A few years ago, I invented the phrase “portals for show, platforms for dough”. I thought it very catchy, but it didn’t catch on- no-one apart from me has ever used it.
Sometimes it takes a bit of time for an idea to catch on, but this one looks dead in the water!
What I meant by the phrase is in a phrase that has caught on “lipstick on a pig”. A pig is a pig – no matter how you dress it up.
If you have a pig of a platform, no matter how fancy your portal, the lipstick will one day wear off. Your naked piggishness will one day appear. Portals can allow you to see your data, but if the data is being poorly managed – you’re going to get found out.
The technology lag
There are a number of technology developments that those who provide platforms and portals could embrace. Some new providers (Pension Bee for instance) , have by-passed platform technology and offer customers fund administration and a record keeping data base, using Salesforce and housing data in the cloud.
Others are looking at the distributive ledger as a means of securing transactions with the fixity of the block chain. It is only a matter of time that some form of crypto-currency is established in fund administration to cut out the need for intermediation. This is for the future.
Already APIs are used to transmit data between payroll and providers such as NEST. The Sage Data Exchange aims to reduce the complexity of auto-enrolment compliance through focussing on providers that can interact with its small scheme software using straight through processing (a rather quaint old phrase!)
This is the here and now of pensions services technology. But the future is hurtling towards us at a frightening rate. The integration of Moneyhub into Monzo and Starling’s open banking, may not shake the world today, but has profound implications for tomorrow. As the press release witters on…
Integration enables Monzo and Starling customers using the Moneyhub app to choose to link up current and savings accounts, credit cards, pensions, loans, mortgages, SIPPs, ISAs and investments. Moneyhub says its technology features the most data links of any aggregation provider in the UK
If data is a currency of its own, then MoneyHub is a potentially a data billionaire and Monzo and Starling’s customers now have access to
“Moneyhub’s proprietary categorisation engine and personalised Smart Nudges, empowering them to make well informed monetary decisions across all assets held and fulfil their financial wellbeing potential”.
The problem for today is getting enough customers regularly using Starling and Monzo’s open banking. There will be more and more who do (I do) but baby-boomers like me are rare, this service is appealing to those who are coming out of university and have a quite new way of looking at money.
The question for insurers, is whether these people will have enough money in short order, to justify the investment they would have to make to adapt and adopt.
Why most insurers won’t go near cutting edge technology.
The plain truth is that the vast majority of personal wealth is concentrated in the hands of senior generations of UK citizens who are not clamouring for new technology solutions.
They want old technology that works. They want payments to be made on time, they want to see what they have got and they are not managing their pensions on an app (yet).
Which is why most life companies soldier on, painting lipstick on their pig.
When they try to upgrade the pig, they move from a proprietary system to something like FNZ’s platform, usually with great pain. Aegon, Old Mutual, Aviva and Phoenix are all in the process of upgrading their platforms (re-platforming), but what they are upgrading to , bears no resemblance to the latest technology being offered by the banks.
Customers are inconvenienced because even the “new technology” is out of date and “re-platforming” resembles the efforts of Super-Mario (with a lot of “lost lives”).
I am not saying that most insurance executives consider re-platforming this way. It’s just that genuine innovation is not presented as an option.
ING’s Yolt for instance provides a radically more advanced solution to its 250,000 enthusiastic users , but I doubt that it is even benchmarked by those considering the customer interfaces to wealth managers.
Platforms for dough, portals for show
I am sure that in terms of the short-term metrics they are judged by, the management of our insurers will be best served by painting pretty lipstick (fancy portals) on ageing pigs (legacy platforms). They may have to change pigs and move to next generation pork, but most of the platform solutions they are moving to were designed and built ten or more years ago.
These solutions are what today’s wealth managers will use, and though they will moan about re-plat forming , they will keep using pig platforms – because the thought of moving data to the cloud, using new databases with API technology, adopting the user experience of a Yolt or MoneyHub, would give them and their clients sleepless nights.
However, sooner or later, their business models will fall over, not because they aren’t providing what their customers want, but because other people will come along and set new standards.
The capacity of the new technologies to undercut the costs of existing players is extreme. Were all these “challengers” to find a mainstream channel of distribution that showcased their service levels and their customer costs against those of current wealth managers, then they would be dangerous.
Banks like ING realise this. A few years back the Prudential incubated “Egg” because in the late 90s, it realised this. But since those heady days, insurance companies have retreated in the scale of their ambition.
They now risk being leap-frogged by challengers. Their lack of investment in genuine innovation may leave them looking very exposed in years to come. But by then it will be someone else’s problem! As so often, the real problem is that there is too little incentive to look forward.
If you sit at the top of one of our leading financial service companies, to invest in the future. There is a great comfort in the certainties of the past.