(Source: Apple)

Modularization of Industry

Industries across the board are undergoing structural change. This change extends beyond individual firms and spills across industrial sectors. Some industries that have been exposed to the tide of technology-driven structural changes have harnessed technology to reinvent themselves as new industries befitting this evolution in industrial structure. The financial industry traditionally has been far from the vanguard of this change.

The proliferation of the Internet and digital technologies is only accelerating the evolutionary shift across all industries. This stands in stark contrast to the traditional non-modular, vertically integrated structure (where all the products and services are provided through and within one exclusive value chain) that the industry has historically embraced. However, disruptive new market players have visibly forced conservative, existing entities to begin to seek new approaches; at the same time, regulatory authorities have started to embark on establishing a new, more robust system for regulating the financial industry.

The hotel industry offers a prime example of modularization on the demand side. Today, hotels, as well as the entire travel industry, offer consumers the experience of comparison shopping across service, price, and quality. Celent refers to this phenomenon as modular demand.

Modularization on the supply side is perhaps best exemplified by the aviation industry. The aircraft industry intrinsically does not lend itself to being a self-contained business, relying on a variety of actors to make, operate, and commercialize aircraft. Technological innovation, deregulation, and cost pressures transformed the airline industry, spurring it to evolve into a quintessential modular structure on the supply side.

This modularization goes beyond the industry infrastructure that includes airports and ground facilities. All components of the value chain — from in-flight services such as meals and movies to ground services such as boarding and baggage handling, as well as aircraft maintenance, flight plans, management, pilots, and cabin attendants — are now all subject to external procurement. The airline business now hinges on corporate management’s adeptness at forging and managing alliances. At Celent, we refer to this phenomenon as modular supply.

Today’s music industry showcases some of the greatest modular advancements. On the demand side, the industry saw a shift in the listening experience, as consumers moved from CDs to online downloads and streaming. Dramatic technological advancements have enabled music distribution sites and social networking services to tailor recommendations to users, offering songs and videos to suit music preferences and enabling consumers to search for, purchase, and enjoy music in real time.

On the supply side, record labels and their vertically integrated model were initially largely blindsided by innovation because musicians no longer needed to rely exclusively on CD sales or being scouted, signed, recorded, and promoted by record companies. The ensuing change saw a shift to a new model where a diverse range of artists recorded themselves and harnessed social media and trendsetters to promote their colorful charm and generate fans. Both the supply and demand sides of the music industry value chain underwent a dramatic upheaval that shook the industry and spawned a more dynamic and open industry. This resulted in a new life for the music industry that relegated the CD and conventional business practices of music labels to history.

To be continued – Click here


Related releases:

Legacy Modernization in the Japanese Banking Industry, Part 1

Legacy Modernization in the Japanese Banking Industry, Part 2









証券サービスにおいては、FIXプロトコルとSTP ( Straight Through Processing ) の推進は機関投資家や個人投資家に、新たな収益機会をもたらすのみならず、電子取引、アルゴリズム取引、HFT、SORなど、業界地図を塗り替えるトレンドの誘因となった。機関投資家におけるHFT(高頻度取引)や電子取引比率の高揚、個人投資家にデイトレーダーやオンライン証券の隆盛は、業界構造に破壊的な変化をもたらした。

保険サービスはどうか。顧客の保険リテラシーの向上は、「勧められる」から「比較する」時代への変化を加速する。主体的な保険取引の行動様式に合致した販売チャネルを構想する時、銀行サービス、証券サービス、ひいては、小売市場全般におけるオムニチャネルの動向は看過できない。特に、O2O (Online to Offline)コミュニケーションや‘People like you’ 機能(例:これを買った人はこれも買っています)など、デジタルネイティブチャネルのマーケティング手法が、保険販売チャネルの常識となる日も遠くないだろう。



一方で、業界や個別金融機関に固有な文書やメッセージ形式が災いし、複雑な商品の事務手続きは、業務プロセスの自動化(STP:Straight Through Processing)にほど遠い。このことは、事務コストや金融取引リスクのみならず、販売チャネルの多様化においても、大きな障壁となる。


今日、デジタル技術の普及は、この潮流をドライブし、デジタル化は全てを改善するキーテクノロジーとなろう。逆に、デジタル化出来ないプロセスは、極めて付加価値の高いプロセスか、削除すべき工程かもしれない。バックオフィスのBPO(Business Process Outsourcing)やシェアードサービスも有効な手段となる。ここでも、多様化は規模の経済、範囲の経済を通じて、新たな事業機会を産み、また、事務処理の改善のみならず、顧客接点の改善においても、セルフサービスと事務処理完結は、不可欠な対応と言える。もはや、デジタル化され自己完結していないプロセスは、顧客からも、販売チャネルからも選択されない。


2014/12/22(月曜日)に報道 された、凸版印刷 、東急リバブル、三菱東京UFJ銀行、三井住友信託銀行、ソニー銀行、三菱UFJ信託銀行の4行の取り組みに、その萌芽を見ることが出来る。






Decoupling of Product creation from Sales: Modularization in the Financial Services Industry

There is no need to quote Darwin on evolutionary theory: only those that adapt will survive. Responsiveness to change — not the ability to avoid it — should foster an ability to leverage change. In this post, as a strategic implication for financial institutions and technology vendors, we discuss the modularization in the financial services industry.

For some time, Celent has advocated that players in the financial services industry seek the full use and application of technology such as modularization, decoupling, and packages, and use these deftly in business functions, business processes, loosely coupled IT systems, standardization of procedures and interfaces, and international division of labor via horizontal deployment. In terms of financial instruments, investment trusts and life insurance products are the areas in which the decoupling of product creation and sales has advanced the most. These are also two major products sold via the banking channel.


The case of investment trusts
In the case of investment trusts, the process comprises two parts: the selection of the investment target (portfolio establishment) and the sales of the investment trust. The first of these involves the design or building (creation) of the product (portfolio); the latter refers to the sales of the investment trust security (shares and investment trust beneficiary certificates). Sellers of the product handle related paperwork, such as generating and processing customer transaction reports.

Until the 1960s, during the closed model era of securities firms and asset management firms, the norm was for asset management companies to entrust sales to external securities firms (full service brokers). A closed relationship with an established fixed commission structure (investment trust commission fee [paid by the customer to the securities firm] and a securities transaction fee [paid from the asset management firm to the securities firm]) existed for a prolonged period of time under which asset management companies and brokers entrusted transactions to each other to their mutual benefit. Subsequently, advances in the diversification in sales models were made.

In the 1970s, direct sales no-load funds emerged. There were a number of factors underpinning this: the liberalization of securities trading commissions, sluggish demand in the securities market, and the emergence of no-frills discount brokers that offered investors no advice. However, this entailed only a diversification of sales; no advancement in diversification of product design, creation, and sales emerged as a closed-model system remained in place.

Ultimately, innovation occurred in the form of what was tantamount to an investment trust supermarket. In 1992, the broker Charles Schwab launched its Schwab One source (product). Under this customers could purchase from a list of several investment trusts without paying any fees; the flip side was that Schwab collected an annual management fee based on the asset balance entrusted by investment trust firms. This was a system under which the investment trusts were put on display — like items on shelves in a supermarket — to be selected by customers, and “stores” paid a commission solely on items sold — , that is to say, the amount transacted. This opened up the interface between asset management companies and securities firms, spurring the modularization — or separation — of product creation and product sales.


The case of life insurance products
The case of Japan’s life insurers differs slightly. For a protracted period of time, the wellspring of their competitiveness was their own sales capacity, which might make the transformation seen in the investment trust business model described above a bit of a rough fit. However, against the background of decoupling of product creation from sales seen in the West, there have been cases of global firms with a long history in Japan genuinely transitioning assembler-type models (business model seen in manufacturing industry which builds up a module that parts makers offer on the premise of open architecture and provides completed products). These companies accomplish this through the integration of the operations of subsidiaries by sector (life, nonlife), finding a balance between indirect agent sales and direct online sales, and sharing back office functions (shared service). In tandem with this, there should also be an increase in insurers that are proactively seeking to supply components (financial products dedicated for these assemblers).

  • Bank Sales Channels
    Insurers will continue to have high expectations for bank sales channels. Insurer premium growth is largely dependent upon growth in the sale of savings-related products such as payment in lump sum whole life insurance. This is particularly important when it comes to the life insurance business.
    At the same time, viewed from the perspective of banks, off-balance sheet bank sales of insurance products by cross-selling is attractive as a new fee-generating business.
    For insurers, the bank sales channel can be regarded as a new business under which insurers develop partnerships with banks on a nearly equal footing. Insurance carriers develop the insurance products and operate the company while agents or producers (firms selling insurance) sell the products. Moving ahead, new partnerships are expected to arise based upon the increasing diversity of sales channels.
  • Brick-and-mortar shops
    Brick-and-mortar shops are increasing rapidly as a new business format for insurance agents.
    In particular, growth has been very visible in recent years as the number of such shops surged from around 200 in 2009 to approach 1,000 shops in 2013 for a compound annual growth rate of over 30%. With these shops frequently located in large facilities with high volumes of customer traffic and in busy roadside areas, the operators of these shops are competing for customers with other retailers and financial institutions such as banks.
    Insurance aggregators conduct contracts for multiple insurers, embodying an approach that strays from the conventional approach of working from selling a set menu of products; instead, they stress “life plans” and focus on demand from customers switching from other plans, offering one-stop shopping for both life insurance and nonlife insurance. In short, these companies have changed sales from the conventional process of offering what is akin to off-the-shelf insurance products, shifting to a neutral, consulting-based sales approach that proposes the optimal “coverage” services or offerings from various insurers.
    Currently, three types of insurance aggregators— shops that conclude sales contracts for insurers and handle the products of multiple insurers— exist in Japan. Today insurance aggregators account for approximately 5% of insurance sales, but Celent sees the share held by the insurance aggregator segment— (including bank channels and an array of sales channels— ) increasing and forecasts growth to the tune of 30% CAGR over the next three years.


In the insurance industry of Japan, for the trends and initiatives of modularization of the financial services industry, we recommend the Celent report below.



セレントはかねてより、金融サービス業における、製販分離とモジュール化の有効性を主張してきた。製販分離とは、すなわち、金融商品の製造と販売の分離を指し、そこでは、「モジュール化」「アンバンドリング」「パッケージャ」などの技術経営の適用と、それらの手法を駆使した、業務機能、業務プロセス、IT システムの疎結合化、インターフェースと手順の標準化、その水平展開による国際分業などの有効性などが提唱される。金融商品において、生命保険と投資信託の2つは、最も製販分離が進んだ商品である。そして、これらは銀行チャネルで販売される2大商品である。



証券会社と投信会社のクローズド・モデルの時代、1960 年代までは、投信会社から外部の証券会社(フルサービス・ブローカー)への委託販売が主流であった。固定的な手数料体系(投信販売手数料(顧客から証券会社へ支払われる)と株式売買手数料(投信会社会社から証券会社へ支払われる))と、投信会社と証券会社の間の互恵的な委託販売関係から、長らくクローズドな関係が構築されてきた。その後、販売形態の多様化が進展した。

1970 年代以降、ノーロード・ファンド(販売手数料ゼロ)の直接販売事業者が出現した。その背景には、①株式売買手数料自由化、②株式市場の需要不振、③アドバイス無しのディスカウントブローカの台頭があるが、この時代は、販売の多様化のみで、設計、製造、販売を兼業するクローズド・モデルに変化は無かった。

最後に、投信スーパーマーケットによる革新が起きた。チャールズ・シュワブが1992 年に販売を開始したシュワブ・ワンソースでは、リストアップされた複数の投信を購入する限り、顧客には全く手数料がかからず、代わりに、シュワブは投信会社から、預かり資産残高に応じた年間の管理手数料を徴収した。投信をスーパー店頭の棚に載せ、売れた分だけの手数料を取る方式であった。投信会社と証券会社のインターフェースがオープン化され、製造と販売がモジュラー化し、分離した。



  • 銀行窓販
  • 保険ショップ



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