I was talking with one of our performance managers last month who has been with the company for much longer than me. We became engrossed in a discussion about the insurance industry and how things have changed. I have always felt it important to hear the opinions of people with a much closer relationship with our customers than mine. Afterwards, I found myself reflecting on the market trends that will determine our success in the future.
The Big Three
My colleague asked me how I thought the industry had changed over the last few years and what I thought the future trends would be. There have been three major developments. Undoubtedly, the first is the advance of technology, which we are all well aware of. What I feel has changed though is the growing influence of digital and the fintech sector, and the consequent expectations we all now have.
There is an eye-watering amount of money being invested in new financial technology. I was asked to comment recently for an industry editorial. It said: In 2017, over $30 billion was invested globally and half of the total European fintech investment happened in the UK. This confidence in the sector will inevitably drive innovations and expectations about what technology can provide.
Given my long career in retail financial services, I know the increased role of technology has changed the relationship between customers and the organisations supplying services. It’s clear that more and more of us find we have transactional relationships with providers rather meeting individuals face to face. This depersonalising trend (and commoditisation) has led to an erosion of the value of many brands. The things we need can be done remotely on various devices, and we can efficiently gather information and buy the things we need without meeting people at all.
Over our chat we agreed that in contrast to this trend, Premium Credit has built its position in the market through strong relationships with its customers and suppliers. This is something that we must maintain in the future and I’ll come on to how we will manage this later.
The final topic we discussed was regulation. We’re all aware that the premium finance and lending industries have been tasked with securing better outcomes for customers. This places an additional burden on us all to show that our customers are entering into sustainable agreements and that they have a product suitable for their needs. As we know, regulation can present challenges, but also many opportunities to build long term, sustainable businesses: I feel it’s our job to make sure our customers and brokers can be confident that the product is right, and that there’s an audit trail to demonstrate the highest levels of good governance.
The Next Three Years
The discussion with our performance manager got me thinking about the future and I asked myself how the market would evolve. While no-one can predict the future with certainty, it’s vital to base our plans on what we think is going to happen. My view is that the three big trends in the industry will continue:
1. Technology playing an increasing role, with growing expectation of what it can deliver.
2. Relationships and customer service being a key differentiator as customers look for better quality.
3. Regulation defining how we provide services, with the more efficient providers having a major advantage over less efficient competitors.
I think we are at a pivotal moment because trying to change and adapt to this environment won’t be possible overnight. It will take careful planning, a long-term view and the right resources to be able to compete. Organisations that are unprepared face a real risk of being left behind, but those that have planned carefully to meet the extensive changes in the industry will thrive.
We saw very similar examples of this during the dotcom boom which benefited from unprecedented levels of investment. As new companies like Amazon were born, many traditional retailers failed to keep up and adapt. Everyone in the insurance industry will need a carefully considered plan or run the risk of falling by the wayside. But for those that can adapt, there is a very bright future ahead.
How this affects Premium Credit
I recall meeting Cinven, our shareholders, when I joined Premium Credit just over two years ago. I was keen to join because I could see that Premium Credit’s plans aligned with my view about the trends in the market. I outlined what I felt the threats were to Premium Credit’s customers and how we would need to help them. Without that support both they and us were likely to encounter problems.
What was pleasing for me is that the shareholders agreed, and they have supported Premium Credit to help it become an organisation able to work closely with its partners now and in the years to come. While the last few years have been exceptionally busy I feel we have put in place extremely deep foundations upon which we intend to build something unique. The plan we agreed was clear.
Firstly, we would replace the core administration platform. We have now created a dynamic infrastructure upon which all new systems can be built. The big challenge for all established players in financial services is how innovative new applications can be grafted onto legacy technology. Get this right, and we can build modern scaleable tools to help brokers.
Then we would launch platforms for each of our broker segments to enhance their administration and their ability to sell their products. Such platforms have enabled us to improve their productivity and automate the legislative requirements of regulations. We are continually monitoring results, but early indications are positive.
This means we can focus on the next stage of the plan, which is the rollout of a series of new tools designed to help our brokers and their customers. 2019 has a full pipeline of new tools to help different segments. These will include:
- continued enhancement to digital self-service to reduce the time required for brokers to service their customers
- automation to replace manual processing
- applications built around the many different devices customers use each day
- technology to help post-sale servicing, designed to increase retention and cross sale opportunities
- analytical tools which will help our partners improve the analysis and refinement of their business
In addition, our telephony platform is being redesigned so that every time someone calls, their contact with us is as simple as possible. Our aim is to provide a service and digital experience that many are familiar with in their daily lives through the latest apps and retailers.
We currently have over a hundred people working on new change initiatives designed to enhance our capability – that’s just under a third of our staff. We are half way through the largest programme of investment this company has ever known.
I feel that it helps that we are specialists in this sector. Everything we do is built around serving brokers and their customers. I’m not distracted by other business units trying to change our platform, bidding for investment or vying for attention in areas outside premium finance and lending. We are totally focused on one goal, which is to improve our service to our partners and our joint customers. If we can keep doing that better than our competitors, we will have a growing and sustainable business.
Like all Chief Executives, I ask our staff to listen carefully to what customers are telling us. However, what’s vitally important to me is that we put in place technology which is genuinely helpful to our partners. As a result, we have developed a culture of rapid improvement based on new information and the real feedback we receive. I know this can put our people under pressure as we have a very busy schedule ahead of us. I’m always very grateful for the effort they put in, but we are totally committed to getting this right.
I believe the future is very bright for the whole industry if it can find a way through some of the complexity of the big three trends. What is clear though is that we are reliant on each other and collaboration is going to be a vital consideration.
If you want to share any of your thoughts on this, or how you feel we can improve, then please email me on Tom.Woolgrove@pcl.co.uk.
Chief Executive, Premium Credit