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Winner on aggregate

It can be uncanny sometimes how things can come together. No sooner had I

emailed last week&#39s article on aggregation to Money Marketing, I answered

my phone to Euan Robertson, development director of Spektra Systems, who

invited me to Livingston to look at the toolset the company has built to

assist a wide range of financial services companies with aggregation.

Possibly, I should not be too surprised as the opportunity offered by

aggregation had been high on the agenda when I ran some workshops with

Spektra recently.

I have to confess, however, to being stunned by the speed at which the

company has come up with a solution. Spektra has good credentials for

moving into the aggregation space. Over the last year, it has developed an

excellent reputation among a number of insurers for accelerating their

integration with the various IFA portals.

Speed to market is critical in our rapidly changing environment. The

sooner we have a range of fully populated portals, the sooner IFAs will

have real choice in their technology partners, so work like this is very

valuable. Spektra clients include Norwich Union, Scottish Equitable and

Standard Life, all of whom, in my experience, speak very positively about

the company.

Although I have been predicting the emergence of aggregation in the UK for

nearly two years, all of a sudden it seems to be the word on everyone&#39s

lips in the UK.

As Money Marketing reported last week, a number of players are planning to

launch aggregation services in the near future.

Most of these are direct-to-consumer offerings and it will be important

that providers which support the IFA community develop the capability to

support IFA aggregation services as a matter of urgency, otherwise the IFA

community could again be perceived as offering an inferior level of

technology support to its customers compared with some of the new direct


No summary on aggregation can be complete today without considering its

impact on depolarisation. One of the things that is increasingly worrying

me about the IFA market today is the number of advisers who consider it

unth-inkable that the FSA will not continue along the path that it has

already taken, introducing the adopted product regime for other products

after the stage two review.

To do anything other than proceed with an extension to the rule adopted

for stakeholder forces the FSA to face some unpalatable choices. It must

either admit it got it wrong when creating the new rules for stakeholder

(and we all now how often regulators admit they got it wrong, even ones who

benefit from statutory immunity) or be honest about the fact that it was

not really its decision at all but it was simply acceding to the will of

its political masters (not very likely unless William Hague or Charles

Kennedy win the general election).

What really worries me is that very little seems to be going on to prepare

for a situation where the answer to phase two ends up looking exactly the

same as the answer to phase one.

My mind flashes back to the days before the original Financial Services

Act hit the statue book. The vast majority of the soon-to-be IFA community

was completely blindsided by the legislation and, with the exception of the

excellent work done at the time by the Campaign for Independent Advice,

which ultimately began both IFA Promotion and Origo, IFAs were virtually

ignored by the Government when creating the legislation. As a result, IFAs

ended up with Fimbra, a wholly unsuitable regulator for the vast majority

of the firms it was authorising.

It is a testament to the resilience of those who call themselves IFAs

that, nearly 15 years later, they are the dominant distribution channel.

Personally, I believe we will end up seeing more change than most IFAs

would like on polarisation. The IFA community should stop just saying no

and become involved in putting forward a range of alternatives that will

allow for a mix of polarisation options.

At this point, you are probably saying, what has all this got to do with

aggregation? Actually, it has a great deal to do with it. I believe one of

the biggest weaknesses of the IFA proposition is the fact that the

indirect-benefit rule has made it far more difficult for product providers

to introduce electronic processing.

If we saw some relaxation of that rule, where it could be demonstrated to

drive down costs to consumers, aggregation technology has the potential to

vastly reduce the cost of maintaining client relationships with multiple


What makes the Spektra proposition so different from many of the other,

mainly US, aggregation solutions I have seen is that it is not primarily

based around so-called screen scraping. This is a process in which the end

customer lets the aggregator have their ID and passwords for the various

underlying services from which they want to gather information.

The technology uses the ID and passwords to present itself to the main

information provider, for example, a bank and building society, and gets

the information as if it were the customer.

I have heard it suggested in recent weeks that regulators may be

uncomfortable with this approach.

It is readily admitted by many people establishing aggregation solutions

that this is far from ideal. Although they can accommodate screen scraping,

the Spektra Open Finance Services are based around cooperation between

financial institutions. This involved the use of industrystandard messages

being exchanged between institutions in the full knowledge of the purpose

for which they are being used.

The skills needed for this are far more akin to those employed in

integrating institutions to business-to-business portals than they are to

unknowingly grabbing information from other institutions as if you are

their customer.

Although the internet is clearly the most appropriate delivery platform

for aggregation services today, these services have been built so that they

can also operate over a range of different platforms. During my discussions

with Spektra, I was shown the tools working on iDTV, Web TV, a hand-held

Compaq iPaq pocket PC and a Nokia communicator.

Although it is early days, I was very impressed by the progress that the

company seems to have made.

I believe it is essential that IFA product and service pro-viders start

taking action now to ensure we have a level playing field between the new

media players such as Virgin Money and Egg, so many of whom are expecting

to use aggregation to enhance their customer proposition, and the

advice-based intermediary, whether IFAs or the increasing number of

multi-tie advisers, who I expect to emerge after the phase two polarisation


Although aggregation is not going to take over the market overnight, in

the next couple of years, it will start to have a significant effect on

what consumers expect to see from organisations providing financial

services. I am delighted to see that the market is not going to be supplied

solely by US players.

Ian McKenna works

as a consultant for industry organisations such as Origo, life offices and

technology companies, including Microsoft, Assuresoft and The Exchange.

He is a consultant

and director of The Financial Technology Centre. He can be

contacted by email at: Tel: 020 7359 5656

Fax: 020 7359 2858


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