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Financial Services

During an economic downturn, management will pay far greater attention to the way in which their company applies innovation to processes and activities. Industry leaders understand that overhead costs must be brought into line with current market conditions.

In order to respond successfully to such challenges, organizations in the Financial Sector must transform current business and IT processes into new business models to achieve higher levels of productivity. It will not be just economies of scale, in terms of banking size, which will be important. The level of innovation in banking, and insurance business models will be of even greater significance going-forward.

The amount of external pressure brought to bear on financial institutions has increased significantly during the past 20 years. Political and regulatory pressures on financial institutions, have resulted in different consolidation processes, and thus to mergers and acquisitions amongst financial organizations. It is critical that financial institutions be prepared, with flexible infrastructure and processes, in order to respond to challenges in terms of future regulatory adjustments.

In addition, the relationship between the financial institution and the customer has altered radically, with the customer gaining relatively more 'power'. The customer no longer trusts the banking industry as in the past. As customers become better informed through access to information sources and social media, they require more input and more complex advisory steps. They demand personal, individually tailored solutions, in discretionary business or insurance products, which fit in with their personal lifestyle.

Mass Customisation is one key success factor in the provision of a personalised approach to financial services. It is also a factor in the reduction of overhead costs in a globalised world, e.g. via such innovations as mobile banking, which can include a wide range of financial services. Financial institutions must enhance service quality and availability. They must adopt new customer-service business models in order to stand out from their competitors. Innovation to enhance the experience has to be a key field of activity in the banking or insurance business of the future.

Such strategies as offshoring shared services (HR, IT, etc.) in order to reduce process costs are not new.  However, such issues as education, culture, language, and time-zone difference demand increased levels of management attention. Following the careful control and regular management of these issues, cost-cutting initiatives will become more effective. Consequently, costs related to subsequent error correction can also be more effectively managed. From a European perspective, EU expansion offers Switzerland an important opportunity. Financial institutions can establish subsidiaries to implement off-shore strategies, and to benefit from the harmonisation of legislation (e.g. SEPA payments). Such countries as Poland offer a higher level of skill/education in the workforce, at reasonable cost. This constitutes a completely new comparative advantage.