According to global management consultancy Oliver Wyman, the value in financial services is quickly shifting from balance sheets and physical distribution to information. This trend is occurring globally, but is perhaps most easily observable in US banking. There, information businesses related to banking such as independent payment networks, credit bureaus, ratings agencies, exchanges, and data providers, among others, may be more valuable than the industry’s traditional balance-sheet based businesses by the end of the decade. Oliver Wyman’s annual State of the Financial Services Industry 2013 report titled, A Money and Information Business, finds that most financial services companies have an opportunity to become information-driven companies that grow and monetize their information assets. Firms that exploit this opportunity will find areas to prosper even in the face of challenging macroeconomic conditions and regulatory uncertainty. On the other hand, firms that fail to identify how the evolving information landscape is affecting their business could suffer from a similar kind of disruptive change witnessed by the travel, media, telecommunications and music industries.
Banks and insurers continue to control a unique and extraordinarily valuable array of information assets. The 16th annual Oliver Wyman report finds that once a firm understands its information assets and how the evolving financial services information landscape can help monetize those information assets or threaten them, it can build what Oliver Wyman calls the “information balance sheet”.
“We conceived the idea of the information balance sheet as a mechanism by which executives can begin to get a grasp on their information assets, exposures, opportunities and threats. In short, it provides a framework to understand the aggregate impact of information and inform on how changes in information are going to change and affect earnings, as well as prioritize potential investments in information,” said Aaron Fine, Partner at Oliver Wyman and primary author of the report.
Other key findings of the report include:
“‘Money’ is a value business, ‘information’ is a growth business. The value of money has never been lower and so financial services firms that define themselves by their monetary balance sheet will struggle to grow. Those that instead define themselves by the growth potential of their information have a very different future,” said Fine.
Key exhibits from the report include:
The Oliver Wyman State of the Financial Services Industry 2013 report is
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 25 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm's 3,000 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.