Securities: Value-added services change the distribution model

Customer demand places new, different requirements on market suppliers, which in turn leads to the development of the supply. An ever-changing, evolving market. Whether in the automotive industry, the entertainment industry or the financial market - suppliers must meet the requirements of their customers in order to remain profitable and attractive for their customers. The product range is no longer sufficient. Customers want more: more performance and faster answers.

For this reason, many industries are already rethinking their range of products and services. The path moves away from the sales models and towards adapted service packages around the products. The current account business, for example, responded to customer needs, resulting in new services for its customers, such as personal finance management.

What are the developments and opportunities for the wealth management business? In which direction is sales, distribution and service developing?


Changing customer perceptions - increasing requirements

Customers want fast and bespoke services for their problems. If you don't deliver, you lose.
In the course of digitalisation, the demands of customers on the services provided by companies are increasingly significant. Customers want precise answers to their inquiries – comprehensive and fast. The quality of the answers and the appreciation of the customer cannot be lost.

According to an IBM study on customer service and customer expectations for telephone enquiries (http://telecoms.com/wp-content/blogs.dir/1/files/2016/10/Virtual_Agent_Whitepaper.pdf), the maximum waiting time acceptable is 1-3 minutes. Online an answer must be given even faster. In addition, a study published by WDS on customer loyalty shows that only 13% of customers show the level of customer loyalty that prevents them from switching (https://www.rcrwireless.com/20130321/carriers/telecom-analytics-the-path-customers-loyalty-analytics).


Experience and added value at the forefront of our services

The studies show a clear direction of the developments: The customer experience is an important decision criteria. This must be expanded with regard to the range of products and services on offer. Otherwise, customers will be lost and concomitantly, sales and market share will follow.

In some industries, the trend towards value-added services is already successfully up and running. Customers are offered qualitative added value in the service.

BMW, for example, offers a ConnectedDrive Service, which not only provides customers with assistance with the Auto Assistant, but also offers useful value-added services across all devices (https://www.bmw.de/de/topics/faszination-bmw/connecteddrive/connecteddrive-services-offers/connecteddrive-how-to-use.html).

The streaming service Spotify offers its customers not only a service but also offers service functions with different exciting content. Music suggestions based on the music listened to or streaming without WLAN are only two of many functions that offer the customer a more pleasant experience.


Good service models replace investments in product sales

Those who offer good and worthwhile service models for their customers will no longer need to invest in product sales in the future. Banks also have convincing service models in their account business. As examples, HaspaJoker from Hamburger Sparkasse or George from Erste Bank, offer customers more functionality and services than standard account services. Both providers present these services precisely and easily online. The customer can make the decision for the product on their own, easily and without sales efforts. Convincing Service - sales was yesterday.

The question that many banks and providers still ask themselves today is, how to generate profitably through sales? However, this is no longer necessary due to the range of useful, value-adding services. For example, customers could talk to Amazon Alexa about their account - maybe even transfer money if they invest in a higher priced account service model. Regardless of which value-added service they end up with, one thing is clear: sales will function via service models in the future.


Successful service models in securities

This strategy has to be established for securities accounts. Currently it’s: Sales via distribution. There are very little or no offers for these accounts or service models that provide added value for the customer and simplify sales for the bank. The providers are now facing this challenge. In future it will not be enough to advertise and sell products, even at a discount. Customers want more. Product plus service - fast and accurate.

How could this look in the securities accounts business: Banks offer their customers service models for their portfolios that include various value-added services (overview, administration, execution via AI). Services that make life easier for securities account customers and make it even easier to integrate securities account management into everyday life. With the corresponding service packages, banks can generate revenues over a constant period of time. The distribution of the products goes along with it. The sales model is supplemented by a service model that offers customers added value and appreciation.

Targobank has a deposit model on the market which varies in services and costs for customers - different prices, different services and added value. We expect the entire market to develop in this direction in the not too distant future. The potential is great. However, advanced service models can also be expanded further. It would be conceivable, for example, to connect the securities account with AI :"My securities account talks to me".


The prerequisite: good and very fast systems

As IBM's study already shows, customers want solutions that meet their needs to be delivered extremely quickly, if not in real time. An interaction between the portfolio system and a voice interface requires an enormous performance of the delivering system.

Processes and securities account balances must be calculated automatically and ad hoc to be able to respond to customer inquiries in real time. In order to increase the success for the institutions through scaling and to make the model successful, this calculation must be carried out in seconds for several thousand customers and securities accounts. To meet customer expectations, the answers must not be delayed. Therefore the system also has to be extremely fast for the individual customer and calculate and deliver all the information in real time.


The Solution: Speed, Flexibility, Mass Suitability

These three components are prerequisites for a modern securities business which is accepted by the customer. Why?

Because only in this combination can genuine value-added services and acceptable response times be generated for the customer. Refined data in milliseconds for all customers - with current legacy systems, this cannot be achieved!

So far, the financial sector has been characterised by heterogeneous IT landscapes with many self-developed systems. These are stable, safe and reliable. But rarely, flexible, easy to integrate and geared to supplying demanding "consumers". As a result, in addition to increasing operating costs, the development of modern applications for personal portfolios is becoming increasingly difficult. Modern institutes therefore rely on two-speed architecture. The stable legacy systems are supplemented by special systems based on them.

The solution for the securities business: A Wealth integration layer with high performance APIs. Such systems can handle huge amounts of data as raw material from legacy systems, refine them quickly, flexibly into condensed information and mass suitable to make it available for all customer systems. To this end, state-of-the-art technologies are used and consistently applied to the challenges of bank IT in digitalisation.

Modern systems offer a variety of services for this purpose. Each of these services should be individually configurable via call parameters. This enables them to be used as infrastructure components to supply many different user groups with refined data.

 

In concrete terms: regular portfolio reporting and detailed analyses at all levels (customer, group of customers, securities, asset class, organisational structure, etc.) that are available on demand. Such systems can also be operated in the cloud, but best case they can also run in their own data center. As a result, a securities IT architecture will be created in order to counter market and custody developments and successfully manage them.

Previous news News overview Next News