottom-line profitability.

Successful financial institutions are likely to embed innovation into the very fabric of the organization – from strategy and processes, to people, systems and business partners – actively developing good ideas into enduring commercial success.

Transparency and compliance as a performance springboard

Regulators and capital markets are demanding greater transparency in all aspects of governance. But top-performing firms by 2015 are likely to go beyond the minimum requirements, using transparency and compliance as a way to win the hearts and minds of investors, and leveraging their efforts to improve decision-making, cost efficiency, and service quality.

This is a significant mindset shift for most financial institutions.  Since behavioral shifts are often the most challenging to attain – expect many financial institutions not to develop this capability for a performance springboard.

Strategic Technology Underpinning

By 2015 leading financial institutions are likely to be some of the most sophisticated users of technology on the planet. Today the top 25 financial institutions in the world spend in excess of $50 billion on technology in a single year.

Financial institutions should get improved productivity, enhanced revenue growth, and better profitability from this level of spend in the future. The challenge going forward for financial institutions should be two fold – digitization of business and effective IT governance.

Firstly, the differentiator between success and failure is likely not to be the absolute amount spent, but rather on the governance of technology within the business. Recent decades have seen large gaps open up between the board and technology departments within financial firms. 

Secondly, financial institutions are incredibly complex businesses. Over the next five years, technology should be applied to reducing this degree of complexity by the eradication of paper-based processes.

For instance, trading of many asset classes is now done on electronic exchanges. By contrast, back-office clearing and settlement is often stuck in a paper-based world driving up complexity, risk and reducing the efficiency of markets.

By 2015, technology is likely to be almost invisible yet pervasive throughout leading financial institutions. This simplicity should drive new business models and be integral to forging each of the hallmarks of success within the global financial services industry.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2012 Oseme Group

The Future Of The Global Financial Services Industry

By M. Isi Eromosele

There are important implications for the financial services industry as it navigates one of the most financially devastating periods in history.

In September 2008, we witnessed the demise of the independent Wall Street business model, significant bailouts and double-digit stock market declines around the world. Indeed, the recent credit turmoil has made two things exceedingly clear: massive herding into new product areas and geographies is taking its toll – and the industry faces an uphill battle to overcome these instincts.

Not surprisingly, a large percentage of financial services firms face substantial near-term change. And despite the need for rapid change, two-thirds of financial markets firms rate their agility as moderate to poor – and less than 5 percent feel confident about their risk management capabilities.

Implications

Financial services firms must shore up their capabilities from two angles: improving their ability to anticipate and drive change, while instilling the courage and ability to act quickly on those insights. This requires more than just data; having the right governance, culture and incentives will allow financial services firms to manage change, not simply react to it.

Innovation beyond Integration

Clients are now better informed and more sophisticated when it comes to acquiring financial services. The emergence of these kinds of clients can have a positive impact on financial services businesses.

Across an array of industries, CEOs are increasing their investment in customer service by an average of 22% to better serve their increasingly informed clients. However, in the financial services sector, companies are raising customer service investment by only half as much. This has to change.

Companies that move slowly on this trend put their firms at risk of losing clients to innovating competitors that are improving client collaborations and segmentation capabilities. Too often, financial services firms tend to guess at what their clients value.

In a previous research analysis, it was found that 75% of Financial Services executives were out of step with what their clients were willing to pay a premium for. This disconnect must be eliminated. As they develop a deeper understanding of their clients and associated risks, they can begin to segment them, based on behavioral factors beyond just type and size.

Above all, financial services firms need to collaborate more directly with their clients – not only by developing stronger relationships, but also using them to co-create meaningful innovation.

Globalization

The world economy is now more globally integrated than ever before. Many financial services firms need to make business changes in response to globalization. Right now, many financial services firms are struggling to globalize beyond brand and footprint. With more than 60% of wealth increases coming from growth economies, financial services firms should be concerned about their rigid, centralized organizational models being able to capture future global opportunities.

To compete effectively for emerging pools of financial and human capital, financial firms must pursue global integration, not just a global presence. Operating models need to be designed around three key tenets: global asset leverage, dynamic capability assembly and seamless collaboration.

Financial firms must be able to access and deploy their assets – people, process, technology, governance and culture – across product and geographical boundaries. They must simplify complexities and build modular capabilities that can be implemented rapidly to respond to shifting growth opportunities.

To drive faster and bolder innovation, financial firms need to provide their employees with the means to collaborate efficiently across organizational silos. Despite the industry’s bias toward self-defeating do-it-yourself approach, market realities are making external collaboration inevitable.

Financial markets CEOs clearly need to be aware of the potential upside of business model innovation. Most of the so-called innovations going on within the industry are being implemented in the wrong places.

Historically, most of them have not focused on innovation that helps them differentiate and grow, staying instead within their comfort zone, tweaking their revenue models.

The current credit crisis is forcing a critical reflection – an opportunity, if not a mandate, to reevaluate business and operating models. Leading financial firms must use this time of historic change, uncertainty and volatility to differentiate themselves by reinventing their business model.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2012 Oseme Group

Financial Services - Integrating Business and Information Technology

By M. Isi Eromosele

In the world of Financial Services organizations, there are four issues that present constant challenges to their sustained profitability. These are identifying and managing customer relationships, leveraging new opportunities for growth, streamlining their disparate technology and meeting regulatory compliance.

To adapt to the constantly changing world of global finance, where competitive pressures, tight margins and consolidations are an integral part of doing business, financial institutions need to integrate their business objectives with their technology infrastructure.

This will produce a flexible technology environment that will reduce time to market for new financial products, effective customer relations management that enables acquisition of new customers and retention of existing ones, while maintaining regulatory compliance. As such, your business objectives will be driving technology.

How do you achieve the above? Business Process Innovation, Business Model Flexibility and integrating your Information Technology assets with Web 2.0. The result is Enterprise Services Architecture.

Business + Technology = Growth

Globalization, world economic weakness and product and service commoditization have increased competitive pressures, lowered profit margins and engendered financial industry consolidation. Many financial institutions have grown so large that they are no longer nimble in responding to the demands if their customers.

Financial Institutions that still maintain inflexible technology are finding it difficult to meet market demands. Today, enhanced technologies have upended the ways financial institutions interact with their customers.

Today, customers interact with multiple bank personnel, who may be located in far-flung locations around the world. Additionally, customers now deal with financial institutions through multiple distribution channels.

To gain a universal view of their customer and determine their profitability, banking organizations have to pull information from multiple sources and share it among the business enterprise. This has proven very difficult to achieve for many financial organizations.

Banking is a heavily regulated industry. Financial Services organizations are required to comply with a dizzying array of U.S. and international rules that emanate from a wide array of various government agencies.

Technology has enabled financial services organizations to partially meet the challenges posed by the above issues. The impediment to banks getting full strategic value is that many still have disparate legacy technology infrastructures that cost so much to maintain.

Many financial organizations are still operating obsolete core business systems with applications that are difficult to modify in response to ever changing time sensitive market demands.

Enabling Enterprise Services Architecture

The first step towards implementing an Enterprise Services Architecture is to install a Service-Oriented Architecture (SOA). This will help maximize legacy technology efficiency by reusing standardized components across an organization.

SOA enables businesses to break up application functionality into reusable components called web services and then link them together in new ways that support complex business processes.

However, Services Oriented Architecture (SOA) is limited in effectiveness since it does address applications and infrastructure in a unified environment. While it increases the efficiency of the infrastructure, the business applications functionality remains limited.

This is where Enterprise Services Architecture (ESA) comes in. Its effectiveness surpasses that of Service Oriented Architecture (SOA). The fundamental premise of ESA is to embed business logic, which mirrors actual business activities and events, modeled as enterprise services, into an SOA framework.

This method of aggregating web services into business enterprise services provides building blocks for the task of automating entire enterprise scale business scenarios. ESA extends SOA by enabling businesses to conduct and change processes by modeling the enterprises services.

Business Benefits of Enterprise Services Architecture

Enterprise Services Architecture enables financial organizations the flexibility to quickly adapt to today’s business demands, to effect business process changes and create new business opportunities, while achieving lower costs.

ESA integrates applications and technology to create a flexible, highly effective service-oriented environment. Issues to consider during implementation include unique business processes, Information Technology landscapes and business objectives.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group

Business Overview - Global Financial Services

By M. Isi Eromosele

Consolidations....Convergence.....Globalization

Changes in the financial services sector are taking place globally. Despite the recent global economic downturn, no financial institution wants to be left behind. Firms must decide not only how to survive in a volatile domestic marketplace but how to survive in the new world of global financial volatility. Apart from the general economic downturn and the mismanagement that had occurred within the financial sectors, there are three other major trends that have had tremendous effects on the global financial services industry. They are:

• Consolidation - through mergers and acquisitions which is being driven by the need for critical mass, economies of scale and the desire for increased market share in lucrative emerging markets around the world
• Convergence - results from competitive pressures to offer a broader range of products and services, including non-traditional products. To protect and grow their business in both the commercial and retail sectors, financial firms are positioning themselves as providers of choice for clients’ multiple financial services needs.
• Globalization - will continue as the world economy recovers and established markets mature, emerging markets develop as the Internet and telecommunications technologies provide access to global markets

Financial services companies now have to create new revenue streams, enter new markets, gain market share and reduce operational costs. In addition, customer expectations are changing. They are better informed and more demanding. Companies should therefore transform their management strategy to become more customer centric than product focused.

Heightened competition, regulatory changes and market dislocations are common in today’s global financial environment. The higher cost of obtaining new customers is causing financial institutions to look for new ways to improve customer service and appeal to customers. Financial services providers must empower their clients - both internal and external - to make strategic decisions intuitively.

In implementing new business models, financial companies need to ensure efficient processes are put in place to decrease costs, meet long-term objectives, generate new revenues and result in increased customer acquisition. To formulate an effective and profitable convergence strategy, financial services institutions should undertake six key steps:

• Complete a self-diagnosis and choose target market segments - Financial institutions need to start with a thorough understanding of their existing customers, markets and capabilities as well as a strong sense of what role non-traditional investment products will play across the organization.
• Understand customer needs and dissatisfaction by segment - While mass market customers are generally satisfied with their investment providers, many feel they need advice and guidance. Financial institutions can capture a greater share of investment revenue through innovative bundling, starter investor accounts, special purpose products and by providing low-cost basic investment advice
• Develop innovative product and services - While financial institutions have traditionally designed products and services with strict product line definitions, consumers tend to view the market through a needs-based lens. Companies need to adapt to this.
• Improve products and distribution economics - Financial institutions need to examine their value chains to determine how they can leverage their own systems and distribution channels to improve the economics of different products, while adapting their sales and delivery models to regulatory and licensing requirements
• Determine an appropriate brand strategy - Many customers view their financial institutions as a trustworthy transaction partner, but not as a partner in managing and advancing their financial well being. Financial institutions need to implement financial planning sophistication to serve these customers, which requires significant investment in developing in-house capacity or co-branding with other institutions
• Select the strategy to deliver the value proposition - In determining its delivery approach, a financial institution can choose between two approaches. The first is to target the middle market with a range of service offerings, including investment products sold as core products. They will control much of the value chain, either through ownership or focused alliances. The second is to provide customers with convenient access to a broad array of products offered by third parties.

The overriding business objective in implementing the above is to establish and nurture client relationships using an integrated and guided approach to acquiring new customers. This would need to be done in a way that creates dramatic productivity and efficiency on the operations end, while delivering unsurpassed responsiveness and satisfaction to their clients.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group

Profitable Convergence Strategy For Financial Services Companies

By M. Isi Eromosele

In order to formulate an effective and profitable convergence strategy, global financial services companies should undertake seven key steps:

Complete A Self Diagnosis and Choose Target Segments

Financial institutions need to start with a thorough understanding of their existing customers, markets and capabilities as well as a strong sense of what role non-traditional products will play across the organization.

• What is the financial institution’s overall strategic direction?


• Can the company achieve its corporate objectives with its current strategies?


• What resources are available or would need to be developed to expand its product and services lines?


• What is the mix of the customer base it currently has?

Analyzing the financial institution’s customer mix and assessing assumptions about which segments, whether mass market or affluent it would target can determine which markets represent the largest opportunity.

• Does the financial institution have any unique capabilities to leverage?


• Does it have a large branch network?


• What are potential economies of scale?

Understand Customer Needs and Dissatisfaction By Segment

The mass market represents a very attractive target market for mid-market banks, provided they can deliver easy-to-understand solutions and products with greater convenience. Feeling neglected by major financial providers, this segment presents a considerable untapped market.

While mass market customers are generally satisfied with their financial providers, a majority of them feel they need better advice and guidance. Banks can capture a larger share of investment services revenue through innovative bundling, starter investor accounts, special purpose products and provision of low-cost, basic investment advice through the Internet. The needs of the affluent market require an assortment of personalized investment products and services. The affluent in emerging economies represent a particularly attractive market segment.

Create Innovative Product and Services

Financial institutions can target the mass market through a focus on simplifying both products and the transaction process. While financial institutions have historically created products and services within strict product line definitions, consumers have tended to view the market through a needs-based perspective.

Innovative products could include:

• Mutual funds starter accounts


• Grouped family starter accounts


• Guaranteed long-term tuition savings accounts

Develop An Appropriate Brand Strategy

Today, many financial services institutions still connect their brands with functionality and not with an overall customer experience as a goal. Many customers view their financial institutions as a place to conduct trustworthy transactions but not as a partner in managing and advancing their financial well being. This perception needs to be changed.

Affluent customers demand access to the broadest possible range of global investment products and services. As such, financial institutions need global financial planning sophistication to serve these customers, which require considerable investment in developing in-house capability or co-branding with other institutions.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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