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Delivering efficiencies in the Financial Sector
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Financial Services Solutions
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European financial services can look to the future with confidence. Challenges lie ahead, but the industry is positioned to respond, backed by strong foundations and deep pools of expertise.
Our consultants will look into every aspect of your business, both present and future, to deliver value through insight.
The EU is a leading exporter of financial services worldwide with annual exports of €78 billion accounting for about a quarter of global financial services exports.
Research shows that nearly 25% of chief financial officers fear that their companies will cease to exist as they do today due to disruptive competition. Challengers and new market entrants are operating with a lower cost base and are spending less money to serve each customer. Unburdened by legacy systems, infrastructure and ways of working, these companies are driven by digitally-focused operating models that target aggressive cost-to-income ratios.
European financial services can look to the future with confidence. Challenges lie ahead, but the industry is positioned to respond, backed by strong foundations and deep pools of expertise. As the environment evolves, continued success will require a dedicated approach and appreciation of the changes ahead.
Find out more at
expensereduction.com
Financial Services play a vital role in supporting business investment and growth, offering people and organisations secure access to their money, protecting against risks and providing stability for households and corporations.
The sector provides more than 11 million jobs in the EU and accounts for €681 billion of economic value. The EU is a leading exporter of financial services worldwide with annual exports of €78 billion accounting for about a quarter of global financial services exports.
Banks, insurers and asset managers are a crucial part of the European economies but face a period of significant change. The financial services industry continues to grapple with the impacts of the financial crisis and is still working hard to build confidence in its products and services. At the same time, it has great cause for optimism, with a chance to innovate, explore fast-growing markets and use transformative technology to unlock new opportunities.
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Industry challenges Who are ERA
Regulatory Compliance &
Risk Management
Cost & Supply Chain
Management
Customer
Expectations
Technology
ERA is a global network of specialist procurement advisors. Our Financial Services team work with clients in insurance, asset & wealth management and banking & capital markets to help tackle issues facing the industry. With experts across more than 40 categories, we can help you find ways to thrive even in a period of uncertainty. Whether you’re preparing for regulatory changes, putting technology to work or rethinking your cost management strategy, ERA work together with you to resolve complex issues, identify opportunities and deliver value to your business.
With our understanding of the Financial Services sector and our analytic approach, we help businesses face both industry and organisational challenges and unlock opportunities in their supply chains. This is shown in our proven track record which demonstrates how ERA improve the efficiency and profitability of organisations just like yours.
ERA provide best practices to your team and deliver additional profit to your business, allowing your staff to stay focused on their highest priorities and your organisation’s key initiatives.
Monitoring and reducing overheads is an essential practice employed by shrewd Directors in any organisation. For Gordon Pratt, Finance Director at Grove & Dean, one particular cost presented a challenge that will be familiar to businesses nationwide: Merchant Card Fees.
“I’d give ERA 11 out of 10 if I could! Not only have they brought their professionalism to the review, they’ve managed cost savings as well.”Gordon Pratt - Finance Director, Grove & Dean
Through their in-depth understanding of the cost-base of the market, ERA ensured that only market driven cost increases can be passed on from the supplier, further protecting and strengthening Grove & Dean’s position for the present and for future renewal negotiations.
Merchant Card Fees: 23%
ERA make light work of complex card fees
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Regulatory Compliance & Risk Management
The Solution
Compliance has come under major scrutiny in recent years, triggered by escalating corporate guidelines with roots in the financial crisis of 2008. Regulators have introduced ever increasing numbers of compliance issues which organisations must conform to and bear the associated costs.
This is particularly true of the Financial Services sector, where organisations themselves have put increasing emphasis on higher standards for ethical and moral conduct, alongside the rise of more cross-company and cross-industry collaboration.
In the risk domain, finance leaders are trying to keep pace with an ever-evolving risk landscape, with market volatility and risk of competition growing, alongside an expanding cybersecurity risk. At the same time, organisations are expected to keep ethical behaviour in line with more stringent public standards – something which can make digital transformation even trickier to execute successfully.
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Financial Services businesses have no option but to comply with national and international regulations, both to operate in the sector and to remain competitive. Control of such factors within your own infrastructure is often a priority and more easily achieved - but managing and monitoring suppliers is often significantly more difficult. The nature of Financial Services means you will be dealing within complex, multi-faceted supply systems, often tied to intricate contracts and clauses.
Transparent supplier relationships are key in optimising your business. ERA help by establishing a supply chain of competent outsourcers who understand your business, your sector and collective expectations. Properly managed, these suppliers will monitor and respond to the constant changes within the regulatory environment to ensure they (and you) have a competitive advantage.
By providing you with the right insight, ERA can help Financial Services organisations to navigate the maze of complex regulations and find the most suitable solutions for your business. Our ongoing reviews help identify emerging opportunities and any inconsistencies within your operations, and ensure you are always receiving best value and compliance within this continually changing space.
Wesleyan Assurance Society was founded in Birmingham in 1841 and operates nationwide delivering expert tailored financial advice/products to select professional groups; notably GPs, hospital doctors, dentists, teachers and lawyers.
“ERA has provided expert advice and support to our team in reviewing and selecting a new fleet management provider, they have been great to work with and we are very satisfied with the outcome of the project.”Benj Street- Procurement Manager
The results of the project were not only significant cost reduction and enhanced terms & conditions, but an improved and wider range of cars for employee choice, more flexible operating parameters, the introduction of an environmental CO2 cap and the expansion of cash allowances to all employee grades.
Fleet : 19%
A fleet testimonial
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TechnologyIn the Financial Services sector today, the accelerating pace of technological change can be a creative force – but also a destructive one.
Every firm must embrace technology as it impacts every facet of the business. Artificial intelligence, robotics, big data and blockchain are transforming the industry. Technology will determine which firms are the winners in a fast-changing landscape.
The promise of blockchain technology has been cited for several years now. Many sceptics are beginning to wonder if it will ever really arrive. Blockchain isn’t a cure-all, but there are clearly many problems for which this technology is the ideal solution. We continue to see banks, brokerages, insurers, regulators and others actively testing ways to harness the benefits of blockchain. The journey has only just begun.
Cybercrime is an ongoing challenge and the speed and the consequences are increasing. Businesses need to balance being open with being secure. As attacks increase and regulators take closer notice, the pressure to act mounts. By recognizing that hackers will find vulnerabilities, leaders can improve the way they design and deliver services, manage risks and train their teams.
Supply chain complexities are not limited to hardware. Most Financial Services organisations are prolific users of software and their associated licencing agreements. This is an area littered with complexities and costs that are often not well understood, and managing a user network across single-site, national and international offices can be a daunting task.
The opportunities for Financial Services who invest in such technology are endless, from reducing operational costs to improving efficiency.
The Financial Services landscape is fundamentally changing. Progressive organisations need to shift to accommodate the opportunities and challenges created by new technologies and evolving customer needs. Technology has become and will remain an integral part of financial services delivery. As such, financial institutions are increasingly becoming technology firms.
Organisations’ cultures and operating models must adapt to this new reality. This may mean embracing new routes to profitability, new approaches to customer engagement and seeking support in the identification and delivery of technology solutions. Developing strong partnerships with the supply chain is a positive step that will open opportunities for greater growth and transformation in the future.
Blockchain is becoming reality. The use of the distributed ledger technology will no longer be just hypothetical. The opportunities for Financial Services who invest in such technology are endless, from reducing operational costs to improving efficiency.
The Solution
The marketplace for IT solutions is increasing in competitiveness and complexity, not least because of FinTech disruptors. These fast-moving companies, often start-ups, are focused on innovative technologies or processes in everything from mobile payments to insurance. This sector is making some of the most profitable contributions to the Financial Services value chain.
Technology will help to drive successful changes in this market, helping to realise more innovative business models, provide better management and improve standards. Being able to quickly and effectively implement technological change will ensure the best chances of success.
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FINANCIAL SERVICE ORGANISATIONS ADOPTION OF FINTECH
Blockchain 92%
Regulatory Technology 62%
Financial Services Software 62%
Data Analytics 39%
Payments & Settlements 31%
Lending 23%
Wealth Management 15%
Personal Finance 15%
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HOW DOES BLOCKCHAIN WORK?
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Person A wants tosend money to Person B
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The transaction is shown online as a block
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The block is broadcast to every party in the network
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The network veri�es the transaction is valid
5Transactions are now permanent & transparent
The block is added to the chain
!
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Money moves fromPerson A to Person B
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Harpenden Building Society is an independent Mutual Society, owned by its members. For over 60 years Harpenden has helped local people to buy their own homes and to save for their futures.
Shredding and confidential waste is an often overlooked cost centre. For Harpenden Building Society, their responsibility to maintain robust and secure systems to protect their customers’ data is one which is taken extremely seriously. ERA was reccomended to the company and so, they seized the opportunity to take some specialist advice on this crucial but often under prioritised business function. The results were staggering.
“Thanks to the great work of ERA, we’ve been able to retain our existing supplier but on significantly enhanced terms, so we’ve got the best of both worlds! We’re able to maintain existing relationships, save money and feel confident that we’ve got water tight policies in place. What more could you ask for? ”Phil Bannister, Head of Operations, Harpenden Building Society
Thanks to ERA’s corporate leverage, they were able to negotiate with the supplier’s head office and secure a highly competitive rate.
Shredding / Confidental Waste: 51%
CostsHalved CA
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Authors
Andrea Gorza has deep knowledge of the insurance market; he is a certified insurance broker in Italy and has run successful insurance projects for ERA clients for more than eight years.
His collaboration as client manager for primary banks and insurance companies in Europe has given him a sound understanding of the sector. His main field of study is related to how new digital technology will impact financial and insurance organisations.
Richard has broad experience working with leading multinational corporations and mid-market private companies, dealing extensively with private equity, venture capitalist, corporate banking, insurance and other financial institutions. He is passionate about using the resources and expertise within ERA to help Financial Service organisations improve the efficiency and effectiveness of operational and business processes, reduce back office costs, manage risk and capture the economic benefits of supply-chain management.
Clients benefit from an impartial but informed perspective on current challenges and a clear view of a sustainable cost management capability.
Andrea Gorza
Richard Placito
Before joining ERA, Pavel gained 20 years’ experience in the finance industry on both sides of the banking market, working at different positions in ING, Raiffeisen and Deutsche Bank as well as the Regional Treasurer of Generali responsible for the CEE region.
He has successfully implemented more than 30 banking projects in several countries from Finland to Mexico, in most cases with above-average savings ranging from 20 to 80%. Many leading European organisations have benefited from his project deliveries.
Pavel Sikora
With a background in property financing, leasing, investment and development, Jason has a deep understanding of operational costs in financial services.
Jason works with a diverse financial and professional services client base enabling him to quickly identify opportunities for cost and service improvement. He works with clients to scope outcomes-focused projects, tailored to individual needs and organisational culture, and then manages delivery with a core team of sector specialists.
Jason Adderley
Customer ExpectationsBoth business and commercial users now expect a digital experience from their financial institutions. It’s about differentiated customer offerings, providing what customers want, when they want it, and how they want it, whether you’re a bank, insurer or asset manager. This isn’t just a matter of cosmetics. Organisations need to change their back-office operations to support it. And they will need to think differently about how to solve problems.
It is apparent that those who research and implement innovative concepts and systems to improve both their infrastructure and customer experiences develop a stronger advantage in the marketplace. The barriers come in the resistance to adopt technological advances into the business model, the costs to incorporate these and the risks arising from limited expertise in the area.
Digitalisation is a challenge, and the way forward is not always evident. Adopters have a great opportunity to drive more value into their customer relationships, capital resources and product offerings.
There is no single best way to approach FinTech. Leading financial institutions are pursuing various avenues to leverage the advantages, from partnering and buying to sourcing and direct investment. One best practice that underpins a successful approach to FinTech, is the definition of a focused strategy. This will often include an alignment between business objectives and the FinTech approach, readiness for change, an understanding of cultural barriers and a deep knowledge of the supplier marketplace.
Digitalisation is changing the way consumers purchase products, with new business models embracing direct-to-consumer approaches. Predictive analytics is allowing businesses to decipher patterns in consumer behaviour to drive sales and carve a competitive advantage for their business, while also presenting them with insights into consumer behaviours that can be translated both into new product strategies and generating more personalised experiences.
At the rate the industry is evolving, financial products and services – and the technological infrastructure behind them – will look remarkably different in a decade. Financial Services institutions that take the time to define their FinTech strategy and align it to their future vision and business goals, will be best positioned to make the most gains.
The Solution
INDUSTRY OUTLOOK
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EU citizens hold around €8 trillion in current and savings
accounts with banks, equivalent to over
€15,800 for every EU citizen.
Financial Services firms employ 6.4 million people across the EU and related Professional Services firms employ 5.1 million people. Together, this represents
5.4% of the EU workforce.
In each of the Member States, more than 5% of the
working population is employed in Financial and
related Professional Services. The industry is a pan-
European employment asset.
The EU Financial Services sector accounts for €681bn of gross value
added, around 6% of total EU economic output. Taking related
Professional Services into account, it is estimated to raise the total to
around 10%.
The EU is the leading exporter of Financial Services, with €78 billion accounting for about 25% of the
sector’s exports worldwide. Within the EU - and representing cross-border
trade between member states - exports are even larger at €81 billion.
Companies in Europe’s insurance industry, the largest in
the world, made annual payments to their customers
worth €952 billion – equivalent to paying out nearly €4,500 to
every household in the EU.
Over 9,500 Financial Services companies are listed on stock exchanges in EU Member States, double the
number in the US. Banks in EU Member States hold around 45% of global bank assets. Over half of cross border international bank lending, a total of over €15
trillion, originates from banks in the EU. The EU accounts for 32% of the global insurance market.
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In the face of such market pressures, and to survive, many companies target short-term savings and quick wins to remove cost from their business. These interventions alone are rarely enough to achieve the required savings sustainably year-on-year. If not planned and executed correctly, they can often do more harm than good – removing spend that drives value for the business, failing to sustain savings in the long-term and ultimately damaging business performance and the customer experience.
Cost & Supply Chain ManagementCost reduction is the number one change imperative for Financial Services organisations, as they compete for profitability in a record-low interest rate and a capital-constrained market environment. Since the global financial crisis, businesses have made substantial progress in the search for a less costly, more efficient way to operate.
The quicker businesses adopt technology and the opportunities it presents, the better placed they will be for the future.
For many companies, these uncertainties far outweigh their concerns regarding cyber security and disruptive technology– which is disconcerting when there’s little guidance for businesses from government bodies.
The Solution
These market leaders see further savings as a primary lever in their struggle to beat established rivals, ward off the threat of new entrants and deliver value to customers and shareholders alike. However, for established organisations, outperforming their competitors on cost is a considerable challenge.
In Financial Services, the delivery of sustainable cost savings cannot come at the expense of the customer experience or regulatory compliance. This presents a significant barrier to delivery for many organisations – cost saving programs often find themselves in the second tier of prioritisation, deprived of focus and resources.
To achieve a competitive and sustainable cost base, firms must find the right mix of tactical cost reduction solutions to drive short-term gains and more strategic initiatives to realise the transformational cost reductions needed to compete in the emerging Financial Services marketplace.
Once an organisation has identified the mix of tactical and strategic initiatives it will use to achieve its long-term cost reduction targets, it needs to focus on effective delivery of the required changes. Most cost reduction programs do not fail because of a lack of opportunities identified or the absence of a vision for transformation, but because of insufficient resources and poor implementation.
Despite this, aggressive new cost reduction targets continue to be announced – since 2015, over 90 percent of major European banks have reported further cost reductions as a key pillar of their 3-5 year strategic plans.
How can we help? Our consultants use their broad experience and insider knowledge of overhead costs and latest market trends to help you find the best solutions available for your company and optimise your supply chain and processes. There is no disruption to your day-to-day operations and you remain in control throughout the project.
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Summary
The Paymex Group is a leading financial solutions company based in the heart of Greater Manchester. The group includes a collection of companies which together provide a host of effective services that have been specifically designed to help both individuals and businesses out of tough financial situations.
Paymex are an organisation conscious of their indirect costs, and when they met with ERA, it became evident that they would become their trusted procurement advisors of choice.
“What distinguishes ERA is that they have provided an end to-end service for Paymex – running tender processes then actively managing our suppliers and ongoing purchasing habits, ensuring that we are always getting the best value available. This has worked exceptionally well for us, the benefits that ERA has brought to our company have gone far beyond just the identified cost savings.“Robin Russel-Fisher, Group Financial Director, Paymex
ERA were asked to explore cost areas where Paymex lacked in in-house expertise and resource to review. This included photocopiers, communications and utilities. The team used their extensive experience and knowledge to find significant savings.
Fixed Line Communications: 47%
SMS Communications: 41%
Mobile Communications: 38%
Photocopiers: 42%
Stationery: 19%
Utilities: 19%
Multiple service improvements and generous savings
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Financial Services organisations throughout Europe are operating in a complex market sector. There are a wealth of intricate challenges that are fundamentally changing the way the industry and businesses within it function, and further developments are inevitable.
New market entrants with a lower cost-base and established competitors are not the only issue. External influences such as regulatory compliance, technology and the growing demands of customers are also having a significant impact on operational processes and ultimately profitability.
Some sectors of the industry are experiencing extensive Merger &
Acquisition activity, and this can bring a whole new set of strains to
supply-chain management. Understanding and then optimising the
supplier base is a crucial element during due diligence phases and in
post-merger integration.
But the impact of these factors is not out of the control of innovative
businesses.
Armed with a depth of understanding and an ability to leverage,
there is enormous opportunity to benefit from the knowledge and
expertise in the multitude of supply chains that support the Financial
Services industry. When properly managed as part of a strategic plan,
existing and new suppliers can help to identify opportunities, resolve
complex process issues and deliver real value.
Successful organisations are reshaping their business models
to accommodate changing times and consumer behaviours,
overcoming barriers by developing and implementing inventive and
sustainable solutions.
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Why now?The ever-changing landscape of the Financial Services market continues to present organisations and their leaders with unprecedented challenges. Greater and more complex consumer demands, fast-moving competitors utilising disruptive business models, increasing risk and compliance issues and the continuing progress of technology are all having an impact.
Additional scrutiny is being applied to more widespread Corporate Social Responsibility issues such as Living Wage, Modern Slavery, Data Protection and Environmental Accountability.
Sustainable supplier management and cost reduction has become an imperative for these organisations to drive profitability, manage risk and increase shareholder value. Businesses must act quickly to find less costly, more efficient ways to operate.
You can call on ERA to give you immediate access to experienced professionals with wide reaching knowledge, backed by a team of international experts with a strong local presence to support your organisation.
Don’t get left behind.
Our process is simple. Our specialists, with expert knowledge of individual sectors, use their fine-tuned skills to negotiate the best deals for your overhead spend. Whether you don’t have the expertise in-house or simply need a fresh perspective on your plans, our specialists are here to help. We’re so confident in our ability to improve your infrastructure and bottom line that we will pay for our fees during the process. To sweeten the deal, if we can’t save you anything or find that you’ve already got the best plan in place, we will not charge you for any of our work. All we ask is that you consider us in the future should you need procurement services again.
However, for the majority of our engagements, we find the businesses are overspending unnecessarily. Sometimes we see organisations that are caught in bad deals, or we see opportunities where companies could be achieving more with a little guidance on a long-term plan.
Let us run your business through our ‘smarter-spending’ approach and see how we can help your business reach new heights. Following our three-step process, we ensure you receive maximum value from your supplier relationships and continue to do so through the support of our regular reviews.
You don’t even need a budget to begin. All you need to do is contact us to set up a meeting, and we can show you why our clients have seen that with a little bit of help, their money can go a long way.
Process Model
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The Financial Services Industry is experiencing a golden era of innovation, so it’s more important than ever to understand the value of the possibilities available.
Our consultants will look into every aspect of your business, both present and future, to deliver value through insight.
expensereduction.com
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