How Distributors Can Navigate the Fragmentation of Vaccine Administration

Posted by Laura Ruth on Apr 3, 2018 9:15:08 AM

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Topics: Market Analysis, New Market Entry, Healthcare, Life Sciences, Competitive Strategy, new entrants

The Undeniable Rise of Challenger Banks in the United Kingdom: What Should the Big Four Do?

Posted by Ken Sawka on Mar 14, 2018 8:03:21 AM

 

How to evaluate, plan and execute a competitive counter-strategy against swift new entrants.

To say that the UK banking industry has weathered significant turmoil since the 2008-2009 financial crisis would be a gross understatement.  After  ten years marked by government bailouts, a string of annual losses, and customer defections, the big four UK banks – Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland (RBS) – are just now starting to re-gain their footing.  All four banks last year reported increases in operating profits, with RBS realizing its first full year attributable profit in ten years.  Most of the big four – with the notable exception of RBS – have returned to private ownership or are close to doing so, having emerged from under the government bailouts provided in the wake of the financial crisis.  Capital ratios are stronger, and customer defections seem to be stabilizing.

However, a confluence of trends, including liberalized regulatory policies, the rapid emergence of digital innovation from FinTech companies, and shifting consumer preferences, has accelerated a competitive risk over the past several years – the rise of challenger banks in the UK.  Challenger banks – also known as “neo-banks” – are small, newly formed retail banks that compete with the Big Four, often by specializing in areas underserved by the those larger, established firms. These upstarts distinguish themselves from the traditional banks by deploying cutting edge information technology practices, such as on-line only operations, that avoid the costs and complexities of traditional banking. And, these technology innovations not only serve to keep costs in check, they also appeal to the increasingly tech-enabled and mobile segments of younger consumers, who liken banking at a high street financial services institution to using a dial up modem to access the internet. 

New Entrants Competing in the Banking Space

According to a review earlier this year of challenger banks by Banking Technology, there are some 76 viable alternatives to the traditional high street banks currently operating, or planning to commence operations this year, in the UK.  To be sure, many of these are extremely limited in scope – Coconut, for example, which launched in January 2018, is a “banking service” targeted at freelancers rather than a full-fledged bank – but many offer virtually all the consumer banking services of a walk-in RBS or Barclays branch anywhere in London.

At the heart of the proliferation of challenger banks is a loosening of regulations that favors the upstarts.  According to the Financial Times, the Bank of England has promised to change the capital requirements for challenger banks so that they can offer a more competitive mortgage service.  Furthermore, the Second Payments Services Directive (PSD2) this year requires banks to open their payments infrastructure and customer data assets to third parties that can then develop payments and information services for customers, according to an analysis of the new regulations by audit, tax and consulting firm PwC.  The new regulation aims to level the playing field for all payments providers while ensuring enhanced security and stronger consumer protections.

And, they are well funded and well managed.  Many challenger banks have incredibly innovative talent behind them, mostly from outside the financial services sector, according to an article in the Financial Times.  Challenger bank founders include American entrepreneur and venture capitalist Eileen Burbidge, Indian steel magnate Sanjeev Gupta, and the billionaire Pears family, one of the largest and most private landlords in London and the Southeast. To assume that these upstart competitors are fly-by-night, shoestring operations would be a grave mistake.

Understanding and Responding to the Threat

What then, should the large established banks, or any incumbent financial services company threatened by these new entrants, do? The first step is to acknowledge that the knee-jerk counter-competitive responses that established banks may have deployed against each other probably will not work against this new breed of competitors. Why?

  1. Profit expectations are undoubtedly different for the challenger banks. Profits that would disappoint the established banks may be a boon to the new guys, especially as many FinTech organizations suffer multiple quarterly losses before turning their first profit. Don’t expect profitability to be a core objective of the challenger banks, at least in the short run, and don’t assume that poor financial performance makes these upstarts any less of a competitive threat.
  2. Challenger banks’ understanding of consumer preferences. Especially among young and tech-savvy consumers who may be opening their first bank account, service expectations are more sophisticated. Having lived through the financial crisis as children and now entering their professional lives, these consumers are not easily drawn to teaser interest rates. These are financially weary, risk-averse individuals for whom rapid accumulation of capital is not a primary driver of happiness.
  3. Trying to compete with challenger banks on their own terms may not be feasible. While large banks may be compelled to launch their own challenger brands, they are likely to be burdened by inflexible legacy infrastructure and an adherence to old business models.  Collaboration and partnerships with the FinTechs may be a better course of action than direct competition.

Establishing a Competitive Strategy

A better approach undoubtedly is to take a measured and disciplined route to developing a unique competitive strategy that is intended especially for the challenger banks.  The first step is to simply get smart about the new rivals.  Basic intelligence gathering and analysis that can uncover challenger banks’ strategic intentions, goals and objectives, and basic assumptions about the market is critical.  Remember, to assume that these competitors are operating to achieve the same goals and objectives of established banks—or even of each other—is a mistake. Any established firm being challenged by a new entrant cannot hope to compete without in-depth knowledge of the intentions and capabilities of the new competitor.

Stress-Testing Your Strategy

With facts about the new competitors in hand, the next step is to stress-test your current business strategy to ensure it is resilient against the challenge posed by the new group of competitors.  This stress test should encompass two critical aspects of strategy:

  • The first is to test for differentiation. At the very essence of strategy is the notion of differentiation.  Strategy, according to Michael Porter, is performing different activities from your rivals or performing similar activities in different ways.  Established banks should determine whether their strategy fits either of these two requirements when considered against the challenger banks’ intentions and capabilities.
  • The second is for the established banks to re-examine their market segmentation. Not every challenger bank is going to appeal to every segment of the market; counter-competitive strategy to take on the challenger banks should focus on 1) identifying and protecting those segments that may be at risk from the challenger banks, and 2) identifying those segments that challenger banks are unlikely to target, and avoiding any shifts in strategy that could weaken the established banks’ appeal to these segments.

Prioritizing and Devising a Counter-Strategy

After re-examining differentiation and segmentation strategies, the incumbent banks should then be able to prioritize where the threat from the challenger banks is most severe and explore different strategic options to counter the threat.  In this situation, tools like scenario analysis and competitive war-gaming can help generate strategic options that have been tested against various market conditions and forces in ways that facilitate internal alignment and a sense of urgency to act.  It’s always better to test and rehearse strategic options in a safe and controlled environment rather than deploying them in competitive markets blindly.

 

Just when the large and established UK banks are solidifying their footing ten years after the global financial crisis, a batch of start-ups, taking advantage of rapid technological advances, lower cost structure, and loosening regulations, is posing new challenges. Established banks must first acknowledge that competitive response to the challenger banks requires new ways of thinking about the competition, and then take a measured and disciplined approach to developing and deploying a targeted and workable counter competitive strategy.

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Topics: Financial Services, Market Analysis, New Market Entry, Banking

An Uphill Battle for Biosimilar Adoption in the U.S.

Posted by Varun Naik on Feb 26, 2018 6:00:23 PM

Biosimilars were expected to spark competition and lower prices for branded biologics, but this potential has still been unfulfilled. The U.S. health industry has been relatively slow to adopt biosimilars due to a combination of complex market access tactics employed by branded biologics manufacturers, on-going patent litigation, lack of interchangeability, and a general lack of awareness and acceptance of biosimilars. To date, the FDA has approved nine biosimilars; however, only three biosimilars have launched. The current biosimilars landscape is in stark contrast to the generics market where payers and pharmacy benefit managers promote these cheaper alternatives to reduce healthcare costs.

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Topics: Market Analysis, Pharma, Healthcare, Pharmaceuticals

WeWork, Lord & Taylor, and the Artificial Separation of Work and Leisure

Posted by Ken Sawka on Nov 21, 2017 4:18:48 PM

One of my fondest memories growing up in New York was going into “the city” (that’s what we Long Islanders called Manhattan) at Christmastime and going to see the Lord & Taylor Christmas display in its storefront window at its flagship location on Fifth Avenue.  There would be long lines, and we’d wait 20 minutes or more just to get a glimpse of the window.  It was magical.

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Topics: Sales Force Effectiveness, Brand Insights, Market Analysis, Merger and Acquisition, Product Positioning

Wearable Devices Provide a New Look for the Modern Clinical Trial

Posted by Premdharan Meyyan on Oct 24, 2017 10:34:40 AM

Clinical development has historically been a laborious and expensive process, driven by lengthy patient recruitment timelines, increasingly complex study designs, and high procedural costs, across different therapeutic areas. Additionally, a complex and dynamic regulatory framework has made it difficult to introduce new technologies to facilitate the development process. 

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Topics: Market Analysis, Medical Devices, Life Sciences

The Importance of Brand Awareness in the Pharmaceutical Industry

Posted by Neha Suri on May 10, 2017 10:15:38 AM

Co-Written by Karl Varkey

Today’s reality for pharmaceutical companies is anything but care free. Competition from the generics market continues to rise, the FDA’s approvals of new drugs has declined, and resolution of the debate surrounding the Affordable Care Act is uncertain. Additionally, the new administration has called for pricing restraints. This is certainly enough to cause angst among the most experienced pharmaceutical executives.

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Topics: Brand Insights, Market Analysis, Pharma, Competitive Strategy

Competitive Chess with Cheese

Posted by Tess Fagan on Apr 25, 2017 10:25:27 AM

There’s a savage war going on at your local deli counter. Shelf space at America’s deli counters is the newest casualty of a cutthroat retail brand battle in today’s supermarkets. Deeply entrenched and beloved brands like Boar’s Head and Land O’Lakes are silently duking it out in a fight over who reigns supreme in the deli section. The result to the winner is likely to be increased revenue; for the shopper this is a race to the bottom, and we should anticipate less choice and increased prices.

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Topics: Consumer Goods, Brand Insights, Market Analysis, Competitive Strategy

Is Amazon Becoming a Bank?

Posted by Ken Sawka on Aug 23, 2016 3:54:49 PM

UPDATE: Wells Fargo and Amazon ended their partnership on 08/31/2016 with minimal comment. The partnership fell under criticism from consumer advocates and organizations promoting affordable education.

Last month, Amazon.com entered the student loan business in a partnership with Wells Fargo, offering lower rates for student loans to Amazon customers who subscribe to the online retailer’s Prime Student service.  Wells Fargo will cut half a percentage point from its interest rate on student loans to Amazon Prime Student members, who also get benefits such as free two-day shipping and access to movies, TV shows, and online photo storage.

Does this deal signal what many have felt is the inevitable entry of technology companies into the financial services industry, or is it a convenient and mutually beneficial partnership between two companies with common interests?

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Topics: Brand Insights, Financial Services, Market Analysis, Competitive Strategy

Can Apple TV Outshine Netflix and Traditional TV Broadcasters?

Posted by Ken Sawka on Aug 3, 2016 11:41:11 AM

Apple has long been expected to “revolutionize” how we watch television.  Ever since it launched Apple TV in 2006, speculation has been rife that Apple would become a major force in video production and distribution.

Apple’s refresh of Apple TV last year - improving voice search with Siri and adding a bunch more apps - did little to quell that speculation.

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Topics: Brand Insights, Innovation, Market Analysis, Technology/Telecomm, Product Positioning, Competitive Strategy

New White Paper: Competitive Pricing Intelligence

Posted by Fuld + Company on May 3, 2016 2:36:52 PM

Creating an intelligence gathering and analysis process for your organization’s pricing function is essential for sound competitive strategy. Failure to gather and assess this intelligence can lead to pricing strategies that are out of sync with market expectations.

Our latest white paper outlines legal and ethical considerations that must guide how intelligence is gathered on competitor prices, the advantages of continuous intelligence gathering, and how one client leveraged competitive intelligence to raise prices without losing customers or provoking a competitor response. 

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Topics: Competitive Intelligence, Sales Force Effectiveness, Fuld + Company, Market Analysis, Product Positioning, Competitive Strategy

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