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You can’t pick up a newspaper today without reading a major headline about the financial services industry. Companies are failing; banks are merging; the government is signing on to bail out struggling organizations that are critical to the underpinning of the U.S. economy.
In this issue of On Financial Services, we share our point of view on the changes taking place in the financial services market, as well as findings from our 2008 Study of Consumer Payment Preferences and the implications of current trends in consumer cash use. We also explore the impact of current market conditions on wealth management and the opportunities that may arise as a result.
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On Banking
Market Chaos
Key Recommendations for Weathering the Storm
By Kim Allin & John Hansen
Not a day goes by without something new being written or spoken about the “credit squeeze,” imploding or frozen financial markets, or financial rescues or bailouts across the globe. Given the currency of this topic, On Financial Services felt compelled to add its thoughts and commentary to the fray.
We believe that the current market environment and its implications dictate that financial services companies focus on three critical areas most impacted by current events: strategy development, risk management, and customer selection.
This article focuses on these three key areas and what financial institutions need to do to address them. To read the full article, click here. |
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On Payments
Fast and Without Cash—That’s How She Pays
Highlights from the 2008 Study of Consumer Payment Preferences
By Melissa Fox and Guest Writer Dan Hough (BAI)
Most of us have fond memories of playing Monopoly®, gleefully organizing our money and counting out pink, green and yellow bills to buy Park Place or to pay rent to a mean landlord (a.k.a., our older brother) after landing on one of his properties. Today, however, the experience of playing Monopoly promises to be very different for many kids and adults, as they swipe their debit card through an electronic terminal to buy property or pay rent in the new Electronic Banking Edition of Monopoly that was introduced in the U.S. last year. And a recent study conducted by BAI and Hitachi Consulting suggests that Monopoly money may not be the only paper payments that are becoming obsolete.
Sponsored by First Data and its STAR Network, MasterCard, Metavante, and PULSE, the 2008 Study of Consumer Payment Preferences is the fifth in a series of studies that have been conducted since 1999 designed to track consumer payment behavior across the three primary payment venues: in stores, online, and to pay bills.
This article discusses findings from recently released 2008 Study of Consumer Payment Preferences and the implications for the payments industry. To read the full article, click here.
What’s Going on with Cash?
By Chris Allen
Now that the payments industry has effectively killed checks at the point-of-sale, cash appears to be the final, or at least the next, frontier with regard to electonifying payments.
Unlike checks—whose decline has been meticulously measured and tracked for the past decade—not much is known about cash. As a country, we have no idea how much cash is being held, where, or by whom. We know cash is an important part of our economy; a significant number of purchases are still made using cash, and reports indicate that there is an entire sub-economy that deals exclusively in cash. It can’t be tracked by the government, a bank, or anyone else for that matter, and many day laborers and other workers continue to be paid in cash. In fact, many people who do not have a bank account will go to great lengths and pay high fees to convert the checks they receive into cash.
Hitachi Consulting has been doing a significant amount of work in and around the cash marketplace. Our conclusion is that despite the threat of electronic payments, cash is here to stay. That being said, usage of cash as a payment method will continue to decline slowly. This trend is posing and will pose unique challenges to companies that deal with cash, including ATM deployers, banks, cash providers, and armored carriers. The cost of handling cash is likely to rise, but there appears to be no real impetus to migrate to a cashless society (unless you are a payments network).
This article shares our point of view on the future of cash payments, what it means for banks, ATM deployers, and cash providers, and what they need to be thinking about as they strategize for the future. To read the full article, click here.
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On Wealth Management
Winning with Wealth Management
By Jim Neckopulos
The recent changes and chaos in the financial services industry will likely have a significant impact on the wealth management business. Key drivers that will impact the wealth management business going forward include:
• The end of traditional investment banks
• Consolidation of commercial banks
• Changes in tax policy
• The demographics of the U.S. population
Each of these drivers, alone or in combination, will need to be successfully addressed for providers to be winners in the wealth management business.
This article discusses these four factors and identifies success criteria for different players in the wealth management space. To read the full article, click here.
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Hitachi Consulting is a recognized leader in delivering proven business and IT strategies and solutions. From business strategy development through application deployment, we leverage decades of business process, vertical industry, and technology experience to understand each company's unique needs and to achieve sustainable ROI. Inspiring your
next success!®
Our national Financial Services team is the result of significant investments the firm has made in this space over the past few years. In August 2005, we acquired Dove Consulting, a Boston-based strategy and organization consulting firm specializing in payments strategy and research. In March 2008, we acquired JMN Associates, a leading provider of consulting services to the financial services, real estate and insurance industries based in San Francisco. Together, our team brings valuable expertise and practical, proven solutions to clients in the areas of business and technology strategy, process improvement, market research, project management, and industry and regulatory compliance.
Visit us at: http://www.hitachiconsulting.com, or send feedback to: onfinancialservices@hitachiconsulting.com.
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© Copyright 2008 Hitachi Consulting. Contents in this newsletter may be reprinted with proper attribution to Hitachi Consulting. |
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