How to Survive (and Thrive) in 2020’s Competitive Market
January 16, 2020
by Adam Thornber, Managing Director, UK Practice
The financial services operating environment has evolved significantly over the last five years, shaped by regulatory and technical change aimed at promoting a more accessible market for new entrants while reducing the perceived advantage of the incumbent players.
The dominance of aggregators and intermediated sales channels has created a price comparison culture in the UK. As we look to 2020, there has never been more choice for the UK consumer or more competition for the UK lender.
As we look to 2020, there has never been more choice for the UK consumer or more competition for the UK lender.
This new age of competition has myriad impacts, chief among these being downward pressure on product margins and greater customer mobility. Consequently, the ability to get your product to market quickly and cheaply has never been more important.
Put trust in your greatest asset, your people
The theme of trust is ubiquitous in any banking system. Developments in technology and data often simply strive to create a digital certificate that mimics the traditional, time-honoured relationship between a ‘bank manager’ and their customers.
Trust your teams and the expertise you have assembled, give each accountable executive a budget they can use to advance the business.
It is the trust equation between bank and employee, however, that is sometimes overlooked. If you’ve built a team of industry experts to lead your credit card or mortgage business, logically you should trust them as the best source of ideas to drive it forward. By providing the tools (and budget) to enable your trusted team to deliver change, your organisation can create fully empowered and accountable teams.
Unfortunately, we don’t always see organisations operating in this manner. Instead, many spend enormous amounts of time and effort determining the strategic change agenda for their product lines without the benefit of their own expert teams.
We see these organisations trying to nail down scope and cost years in advance in order to secure budget from a central fund. In our opinion, much of this activity is throwaway—market dynamics and other macro developments inevitably move the goalposts before a project has even started.
What effect does this have on your trusted experts? It forces teams into a game of pseudo-specificity where benefits and cost are modelled to the nth degree simply to achieve the greatest hurdle to be negotiated—funding.
A better alternative? Trust your teams and the expertise you have assembled, give each accountable executive a budget they can use to advance the business when market opportunities present themselves.
Build a better manufacturing platform and capabilities
Ideas go nowhere without an effective delivery mechanism. Although Tesla (to cite an overused example) has the technology (batteries), the slick design and the marketing, because it has yet to master the art of manufacturing, it continues to struggle to turn a profit. Part of the problem may lie in how it empowers, integrates and structures its teams.
To avoid a similar fate, consider the following:
- Increase the autonomy of your business units to formulate and pursue product strategy. Trust your teams and the expertise you have assembled.
- Align the accountability for commercial performance with the means of delivering change to that business line.
- Strengthen the tollgates, checks and balances present within the enterprise project management journey. Do this in a way which prioritizes cost control, benefits accountability and customer impact. Encourage freedom of thought, not freedom from commercial realities or control.
- Position the voice of the customer (and colleague) at the centre of all product design to avoid inside-out thinking.
- Create ‘no regrets’ seed-funding budgets to enable feasibility assessments of strategies so that products can be completed cost effectively. This will also foster an entrepreneurial mindset.
Identifying an opportunity is the easy part—successfully exploiting it is another matter
Life is complex.
The opportunities (and threats) from Brexit and other developments may mean we’re headed into a period of deep uncertainty. But, for an organization with capable product and services launch platforms, the new year also presents opportunity. Accordingly, now is the time for your organisation to increase the autonomy of your business units through empowered teams. And, if you find yourself looking for insights on how to bolster your product and services platforms, consider turning to a trusted expert to help you navigate the coming year.