More powerful data transmission channels will be needed to meet demand for information, says Ian McKenna, director of the Finance & Technology Research Centre
I recently had the opportunity to sit in at the first full meeting of Workplace Forum, the new industry collaboration group which is being facilitated by my colleagues at F&TRC. It brings together key industry players to create a more efficient environment and better services for employers and scheme members, as well as reducing industry costs.
The initial projects and activities for the group will be communicated in the near future, but it is already clear that there is both a need and an appetite for employee benefit providers, consultants and corporate advisers to work in partnership to understand how information can be communicated in consistent forms thus streamlining processes.
A consistent theme emerged around the need for more information to be supplied to more people more regularly. Existing systems have emerged in ways that have best suited needs at the time. But there is an increasing need for consistency moving forward if the ability to deliver new, information rich services is not to be constrained.
There are many major initiatives in the marketplace designed to deliver far more functional services to the members of corporate schemes. But this does make me question if we have all the infrastructure in place necessary to support wider services. As the new workplace and corporate wrap propositions come to market it will be essential to their success for organisations to learn from mistakes that have been made in the individual market platforms.
It is worth remembering that one of the major factors in the demise of Northern Rock was the failure of their online banking service
In the individual arena, platforms have very much become known as vehicles for new investments. They have failed to deliver aggregation of customers’ existing assets and consequently are under threat from advisers’ own client management systems as software suppliers often build the content to power advisers’ own websites.
Last year I wrote a paper for the individual platform community entitled “Client Management Systems, Friend or Foe?” It has been fascinating to see different platforms perspective on this issue. In practice many of these client management systems are now plugging in the trading capability that will give them the ability to replace the platform in many respects. System providers are only able to achieve this as they have built the ability to aggregate values on customers’ existing assets, using the so-called Contract Enquiry services as well as new investments.
In order to fully meet consumers’ needs it is essential that providers are as able to deliver information on their legacy books as they are on current products. Some providers have made great strides in this area in recent times – Aviva would be a name that particularly comes to mind – but all too often I find myself talking to advisers who are frustrated by the limitations to data on historic contracts. If, as an industry, we appear to be encouraging consumers to expect a rich vein of information from their benefits providers this needs to be delivered across all contracts and all providers.
Equally, insurers need to be certain that their systems will have scalability to deal with peaks of demand. Whilst it may normally be easy to predict when these will take place, occasional market events such as those in the autumn of 2008 could drive large numbers of consumers to press the update button on their phones’ internet connections in a very short period. How many systems could cope with a 100-fold increase in requests for information?
In reality it is not a question of if but when such events next take place.
Once consumers are used to using such services, if they suddenly become unavailable this could cause major concerns. It is worth remembering that one of the major factors in the demise of Northern Rock was the failure of their online banking service. Whilst not suggesting that insurers’ liquidity would be similarly at risk, there must be a real threat to reputation and brand should services fail.
With more and more organisations, consultants and providers building their own online portals, it will be important not to underestimate the scale of support necessary to meet peak demand. Mobile internet services are already growing far faster than fixed line Internet achieved in the early years.
It is already predicted that mobile internet connections will exceed fixed lines by 2014. The ability of consumers to access online services at any time in any place, combined with the plethora of new services being launched, suggests to me that prudent planning should now allow for at the very least a tenfold increase in service requests in the next three years, even before considering the capacity necessary to cope with market events.