Global Trends For the Financial Service Industry

As the economic crisis continues to unfold, the financial service industry faces serious challenges. The crisis is rooted in continuous imbalances, including long periods of low interest rates, rapidly rising asset prices, and massive credit and savings imbalances. The 2007 and 2008 Reports from the World Economic Forum predicted these changes as continuous risk to the market.

Earlier decades of exceptional growth and capitalism at its best have now caused the market to adapt to tighter credit, growing government intervention, slowing pace of globalization, and no economic growth. With increasing regulations in the United States and decreasing availability of credit, the industry faces a significant risk of stunted growth. The global recession is also affecting the financial sector because of capital markets and decreased aggregate demand, according to Max von Bismarck, Director and Head of Investor Industries.

This article will provide leaders, employees and investors in the financial service industry with five unique and timely trends to keep in the forefront of their growth strategies for the next five years. These five key trends will shape the post financial crisis in a holistic and systematic manner.

FIVE KEY TRENDS

GLOBAL BANKING. According to the World Bank, although many banks such as American Express, Citibank and JPMorgan Chase conduct business in multiple countries, they are relatively regional in the United States. In order to grow, the financial industry will have to infiltrate emerging markets. For companies that have a more aggressive growth strategy, the spread to emerging markets such as Africa and Asia presents unparalleled opportunities for profit and increased market share.

IT PLATFORM SHARING. Network World confirms that financial service firms’ business strategies must be altered for the new dynamics and intricacies of today’s market. Immediate access to information and integration along product lines and geography are a must for future success. With the need to supply information to a global market, firms must decrease cost. One cost effective initiative is the use of platform sharing; like cell phone companies that collaborate with local companies in order to decrease cost and increase access, financial firms can do the same.

E-BANKING. A special report from The Economist sees that with 3.5 billion people with cell phones and an expected 10-20% year over year growth, personal and business banking transactions are conducted through cell phones more and more. Thus, E-banking capability is quickly becoming an increasing requirement in order to compete in the marketplace. E-banking capabilities provide companies with essential flexibility and differentiation in the market through Internet-based service applications.

MOBILE MONEY. The increase of mobile phone usage in emerging markets makes mobile money a safe, low cost initiative for the financial sector. It is an easier way to transfer money to family and friends, money is sent, and payments and withdrawals can be made without ever going to a physical bank or payment center. M-Pesa, an early developer of mobile money, concluded that mobile money “has enormous social and economic benefits.”

SELF-SERVICE. Self-service and the customer should be a primary focus for firms in this new financial service world, according to IBM. AppViewXS is a self-service portal firms can purchase, so customers can check the status of their account and gain instant access to available services. Customer questions and concerns are addressed more quickly, states an IBM representative. This technology automates many processes; the result is that staff workload is reduced while representatives operate faster and more efficiently.

Financial service firms need to have sustainable, steady expansion in the emerging markets in order to grow in the future. Deloitte and Touche Research reports that financial service firms have not positioned themselves to capitalize on more geographically dispersed opportunities. More than 93 percent of the executives interviewed for this report acknowledged that their firms “are not operating in a globally integrated fashion.”

The same report states that financial firms need to invest away from veteran or mature markets and toward emerging markets because “by 2025, veteran markets will be rivaled by other markets with faster growing economies and increasingly sophisticated financial product appetites.” USA based firms can look toward Japanese and African markets for expansion opportunities. Kennedy Consulting analysts believe that the market will rebound from the global financial crisis in 2011, but there will not be any return to the robust levels prior to 2007 until much later in the decade; hopefully, the five key trends in this report will help the leaders, employees and investors in the financial service industry to look toward a robust sound future.

In addition to growth strategies, in the 2002 Journal of Business and Industrial Marketing, Henson and Wilson discuss the extreme changes that have occurred in the financial service industry and how many firms are trying to develop and execute successful strategies based on innovative technology and customers. Aside from the regular ups and downs of the financial world, technology and innovation will always prevail as the win-win for the financial service industry. Because online banking has become the norm for most customers, technology will be very important in these firms’ strategies.

With the customer at the center of most trends in financial service firms, creating new values for their current and potential clients beyond current expectations will be a top priority. The need for convenience mixed with technology makes mobile money a great initiative in the emerging as well as the developed markets. Many firms have speed pay, the ability to pay without swiping the card, as part of their credit card services. An embedded chip in the credit card enables payments to be made by putting the card close to the payment processor. Mobile money will be an expansion of payment and money transfers without the need for a card, the need to go to a physical bank, or to use Internet banking. Payments, transfers, deposits and withdrawals can be made with a cell phone.

The World Bank concurs that innovative technology and an increase in e-business strategies will lead to much lower costs and greater competition in financial services. Internet and related technologies, the World Bank affirms, are more than just new delivery channels; they are an inexpensive, different, and very effective way to provide the same services. Since financial service firms must grow organically, build customer loyalty, and accommodate the customers’ expanding needs for services and convenience, partnerships with new technology businesses will allow them to lower their expenses and be competitive.

Established firms such as Amex, Citibank, and others can partner with groups such as the wired tech savvy Google Alumni who are not averse to risk and who own fledgling technology businesses that are reshaping the industry with a new wave of innovative products, write Spencer Ante and Kimberly Weisul of Business Week. Mobile Money Ventures is one such fledgling company that is a provider on the forefront of alternative financial service products. Small companies such as these are able to provide well-known financial firms the wherewithal to open in emerging markets where there is a need for cooperation with other firms in order to attain then obtain the local customer base.

Today’s competition is fueled not just by profitable customers, but also by the firms that are the most efficient and cost effective. Procedural and cultural clash will result from expanding into unknown markets as seen by the history of Citibank in Asia Minor. But in the long run, tighter regulations, new technology and improved business processes will cause expanding in emerging markets not only to change the demographics of the clients (both geographically and core clients), but also to better the global economy and the future of the financial services industry. Keeping the previous trends at the forefront of managers’ strategic plans, financial firms will rebound bigger and better than ever.

Cost Effective Business Services

A business services franchise is a good option for many who are willing to serve the corporate world. A business franchisee needs an investment in terms of fees, real estate, marketing, merchandise etc. there are both small business services as well as high cost businesses in the category. Here we discuss some prominent business services franchises.

Financial services: The financial services space is rapidly growing in India. It is one of the most significant business services in India. According to the latest Central Statistical Organisation (CSO) data, financial services, banking, insurance and real estate sectors have risen by 7.8 per cent in the third quarter of 2009-10. This displays the success of the financial service industry. With the over-all increase in the finance services seekers, finance service providers took to franchise route, thus creating a great scope for franchise opportunity.

Till a few years back, the franchising which was an unknown concept in this field has gained lot of momentum in the present times. Before discussing the factors responsible for this development, let us first get familiar with the term ‘Financial services franchisors’.

Financial services refer to services provided by the financial service companies. The finance service companies encompass a broad range of organisations that deal with money management. A few of these organisations include banks, insurance companies, consumer finance companies, stock brokerages, investment funds etc. These companies offer various services such as asset protection, investment and savings, retirement plans, customer-orientated service, besides offering personal loans, commercial loans, mortgage loans, and education loans for the aspiring students. Financial service providers are on the rise as franchising as a mode of expansion is being opted by this industry. Manish Shah, Associate Director- Business Strategy, Equity & Product Development, Motilal Oswal Securities Ltd shared, “The belief in entrepreneurship and the drive it brings to the business, made Motilal Oswal take the franchise route. Franchising brings more scalability to the business and the business becomes entrepreneur driven.”

Courier Services: Another category of business services is courier service. The companies basically work around transportation of goods from one place to another, delivery of documents, packages, and larger shipments of products. These provide services to companies and individuals who need rapid service, accountability, and tracking that regular mail does not accommodate. Courier services are more reliable and dependable as compared to ordinary postal services due to less time consumed and delivery guarantee. However, with the introduction of modern gadgets and faster modes of transportation this system has also progressed a lot. Moreover, franchising is also one of the main stimulants of its popularity and profitability.

Franchising in this sector has grown with more and more players taking the franchise model for reaching out to far flung areas in the vast nation. Courier service companies are required to deliever important mails and parcels to any part, whether city, town or village in the country. Therefore, franchising can be the best mode for guaranteed delivery of the items. According to DS Patel, Channel Head, DTDC, “Franchising is an essential and most effective way of expanding the network. Opening our own company owned courier offices is very expensive and time consuming. However a franchise outlet is economically beneficial to the company.” As informed by Praveen Govindraj, Assistant General Manager, First Flight Courier, “Franchising definitely helps in directly reaching to far-fling areas for delivering items due to our local partners in those areas.” He further added, “Franchising can be a win-win situation for both the franchisor and franchisees as both benefit from it. The local partner (franchisee) has a much better idea of a particular locality than the main company which is based out of Delhi or Mumbai. Delivering parcels to small towns and cities becomes difficult and also take a lot of time if it is done by the company in metropolitan areas. At such times the local franchisee can be of great help.” This can be the major reason for courier companies to opt for the franchise route. Moreover, having local partners all over the nation, who deliver all items on time, also increases the credibility and profit making of the parent company.

The typical feature of the courier service franchise includes doorstep booking, customer convenience and security of each and every consignment that has been entrusted to it. Jaguar Couriers Franchise, Blazeflash Couriers, etc are some of the franchising companies under this category.

Cartridge refilling: Cartridge refilling forms another business service category. In the modern age of I.T, there is a constantly growing need of cartridgere-fills. Foraying in the cartridge refill industry through franchise route is a promising venture. A cartridge refill franchise offers to its user’s quality refills at a fractional cost. Current industry trends and future projections suggest that printer cartridges demand will continue to multiply at a very fast pace as computers and low cost printers swamp the market. Cartridge World, Cartridge CafĂ©, Cartridge Xpress are some of the good low-cost franchise options.

Challenges

Every business has attached to it certain set of challenges. Though the basic challenges remain the same across the board for all business service franchises, their relevance with each sector differs.
Before opting for any of the above options, clear all your doubts. Apart from your initial investment, take into account the ongoing costs that must be paid to your franchisor, including franchise royalties, marketing fees and other required purchases. After you are convinced go ahead and make your mark in the franchising world!

Life In The Service Industry

The title “Service Industry” is a broad and encompassing term that includes business enterprises ranging from courier and delivery to the high tech industry; from the grocery to the gas station to the hospital and all businesses in between. Obviously, various business ventures are geared to present their wares to particular clients and customers but they all have a common thread – service to their clientele. This “service” may be excellent or it may be horrendous. In these articles we will explore the concepts of service and repercussions of the good, the mediocre and the bad with the intention of improving the service commitment of the readers to their customer.

PERSONAL QUALIFICATIONS

My personal background in the service industry is in the telecommunications field. Beginning my career in 1970 with the Bell System before Divestiture, I left after the government forced the breakup of Ma Bell and have been in the private business world of telecommunications ever since.

During the early years of my career I was taught the importance of customer service and maintaining the correct relationship to customers. Two of the Bell System’s top priorities were “safety” and “customer service”; safety for the employees and service for the customer which included a high quality in the standard of work practices and ethic.

Becoming a business owner, I was introduced to business world situations that a novice could never have dreamed of and it is always rewarding to work through them. I believe that our strong commitment to service excellence is what has carried our company for 22 years. The service excellence ethic that I had been taught and conformed to was easily incorporated into my business. Instilling this ethic into the hearts of technicians that haven’t come from that environment has always been the challenge. Some get it and make great team members. We all agree that everyone in our business has basically the same products and pricing. What sets us apart is our commitment to our customer’s needs when they need us.

THE QUEST FOR SERVICE EXCELLENCE

The particular industry with which you are connected doesn’t matter. The concepts that we will discuss remain valid for all with the result being to safely provide a quality product to your customer and make a profit in the process.

When we hear the word “service” in the context of the business world, it brings to mind someone providing a desired product, tangible or not, to someone else. This product should be designed to bring satisfaction to the customer and bring them to the point of willingly rendering legal tender to the provider. When it all works properly, the customer is satisfied with the product and the provider makes a reasonable profit and is able to comfortably seek another customer and not be apprehensive to invite former customers back.

Of course, I have just explained free enterprise and what happens when the system is employed properly. The proper understanding of providing service to customers and clients makes the American economy tick. The misunderstanding of providing customer service makes consumers sick.

May I say up front that making a profit is not a sin to be shunned but is the backbone of free enterprise. The potential of owning a profitable business keeps the entrepreneur focused on his goals and this in turn provides jobs to the economy. As in anything else in this world, overindulgence and the extravagant and unnecessary profit by taking advantage of others is wrong. But the enjoyment of a reasonable profit for a business will keep that business alive and healthy for you, the customer to return and claim that great product again.

IT ALL BEGINS WITH ATTITUDE

A Service Manager who I know told his boss, “We have spoiled our customers!” The boss said, “Yes, we want every one of them to think that we have our tools in hand and our hand on the doorknob just waiting for their call.” That’s the service attitude it takes.

In our next posts we will discuss Service Attitude, Performance, Leadership and Stories and Experiences of the sometimes roller coaster ride and never dull life in the service business.

LIFE IN THE SERVICE INDUSTRY PART 2

IT ALL BEGINS WITH ATTITUDE

Providing great customer service starts when you get up each day. It begins with ATTITUDE. I don’t believe this is just a simple clichĂ©. The life you live each day begins with an attitude of some kind. Abraham Lincoln said words to the effect that a man is just about as happy as he makes up his mind to be. I have seen that to be true with a service mindset also. You can allow situations to occupy your thinking or you can put those aside, concentrate on providing properly for your customer and then pick them up later at an appropriate time. Don’t worry. They will be there waiting for you.

We know that most days are filled with challenges of all kinds. Employees, schedules, equipment breakdowns, customer complaints…the list goes on. So if you know at the outset this is going to be the usual day, why begin in a grumpy mood? You already have a head start on it by knowing what to expect, so make it a positive. You are only making your day more difficult if you dwell on the negative that will come. Be tenacious as you greet each new challenge. When you work through it to success, your reward of satisfaction will be awesome; and if a customer witnesses your positive approach to their problem, you will raise your value with them.

A good example from our industry is when a customer is having problems with one of their service providers, i.e. local phone company, internet or long distance provider. Many times they can’t relate the problem they are having properly and talk the tech language that is required. The customer is always relieved when we step in, spend the time with the support group and follow the trouble ticket to completion. We assure them that we will take care of the situation and that they can get back to doing what they do best in their business.

Sales turnaround specialist Lou Ludwig says, “If we don’t wow them, it’s likely that we won’t do business with them…this is not a casual occurrence, it’s a planned and consistent activity.” Looking for ways to “wow” customers should be a daily exercise. Many times the seemingly insignificant things will speak the loudest to customers.

Another example from our experience is brought to mind. More than once we have been congratulated on leaving our work area like we found it or in better condition. We have all seen cluttered, dirty closets where communications equipment is located. That closet may not have been swept in the last 10 years, but when we left it was clean. For the observant customer, this speaks volumes about who we are.

Now, relate these examples to your personal industry. How can you perform a little better and provide a “wow” for your next customer? Maybe an extra special greeting to them when they walk in; maybe a little something additional added at no cost to their purchase; maybe asking them how their family is. One wise man said, “Everyone walks through life with a sign around their neck that says ‘make me feel important’.” If we can make that customer feel that they are important to us, they will be back time and time again.

I once employed a technician that was not a very good technician. However, he had the people skills that a service company should fervently seek. Customers loved him and even stood up for him when he needed to be reprimanded on a particular job. And they insisted that I and my service manager get to the bottom of the problem, because it certainly could not be the technician’s fault. So, we reworked the job and solved the problem without pressing the issue. The customer relationship was worth more than the immediate understanding of where the blame actually lay.

Are you attacking each day with a great customer service attitude? Is your priority to provide service excellence or just to make a profit? These two goals go hand in hand, and I believe the attitude of customer service comes first. If you are striving daily to provide the quality product that your customer desires, you are stretching a long way toward continuing to build a profitable business.

So, as the old song says, “Put on a happy face” and enjoy providing the service that you are capable of.

This will bring us next time to performance. You can say it all day long, but you must do it!

LIFE IN THE SERVICE INDUSTRY – PART 3

Performance

Performance is the key to your longevity in business. If you are in business, then you have put your reputation on the line as a performer that can get the job done. As you continually prove to your customers that you can perform, they will beat a trail back to your door when they need the service or product you provide. If you do not perform and have an unconcerned attitude for performing, then fold your tent, it’s just a matter of time.

Over the years I have been a witness to many varied personalities and attitudes in the service industry. Here are some examples:

1 – I have seen megalomaniacs who wanted everyone to know that they were God’s gift to their field of expertise. One such technician worked for me. He was a very intelligent person but could not perform when it came to customer or other employee relations. When I finally terminated him he was completely offended and questioned my decision, as he put it, “You don’t want to work with me anymore?” This was after I had presented 2 pages of customer complaints that had been discussed previously to no avail. He just couldn’t get past his own greatness. To my dismay, I waited too long to get this done and lost some business in the process.

Another such individual was a business owner. He was a friend and a very intelligent person. But his visions of grandeur about who he was became a flaw that he could not overcome and led to his company’s collapse because of his non performance with his customers.

These types of individuals are not willing to do whatever it takes to perform and provide customer service. In their world they are right every time and in all situations, and this leads to a less than acceptable performance level.

2 – On the other hand, I have seen people enter the workforce with no background in our business and become outstanding service performers because they realized that the most important aspect of our business is our customer. As we said last time, it all begins with attitude. The attitude to learn the business and perform for the customer is a gold mine for a small business owner when he finds this individual.

One young man came from the retail industry as a store manager. He had no technical background or computer skills. My concern was how he would acclimate to the high tech world. His attitude and customer skills propelled him to eventually be our service manager, overseeing a team of technical service performers daily.

We have all had less than desirable experiences with service providers. Maybe it does not bother you as it does me or maybe you’re not as sensitive to it as I. But when I see a waitperson or technician or delivery driver, etc with a frown or a trite attitude it really affects me in a negative way.

I realize that the situations in people’s lives are many and varied and can very easily become outwardly expressed in facial and voice expression. But this is what we have been discussing; you must get past this and concentrate on your customer for the long haul. They have problems too. Don’t provide an outlet in attitude and/or body language that potentially will ruin that relationship.

When a customer has a need, the good service performer goes to work to fill that need. If it’s a product, they will provide it; if it’s a service, they will get it accomplished; if it is working through a problem, their mindset will be, “It ain’t over until I win!” The businesses that employ people with these attitudes will perform and be recognized as the best in their industry.

In the best seller Good to Great, Jim Collins writes, “When you combine a culture of discipline with an ethic of entrepreneurship, you get the magic alchemy of great performance.” This is the prescription for maximum performance; the discipline of service excellence and the strong commitment to the work ethic. Mix them together and be proud of your service performance.

Service Industry Gets an Uptick From Recession’s Bottom

Most people do not realize it but the service sector of our economy in the US makes up the greatest portion of the jobs. Manufacturing is now the smallest well under 10% of the employment base. Retail is fairly large, but it’s nothing compared to the service industry. Having the service industry expand does indicate that we are coming off the bottom of the recession and things will be looking up from here on out.

Of course, we still have to worry about the commercial real estate market fallout, which will be significant and another huge hit on the banks, but the authorities, the fed, and the TARP monies are sitting on the sidelines ready to do something serious about it. Obviously, the service sector was hit hard as consumers in the middle class are spending less money going out to eat, and traveling. The hospitality industry has a huge chunk of service related jobs.

According to Industry Week in the first week of October 2009;

The ISM said the overall economic outlook remains clouded: “Even with the overall month-over-month growth reflected in the report this month, respondents’ comments vary by industry and remain mixed about business conditions and the overall economy. Services makes up the lion’s share of economic activity and employment, and is therefore critical to recovery from the long recession.”

The US economy cannot recover from the recession until the service industry recovers and starts replenishing those jobs that have been lost. As more and more companies see more and more customers, their profits will increase. They will have to hire back those workers they laid off. With more workers making a paycheck again, that means retail sales will go up, and therefore, manufacturing jobs will also increase because those retailers will need more inventory to replenish what they’ve sold.

This is a very good sign for economic recovery, almost as good as the stock market, which generally leads economy by 6 to 10 months, and it has been going up now for over six months. Please consider all this.