Would it bite the hand that feeds it?  Google’s complex relationship with financial services.

Would it bite the hand that feeds it? Google’s complex relationship with financial services.

I love a good infographic.  As I was enjoying one depicting Google’s 2011 earnings I learned that Google’s number one customer by ad revenue is the financial services industry ($4b) with a big step down to the next largest source of revenue (Retail at $2.8b)

There has been a real shift in all industries on how consumers research products.  There are increased independent review sources.  Product information needs to be available and comparable.  Google has the search market cornered (with 66% of market share) and they are getting stronger by moving up the value chain and into product comparison

There is a rapid convergence of media, advertising, content, location, and payment.  It is possible now to place the right product in the right hands of the right person at the right price and to make it very easy to complete the transaction.  Google flanks this convergence from several key angles:  the advertisement, the distribution of comparative information, location awareness and ability to transact.

Financial services are a major source of revenue for Google – but also a source of opportunity.  Google advisor provides a comparison service by which like products (CD’s, Credit Cards, Savings, Checking) are compared.  Herein lies the threat:  This type of product/price comparison threatens the strategy of many financial services firms — particularly those that are pursuing a product differentiation strategy or a strategy that emphasises the customer relationship. 

As consumers move more financial services decisions online and if Google succeeds at building an advisor relationship with consumers the banks will need to have products that conform to the comparative structures that Google provides.  If rate, term and minimum opening balance are the key comparative factors for term deposits when compared by Google:  these now become the key product attributes.  Other products may not see the light of day in a market where digital selection and comparison is the norm.  A more exotic product such as an indexed term deposit where different types of risks and rewards are balanced would be difficult to compare with this approach.

There are some really positive aspects of this trend as well — for those firms focused on low-cost provider strategies Google represents an opportunity to be at the table when customers are making buying decisions.  Big brands will need to compete with upstarts and traditional financial institutions with new entrants.  Consumers can also hone in on those brands that are competitive on price and potentially drill down to understand the product offerings in greater detail.

As financial institutions consider the objectives of transformation it is important to consider the external factors.  Having a full perspective of customer and a robust product factory can be a great strategy to combat these kinds of threats — and if they are not key considerations or objectives for your transformation program, why not? 

So.. would it bite the hand that feeds it?  Much depends on how the consumer/banking relationship  evolves as technology and banking continue to converge.  If banks can differentiate products and relationships in a way that is meaningful to consumers then the disintermediation of product selection will fail — but if the current trends continue and consumers are looking for the lowest common denominator when it comes to banking products then Google will be glad to provide this service with a smile.

3 Responses to Would it bite the hand that feeds it? Google’s complex relationship with financial services.

  1. Very insightful post Kris. It’s time all companies pay attention to their relationships. We know that time of a customer is valuable and only so many hours in a day to attend a physical location. But with the web open 24 hours we must leverage and respect the time a customer engages to always bring value. Physical or online. No value means you maybe replaced. Value is earned by listening to what your customers want 24 hours. Now with web analytics we have no excuse to engage with a customer and not know what products or services they currently own today. The day we had to go to the bank because we felt we had to place are cheque or money in a bank to keep it safe our far over. So why do we want to have a relationship with a bank? I don’t think financial institutions are realizing that change needs to happen immediately. Making billions on our money and sticking us with service fees not a a great idea if these institutions want to increase value to customers. Great for shareholders for now….

  2. Great observation Kris. I think the better question, and you alluded to it above, is how will banks adjust to feed the Google alligator better?

    I think it is the bank’s marketing that will end up adjusting. Google is not the only product aggregator and advisor out there although they obviously pull the biggest audience. Having said that if on any given day you take a look at something like http://www.ratehub.ca and see a variance on 5 year fixed rates of 2% between a large bank and a small mortgage brokerage an informed consumer will start to ask questions. Once enough questions are asked bank’s that post rates in hopes of customers blindly accepting them will have to start questioning their current operations and posted rates (or whatever the comparison criteria) that are realistic and competitive.

    Google could, in the end, do what it always does and sell the add space associated with their advisor service to the highest bidder. Once banks adjust their criteria to compete in the comparison the biggest differentiator will be the size of the banner add!

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