Working together

Technology has been playing a key role in the protection market for some time. However, the way technology is being used now is just the tip of the iceberg. What we are beginning to see is the consolidation of much hard work and investment to create IT systems that will enable IFAs to take advantage of the real benefits of e-commerce.

IFAs have been adopting technology to support various parts of their business process at an ever-increasing rate. Not so long ago they would perhaps use technology to carry out some research or to get a comparative quote. Now there are applications available to support the entire sales chain, from lead generation to client servicing.

The challenge we now face is to make sure intermediaries are getting the most out of technology and can start to realise the business benefit from true e-commerce, as opposed to standalone applications. The key to all this is integration.

The majority of financial intermediaries working in the protection market probably use an online comparative quotation service and online product research tools. An increasing number are downloading product information and key features documents from portals and provider extranet sites. The latest development has been the emergence of online transactions which, while still early days, are starting to increase in volume.

Most of this technology supports the IFA around the actual sale of a product. But there is also the technology available to support an IFA's pre-sale activity and their back office administration.

There is a full range of electronic fact finds available for term assurance, critical illness, whole of life, income protection, family income benefit and so on. There are also tools that can support the IFA's needs analysis process. Notice the use of the word 'support' because technology cannot replace the IFA when it comes to needs analysis. This is where IFAs use their knowledge and experience of the industry, the products and their client to add real value.

The way forward

In the back office the advantages of technology become very apparent as it can greatly reduce the amount of administration work that needs to be carried out. On a practical basis, a back office system can automate the commission handling process. With commission feeds coming in directly from product providers the IFA can quickly and easily check commission status and automatically manage the commission checking process.

Increasingly IFAs are viewing technology as the ideal means through which to help them improve client service. By providing a single view of client data a back office administration system gives an IFA easy access to full records of each client's financial product holdings, product applications and quotations. Electronic links to product providers can ensure policy and fund information is always current and this information can be provided direct to the client via the IFA's website.

In today's market, where IFAs are having to work within tighter margins and compete with new distribution channels, it is essential they protect their existing customer base and find ways of increasing the amount of business they generate from it.

This is where effective customer relationship management (CRM) comes in. CRM technology can enable a single view of client data, giving IFAs a clear picture of historical activity and helping to identify future needs.

If this data is held centrally, rather than scattered among different filing systems, CRM tools can help mine the data and create further business opportunities. For example, an IFA could search their records to find all clients between specific age ranges who bought term policies from a particular provider, with a view to rebroking to take advantage of more competitive rates. Instantly the IFA has a warm prospect list they can market and potentially sell products to.

Completing the circle

If the business is won we have essentially completed a full circle from fact find to new business generation with technology supporting every step of the process. Underpinning all this is compliance. If all processes are carried out electronically, the IFA has a full online audit trail. This enables them to audit their own compliance as well as keeping the regulator happy.

At the moment, if an IFA uses some or all of this technology they probably do not get it from one solutions provider. This creates two problems. First, they have to pay separately for each element and are thus not benefiting from the economies of scale of using a single supplier. Second, it means all the components they use work independently of each other.

The key now is to integrate all this technology into a single technology platform upon which an IFA can run their entire business ' this is the rest of the iceberg that is just emerging. Every stage will be integrated with the next to create an end-to-end solution. From fact finding and initial contact, through quotes and transaction, to policy servicing and client management, IFAs will have access to integrated technology that will reduce the administrative costs of doing business. IFAs will only have to enter data once, after which all client information will appear pre-populated, whichever part of the system the IFA is using.

One of the main concerns of IFAs is over the investment they need to make, both in terms of time and money, to build an IT system with this level of functionality. To buy the hardware needed can often be expensive and simply unaffordable for all but the largest IFA firms.

The real beauty of the end-to-end solution is that it can be hosted and managed by a third party. IFAs do not require a large IT infrastructure in their office. The e-commerce tools and services are hosted by a third party on high performance web servers and the IFA accesses them from their existing desktop computer. This keeps the costs of using the latest technologies to a minimum and removes the need to have expensive hardware on the balance sheet that is not counted as an asset by the regulators.

Research shows that IFAs are willing to accept this way of working, but they do have some concerns. In a recent survey we conducted, 38% rated 'security of data' as their biggest concern. In fact, the data may be safer than it is at the moment. The third party host of these services is contractually bound to protect the data and so have to invest heavily in security and back up systems. How many IFAs back up all their key business information at the moment and more importantly, test those back up systems on a regular basis?

Online costs

Other concerns are the cost of being online all the time and the time it takes to download the data. However, the increasing number of affordable, high-speed connection deals available today can make permanent connection to a third party server a cost-effective reality.

The technology is available ' but integration is the key. Once back office functions are integrated with existing quote and transaction services we will have the office of the future. Quote systems will be integrated with new business systems so IFAs can pre-populate the application forms with data from the quote screen. Back office systems will be integrated with new business systems so the client data can be stored automatically with no need to re-enter all the details.

No one is naive enough to believe the manual way of writing business will disappear. There will always be those IFAs and even product providers who prefer to work this way. Indeed, some believe more complex protection products such as long-term care and income protection will always be transacted using paper.

But the key issue here is that there is nothing to prevent these products being quoted, applied for and serviced electronically, with the needs analysis and advice elements still requiring an IFA's personal skills and being face-to-face. Technology can simply relieve the administrative burden on an IFA's business.

The technology is available today to help IFAs at every stage of the business process, from needs analysis, through transaction to client servicing, with training and compliance functionality built in across the whole process. When it is all integrated into a single technology platform it will have the potential to streamline an IFA's business enabling them to save time, reduce costs and deliver improved levels of customer service.