By Tom Murray, Head of Product Strategy for LifePlus Solutions at Majesco.
The prime area for all businesses to assess is any areas that involve direct, face-to-face interaction between the customer, or prospective customer, and the organisation. In the case of the life and pension industry, this is primarily the interaction between the customers and sales agents, whether they be direct sellers or independent brokers.
But moving from a person-to-person approach to a completely direct to consumer approach is a major shift and would abandon a huge section of the market who still need advice from financial professionals in order to manage their financial affairs. This is a key area for a market in which products are still primarily sold and not bought.
For simpler products, the move to direct to consumer sales was already well underway and this will be accelerated by the new environment post the lockdown. However, these simple insurance products are only the tip of the iceberg for the financial sector. Most people would benefit from more complex protection and investment products, but suitability is something that needs a higher level of expertise in financial products than most people possess.
Robo-advisers are the ideal solution for those looking for financial advice, but who do not necessarily want to meet up with an adviser. Also, given the cost of advice, they are a key factor in being able to expand the market for complex products beyond those who can afford face-to-face advice, which is highly expensive. This requires a platform which enables the provision of advice linked to straight through processing that allows for the policy purchase or alteration to be completed without human intervention.
There remains the question of those who want advice from a professional but don’t want to meet up for the long sessions that are generally involved in completing a holistic financial review and a full financial plan.
Life and pension providers need to put in place a flexible platform – one that allows direct to consumer sales but also provides a robo-adviser that can give consumers access to fully regulated financial advice with human interaction. However, there is also a half-way house where the robo-adviser can be used by the agent to manage remote sales, giving the consumer the intimacy of dealing with a person whilst allowing the system to make the recommendations and monitor the sales process to ensure it is fully compliant with the regulations.
What the life and pension providers need, therefore, is a flexible platform that supports both Business to Consumer (B2C) transactions as well as Business to Business to Consumer (B2B2C) transactions. This will enable the life and pension provider to not only support their current distribution processes but will enable them to exploit the growing market of those who want financial products but cannot afford the advice processes.
A broad platform which encompasses all this and is part of a broad ecosystem will allow the creation of products and services that will meet the needs of the market post-lockdown. This will have to support the rapid development of products and services and the support of new distribution channels that are acceptable in this new socially distanced environment.
The platform should also be intuitive to use, allowing consumers to manage their own financial affairs. This will also enable it to be used by a distributed workforce, so that services can easily be maintained in the event of a new total or localised lockdown.
The new environment calls for major flexibility from life and pension providers. The nature of their product set, their distribution channels and the demands from the marketplace means that they need to be able to respond quickly and flexibly as the new normal evolves. Their system needs to empower this speed and dynamic approach, not hinder it. Platforms that empower and enable the company to create new products and services whilst still maintaining access to their legacy systems, with their vast trove of information, will be essential for companies looking to thrive in this uncertain future. It’s time for life and pension providers to assess their capabilities and ensure that they have the infrastructure to succeed.
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