Leading a revolution in banking
An Intelligent finance case study

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Page 2: Identifying a gap in the market

Intelligent Finance 7 Image 2In today’s technology driven, modern world, most organisations operate in highly competitive markets, this is particularly true of the financial services sector. Technology has been one of the key drivers of change within this market and most retail banks now offer on-line banking services. Until recently, most banks operated from the traditional high street branches, offering very similar products and services to their customers. A product can be defined as anything that can be offered for sale, this could be something tangible that can be owned or it may be a service that is performed for the buyer. Mostproducts contain both a tangible and a service element.

Product positioning is the way in which a product and its associated brand is perceived by customers in relation to other competitive products. Different customers value different combinations of product or service attributes, based on the extent to which it meets their particular need at that given time. For example, the diagram shows that some customers are prepared to pay a particularly high price for a high quality service. While others, prefer a quick standard service, for a low price. If an organisation identifies a group of customers, who require a combination of either goods and or services which is not currently offered, it will have discovered a ‘gap’ in the market.

Intelligent Finance’s Chief Executive, Jim Spowart, has been a pioneer of direct banking. He realised that while people were queuing in banks at the counter, the customers who telephoned got priority. He felt that if telephone banking could be improved, then a fast and efficient service could be delivered to customers, without the overheads of an expensive branch network. This was the beginning of Jim Spowart’s venture into direct banking. Intelligent Finance is the third new generation bank Jim Spowart has set up. It set out to offer something that no other bank was offering, therefore, filling a gap.

By embracing new technology, Intelligent Finance has developed a new approach to delivering both products and services, in a highly innovative way. This looks set to transform the traditional retail bank as we know it – by putting the customer first.Intelligent Finance 7 Diagram 1

The proposition

Despite the fact that most banks now offer telephone and internet banking services, most continue to function in traditional ways. Placing traditional branch networks at the forefront of their operations. High street branches are an expensive overhead and often offer products which do not always meet the customer’s needs.

Intelligent Finance was launched last year as a division of the Halifax plc. Intelligent Finance offers a phone and internet banking service, with products that give the customer choice, flexibility and the ability to make the most of their own money. Intelligent Finance offers five products; a current account, savings, credit card, personal loan and a mortgage. The innovation is in the way in which the technology has allowed customers to choose to manage their money and allows them to link the products together to ensure that their money works for them in the most efficient way.

Technology has facilitated this revolutionary new system of banking. This allows customers to connect products together, taking account of both their borrowings and savings. This means that by connecting products together, interest is only paid on the balance. For example, a customer may have two products with Intelligent Finance, a personal loan and a current account. The customer has a personal loan for £5,000 and £2,000 in their current account. Intelligent Finance’s integrated approach allows the customer to connect the two accounts together. The £2,000 in the customer’s current account can be offset against the loan, so interest is only paid on the £3,000 personal loan balance and the customer receives no interest on the current account balance. Alternatively, the customer can choose to pay borrowing rates on their loan and receive the same rates on their savings. It is based on the principle that in effect, some of what customers borrow is their own money, so they should not pay or receive different interest rates on it. Given that the amounts can change daily, the system will calculate balances on a daily basis, allowing the customer to receive the best possible rate of interest on their money. The system is unique in that it allows a customer to have a few products or the whole range of products in their plan. Other banks require the customer to have a mortgage to benefit.

Intelligent finance | Leading a revolution in banking