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Phil Male is currently CEO at UK2 Group, one of the world’s largest hosting companies, and also a respected guest speaker on the University of Cambridge Judge Business School’s advanced leadership programme. Here, he offers an insight into the talks he gives to seasoned business executives on social media in the financial world.

Social media has taken the world by storm over the past decade. Facebook, which is generally considered to be the “grandfather” of social media, was only founded 11 years ago, YouTube the next year and Twitter two years later.

The usage numbers for social media are staggering. There are now 284 million Twitter users and 332 million LinkedIn users. However, Facebook dwarfs them both, having passed the one billion user mark last year. In addition, one billion people visit YouTube every month.

Capitalising on Social Media

With numbers like this, it’s not surprising that organisations across all industries have rushed to develop strategies for how they can capitalise on social media as a marketing and customer communication tool. But what about financial services? What kind of job are financial organisations doing when it comes to using social media as a marketing tool?

There are unique challenges for financial organisations when it comes to using social media as a part of their marketing and customer communication strategies. Chief among these are compliance concerns, security risks and regulatory restrictions.

However, these challenges should not keep financial organisations from implementing strategies for using social media as a marketing, sales and customer service tool. The potential benefits for financial organisations of using social media in this way are numerous. For example, customers that interact with their bank using social media are 12 per cent more likely to be mass affluent and 18 per cent more likely to be emerging affluent, according to Gallup.

These statistics essentially mean that customers using social media are highly likely to be among the most valuable financial customers. Therefore, forward-thinking financial organisations are formulating strategies now for how they will incorporate social media into their strategic objectives going forward in the 21st century.

Common Uses of Social Media

Financial organisations can use social media in several different ways. One, of course, is as a sales and marketing tool. More financial customers of all ages, from Millennials to Matures, are using social media networks to seek out information on financial organisations before deciding which ones they want to do business with. As a result, they are shaping brand perceptions through posts, comments and “likes” in ways that many financial organisations aren’t even aware of.

This makes it critical that financial organisations be proactive, instead of reactive, in managing their social media presence. But managing comments and likes on social platforms is just the tip of the iceberg when it comes to using social media as a sales and marketing tool. Progressive financial organisations are going beyond just using social media as a customer engagement tool to engage in Social Media 2.0, or collecting and using data from social media to gain insights that can help with sales and marketing.

Phil Male

Phil Male

For example, such data can help financial organisations better determine which financial products and services their customers want. It can also help pinpoint which social networks are the most effective platforms to use for placing targeted messages and adverts. And by carefully monitoring customers’ and prospects’ comments and posts on social platforms, financial organisations can gain actionable intelligence that gives them a better handle on their product preferences and enables them to plan their marketing strategies (both online and offline) accordingly.

In addition to sales and marketing, progressive financial organisations are using social media as a key component of their customer service initiatives. It’s not surprising why: Research has indicated that social media is the most cost-effective channel for delivering customer service. For example, handing a customer service request via social media costs less than £1, while handling the same request via the phone costs around £3.50.

In fact, almost half of all social media users say they have used it to obtain customer service. And they expect the organisations they interact with to respond to their social media customer service inquiries quickly: 32 per cent expect a reply within 30 minutes and 42 per cent within an hour.

Most Common Social Media Platforms

Which platforms are financial organisations using the most in order to interact with their customers via social media? According to, the winner is Twitter, with 92 per cent of financial service firms tracked maintaining a Twitter presence. American Express is the most active social media financial service firm, it states, maintaining three separate Twitter accounts and five separate Facebook pages, with 400,000 followers. AVIVA, Barclays, Charles Schwab and Chase are other financial organisations that have a strong social media presence.

Most financial organisations that have successfully implemented social media have taken the time to develop a comprehensive plan that drives their overall social strategy. Such a plan typically consists of four main components:

  1. Getting a handle on their existing social media presence. The first step is to determine your organisation’s current social media footprint. For many organisations, especially large ones, it’s much bigger than they realise, with potentially dozens of social media accounts spread out among many different platforms.
  2. Creating an over-arching, organisation-wide social media strategy. This strategic plan should dictate how social media will be used across the entire organisation and bring together disparate silos and departments that might currently be operating independently of each other. In addition to sales and marketing, this should also include compliance, IT, human resources and customer service, among other departments.
  3. Setting social media objectives and identifying metrics in order to measure them. Just like all organisational initiatives, there should be goals and objectives attached to social media efforts. And they need to be tangible, trackable and measurable so you can see how your organisation is doing in meeting them.
  4. Educating employees who will be responsible for implementing the social media strategy. Employees shouldn’t be held accountable for devising and implementing the social strategy if they haven’t been properly trained. Social media is becoming a field of study in its own right, so invest in adequate education to equip employees with the tools and education they will need to be successful.

If the past decade is any indication, social media is not only here to stay, but it will increasingly become the go-to channel for financial customers as they make decisions about which financial organisations to do business with. This makes it critical that financial organisations devise and implement a broad strategy for social media success.

Phil Male delivers a session on social media and changing communications on the Cambridge Advanced Leadership Programme. For more information, visit:

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How do you adapt your insurance pricing strategy in the face of increased price competition?



How do you adapt your insurance pricing strategy in the face of increased price competition? 1

By Ketil Kristensen, Senior Advisor, Insurance, SAS

Many countries in Europe have in previous years experienced increased price competition for general insurance products. Especially in Southern Europe, the competition has been very fierce, fuelled by online price comparison websites. In Spain, Portugal and Greece, there has been a substantial drop in average premiums for products like motor, home and health insurance. This poses a real threat to the profitability of property and casualty insurers.

While some insurance products are highly specialised and almost impossible to compare, most common products have increasingly become commodities. Consumers can now easily compare them online.

When comparing insurance policy prices and details becomes as effortless as getting quotes for airline tickets or hotel accommodation on price comparison sites, more insurance companies will eventually enter the market. And thus price competition will increase.

Preparing for a price war

Once the price war starts, there is no way to avoid it. And insurers need to meet their competitors head-on.

To win a price war, insurers need to be meticulous when they set the premium levels. They might also need to rethink the definition of “profit” when they are making pricing strategies for the future. In a market where premium levels are volatile and the competitive situation may change rapidly, insurers also need the capability to evaluate potential future scenarios in a short period of time.

Setting the premiums right

In the fast-paced digital era, customers expect insurance prices to be easily available online. They will make inquiries for insurance covers for their cars or homes on price comparison websites and expect the prices to be available immediately. From an insurer’s point of view, the premium customers will see on their screens when comparing insurance policy prices is the sum of the insurer’s technical premium and the commercial loading.

The technical premium represents the break-even price that the insurance company would charge for the policy if it had no costs and no desire to make a profit. Commercial loading represents the sum of the insurance company’s costs and the profit it expects to make on the policy. Technical pricing is the subject of many actuarial textbooks. But as machine learning algorithms make their way into actuarial departments, we will need to rewrite those books. Modern pricing techniques that include machine learning algorithms are a notable improvement compared to traditional models. If applied properly, ML models will result in more accurate technical pricing given the same data.

But what about commercial loading? How much profit should the insurer aim for?

Every one of us has a different tolerance for how much we would pay for, e.g., a car insurance policy. Some customers don’t consider price to that important. Others will try to search for a better deal elsewhere, regardless of how much time the process would take. Most customers are somewhere in between.

Being able to price the insurance products analytically based on the “willingness to pay” is, for many actuaries, seen as the holy grail of insurance pricing.

Personalised premiums

Most insurers already do personal pricing to some extent today. For example, they give different discounts to policyholders with equal risk. However, there is often a great potential to do segmentation and price calculations in a more analytical manner. Ideally, insurers would like to set the premiums as high as possible, but not so high that customers move their policies to another insurer.

On the other side, insurers would like to move customers away from their competitors by offering low premiums – but not too low. The insurer must first determine the price sensitivity of insurance customers and then price each insurance policy so that it maximises the profit for the insurer. At SAS, we refer to this as portfolio optimisation.

Insurers that can quickly reoptimise changing prices in the online market will also quickly identify customers that are at risk for churn. They can then perform the appropriate actions to prevent this from happening.

Rethinking ‘profitability’

When insurers think “profit,” they usually mean the income statement for next year. This is about to change. The concept of Customer Lifetime Value (CLV) is becoming more and more common in the insurance industry. And many insurers are now refining their pricing strategy based on a maximisation of the CLV of all its customers, thus not focusing solely on the profit definition in the income statement. The CLV of an insurance customer is the net present value of this customer for the insurer, where behavioural effects like renewal, cancellation and cross-selling of other insurance products are considered for the entire lifetime of the customer.

To accurately compute CLV for a customer, the insurer will need data that describes the behavioural patterns of the customer. Most insurance companies have quite a lot of such data available – the problem is usually that it is not adequately structured. In practice, to quantitively identify the customer lifetime value, insurers need to integrate both actuarial and customer behaviour models. Once a system for this is in place, insurance companies will have a strong quantitative foundation to compute the customer lifetime value of their policyholders.

SAS and insurance pricing

Price competition is changing the insurance market right now. When a customer determines where to buy insurance, the price is the most important factor. Thus, to stay competitive and still run a profitable business, insurers need to set their premium levels just right. The evolution of price comparison websites – which provide real-time quotes on competitor prices and increased access to data that contains information about the customer’s insurance risk – has made the actuary’s job of calculating the premium more complicated.

Over the years, SAS has worked together with insurers to ensure that strong system support is in place to compute premium levels down to an individual policy level. These pricing systems have been put through the test in some of the most competitive insurance markets in Europe. They have turned out to be a valuable strategic tool for insurers to balance the desire for profit against the desire for market share. And maybe most important of all, they have enabled these insurance companies to effectively join the price war, fight it and still make a profit.

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European shares drop on inflation risk concerns; Lagarde speech eyed



European shares drop on inflation risk concerns; Lagarde speech eyed 2

(Reuters) – European shares fell on Monday as concerns over the risk of higher inflation due to a jump in commodity prices tempered optimism around a vaccine-led economic recovery.

The pan-European STOXX 600 index was down 0.7% by 0810 GMT, led by declines in technology companies and food and beverage stocks.

Germany’s benchmark stock index dropped the most among its European peers, down 1.1%.

Europe will decide whether to extend the suspension of its rules limiting budget deficits and debt, known as the Stability and Growth Pact (SGP), in coming weeks, the Commissioner for Economy Paolo Gentiloni said.

Britain’s FTSE 100 dropped 0.4%, as Prime Minister Boris Johnson plots a path out of COVID-19 lockdowns in an effort to gradually reopen the battered economy.

All eyes will be on European Central Bank President Christine Lagarde’s speech on stability, economic co-ordination and governance in the EU later in the day.

In company news, French car parts maker Faurecia lost 1.5% even after it targeted its sales close to 25 billion euros ($30.29 billion) and an operating margin above 8% of sales by 2025.

(Reporting by Shashank Nayar in Bengaluru; Editing by Sriraj Kalluvila)

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OPEC, U.S. oil firms expect subdued shale rebound even as crude prices rise



OPEC, U.S. oil firms expect subdued shale rebound even as crude prices rise 3

By Alex Lawler and Jennifer Hiller

LONDON/HOUSTON (Reuters) – OPEC and U.S. oil companies see a limited rebound in shale oil supply this year as top U.S. producers freeze output despite rising prices, a decision that would help OPEC and its allies.

OPEC this month cut its 2021 forecast for U.S. tight crude, another term for shale, and expects production to decline by 140,000 barrels per day to 7.16 million bpd. The U.S. government expects shale output in March to fall about 78,000 bpd to 7.5 million bpd. [OPEC/M]

The OPEC forecast preceded the freezing weather in Texas, home to 40% of U.S. output, that has shut wells and curbed demand by regional oil refineries. The lack of a shale rebound could make it easier for OPEC and its allies to manage the market, according to OPEC sources.

“This should be the case,” said one of the OPEC sources, who declined to be identified. “But I don’t think this factor will be permanent.”

While some U.S. energy firms have increased drilling, production is expected to remain under pressure as companies cut spending to reduce debt and boost shareholder returns. Shale producers also are wary that increased drilling would quickly be met by OPEC returning more oil to the market.


“In this new era, (shale) requires a different mindset,” Doug Lawler, chief executive of shale pioneer Chesapeake Energy Corp, said in an interview this month. “It requires more discipline and responsibility with respect to generating cash for our stakeholders and shareholders.”

That sentiment would be a welcome development for the Organization of the Petroleum Exporting Countries, for which a 2014-2016 price slide and global glut caused partly by rising shale output was an uncomfortable experience. This led to the creation of OPEC+, which began cutting output in 2017.

OPEC+ is in the process of slowly unwinding record output curbs made last year as prices and demand collapsed due to the pandemic. Alliance members will meet on March 4 to review demand. For now, it is not seeing history repeat itself.

“U.S. shale is the key non-OPEC supply in the past 10 years or more,” said another OPEC delegate. “If such limitation of growth is now expected, I don’t foresee any concerns as producers elsewhere can meet any demand growth.”

Still, OPEC is no rush to open the taps. Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said on Feb. 17 oil producers must remain “extremely cautious.”


Shale output usually responds rapidly to price signals and U.S. crude has this month hit its highest level since January 2020, topping $60 a barrel.

While shale companies have added more rigs in recent weeks, a tepid demand recovery and investor pressure to reduce debt has kept them from rushing to complete new wells.

“At this price point, any oil production is profitable, especially the relatively high-cost U.S. shale patch,” said Stephen Brennock of broker PVM Oil Associates.

“Yet despite these positive growth signals, U.S. tight oil production is far from recovering its pre-COVID mojo.”

The chief executive of shale producer Pioneer Natural Resources Co, Scott Sheffield, recently said he expects small companies to increase output but in the aggregate U.S. output will remain flat to 1% higher even at $60 per barrel.


Last week’s severe cold will wreak havoc on oil and gas production as companies deal with frozen equipment and a lack of power to run operations. The largest U.S. independent producer, ConocoPhillips, on Thursday said the majority of its Texas production remained offline.

But J.P. Morgan analysts said in a Feb. 18 report rising oil prices might prompt a quicker shale revival.

“As long as operators have sufficient drilled but unfracked well inventory to complete, they should be able to easily grow production while keeping capex in check,” the bank said, using a term for drilling spending.

Forecasts for 2022 such as from the U.S. Energy Information Administration are for more U.S. supply growth [EIA/M], although perhaps not enough to cause problems for OPEC+ for now.

“U.S. oil output will not go back to pre-COVID levels any time soon,” said PVM’s Brennock. “But that is not to say that U.S. shale will not one day return as a thorn in OPEC’s side.”

(By Alex Lawler in London and Jennifer Hiller in Houston; Editing by Gary McWilliams and Matthew Lewis)

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