Changes to legislation created a storm in the pensions market last year with regulatory and operational costs driven up as new-found consumer freedoms encouraged customers to move money or otherwise swamp providers with requests for information on their accounts.
The challenge mounting for pensions providers is fierce. The pension market has inherent inefficiencies as it relies heavily on legacy systems and manual processes simply to ‘keep the plane in the air’.
The pensions sector lags perhaps 15 years behind in terms of innovation, so when regulatory changes are made its difficult and costly to install a ‘fix’ to its systems.
In short, there is little about the process that adds value, and much manual intervention is relied upon to cover gaps and achieve the outcomes required by the regulator.
With retention rates threatened by a market in flux, and customers demanding greater engagement, whole systems are under pressure like never before.
Reliance on paper documents and the postal service to communicate with customers is just one example of where a huge dependency is placed on a manual process that does nothing to enhance the overall customer journey.
Like the majority of manual processes, this one can slow the journey down and makes it less appealing for customers.
Of course, there is also the direct cost to the pension provider: a high head count to marshal processes, then pricy infrastructure changes to meet new regulatory standards, and the time and resource of internal and external management teams to oversee it all.
One solution would be to throw it all out and replace everything with new technology, but this would be expensive, time-consuming, and fraught with difficulty. Incremental change, evolution of process, might be the better solution.
Providers need help to dispassionately examine processes and ask why individual stages happen in a particular way. Taking a systematic, step-by-step view could help providers make sense of all the inefficient, costly, and slow areas of their business.
Once this is achieved, some of the risk, cost, and the manual component can be removed from systems and be replaced with technology that enhances the quality of the service for all those involved.
— Richard Howells (@RH_Experian) June 15, 2016