For the most part, new businesses are cool by definition.
Whether a firm has been operating for 6 months or 60 years, we all ask ourselves the same basic questions:
What are my products? How do I connect with my customers? How do I get the best from my people? What does my brand stand for? How do I change and evolve?
New businesses have the fortune of answering these questions without the constant headache of legacy systems and processes which must be dragged along on the journey.
Answering these questions from a blank canvas, the chances are, you would connect with your customers digitally, automate as much of the customer journey as your budget allowed, ensure that your data strategy was watertight and then let Amazon handle the tin. Making these decisions takes no extraordinary knowledge, skill or effort and what you will have built is a slick, digital brand with every right to throw away the dress code and open a coffee bar in reception.
New entrants also have another key advantage: the big boys. ‘Changing customer expectations’ has been on every CEO’s whiteboard in some guise or another since broadband and whilst some firms have made mistakes, the general march over the last 15 years towards 24x7 availability and access, while differentiating their product for individuals, has added tremendously to our understanding of successful strategies.
New entrants harvest these learnings without enduring any of the suffering or wearing of any scars that was necessary to uncover them. In short, new businesses stand on the shoulders of giant IT organisations.
The TORI team have combined their significant experience and expertise in Wealth Management, Insurance and emerging technologies to look at the current digital capability across these industries. Some of our findings are shown on the graphic below. The analysis considers a number of digital dimensions, some of which assess the state and vision, and technology or data – these are often the main focus; but also others that consider aspects of change, people & culture and working practices.
At first glance, the findings may look axiomatic across the 3 groupings - large life heritage companies; large investment specialists and more modern platform players that entered the market relatively recently.
Large life heritage companies trail new entrants significantly in all departments. Looking at Data as an example, it's an area in which the large heritage firms cannot be expected to match their lighter counterparts - systems built 10-20 years ago simply weren’t designed to capture and exploit the information that is available now.
However, the analysis has shown that virtually the same capability gap exists in areas such as People & Culture where the equivalent historical and technical barriers are not apparent. TORI believes that there is tremendous value available to big businesses who craft cultures of innovation and collaboration and that this value that is not currently being exploited within these organisations.
TORI’s analysis has looked at a simple question: how do large Insurers and Wealth Management firms bridge the digital gap with newer companies?
The key appears to be not just the IT - the technology; crucially the “softer” aspects of Change, People & Culture and working practices can rapidly enable traditional companies to compete with newer entrants. Aviva’s “digital garage” is a good example of this where a “Newco” or “FinTech” mindset has been taken with new capabilities, people and approaches being introduced over the last 2 years to drive innovation and digital thinking into a traditional life insurance company – and others are following their lead.
TORI is in a unique position having experienced life inside both FTSE 100 organisations within Wealth, Life and Pensions and Insurance and more agile, new market entrants; and by bringing together the strengths of both of these, can help companies succeed in the digital world of Financial Services.