The new: Entrants, expectations and propositions.
It’s the start of 2018 and “out with the old, in with the new” feels like a timely phrase. “The new” will be a recurring theme for the Life, Pensions and Investments (LP&I) industry over the next 12 months. New entrants, new expectations and new propositions. With that in mind, here are my top-three predictions for LP&I this year.
1. Winning Providers
It’s something we’ve been talking about for a while. The yawning gap in the market that’s crying out for a new, engaging LP&I proposition. Consumers live digital lives. They expect intuitive, relevant experiences from every interaction. Providers that can deliver these, with propositions targeted directly to end-consumers, will win big.
No mean feat, I hear you cry, particularly with all the regulatory challenges around digital advice/guidance. But it can and will be done. We’ve seen new, digitally native entrants taking a good shot at it. But thus far, they’ve struggled commercially because of lack of scale. And while traditional players have the scale, they still lack the compelling propositions!
I predict that this is the year a provider finally cracks the challenge. By combining a slick, user-centric digital proposition with simple, digitally enabled guidance/advice and offering it to a large customer base, they’ll achieve the commercial scale required for financial success.
But who will it be? That’s still up for grabs. It could be a bold new start-up potentially partnering with a traditional provider. It could be a GAFA (Google, Amazon, Facebook and Apple) provider making the diversification leap. Or it could be one of the traditional LP&I providers bravely plunging into the unknown. Place your bets, ladies and gentlemen.
2. Employees want change too
It’s not just LP&I customers who are looking for change. LP&I employees also have new expectations. Thanks to the retail brands they interact with, and their increasingly digital homes, they expect their workplace to move into the 22st century. They’re customers too…and they’re frustrated when their employers don’t deliver.
Employees already see a stark contrast between their digital experience ‘outside’ of work versus their increasingly moribund 1990’s time-trap office experience. Old technologies will frustrate them more and more. To attract and retain the most talented workforce, providers will have to provide truly digital workplaces that encourage collaboration, agility and innovation.
That’s not all. Employees’ expectations on how their workplace proposition should engage them and what it should offer keep on rising. Coinciding with their increased savviness, we’ve seen Pensions Dashboards and Open Insurance come on-stream. The bottom-line? If their workplace offerings don’t hit the mark, we’ll start to see trail-blazing LP&I employees look beyond their employers to meet their long-term financial planning needs.
3. Evolving propositions
My final prediction? A dramatic evolution in product propositions. We all know that customers have never thought in product silos. And, in response, we’ve seen the traditional providers slowly evolving their structures away from distinct Product Manufacturing Units. It’s a start, but it’s not enough.
From a customer’s perspective, their definition of ‘protection’ or ‘investments’ doesn’t always conform with the provider’s view. For example, ask a customer and I’m sure they would define ‘protection’ as a product that protects them and their families from a whole host of eventualities. A few examples being illness, unemployment, crashing the car, their children losing their mobile phones… and the list continues!
As such, I predict that this year we’ll see an upsurge in interconnected propositions. Think about it. For the end-consumer, why should an investment in a new home be any different to their investment ISA? Surely any future-thinking proposition should be able to rebalance their equity portfolio away from property on notification of the house purchase? Leveraging open banking, perhaps the insurer could also automatically amend the home insurance premium on notification of the house purchase. And maybe as a goodwill gesture, perhaps the life insurance premium could be automatically reduced if the postcode changes the risk rating?
Customers are a demanding bunch and they want more. Product propositions should also be taking advantage of the mass-connectivity that’s part and parcel of the Internet of Things (IoT). Some new entrants are doing just that. Vitality, for example, brings together IoT, health insurance, gym partnerships and an integrated rewards eco-system under one offering. But there is huge space for other providers to leverage the opportunity here.
We might have sung in the New Year with Robbie Burns’ famous words “for auld lang syne”, which actually means for the sake of old times. Now it’s time we turned our attention to the new.
Thanks for reading