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Client loyalty in the cyberfinance-world

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Charles Goldfinger www.gefma.com Client loyalty in the cyberfinance-world Forum Banca & seguros Lisbon, December 3 2002 Presentation plan Digital tornado and ... – PowerPoint PPT presentation

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Title: Client loyalty in the cyberfinance-world


1
Client loyalty in the cyberfinance-world
Charles Goldfinger www.gefma.com
  • Forum Banca seguros
  • Lisbon, December 3 2002

2
Presentation plan
  • Digital tornado and financial hurricane
  • Cyberfinance lessons of experience
  • No disintermediation
  • Triumph of click and mortar
  • Cyberfinance challenges
  • From multi-channel to cross-channel
  • Smart customer
  • Capturing value

3
Digital tornado
  • There is no Internet hype !
  • We tend to overestimate the speed of change in
    the short term and underestimate in the longer
    run
  • - Unprecedented rate of growth
  • Years to reach 50 MM users
  • Radio - 38 years
  • TV - 15 years
  • Internet - 5 years
  • Unprecedented scope of change
  • Telecommunications realm
  • Information Technology Realm
  • Business realm

4
Digital tornado
  • Three dimensions of Internet revolution
  • Telecommunication protocol
  • Infinite connectivity
  • Information architecture
  • Network computer convergence
  • Business model
  • Abundance management

5
Digital tornado
  • Information architecture
  • From centralised
  • Master - slave
  • ...to distributed
  • Client - server
  • ..to ubiquitous
  • Peer - to- peer

Network is the computer
and
Computer is a network
6
Digital tornado
  • Infrastructure - network dissociation
  • From physical to virtual
  • From dedicated to shared

Before
Network
Infrastructure
Now
Network
7
Digital tornado
  • Business Model impact
  • No disintermediation
  • Growing demand for intermediation
  • Markets
  • Systems
  • Middleware
  • Upheaval
  • but no disruption

8
Financial hurricane
  • From geofinance

to eurofinance
and cyberfinance
9
Financial hurricane
  • Cyberfinance
  • Financial services is the domain where Internet
    impact has been the strongest

E-commerce market share (in of total turnover)
10
Cyberfinance
  • Ubiqutuous reach

Financial markets
Wholesale banking
Fundmanagement
RetailBanking
Insurance
Financial Data
11
Cyberfinance
  • New configuration

B2B banking
E-markets
Asset management
E-Banking
Riskmanagement
Financial Portals
12
Cyberfinance
  • Preliminary lessons of experience
  • E-finance is only beginning
  • Blurring boundaries
  • Finance Technology
  • Information Transaction
  • Financial institutions Technology providers
  • Key role of incumbents
  •  Click and mortar  model dominant

All finance is becoming cyberfinance
13
Cyberfinance
  • Lessons of experience Internet banking
  • Initial prophecies
  • Low costs
  • Ease of entry
  • Revolutionary impact

Killer application !
BAH famous transaction cost diagram
14
Cyberfinance
  • Lessons of experience Internet banking
  • Iceberg costs
  • Implementation complexity
  • Client acquisition
  • Difficult entry
  • Obstacle course
  • No revolutionary impact

Not a Killer application !
15
Cyberfinance
  • Lessons of experience Internet banking
  • No salvation outside click and mortar
  • Success stories
  • Nordea
  • Wells Fargo
  • Bradesco
  • Critical success factors
  • Integration
  • Technology
  • Marketing
  • Business models

16
Cyberfinance
  • Key challenges
  • Technology
  • Not just another channel
  • Customers
  • End of asymmetry
  • Smart customer
  • Business model
  • Capturing value

17
Cyberfinance
  • Technology challenge
  • From multi-channel architecture.

18
Cyberfinance
  • Technology challenge
  • to cross-channel architecture

TCP/IP
19
Cyberfinance
  • Technology challenges
  • Integration imperative
  • From e-finance to m-finance
  • Anytime
  • Anywhere
  • Anyway

20
Cyberfinance
  • Customer challenge
  • Three structural trends
  • Lower transactions costs
  • Market power shift

Distributor
Producer
Consumer
  • End of information and knowledge asymmetry
  • Goldfingers law

21
Cyberfinance
  • Customer challenge
  • Willingness to search
  • Quality imperative
  • Willingness to shop
  • Willingness to pay
  • Failure tolerance
  • Loyalty

22
Cyberfinance
  • Customer challenge
  • Conflicting trends
  • Time pressures
  • Convenience
  • Low search costs
  • Better information
  • One-stop shop
  • Best of breed

Financial supermarkets
Specialised providers
23
Cyberfinance
  • Customer challenge
  • Mixed experience
  • Financial supermarkets
  • What synergies for customers ?
  • Internal turf wars and co-ordination costs
  • Cross-selling challenge
  • Specialised providers
  • Preserving talent
  • Maintaining competitive advantage
  • Avoiding mid-size trap
  • Too small or too big

24
Cyberfinance
  • Customer challenge
  • Third way Aggregation
  • Best of both approaches
  • Advantages
  • Convenience
  • Broad choice
  • Capitalising on common standards
  • Hurdles
  • Permanent tension between aggregators and service
    providers
  • Brand primacy
  • Revenue sharing
  • Privacy protection
  • Customer trust

25
Cyberfinance
  • Customer challenge
  • Aggregation experience to date
  • More developed in US than in Europe
  • Tradition of vertical integration in Europe
  • Challenge of cross-border integration
  • Focus on
  • Information consolidation
  • Technology convergence
  • Not so common standards
  • No customer rush
  • Yoodlee
  • Less than 1 million clients

26
Cybefinance
  • Business model challenge
  • Great difficulty of catching value
  • Willingness to pay
  • Growing importance of indirect revenues
  • Manchester United model
  • 80 000 paying ticketholders
  • 50 000 000 non-paying fans
  • Retail banking model
  • Float vs. service services

27
Cyberfinance
  • Business model challenge
  • Proliferation of pricing systems and mechanisms
  • Direct payments
  • Third party payments
  • Advertising
  • Supplier rebates
  • Services commissions
  • Spread capture

Catch value when and where you can
28
Cyberfinance
  • Business model challenge
  • From CRM to DTM
  • Dynamic Transaction Management

Simulate analyze dynamic pricing
System Performance, Scalabilityand Real Time
Control Multiple Revenue Streams
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