Difference and Differentiation: What next for investment platforms? - Paper - Page 12
Same same, but different:
Using service to stand apart
The cost challenge has seen both product providers
and platform providers seek lower cost models,
and therefore cheaper ways to service their clients.
We have seen redundancies within the industry
repeatedly over the years, particularly hitting
distribution personnel, only for a recruitment drive
to take place a few years later, maybe even hiring the
same people back!
As providers have reviewed their operating costs,
there has also been consideration of the business
model they want to adopt, as well as how best to
deliver commodity services and where the points
of differentiation can be found. The maturing of the
platform market in this way echoes how the earlier life
& pensions market matured, with the large providers
seeking to consolidate and reduce operational cost,
sometimes through use of outsource partners.
Outsourcing has, in some form, been part of
the platform market for several years, with firms
outsourcing some responsibility for their technology
solutions to specialist third-party system providers.
A few, with FNZ being the largest, also offer some form
of administrative service alongside the technology.
But over the last few years, the outsourcing of these
services has started to wash through the industry,
with technology providers increasingly offering a
broader range of operational functions for platforms
to consume.
These days, platforms will have remarkably similar
technology stacks sitting behind their businesses
and because of that, terribly similar approaches
to how products are administered. Platforms are
trying to keep their identity and independence by
retaining their digital front end, the front-office staff
and those who provide what they believe to be that
personal touch, but how easy is it to really be different
when you share the same underlying technology
and back-office administration as your peers? For
an online, digital proposition you would hope that
your customers would never need to speak with your
front-office team, as that suggests something has not
worked as expected or just simply gone wrong.
The impeccable service model has therefore often
taken a backseat when it comes to a platform’s
ambitions, due to the time and cost of all the above.
However, with the consolidation of technology
providers, and the vast similarities of each platform’s
product offering, proposition and cost models, service
models have really shown themselves to be the only
true differentiator.
Distribution of Platform Brands, Service and Technology Providers
Brands
Services
Technology
Figure 8 – Distribution of Platform Brands, Service and Technology Providers
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