With its over adherence to paper-based processes the pension sector has struggled to keep pace with the movement of the times – but that’s something it can no longer afford to do.
Pension providers need to understand the requirements of a new, emerging digital economy and the expectation customers now have for any organisation that provide them with services. Traditional processes are therefore becoming obsolete in a world where a customer has become used to new, digital ways of life.
In fact, there are multiple compelling reasons why pension providers might want to convert existing procedures to digital processes:
- Organisational efficiencies – if the manual processes of the pensions sector are to be streamlined significantly then a digital journey, with its speed and automation, must replace the status quo. This can reduce manual intervention and enable people and resources to be allocated elsewhere which adds incremental value.
- Costs – working hand-in-glove with those organisational efficiencies comes a significant cost saving brought about by digitilisation. And not just reducing costs, but understanding where cost occur, and reducing risk through the application of automated checks and processes, thus reducing fraud and operational loss.
- Fraud – the more you automate identity verification, the more positive the outcomes in terms of fraud prevention. With fraud costing the sector £13 million in pension scams since the reform* – and pension freedoms seeing £3.5 billion being released from their accounts to the economy, the pot has even more significance for the fraudster. Analysis also suggests that whilst individual cases are declining, the amount of defrauded funds has increased suggesting fraudsters are focussing on the larger sums such as accumulated pension funds. Applying appropriate validation and fraud controls is imperative. With little customer interaction and outdated processes, ensuring that the right individual policy holder is being paid is essential.
- The customer – customers across every market, including financial services, have a much greater desire to engage digitally with services, this is what they have become familiar with in everyday life. As a result, this is critical and the number one reason why digitilisation is necessary. Customer expectation is driving change – and pension providers concerned about change need to understand this is an irreversible direction of travel.
- Disruption – people won’t tolerate disruption. Why? Because they don’t need to. They are used to digital, fast and personalised processes that are easy to manage and easy to fulfil. If they are expected to complete lengthy, paper-based forms, followed by laborious processes then the journey will collapse almost immediately. Pre-population of data can enhance this and avoid disruption as a result. Pinning data is also essential to offer identification across multiple data sets and databases.