Financial Services Must Transform for Future Value
January 17 2017 - 1:00AM
Business Wire
Oliver Wyman Report Says Corporate
Valuations and New Shareholder Value at Stake
for Incumbents in a Digital, Modular
Marketplace
According to global management consultancy Oliver Wyman,
financial services incumbents face a huge transformation challenge
as the world digitizes. Although digitizing existing core
businesses to radically reduce operating costs is necessary to
maintain current market share, profits, and valuations, merely
digitizing for increased efficiency is insufficient for new
shareholder value creation for these firms. Oliver Wyman’s State of
the Financial Services Industry 2017 report titled, Transforming
for Future Value, finds that financial services incumbents will
need to make clear, strategic choices about where and how they can
compete in evolving ecosystems, by choosing a single ‘archetype’
for each business in their portfolio in order to create
sustainable, future value.
“Very few firms have articulated a digital equity plan which
establishes how their investments will generate future shareholder
value in a digital, modular financial services environment,” said
Oliver Wyman’s Managing Partner for Financial Services, Ted
Moynihan. “Thus, while the largest global banks and insurers saw
shareholder value grow by an average of 10% per year, major fintech
firms both new and old delivered value growth at more than twice
that rate – comparable to growth rates of leading tech industry
giants.”
The 20th annual Oliver Wyman report poses a range of potential
examples for CEO and firm approaches to digitization (Stay the
Course, Digitize and Defend, and Go on Offense to Grow). In
addition, the report explores three emerging ecosystem archetypes
-- demand aggregators, platform providers and component suppliers
-- the capabilities and broader organizational implications of each
archetype, and management actions that will guide an incumbent’s
journey to sustainable advantage and new shareholder value.
“Last year, our 2016 State of Financial Services report, Modular
Financial Services, focused on the changing structure of the
industry as digital tools made it easier for firms to compete as
specialized providers in a richer, more modular financial services
ecosystem,” said report co-author and Oliver Wyman partner, John
Lester. “This year, we dive deep into the implications for the
large financial services incumbents that play such a crucial
day-to-day role in supporting the world’s economies.”
“We believe the central issue for incumbents confronting that
future is sustainable value: how can incumbents bring more value to
customers’ daily lives in a digital word? How can incumbents
translate that into increased value for shareholders? Our goal in
the report is to chart out a few different paths that incumbents
can take in answering those questions,” said Rick Chavez, Oliver
Wyman partner and report co-author.
The Oliver Wyman Transforming for Future Value report is
available here.
Key exhibits from the 2017 report include:
- Exhibit 1. Combined Valuation of Top
Global Firms in Each Category
- Exhibit 5. A Systematic Approach to
Modernizing Your Business
- Exhibit 6. The Three Archetypes
- Exhibit 7. Top 50 Fintech Firms by
Dominant Archetype
- Exhibit 8. Building Capabilities with
Systematic Discipline
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With
offices in 50+ cities across 26 countries, Oliver Wyman combines
deep industry knowledge with specialized expertise in strategy,
operations, risk management, and organization transformation. The
firm's 4,000 professionals help clients optimize their business,
improve their operations and risk profile, and accelerate their
organizational performance to seize the most attractive
opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh
& McLennan Companies [NYSE: MMC]. For more information, visit
www.oliverwyman.com. Follow Oliver Wyman on Twitter
@OliverWyman.
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Oliver WymanMedia:Gregor Ridley, +44 20 7852
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