--- APRIL 7, 2006 ---

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Tiburon is pleased to announce the release of its twenty-first research report titled Technology Developments in the Financial Services Industry: Implementing Cutting Edge Technology Strategies for Captive & Independent Financial Advisors. This new report provides a comprehensive understanding of key technology developments in the financial services industry. This release includes some key highlights and future predictions from the report

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Context Setting

Tiburon Strategic Advisors, a market research & strategy consulting firm serving the brokerage and investment management industry, released a new research report to provide financial services executives & technology companies with a cutting edge understanding of emerging developments in technologies designed to increase the efficiency and productivity of financial advisors, and to establish a broader framework for analyzing back office technologies in the financial services industry.

Please click the image above to view the table of contents for Tiburon's new Technology Developments in the Financial Services Industry research report
This is Tiburon's first effort at putting its views of the impact of technology on the financial services industry into a single report. The report begins by addressing the four phases of technology evolution in the investment advice market. This historical account is followed by a category-by-category description of current technologies and their related issues. The report will concludes with Tiburon’s predictions for future impacts of technology in the financial services industry.

More Information

Key Highlights

Context Setting: The History of Technology in the Financial Services Industry

  • The initial driving force of the growing personal computer market was the US, where personal computers began outselling televisions in 1995
  • Over the ten years from 1990 to 2000, Intuit’s Quicken outsold all other personal financial software applications combined
  • Investors were over twice as likely to use the internet as non-investors by 2000, 75% to 34%
  • The consumer day trading craze of the late 1990s led prognosticators to think 50% of all trades would be online by 2000, far higher than realized figures
  • Online mortgages & online insurance emerged as the next hot ideas, but their realized numbers proved far short of the hype by 2000
  • Driven by the stock market troubles, a recasting period from 2001 to 2002 was defined by the number of online brokerage firms falling from 75 to 50 due to consolidation in the industry
  • Large banks continued to hit home runs in online bill pay, exemplified by 20% US household penetration by 2002
  • Online mortgage sites continued to get hits during the recasting period, but sales remained at only 1% of all mortgage sales as late as 2002
  • Online only banks such as ING Direct and EverBank sprung to life again during the rebound period, gathering huge assets from other institutions

Technology Utilization

  • Bank institutional technology is best divided into thirteen components: data processing, banker desktops, ATMs, online banking & bill pay, online security, transaction processing hardware, transaction processing software, check imaging, mortgage & loan processing, trust & investment accounting, treasury workstations, statements, and compliance & anti-money laundering systems
  • Online banking security is designed to help stop such things as online transaction fraud and identity theft, which cost victims $60 billion and $50 billion a year, respectively
  • Online security spending is expected to rise from $150 million per year to $225 million by 2008
  • Transaction processing hardware is led by three firms: Hypercom, Verifone, and Ingenico
  • Transaction processing software & service is led by firms including CheckFree, Certegy, and First Data
  • Check imaging technology in the future will be led by archives including Viewpointe, whose bank customers cover 55% of all check volume, and fast growing image exchange networks such as SVPCO and the Endpoint Exchange Network
  • Further, banks will increasingly bring check imaging technology to the front office, depending on branch tellers to execute the function to eliminate costs incurred with bundling & shipping checks to central repositories
  • Searchspace serves half of the top 25 banks needs for anti-money laundering software
  • Brokerage firms’ electronic commerce platforms must be focused on battling fraud, of which there are 5,000 reported incidences against financial services companies per year
  • CheckFree APL dominates share in managed accounts technology, counting 90% of the top asset managers as clients
  • NaviPlan & Financial Profiles are the two leaders in financial planning software users, with 70,000 and 50,000 users respectively
  • One leading broker/dealer claims that only 40% of its advisors use financial planning software, with far fewer using it for a majority of their clients
  • There is an increasing trend for enterprises to private label financial planning software, such as Northwestern Mutual’s private labeling of NaviPlan and Wachovia’s private labeling of Financeware
  • The most popular data & research service for mutual funds is Morningstar, which thoroughly surpassed former leader Lipper during the 1990s
  • Charles Schwab & Company’s data download software leads with 5,000 users, with Fidelity Investments and TD Waterhouse both counting about 2,500 each
  • At last count, there were 34 advisor portfolio management software products on the market
  • Financial advisors would be wise to spend the small incremental cost to purchase advisor specific contact management software, but with leaders Junxure-I and ProTracker amassing only 2,000 users combined, that is far from a reality
  • VoIP is suspected to be used by three-quarters of all corporate phone systems by the end of the decade

Conclusions & Predictions

  • Looking forward, the continued growth in personal computer usage will likely be driven by the less affluent and foreign markets
  • One software engineer in Germany has developed a rival to the internet out of unease about the US government’s control over the global internet
  • The share of US households using online banking will possibly rise from today’s 40% figure to as high as 75% by 2010
  • The streamlining of financial services front offices is inevitable, as margins can increase from 40% to 60% by focusing on technology
  • Financial services technology spending is expected to grow at a rate of 4% per year until 2010
  • Key companies that excel in getting a strong return on technology investments are Fidelity Investments and Charles Schwab & Company, which invest 25% and 15% of revenues in technology respectivel
  • CheckFree, Intuit, and Bisys are likely to make acquisitions in the future
  • Venture capital opportunities lie in both the front and back offices of financial services companies

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Tiburon Strategic Advisors

Tiburon Strategic Advisors, based in Tiburon, CA, was formed in 1998 to offer market research & strategy consulting services to all types of financial institutions and investment managers:

  • The firm has served almost 300 corporate clients and completed over 800 projects since its founding, and today, its knowledge base includes mutual fund distribution, separately managed account programs, alternative investments, wealth management, insurance products, banking services, the fee-only financial advisor market, the CPA firm market, the family office market, and various international markets.
  • Tiburon holds a series of CEO Summits semi-annually for its executive-level clients. Attendance is by invitation only and attendance at the Summit is limited to 75 senior industry executives. Visit the CEO Summits section of Tiburon's web site for details on current and past CEO Summits, including attendee lists, meeting agendas, and highlights. Please contact Tiburon’s Managing Principal Chip Roame at CRoame@TiburonAdvisors.Com or (415) 789-2541 if you are a Tiburon client and have an interest in attending a future Tiburon CEO Summit.
  • Tiburon offers thirteen online business benchmarking tools that are available to all types of financial advisors in an effort to help them benchmark their business practices and build more successful businesses. The sites include www.BrokerBestPractice.Com for wirehouse & regional brokers, www.FABestPractices.Com for fee-only financial advisors, www.IndependentRepBestPractices.Com for independent reps, and www.PrivateBankerBestPractices.Com for private bankers. Almost 5,000 advisors have used these tools. By completing one of the online surveys, financial advisors can access a FREE copy of the relevant comprehensive Tiburon research report, which summarizes and analyzes the collective results.
  • Tiburon has published twenty-three ~100-300+ page research reports, which offer detailed analyses of growing business segments; each is available for $5,000; these reports can be ordered by contacting Brian Cotter at BCotter@TiburonAdvisors.Com or (415) 789-2546.
  • Tiburon’s weekly research releases, like this one, are emailed for free to interested industry executives, media representatives, conference planners, and individual financial advisors. Over 38,000 industry executives now receive these releases. Feel free to sign up to receive future research releases at Tiburon’s web site (www.TiburonAdvisors.Com) if this release was passed to you by a colleague and you would like to receive them directly in the future.
  • Tiburon expanded its workforce in 2005-2006. New research managers will develop proprietary research content for Tiburon research reports and client projects and new marketing managers will enhance the firm's web site, weekly research releases program, and the firm's relationships with media representatives, conference planners, and its clients & executive program members.
  • Tiburon has built three executive programs (CEOs-in-Residence, Financial Advisor Roundtable, and Consulting Fellows) in an effort to bring the experiences of additional senior level industry executives to Tiburon clients. Feel free to contact any of the members of Tiburon’s executive programs directly or ask that they be included in any ongoing Tiburon project.

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