Financial Feng Shui
How to rearrange the industry’s front office. By Chris Hawes, Senior Editor, Branded Content
Since the Chicago trading pits closed their doors in 2015, Lloyd’s of London has stood as one of the final reminders that finance was once a physical industry. Each day, insurers would pinball around the floor, gossiping, negotiating, and underwriting risk.
But the fallout of the covid-19 pandemic has proven that moving the insurance industry online is, if not easy, then at least viable. Lloyd’s is planning to reopen as government restrictions ease, but it is swimming against the tide of advancing technology and the need for businesses to cut costs as the economy contracts.
This centrifugal force is already pulling companies out of the City and into the digital world. A survey conducted by PwC earlier this year found that around a quarter of CFOs were preparing to cut real estate costs, with firms such as Facebook and Twitter among the 49% of businesses planning to make remote working a permanent option for staff.
These changes are a boon for employees’ quality of life, but digital platforms are still no substitute for the city when it comes to building corporate relationships. Companies should therefore consider merging the two — using digital brand-building to start conversations that spill over into real life. Two skills will define those that succeed.
Building trust
The first is the ability to build trust online. During a crisis, companies will often try to map a “new normal” for their industry, or announce “future-facing” mission statements. This not only leads us to question which way they were facing before, but whether we should trust a business’s judgement if it can so easily be altered.
Unprecedented events should tighten a company’s grip on its vision. Take Vanguard, one of the few firms to double down on its founding principles amid the wreckage of the 2008 financial crash. Since launching the business in 1974, John “Jack” Bogle maintained that the average investor would find it almost impossible to beat the market over a period of time, and that the smart money followed an index. Rather than scratch its head, Vanguard started to produce content that positioned the financial crisis as another step towards Bogle’s vision of a transparent and more cost-effective investment landscape.
This consistency builds trust in a business. With less opportunity for face-to-face contact, people will turn to trusted thought leaders online. The problems that were once thrashed out over a pint in pubs across the City will be broached online as people scour the internet for solutions.
From the virtual to the real world
This may sound dry, but these conversations will not stay online for long. Far from it. As social distancing eases, businesses will need to perfect the art of converting online engagement into real-world conversations.
Lockdown has seen innovative blends of social and real-world marketing. The Good Egg, a popular chain of Tel Aviv-style restaurants, has been posting “bake-your-own babka kits” on its social media channels, with the aim of eventually drawing followers into restaurants to compare their homemade delicacies with the chef’s own. Meanwhile, golf clubs are sending practice routines for members to try at home, with the option of arranging post-quarantine lessons where the club professional can check on their progress.
This innovation is built around the changes in customer’s daily routines. Similarly, the insurers who would once start their day with a latte in Lloyd’s Coffee House may now begin with a look at their news feed. Rather than scanning the huge logos adorning London’s skyscrapers, they will pass branded content on their scroll to work. If they see something that interests them, perhaps they will start a conversation and arrange a time to meet in the City.
Incumbent brands may profit in the short term. The CEO of one of London’s insurance giants admitted their business was “living off social capital accrued before the crisis,” in a conversation with Insurance Day, an industry publication. This dynamic will not last indefinitely, however, while remote working could. The companies developing new ways to start and maintain remote relationships will be quick to pick up new business as the incumbent’s social capital begins to run out.
Accept it or not, we are heading towards a time in which business relationships transcend the physical world, helped on by 5G and other technological tailwinds. The companies that survive the journey will have cultivated social and digital skills that allow employees to start, build and maintain these conversations.
Life after lockdown is going to be very different. We had better start preparing.
The Economist Group are helping companies start these conversations every day. To discuss your company needs contact Chris directly on ChrisHawes@Economist.com
