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Inside edge

Money Marketing recently covered a report by Cap Gemini Ernst & Young which claimed that life companies&#39 consumer-facing-commerce strategies have failed to deliver.

This conclusion is not surprising. The industry has been aware for a while now that consumers&#39 use of the internet to purchase financial products, particularly more complex products such as mortgages and pensions, has not grown as quickly as once anticipated.

The report goes on to state that the focus for-commerce strategies now has to be to encourage IFAs to deal with product providers online. Only by doing this will they be able to achieve the cost savings from-commerce that they need to prosper in the emerging market of lower margins.

This is a view that has my total support. I think it is excellent news for the IFA community. Not only will product providers benefit from interacting with IFAs electronically but there will be significant efficiency and cost savings for IFAs as well.

What we need now is a concerted effort by product providers and technology service providers to make it easy and worthwhile for IFAs to submit new business application forms electronically. The systems have been in place for a while now but there are a number of factors getting in the way of the widespread use of these services by IFAs.

Currently, IFAs are not incentivised to use these new services and so are reluctant to change the way they conduct business, particularly if there is still a need for paperwork that duplicates some of the process.

What we need to see from product providers is the introduction of exclusive products that can only be transacted electronically.

These-products need to offer improved terms for IFAs and their clients to encourage IFAs to change their business processes and submit their applications electronically.

The first-products are already being sold by IFAs but when they become more widely available we will see more and more IFAs moving towards this way of doing business.

Provider and product availability are also key issues. It is still early days and there are still relatively few providers which will accept application forms electronically. The products for which IFAs can submit forms online is currently focused on bonds, term insurance and only very recently pensions. Once IFAs can submit forms for the majority of products to the majority of providers, they may be more inclined to invest the time and resources into adopting electronic transmission processes in their business.

The final hurdle is the integration of these new business services into the back office of the IFA. If they are not integrated, all the client details have to be entered twice – once into the new business service and again into the back-office admin system. This is creating more work for IFAs, so why should they start using the new business services in the first place?

This is an issue for the service providers.

Sean Crawford of Cap Gemini Ernst & Young quite rightly points out that if IFAs are going to be encouraged to use online services, the online experience has to be good.

Despite the uninformed view recently expressed by one of our competitors just entering this market, The Exchange is not just a quotation engine.

We are an independent software house that does not own distribution and as a result we have to be the provider of choice.

We are already enabling IFAs to transact electronically with product providers and are working towards true end-to-end processing for delivery in early 2001.

We will continue to work with both sides of the process to ensure they can achieve the cost savings that they are undoubtedly seeking from-commerce.

Jim Gaskin is managing director of The Exchange


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