I HAVE SEEN THE FUTURE and it is the Co-op. Not convinced? Then you should look up news of the Co-op’s decision to enter the legal market. Canny observers will see the significance for accountancy firms immediately.
The Co-op proposes to take advantage of the Legal Services Act, which changes the ownership rules for law firms, and leverage an already trusted brand to break into the market for legal advice.
But if the Co-op can do law, why shouldn’t it do accountancy? Remember it’s a trusted name, with a solid history, strong values, ethically sound. The uncontaminated bank gives it credibility as a provider of financial expertise.
Now, the recent news includes no suggestion that this is the Co-op’s plan, or that they’re even thinking of it. But it’s no great stretch of the imagination to see that a brand like the Co-op, or someone else, might soon see how their status and relationship with consumers can be exploited to move into providing some accountancy services.
This is especially the case with process-driven tasks. Why shouldn’t the Co-op do book-keeping, self assessment returns, your bankruptcy, company formations?
The Co-op has me thinking two things. One, we cannot be too far from a time when all basic and repetitive tasks are farmed out to large centres, either here or morely likely abroad in places like India.
Secondly, the Co-op heralds the possibility of a new set of competitors for the traditional accountancy firms. There are at least two directions from which new competitors will appear.
Firstly, the owners of existing technologies (software or internet interfaces) will suddenly realise they have new applications in other fields. One of these could, and probably should, be the ground currently occupied by accountancy firms.
Secondly, as we’ve mentioned, established brands, like the Co-op, will realise they can go places they’ve never been before. They will then utilise new technology to do so.
At the moment, it is the law. But accountancy may be next. The big supermarkets have long exploited the principle of brand extension; it’s only a matter of time before someone turns seriously to professional services. We may not trust Tesco to do our tax returns, but we might have faith in John Lewis, or perhaps the Post Office. Other versatile brands must surely exist and must be out there waiting.
Their advantage comes from the fact that they understand that brands form bonds that go beyond providing something at a good price. Consumers form emotional ties with the suppliers of goods and services they like and value. Social networking is accelorating this process by encouraging people to become brand advocates to their friends and contacts on a much more efficient scale.
Mostly, people won’t do advocate on the basis of empirical data. They will feel their way to the answer. To “buy-in”, people want to love their chosen brands, feel reassured and protected by them, have them reflect the values they hold for themselves. They want their brand choice to say something about themselves too. In many cases, this will be more powerful than any presentation of data. Just look at how Hiscox, the insurance provider, is advertising on the television right now – a classic attempt to rouse emotions in the viewer with keenly honed messaging. The organisations that can achieve this in professional services will win out.
This raises big questions for the strategic direction of many accountancy firms, especially whether they can hope to continue as they currently are if they fail to harness these forces. Those that are more traditional will find it hard to compete unless they can find ways of adding value to clients and creating bonds that run deep and are more enduring.
Such demands may require a new kind of accountant, one whose thinking is not narrowed by the rigid compliance-based education provided by the main institutes. He or she will need to be an expert in finances but also a free thinker with skills that go far beyond the current range of disciplines currently thought necessary. Accountancy firms will need to become places of creativity, imagination and, most of all, passion for their pursuit.
This will go beyond the parochial nature of the personal relationships by which many practitioners currently set so much store. It will mean thinking about strategic messaging and branding in ways that perhaps have so far been ignored.
In one sense it calls for a new approach from accountancy firms, one that will call into question everything that is currently held dear. They will need to embrace new technologies as first users, not followers; recognise the profound value of imaginative messaging; understand the changing nature of business and our cultural relationship with the providers of goods and services; consider whether their ownership structures are actually fit for the new business world.
In short, the new accountant will know as much about the outside world as he or she does about tax returns. He or she will be financial guru, strategist, cultural anthropologist, instinctively empathic and demonstrate an all-consuming passion for aiding clients in their efforts to deliver high-quality products.
The Co-op’s decision tells us all of that.
Gavin Hinks is a journalist and an advisor on leadership
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