Strategy in financial services is becoming a winner-takes-all game played at breathtaking speed.

In the past, a successful strategy could give a bank a slight edge over the competition, and that edge could last for decades. Today, the winner often leaves its next-best rivals in the dust, but a strategy can become outdated a few years after adoption.

So financial services providers need to reinvent themselves regularly, creating new designs for their businesses on the fly.

At first glance, this seems to pose an overwhelming problem for senior managers. But strategies don't need to be created from scratch. On the contrary, most fit into larger patterns of strategic change that have played out in industry after industry over the past two decades.

Banking executives who learn these patterns and apply them to their own situations will be that much quicker to adapt to changes in the marketplace.

What are these patterns? They can characterize both the ways industries evolve and winning business designs that have proven themselves repeatedly. Patterns may be organized along the primary areas of impact: value chain, customer, channel, product, knowledge, and organizational systems.

Within financial services, the fundamental economics of the business have been transformed by a confluence of patterns:

Disintermediation. The tidal wave of information about customers unleashed by continually cheaper and more powerful information technology has undercut the economic value of being an intermediary. That business model was based on proprietary information about, for example, customer creditworthiness, which allowed the institution to effectively match borrowers with lenders.

Industry convergence. The information deluge, along with deregulation, enabled firms to cross traditional industry boundaries as the core abilities to manage customers, price and package risks, and place risk with investors became increasingly common to players in banking, securities, and insurance.

Customer power shift. Simultaneously, information technology gave financial products and services greater economic transparency, which expanded customer choice and power.

De-integration of the value chain. Transparency also encouraged the funding and profitable growth of category killers that specialize in one part of the value chain at the expense of the vertically integrated players.

These and other patterns-both existing and emerging-are catalyzing another cycle of "creative destruction." As the easy-money era of a nearly ideal interest rate environment and merger-driven value growth ends, innovative business designs for poaching high-value customers should generate the lion's share of shareholder value.

The new business designs with the greatest potential for growth are not likely to resemble the giant organizations created by the megamergers of the past year. Research by Mercer Management Consulting shows that the stock market has not changed the underlying valuation of the industry consolidators, which trade at roughly the same market-to-book multiples as smaller, traditional players.

The consolidators may have grown bigger, but they have not created business designs that generate more value for customers or shareholders.

Two new business designs pose the greatest threat to the traditional consolidators model. They exploit the four core patterns described above, as well as several others:

Reintermediation. Web-based companies add value by bringing together buyers and sellers on-line-a partial reversal of the general trend of disintermediation.

Profit shift. Profitability is concentrated in a small group of customers.

Microsegmentation. This permits the cherry-picking of highly profitable customers.

Product and customer knowledge. The ability to convert knowledge about the customer into profitable action is the key.

One of the two new business designs, which we call the "next wave category killer," starts with the customer-value and information-based strategies exploited by first-generation category killers. But the new companies incorporate "experience management" (enhancing the customer's total experience with the company, including but not limited to the use of the product) and interactivity (constant feedback about the customer's needs and preferences).

The goal is increase both the economic value offered to customers and the value that can be extracted from the most profitable customers.

For example, the Internet credit card company NextCard gives almost instant credit approval through on-line links to credit bureaus, and it uses incentives to steer customers toward the product and behavior most likely to yield profits. At the same time, NextCard supplies the on-line capability for customers to craft their own offers-creating a valuable reservoir of insights into customer choice.

Next wave category killers don't only operate on-line. Cendant's homebuying businesses combine relocation assistance, real estate sales, and mortgage brokering capabilities with such services as insurance and shopping for appliances or furnishings. In the process, it relieves stress for families and creates relationships with new homeowners, an attractive target for additional financial services.

The other emerging business design, the "on-line aggregator," threatens to commoditize all other participants in the financial services value chain. By offering an array of third-party products, an on-line aggregator can make the unique and forceful claim that it is on the customer's side of the table, pushing no product of its own.

The goal of E-Loan or Insweb is to become a customer relationship gatekeeper, both a trusted adviser and an intelligent agent that can scan the Web for products that best suit a customer's needs. By supplying an experience in which customers believe they are controlling the interaction the bar of customer expectations is raised.

Though traditional players will undoubtedly survive into the near future, the next champions of value growth will be those that recognize key patterns and capitalize by creating customer-centered business designs. Mr. Quella is vice chairman of Mercer Management Consulting in New York and co-author of ?Profit Patterns: 30 Ways to Anticipate and Profit From Strategic Forces Reshaping Your Business? (Times Books/Random House). Mr. Yulinsky is a Mercer vice president. contact: Howard Bailen 345-7506

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