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Personalised Investment Portfolios: The Customer Takes Centre Stage

 3 min read / 

Control is a very interesting notion regarding human behaviour and thinking. When customers feel they have control over their choices, it promotes emotional attachment. The self-selection of features leads to higher satisfaction and psychological ownership, eventually contributing to happiness and a higher service value.

How Personalisation Worked For Big Brands

It is a huge trend towards co-creation and personalisation, moving from attention economy to participation, where the customer is considered not only the recipient of value, but also a co-creator of value, not as part of a segment, but instead as unique individual with specific goals and preferences.

This concept has been proven successful by the well-known brands, most of them in the retail industry, but the financial sector is also catching:

  • Coca-Cola’s extremely successful marketing campaign Share a Coke allowing customers to put their names on the bottles
  • NikeId offering customers to customise and design their footwear
  • Lanieri – a pure Italian brand allowing men to express their style and taste through custom-made suits and shirts

Customers are spoiled by the tailored approach of well-known brands and expect the same experience from their financial providers. Compared to the retail industry, the financial sector has a big advantage, due to the significant amount of customer data that is collected through various applications and transactions, and that can be potentially used for redesigning current products and services, focusing more on customers’ beliefs, goals and preferences.

The Winning Strategy

Not too many financial industry players have reached this point yet, although some are heading in that direction. This is the reason why Fintech startups are disrupting the financial industry, implementing customer-oriented approaches and personalisation strategies throughout the customer journey.

From insurance to wealth management, from peer-to-peer lending to payments, Fintech startups are transforming the financial system. They attracted $5.2bn in the first quarter of 2016 alone. Customers have many reasons to flock towards Fintech offers: low-cost, user-friendly interface, accessibility, transparency and exciting customer journeys.

Awareness of digital services

(Source: BI Intelligence)

There are more than 50 startups in Europe developing and providing automated investment management advice and the space is getting crowded. Unfortunately, most of them are far from personalised solutions. The majority of current robo-advisors offer model portfolios based on risk assessment questionnaires. It means you will be placed into one of the various portfolios based on your risk tolerance. But customers are more than just investment portfolio #77. They have many goals, beliefs and values that they would like to be reflected in their portfolios. Robo-advisor providers should realise that one-size-fits-all investment strategies will not work for all investors.

Conclusion

Personalisation nurtures deeper relationships with each customer and could potentially add a human touch to the services offered by robo-advisors. Everyone appreciates being able to set up a service in just the right way to fulfil their own needs. It is not about technology or functionality, but the meaning that people assign to a certain service. If you want to win the battle for customers in the red ocean of bloody competition, it is time for embracing personalisation in your offerings. Treat your customers like a person, not just like a number, putting them at the centre of everything you do.

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Companies

Saved: Emirates Places Order for Airbus A380

 1 min read / 

airbus emirates

The Dubai-based airline, Emirates, has announced an order for 36 A380s worth $16bn, saving the superjumbo after Airbus threatened to stop production. The deal places a firm order for 20 planes with the option of ordering another 16. Deliveries are scheduled for 2020.

The two-decked superjumbo has faced declining sales as more airlines opt for smaller, cheaper aircraft.deal is said to be worth $1.6bn. Emirates is by far Airbus’ largest customer, with Thursday’s order taking their commitment to 178 aircraft.

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Companies

Financing for Green Sustainable Development

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Green Sustainable Development

Green sustainable development has been on multiple discussions channels. Talks, seminars, workshops, you name it. However, financing it has not been thoroughly discussed. How do we finance sustainable green development? Is it profitable for companies who do so? Is the rate of return high enough to cover the cost of investing in green technologies?

No doubt, green sustainable technology is an expensive technology with no clear ROI. Venturing into green technologies may be a blind-man guided only by a voice in his head. Yes, green sustainable technology yields a significant Marginal Social Benefit (MSB). But often, MSB is non-quantifiable.

Leading this social-technology movement, Jeffrey Sachs, with the support of foundations such as the Jeffrey Cheah Institute, established the Sustainable Development Goals (SDG) centre in the backdrop of academics – Sunway University.

The aim is to directly address the issues for SDGs and to ensure the goal set in the Paris Climate Agreement is able to be achieved successfully.

Now, as mentioned, private firms are both afraid and pessimistic about green sustainable development. Many do not see the outcome of this initiative and are not concerned about the environment. The technology is costly, and some firms are even struggling to break-even at their current costs. Lack of momentum from firms involved in similar industries and lack of financial support has made venturing into green technology unattractive.

On 14th of January 2018, pioneers and advocates from across the globe were invited to join a workshop at Sunway University. The idea was to bring together a group of academics, from the Asian Development Bank Institute to representatives from New Zealand and Austria, to discuss how to finance green sustainable developments. It attracted a number of firms involved or who wanted to be involved in this movement.

Financing models such as the SIB model and the Yozma model were introduced by Dr Hee Jin Noh. Papers on the theoretical relationships between a firm, a bank, and households were presented by Dr Maria Teresa Punzi. And the outcome of these series of workshops will be a book, which aims to provide a better insight and guideline for green financing, written by Dr Hee.

Also presented was a case study, comparing different countries. Associate Professor Ivan Diaz-Rainey had made comparisons on some successful countries, looking at European countries versus New Zealand and Australia. In the case study, countries were compared, and recommendations were made on how to make green financing successful. Though the definition and KPIs of a successful green development country are still vague, countries from Europe are exemplary on the ‘theory to practice’ phase.

While there is a significant increase in awareness and wanting to be involved by private firms, it needs to be supported by the government more. Regulators need to provide sufficient information to assist private firms venturing into green technology or green development. A healthy government support will increase the chance of a firm venturing into green development being successful. And these are the baby steps needed in order for transformation at city-scale or nationwide-scale.

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Companies

Carillion: Funds Buy Debt for Peanuts

 1 min read / 

carillion debt

Distressed debt investors are reportedly buying up debt in the collapsed construction company, Carillion, for as little as 2% of their face value, with private notes exchanging for as little as 5%.

Distressed debt investors normally buy up bonds in companies facing liquidation on a hunch that their value will increase. Often they will buy a small amount that allows them access to company records before deciding on whether to place a larger bet. If Carillion retains its public contracts, in schools or hospitals for example, then investors can expect a return by buying up bonds now.

Keep reading |  1 min read

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