Keys to success

This year we will see a significant 'step-change' in the technology that is readily available to financial intermediaries. Nowhere will these changes be experienced more than in the protection industry. The emphasis is on the word 'readily' because it is not just about what is out there but what is accessible, affordable and of practical benefit to intermediaries.

The step-change that we will see is being driven by market forces. The shape of the industry is changing and the way intermediaries operate will change with it. As a result, any business application that intermediaries use must evolve to meet the new requirements. Technology is certainly no exception. And, as the changing nature of our industry will place greater importance on the use of technology it is crucial that technological developments closely mimic intermediary requirements.

The external pressures that are forcing our industry to change are numerous. The poor state of world equity markets, an increasingly demanding public and regulatory upheaval are the three principal drivers.

There is little that can be done about world equity markets but the other two factors are inextricably linked and are having a major impact. With greater access to financial information and analysis via traditional media and the internet, consumers are becoming more financially aware. Coupled with this the driving forces behind many of the Financial Services Authority's (FSA) recent consultation papers and regulatory reviews are the objectives to make financial products easier to understand and more accessible to consumers.

Keeping up

Whether they meet these objectives remains to be seen. There has been a plethora of consultation papers over the last 18 months or so and for the majority of smaller businesses it can be hard to keep up. Certainly CP166 and the resulting changes to the polarisation rules is one of the most important of recent times.

CP166 was a welcome update to the original CP121 proposals for depolarisation. It will allow the independent sector to continue largely as it is. There will be little, if any fall-out to the multi-tie market. This will mainly be created out of an expansion of the tied market.

In addition, it is unlikely that the independent sector will lose clients to multi-tied advisers. These will be targeting the lower earning mass market. High-net worth individuals, with more complex financial affairs, will still seek independent advice.

Indeed, there is a significant opportunity for all companies, providers, distributors and independent advisers alike, to expand their businesses and offer different types of advice to different types of customer.

Companies have been constrained for so long by the polarisation regime that it may be difficult for them to change quickly enough to take advantage of the huge range of business models that are now possible. In a way, companies have been let out of jail and it will be interesting to see whether they embrace the free world or run back into their cells.

Without a doubt it will be the companies that are creative and flexible enough to initiate changes to their business processes that will be the winners.

Yet depolarisation is only part of the story. Specific to the protection sector we have statutory regulation of general insurance, including non-investment life assurance, critical illness, income protection and long term care, due to commence in 2004. We also have the prospect of a new suite of low cost, simple financial products that may include a protection product, as proposed by Ron Sandler.

Moreover, anecdotal evidence suggests that many more intermediaries have their sights on the protection market. The so-called 1% world, combined with the prevailing depressed stock market has led many traditional life and pensions intermediaries to look at personal lines and health protection sales to bolster their income.

The combination of proposed regulatory change and greater consumer sophistication are forcing the whole industry to look for ways to reduce costs, increase efficiency and improve customer service. There are many factors that can contribute to achieving these three requirements but technology can undoubtedly play a pivotal role.

Regular interaction with customers tells us that there is an increasing focus on holistic financial advice. IFAs want to provide a professional, efficient service which results in a long-term client relationship with appropriate financial advice given at the relevant milestones. The emphasis is on customer relationship management. Advisers do not want to be bogged down with unnecessary administration ' rather they value the freedom and time to provide a first class service to their clients.

Technical support

This is where technology can really add value to an intermediary. It can help streamline some of the administrative tasks that are currently part of an adviser's business process, reducing the costs associated with employing staff purely to handle administration.

There are many areas where technology is already helping intermediary firms reduce their administrative burden. Product research and comparative quotes are two areas where technology has become integral to intermediaries' business processes. Comparative quotes can now be retrieved via industry portals in a matter of minutes. Writing or phoning each company individually and manually could take a few days.

With online portals now being used by the majority of advisers, they are the obvious route via which to deliver the next significant technological developments to the intermediary market. This comes back to the objective of making technology easily accessible and affordable.

If new functionality can be introduced via the portals that intermediaries currently use it makes it much easier for them to incorporate it into their way of working. The technology is familiar to them in the way it looks and operates and it is already on their PC so there are no expensive set-up or configuration costs. Portals are also able to aggregate data from multiple providers so they offer intermediaries access to consistent processes. Moreover, only one password and log-in is required.

In line with the changing requirements of intermediaries, the new services will focus on helping them manage their client relationships and reducing the administrative burden. For the first time we will see a client database becoming integrated into portal services. Client details will be entered once and used across multiple services removing the need for IFAs, para planners and their administrators to enter the same type of data up to five times.

All the existing portal functions, such as quotations and online applications, will still be integral to service but in addition IFAs will be able to receive client-servicing data from providers direct to their desktop and processing times for new business will be reduced.

The client servicing data that intermediaries will be able to access can add significant value to their business. To date many intermediaries have been reluctant to submit business electronically. There are many factors contributing to this reluctance but one of the main ones is that intermediaries do not see any value to them in doing it. They see it as helping out the providers, which no longer have to enter data onto their systems because they receive it electronically. With the new functionality intermediaries will be able to track the progress of applications online once they have been submitted electronically. This is giving something back to the intermediary and will hopefully encourage the uptake of electronic new business services.

In addition, further client servicing data in the form of aggregated policy valuations is likely to be made available to intermediaries. In the same way that comparative quotations benefited IFAs on a pre-sales basis, this will significantly reduce an intermediary's administrative burden post-sale and will give them instant access to up-to-date policy information as and when clients request it.

These are just some of the added functions we are likely to see from intermediary portals in the near future. It is clear that as well as causing many headaches for intermediaries, the changing nature of the industry will deliver many benefits. Technology suppliers are aware that there is likely to be increased demands for innovative services that can help intermediaries thrive in the face of change and this will drive the development of new services that will deliver practical benefits to them.

Intermediaries need to embrace new technology, take advantage of the support and training courses that will accompany new launches and ensure they are well positioned to continue to operate successfully in this dynamic industry.

Charlie Musson is marketing manager at The Exchange