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Waiting on line

Millions of pounds have been invested in the development of online new business systems, promising to provide complete online transactions and reduced costs across the industry.

Why is it then that so few IFAs are using it and so many more are in the dark over its availability and purpose?

It might be helpful to give a bit of background on what online new business systems do and where they come from.

They are online methods of selecting, buying and, in some cases, administering financial products. An IFA can work offline to complete data entry and then go online to send

a transaction directly to the product provider.

The better-known new business systems rely on the use of PAC-based technology, which is provided by companies such as Focus Software, Synaptic and Misys.

The advantage of the PAC-based systems probably lies in the standardisation of format, which should provide a familiar look and feel for most IFAs who are familiar with Microsoft&#39s email software such as Outlook and Outlook Express. PAC-based new business systems use similar menu structures and icons to give clear information on the status of the online new business – tracking responses, confirmations and keeping copies of all activity, for easy reference.

Despite the vast sums of money invested in these types of technology, few IFA firms have used online new business and are unlikely to do so as they stand.

Among the bigger IFA firms which have new business systems, many feel the reason for its disappointing take-up lies in the failure of communication between providers, portals and IFA firms before launching the systems, with blame apportioned fairly equ-ally among these parties.

One of the most successful advocates of new business technology is Towry Law. It believes its success is down to its efforts in building a more complete business process around the technology.

Towry Law product services director Charles Levitt-Scrivener says: “We reviewed the process for administering new business and found that while the technology was

built, the business processes were not and we needed a

complete solution which handled the business requirements, linking to our centralised processing and report team (reason-why letters).

“In the longer term, we think there will be cost savings as you remove duplication of tasks but in the shorter term we have had to make a considerable investment which may well be beyond the capabilities of many smaller IFA firms.”

The cost savings for Towry Law have come from not reworking paper-based applications, with error rates dropping significantly. Its own sampling research has shown

a substantial drop in errors from 40 per cent to 9 per cent.

This is an excellent case study of the proof in the new business pudding but even Towry Law admits similar savings are probably beyond most of the IFA sector as the services available via portals and extra-nets lack the process design

and change management.

The issue is not just about the advantages of straight-through processing but, more important, the feedback loop between IFA and provider. Without this centralised resource, the benefits of using online systems may well be beyond most of the customer base that they have been designed to assist.

Financial Technology Research Centre director Ian McKenna, one of the architects of the new business initiative, says the response from insurers could well be a significant contributor to the slow take-up of new business.

McKenna says: “The new business project went off track during the development process. There are very real benefits to providers from receiving validated new business electronically. As originally conceived, this would have been an easy process for IFAs to work with.

“Sadly, a small number of insurers argued the most valuable elements for the IFAs from the process during the implementation work. There were also some key commercial issues which were not properly addressed as the project progressed. The IFAs involved repeatedly flagged these but some people chose not to act on them. This has directly contributed to the failure of the project.”

Greater success with a broader IFA community has been achieved by a few providers pioneering non-PAC systems – for example, the online term assurance initiative (Olta) from Legal & General, which is available via The Exchange and Assureweb portals, as well as from L&G&#39s own extranet.

L&G launched Olta with Exchange FS in November 2000, giving it a three month exclusive. The link is embedded into its comparative term quotation service and enables users to move easily from an L&G quote to the application process on the L&G IFA Cen- tre website. All the data entered is reused, saving users&#39 time.

Exchange FS head of life and health protection Stephen Wynne-Jones believes the positive Olta results may stem from the instant nature of the service. He says: “We have been astounded by the success of this initiative but I guess it reflects the value it is adding to IFAs&#39 processes. Getting instant cover within 10 minutes may seem more attractive than sending an application form electronically and waiting for a reply from the provider.”

Another company which has taken a successful product and developed it sensitively to maximise the benefits of working online is Synaptic, whose research product, Product Research Professional, now inc- orporates quotation and new business transaction capabilities, allowing IFAs to complete their research, get a comparative quotation and submit new business within one seamless application. Five providers are live on this system, with a further three committed.

Synaptic is also investing in training for IFAs, claiming more than 50 firms a week attend its new business training sessions, something which clearly needs to be replicated by other technology providers and insurers if the move to online working is to succeed.

Exchange FS is aware of the need to invest in incentives and support, something which it claims to be focusing on with its new parent company Marlborough Stirling. Exchange FS product marketing director Chris Baker says although the technology is available, IFAs need an incentive to submit business forms electronically.

Baker says this can be done by introducing e-products with enhanced terms for IFAs and their clients, integrating new business services with back-office systems and providing training support material for IFAs and their staff.

Baker says: “We are working with product providers to promote our electronic new business service to IFAs and provide them with the training material to get started on the system. We are developing a back-office system that will be fully integrated with our existing quotation and new business services so data can be ent-

ered just once and then shared across the entire system.”

The industry&#39s new business initiative has not received a warm reception but there are signs that those at fault are recognising their errors and making efforts to remedy them.

Whether this will be enough is a bigger question, particularly as the further invest- ment in technology and sys- tems may well prove too much for some of the key players, leaving a consolidated group of survivors to battle it out.

For most IFA firms, the answer could be to shout more loudly and wait for more user-focused solutions to emerge.


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