The general public in the UK is clamoring for new digital services and has an expectation that all facets of their lives should, in one way or another, be manageable through desktop or mobile. This new reality is recognised by pension firms, but in an industry that has so far been resistant to digitisation, they are keen to ensure they take the right steps – and do that soon – so that when new technology is integrated into the sector it’s done right and in a timely way.
While it recognises the need for change, the pensions industry is still dominated by paper documents. It will, therefore, represent a huge cultural shift to ‘go digital’ and concerns exist about how they would go about building rapport with customers in the digital age.
How, for example, could they provide a picture of overall worth, from multiple fund pots, to an individual customer?
Equally, the providers wondered if they had sufficient expertise in-house to build and manage any digital expansion and to ensure that any new systems or processes were secure. A related question surrounded how, if that expertise did not exist, they would go about establishing that capability.
With no history of digital innovation, the providers hold dual concerns around customer engagement. Most obviously, there is an apprehension about being able to meet the needs and expectation of a digitally savvy public, but there is also recognition around hard-to-reach groups.
The providers highlighted difficulties in engaging new entrants to auto-enrolment pension systems in their online accounts and asked how they could get them more involved. Engagement was equally difficult, they said, with other groups – like the elderly and people recently moved to the UK – and there could be a significant cost associated in encouraging them to become involved in their personal finances.
What do banks do?
Across many different topics, discussion often returned to what the pensions sector could learn from the banking industry. In terms of building new systems and user-friendly products, pension providers asked what lessons – good and bad – could be established?
It was also important to understand what could be learned about day-to-day engagement with customers online, and, perhaps most importantly, fraud prevention and security.
Naturally, a large part of the conversation was devoted to various aspects of digital fraud – potential risks for the institutions and for customers through third-person frauds.
It was asked whether digitisation opens up a greater risk of cybercrime for providers and customers and then how, if that was the case, providers could build that risk into their business model and create robust new systems with sufficient in-built safeguards?
On this topic, much conversation was around verification of identity, frauds based on ID theft, and the new technological solutions that were being put in place to prevent or minimise potential threats.
Reputational damage about paying in error is a live concern, so gaining an understanding of the possible vulnerabilities in any new systems was paramount.
Equally important was the idea of informing and educating customers about the risks that now existed following liberation of the pension regime, and getting them to understand measures that could be taken to prevent themselves becoming the victim of a third-person fraud.
Beyond the immediate changes the pension sector is about to undertake, much of the debate asked where future technology will take them; pension providers wanted to understand where threats could lie and new security measures made possible by emerging technologies.
Finally, it was asked what does customer engagement look like in the future.
Pension providers were told that, in the future, consumers would be able to gain an at-a-glance idea of all financial dealings through a simple dashboard or single account management tool that covered every aspect of their finances.
Then, to ensure customer information would be protected yet easy to access, it was outlined how consumers of the future were likely to access their info using an online identity that could be carried with them across multiple sites.
That’s the likely future – and it’s actually a lot closer than most providers anticipated.