The Long Tail
by
René Aerdts
A lot has been written about the Long Tail, a re-cast of the "80-20" rule in business terms. Basically, specific retailers with low distribution and inventory costs can afford to have a large number of low-turnover items on hand, thereby creating a niche market for specific items of interest to specific market segments (or consumer markets).
Now let's take this approach and cast it upon another market segment: the financial services industry. Two of the more prominent systems within a financial institution are (among others) the core banking system and the wealth management system. The phrase "system" in this context does not refer to a single product, but rather implies a suite of integrated products that provide the service at hand.
In general, these services are focused on consumers with a specific minimum amount of financial resources available for deposit or investment. The minimum is usually dependent on the services required. As an example, wealth management targets the high net-worth individuals.
Now look at these services in the light of the Long Tail: what if we could provide these types of financial services to the "long tail" of consumers that have a (far) less-than-average investment capability than is normally required by the financial institutions. This approach would provide an Amazon-like approach to financial services: providing services for markets that are normally left untapped by the normal distribution channels.
Granted, this approach will face technical difficulties, in that the systems that run the financial services need to be revamped to allow for a low-volume, high consumer-base solution that provides the financial payback that the financial institutions are looking for, while providing services that are targeted specifically at the consumers in the "long tail.'
