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How to grow and differentiate in a commodity market

With many Nordic pension products dictated by regulation, how can you stand out from the crowd?

Markku Luoma-Aho / July 30, 2018

You are at the grocery store shopping for oranges. There are several varieties side-by-side which all look the same. Then you see a display of Sicilian blood oranges cultivated under the warm Mediterranean sun. They look different and taste better, something you can’t get from generic oranges. This is an example of differentiation in a commodity market.

The Nordic pension and insurance markets can be seen as commodity markets. Pensions are highly regulated while the insurance market has a lack of innovation and competition from novel solutions in the most profitable and high-volume products, such as traffic and employers’ mandatory accident insurance. If you want to grow your business in such an environment you need to differentiate yourself and offer something the customer can’t get elsewhere.

Improving the customers’ lives

The best way to differentiate and grow your business is to focus on the lives of the end customer. You want to make their lives better and easier. New kinds of services will lure them to you.

For example, let’s say you are targeting entrepreneurs. Everyone offers loans, banking and mandatory insurance products, so you also develop innovative services. Perhaps you can offer them a marketplace: accounting, legal advice, headhunting, networking with investors… and, of course, your financial solutions.

It is not enough to simply offer a good customer experience anymore. You need to be in the customers’ daily lives, offering real added value. For example, how many companies do you have to call if you have a car accident? The insurance company, tow truck, mechanic, rental car company? What if you had one service number that took care of all of that? This is real value in the P&C market.

Ecosystems add value

Many companies focus on existing customers and pay less attention to marketing and onboarding new customers. This will be exacerbated with the SOTE reform in Finland, challenging the ability to keep current customers.

The solution might be an ecosystem which provides innovative products and services, adds value and provides real results. The modern era is the era of collaboration, not conglomeration.

Ecosystems have their own challenges, not least how they are financed. Yet if you can enable an ecosystem which finds common targets and benefits for all members you create an environment which adds value to the end customer and helps you grow in a commodity market.

What to do next

Tieto can support your growth agenda by helping with the latest technology, distribution channels and methods. We can help you bring solutions to the end consumer while ensuring regulatory compliance, and we build successful ecosystems. We share your goals and have a broad range of cross-industry experience.

If you would like to learn more about how Tieto can help you grow, even in tough environments, please contact me to set up an appointment. You can also find my thoughts on other important topics here.

Markku Luoma-Aho
Head of Financial Services, Tietoevry, Finland

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