# Learning from the disrupters – how finance brands can build transformative business models Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2020-12-10 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Why Financial Brands Need to Embrace Shared Value in a Meta Description: Discover how finance brands can adapt to the changing landscape of the industry, focusing on shared value and genuine interactions with customers. URL: https://financedigest.com/learning-from-the-disrupters-how-finance-brands-can-build-transformative-business-modelshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/untitled-design-2020-12-10t162236-1736838689341-compressed.jpg) _By **Andrew Roberts,** Senior Partner, Vivaldi London_ According to [Gartner](https://www.gartner.com/en/newsroom/press-releases/2018-10-29-gartner-says-digitalization-will-make-most-heritage-financial-firms-irrelevant-by-2030) by 2030, 80% of heritage financial services firms will go out of business, become commoditised or exist only formally but not competing effectively. So is their demise inevitable? Not necessarily. Rather than [adopting a ‘me too’ strategy](https://www.financedigest.com/bev-automotive-oil-filter-market-recent-industry-developments-and-growth-strategies-adopted-by-players.html "BEV Automotive Oil Filter Market: Recent Industry Developments and Growth Strategies Adopted by Players") mimicking the nimble disrupters, finance brands should start with understanding how they can support the lives, needs and passions of their customers better. We are moving from an era where finance brands lived in insulated ivory towers, a ‘World of Walls’ to a new age driven by the ‘World of Webs’. In this always connected world, finance brands must [build genuine interactions with customers](https://www.financedigest.com/how-do-you-build-customer-loyalty-3-steps-to-follow.html "HOW DO YOU BUILD CUSTOMER LOYALTY? 3 STEPS TO FOLLOW") to help drive future growth and address their changing needs. Yet traditional finance brands have been slow to respond to the disruptive change impacting the industry. They have been hampered by top down, centralised and often analogue systems in a [digitally native and data-led](https://www.financedigest.com/whose-role-is-it-anyway-why-finance-underpins-data-led-digital-transformation.html "Whose role is it anyway? Why finance underpins data-led digital transformation") world. New challengers in areas like banking, fintech and insurance have [innovated by starting with the needs of their customers and then built business](https://www.financedigest.com/disruption-and-innovation-four-predictions-for-the-business-landscape-in-2016.html "DISRUPTION AND INNOVATION – FOUR PREDICTIONS FOR THE BUSINESS LANDSCAPE IN 2016") models and solutions suited for their lives. In shaking up the previously closed world of finance, they have harnessed technology to create new products, [market places and platforms](https://www.financedigest.com/cloud-communication-platform-market-2022-scope-of-current-and-future-industry-2030.html "Cloud Communication Platform Market 2022 | Scope of Current and Future Industry 2030"). According to research from EY [64% of consumers worldwide](https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/banking-and-capital-markets/ey-global-fintech-adoption-index.pdf) have used one or more fintech platforms, up from 33% in 2017. By 2023, it is predicted Europe’s ‘neobanks’ will win up to 85 million customers, reaching more than 20% of the population over the age of 14. So how can finance brands adapt to the new world? - **Think [shared value](https://www.financedigest.com/boat-steering-system-market-to-witness-cagr-of-9-rise-in-value-share-during-the-period-2019-2029.html "Boat Steering System Market to Witness CAGR of 9% Rise in Value Share During the Period 2019 – 2029"), rather than just shareholder value** In late 2019, [The Business Roundtable](https://www.businessroundtable.org/) – a group of CEOs from major U.S. corporations (including many FS institutions) issued a statement dropping the age-old notion that corporations function first and foremost to serve their shareholders and maximise profits, but instead that it should be about investing in employees, delivering value to customers, dealing ethically with suppliers and supporting outside communities. In an industry traditionally focused on shareholder value, this has big implications for financial brands. A year on, the pandemic has even more starkly revealed the increasingly interdependent world we live in and the need for a new approach. The ‘value creation’ of a company can be the responsibility of a host of different players. This includes the company itself, its customers, suppliers, partners, and other stakeholders. It also even includes competitors, along with other players in the wider ecosystem from observers to government agencies. This is something Vivaldi calls an ‘interaction field.’ Key to embracing ‘shared value’ is a fundamental cultural shift in [viewing customers](https://www.financedigest.com/insurance-marketing-is-more-targeted-with-the-single-customer-view.html "Insurance marketing is more targeted with the single customer view") and suppliers as valuable partners rather than just someone a finance brand has a transactional relationship with.  The lack of shared value in existing relationships is often the result of the long standing nature of these associations.  A [bank will often have a customer’s mortgage and bank account](https://www.financedigest.com/community-fintech-11onze-to-launch-el-canut-a-super-app-offering-universal-banking-accounts-and-digital-debit-cards.html "Community fintech 11Onze to launch – EL CANUT – a super APP offering universal banking accounts and digital debit cards") with that customer staying with the same organisation for 20 years. It becomes something of a loveless marriage with loyalty taken for granted. Financial organisations can succeed by re-framing the understanding of the relationship. Key to success in any relationship is listening to your partner. This is something the disrupters have been so good at. For example social finance company SoFi carved a niche for itself in student loan refinancing, before expanding into mortgages and [wealth management](https://www.financedigest.com/annual-survey-of-wealth-managers-2022.html "Annual Survey of Wealth Managers 2022"). This is because its users had asked for help with other aspects of their financial lives. SoFi operates on a membership basis, and provides complimentary [financial advice](https://www.financedigest.com/financial-advice-for-starting-your-own-business.html "Financial advice for starting your own business") for all of its members. Its users helped with the value creation of the company. This type of collaborative approach can engender genuine and not assumed loyalty. - **Focus on solutions, not products** The challenge for traditional finance brands is they have been built very much on a pipeline model. Ie. I take your money for a specific product like a pension and you trust me to invest your money. The new challengers have been so strong because they start with the [customer’s needs](https://www.financedigest.com/you-dont-need-magic-to-anticipate-your-customers-needs-just-the-right-tech.html "You don’t need magic to anticipate your customers’ needs, just the right tech") and then build out solutions. A product like Revolut works to help educate customers on how to budget better or take the pain out of common situations like bill splitting. It is ground up, not top down and reframes the role of the brand, from being solely concerned with [money and specific products to helping people](https://www.financedigest.com/more-than-twice-as-many-consumers-trust-customer-reviews-over-companies-themselves-according-to-research-from-smart-money-people.html "More than twice as many consumers trust customer reviews over companies themselves according to research from Smart Money People") better manage their lives with advice and guidance. Meanwhile a raft of new [fintech disruptors have developed new ways to help people get access to financial products](https://www.financedigest.com/why-make-fintech-products-accessible-for-all.html "Why Make Fintech Products Accessible For All?"). Digital addressing startup OKHi has developed an innovative platform to solve address verification for financial services, an endemic problem that holds back financial inclusion across [emerging markets](https://www.financedigest.com/autonomous-vehicles-market-emerging-growth-analysis-future-demand-and-business-opportunities-2026.html "Autonomous Vehicles Market Emerging Growth Analysis, Future Demand and Business Opportunities 2026"). The [technology enables any business](https://www.financedigest.com/2016-the-year-of-technology-financing-the-year-of-business-growth.html "2016 – THE YEAR OF TECHNOLOGY FINANCING, THE YEAR OF BUSINESS GROWTH") to collect an accurate address from their customer via their mobile phone, verify it and navigate to it. It started with a real challenge in the lives of people, that billions of people worldwide don’t have a fixed address and postcode, and then developed the solution. - **Respond swiftly to changing circumstances** Being immediately responsive is crucial in tackling the multitude of new challenges in today’s fast-moving world. The challenge for traditional financial brands is being encumbered by legacy systems and fragmented data sources, with lots of information held at the local or even branch levels. The [oil tanker](https://www.financedigest.com/u-s-sanctioned-oil-tanker-stuck-in-indonesia-carries-venezuelan-fuel.html "U.S.-sanctioned oil tanker stuck in Indonesia carries Venezuelan fuel") analogy applies here. However, traditional finance brands have the opportunity to consolidate their large data resources to really drill into the patterns of behaviour of their customers to develop fast, actionable insights. The shock of the pandemic has really brought to the fore the need for rapid, responsive innovation. Those who have responded have built up a bank of goodwill. For example insurance provider Admiral recognised peoples’ massively reduced [car](https://www.financedigest.com/electric-car-insurance-your-questions-answered.html "Electric car insurance: your questions answered") use during the pandemic and offered and refunded £110 million of insurance premiums to car and van customers. Meanwhile In the US fintech loans company Kabbage worked with other fintechs like Lendio, Finix, and Fundera to launch a platform allowing consumers to buy gift [certificates to support local small businesses](https://www.financedigest.com/reasons-to-obtain-iso-9001-certification-for-small-businesses-in-australia.html "Reasons To Obtain ISO 9001 Certification For Small Businesses In Australia") during the coronavirus crisis. The gift certificates could be redeemed at any time, but [small businesses](https://www.financedigest.com/pakistan-floods-add-to-pain-for-struggling-small-businesses.html "Pakistan floods add to pain for struggling small businesses") received the revenue within one business day of purchase. - **Put purpose at the heart of your mission** In 2020 it is also crucial to have a purpose-driven offering. This is becoming more important than ever with the increasing purchasing power of millennials and generation Z. Of course this needs to be built on genuinely sustainable foundations and not just ‘greenwashing’ or ‘woke washing’. For example Deutsche Bank’s initiative  #whybanksmatter  has started from first principles, why a bank should exist and what the changes in today’s world mean for a bank’s role in the economy, the planet and the platform revolution. This includes how banks can become valuable partners for businesses, households and investors focusing on what is changing, what [needs to change and how banks](https://www.financedigest.com/scams-have-eroded-digital-trust-banks-need-to-do-more-to-combat-the-industrial-scale-of-scams-in-the-uk.html "Scams have eroded Digital Trust – Banks need to do more to combat the industrial scale of scams in the UK.") can be a catalyst for this – including investing in people and projects making a positive difference in the world. Meanwhile insurtech [company Lemonade has had a remarkable ascendancy of growth](https://www.financedigest.com/top-social-media-growth-companies-in-the-uk.html "Top Social Media Growth Companies in the UK"). It became the best IPO debut of the year after gaining 140% on its first day of trading in July. The company reverses the [traditional insurance model](https://www.financedigest.com/insurers-must-reimagine-traditional-risk-models-to-adapt-to-climate-change.html "Insurers Must Reimagine Traditional Risk Models to Adapt to Climate Change ") as a public benefit corporation and certified B-Corp. Social impact is part of its DNA, [legal mission and business](https://www.financedigest.com/how-to-budget-for-legal-fees-in-your-business.html "How to Budget for Legal Fees in Your Business") model. The company takes a flat fee and [gives back](https://www.lemonade.com/de/en/giveback) what’s left to causes its customers care about. In doing so customers are invested in not falsifying claims. - **Develop a company-wide ‘strategy to action’ plan** Finally, finance brands need to embrace the internal transformation to enable them to respond to the changing external situation. A new methodology is needed to help reframe challenges and opportunities from the customer’s perspective by leveraging the dynamics of a customer-first & [digital-first world](https://www.financedigest.com/the-digital-first-world-financial-services-predictions-for-2022.html "The digital-first world: financial services predictions for 2022"). The new thinking [needs to be embedded at all levels of a company](https://www.financedigest.com/italys-windfall-tax-on-energy-companies-needs-to-be-rewritten-pm.html "Italy’s windfall tax on energy companies needs to be rewritten – PM"). From rolling out employee engagement programs, facilitating action-learning workshops and building marketing capabilities and teams. However, strategy does not [drive growth](https://www.financedigest.com/how-embedded-insurance-can-drive-growth-and-value-for-the-insurance-and-finance-sectors.html "How Embedded Insurance Can Drive Growth and Value for the Insurance and Finance Sectors") if it isn’t implemented  in the right way. This needs to then be rolled out through customer journey mapping, content marketing to campaign development, to transformation through digital [product design](https://www.financedigest.com/product-design-verification-and-validation-solution-market-2021-present-scenario-and-growth-prospects-2025.html "Product Design Verification And Validation Solution Market 2021 | Present Scenario and Growth Prospects 2025") and platform development. The future is going to be about [creating value](https://www.financedigest.com/how-to-create-value-in-digital-transformations.html "How to create value in digital transformations") for everyone. [Finance businesses that solve the immediate challenges of people today](https://www.financedigest.com/from-fragmented-systems-to-unified-cpm-unicredit-prepares-for-todays-finance-challenges.html "FROM FRAGMENTED SYSTEMS TO UNIFIED CPM – UNICREDIT PREPARES FOR TODAY’S FINANCE CHALLENGES") and also the major social and economic challenges of the future are the ones that will survive and grow. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---