Leading a Revolution in Banking

Identifying a Product positioning is the way in By embracing new technology, Technology has facilitated this revolu- Meeting Gap in the Market which a product and its associated Intelligent Finance has developed a tionary new system of banking. This Customer Needs Introduction brand is perceived by customers in rela- new approach to delivering both prod- allows customers to connect products together, taking account of both their tion to other competitive products. ucts and services, in a highly innovative The Chartered Institute of Marketing In today’s technology driven, modern borrowings and savings. This means Changes in society, markets and economies has Different customers value different com- way. This looks set to transform the tra- use the following definition to describe world, most organisations operate in that by connecting products together, intensified the need for most organisations to binations of product or service attribut- ditional retail bank as we know it Ð by marketing. highly competitive markets, this is par- interest is only paid on the balance. For be more and more innovative with the products es, based on the extent to which it meets putting the customer first. ticularly true of the financial services example, a customer may have two "Marketing is the management process that they offer, in order to attract new customers their particular need at that given time. sector. Technology has been one of the products with Intelligent Finance, a responsible for identifying, anticipating For example, the diagram shows that and increase product holdings. New products key drivers of change within this The Proposition personal loan and a current account. and satisfying customer requirements some customers are prepared to pay a and services can provide the mechanisms market and most retail banks now offer The customer has a personal loan for profitably." particularly high price for a high quality Despite the fact that most banks now £5,000 and £2,000 in their current through which further market growth can be on-line banking services. Until recent- service. While others, prefer a quick offer telephone and internet banking This definition places the consumer at ly, most banks operated from the tradi- account. Intelligent Finance’s integrated achieved. Increasing competition, which often standard service, for a low price. services, most continue to function in approach allows the customer to connect the centre of an organisation’s activities. tional high street branches, offering stems from new products and services, means very similar products and services to that innovation in new product development is High Price their customers. Quick StandardService no longer an option but a necessity. A product can be defined as anything This case study examines how technology has that can be offered for sale, this could enabled Intelligent Finance to revolutionise be something tangible that can be owned or it may be a service that banking, by creating not just a new bank, but a is performed for the buyer. Most totally new way of banking. Intelligent Finance’s products contain both a tangible and a objective is to be the consumer’s champion by service element. GAP placing the needs of customers at the heart of High Quality Service its marketing activity. Low Price

If an organisation identifies a group of traditional ways. Placing traditional the two accounts together. The £2,000 in Intelligent Finance set out to be the customers, who require a combination branch networks at the forefront of the customer’s current account can be consumer champion. Organisations of either goods and or services which is their operations. High street branches offset against the loan, so interest is seek to offer customers particular bene- not currently offered, it will have dis- are an expensive overhead and often only paid on the £3,000 personal loan fits in order to meet their needs. They covered a ‘gap’ in the market. offer products which do not always balance and the customer receives no want the right products, at the right time, in the right place at the right price. meet the customer’s needs. interest on the current account balance. Intelligent Finance’s Chief Executive, Alternatively, the customer can choose to Jim Spowart, has been a pioneer of This is known as the marketing mix Intelligent Finance was launched last pay borrowing rates on their loan and and is made up of the four P’s. direct banking. He realised that while year as a division of the Halifax plc. receive the same rates on their savings. It people were queuing in banks at the Intelligent Finance offers a phone and is based on the principle that in effect, To meet the needs of consumers, organ- counter, the customers who telephoned internet banking service, with products some of what customers borrow is their isations must: got priority. He felt that if telephone that give the customer choice, flexibility own money, so they should not pay or banking could be improved, then a fast and the ability to make the most of their receive different interest rates on it. ¥ develop products to satisfy them and efficient service could be delivered own money. Intelligent Finance offers Given that the amounts can change daily, to customers, without the overheads of five products; a current account, sav- the system will calculate balances on a ¥ charge them the right price an expensive branch network. This was ings, credit card, personal loan and a daily basis, allowing the customer to ¥ get the goods to the right place the beginning of Jim Spowart’s venture mortgage. The innovation is in the way receive the best possible rate of interest into direct banking. Intelligent Finance in which the technology has allowed on their money. The system is unique in ¥ make consumers aware through is the third new generation bank Jim customers to choose to manage their that it allows a customer to have a few promotion. Spowart has set up. It set out to offer money and allows them to link the prod- products or the whole range of products something that no other bank was offer- ucts together to ensure that their money in their plan. Other banks require the cus- So how has Intelligent Finance devel- ing, therefore, filling a gap. works for them in the most efficient way. tomer to have a mortgage to benefit. oped a successful marketing mix? Glossary of Keywords Products interest on their savings. Without the Direct Channels: Customers enquire already a well established household and develop its products and systems to overheads of traditional high street directly by phone or on the web. name, Intelligent Finance came to the continue to meet consumer needs. Intelligent Finance’s proposition com- branch networks, Intelligent Finance is market offering a radical and new Professional Advisors: Intelligent Competitive Advantage: Having a distinctive characteristic that bines both service and tangible prod- more cost efficient, therefore, Intelligent approach to banking. Finance has a sales force who promote Conclusion yields superiority over rivals. ucts, which results in an integrated Finance is able to pass on these savings the Intelligent Finance product to pro- Therefore Intelligent Finance needed to product Ð one could not operate as to its customers. fessional advisors throughout the UK. create a new brand identity, capable of Technology has facilitated this new efficiently, or in the same way, without Distribution Channels: The stages of ownership that takes place as These professional advisors sell prod- promoting the bank not just to potential approach to banking. Intelligent the other. In this case, transactions and a product moves from the manufacturer to the consumer. ucts from a variety of financial services consumers, but also, to professional Finance can now use the intelligence accounts are totally integrated. Place institutions in order that their cus- advisors, who would have the ability to and information that telenet banking Marketing Mix: The main variables through which an organisation Flexible technology enabled Intelligent Market research revealed that the most bring in large volumes of business. The can provide Ð through measuring the tomers can make an informed choice. carries out its marketing strategy. Often known as the 4p’s, Product, number of hits on the web and the Finance to develop this new product successful banks were those that oper- The advisor may earn a commission on bank concentrated on the end benefits to Price, Place, Promotion. offering. The systems enable the bank ated multi-delivery channels, including each product sold. the customer, comparing it to buying a length of time of the hits etc - to con- to deliver choice and flexibility to both phone and the internet. If sports car Ð the customer does not need tinue to develop its products and ser- Affinity Partners: Intelligent Finance Product Positioning: The way in which a product is perceived in customers who can mix and match customers were able to speak to some- to know what goes on under the bonnet, vices. Intelligent Finance knows that has a number of partnerships with relation to other competitive products. their products. one on the phone, it seemed to be the simply that it looks good and goes fast. just as it has embraced technology, it is key difference between success and external companies. These partnerships now a driver of change within its Customers can connect products and Intelligent Finance recently completed failure. Intelligent Finance followed are with organisations who can provide market. The challenge it faces is to make their money work for them. For a very successful campaign, which uses this model and customers have a range added value to each other’s member- continue to develop its product example: Jim and Sarah have a current its customers to explain the merits of its of ways to connect to the bank: phone, ship base. For example, the Living Well proposition. Intelligent Finance must account, a savings account and a mort- product proposition. The campaign internet, or WAP technology. This Health Clubs, promote Intelligent continue to deliver the right product, at gage with Intelligent Finance. In an provided a good explanation of the means that customers can make bank- Finance to its membership base, achiev- the right time, to the right place, at average month they have £1,200 in product and appealed both to new and ing a part of their busy lives. In modern ing cost effectiveness through distribu- the right price - if it is to remain the their current account and £4,000 in existing customers. society, people now have less time to tion, while gaining direct access to the consumers champion. their savings account. They also have a visit high street banks. However, they club’s membership database. Living mortgage for £55,000. With Intelligent can still telephone the bank and speak Well can obtain advantage by being Finance, customers can choose not to Competitive Advantage to someone if they wish. Intelligent associated with a strong reliable brand. earn interest on their current account Finance offers banking for a 21st cen- In a highly competitive market, devel- and savings, the combined balance of tury lifestyle. oping and maintaining competitive the money that they have in their cur- Promotion advantage involves continuing to lead rent and savings account (£5,200) Intelligent Finance uses three distribu- the field. In just twelve months, would connect to work with their mort- tion channels to sell its products Promoting Intelligent Finance was an Intelligent Finance has revolutionised gage helping to reduce the amount of and customers can use a number of enormous challenge. Even though the the banking sector. interest that they have to pay. communication channels to enquire bank provides the reassurance of being Therefore, they only pay interest on about these. associated with the Halifax, which was Since it’s launch in November 2000 £49,800. If any of the amounts change, Intelligent Finance has achieved almost this is calculated daily and interest cal- 9% market share of the total UK net culated on the new balances. “I madean excellent mortgage lending and mortgage sales, equivalent to an additional 800 bank branches. It has also had 80,000 current Price decisionby moving to account applications. Customers can make their money work However, in a competitive environment, much harder with Intelligent Finance. Intelligent Finance” competitors will be looking to catch up The bank’s product proposition, means with Intelligent Finance and overtake Jan McLaughlin, that customers can choose to pay less Business Development Manager them. Therefore, Intelligent Finance interest on their borrowing or earn more needs to continue to look to the future ©Business Case Studies LLP

1 Carry out market research amongst 2 What makes the banking indus- 3 Carry out an analysis on a product 4 How has the development of 5 Why is it important for Intelligent a small sample (five) of other stu- try so competitive? or service of your choice. Try to Intelligent Finance impacted on Finance to build its brand? dents to find out, what they see as identify, by using a product posi- the personal banking market? being the essential features of an tioning framework, if there is a gap internet banking service. in the market

Questions www.if.com