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Big tech moves in on financial services, and it’s marketers who will be squaring up for the fight



Big tech moves in on financial services, and it’s marketers who will be squaring up for the fight

By Mark South, Managing Director, MSQ Partners

Earlier this month European financial regulators began discussions over whether to supervise the creep of big tech firms like Google, Apple and Microsoft into the financial services sector, following the EU’s second Payment Services Directive opening the doors earlier this year.

The big banks seem unconcerned at the prospect of losing share in the short term and are sticking to their guns, continuing to build the relevance of their brand for their huge customer bases. Only time will tell whether this strategy is reflective of strong business leadership or a milestone ‘head in the sand’ moment.

For small and mid-sized financial services companies, and newer entrants alike, the prospect of competing with businesses that have an unparalleled view of consumer behavior and a seemingly bottomless investment pot is daunting.  Particularly when the key source of competitive advantage has been their customer experience or innovative ‘digital’ products – the elements most easily replicated or bettered by the tech giants.

The incumbent, big players in the industry will struggle less – able to pay the often-astronomical fees demanded by global network agencies and management consultants alike to help them better understand and communicate with current or potential customers, as well as develop product solutions that meet their changing needs and behaviors. Or, they will do it themselves, by building ‘in house’ agencies – a path being trodden by the giants of the consumer goods industry like Unilever and Coca-Cola. But for everyone else, many of whom are faced with capability and capacity constraints in marketing and tech, there are only really two options – attempt to follow suit by developing an ‘in-house’ agency model, or move to ‘marketing outsourcing’.

When one thinks of outsourcing, perhaps IT, HR, or accounting comes to mind. The practice of handing over responsibilities to a third party is common across most business functions, but to date, not marketing – in the UK at least. According to The CMO Survey, in February 2018, marketing outsourcing is on the rise, most notably in the financial services industry.

 “We’ve had enough, and we’re just going to do it ourselves”.  That’s the message many large companies like Unilever and Coca-Cola are sending to their agencies by ‘in-housing’; building their own agencies in-house.  It really shouldn’t come as a surprise that these giants with the money to go the DIY route are taking it, after decades of complaining about big-agency inefficiencies, ‘black box’ processes and fluctuations in cost and quality. But there are two other questions to be asked and answered.  Firstly, how on earth did it come to this? And secondly, is in-housing actually the right solution in the long run, for the giants, or for everyone else in the financial services industry?

 How did it come to this?

Whilst there has been a slight regression in digital marketing spend in 2018, the fact is that total spend on digital marketing still grew 9.9% according to the Advertising Association and WARC, versus traditional marketing spend which experienced negative growth. So, the majority of marketing effort continues to tilt toward originating content to provoke engagement, as well as ensuring the design and delivery of a great customer experience.

Pressure on production has consequently increased, and demand is for more, more quickly. Agencies are seeing increased demand from all their clients at once and haven’t been able to scale quickly enough. Overstretched production departments supplemented by external contractors have become less reliable as well as more expensive.

Agencies haven’t kept their knowledge of marketing technologies sufficiently up to date to keep pace with client adoption. Clients expect their agencies to understand how to use the best of the new tech and tools available to place content and advertising, stay on top of measurement data, employ nudge tactics, and steer the ship across multiple media channels for the most effective outcome. Few agencies can do all of this at speeds close to real-time and the agencies that lead in the use of technology tend to be small niche players. Clients therefore have to play the co-ordination role at the centre of a host of providers, all the while paying each of them for account-management. To evolve, the big networks would have needed to better understand their own processes and capabilities, the role they were playing in the wider client marketing ecosystem, invested for the long term and become more disciplined – relying less on personal heroism and becoming more systematic. But they haven’t, so clients have determined that they can develop an agency model better suited to their needs, themselves. 

Is ‘In-housing’ the right answer?

In the short term, for the brand giants in consumer goods and financial services at least, it may be. If they can bring in new talent, and keep it happy, in-housing could help these companies win the battle that starts afresh each day. But it will be a very costly exercise, certainly not affordable to mid-tier businesses, and could come with some problems of its own;  a lack of deep understanding of market movements and industry trends over time, how to originate the creative insight that usually comes from an independent perspective, how to create sufficient variety of challenge to excite and develop creatives working on just one (very big) brand portfolio, and how to avoid your agency ‘going native’. In time, talent could be lost, or cease to evolve at the pace of the wider industry. The other big issue is that an in-house agency is ‘cost-free’, meaning capacity limits are quickly reached and breached, and cannot easily scale to meet demand. These constraints can quickly become a frustration and prioritising work becomes a political challenge – the net outcome being increased levels of paperwork and declining internal client satisfaction.

For everyone else in the financial services industry, a new marketing agency solution is required to combat the threat from big tech and ensure long term survival and growth; one that supports the development of outstanding CRM capability, enabling a ‘segment of one’ view on their customer base, and prioritises new customer acquisition. They need to be able to meet new prospect customers with propositions better than the competition and communicate their value broadly, simply and clearly. And above all, build a ‘marketing machine’ that is more efficient and more effective than either an in-house or traditional agency/client relationship. The answer may well be outsourcing.

The outsourcing alternative

The idea of outsourcing has never found much purchase in marketing.  A couple of factors could explain this; clients have been reluctant to outsource ‘core’ activities and marketing agencies haven’t been able to take a process-led view of what they do, or transform their business model to allow them to provide service in this way.

To offer a marketing outsourcing solution, a would-be-provider must understand both marketing, and outsourcing.  Getting outsourcing right is a complex business, usually the domain of management consultants who map out exactly how things happen; how much of each activity is undertaken, the costs, the skills involved and the technology enablers. And then there is the transition plan and contract. They are rational and driven by efficiency goals. They reduce complexity into elegantly simple processes, frameworks and models. It’s unusual to find management consultants in marketing agencies. But not impossible. MSQ Partners, is probably the only agency to include consultants from both McKinsey and PwC in its leadership team. The benefit is the ability to develop outsourcing solutions that take clients on the journey from becoming outsourcing ready, to deep interdependent partnerships, offering skills that map to each step in the marketing process.

Agencies are the opposite. They understand the human aspect of how companies and teams really work. They prize creativity, human insights and are driven by the effectiveness of their work in delivering social change or selling more products. But they can sometimes lack structure and don’t obviously seem to follow a route-map.

When you blend the strengths of both, the weaknesses are cancelled out and the result is an agency with the skills and a culture fit to offer an outsourcing solution built for both efficiency and effectiveness. An outsourcing relationship can feel as close as an in-housing arrangement, without the set-up cost or downsides.

The final piece of the argument comes from the way in which an outsourcer contracts with its clients.  Outsourcing contracts and relationships are longer term, anything from 3 to 10 years, and so,both the client and the outsourcer are able to forecast revenues over a longer time-frame, fostering a longer term perspective on the investments to be made – to keep ahead of developments in technology to meet service standards, and in the capabilities of people.

In-housing may be the start of the trend, but outsourcing may be where it ends up.

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Predictions 2021: The Path To a New Normal Demands Increased Business Resilience and Cost Efficiency 



Predictions 2021: The Path To a New Normal Demands Increased Business Resilience and Cost Efficiency  1

By Jussi Karjalainen at Valtatech

A global pandemic, wild bush fires, a stock market crash, a presidential impeachment, and presidential elections – 2020 has been a year like no other and the impact on some businesses has been devastating. 2020 has highlighted how vulnerable many businesses are, and what they need to improve to survive and thrive – a topic that I recently wrote about. The key focus for businesses moving into 2020 will be on how they recoup their losses from 2020 and set themselves up for success. With that I mind, here are my 5 predictions on what 2021 will bring for businesses and what they need to be thinking about as we head into a New Year.

Continued Business Disruption – There are some serious global headwinds that businesses are set to face next year. Many countries are likely to go in and out of lockdowns, which will impact on local and global supply chains, consumer, and business spending, as well as overall business confidence. There is also the unknown of how the results of the US Presidential election and final transition of the UK out of the EU will impact global trade relations. Recent talk of a vaccine to stem the COVID-19 pandemic may provide some reprieve, but we predict continued business disruption heading into 2021.

So, how can your business prepare for disruption? Business resiliency is key. Namely your business ability to rapidly adapt and respond to business disruptions. 2020 taught us that finance and procurement operations are key to driving business resiliency. Getting a view and a grip on where your business is spending its money? What can be consolidated and what can be reduced? Having full control and visibility over your finance and procurement operations are key.

Cost Efficiency Should be at the Top of Everyone’s Agenda – If 2020 has shown us anything, it is that we need to have greater control over our cost base. Not least because sales are, largely, harder to come by than ever before. Every organisation should be looking at the return that they are getting for every dollar invested – a simple equation of your total spend divided by your total revenue will give you a high-level overview. The focus for businesses will be on how to improve this ratio. For example, for every dollar spent enables $1.60 in revenue – increasing that number can have a huge impact on your overall profitability.

You can take a few approaches to getting this right: There is the 1% improvement approach – how can you make each process 1% more efficient and reap the benefits of the cumulative impact of those 1% gains. The alternative is to assess a specific process in more detail. Take your procure to pay process as an example. Map out your current process, identify the pain points that take the most time, and build out a business case to drive greater efficiencies in that process. It is a process we have undertaken with several businesses to deliver real bottom line value.

Jussi Karjalainen

Jussi Karjalainen

Konica Minolta Business Solutions Asia recently outlined the results of their procure to pay digital transformation project which “helped us to reduce costs, identify risks and improve value delivery across the business; while providing the visibility and insights my team and I require improving risk mitigation, due diligence processes and governance.”

Public Sector Spending Spree – Most national and state governments have announced large economic stimulus packages to get their economies going again. This will likely continue heading into 2021, with many tenders and grants being made available. Businesses wanting to take advantage of this spending spree need to be mindful of the likely compliance requirements for public sector contracts and grants. To qualify for many public sector contracts or grants, businesses may need to prove they comply with regulations around supply chain sustainability, modern slavery, buy local and national initiatives, diversity, and inclusion, for example.

In order to prove you qualify it helps to have systems and processes in place that can make supply chain mapping and transparency much easier giving you clear visibility over your entire supply chain. This enables you to know exactly where your goods are coming from in your supply chain, from who whilst being able to capture important information relating to compliance around sustainability, modern slavery etc.

Data, Data and even more data – As businesses seek to ensure their business resiliency, the demand and need for more accurate and timely data across business processes will greatly increase. Businesses that can track efficiency at a process level are going to become more cost efficient and future-proof their business. Equally, as business disruption continues, the demand for business agility can only be fulfilled through executives having access to accurate and timely data, which will put more pressure on teams to supply that data.

An effective combination of people, processes and technology can provide hugely valuable and actionable data insights. Considering the source to pay process, having access to data insights, such as invoice processing times, percentage of purchase orders and invoices sent and received electronically, and percentage of managed spend (e.g. spend going through contracts, preferred agreements etc) can reveal some real opportunities to drive efficiencies in your process.

Technology being the answer, rather than the enabler – It is only when the right processes and people are combined together with technology that real transformation can occur. Too often businesses look to technology as an answer to a problem, rather than an enabler to help solve the problem. Picking the technology before truly understanding the process that they are trying to transform has led to many failed and ineffective technology projects over the last 20 years. As businesses find themselves under more and more pressure heading into 2021, businesses will likely continue to make pressured transformation decisions based on fancy, shiny technology, rather than a clear understanding of the outcomes that they are hoping to achieve. Creating unnecessary and avoidable risk into their transformation activities.

Instead, why not conduct an in-depth analysis of your current business requirements through key stakeholder interviews and current process reviews? This can help to deliver valuable insights and resources such as:

  • Key insights into the current processes
  • Identification of key pain points
  • Identification of key levers to drive user adoption
  • Identification of key areas and drivers for financial return on investment
  • Identification of quick wins and longer-term development areas
  • Current state technology landscape map across your processes
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Beyond the bottom line: why brands must show they care to connect with customers



Beyond the bottom line: why brands must show they care to connect with customers 2

By Vadim Grigoryan, Partner, Lunu

Over the past few years, we’ve witnessed an ever-growing activism among consumers, with public opinion demanding that their concerns be heard and addressed. No industry has experienced this more than the retail sector, with brands regularly slammed by NGS or consumer-led initiatives for violating legal requirements or moral principles. Moving one step further in the experience economy, brands are not only required to provide a first-rate customer experience, but also a conscience. The product must be good quality, as should the experience of purchasing it. But now on top of that, consumers should feel positive about where they’re spending their money. This is particularly true in the crypto community, with cryptocurrencies regularly pointed out as too speculative as a product, or to energy-intensive. Is this really a surprise coming from a generation whose top concerns are collective ones such as the environment and global warming? The answer is a straight no! Brands have to face this new reality and embrace it accordingly.

This next step in the experience economy, that can be called conscious consumerism, provides an opportunity for brands to reinvent themselves and bring to the top of their agenda something that has so long been kept at the bottom, or on the side. Brands need to stand for something bigger than themselves. If they fail to do so, they will also fail to make an impact in the consumer’s mind, ultimately disappearing as a brand altogether.

  1. From the experience to the conscious consumerism. Today’s economy is as much about giving people the opportunity to feel good while purchasing the product or service, as it is about the feeling after the purchase. Environmental, social, and moral concerns are increasingly at the top of consumers’ minds and on the front pages. Brands need to realise this and adapt, but also accept this as an opportunity rather than a constraint. Profitability isn’t the number one priority anymore and they now have the chance to fully develop their CSR programmes without facing many of the internal/external constraints they would traditionally have faced.
  2. Having a meaning actually means something. Modern brands have to stand for something and if they do, they will also stand out in the consumer’s mind. Your brand won’t just be a jewellery maker anymore – it will be one that aims to make diamonds cleanly and ethically by creating them in a lab instead of digging them out from thousands of meters below the ground. Standing for something will also give you a voice and help you break through the noise, reaching out to ever more consumers.
  3. Having a purpose provides a valid reason to exist. By this we mean existing in the customer’s mind, as well as in stores and shops – because the truth is, both are now linked. To truly connect with your customers, brands need to go beyond their bottom line. They also need to show that this bottom line serves a purpose and isn’t a finality. Don’t be scared to embrace a cause if you want to keep a place in consumers’ hearts and minds.
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The largest event in e-commerce history? ‘Tis the season



The largest event in e-commerce history? ‘Tis the season 3

By James Booth, VP Head of Partnerships for EMEA, at PPRO

Sometimes, change happens slowly. Other times it chases you down like that boulder at the beginning of Indiana Jones. In 2020, change is fully in boulder mode. And the holiday season is when it either catches up with you or you leap triumphantly from the temple entrance, golden statue in hand.

The shopping season kicks off on 11 November, with the 11.11 Global Shopping Holiday (formerly Singles’ Day). According to analysts, Alibaba and its merchants are on track to rack up $45 billion worth of sales on Singles Day alone [1], up from $38 billion last year [2]. And if last year’s results are anything to go by, a large proportion of those sales will go to non-Chinese companies. Last year brands such as Bose, Estée Lauder, Gap, Levi’s, Nike, The North Face and Apple all made over 1 billion yuan ($143 million) on Singles’ Day [3].

Increasingly, US and European consumers are also participating in Singles’ Day. However, both markets shift into proper holiday mode with Black Friday on 27 November. And there is every indication that this, too, will be bigger in 2020 than ever before.

Adobe Marketing Insights predicts a 20% increase in e-commerce spend over the Black Friday to Cyber Monday weekend [4]. Looking at the holiday season as a whole, Deloitte forecasts that seasonal e-commerce — online spending  is expected to grow by up to 35%, compared with just 14% last year [5].

But that doesn’t mean you can just relax and wait for the holiday season sales to rack up. As well as driving customers online, lockdown has also disrupted brand loyalties. During lockdown more than two-thirds of customers in some markets have tried a new product or service and of these, a quarter do not plan to return to their old habits once lockdown has ended [6].

Old shopping loyalties have been upended, and that means their holiday-season shopping is up for grabs.

For instance, 43% of over-65s are now shopping online compared to just 16% before lockdown [7]. For online merchants the grandparent present budget just became accessible. But to win your share of it, you have to provide a customer experience that this demographic will love.

Making the checkout page a priority 

The question then, is how to prepare your merchants’ or your own e-commerce site for the holiday shopping season. It’s only a few weeks until Black Friday, so there’s no time to lose. You need to find out where gaps are in your customer journey, and plug them, before those customers run away to someone else.

The customer experience at checkout is particularly crucial. One of the surest ways to lose customer trust at the checkout, is by not offering shoppers’ preferred payment methods. According to research by PPRO, up to 50% of customers have abandoned a transaction because the merchant did not offer their preferred payment method [8].

It’s a question of localisation. Except in this case, you’re not necessarily localising for customers in a particular geography. Instead, you might consider localising for consumers in a particular age group who are now shopping online for the first time. Or customers from a range of demographics who have never shopped online for a particular category.

No one size fits all when it comes to global payment preferences

If you want to succeed in global e-commerce, you must offer the preferred payment methods for every market and demographic you want to win over.

Worldwide, consumers use alternative or local payment methods in more than 70% of all consumer transactions [9]. These are the payment methods whole markets and demographics grew up with online and trust. Fail to offer them and you can have the best possible customer journey, but you’ll still lose basket after basket at the checkout.

With the acceleration of e-commerce and the influx of online competition, anyone who hasn’t optimised their payments offering will be desperately racing to catch up. Merchants need to think now about how they are going to maximise their revenue from what looks to be the biggest online holiday season ever. And payments is a crucial part of that conversation.


9. Original PPRO research.

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