Advisers and providers need to start targeting their services at the growing number of consumers who are already using online financial services such as banking.
This is the advice from 1st-The Exchange which has identified a ‘virtual high street’ of around eight million and growing in its white paper ‘Gaps & Opportunities’, examining the effects of changing market and regulatory conditions in the UK advisory sector.
“The 8 million XY ‘surfers’, already using online banking services and readily open to similar offerings, represent a very powerful online high street for financial services providers,” the report says.
It concludes both advisers and providers will need to make a rapid re-assessment of current distribution strategy to cope with the changing regulatory environment including the impact of the Retail Distribution Review (RDR).
The report found many smaller advice firms are under capitalised and although they are able to provide a good service to current clients, lack the scale and financial security to move beyond this model.
It says using a web-based distribution model, providers and distributors should capitalise on the lower end ‘sales’ opportunities of direct internet customers. However, they should use good ecommerce to manage the more advanced needs of distributors and their higher end fee-based clients.
David Child, managing director of 1st – The Exchange, comments: “The continuing economic problems, together with the impact of RDR and regulatory change, will not disappear overnight.
“We believe that the secret to survival for many distributors will be in their ability to industrialise processes - stripping out unnecessary costs and providing efficient, streamlined services to the growing ‘virtual high street’ and internet-savvy population.
“Huge potential exists here for those organisations able to migrate to or launch parallel web-based distribution channels, servicing a new and expanding target market.
“It is clear that the FSA shares this desire with its comments on the new ‘guided sales’ principles which would ‘encourage customers to go through an automated process that then prompts them to decide what they want and helps them to buy a product.
“Solutions are already being developed for organisations to take such technology and customise or white-label it to their own requirements - giving rapid entry to market.”
Copies of the 1st – The Exchange White Paper, ‘Gaps & Opportunities’ – the virtual high street, can be downloaded free of charge from www.1stsoftware.com
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