Too many new initiatives are ignoring the obvious foundation available from
which to build on
Last month’s Budget documents confirmed the government is supporting the pension dashboard project, setting aside £5m to fund it. But the most significant part of the announcement was that the documents referenced “pension dashboards” – plural, not singular.
The clear indication we will have multiple dashboards, as opposed to just a single solution, is great news for consumers and their advisers.
For now, the move to restrict access to dashboards via the new Single Financial Guidance Body also appears to have been dismissed.
Pension dashboards made most progress under the Treasury’s leadership, so its renewed interest and direction are valuable.
But while this news is very welcome, there is still much to do to ensure maximum consumer engagement. I have been saying for several years that similar initiatives will emerge in other areas relevant to financial advice and this is now happening. In addition to the dashboard project, useful work is going on to expand a protection calculator service designed to help consumers understand the extent of income they will receive from universal credit.
Based on a service built by Policy in Practice, the proposition would make it easy for employers to demonstrate their sick pay policies and interaction with universal credit. This will help employees understand how long they would get employer or state support in the event of a long-term illness.
I warmly support the concept. However, the current thinking around deployment makes the scheme unlikely to succeed.
Apparently, a pilot will be run using the Association of British Insurers website, with the intention then being to deliver a standalone service promoted to employers.
I was recently given a demonstration of an app Aon has made available to employees of any organisation where it organises benefits. Aon was already building a similar universal credit comparison capability of its own but has respectfully paused activity, pending creation of a potential industry solution.
That said, having created a system which can unify all the third-party applications it deploys to clients’ staff, it would make no sense for Aon to promote a separate ABI-sponsored service.
Serious players in the employee benefits market are spending significant amounts building solutions, so connecting the proposed ABI service with existing technology supplied to employees is likely to attract far more users than creating a standalone proposition.
If the Policy in Practice solution were integrated via API to the Aon app and other similar services from other advisers, there would be an immediate opportunity to reach millions of employees.
It could also be complemented by quotation services, indicating the cost to the employee of buying top-up cover for income protection or similar benefits. The single best way to achieve the widest engagement with pension dashboards, protection calculators and the like is to build on services consumers already use most frequently.
For example, which do most people look at more: an online representation of their pension, their online life insurance policy documents or their online banking?
The answer is obvious and simply reinforces why it is so critical pension dashboards, protection calculators and any other services aiming to guide and inform consumers are rolled out as an extension of the open banking project, rather than created in individual silos.
Such an approach would make it far easier to deliver information via a range of services, such as benefit portals and electronic payroll systems.
The data available would also transform the way advisers could deliver their services. It would bring major savings in time and effort and make millions of consumers economically viable for firms again.
Advice firms, life companies and platforms should look to understand what is going on at Experian, Intelliflo, Moneyinfo, True Potential and Yodlee, all of whom are doing very creative work in this area. These key players can help organisations take best advantage of all a wider open personal finance infrastructure can deliver to consumers.
Success in the 21st century is about collaboration. Building individual quangos and similar governance structures will create competing empires for trade bodies and, while it might create lucrative cosy jobs for former politicians, it will produce poor consumer outcomes.
The existing open banking project provides the obvious framework from which to build out wider services by reusing the great work that has been done around governance, customer consent and so on. This will deliver a vastly better experience for consumers and reach millions more people at a fraction of the cost of operating individual projects in each area. It must make sense to unify these activities as a matter of urgency.
Ian McKenna is director of the Finance & Technology Research Centre