Financial Services Industry Overview

Financial Industry Overview

When marketing to the financial services industry, it is important to have a firm grasp of the current financial industry environment. Instead of rehashing the out-of-control events of recent history, our intent here is to look forward, from recovery onward, highlighting basic trends of interest to our clients as they target financial customers. National and international trends have not universally changed as a result of all that has transpired, nor have all changes produced only ‘good’ or ‘bad’ results. What remains intact are the basic tenets of sound marketing, so, now that the smoke has cleared, we can look ahead with more confidence that our decisions and strategies will have time to germinate.

Let’s start with ‘what we know:’ the finance and insurance industry is cyclical; its health is bound-up with that of the economy, both national and international. This vulnerability is a key challenge faced by the industry, along with ever-present data management issues, complex concerns over security and identity theft, and increased regulation and accountability now in place due to the potential impact of the finance and insurance sector on the health of the global economy. Profits depend upon accurate evaluation of costs and risks, and firms are seeing a ‘renewed focus’ on risk management, for obvious reasons.

Current notable financial industry trends are a mix of new and old. Consolidation continues as larger firms swallow smaller insolvent ones at low cost, a primary source of growth in the industry. Financial institutions continue to offer a widening array of products / services and vie for consumer dollars as they opt to become ‘one-stop-shops’ for customers, and the Internet allows those patrons greater access to services without the help of advisors. While our world economy is in recovery mode, industry analyses show a trend toward careful data analytics, with firms using in-house / farmed-out teams and specialized software to help with forecasting, portfolio analysis and consumer trend insight. The international market is ever more attractive (but comes with its own set of issues, notably political) and technology has helped here also, allowing easier access to foreign exchanges.

Despite all the wrenching changes wrought by events of the last few years, some things have remained the same: ‘Developing and maintaining long-term relationships are major goals of marketing and sales.’ And, an old idea back in the spotlight: ‘A firm’s reputation for reliable performance and strong returns can be more important for customers than fees; investors are attracted by the possibility of high returns.’ these from a key industry overview; a good sign.

In terms of recent developments, industry indicators note the following trends: US personal income rose 3.9% in November 2011 compared to the same month in 2010, total US revenue for the finance and insurance sector fell 1.4% in the third quarter of 2011 compared to Q4, 2010, and finally, US corporate profits (which would indicate corporate demand for financial services) increased 7.9% in the third quarter of 2011 compared to Q 3, 2010.

In spite of recent history or perhaps because of it, financial service still has one of the highest IT spend rates of any industry.

What IT upgrades might the financial services industry be looking at in the near future? Industry analysts point to two key areas: better and faster systems to expedite trades, move information, and help with communications / operations, and, improved real-time backup systems for help in dealing with emergencies.

And, finally, a note on marketing and demand generation: Finance and insurance companies have notoriously complex hierarchies and organizational structures. They operate in many ‘silos’ and their title conventions make it challenging to identify appropriate levels of authority and difficult to reach marketing targets. Frantz Group is skilled at penetrating complex financial services and insurance companies, promoting a wide range of technologies and products and netting our customers results to worthy of our reputation.