Consolidation Concerns to Underscore Focus of Market Intelligence for Financial Services Companies over 2010/2011 Read more: http://www.globalintelligence

December 14, 2009. Consolidation, increased competition and greater government regulation are top concerns for global Market Intelligence professionals within the financial services industry, according to the 2009 Global Market Intelligence* survey. Banks, insurers, stock brokerages, investment funds, consumer finance and credit companies are just very slowly recovering from the effects of the economic crisis. How will they use Market Intelligence in 2010/2011?

Conducted by M-Brain (formerly Global Intelligence Alliance), the 2009 Global Market Intelligence survey consolidated the responses of 69 Market Intelligence professionals and end users at some of the world’s largest global or regional financial services organizations, and provided some interesting insights. The total number of responses globally reached 724.

Industry consolidation brings some threats, and a slew of opportunities
Consolidation, increased competition and greater government regulation are perceived to be the top threats to the industry, while consolidation is also seen to bring many new opportunities. The “current reshuffling will leave several client segments insufficiently banked,” said one respondent. Several will also pursue new market segments such as Generation Y customers, small business, retirees and pensioners.

Companies will also look into relatively cheaper asset acquisitions, as they look to increase their assets under management (AUM).

In addition, “underdeveloped banking markets (geographically) shall ensure tomorrow’s global leadership” was another common sentiment.

Overall, financial services companies are looking to grow stronger and more innovative in their business models.

The Market Intelligence function is not yet mature in the Financial Services industry
Only 51% of the respondents have some form of systematic Market Intelligence operations, falling behind Telecommunications, Technology and Media (75%), Chemicals (74%) or Pharmaceutical and Healthcare (71%), the top three users of systematic Market Intelligence. In fact, the survey respondents fail to use Market Intelligence in absolutely all their key decisions, and choose to use it only selectively across some key decisions.

While slightly over half of the companies (55%) house Market Intelligence under Strategic Planning and Business Development and a quarter (26%) under Sales and Marketing, a handful do not organize Market Intelligence under any function (10%). On average, there are two layers between the CEO and the most senior Market Intelligence manager, indicating that valuable market information may not reach key decision makers in a sufficiently timely manner.

Overall, it is not surprisingly then that only half considers their decision making to be extremely or largely efficient. This is a matter for concern for an industry that is undergoing changes that have never been experienced before and which should be closely monitoring its environment. After all, the purpose of Market Intelligence is to facilitate accurate and confident decision-making that is based on processed and analyzed business information. Insights generated through the Market Intelligence effort improve planning, decision-making, operations and performance.

Financial services companies see the need for more Market Intelligence during an upturn but prefer to be conservative

Change in need for Market Intelligence during an upturn

Graph - Change in need for MI during

N=442 Market Intelligence executives
Source: M-Brain (formerly Global Intelligence Alliance), Global Market Intelligence survey 2009

Could the recession have been a “˜blessing in disguise’ for Market Intelligence activities? Companies have had to focus and prioritize, and while doing so, to think about what Market Intelligence is absolutely vital, why, when, and to whom. In such an environment, there is no room for information that is simply “nice to know”.

The good news is that Market Intelligence has increased in importance as a result of the downturn for 50% of financial services companies. The bad news is that the industry still lags behind other industries in terms of how they see the use of Market Intelligence to combat the economic crisis.

Only 55% of respondents will actually do so over 2010/2011 – perhaps due to perceived uncertainties about the future. In fact, 14% actually plan on decreasing their investment in Market Intelligence overall.

Market Intelligence will be most likely be used on conducting customer intelligence, M&A due diligence and new market entry studies
Overall, financial services companies plan to place “˜somewhat more emphasis’ on Market Intelligence across all geographic regions as they look for opportunities and greater efficiencies. They are most likely to conduct customer intelligence, M&A due diligence and new market entry studies.

* Market Intelligence or MI is the discipline where organizations systematically gather, process and analyze information from their operating environment to facilitate decision-making.

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