Product Type: Market Research Report
Published by: Business Insights
Published: January 2002
Product Code: R162-397Description As market convergence occurs, not only within, but between industries, the financial services sector is becoming increasingly vulnerable to the threat of new entrants. The growth in eBusiness companies and the increased availability of low cost data management platforms for CRM applications, mean these threats can come from any direction. The new report New Entrants in European Financial Services - Opportunities and threats 2002 - 2005 by Business Insights, analyses the potential for traditionally non-financial services companies to enter the financial services market. It identifies where the greatest threats will be presented and what opportunities exist for incumbent companies to defend against these threats. This report will enable you to develop innovative strategies that defend your current position and allow sustained long term growth.
Table of Contents Executive Summary
The Market for New Entrants in European Financial Services
The US Experience
Case Studies of Financial Services Entrants
Perceptions of Future Threats
Chapter 1 Introduction
Introduction
Report Purpose
Report Audience
Report Structure
Executive summary
Market model
US experience
Competitive environment
Views of the future
Research Methodology
Primary research
IMPACT survey 2001
Secondary research
Methodology for forecasts
Chapter 2 The Market for New Entrants in European Financial Services
Summary
Introduction
European financial services is changing
The threat of new entrants is underestimated
Quantifying new entrant activity in Europe
Future threats are significant
Why should non-financial services companies cross the boundary?
Traditional success factors are becoming less critical but are needed for survival
How do the new entrants succeed?
Expanding on the new success factors
The importance of customer relationship management
A large customer base is important
Popular brands can help build financial services businesses
Brands as instant messengers
Financial brands, in general, lack strength
How new entrants can beat financial services companies at their own game
Boots had a number of advantages entering the financial services market
Boots markets innovative products to untapped markets
How should incumbents prepare and defend?
Incumbents need to practice customer relationship management
Banks have responded by establishing in-store bank branches
Develop partnerships to defend
Using brand
Partnerships place mutual demands on service levels
Partnerships to cross borders
Partnerships to boost product lines
Increase in partnerships increases pressure on margins
Threat of cannibalization
Changing customer perceptions of financial service products
New entrants will make customers more comfortable with financial products and increase commoditisation
Conclusion
Financial services companies need to be proactive
Chapter 3 The US Experience
Summary
Introduction
Market segments
Defining US financial services threats from out-of-sector
New entrant activity
The rationale for entry
Disintermediation as a new entry threat
Quantifying the penetration of new entrants in the US
Motor manufacturers control 56% of the motor finance market
Non-financial services companies control 7% of the credit card market
Non-traditional players distribute 12% of general and long term insurance
Unsecured lending is still developing
GMAC is the only major player in the mortgage sector
Retail savings and investments is still developing
The revenue opportunity for new entrants is significant
The threat of disintermediation
Account aggregation a reality in disintermediation
Drivers of new entrants
Technology is one of the most important drivers for new entrants
Competition in ‘own-sector’ is encouraging companies to expand into financial sectors
New entrants are able to offer more flexible products and services
Understanding the US new entrant strategies
Customer requirements
There is evidence that non-financial services brands are transferable
Consumers buy only a small proportion of financial services products online
The case for functional specialisation
Some alternative providers prefer not to specialize functionally
Clear strategic fit between core business and entry into financial services
Customer-focused solutions are enhanced by offering best-of-breed products
The real threat of aggregation
The integration of financial services products into the wider consumer offering is a significant threat
Branding and marketing
Online financial services brands are difficult to build
Conclusion
Chapter 4 Case Studies of Financial Services Entrants
Summary
Introduction
Affinity Bank
Threat as a new entrant
Company background
Business strategy
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
BMW Financial Services
Threat as a new entrant
Company background
Business strategy
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Creation Financial Services
Threat as a new entrant
Company background
Business strategy
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
FDS National
Threat as a new entrant
Company background
Business strategy
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Ford Credit
Threat as a new entrant
Company background
US business strategy
European business strategy
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
GE
Threat as a new entrant
Company background and subsidiaries
GE Capital Services
GE Capital Bank
GE Capital in retailing
GE Capital Woodchester
Business strategy
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
GMAC Financial Services
Threat as a new entrant
Company background
US business strategy
European business strategy
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Littlewoods
Threat as a new entrant
Company background
Business strategy
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Marks & Spencer Financial Services
Threat as a new entrant
Company background
Business strategy
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Nordstrom fsb
Threat as a new entrant
Company background
Business strategy
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Sears Roebuck
Threat as a new entrant
Company background
Business strategy
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Target
Threat as a new entrant
Company background
Business strategy
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Chapter 5 Perceptions of Future Threats
Summary
Introduction
The effects of loyalty
Replicating successful strategies
Barriers to success for potential new entrants
Chapter 6 Appendix
Index
List of Figures
Figure 2.1: The threat of new entrant activity
Figure 3.2: Sources of new entrants into US financial services
Figure 5.3: Change of customer churn expected in financial services
Figure 5.4: Ease of replicating key success factors
Figure 5.5: The most significant barriers to success for new entrants
List of Tables
Table 5.1: Changes in customer churn by financial services product
Table 5.2: The ease of replication of key success factors
Table 5.3: How specific features may prevent customers from switching
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