Platforms and the role of technology
Al Ward, Head of Platform
In the second instalment of Al Ward’s conversation with the The Lang Cat’s Steve Nelson, the two men focus on that convenient catchall term – technology.
Technology that sings from the same hymn sheet
Steve Nelson: Digital capability means something fundamentally different to platform outage or failure. If a certain process fails, it also means something different to picking up the phone and getting that authenticity of service immediately. Something that I feel we just don't talk about as a sector is what different firms need depending on their own proposition. An investment proposition, for example, can be fundamentally different if you're running models compared to outsourcing?
Al Ward: I completely agree, and part of Aviva’s job is to take all of that information and distil it down – what do we deliver and how do we deliver it? That's part of the challenge: you might not believe that something small is making a difference, but actually when it’s combined with other factors, it works. We think about what we deliver from a service perspective and whether it’s going to the BDM or into the business support team, but maybe it's actually the technology service that’s bringing all that together.
And to me, this type work is the challenge and it’s often the fun part of the job – making sure every part of the technology “choir” is singing at the right time, with the right harmonies, solos and everything else happening when it should.
The legacy challenge
SN: So taking a step back, one thing that we continuously find which is quite interesting and almost counterintuitive to some of the discourse that you see online in particular, is that most people are pretty satisfied with their primary platform.
Year on year we ask a question: in a consequence-free world with a magic wand, what would you change? Every year, something like 70 to 75% of people would choose the same primary platform. That suggests to me that there isn’t a widespread dissatisfaction with the platform itself.
We do see much dissatisfaction with trying to get information out of legacy providers or certain other providers. The asset transfer process as well can often, despite all the great work going on behind the scenes, still be laborious in certain instances.
AW: You only have to go back a few years and the technology is not the same as the capability we have today. That's why I believe moving to a modern platform like Aviva or others is so beneficial. The transfer process can be painful for any firm, partly because of the advances in technology and the mismatch this can create with legacy systems. My job is to help make that process easier. We've got a number of different responsibilities: one is the cost to the end customer and our role is to help the adviser make that efficient. Then there’s the third party in terms of regulatory risk and our own requirements in making the transfer successful.
The ability of technology and the outputs it can create are evolving all the time – the challenge can be in deciding what to build and where to build it. Sometimes it’s only when we’re a few years down the road that we can see whether what we created has been a success or not.
Innovation – threat or opportunity?
SN: Looking at technology and around what's coming down the line, where do you see the next opportunities? Is there anything you see as a threat – are the robots coming for us and intending on making us all redundant?
AW: Technology is ever changing, so you've got to stay on top of it. There are always innovations coming through, some of which will be successful and some not. It’s important to keep an eye on that and understand where it’s going and what it might mean in practical terms.
Technology is there to make things easier. If you look at your reports you can see that technology drives efficiency, but it also drives complication. There's a big challenge in finding our way through the tangle of what’s possible and what could end up dead in the water. There are different models emerging in terms of platform and all sorts of ways of operating, which we keep a close eye on. I don't see that as a threat; I see it as an opportunity.
Innovation and changing the industry has got to be a good thing. If there was no interest in changing the industry, nobody would be investing in it, it wouldn't be growing and it wouldn't be improving . Clearly there's a lot to work through and a number of pitfalls that could potentially come up. But I think what’s key for us is listening to advisers, understanding what they need and looking at the changing advisory models.
Big, small and everything in between
SN: 95% of firms are very, very small organizations and then there’s a handful of extremely large organizations, so there's that polarization and then a bit of a middle ground where firms are trying to grow or multiply their offices. Do you see anything in particular emerging at either end of the scale?
AW: There’s quite a bit of consolidation going on with smaller firms merging or being taken over, but there’s still a large number of smaller firms, of maybe just one or two people. So how do we service across all of that and that changing need? It comes down to marrying the technology change with what the businesses and firms that we work with need. We work across the full spectrum, from large firms with billions of assets to smaller firms with maybe £20 million. How do we manage that diversity and scale of requirement – what do we build and deliver? It comes back to aggregating it up, understanding what the industry is doing and then delivering a really solid and consistent product across the piece.
We talk to firms all the time. We'll review what they're doing, how they're running the business and what's really important for them. I think you call out some of that in your reporting and these are the key things that firms are looking at. We have chats around technology, we have chats around white labelling and what white labelling is – is it just branding or is it running your own platform or a model in between.
We have conversations with firms and some are looking at a bit of a hybrid approach. They want to do a bit of their own and a bit of a platform provider service. Others are saying, “We don't want to go down a particular route because that's not our expertise.” Some firms are actively looking at different solutions and different models, deciding whether it will be right for them and their business.
We offer a really solid product and we work closely with firms; it’s something we’re really confident in. We also keep an eye on alternative models, but it comes back to understanding what firms want and why they want it, followed by asking how we can support and deliver it.
The type of platform is key. What we offer is exactly right for some firms and will suit their kind of model. There are various capabilities you need to think about within that though, like capital ratios, operations and technology capability and the time and effort it takes to look at those. We spend a lot of time working across it all. I like to think Aviva takes the challenge and the pain away from firms getting bogged down in this. Our job should be to deliver a really solid service so that advisers can get on with advising clients and helping them out. But different firms want to do different things, so different models will work for different people.
SN: If you think of owning a relatively small organisation you’ve got a lot of balls to juggle. You've got to run an effective, productive, profitable organisation, remain compliant, and understand the regulatory environment you're working within.
I think it's a big stretch to then say, “Actually what I want to do as well is become my own platform operator,” with all of the risks and responsibilities associated with that. At the other end of the scale, it’s absolutely understandable why the very, very largest firms would look at this. There’s almost a strategic obligation running a very large firm to look at alternative models and to investigate the feasibility of it. We have spoken to firms in instances where this is running really, really well.
AW: The role of technology is to make all these things easier; whether it's more efficient for the adviser, a better outcome or more engaging for the customer or whether it's more efficient for Aviva to operate that really solid service at scale.
It’s what we should be striving for – getting data, understanding data, understanding what the customer needs, servicing the customer, monitoring and managing risk over time. That's the role of technology and that's where it can really help. Aside from the models, that's where I believe the technology focus needs to be.