Last month moneysupermarket.com ran a ‘5 ways to make your money work harder’ article. These articles have become a staple of lifestyle magazines and Sunday supplements, usually containing a fairly time-worn set of commandments ranging from overpaying the mortgage to clearing credit cards every month, as this article duly did.

However, something new had crept in at number five; social borrowing and lending, and this is interesting for a few reasons.

Firstly, it points to the ever-increasing acceptance of social lending as part of the financial services market. Zopa, Funding Circle and Rate Setter are no longer novelties. With the best fixed rate bonds returning around 4% after tax, the returns of 8% offered by most social lenders beat not only traditional products, but can claim to outperform corporate bands and the FTSE 100 as well. With RPI inflation running at 5% or more, the type of return and low risk profile seen with social lending has moved this asset class firmly into the mainstream.

Secondly, there’s the fact that apparently my main source of FS advice is now a price comparison site. Well, that’s not quite true, but it was the best place I found when looking to write a blog post on money advice. Top tier product aggregators now have online advice and guidance services that outperform the digital offers of most high-street banks. And that speaks volumes about their ability to assume the roles of traditional full-service models when dealing with certain types of products such as savings and personal loans.

Then there’s the third, and most interesting, aspect of this story; that it points to a potential direction for the future of FS. This being the combination of product aggregators and point solutions eroding the traditional value chain on which full service models have relied, something that we’ve seen in the travel industry with the demise of the traditional travel agent. We can now start to see the beginnings of the growth in new savings models and financial aggregators.

On this basis it looks like no-one in the Financial Services world can take their role for granted. But what can they do about it? Well only by making sure their proposition meets a real customer need, is communicated well and offers a customer journey/experience that beats expectations. So that’s the same as it is for all other sectors then.

Image with thanks to alancleaver_2000