The dichotomy between old and new skool pensions has rarely been so well displayed as at Wednesday’s Pension Dashboard Summit
- Enterprise v Start -up
- Consumer led v business case
- Big Government v entrepreneurs
- ABI v open banking
- Saving v Spending
- Prospective v Retrospective Governance
The conference showed the chasm between those who just want to do it and those who want to follow due process.
The frustration of those who followed due process, created the pilot and watched their work grow old on the digital shelf, was very evident. It was matched by the concerns of those like Romi Samova and Chris Sier who have watched “nothing happen” since the DWP took the project over last year.
The DWP’s problem is clearly in decision making. Does this dashboard project follow conventional lines with business rationale’s feasibility studies, consultations and prototypes. Or does it follow the open-banking model where the banking industry was told by the CMA to find a way to “open banking” – and did.
In retrospect, the decision to hand over the reins to the DWP by the Treasury was a bad decision. The Treasury has championed Fintech and has clear skin in the game. It’s regulator – the FCA – has its innovation hub and its Sandbox, it also has a massive budget. By comparison, the DWP has a noble but underfunded regulator in Brighton, which – despite the success of auto-enrolment implementation, has virtually no experience of pensions.
Today has seen a big step in the governance of faster payments with a consultation launched that would make banks responsible for the prevention of fraud by making banks liable for the consequences of fraud. I have not heard of such a thing with relation to the pensions dashboard, but it is easy to see a replication of the principle.
The issue of retrospective governance of faster payments (at the core of open banking) is critical as faster payments are now part of our lives. Cash doesn’t so much burn a hole in the wallet, as get glued to its sides. I have notes in mine that have been there some time!
If the pensions dashboard means one thing to the population , it is that their pensions money becomes real and spendable. While we have faster payments, we have not yet had faster payments. Try to drawdown your pension pots and you will have mixed success!
What the ABI and other old-skool dashboard advocates haven’t recognised is that in countries which have dashboards, it is the over 50s who are the main viewers. They are preparing to rely on their retirement savings and pensions and need a high level of visibility of what they’ve got in terms of prospective income and capital.
The relentless mantra of the old-skool dashboardeers is that dashboards will improve saving. I am sure that most people, when they think of dashboards aren’t thinking of saving more – but spending more.
Dashboards for most of us mean faster pensions – whether “pension” means one big payment or a “wage in retirement”, faster pensions means access to money.
Dashboards = Faster Pensions = Better access to money in later life
Enterprise v start up
Old skool enterprise struggles to achieve the agility and energy of start ups. The Aviva digital garage is one attempt to bridge the gap. Another is L&G’s colossal funding of Smart Pensions. Old skool insurers have worked out that they are least able to deliver digital innovation of the type we’ve seen in open-banking. They turn to partnerships of open self-contained digital annexes to ensure that innovation happens without the obstruction of enterprise.
The Government should recognise this. Open Banking didn’t happen just because RBS, Lloyds, HSBC and Barclays pout their hands in their pockets. The main driver was the challenge of the challenger banks.
The DWP face a situation where it has relied on old-skool insurers to deliver digital innovation. They have come up with an old-skool website – which already looks totally out of date. The whole concept of a standalone dashboard now seems quite absurd!
A dashboard needs to embedded in something – a car, a plane – a pension plan. But to imagine embedding a dashboard that brings the state pension and other private plans (DB and DC) to where individuals are managing their money, seems quite beyond the old skool.
Meanwhile the scrapers (Yolt, Moneyhub etc.) struggle on showing us how it could be done. When we move on from individual log-ins to a single secure log-in, when every interface is a properly coded API and when 80% of the information we need is available in real time, we will have a dashboard. The prototype is an upgrade on a PowerPoint presentation.
Leaders not committees
The people who get things done in financial services these days, don’t rely on the DWP to issue a paper, they do it. Chris Sier made the IDWG happen by showing the FCA he could do it. Romi Samova is changing the way millennials save, by just doing Pensions Bee and Andrew Evans is showing that a Pentech can work within the world of occupational pensions by making Smart work.
These are to Pentech what Ann Boden and Anthony Thompson are to open banking and the wider Fintech.
The DWP should be talking more to Chris Sier, Andrew Evans and Romi Samova – and rather less to itself.
A way forward for the DWP
It’s time to let those entrepreneurs just do it. It’s time to orientate the dashboard towards the consumer by recognising that it’s about spending not saving. It’s time to drop up-front governance and regulate retrospectively. It’s time to start listening to entrepreneurs and not the ABI and it’s time the DWP started supporting the entrepreneurs who will make this work!