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Financial Service Industries in the 21 st Century What really matters? Ian McCall Lead Partner – Strategy and Operations Consulting 2 nd June 2011.

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Presentation on theme: "Financial Service Industries in the 21 st Century What really matters? Ian McCall Lead Partner – Strategy and Operations Consulting 2 nd June 2011."— Presentation transcript:

1 Financial Service Industries in the 21 st Century What really matters? Ian McCall Lead Partner – Strategy and Operations Consulting 2 nd June 2011

2 “The future is already here – it’s just not evenly distributed” - William Gibson, The Economist, 4 th December 2003

3 What I am going to attempt to do is join the dots between a few things that are “already here” A few consistent conclusions

4 6 things that are already here… The incredible vanishing value –How large companies have ‘misplaced’ their value The death of the industrial age –A democratised competitive landscape The loaded gun –Seeing the change to which we are already sentenced Need finding and the search for meaning –The importance of design thinking The fable of Pharaoh and Hosni –How customer behaviour really hasn’t changed The ascendancy of the Digital Natives –Immigrate or die

5 1. The incredible vanishing value - the Big Shift… The Shift Index –2009 Deloitte study of the US Economy –Analysis of 25 metrics to quantify the impact of changing technologies, business practices and public policy –9 major industry perspectives developed Key Findings –Since 1965, ROA of US Firms has dropped by 75% –Labour productivity has improved although at more modest rates –“Firm topple rate” has doubled –US Competitive intensity has more than doubled in the last 40 years The big question – where has the value gone?

6 © 2010 Deloitte Touche Tohmatsu2015 Strategic Vision. There has been a long term trend… … value has migrated to the ends of the value chain.

7 No one is immune… Competitive Intensity 1 DecreaseStaticIncrease ROA 2 Increase Aerospace and Defence Health Care Static Consumer Products Financial services Decrease Retail Aviation Energy Insurance Life Sciences Process and Industrial Prod. Automotive Media Technology Telecom 1 Static Competitive Intensity is defined as a change of less than.01(+/-) in the HHI. 2 Static ROA is defined as a change of less than 5 percent Changes in Competitive Intensity and ROA (1965 – 2008)

8 © 2010 Deloitte Touche Tohmatsu2015 Strategic Vision. Ignore this lesson at your peril… it can move very fast

9 2. The death of the Industrial Age Who moved my competitive advantage?

10 © 2010 Deloitte Touche Tohmatsu2015 Strategic Vision. Scale learning and collaboration not Scale efficiencies create value

11 The democratising effect of information…

12 Impact Index 3. The loaded gun… … the change to which we are already sentenced. Flow Index Foundation Index Markets Firms People Virtual Flows Physical Flows Amplifiers Technology Performance Infrastructure Penetration Public Policy Computing Power, Digital Storage, Bandwidth, Internet Users, Wireless Subscriptions Internet activity, KX Flows, Travel Volume, Worker Passion, Social Media Competitive intensity, ROA, Consumer Power, Returns to Talent } } }

13 Institutional innovation will be the most powerful form of innovation We haven’t fully realised the potential for change that is already built into the world Flow Foundation Impact Component Index Trends ( ) Source: Deloitte Analysis

14 4. Need finding and the search for meaning… …the rise of design thinking Use Usability Meaning

15 4. The fable of Pharaoh and Hosni – what has changed? Exodus 8:1 “Let my people go that they may serve me” Power of the crowd to complain

16 Consumer complaint behaviour – three questions? Isn’t it all just a cost benefit analysis at the end of the day …. Why do people bother to complain – because they love me or because they hate me? It often easier to complain about you than to you – why?

17 …and the benefit of complaining about you just went through the roof Damned if you don’t… Vodafail_com - Looks like Vodafail to me.htm Damned of you do… “Excessive posts drives many to ‘un-Like’ a brand on Facebook A new study released by ExactTarget and CoTweet found the top reason for ‘un-liking’ a brand on Facebook was too many posts with 44 per cent of U.S consumers agreeing to ‘un-like’ a page if the company posted too frequently. The study also found 38 per cent of consumers would ‘un-like’ a brand if the content was becoming repetitive or boring over time and 26 per cent said they only ‘liked’ a company to take advantage of a one-time offer.” – DynamicBusiness.com.au

18 Alan Kay “ ” Technology is only technology for people who were born before it was invented. 6. Behold the ascendancy of the Digital Native..

19 19 Meritocratic Hyperlinks subvert hierarchy!

20 20 Famous 2000 followers on twitter!!

21 21 Fast Instant coffee is too slow!

22 Empowered We believe us, not you!

23 Always On What work/life balance?

24 Large Closed Top Down Business Plans Control Privacy Monologue You Fast Open Bottom Up Iterate No Control Trust Dialogue Us

25 Immigrate Learn to speak a second language!

26 So what does all of this mean? The incredible vanishing value –How large companies have ‘misplaced’ their value The death of the industrial age –A democratised competitive landscape The loaded gun –Seeing the change to which we are already sentenced Need finding and the search for meaning –The importance of design thinking The fable of Pharaoh and Hosni –How customer behaviour really hasn’t changed The ascendancy of the Digital Natives –Immigrate or die A more complex, fragmented and diverse set of value chains delivering services to clients. Talent extracting even greater rewards than ever. An environment in which your failures will be exposed more quickly and to greater effect in multiple media you can only influence A new set of consumer attitudes that are shaped by an empowering digital landscape.


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