In a recent Microsoft/MORI survey looking at business drivers behind take up of B2B practices in UK industry, 50 per cent of UK executives backed entry to the single currency in order to aid participation in pan-European electronic trading exchanges.
Interestingly, financial services executives were the only sector representatives in the research to disagree, no doubt due to the fact they deal in multiple currencies everyday and their systems are set up to do so. B2B e-business is going to revolutionise the way financial services organisations conduct their business but it’s not an argument for the euro alone.
The holy grail for modern financial services organisations is the ability to respond to changing conditions and customer demands with speed and agility. In the new economy change is the only constant, and things are moving so fast that this is already a cliché.
Financial services companies are quickly recognising the inherent benefits of using internet technology to link with their partners simply and cost-effectively. In our survey, executives are clear on their top strategic priorities when implementing these solutions. A fast return on investment and speed of implementation are key to gaining market advantage and delivering on customer expectations. An effective B2B solution will enable companies to share and exchange information with trading partners, suppliers, distributors and customers – in fact any group within the supply chain. It will streamline internal processes, empower employees to make more focused business decisions and reduce costs.
We interviewed 400 senior business decision makers, including 60 from the UK’s major financial services organisations, about the current and future impact of e-business on their industry. According to the financial services institutions surveyed, survival in this sector actually depends on successful B2B e-business. Two in three feel that the growth of B2B will make the UK more competitive on a world stage and increase GDP.
The financial services industry lends itself particularly well to online collaboration, business intermediation and portal services and is already adopting these models. Looking forward, electronic fulfilment is a huge growth area for the industry as companies aim to slash administration costs over the next two years.
As to where we are now, the UK financial services industry is actually leading other industries in the B2B space. Over three-quarters of UK financial services organisations are currently engaged in B2B projects, 88 per cent have B2B on the board agenda and three in four have appointed an e-business manager/director. 58 per cent have implemented an organisation-wide B2B strategy compared with 45 per cent of manufacturers, 40 per cent of retailers and 33 per cent of public sector companies. Financial services organisations are also currently investing the most money in B2B initiatives and this investment will increase over the next two years with one in ten planning to spend upwards of 11 per cent (as a percentage of turnover) on such activities.
However, the research reveals that the current situation still fails to live up to the hype. One in three financial services organisations feels that the UK lags behind the rest of the world in its adoption of B2B e-business practices and the survey shows UK financial services organisations are still relying on traditional paper and email-based methods to link with trading partners. Although still leading other industries, paper/email-based transactions currently represent an estimated average of 67 per cent of total transactions in the financial services industry, Electronic Data Interchage (EDI ) accounts for 17 per cent and only 4 per cent of transactions are web-based. Where investment has been made in expensive proprietary networks, growth in EDI is set to continue with 26 per cent of transactions using this method by 2002. Nevertheless it is web-based transactions that will experience the biggest growth as B2B investment matures, with financial services organisations predicting a six-fold on average increase to one in four transactions by 2002.
The financial services sector is often regarded as one of the most forward-thinking and fast-moving industries in its adoption of new technology and practices. Our research supports this view. In such a competitive environment, the key advantage is not to be shackled by existing technology to one unwavering path or strategy. A true internet-based B2B strategy will give financial services organisations the flexibility they need to make the most of the huge opportunities out there.