How Did Oliver Wyman Conduct Their Gap (White Space) Analysis?
I refer to this report by Oliver Wyman:
http://www.oliverwyman.com/media/Targeting_the_White_Space.pdf
Disclaimer: This is merely a cursory analysis of their methodology and reporting style. I will not attempt to provide any value judgement on the accuracy or efficacy of the report. It also does not mean all other Gap Analysis will follow the format of this report.
Ultimately it is my personal attempt to glean insights into basic reporting techniques and problem design when attempting to conduct a Gap Analysis. I am thankful for this learning opportunity and I hope to analyze other reports in the future so that I can improve in this specific skillset.
PART 1: INTRODUCTION
1) The White Space/Gap
Emerging Asia Wealth Management
2) Define Macroeconomic Issue and effects leading to the creation of the White Space
Macroeconomic issue:
Regulators and politicians around the world are rewriting the rules of banking at unprecedented rates.
Effect #1
"These changes, aimed at increasing stability in the financial system, are driving up capital and funding costs..."
In particular, focus on the opportunity (ie. whitespace/gap) that arises:
Effect #2
"...wealth management has moved into the limelight of the wider banking industry..."
3) Define the Threat to the Status Quo (if the Gap is not bridged)
Threat #1
"European and North American authorities have now started to recoup lost tax revenues from offshore hubs...eroded the traditional offshore wealth management business model."
Threat #2
"...economic growth in many developed markets is limiting wealth creation..."
Threat #3
"...increased client servicing demands and heightened scrutiny of costs have put additional pressure on wealth managers in mature markets..."
The threats are meant to highlight the erosion of profitability/reputation/other important aspects of the business if the status quo is maintained.
4) Propose the Whitespace/Gap as an improvement from the Status Quo
"With over US$11 TN in unmanaged wealth combined with 10%-plus growth rates the opportunity is clear..."
5) Identify the Existing Problem Situation
Existing Problem Situation:
"...few organisations active in Asian wealth management have delivered compelling shareholder value to date. With industry-wide cost/income ratios now nearing 90%, top-line growth has yet to be fully translated into bottom-line profitability..."
Note: This implies that there is a Potential Outcome which is not attained.
A whitespace/gap exists until the Existing Problem Situation is moved to the Potential Outcome.
6) Identify the Key Causes of the Whitespace/Gap
Cause #1
"Relationship managers (RMs) are in short supply, resulting in excessive compensation..."
Cause #2
"Clients have historically preferred non-advised products, increasing revenue volatility across market cycles..."
Cause #3
"Investor protection regulation has become stricter, resulting in ever growing compliance costs (for example the MAS’s product risk rating structure and Hong Kong’s client suitability framework)"
7) Highlight the Existing Attempts to bridge the Whitespace/Gap
Existing Attempt #1
"...hire new relationship managers..."
Existing Attempt #2
develop a “compliance-driven advice framework”
Existing Attempt #3
"...attempting to contain costs..."
8) Highlight the Inadequacy of Existing Attempts
"...fails to recognise the largest pool of wealth in Emerging Asia and address the true challenge in developing the capabilities needed to capture assets..."
PART 2: IN-DEPTH ANALYSIS OF WHITESPACE
1) Evaluation of Businesses
- Existing Types of Businesses: Private/Investment Banking, Private Banking, Premier Banking
- Platforms: Guided/ Open/ with Proprietary expertise
http://www.out-law.com/page-10991
http://www.ft.com/intl/cms/s/0/78145f10-db84-11de-9424-00144feabdc0.html#axzz2WMqGjaMQ
- Brand Positioning: Aspirational, Luxury, Limited Edition
- Degree of horizontal differentiation/customization: Basic Offering > Offering with Advisory > Bespoke
- Market Coverage
http://www.oliverwyman.com/media/Targeting_the_White_Space.pdf
Disclaimer: This is merely a cursory analysis of their methodology and reporting style. I will not attempt to provide any value judgement on the accuracy or efficacy of the report. It also does not mean all other Gap Analysis will follow the format of this report.
Ultimately it is my personal attempt to glean insights into basic reporting techniques and problem design when attempting to conduct a Gap Analysis. I am thankful for this learning opportunity and I hope to analyze other reports in the future so that I can improve in this specific skillset.
PART 1: INTRODUCTION
1) The White Space/Gap
Emerging Asia Wealth Management
2) Define Macroeconomic Issue and effects leading to the creation of the White Space
Macroeconomic issue:
Regulators and politicians around the world are rewriting the rules of banking at unprecedented rates.
Effect #1
"These changes, aimed at increasing stability in the financial system, are driving up capital and funding costs..."
In particular, focus on the opportunity (ie. whitespace/gap) that arises:
Effect #2
"...wealth management has moved into the limelight of the wider banking industry..."
3) Define the Threat to the Status Quo (if the Gap is not bridged)
Threat #1
"European and North American authorities have now started to recoup lost tax revenues from offshore hubs...eroded the traditional offshore wealth management business model."
Threat #2
"...economic growth in many developed markets is limiting wealth creation..."
Threat #3
"...increased client servicing demands and heightened scrutiny of costs have put additional pressure on wealth managers in mature markets..."
The threats are meant to highlight the erosion of profitability/reputation/other important aspects of the business if the status quo is maintained.
4) Propose the Whitespace/Gap as an improvement from the Status Quo
"With over US$11 TN in unmanaged wealth combined with 10%-plus growth rates the opportunity is clear..."
5) Identify the Existing Problem Situation
Existing Problem Situation:
"...few organisations active in Asian wealth management have delivered compelling shareholder value to date. With industry-wide cost/income ratios now nearing 90%, top-line growth has yet to be fully translated into bottom-line profitability..."
Note: This implies that there is a Potential Outcome which is not attained.
A whitespace/gap exists until the Existing Problem Situation is moved to the Potential Outcome.
6) Identify the Key Causes of the Whitespace/Gap
Cause #1
"Relationship managers (RMs) are in short supply, resulting in excessive compensation..."
Cause #2
"Clients have historically preferred non-advised products, increasing revenue volatility across market cycles..."
Cause #3
"Investor protection regulation has become stricter, resulting in ever growing compliance costs (for example the MAS’s product risk rating structure and Hong Kong’s client suitability framework)"
7) Highlight the Existing Attempts to bridge the Whitespace/Gap
Existing Attempt #1
"...hire new relationship managers..."
Existing Attempt #2
develop a “compliance-driven advice framework”
Existing Attempt #3
"...attempting to contain costs..."
8) Highlight the Inadequacy of Existing Attempts
"...fails to recognise the largest pool of wealth in Emerging Asia and address the true challenge in developing the capabilities needed to capture assets..."
PART 2: IN-DEPTH ANALYSIS OF WHITESPACE
1) Evaluation of Businesses
- Existing Types of Businesses: Private/Investment Banking, Private Banking, Premier Banking
- Platforms: Guided/ Open/ with Proprietary expertise
http://www.out-law.com/page-10991
http://www.ft.com/intl/cms/s/0/78145f10-db84-11de-9424-00144feabdc0.html#axzz2WMqGjaMQ
- Brand Positioning: Aspirational, Luxury, Limited Edition
- Degree of horizontal differentiation/customization: Basic Offering > Offering with Advisory > Bespoke
- Market Coverage
2) Matrix with Two Dimensions: Brand Positioning & Market Coverage (Exhibit 2)
Brand Positioning: Refers to the target groups. In this case, it ranges from Retail to Ultra-High Net Worth clients.
Market Coverage: Refers to the geographic reach of the product. In this case, it ranges from Pure Onshore to Pure Offshore.
The "White Space" are the areas which can be targeted.
3) "White Space" identified under the Core-Wealth segment in Emerging Markets.
"due to gaps in the current capabilities of wealth organisations"
Three Component Capabilities: People, Product, Service
"Service" can be elaborated as the "processes and systems capabilities to handle increased volumes in terms of clients, transactions or RMs"
After reading through the report, I realized that it may not be possible to pin down exactly which are the other elements for Gap Analysis, although the essentials, tools, diagrams and evaluation criteria are helpful in allowing us to consider it for other projects.
Here are a few additional components of their analysis:
Profit Margin that can generally be extracted from various market segments
Identification of "First Movers" who had started planning/entering the White Space.
Regulatory incentives to enter the White Space
Identification of Challenges for Firms Attempting to enter a White Space:
Which markets to target
Where to prioritize coverage within markets to achieve access
-Coverage Strategy
How to systematically identify clients to optimize value propositions and build market share
- Age
- Gender
- Profession/Status
Cluster Analysis: Behavioral Clusters, Archetypes
Failure to opportunistically target significant Archetypes
Using results of Cluster Analysis to challenge existing perspectives of client behavior and background.
"clear proposition, product and operating model attached to client behaviours can mean radical change for organizations"
Part 3 focuses on the "Levers of Success": Brand, People, Segmentation, Product, Pricing, Service, Processes, Operations
Brand Positioning: Refers to the target groups. In this case, it ranges from Retail to Ultra-High Net Worth clients.
Market Coverage: Refers to the geographic reach of the product. In this case, it ranges from Pure Onshore to Pure Offshore.
The "White Space" are the areas which can be targeted.
3) "White Space" identified under the Core-Wealth segment in Emerging Markets.
"due to gaps in the current capabilities of wealth organisations"
Three Component Capabilities: People, Product, Service
"Service" can be elaborated as the "processes and systems capabilities to handle increased volumes in terms of clients, transactions or RMs"
After reading through the report, I realized that it may not be possible to pin down exactly which are the other elements for Gap Analysis, although the essentials, tools, diagrams and evaluation criteria are helpful in allowing us to consider it for other projects.
Here are a few additional components of their analysis:
Profit Margin that can generally be extracted from various market segments
Identification of "First Movers" who had started planning/entering the White Space.
Regulatory incentives to enter the White Space
Identification of Challenges for Firms Attempting to enter a White Space:
Which markets to target
Where to prioritize coverage within markets to achieve access
-Coverage Strategy
How to systematically identify clients to optimize value propositions and build market share
- Age
- Gender
- Profession/Status
Cluster Analysis: Behavioral Clusters, Archetypes
Failure to opportunistically target significant Archetypes
Using results of Cluster Analysis to challenge existing perspectives of client behavior and background.
"clear proposition, product and operating model attached to client behaviours can mean radical change for organizations"
Part 3 focuses on the "Levers of Success": Brand, People, Segmentation, Product, Pricing, Service, Processes, Operations
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