Now the challenge in the UK is to “get as many of the 17 million currently without access to the net online by the time of the Olympics in 2012”- (Martha Lane Fox – UK Digital Champion).

As the digital economy evolves there are inevitably winners and losers.  Market sectors such as Travel & Leisure, Retailing, Media and parts of the Financial Services have undergone a sea-change.  Ageing products, poor service and uncompetitive pricing are being challenged by both consumers and new market entrants.  For those companies left behind the impact has been severe.  Loss of market share and the decline of brand have led many of them to reappraise their operating rationale and even their long-term position in the market.

So who or what are the contributors to this self-service revolution?  Essentially, there is interplay of three basic elements – technology, consumer and suppliers – glued together by an insatiable desire for information.  When linked with other powerful market forces such as globalisation and global information access and distribution, they fundamentally reshape markets.  

Technology, by virtue of all its hardware and software forms, operating environments and low cost entry points, acts as the fundamental change agent in both leading and responding to consumer demand by virtue of its own inescapable growth laws (e.g. Moore’s law).  

Consumers meanwhile are harnessing the power and potential of technological innovations.  Hand-held mobile devices, downloaded software, vast information repositories, search engines and web-based product and services providers are all being harnessed.   The very concept of a customer relationship is being redefined with businesses.  

However, companies that lack the means to connect digitally with consumers are showing signs of strain.  There is evidence of in-built organisational inertia. The pace of change and speed in adopting new technologies is painfully slow.  Too often it is minimal investment, a grid-locked management structure and rigid ‘legacy’ operating environments that restrict a company’s ability to change.  All of which of course can make it unresponsive to rapid movements in the market and lead it in to trying to box the consumer into an ‘arthritic’ operating framework.

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In Financial Services not all organisations have approached the development and use of self-service channels from the same starting point.  Some retail banks regard the emergence of digital self-service as an opportunity to create a ‘low-value transaction’ channel.  This forces the customer base to use it for a range of commoditised activities (e.g. intra-account transfers, direct debit updates).  Using self-service for commoditised transactions, the branch network is able to concentrate on the ‘high-value opportunities’ – marketing and selling higher value profitable products and services to the customer.

On the other hand, insurers operating in the highly competitive General Insurance (GI) marketplace (focused on areas such as car, home and contents, travel) view self-service channels as a means to sell both commoditised and personalised products to a price-sensitive and brand-independent consumer base.  But this prized connection between insurer and consumer is now being heavily disrupted by ‘Product Aggregators’ such as Moneysupermarket.com, Confused.com, etc.   When the aggregators first appeared they provided comparison product/price search services, but now they are ‘e-intermediating’ themselves between consumer and insurer, offering a more comprehensive product purchase experience.  

But, irrespective of whether it is an insurer or a product aggregator digitally connecting to a consumer, research has shown that on average a web site has 8 seconds to convince a consumer that is has something to offer.  The challenge for the supplier therefore, is to create a sustainable and ‘sticky’ connection with the consumer (i.e. a ‘relationship’ that lasts longer than the lifespan of a single transaction).  

It is clear from research findings that to create competitive edge and retain customers in the digital self-service world, the traditionally structured Financial Services organisations must reassess their operational philosophies.  Only those willing and indeed prepared to develop their self-service strategies to meet emerging demands will be able to address the challenges.  Such organisations will have to forcibly align their businesses (i.e. products, services, operations and customer information management) to a strategic digital vision.  

So what conclusions can we reach?   For many large organisations there are many challenges. For some, there remains confusion as to which organisational business function is responsible for implementing a self-service strategy – namely, who articulates it, who is accountable and who delivers it.  For others, the only viable option is in creating a ‘green field’ digital organisation outside of their unwieldy business models to connect to the digitalised consumer.   

Only time will tell how many of our existing large and well-known business brands will exist in 10 years time when digitalisation is an everyday feature of our lives. What is evident through all major industrial changes, is that businesses that are adaptable and responsive, that rise to meet the challenges and understand the fundamental shifts taking place, will survive albeit sometimes in a very different form.  For those unable to do that, the industrial wastelands in Britain are visible reminders of the future.

Ian Marshall – co-author of a recent report -  ‘The Revolution in Self-Service Channels in the Financial Services Sector’ (found at http://selfservicereport.businessdecision.co.uk/).

 

(Article originally published on egovmonitor.com, 12th October 2009)

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