Getting the financial house in order
As the world's financial markets continue to fluctuate, the
financial industry has a friend in Novantas. In recent years, the
firm has rapidly expanded its research and solutions offerings into
robust practices, adding thought leadership and financial software
ingenuity to its reputation as trusted advisor to 20 of the top-30
banks in the U.S. The solutions and research business now
contributes approximately half of the firm's revenue. The firm's
research division, Novarica, provides information and perspective
on markets, operations, and technology to financial services and
insurance executives, while Novantas Solutions' software harnesses
data analytics to measure, quantify, and accelerate revenue growth.
Though most of Novantas' clients are headquartered in North America
and Europe, the firm has increasingly served financial institutions
in Eastern Europe, Southeast Asia, Latin America, and the Middle
East; it now works with four of the top-10 banks in the
There's no "I" in team
Novantas was founded in the mid-1990s by consultants and
practice leaders from Booz Allen Hamilton, Bain and First Manhattan
Consulting Group, who realized that their clients were looking for
something different from the traditional group-think consulting
model. Clients were tired of working with large consulting teams
with generally inexperienced staff, who came up long on writing
reports but short on delivering results.
The firm that came about as a result of these observations seeks
to break out of the old consulting mould. Novantas vows to deliver
tangible changes-not mere paperwork and studies. Generally, its
consulting teams have a higher director-to-staff ratio, and
consultants are selected based on their expertise-whether it be
financial analysis, statistical modeling or customer research.
Teams are typically comprised of three to five professionals, led
by one or more Partners, who bring a combination of industry
insight and practical solutions.
The science of consulting
Novantas has turned its practical approach to consulting into a
near-academic discipline. "Customer science," according to the
firm, defines, builds, manages, and measures the total cosmos of
revenue-generating capabilities for the firm's clients. This
includes branding, market mix management, segmentation, product
design, pricing, distribution management, sales execution
effectiveness and customer experience-all tools in Novantas'
consulting, solutions, and research laboratory.
At the heart of these analytical methods are the firm's
proprietary tools: MindSwift, the Stratascape database suite and
PriceTek, to name a few. MindSwift, deployed as an application
service provider, or ASP, systematically reviews a company's
interactions with a customer, gauging the value and impact of the
interactions and then designing possible improvements in technique,
both conversational and online. These techniques can be instituted
in existing customer relationship management applications or
implemented through MindSwift on the client's desktop. Products in
the Stratascape database suite are designed to help retail and
business banks determine the optimum configuration (ie, location of
branches, ATMs, and sales force) in each of the markets the
institution operates in. PriceTek is another ASP service that
analyzes how current and prospective customers respond to changes
in a bank's interest rates, relative to the competition. Based on
these elasticity measurements, PriceTek creates predictive models
of how balance acquisition, growth, diminishment and attrition
could be affected by pricing. Traditionally, these services and
products have been sold exclusively to the financial services
industry, though with new information-based products in the
pipeline, Novantas has expanded these offerings into the insurance
and brokerage industries.
Entrepreneurs as well as advisors
Novantas directors see themselves as a collection of
entrepreneurs as much as business consultants-they are constantly
on the lookout for new businesses to build to serve financial
industries. Their information services division, Novarica, evolved
from its consulting practices just five years ago to help insurance
executives navigate the rapidly changing technology world.
Together, the consulting, information and research businesses bring
insights to clients across a range of different industries, and
provide employees with the opportunity to work in different areas
throughout the course of their careers.
IN THE NEWS
The End May Be Near for Debit Cards
Sherief Meleis, a Managing Director with Novantas, was quoted in
a Wall Street Journal article that suggested banks may try
to steer consumers to seek payment options such as credit and
prepaid cards. "It really could mean that the debit-card business
is much less viable," said Meleis.
A New Day Emerges as the Gap Between Bankers, Advisors
Most banks today are focusing on their investment and wealth
management programs as revenue from traditional lending and banking
businesses continues to slide as a result of low interest rates and
increased regulation following the 2008 financial crisis, according
to an article in Bank Investment Consultant. The
best-in-class wealth management units have penetration rates
between 15% and 20%, so "there's a very significant upside," notes
Wayne Cutler, Managing Director at Novantas.
A New Era of Branch Wars at Nation's Big
The revolution has started: with consumers using technology to
carry out everyday banking tasks, America's banks are reconsidering
the future of the branch. "We're thinking about 25 percent of U.S.
branches are financially unaffordable," Kevin Travis, a Managing
Director with Novantas, told CNBC.
Online-Only Banks Start to Yield More than a Virtual
A Wall Street Journal article asked the following
question: Are bank customers ready to adopt a purely web-based
model? Overall, online-only banks saw their deposits rise $364
billion in 2012, up 32 percent from 2010 and more than 400 percent
from 2004, according to Novantas.
More Companies Join Mobile Payments Rush
Following announcements by Wal-Mart and Starbucks of plans to
make it easier for customers to pay using smartphones, the
Financial Times reported that the mobile payments market
is finally moving into the mainstream. "There will have to be a big
shakeout," says Steve Ledford, a Managing Director at Novantas.
Bank branches, hitherto all-important, will become far less
numerous-and look very different, according to an article in
The Economist. Sherief Meleis, a Managing Director at
Novantas, reckons that thanks to low rates banks are about $60
billion a year worse off than in 2007.