Step two is assessing your strengths and defining the opportunities for which you can respond. We have defined four Advantage Factors below (and go in-depth within our toolkit).
And step three is putting those advantage factors into immediate action from a tactical standpoint. Defining the specific things your sales and marketing teams can go out and do quickly.
Hortz: What are the biggest advantages for incumbent financial services firms to focus on in developing a disruption response?
Lewis: There are four core advantages we see incumbents needing to leverage as quickly as possible:
1. Existing Revenue Pathways – Incumbents have a strong customer following and established position. They need to harness their client base to refine and broaden their appeal. Our research indicates financial services incumbents typically have significant customer loyalty. So, an example might be to focus on loyalty of their customers – identifying those key segments most likely to switch and rewarding their loyalty.
2. Audience Perceptivity – Incumbents have a massive amount of historical data and insights to gain a greater perception into market needs. Using this data to their advantage might mean increasing overall personalization, matching the right content to the right buyer, and understanding when and where to engage with buyers based on what that data says. If we pull an example from the insurance industry, State Farm did a great job at leveraging data to improve their digital experience (along with the hiring of a Chief Digital Officer) and increased their app installs and online bill payment as a result.
3. Omnichannel Presence – Fintech entrants by nature are going to use technology as their main product delivery platform. But our research shows physical presence in a community, in-person, or over the phone is still sought after. This might mean enhancing those experiences. Capital One, built a new experience for customers by offering coworking spaces, free wi-fi, and conference rooms with their “Cafes.” In turn, they quickly saw an uptick in millennial deposits.
4. Brand Platform – The most underused tool is a brand’s platform. Fintech entrants will struggle to delineate their brand and build awareness. But incumbents already have an established brand platform. Incumbents need to emphasize this and for example, stress their ability to service more customer needs than that of an upstart.
Hortz: What are the biggest obstacles and challenges for companies in making these needed changes?
Lewis: The slow-moving nature of financial services firm innovation, combined with extended timeframes of disruption, can often lead to delayed response or inaction. At the macro-level, we see industry leaders taking disruption seriously and working to build innovation across their products and services as well as changing their culture.