Knowledge

The need to recover margins and face new competitive dynamics requires financial institutions to radically transform their business models.

Therefore

Profound change of all the main elements of the “way of doing business”:

• Governance around innovation
• Supply system
• Organization and processes
• IT systems and platforms

Financial institutions often adopt a passive approach towards their clients and the digital evolution will require them to play an “active” role towards their customers and all stakeholders.

Therefore, it is necessary to design Customer Care policies in order to accompany the customer in the “delicate” moments of the relationship (“fall risk”):

• Proactive and non-reactive approach
• Construction of an “active” and dynamic care program
• Targeted services
• Personalized management of failures/ complaints

Financial institutions’ pricing policies are not always optimized and governance is not always steady. This impacts distribution effectiveness and margins.

Therefore

Financial players need to seek marginality in offering and product pricing, identifying areas of inconsistency in their offering system and opportunities for recovering margins from regulatory enforcement:

• Dynamic pricing
• Competitive benchmarking
• Price components (industrial sustainability)
• Commercial policies, rules and processes
• Pricing governance
• Repricing policies

The profitability of financial institutions requires a continuous search for operational and organizational efficiency that must go beyond cost reduction.

Therefore:

Financial institutions must give cost reduction policies a strategic and constant value over time:

• Strategic relevance of the Procurement Office
• Functioning and span of interventions of the Procurement Office
• Research of synergies and outsourcing
• Design-to-cost

The transformation of operational data into targeted contacts, sales acts and improved services is the future engine of profitability.

Therefore:

Financial institutions need to “align” strategic guidelines with inputs to networks and monitoring system to maximize revenues:

• Data and CRM architecture
• Leads generation algorithms
• Translation into sales campaigns
• Strategy and sales alignment through execution
• Monitoring reports

The evolution of market needs, the entry of new competitors and new regulations have a strong impact on payment systems, forcing the search for new solutions.

Therefore:

Financial institutions will have to define new strategies in relation to their payment systems:

• Strategic role of e-money and payment systems
• Business development and profitability assessment
• Review of the offer system
• Operational efficiency of the model
• Strengthening compliance

Financial Institutions operate in a highly regulated sector and business development will increasingly need to consider regulatory enforcements.

Therefore:

Financial institutions in defining their strategies cannot ignore responding to (and possibly anticipating) regulatory solicitations, while trying to minimize the impact on their businesses:

• Adaptations to specific regulatory areas (MiFID II, PSD2, Solvency II…)
• Preventive check up
• Definition and implementation of remediation plans
• Governance mechanisms

The profound transformation taking place in the financial services sector (particularly in banking) requires a radical overhaul of corporate culture and a greater orientation towards “flexibility” and the ability to “adapt”.

Therefore

Financial institutions must carefully oversee change programs through the construction of effective and credible Change Management plans:

• Involvement of all Stakeholders
• Commitment from top management and identification of change agents
• Definition of an “agile” organization and a structured program
• Adoption of a “try and error” logic
• Human resources (above all)

Banks, Insurance and Wealth Management Companies’ will be subjected to a strong concentration trend. Players need to focus on economies of scale to remain profitable. Nevertheless, the benefits stemming from merger plans are not evident.

Therefore

The governance of a Post Merge project requires:

• The control of hard aspects with a top down approach on single issues and with vertical competences
• The adoption of soft aspects with a bottom-up approach on transversal aspects such as culture and commitment of all the structures involved