From pensions and protection to investments, companies across the financial services spectrum are innovating to improve the adviser and client experience.
Breaking free from a traditional hierarchical structure was a step into the unknown for Lloyds Banking Group, but it is something David Holton, corporate pensions director at its Scottish Widows subsidiary, felt passionately about when he formed its innovation lab two years ago.
“There’s no hierarchy here,” said Mr Holton, gesturing towards the entire floor of open-plan office space in the basement of its Finance House premises in Edinburgh where developers, customer services staff and those involved in operations, risk, finance, communications and IT sit side by side.
He said: “If you truly want to put customers at the heart of it, you have to do things a bit differently. I wanted the entire ecosystem for our corporate pensions business to be in one place.
“When I saw this space I knew it was perfect. There was nobody here – no desks or anything on the walls. It enabled us to start with a blank canvas and design the hub specifically for our purposes.”
If you truly want to put customers at the heart of it, you have to do things a bit differentlyMr Holton took 60 people from all over the group – many of them outside pensions – and set about a six-week process to design the corporate pensions business from scratch.
The team mapped every single touch point and how the customer – whether company or financial intermediary – felt at each interaction, then undertook the same process for the employee. The analysis remains on the wall as a reminder of the lab’s foundation.
The end result was an entirely new corporate pensions interface designed for and alongside customers that officially went live in October 2016 following beta and pilot phases. Today, more than 40 per cent of Scottish Widows’ corporate pensions book is on the new platform.
Power of automation
Much of the business is automated. While at one stage companies had to submit raw data for monthly pension contributions to be processed manually, automation has reduced processing times from 22 days to a single one.
Automation is revolutionising the investment industry too. Of the top 20 adviser platforms, 17 boasted automated transfers and re-registrations in 2016, compared to 15 a year earlier, an analysis by Altus Business Systems shows.
Among fund providers, 96 had an automated process for transfers and re-registrations, equivalent to 87.5 per cent of UK funds under management, compared to 67 or 73 per cent in 2015.
Of those counterparties supporting electronic transfers, 56 per cent of transfers were last year completed within one day, up from less than a third in 2015.
For Howard Finnegan, sales and marketing director at Altus, the picture is constantly improving.
He said: “We’ve just starting to work through data for the first six months of this year, but it looks like there’s been a jump in the number of counterparties supporting the open standards for electronic transfers and transfer times continue to fall."
Companies are also harnessing technology to reduce the time taken for advisers and clients to buy protection or make a claim.
Zurich has introduced e-signatures across its retail business to request medical records and for group risk customers to make a claim, with 68 per cent and 60 per cent of documents respectively being returned within 24 hours, and is piloting the use of electronic GP reports. In December, it launched a protection platform, ZHub, to enable advisers to apply for multiple policies in one application.
A raft of initiatives to improve the claims process – greater use of text and email to communicate with customers, a single point of contact and direct credits to customers’ bank accounts – have cut the average time taken to pay a critical illness claim from 50 days in 2014 to 27, with the fastest being just two.
As a result, Zurich has seen a big improvement in scores on claims through the Net Promoter System, with 180 perfect 10 scores achieved in 2016.
Pace of change
Scottish Widows’ innovation lab is now home to 140 staff and is far from a blank canvas. Every wall is adorned with information – from how much has flowed through the interface (£90m and counting) to how much capacity is left in the system and customer feedback (green text for positive and red for negative) – and hundreds of Post-it notes detailing action points.
These are physically moved along the walls as action is taken – either the result of a member of staff taking ownership of an issue or collective "scrums", whereby staff jointly decide what to do and when.
Mr Holton said: “We’re trying to make everything as visual as possible to bring to life the pace at which we need to work."
Testing new code takes two minutes, as opposed to two weeks previously, again thanks to technology that enables it to be done in an automated fashion. It means Scottish Widows can keep up its momentum in innovation: a working piece of code or new capability is developed in two-week "sprints" and released to the end customer every month.
A six-strong band of customers is an integral part of the process, involved in beta stage testing of new functionality alongside developers, while a few hundred customers are involved in each pilot phase to give the trial the necessary scale for a live launch.
Mr Holton said: “Some of our customers really want to be part of what we’re doing and they feel a bit of ownership of it. They’ve given us some really good ideas and have seen a huge impact in a short space of time.”
More than 90 per cent of customer needs are met in one interaction with its servicing team, up from 40 per cent 18 months ago, and its average Net Promoter score has increased by 80 points over that timeframe.
The feedback from higher up Lloyds Banking Group is positive too.
“The exec is happy with the pace of change and customer feedback,” said Mr Holton. “The right business metrics are being delivered. We’re not doing it by focusing on them – but on the customer.”
Future plans
Mr Holton has almost spent an £80m investment by the bank and is pitching for more cash to grow and develop the lab.
A multi-device interface for employees is in the pilot phase. They can register in two minutes to access information on the value of their company pension, contributions and tax relief.
Seven Investment Management’s app, 7Imagine, enables clients to capture their entire financial position, including any number of income streams, properties and other assets, and tells them if they are on track to meet their investment goals. The app can be white labelled by advisers.
Mr Holton’s focus remains on corporate clients and their workers, but he plans to branch out from pensions to other workplace propositions, such as workplace Isas and general investment accounts, this autumn. “It’s not about products, but investment and innovation driven by adviser and customer demand,” he said.
Meanwhile, the introduction of fintech for proof of concept work is imminent.
Mr Holton said: “There is some really smart fintech capability out there that I’m interesting in bringing in as a fresh pair of eyes. If all you do is think about the very specific industry you’re in you’ll miss some of the great things that are happening.”
What Mr Holton is most proud of is not an increase in new business or growing the number of panel positions with advisers, but engagement levels within his team.
“There’s a lot of demand for staff from other parts of the business to work with us. People feel they are able to do things for the customer here and do them quickly. They have a voice and can see things happening. We are a massive change engine for the group,” he said.
Jennifer Hill is a freelance journalist.
