Looking to customer value to drive growth in wealth management during challenging times

South Africa’s high savings gap and growing working-age population infers a robust retail investment market. Yet the reality is the impact of high unemployment and consumer indebtedness has resulted in a complex economy that requires a micro-level focus on customers to identify opportunities.

Understanding consumer segments is thus key. Although this is not a new concept, traditional segmentation models based on income and age are insufficient for South Africa’s complex economy. Added to that, consumer behaviour is now much more nuanced in an increasingly digital world. Mobile technology in particular is driving increased consumer use of technology in the everyday lives of African consumers.

These statistics indicate the complexity of the South African economy, impacting the retail investment market:wealthmanagement_bsg

  •  Association for Savings and Investments South Africa (ASISA) estimates that the insured gap in SA has grown steadily to R28.8 trillion in 2016, a 6.3% increase per year since 20131
  •  The South African Reserve Bank (SARB) reported an aggregate savings rate for Q2 2016 of 16.5% of GDP, including a household savings rate of 1.1%2 
  •  The unemployment rate is officially 26.6%, but youth unemployment is twice as high2 
  •  At the end of March 2016, 9.55 million credit customers had impaired records, representing almost 40% of credit-active consumers3

A variety of devices and the ability to use these devices in different locations and for specific uses requires an understanding of the attitudes and behaviours of different types of consumers, to optimise mobile solution design. For example, it is impractical to expect a user to navigate a complex mobile app while discussing their investments. Conversely, expecting consumers to use only a well-designed mobile app is also not enough.

Most consumers don’t rely solely on digital channels for interaction, they expect to supplement this with traditional call centres and face-to-face interaction. Furthermore, these channels are also starting to merge as voice-enabled digital assistants personalise digital touchpoints.

And it is not only about different channels, many consumers have extended the concept of online communities enabled by Facebook and others to investing. South Africa alone has 13 million Facebook users4.

Gartner surveyed more than 10 000 consumers globally to understand their preferences across a range of investment issues. This included their interest in participating in an online or social network to discuss investments and related topics, tracking the investment plans and portfolios of other investors, and investing in other alternative assets… Interest in participating in these groups is higher among younger consumers; however, this interest remains significant in the more senior groups we surveyed…More than 40% of consumers in developing markets expressed similar interests5.

Most organisations are investing heavily into business and IT, combined with various internal initiatives, to maximise customer value—a key imperative for organisations to enable them to achieve their three to five year goals. This requires flow across the entire client value chain, by breaking down organisational silos that impact customers’ experiences.

BSG’s 20 years of experience ensures we understand the challenges faced by organisations when overcoming these silos. Delivering the required results also necessitates an understanding of how the change will impact the entire ecosystem. Too often we see meaningful work taking place independently within business areas, or being duplicated or double counted from a business case perspective.

Are retail banks realising the full potential of their customers?

Are retail banks realising the full potential of their customers?

Are retail banks realising the full potential of their customers?

Are retail banks realising the full potential of their customers?Conclusion:

Despite the challenges, PwC forecasts 9.6% growth in assets under management per year until 2020 for select markets in Africa, including South Africa6.

A focused strategy, using customer insights, will enable wealth managers to find the growth opportunities in the market complexity.

References:

  1. The South African insurance gap (2016), 9 October 2016, ASISA
  2. Quarterly Bulletin, September 2016, South African Reserve Bank
  3. Media Release: Credit extension slows down, July 2016, National Credit Regulator
  4. http://www.worldwideworx.com/wp-content/uploads/2016/02/SA-Social-Media-Landscape-2016-Executive-summary.pdf
  5. Wealth Managers Must Use Social Media More Effectively or Lose Clients, 14 November 2016, Chuck Thomas, Gartner
  6. Africa Asset Management 2020, 2015, PwC

About the author: An executive responsible for knowledge and insights, Gary Stocks is passionate about unlocking potential and accelerating performance at BSG’s clients and people. His focus is on creating value in an increasingly digital world through customer-centric thinking and data-driven insights.

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