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Keeping the doors open

  • 31/01/2003
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Regulation is synonymous with compliance, but managing client relationships in a regulated market will be crucial if brokers are to prosper

Statutory regulation means a more focused and competitive market, so retention will become as important as finding new clients next year.

A Customer Relationship Management (CRM) system will prove invaluable here as it can automate admin- istration processes such as managerial reporting modules, and monitoring compliance. Sandler’s proposal for a suite of highly-regulated stakeholder products should allow brokers to branch out, but it will need to be managed via a CRM system.

Recent regulatory activity has been focused on improving the service provided by the financial services industry to customers. The exact picture for regulation in the market and the impact this will have on advisers is not yet clear, but there is little doubt that technology, which can support improvements in customer service, is going to be a key requirement over the next few years.

Ready, steady…

Brokers need to be preparing themselves now to be able to succeed in an increasingly competitive regulated market. Central to this success is the ability to retain existing clients in order to identify cross-selling and re-mortgage opportunities. Winning new clients is important, but if existing clients are disappearing out the back door just as quickly, then brokers will be working hard simply to maintain the current size of their business.

Keeping existing clients and potentially cross-selling to them is something intermediaries need to be focusing on. This is where CRM comes in. It is important to point out that CRM is about much more than technology. Intermediaries will manage the relationships with clients, but technology can help do this more efficiently.

Technology is already utilised by intermediaries to reduce the amount of time they have to spend on administration and hence have more time to focus on their clients’ needs. Widely-used services such as product research and mortgage sourcing services are working examples of this. However, as the administrative burden increases with the onset of regulation, we are seeing greater emphasis being placed on back-office administration systems as the vehicle for reducing the burden further.

These systems can streamline more of the administration processes that are currently a drain on an intermediary’s business, enabling advisers to spend more time focusing on their customers and growing their business through cross-selling and up-selling opportunities. For example, they can provide automated management reporting modules, manage fee payments, monitor compliance via online audit trails and control service levels via automated ‘workflows’ that ensure best practice across all processes. In a regulated market this type of functionality will help brokers manage their time effectively in order to remain focused on their customers.

But more importantly a good back-office system can give intermediaries a single view of each client. This is the starting point for a co-ordinated CRM strategy. A good back-office administration system is based around a central customer database that stores all client records, contact history and policy details, giving advisers a concise, single view of each client.

This single view of each client makes it easier for advisers to identify and meet clients’ needs. For example, it makes it quick and easy to spot key dates for each client, such as the end of a fixed rate or capped term, and recommend appropriate action. In addition they can interrogate their client database to identify cross-selling opportunities and increase the percentage of business written from existing clients.This may be relevant to mortgage intermediaries in a regulated market.

Once the Financial Services Authority (FSA) is regulating mortgage advice it may become easier for intermediaries to extend their authorisation to include other product areas. The cross-selling opportunities for products such as term assurance, household insurance and investment products become significant.

In addition the proposal by Sandler for a suite of stakeholder products may play into the hands of mortgage intermediaries. As the proposal currently stands these products will be heavily regulated and hence may be sold via more lightly regulated sales channels. Depending on how this pans out it could create an opportunity for mortgage intermediaries to sell these products without being fully regulated, either directly or via their website. Again the cross-selling opportunities may be significant and so a back-office system that can help with lead generation and marketing will be vital.

Regulation presents many opportunities for intermediaries. The exact nature of these is not yet clear, but now is the time to be implementing technology that can help take advantage of these opportunities as they arise.

The intermediary view

The Exchange recently surveyed financial intermediaries to find out what back-office administration systems they currently use and to gauge their views on what they consider being the main business benefits to be gained from using them.

Graph one (see page 22) shows most respondents have some form of automated back-office system, with 59% using a packaged system.

Functionality was quoted as the most important consideration when selecting a back-office system by 45% of respondents (see graph two on page 22). This suggests intermediaries are looking for technology that meets their specific business needs in a system for use within the increasingly regulated financial services market.

In terms of business benefits to be gained from using a back-office system, ‘time management and savings’ came out top with ‘improving customer service’ and ‘reducing administration cost’ a close second and third (see graph three above). Intermediaries are clearly turning to back-office systems to help reduce the amount of time they have to spend on administration in order to spend more time servicing their clients’ needs. This will become even more crucial in the mortgage market as regulation is introduced and the compliance burden on brokers increases.

When asked specifically about functionality, 89% of intermediaries said ‘client management’ is key with 50% saying ‘policy management’ and ‘reports and management information’ are also important functions (see graph four above).

CRM is obviously at the top of the priority list for intermediaries. Back office systems that store all client data in one place and enable intermediaries to quickly and easily interrogate that data are going to be a key requirement over the next few years.

Sue Summers is managing director of The Exchange

sales points

An efficient back-office system will help with cross-selling opportunities when they arise.

A CRM system will be essential in easing compliance burdens, allowing more time for face-to-face meetings.

A CRM system can also help with lead generation and marketing.


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