I am currently exploring how consumer financial service organizations can use cost measurement techniques to design services that are both viable for low to moderate income consumers and profitable and sustainable for the firms providing them. This is an important issue given increasing regulatory pressure on different fee-based revenue streams in the U.S. banking industry, the importance of consumer access to basic financial services, and the income levels and structure of consumer markets in developing countries around the world.
While technology-based delivery channels have long held out the promise of profitable delivery of financial services, my prior research shows that such “low cost” channels can alter consumer behavior in ways that paradoxically lead to increases in the overall cost-structure of financial organizations. This work suggests that identifying business models and delivery strategies for providing sustainable access to basic banking services will be a difficult challenge with respect to low and moderate income consumers segments. I am currently working on case studies and empirical research projects aimed at investigating the following questions in U.S. and African banking markets:
- What product and delivery innovations are currently being used to provide financial services to low and moderate income consumers?
- How are the cost and profitability of these innovations being measured? How can cost measurement systems be used to inform the design of product and delivery innovations for these consumer segments?
- What consumer behaviors with respect to these innovations are the most important cost drivers, and how can these behaviors be managed effectively through product and delivery channel design, pricing, or other mechanisms?