At its most extreme, the bank lends its brand to the remaining participants in the value chain. In a strategic sourcing model, marketing, distribution and, in some cases, asset management and customer service management remain the bank's province, while product development and policy administration are conducted by one or more insurers with which the bank has forged strategic sourcing arrangements. Meanwhile, the insurance provider can make better use of its existing administration systems and offset some of that investment against the revenues brought in by becoming a sourcing partner. Moreover, both parties enjoy much greater speed to market, since they have already developed the products that will form the basis of the venture. But for this model to work, banks must be good at customer information management.
Customers benefit as well.
They get a comprehensive choice of high-quality products, which are competitively priced, given the economies of scale that come with volume throughout the system. Although they have made significant progress in a short time, they have done so by offering very attractive interest rates, which they may not be able to sustain. The number of competitors in the market and the experience of the banks and building societies suggest that the assurerbanks' impact will peak and then start to tail off as the banks fight back. Like the bancassurers, they may have turbulent times ahead as they attempt to steer a course in what for them are uncharted waters. And for all players, the increased commoditization of the market will reduce margins.