If it is not a marriage made in heaven, the acquisition of DBS and its
Assureweb subsidiary by Misys must be a marriage made in cyberspace.
Clearly, there is a wide range of issues that need to be addressed when
considering if the takeover in its entirety is a good thing, but from a
pure technologyperspective it has much to commend it.
Bringing together the two main competitors to the dominant position of
Exchange FS as the main provider of online services to IFAs will be no
small benefit to product providers' IT departments struggling to meet the
needs of so many competing portals.
Some fascinating market dynamics are playing out in portal space. With a
target market of over 7,000 “in-house” advisers, the combined
Assureweb/m-link business should have the capability to consolidate its
position as the second-biggest portal simply by capturing the majority of
the registered individuals associated with its parent company.
Much is made at present of the number of registered users that one or
other of the portals may have but there is little information on who
advisers use for their primary portal relationship.
When it comes to getting illustrations, from a practical perspective, I
would expect the Exchange to be the portal of choice for most advisers as
it still has a far bigger number of products and providers on its service.
But in recent months there have been clear signs that Assureweb has been
While the Exchange has a clear advantage in the quotation area, there are
many other elements involved in providing an IFA with online services.
Online commission services is an area where Assureweb is ahead of the
Exchange and, when it comes to online new business, the two companies'
capabilities are far more closely matched.
As far as delivering websites to IFAs, Assureweb has a couple of thousand
using its free IFA Window sites with several hundred opting for more
advan-ced paid-for sites.
The Exchange is known to be considerably increasing the scope of its
offering. The Office Web platform it is developing, acquired as a result of
its acquisition of Crisp Computing late last year, will enable it to
position itself right at the heart of an IFA's operation. The system is in
development so it is too early to predict its success or otherwise, but
what I have seen looks promising.
I see it as inevitable at some stage the Exchange will lose some of its
customer base, especially among the 7,000 advisers that are known to be “in
house” to Misys but I would expect it to replace such revenue by delivering
a wider range of complex services to power the advisers' own systems and
its clientfacing websites.
Ultimately, provided it can make it attractive enough, the natural IT
partner for a network member must be its network's chosen solution, given
the synergies that can be delivered via such unions. On the other hand,
many IFAs have a love-hate relationship with their networks and a desire to
maintain independence in all other ways that they can.
Although this takeover creates a very powerful competitor for the Exchange
it must gre-atly increase the importance of the Exchange to insurers, given
the emergence of the combined Assureweb/m-link business it becomes
essential there is a strong healthy competitor available. Without a healthy
and viable Exchange business, the impact of this takeover on product
providers' ability to distribute electronically would be devastating.
It is also important not to ignore the role of other players such as
Synaptic Systems and Bankhall's IFA Engine. I have long said that if I were
still practising as an IFA, the former's system would be the one that I
would choose to use myself.
Having recently seen some of the developments it is due to release
shortly, I continue to have a great respect for its work. IFA Engine tells
me it will be putting more of its service live very shortly and this will
be interesting to see. These organisations, too, have an important role to
play in maintaining a competitive market. While a strong Exchange is
essential to compete with the merged network-owned technology platform, the
prospect of a powerful duopoly should hold little attraction either – there
must be a range of service providers to encourage real competition.
One thing I hope will be lost in the merger of Assure-web and m-link is
the concept of everything being free to IFAs. I believeit is undermining
the extent of resources that can be allocated to IFA software and the
quality of solutions being delivered.
In my view, a movement towards paying a more realistic price for the
technology they use would lead to a higher quality of solutions being
delivered. After all, if you are paying nothing, or virtually nothing, for
your software do you really have a right to complain if it is not that good?
This is, of course, a legacy of the “life company pays” attitude of the
pre-FSA era, combined with an element “of everything is free on the
internet”. The truth, however, is that those days are long gone, even the
mighty Microsoft has recently admitted that it is not viable to run web
services purely on advertising sales.
If IFAs really want to have everything delivered to them for free perhaps
they should be looking to move into a multi-tie environment where it is
likely to be more acceptable for providers to provide highly sophisticated
Although recent research shows that the vast majority of advisers are
fiercely resistant to the concept of moving to multi-ties, if the powers
that be decide that some element of depolarisation could be in the
interests of consumers, I bel-ieve they may find that such an environment
might have major benefits for themselves and their clients.
Technology is like everything else in life – you get what you pay for.
Consolidation in the portal market is a good thing. It will enable a small
number of players to achieve critical mass and deliver quality solutions at
affordable prices although I would expect this to cost rather more than the
levels currently being paid by advisers.