Business agility – the ability to respond quickly to change and stay ahead of competitors – will be crucial for IFAs and service providers as they struggle to survive in a sector where products and services are being developed faster than ever and new regulations are constantly being imposed.
However, research from BT suggests that one in 10 business leaders in financial services admit they are not agile enough to react to economic and market changes, including economic downturns and changes in customer habits.
The research found that company culture was the main barrier to responding quickly to market or economic changes for more than a quarter of respondents.
The relationship between IFAs and financial service providers is at the root of the problem. The two parties should be working in close co-operation, yet many are unable to share basic information effectively. This is costing them time and money.
Direct sales are in decline and proposed regulations could require IFAs and service providers to work even closer together in future. It is in both parties' interest to improve their partnerships if they are to survive, let alone flourish, in what is fast becoming a 1 per cent world.
Many IFAs are struggling to keep pace with the sheer range of new products, services and regulations on the market. They often find it hard to access information that would strengthen their relationships with customers.
Our research suggests they consider technology to be key to improving sales. They often blame service providers for failing to offer support by keeping them up to date with the latest developments electronically.
Their views are supported by research from the Institute of Financial Services, which suggests that many UK banks do not know their intermediaries very well. It shows that while most UK banks can provide a unified picture of customers across their branches, fewer than 40 per cent can extend this view to partners selling their products.
But with over 20,000 IFAs across the UK and an explosion in customer delivery channels, such as telephone, mobile and the internet, it is perhaps not surprising that relationships between intermediaries and providers have not been cemented effectively.
Many companies struggle to keep their own in-house staff abreast of the latest developments in their industries – how much more difficult it is to open the workings of your organisation to outsiders?
These people are not privy to many of the meetings, memos and intranet information that are taken for granted by internal staff. They need to be able to access information about customers, track the processing of a new product or study a product's performance at the touch of a button.
This is an issue that cannot be ignored. Service providers must redress the balance now if they are to make sure that they choose the right partner for the right job and exploit the benefits for both parties. But how can companies capture this kind of information to make their businesses more agile? I believe that sharing and capturing data quickly and efficiently will be key.
Many financial service providers already have the right technology at their fingertips in extranets – secure internet sites for which access can be limited to certain groups of people. The problem is that many providers are not using them properly and the level and quality of information provided by extranets is often patchy. This is a wasted opportunity since extranets are a simple and cost-effective means of communication.
Service providers also need to look towards new web-based technology, such as partnership relationship management software (developed by the motor industry for its third party distributors) which can enable intermediaries to work more closely together to achieve accurate business planning, improve sales and reduce costs. It can also help financial services make better use of their relationship managers and call-centre agents to communicate with intermediaries.
As the market becomes increasingly complex, comp-anies will have to automate procedures in order to create a more collaborative working environment. They will have to use technology to gather information about their intermediaries' capabilities and to automate workflow so that intermediaries become increasingly “self-service” orientated, reducing costs for both parties. Broadband internet will also be required to accelerate the flow of information.
Collaboration will be the key to success in the fastmoving financial services sector. Managing the relationship between product provider and seller is becoming as important as managing the relationship with customers. Both parties must recognise this if they are to become agile enough to meet the challenges ahead.