Financial institutions underestimate finance portals’ usefulness in customer acquisition, product matching, and selling, according to a new Report from Forrester Research B.V. (Nasdaq: FORR). Instead, Forrester advises that they should engage in cobranding, outsourcing, and coselling partnerships with portal winners that survive an impending portal shakeout.
“With thousands of financial institutions gradually moving to the Net, marketers face a click-and-mortar bloodbath,” said Dr. Therese Torris, research director at Forrester’s European Research Center. “To survive, these firms — in Forrester terms, attracters — must extract every ounce of value from their online marketing and distribution deals. They will do so by moving from simply placing banner ads on portals to fully exploiting these sites’ influence on consumers at all stages of the customer life cycle. In limiting their online marketing to placing banner ads, firms too often ignore portals’ capacity as directories, search engines, and matchmakers. Instead, marketers should rely on portals to guide consumers to their products. As matching points, portals will create a trusted environment for product selection and for matching products to customers’ requirements.”
Firms must go beyond traditional advertiser-media relationships and engage in two-way exchanges in which they cobrand, proactively participate in product matching, and cosell their services. At the same time, they need to outsource to portals peripheral activities like general content production and they must leverage the advanced content that portals produce for their customers. In an open online distribution environment, financial retailers and manufacturers must proactively participate in the online product-matching process, and winning financial firms will use portals to distribute their products and services as widely as possible.
“This focus will accelerate the shakeout that will force more than half of the existing 400 finance portals out of business — mostly pure-play firms caught in a negative spiral of lack of funding, poor content, and traffic attrition resulting in fewer but stronger portals,” Torris added.
“To differentiate themselves more clearly from broad-based portals, financial specialists will intensify their focus on consumer groups like the self-directed affluent and marketers will outsource content from portals turned syndicators. From successful investment portals, financial firms will not only buy advertising and shelf space but also source content feeds, market analysis, and software tools. And cooperating with successful portals with active communities will enable financial firms to let their users enjoy discussion forums and chats without taking any editorial and legal responsibility for them.”
For the Report “Exploiting Finance Portals,” Forrester spoke with executives from 40 universal banks, insurers, brokerage firms, and fund management firms to assess their partnerships with finance portals, as well as with executives from 21 finance portals.