BT briefed providers and a number of industry experts last week, unveiling plans to create a high-speed secure platform and access point for advisers to transact business.
At its core is a proposal to build a new communications hub between advisers and providers. BT believes the proposal has the potential to reduce industry costs, including saving advisers hundred of pounds in communication costs, in addition to increasing the take up of e-commerce.
It believes its technology can help provide better third- party links between IFAs and portals, software providers and wraps. BT says it already provides a similar service, called Radianz, for the banking investment sector.
The move does not come as a surprise to many industry e-commerce players, who have seen several telecommunications and IT companies try to move into the financial advice sector.
Technology & Technical director Nicola Mitchell describes the new proposal as something of a “phoenix from the flames” following previous attempts to create hubs and portals for the advice industry.
She says: “There have been many abortive attempts in the past 10 years, one of the most notable being the Polaris venture set up by a number of providers. It was aimed mainly at the general insurance sector and backed by IBM, among others. But without a large consensus of support from key providers, this and other portal initiatives fell by the wayside.
“No entry into this market can be done unilaterally, regardless of the financial muscle behind some of these big blue chips – it is just not feasible. BT has hopped in and out of this sector, as have Microsoft and IBM, and none has succeeded to date.”
Industry consultant and wrap developer Stan Kirk says variations of the BT proposal have been floated around for some years but any plan to improve the infrastructure that advisers have to deal with would be welcome.
However, he says providers would have to fix their own admin systems in order to cope with the increased capacity that would be created.
He says: “Anything which speeds up the woeful response and processing times from so much of the retail life, pension and investment industry is to be welcomed but the effect is like introducing a few miles of pristine new four-lane motorway so that you arrive at the next jam a bit quicker.
“In most cases, the real jam is the provider legacy administration systems, which cannot cope with 21st century instant communication and data transfer speeds.”
Documents seen by Money Marketing suggest that BT is looking at creating a member portal which could involve integration with existing portals, wrap platforms and the creation of an e-governance gateway.
The existing user base of the three main industry portals – Assureweb, The Exchange and Webline – numbering around 50,000 individuals, certainly represents a primary target for any telecoms supplier.
But there could be unease among e-services providers if the BT hub looked to compete in this area.
Suppliers such Vertex or Capita, which own The Exchange and Webline respectively, have invested in the adviser marketplace and worked to create relation-ships with major product providers.
A Vertex spokesperson says: “Looking at their research to date, they are clearly at a very early stage in their explorations and will no doubt need to refine their proposition quite substantially before there is anything solid to consider.”
Assureweb is more receptive, suggesting that the move could be benefit the portal. Chief operating officer Andrew Simon says: “Assureweb would be interested in powering some of the services that BT might be offering. From that perspective, we would welcome the opportunity.”
Norwich Union head of e-business Billy Burnside, who attended the presentation last week, says: “It is very early days but if you look at Assureweb or The Exchange or any other portals, there is potential for them to benefit from this underlying infrastructure. It does not mean they will be a competitor.”
Burnside says providers are sitting up and taking notice of what BT is looking to offer. He says the technology that BT can bring to the industry is impressive and better than what is currently available. He says: “When an organi- sation like BT approaches you, you take an interest.
“Pulling all the components together through an organisation like BT could potentially be quite a beneficial service for the industry. We are very keen to work with BT to shape what that proposition could be and will then make a decision collectively with the other providers if it is going to be a flyer or not.”
The documents seen by Money Marketing include plans for five providers potentially to take a stake in the new hub but the industry is sceptical that such a funding plan would work.
Mitchell says the plans would be “short-sighted” as the hub would only serve a commercial purpose if it has access to independent distribution, which may be threatened if it was owned by a few providers.
She says: “A hub or portal can only prove valuable to advisers if it is able to supply market-wide data from a sufficiently large cross-section of the industry to make best advice viable. It is not just the hub provider which must invest to build such a system. The business load and depen- dency on other partners is a significant one.”