10 business trends to watch in 2017 – New revenue sources (3/10)

Banks, asset and wealth managers, as well as insurers are scrambling to find new revenue sources and ways to grow: organically, by introducing new services, through acquisitions, or by developing strategic partnerships.

Growing the top line is challenging, as consumers grow accustomed to paying little or nothing for products and financial services. Inspired by their experience with other, advertising-supported businesses, they’ve come to expect most services for free. They also want interactions to be effortless, personal, and fast. From banking to insurance to asset and wealth management, 2016 had a somewhat lower M&A profile than the previous year. But some financial institutions still made strategic acquisitions to consolidate and to acquire technology.

For new revenue sources, go where customers are

Financial institutions have to become part of the daily lives of their users. If they’re targeting customers who want to achieve financial fitness, for example, they should provide products that bundle advice with reviews and service. They should also make interactions fun and rewarding.

Leading financial institutions will use digital tools to discover unmet needs. They will commit to strategic investments that let them understand how to meet those needs. We expect firms to analyse more thoroughly structured and unstructured data to anticipate rather than reacting to events. This changes everything—from fighting fraud to preventing insurance losses to spotting new sources of revenue. The underlying conditions for M&A activity will remain in place in 2017, but we also expect firms to invest in developing alliances, partnerships, and joint ventures. These other business relationships can make it easier for them to address client needs more quickly.

This year will favour firms that need to learn fast, fail fast, and partner as needed. Financial institutions have to understand how disruptors innovate and reshape their own thinking accordingly. It will also be the year of non-traditional relationships, with a greater emphasis on new ways to access and share data.

 

 

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