On the very day that last week's Money Marketing was going to press,
including my recommendation that it is in the IFA community's best
interests to form links with the major technology service providers, I
found myself in successive situations which served to reinforce that
During a single day, I was both impressed by the quality and extent of
co-operation going on across the industry to deliver technology to support
IFAs and horrified at the naivety and lack of research of another potential
The former situation occurred while I was leading a workshop at Origo to
demonstrate the electronic new business services that are being developed
for the industry. During this workshop, I was able to demonstrate the
software that The Exchange has developed for this process and discussed the
I understand from Misys that it expects to be able to launch its quotation
and new business system on May 19. In addition, both AssureWeb and Synaptic
Systems are committed to providing such services within the current target
date for delivery of the end of July.
Norwich Union and Legal & General made versions of their electronic forms
available for use during The Exchange demonstration and I understand that a
number other life offices are also in the last stages of developing their
At this stage, it would appear reasonable for the more
e-commerce-oriented among the IFA community to start pressing their key
business partners to confirm when they will have their electronic forms
The general reaction from those IFAs present was that the services
outlined could be seen to offer benefits both for advisers and life offices
compared with conventional paper-based systems.
With 12 life offices now participating in the implementation phase of this
project, any life office in the bond market that does not have a specific
delivery date for its elec- tronic forms capability will inevitably lose
its competitive edge by the end of this year, no doubt with a consequent
loss of market share.
It was with a mood of optimism after such a positive reaction from the
assembled IFAs that I called my office to collect messages. Among these was
one from a “journalist” who I had never heard of writing about the effect
of e-commerce on the IFA market.
After a few minutes talking to the “journalist”, it transpired that he was
working for a web design company and the output was not for publication but
clearly part of some early business plan that was being assembled.
Suddenly, the grim reality dawned on me that this was yet another
organisation which knows nothing about our industry, thinking that life and
pension offices' coffers are overflowing with cash that they will be all
too willing to send in its direction based upon promises of an electronic
Most product providers are being deluged by such proposals and one of the
most common complaints I am hearing from life office e-commerce directors
is that they are simply not going to have the resources to support all the
different proposals being put forward.
There is a very real risk that too many service providers will dilute the
overall benefits to the industry and undermine the ability of the market to
achieve critical mass. I believe this is exactly the situation that has for
many years undermined the quality of back-office software available to
Too many small companies with inadequate financial resources and
development budgets have meant that IFAs have received lamentable quality
for their software licence fees.
Against this background, it is not surprising that Origo recently received
support from its sponsors to seek to promote a set of common guidelines for
the so-called portals or service providers to adopt in order to bring about
more effective relationships with life offices.
Generally, I believe this is a positive step although it does create many
challenges that Origo will need to meet. First, any operating guidelines
must be achieved by consensus. To be fair to Origo, it has already made it
clear that there are certain areas that it cannot enter. These specifically
revolve around commercial terms and pricing.
Any attempt to deal with such matters centrally would be surrounded by the
risk of anti-competitive practices and Origo is wise to make it clear from
outset that these are no-go areas.
It is equally important to make it clear that the industry is well beyond
the stage where it is reasonable to expect life offices to fund the
development of new services.
Misys has committed around 50m to the development of its portals, The
Exchange is funding its develop- ments from capital reserves and DBS
recently raised 10m from shareholders to develop AssureWeb.
This does not mean that individual product providers should not invest in
such propositions but the investment decisions must be made in purely
The guidelines, as recently circulated to the various service providers
and portals, seek to identify a framework that will have benefits for
consumers, product providers and advisers, not least by accelerating the
deployment of a wide variety of e-commerce tools.
There may still be situations where individual commercial partners elect
to operate outside the guidelines for valid commercial reasons.
One of the biggest challenges facing Origo in fulfilling this new role
will be creating an environment where companies not traditionally involved
in financial services will be prepared to accept their role in defining
standards and other operational practices. In the US, non-financial
services providers are taking a greater role in the provision of financial
information and advice.
AOL, Quicken and CNN are just three examples of massive consumer brands
moving in this direction. It can only be a matter of time before similar
media organisations in the UK start demonstrating such aspirations due to
the intangible nature of financial services products.
Achieving an environment that can support everyone will require
considerable skill and diplomacy and, in being prepared to take on this
role, Origo is offering to fulfil a further valuable role for its sponsors.
If the industry co-oper- ates – and in this I include the service
providers – there will be an excellent opportunity to benefit from such
arrangements. But it will be necessary for service providers, life offices
and Origo to exhibit flexibility and understanding of each other's
Ian McKenna is a consultant and director of The Financial Technology
Centre. He can be contacted by email at: IanMcKenna@MSN.com Tel: 0207-359
Fax: 0207-359 2858