Ian McKenna: Widows’ Fintech approach to corporate pension overhaul

Ian-McKenna-in-2013-700.jpgScottish Widows’ new development lab is changing the way it deals with corporate pensions partners says F&TRC director Ian McKenna

At the end of 2015 Lloyds Bank Group committed a £50m budget to support the transformation of Scottish Widows’ corporate pension proposition. Less than a year later the effects should from this month begin to be felt across the company’s 12,000 corporate customers and their advisers.

The organisation has employed agile development techniques to significantly reduce the timescales normally associated with such changes and also work closely with employers and advisers to build the changes they see as most beneficial.

To deliver this transformation Scottish Widows director, corporate pensions David Holton created a development lab where people representing all parts of the workplace organisation work side by side with developers. I have visited this set up a number of times in recent months and it is far more like a FinTech business in the way it operates than a traditional conservative life insurance company.

Although the first development work only started on 20th January, October saw the roll out of the new services to Scottish Widows group personal pension customers. The new process has delivered the sort of change in nine months that might normally have taken two years or more using traditional techniques.

The lab works closely with a small group of beta customers, designing new processes. This group includes a diverse range of organisations to reflect the wider Scottish Widows corporate customer base. Code is created in fortnightly sprints although individual changes may actually be spread across multiple sprints. This is standard practice for agile development but a big departure from the way financial institutions normally build things. It demonstrates a significant cultural change. Working closely with real customers enables far more focus on what will really help the employers. Bugs and challenges can be ironed out as they emerge rather than having to spend months waiting for fixes later.

Having developed the services in partnership with their beta customers these are then rolled out to a pilot group of around 125 employers for further testing.

The process also includes a number of adviser firms who operate third party services for employers. Once their feedback has also been factored in, changes are moved to the live environment for the wider community of Scottish Widows corporate customers.

The lab has focused on identifying and transforming high demand issues so it is no surprise that the first manifestation of these changes is a new contribution process. These can now be operated without any human intervention. It is important to acknowledge that the company is not digitising for the sake of digitising, but transforming the transactions it makes sense to change.

Importantly, certain transactions where a human element is essential, such as transfers out and death claims, are still supported by real people. While the contribution collection capability is the first product of these changes, Scottish Widows has in parallel created a new ecosystem onto which it can apply further developments, enabling swift deployment of new features to customers within a short period of time.

This should enable Scottish Widows to respond to market changes far more quickly in the future. While the initial changes are employer focused, their next challenge is to deliver similar enhancements to members.

At the same time as delivering the new digital front end and transforming the back office systems, Scottish Widows has implemented a major operational change in the way its teams work. Staff no longer carry out specific tasks time and time again, but are able to support virtually any request that may come from an adviser or employer. Whoever fields a call is then responsible for seeing the transaction through to its conclusion, end to end, with the objective of reducing the need for callers to need to explain the same thing time and time again. Issues are no longer placed in a queue for action but acted upon by whoever fields the enquiry, unless very specialist knowledge is needed.

The company believes end to end case management enables better allocation of resources and while they will still experience peaks and troughs of demand, resources have been structured so they can bring extra people online at certain times of the month. Consequently the customer experience should be more seamless. This all makes sense – they now need to make it work, in practice, over an extended period.

Scottish Widows is definitely moving in the right direction. The real test will be can it make this new approach its normal way of doing business. Significant changes have been made and it is good to see the first results so soon. They do however need to maintain this over the long term and deliver real benefits across all the stakeholders, employers, scheme members and advisers. If this can be achieved, they will be very well placed to be a strategic business partner for corporate advisers for many years.