The title of this thesis might lead the cursory reader to the assumption that this is another one of countless academic works whose authors have overestimated the prospects of the Internet. However, this paper lays claim to be one of the early few that take a more rational approach to the subject by analyzing the realistic profit potential of online business models.
Furthermore, future success factors for finance portals will be discussed and their respective value proposition thoroughly examined. Since the fast moving Internet hype has had to give way to an almost equally swift consolidation of the market, this will prove to be crucial information for any company of the finance industry. Additionally, when taking into account that the oncoming ‘second wave of customers’ is to be divided amongst the remaining online players, the findings of this thesis will be of eminent relevance for any provider of a financial website.
Towards the end of my internship with AOL I was asked to research the required success factors for finance portals as a basis for AOL’s finance channel content strategy. Inexperienced Internet-users such as those of the Second Wave are likely to utilize the user-friendly and convenient service of AOL as an ISP. Therefore, it will be of vital importance for AOL to incorporate the above mentioned success factors within their service in order to increase the usage of its finance channel.
At this point I would like to thank AOL, not only for the financial, but especially for the professional support, which both have simplified my task to a substantial degree as well as all others who have been kind enough to let me benefit from their knowledge in the field.
Table of Contents
1 Incipience
1.1 Topic Introduction
1.2 The Second Wave of Customers
1.3 Methodology and Scope
2 Definitions and Background Information
2.1 Definition of Finance Portals
2.2 Types of Finance Portals
2.2.1 Content Portals
2.2.2 Corporate Portals of Banks and Insurance Companies
2.2.3 Neutral Brokers and Intermediaries
2.3 Providers of Finance Portals
2.3.1 Providers from the Banking Sector
2.3.2 Providers from the Insurance Sector
2.3.3 Providers from the Near-Bank Sector
2.3.4 Providers from the Non-Bank Sector
2.4 Usage of Finance Portals
2.4.1 Technical Prerequisites
2.4.2 General User Information
2.4.3 Usage based upon Demographic Factors
2.4.4 Usage based upon Consumption Behavior and other Characteristics
3 Analysis
3.1 Selected Market Characteristics
3.1.1 Online Finance Value Chain
3.1.2 Competitive Situation in Online Finance
3.1.3 Customers’ Perception of Services
3.2 Service Areas of Finance Portals
3.2.1 Information and Content
3.2.2 Brokerage
3.2.3 Funds
3.2.4 Direct Banking
3.2.5 Insurances
3.2.6 Real Estate
3.3 Basic Prerequisites for successful Finance Portals
3.3.1 Branding
3.3.2 Content
3.3.3 Member Base and Traffic
4 Future Success Factors
4.1 Advanced Prompt Facilities
4.1.1 Contextual Guidance
4.1.2 Intelligent Transaction
4.1.3 Pre-emptive Support
4.1.4 Implications for Finance Portals
4.2 Personalization
4.2.1 Types of Personalization
4.2.2 Sources for Customer Information
4.2.3 Customers’ Demand and Privacy Issues
4.2.4 Implication for Finance Portals
4.3 Peers’ Advice
4.3.1 Acceptance and Penetration of Peers’ Advice
4.3.2 Types of Peers’ Advice
4.3.3 Implications for Finance Portals
4.4 Mobile Services
4.4.1 Consumers and Mobile Services
4.4.2 Underlying Business Models
4.4.3 Barriers to Mobile Services
4.4.4 Implications for Finance Portals
4.5 Electronic Bill Payment and Presentment
4.5.1 Market Potential and Penetration
4.5.2 Delivery Models
4.5.3 Revenue Streams and Potentials
4.5.4 Implications for Finance Portals
4.6 Channel and Product Integration
4.6.1 Channel Integration
4.6.2 Product Integration
4.6.3 Implications for Finance Portals
4.7 New Marketing Ideas
4.7.1 Affinity Marketing
4.7.2 Affiliate Marketing
4.7.3 Performance based Deals
4.7.4 Implications for Finance Portals
4.8 Account Aggregation
4.8.1 Technology and Legal Issues
4.8.2 Current Market and Forecasts
4.8.3 Business Models and Returns on Investment
4.8.4 Requirements for Success in Account Aggregation
4.8.5 Implications for Finance Portals
5 Profitable Business Models
5.1 Fundamentals of Internet Business Models
5.2 Pure-Play Portals
5.2.1 Revenue Potentials
5.2.2 Incurred Costs
5.2.3 Implications for Finance Portals
5.3 Multi-Channel Providers
5.3.1 Different Approaches and their Reasoning
5.3.2 Potentials and Incurred Costs
5.3.3 Implications for Finance Portals
5.4 Coopetition
5.4.1 Structure of Coopetition Partnerships
5.4.2 Potential of Coopetition for Finance Portals
5.4.3 Implications for Finance Portals
6 Conclusion
Objectives & Core Themes
This thesis aims to identify the future success factors for finance portals within the business-to-consumer (B2C) sector. It explores how these platforms can effectively engage the "Second Wave" of Internet users—a more conservative and less technologically experienced demographic—by transitioning from traditional models to personalized, integrated service environments.
- Analysis of the "Second Wave" of Internet customers and their specific financial needs.
- Evaluation of finance portal service areas, including brokerage, banking, insurance, and real estate.
- Investigation of new success factors such as contextual guidance, website personalization, and peer-to-peer advice.
- Exploration of innovative marketing strategies, including affinity and affiliate marketing.
- Strategic assessment of profitable business models, focusing on pure-players, multi-channel operators, and coopetition strategies.
Excerpt from the Book
3.1.1 Online Finance Value Chain
In the old banking system, value was mainly created by physical transaction. Classic community banks knew their customers on the basis of personal contact. Therefore, brick-and-mortar banks were able to create value for their customers by intermediating between investors and savers as they themselves had no means of obtaining information about the availability of credit and the competitive prices structure. As banks have grown bigger and waves of consolidation have eroded the number of small financial institutions, this source of knowledge has almost run dry.
The Internet has the potential to replenish this wellspring of information. The flow of information rather than physical transaction can be looked upon as the primary mechanism for creating value for the new banking industry. Today, competitive advantages are increasingly based upon the gathering and usage of data that allows the development of a mutually beneficial relationship between a company and an individual.
Without the Internet, marketing has to compromise between depth of information and market reach. A sales representative pitching to a single customer delivers the highest richness in information, but has of course a very low market reach. On the contrary the message of an advertisement in a newspaper with mass circulation is limited to basic content. However, the Internet turns around this trade-off since it permits an unprecedented level of personalization and customization with a merely limitless market reach that EVANS has referred to as the process of “deconstructing the information value chain.” When considering this separation of physical flows - or rather their obsoleteness due to digital delivery - and information, one can rightfully claim that the old value chain is at least partly being unglued and recreated. Furthermore, the high speed with which information is delivered and the ready accessibility of real-time quotes for private customers have changed the value chain dramatically.
Summary of Chapters
1 Incipience: Introduces the rise of the Internet in the finance sector and outlines the shift from early adopters to the "Second Wave" of consumers.
2 Definitions and Background Information: Defines finance portals from customer and business perspectives and categorizes various providers based on their sector origins.
3 Analysis: Examines the online finance value chain, current market characteristics, and the shift of former success factors into basic prerequisites.
4 Future Success Factors: Discusses critical innovations for future growth, including personalization, peer advice, mobile services, and account aggregation.
5 Profitable Business Models: Evaluates sustainable business strategies, including pure-play, multi-channel, and coopetition-based approaches.
6 Conclusion: Summarizes the necessary strategic evolution for finance portals to remain profitable through service excellence and customer retention.
Keywords
Finance Portals, e-Finance, Second Wave of Customers, Online Banking, Value Chain, Personalization, Account Aggregation, Multi-Channel Strategy, Coopetition, Customer Satisfaction, Business Models, Affiliate Marketing, Digital Finance, Customer Retention.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis focuses on identifying future success factors for B2C finance portals, particularly how they can adapt to the emerging "Second Wave" of less experienced online users.
What are the primary thematic fields covered?
The study covers the evolution of the finance industry online, service areas like brokerage and banking, and strategic adaptations such as personalization and multi-channel integration.
What is the primary research objective?
The goal is to provide strategic directions for finance portals to successfully navigate market consolidation and sustain profitability by addressing the needs of a new generation of customers.
Which scientific methods are utilized?
The work employs market analysis and comparative research based on industry reports and data from the US and European (primarily German) finance markets to derive strategic insights.
What is discussed in the main body of the work?
The main body analyzes market characteristics, the online finance value chain, service areas (like funds and direct banking), and specific success factors such as contextual guidance and new marketing ideas.
Which keywords best characterize the work?
Key terms include Finance Portals, e-Finance, Second Wave, Personalization, Account Aggregation, Multi-Channel, and Coopetition.
How does the "Second Wave" of customers differ from early adopters?
Second Wave customers are typically older, less experienced with technology, more risk-averse, and require higher levels of advice and guidance compared to the early, affluent, "heavy trader" demographic.
Why is "coopetition" considered a key business model for finance portals?
Coopetition allows market participants to combine complementary strengths—such as the trust of traditional institutions and the digital/community capabilities of portals—to achieve better results at lower risk than competing individually.
- Quote paper
- Axel Täubert (Author), 2002, Future Success Factors of Finance Portals - Dividing the Second Wave of Customers, Munich, GRIN Verlag, https://www.grin.com/document/4716