Do Financial Companies Know Their Information Balance Sheet?

According to global management consultancy Oliver Wyman, the value in financial services is quickly shifting from balance sheets and physical distribution to information. This trend is occurring globally, but is perhaps most easily observable in US banking. There, information businesses related to banking such as independent payment networks, credit bureaus, ratings agencies, exchanges, and data providers, among others, may be more valuable than the industry’s traditional balance-sheet based businesses by the end of the decade. Oliver Wyman’s annual State of the Financial Services Industry 2013 report titled, A Money and Information Business, finds that most financial services companies have an opportunity to become information-driven companies that grow and monetize their information assets. Firms that exploit this opportunity will find areas to prosper even in the face of challenging macroeconomic conditions and regulatory uncertainty. On the other hand, firms that fail to identify how the evolving information landscape is affecting their business could suffer from a similar kind of disruptive change witnessed by the travel, media, telecommunications and music industries.

Banks and insurers continue to control a unique and extraordinarily valuable array of information assets. The 16th annual Oliver Wyman report finds that once a firm understands its information assets and how the evolving financial services information landscape can help monetize those information assets or threaten them, it can build what Oliver Wyman calls the “information balance sheet”.

“We conceived the idea of the information balance sheet as a mechanism by which executives can begin to get a grasp on their information assets, exposures, opportunities and threats. In short, it provides a framework to understand the aggregate impact of information and inform on how changes in information are going to change and affect earnings, as well as prioritize potential investments in information,” said Aaron Fine, Partner at Oliver Wyman and primary author of the report.

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