The introduction of stakeholder on April 6 and the provision that all businesses with five or more employees must arrange a stakeholder for their staff from October 8 opens up the possibilities of selling other financial services and products in the workplace.
Selling financial products in a work environment is not a new concept. Many companies already offer benefits such as pensions, life insurance, private medical insurance and other products and services through work-based schemes.
Surprisingly, worksite marketing remains a relatively untapped area. Over half of the UK's top 250 companies currently provide no voluntary benefits.
Today's workplace is rapidly changing, driven by consumer demand and new technology. The boundaries bet- ween work, play and home are starting to blur and employers are looking for more innovative, flexible and affordable benefit provision while their employees want choice and convenience.
Too often, company benefits are disjointed and inflexible. What is needed is a provider which can consolidate various products and services into a single scheme and offer them through a single interface or point of contact, with the ultimate objective being to attract and retain the most valuable employees.
If done well, this approach benefits everyone. Employers enhance staff satisfaction, which leads to a more motivated workforce. Employees gain access to valuable services at either a price or terms unavailable elsewhere and providers develop a new and profitable channel.
Evidence that this kind of approach pays dividends can be found in the US, where worksite providers of financial solutions have demonstrated significant and consistent growth both in long-term and annual renewal products.
Products could be packaged or combined so they are presented in a context that means something to, and is valued by, the employee.
Such contexts may include retirement planning, planning for life or moving home. These relate far more to what the consumer wants rather than a potpourri of unconnected benefits.
With the advent of new technology, what was once a wistful fancy is now becoming a distinct possibility.
Technology is opening up the possibilities, particularly with the internet. Specific packages are being made available for a range of employers after being the preserve of bigger companies. But tech-nology also makes things more affordable.
Who are the current providers of such benefit packages? They do, in fact, fall into two distinct categories. One is insurance companies, banks and building societies, which tend to have technology systems already installed. Two is the specialist benefit providers or intermediaries which very often lack the infrastructure to take advantage of what might, in some cases, be a superior product range.
What are the possibilities? How do the different players enter and compete in this marketplace? In essence, modern technology makes it much easier to package multiple products and deliver them (typically using browser technology) in a consistent manner, in this case to employees or to any affinity group (any consumer group with a common set of interests). The difficulty and the key to success lies in defining the right combination of offerings.
With the right products in place, it only remains to work out how to present them. With relatively little effort, a standard “base” solution can be tailored into an almost infinite range, each specifically tailored to the needs of particular groups.
By 2005, the worksite marketplace could be pretty crowded. As well as the usual financial services players, banks, insurance companies, intermediaries and the specialist employee benefit providers, the new entrant e-financial companies will continue to lead the way in electronic delivery. But another new player looks set to enter the marketplace and will be a considerable cause for concern.
This player will not come from the traditional world of financial services and will be a new entrant. It will be able to leverage its considerable presence in other markets to act as an employee's gateway to multiple products and services, of which finance is unlikely to be the lead proposition.
If we look at non-financial companies such as supermarkets, retailers and utility providers, all of which seem to be entering the financial services market, we can see the way the landscape is changing.
For example, Tesco's long-term strategy is to be as strong in non-food products as it is in food products. It has already entered areas such as health and beauty, mobile phones, online banking and insurance. Tesco Personal Finance has doubled its customer accounts to 1.5 million in just a year.
With a food customer base of 17 million, Tesco has much more to reap in the next few years as it pushes into web-enabled services.
Sainsbury's is a similar story. Over the last three years, Sainsbury's Bank has attracted deposits of £163.1.6bn with a customer base of 1.25 million.
What we are seeing is a convergence of markets and providers, driven by technology capabilities that enable information and service to be placed more and more into the consumer context. The challenge lies in the delivery or provision of services in a simple, cost-effective and user-friendly way. Technology will play a big part in who wins the battle of workplace marketing.
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