Addresses Japanese Financial Services Executives at High-Level Hitachi Seminar
Hitachi Executive Seminar for Financial Institutions, Tokyo, Japan (Dec. 18, 2002) – TowerGroup president and CEO Mark Sievewright today outlined several key trends and challenges facing institutions in the global financial services arena. His remarks opened the Hitachi Executive Seminar for Financial Institutions, attended by high-level Japanese financial services executives.
In his comments, Sievewright discussed how macro industry trends – such as the need to forge more customer-focused strategies, invest more effectively in information technology, and increase revenues – will impact both the business and technology strategies of Japanese financial institutions. In summarizing the most critical of these trends, Sievewright outlined what TowerGroup terms the “Five Cs”:
- Customer Focus – Financial institutions looking to expand their customer base must maintain a laser-sharp focus on the customer segment, while simultaneously working to improve product offerings. Sievewright added that “fragmentation of customer data is the single greatest issue facing financial institutions as they seek to expand ‘share of wallet’ among their customer base.”
- Channels – Multiple delivery channels for retail banking services provide the most effective way to fulfill customers’ varied needs. Sievewright said, “The Internet will become even more important for financial institutions as a channel for linking customers, partners, suppliers and staff in the future. And TowerGroup believes the Internet’s importance in the sector will grow significantly in the next three years.”
- Cost of Ownership – Despite the soft global economy, financial institutions must continue to invest in information technology to improve service, streamline internal processes and ultimately gain competitive advantage. Sievewright added that outsourcing and off-shoring have seen a resurgence within the industry as financial institutions seek to contain the cost of expensive processes. He warned against outsourcing for the wrong reasons, stating that “cost and expense reduction in itself should not be the sole reason for outsourcing.”
- Consolidation – Financial services institutions are experiencing consolidation on a massive scale, driven by technology, regulatory changes in the marketplace, and the need to maximize the value of customer offerings.
- Convergence – Convergence of service offerings continues throughout in the industry. In the U.S., many banks are essentially transforming into “financial supermarkets” by offering a full range of financial products to their customers.
“Each of the major trends driving the industry on a global basis present unique challenges for financial services players,” noted Sievewright. “A greater focus on customer needs and multiple delivery channels both require a more sophisticated, and in many cases more personalized, approach to product distribution and customer services. And while trends like consolidation and convergence both require significant investments in human and technology resources, there will continue to be a strong push to drive down total cost of ownership.”
About TowerGroup: TowerGroup provides a comprehensive range of research and advisory services focused on the financial services industry, bringing some of the world’s largest financial services, technology, and consulting firms a deeper understanding of the business and technology issues impacting them. Headquartered near Boston in Needham, Massachusetts, and with offices in New York, London, and Kuala Lumpur, TowerGroup serves a global client base.