New research shows electronic business transactions are set to grow
IFAs are expected to transact £2.8bn of business electronically in 2008, according to research from Marlborough Stirling and The Exchange's annual technology index of over 350 financial services companies.
The research showed that 46% of respondents think over 50% of business will be conducted in this way, while a further 42% say it will be between 21% and 51%. The study also showed that Financial Services Authority (FSA) regulation is expected to impact the use of technology in the sector. A total of 83% of advisers believe the use of technology will increase as a result of FSA consultations and other regulatory reviews.
Of all the survey respondents, 99% believed it was 'very important' or 'important' to have modern technology in place to deal with forthcoming regulatory changes. However, 70% said they are not getting the greatest potential out of their current technology and 42% said this is attributed to a lack of expertise or training.
The advantages of using technology as a way of saving time was cited by 39% of advisers as the most important business benefit, while 30% said reduced costs to the business was the most significant benefit. A total of 24% of those questioned said technology also helped to improve customer service.
When questioned on the challenges that faced the industry, a total of 85% of advisers believed product providers are going to find it 'difficult' or 'very difficult' to deal with changes to polarisation rules and the introduction of stakeholder products due to inadequate technology.
However, 86% of those questioned said that providers are not to blame for this and say that the regulators have not considered the technology implications of a complete product or distribution review. Similarly, most IFAs believe that product providers are not sufficiently focussed on ensuring their extranet technology meets IFA requirements.
Charlie Musson, spokesperson for The Exchange, said: "These findings show that in five years our industry will be operating dramatically differently. Electronic processing will become the norm, however, to achieve this there must be co-operation between intermediaries and providers."
Diane Saunders, principal of Diane Saunders Financial Adviser, supported the findings. "Embracing technology is crucial. It speeds up transactions and makes businesses operate more efficiently. By 2005, I expect to be transacting all of my business online," she said.
