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Refocusing on trust and relevance Refocusing on trust and relevance
Not an option - but an imperative
In Accenture’s view, refocusing on the client is not just a smart thing for capital
markets businesses to do, but also a prerequisite for future high performance. Over a
prolonged period of ‘fat’ years, firms neglected investment in client service in favour
of developing ever more highly engineered products from within different silos. As a
result, they have undermined the value and loyalty on which long-term client
relationships depend, while simultaneously losing any unified or consistent view of
each client’s needs, and also profitability.
Today, in the colder post-crisis environment, this legacy has resulted in two major
fault-lines in firms’ client relationships.
• The first fault-line is a crisis of relevance and trust. The focus on developing and
selling products has made clients feel that firms are pushing different products
through separate parts of their organisation, with little all-round understanding
of the client’s requirements. Experience shows that clients trust firms that they
feel understand them and that as a result consistently provide them with relevant
products that meet their needs. The widening gap between the products on offer
and clients’ real needs — coupled with underperformance by some of the
products themselves — has critically undermined this trust.
• The second fault-line is the economic unsustainability of the product range,
the business and operational complexity in involves, the sales and client service
model. By effectively becoming factories churning out products through siloed,
product-focused sales teams, capital markets businesses have made it very hard
to create and maintain an integrated and unified all-round view not just of client
need, but of client profitability. And conversely, this also means that it is very
hard, if not impossible to evaluate the degree to which a significant amount of
the complexity and cost in a modern capital markets business actually creates
value. At the same time, reduced client willingness to buy complex, high-margin
products has forced firms to refocus on some of their more commoditised
offerings, driving down margins still further.
The problem is compounded because, as mentioned above, capital markets businesses
have allowed complexity and cost in their operations to spiral, reflecting the growing
range and diversity of their activities. This complexity and cost aren’t necessarily a
problem in themselves (apart from making risk, cost and capital management more
difficult) provided they create value for clients that the clients are willing to pay for.
However, it is questionable whether clients do value all of their providers’ complexity,
and in the current configuration it is very hard for firm to distinguish value creating
from value destroying complexity.
Taken together, the combination of these two fault-lines with firms’ rising complexity
and cost means leaving things as they are is not an option. Post-crisis, it is
increasingly clear that what key segments of a capital markets firm’s client base now
value — and will pay for — is not products for products’ sake. Instead, they want a
service that is aligned to and serves their specific business needs for an acceptable
price. Delivering this in a world of tighter margins and higher capital requirements is
the challenge now facing capital markets businesses worldwide.
The way forward: client centricity
There is a proven way by which firms can simultaneously address both the crisis of
relevance, and the economic unsustainability of their product and sales model. By
putting the client’s behaviours and needs at the heart of everything they do, and
aligning every aspect of their service and product offering with these, firms can
rebuild relevance and trust and regain visibility and control over client profitability.
Once client centricity is embedded, the sales and marketing teams can increase the
benefits still further, by using the new client insight to identify and target highpotential
clients with the optimal combination of product, service and channel.
Equally importantly, the firm will have clear sight of the return on investment from
these efforts.
In seeking to achieve customer centricity, capital markets businesses need to take
into account two ongoing shifts on the client side. One is that today’s clients are
more diverse than ever before, with more specialised needs and preferences — so
understanding them requires correspondingly more insight and precision. The other is
that customer expectations are rising as fast as their sense of sense of loyalty
declines, with the result that satisfying clients’ requirements now demands more
focus and consistency than in the past.
So, how can capital markets businesses achieve the benefits of client centricity in a
way that takes account of these challenges?