With everyone wondering of what the Post pandemic growth might look like. The phenomenon known as the ‘Subscription Economy’ has given an insight as the term describes a new business model where the consumers pay a regular fee at recurring intervals like monthly, weekly, yearly or based on the customer usage, in order to access a product or take a service. Unlike the more well known Product economy, that relies on one and one transactions, these subscription business models are built around the generation of stronger lifetime customer value.
For the financial services sector, this economy could mean that it will have more opportunities to upsell and cross sell services to their customers, helping to reduce the customer toss and to start a new revenue streams. Since a decade of facing the challenging regulatory frame works, the wave of digital challenges and failure to pivoting business model as per them can cast an end to many businesses which are operating within the financial services industry.
The subscription economy, however is just getting started and the use cases re increasing by the day and are likely to continue evolving as the tech develops to meet the customers demand. Throughout the COVID-19 lockdowns, many digital-based payment commerce models managed to do well due to their ability of convenience and strong business stability. Study from the recent Subscription Economy Index has shown that corporations that incorporated subscription-based models grew at 400 per cent on a typical year over the last 8.5 years, outperforming S&P 500 revenues by almost 6x during the pandemic last year. One of the recurrent accomplishment factors for these organizations across the board is personalization and those that clasp customer-centric business practices win through over those that do not. Contouring a product or service to a customer’s needs in a period of enormous alteration is a sure-fire way to gain allegiance and win over those who formerly favored more traditional financial organizations. Subscriptions can also help cast a bigger net to expand the organisation’s addressable market. Financial service institutions can expand their market by making the products and services they offer be more affordable, even if it not necessarily mean by reducing the total cost but by letting the customers to spread their payments for a much longer duration. With their aptitude to grow user bases, subscriptions can increase the revenue growth in the long run.
Though the evolution to the Subscription Economy is still in its beginning for the financial services industry, we can see momentous pull from organizations in this area, charted in the current whitepaper, a new method for growth for The Financial Services Industry (FSI). Charles Schwab, Multinational wealth management and financial advisory company recently shifted to the subscription model on a single product line and automated investing to build and handle clients’ cases for $30/ month fee for accounts with at least $25,000, and in doing so transported in $1B in new client assets, predominantly from the younger investors. In the interim, the B2B space, Serai (by HSBC) leverages HSBC’s trade banking client network, joining buyers and sellers round the world and serving them to abridge the difficulties of international trade. For “high touch” B2B offerings, the sales force is a vital building block of sales approach.
Shifting to the Subscription Economy can be an imperative and a try-and-learn attitude. That said, in a period of disturbance and fast commerce variations, financial services enterprises can’t come up with the money to consider the relative merits of the Subscription Economy for their business. Industry leaders want to be asking not if, but how they can implement subscription models to place their organization for growth and success.