One of the inevitable consequences of writing a regular column like this is that lots of people approach you with their ideas on how to move forward with industry e-commerce. I try to filter these and concentrate on the good ones. However, every once in a while I am approached on something where my reaction is similar to John McEnroe disputing a line call. “You cannot be serious!” The latest example of this was when I was invited to look at a new service from Key Software Solutions which aims to get IFAs completing electronic versions of paper applications in order to reduce the number of errors that emanate from paper forms.
This is, of course, an entirely laudable aim. However, it is important to recognise that to have any chance of success, such a service must make life easier for advisers and providers.
For the sake of clarity, I should make it clear that Key Software is not in any way connected with Quay Software, which produces Link, one of the more popular IFA back-office systems.
In this case, the idea is that advisers download applications and documents in PDF format from a central repository and comp-lete these on screen. Key Software contends that doing so will reduce errors and so help life offices.
To use this service, an adviser will require good keyboard skills, hardly an abundant commodity among a male-dominated IFA community with an average age in their 50s.
Essentially, advisers are being asked to relinquish the paper-based forms which they can complete quickly and use electronic forms into which they need to type information. These are then printed and sent to the life office, just like a paper application.
At the time when I examined the service, the only interactive form on the system was a proposal for Scottish Widows' stakeholder pension although there were a number of static forms from Lutine, Skandia and Swiss Life – hardly what one would call a well populated service.
The validation did appear to work successfully on the Scottish Widows form but I am at a loss to see why an IFA would bother with this approach.
The life and pension industry is littered with e-commerce initiatives that, had they succeeded, would have created economies for product providers. All too often, the reason why they fail is because they do not in any way improve things for IFAs. This latest initiative, however, is rather unique in that not only does it fail to deliver benefits to IFAs, as far as I can see, but it will hardly deliver anything worthwhile to life offices either.
It is my understanding that life offices want to receive validated new business applications delivered using the standard internet XML messages developed by Origo. These can be imported seamlessly into the provider's back-office systems without the need for rekeying. Use of the declaration approach also allows for the electronic submission of the XML-based application with a signature following separately. This provides the additional protection for the consumer that they receive a full copy of the data submitted by way of the confirmation schedule that is sent to them.
At the same time, an increasing number of providers are adopting a signature-free approach to protection cover, further accelerating the process, particularly where no additional medical evidence is required. By comparison, I just cannot see the point of this service from Key Software.
It is a sad fact of life in our industry that something approaching 40 per cent of paper-based applications need additional follow-up from the life office because of missing or conflicting information. It is not surprising that life companies want to reduce the need for such activity.
An increasing number of providers have had some success in making available validated electronic applications via their extranets. From a number of conversations I have had recently, these companies are achieving significant savings in processing costs on new business acquired this way, even after paying additional commission to IFAs for the extra effort it creates for them.
In the main, however, this does not mean that they are able to take advantage of reusing the significant amount of information that sits on the adviser's own systems. There is an increasing body of evidence that it is this functionality that will finally persuade advisers that it is worth the additional effort that learning to submit electronically involves.
A few weeks ago, I gave examples on this page of the dramatic level of take-up of electronic applications that Legal & General is achieving with its Choices range. Reuse of data already contained in adviser systems is at the heart of this initiative.
Life offices want to benefit from what is known as straight-through processing, whereby they receive data electronically and it goes straight through their system without data having to be entered manually and with any manual intervention avoided or kept to an absolute minimum.
If we can create an environment where advisers make maximum use of the information they have already collected as part of the fact-find process or in previous dealing with a client, we can begin to restrict the amount of data they have to key in to a level where it really will be quicker than a manual form. Combine this with the reduction in errors that can be achieved by validation – which one industry study showed as reducing errors from 40 per cent to 4 per cent – and you begin to have a worthwhile proposition for everyone.
I understand the argument that e-commerce should be achieved by a series of small deliverable changes but each change must still deliver some significant benefits for all parts of the trading community, otherwise the chance of adoption is minimal.
The www.advisertools.co.uk site, from which these applications are downloaded, offers the potential of a wealth of other information to assist IFAs. However, in just a few minutes surfing around the service, it was clear that much of this is far from fully populated, with whole sections of the service being marked as “data being updated”.
To come up with a solution that ignores all the adviser's existing client data sitting in their back-office systems, that requires advisers to type in information and delivers in a format that has then to be scanned or manually entered into the provider's systems is sheer folly. If this is all e-commerce can deliver in the 21st Century, we might be better sticking with paper.
Hopefully, providers will focus on solutions that can deliver value to all concerned rather than just using technology for its own sake.