Magazine article Risk Management

A New Era for Financial Services

Magazine article Risk Management

A New Era for Financial Services

Article excerpt

Now that the Gramm-Leach-Bliley Act of 1999 has been signed into law, the insurance industry is more carefully scrutinizing the ramifications of this long-awaited legislation. Although not entirely united in their assessment of the act, most recognize the growth potential it offers.

"This historical legislation will prove to be a great benefit to the American consumer," says Larry Forrester, president of the National Association of Mutual Insurance Companies. "It levels the playing field among equal competitors, who will compete vigorously with each other and with foreign conglomerates, which have operated for decades under rules similar to those established by this bill."

In response to the more open market, experts are predicting a "flurry of U.S. and cross-border mergers and partnerships in the financial services industry," says Mike Nemeth, executive vice president of financial services for Computer Sciences Corporation, a consulting firm and information technology provider. CSC sees three emerging organizations in the future: total solution providers, broker/content aggregators and affinity/niche providers.

In order for any sector of the insurance or banking industry to be successful in this new market, however, companies must pay close attention to "managing the tremendous cultural and organizational change that comes with new business models," says Nemeth. Strategies include breaking down product and geographic silos, reexamining core strengths, adjusting to changing environments and devising methods to expand customer relationships. …

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