There was a time when only financial services people thought financial services was exciting, but change is in the air and the sector is looking increasingly like a des res for innovative marketers. So, in case you fancy boldly going where no brand builder has gone before, here’s a bit of a street map.

These days there is barely a financial business, some dark corner of whose cloistered halls isn’t home to a nerd in search of Nirvana. In their case this translates as a completely new business model that will make the emerging mass not-so-affluent viable for advisers and financial service providers. The race is on and adrenalin is starting to race!

The challenge is significant. Not only will future clients have significantly less money to play with, but they are telling us they don’t want a financial adviser beaming into their lives. And in some ways you can understand this. Traditional routes to saving are increasingly succumbing to the realities of the new paradigm. Growth, which for some could have in the past run into the tens of percent is now reduced to twos and threes on a good day, which makes the cost of a wealth manager look high. Nevertheless, this new market segment cannot be ignored, because in as little as three years from now they will start to look like the only show in town for many financial advisers wanting to expand their client base. That fact also adds the final straw to the burden of the sector. With operators from all financial sub-sectors converging on an integrated holistic offer in the hope (yet, I detect, not always total belief) that diversity is the answer, competition for any financially active segment is going to hot up.

However, defining the offer is just one thing the sector has to get right. Delivering it will be a big ask and as a prelude to this the players need to address the arguably bigger challenge of increasing productivity. Financial services businesses are renown for bureaucracy, paper, ponderousness and manual processes, all of which has to be addressed before they can even hope to tackle the question of a mass-market model. Nevertheless, in the words of the transformation people, the best you will get from streamlining the existing model, even if it does involve some ground up re-thinking of processes, is a fast caterpillar. Like all other sectors, what financial services need is a butterfly – an entirely new business model. Enter the disruptors. Now it gets interesting!

As in many other sectors the alligator snapping at the backside of the traditional players are tech start-ups. Nimble, enthusiastic, unburdened by legacy and irreverent, the tech boys are challenging some of the regulations that others may have wanted to before, but not had the bottle. And therein lies the real issue. Compliance may have proven necessary in the past to ensure fair play and best practice, but it is by far the greatest contributor to the sector’s current problems.

If you create rules so rigid that the people doing the work don’t have to think for themselves you condition your workforce to operate like automatons. As is the case in this secor, you evolve a passive culture and provide an excuse for inaction. The newcomers to the sector arrive with none of this burden and there is evidence that the legislators are taking note and learning from their challenges.

Conversely though, the newbies don’t have experience of operating in a regulated environment and there’s no way that the handcuffs are going to be totally removed, so while their brands might cosy-up to a younger audience they don’t have the credibility of one built on generations of financial management experience, nor will they get far without learning how to navigate these highly regulated waters. Even if they are prepared to engage in conversation with a new and trendy financial adviser, will a younger audience be prepared to hand the management of their savings to someone who doesn’t have credentials in this area? And in case we don’t have enough factors to consider, here’s another one – the old guys have deep pockets, so when they finally do ”get it” they can affect change pretty quickly by throwing money at it.

The race is on! Will the newcomers achieve financial credibility before the old fogeys learn to operate (which entails building an entirely new business model and brand) in the new environment? Right now it’s hard to tell, but one thing is for sure, the financial services sector needs real brand developers with the emphasis on “real”. If you still think that branding is about logos this is not for you, but if you recognise that brand development is about aligning an organisation, it’s structure, its practices and the minds of its people behind the delivery of a promise that means something to the market, you might just have what the UK financial services sector needs right now.

First published on LinkedIn October 2016

Phil Darby
August 3, 2018

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