Over the past 10 years, the financial services sector has become more and more competitive, with many companies now fighting for that competitive edge. Today, a key part of this battle is the ability to launch innovative financial products that savvy investors will find appealing – and to do it very quickly.
Most financial institutions are actually set up to develop new and innovative products - they often just need to find the right development path to take the product to market. In fact, financial institutions can delegate the majority of the hard work involved in a new product launch and focus their efforts, instead, on creating a financial product that is in tune with the market and what customers want.
Even for an established provider, the cost of developing and launching a completely new product can be very high. An increasing number of banks are therefore working with outsourcers to develop, launch and administer a wide variety of new products, since companies that specialise in this area can reduce the time-to-market for these products dramatically, and yet still meet the demanding standards that the provider would expect from its inhouse development teams.
By using an outsourcer for third-party administration, financial services companies can also delegate the responsibility for time-consuming tasks such as customer communications, product distribution, marketing etc.
As such, third-party experts can mirror the activities that would usually be handled by the financial services industry in-house, including issues related to actuarial support, compliance, business administration and IT.
The key to making sure that outsourcing delivers the desired result is to view the relationship as a true partnership. When working with an outsourcer to launch a new financial product, financial services providers will need to begin with a few very basic questions: will this product appeal to our clients? How will this product fit with what the market expects from us? How can we make sure that it accurately reflects our brand? And will it meet our particular needs in terms of return on investment, risk and service quality?
As technology continues to develop, financial services providers will increasingly need to make sure that they have access to a robust technology platform that will enable them to offer and support any new products through multiple channels, whether that means via the internet, on mobile devices, an extranet site, through the post and/or by telephone. Access to this kind of technology will play an essential role not only when launching new products, but also in supporting them once they’ve been brought to market.
Before long, retailers, supermarkets and other new entrants to this market will be launching new financial products of their own, and will therefore be facing these same challenges. As companies outside the financial services sector begin developing and selling unique ‘own-brand’ mortgages and pension products, expert advice in these areas will be essential. Companies like these will therefore benefit greatly from working with outsourcers, since they may not have the in-house expertise required to bring these new products to market quickly.
Regardless of the type of company launching a new product, however, an outsourcing partner should be able to produce comprehensive technical specifications and delivery plans within very short time frames, using systems that are bespoke to the company’s specific needs. Above all else, the real key to the successful launch of a new product will rely upon the outsourcer’s unique expertise and strong understanding of the financial organisation’s requirements and product concept – and that is the true power of partnerships.