For each of our markets we have considered the business imperatives, business trends and the impact that emerging technologies and solutions may have in addressing these.
Imperatives
Regulation Changes
A huge shake-up in regulation will occur as the days of self-regulation come to an end. Regulation based on principles is coming to an end as it becomes more prescriptive and is followed by tighter governance. There is need for more global and stronger pan-European regulation as markets are now inter-linked through the global financial economy. Solvency II will be revisited in light of the recent financial turmoil to ensure that it meets the needs of this new era of regulation.
Focus on Wealth Management
High net worth individuals, beyond the ISAs and stakeholder pensions, are currently the most lucrative market. There is a focus on selling through financial advisers to those with significant investment wealth.
Legitimacy of Credit Rating Agencies
How capital adequacy is accessed may be questioned in the light of such massive failures. Credit agencies need to rebuild their credibility. The current conflict of interest needs to be addressed so that they are not pressurized into giving good ratings. The basis on which investments are made needs to be reconstructed.
Business trends
Failure to address the needs of the client base around fruitful long-term savings and investment will require smarter alignment with customer segments.
The product is a long-term investment which makes it exceedingly difficult to retire legacy. In addition, organizations are battling the high costs of regulation whilst trying to balance shareholder and customer requirements with a need to cut costs.
Investments are currently coming under huge strain as the price of assets fall dramatically.
The portfolio has shifted towards purer protection products. More traditional product sets around investment have been massacred by both regulatory challenges around mis-selling and poor stock market investments.
Duplication, lack of agility, and redundant legacy applications are the cause of inefficiencies and high costs and this is driving product and process consolidation, refinement, and streamlining.
In the back-office, organizations are focusing on process improvement and the separation of business processes from monolithic back-office applications. Currently there is less focus on the front-office as the priority is keeping the ship afloat. However, there will be a move towards front-office investment for improved servicing, and increased customer intimacy and retention.
Pension simplification and depolarization is going some way to protect consumers by increasing disclosure transparency.
There is further market consolidation through mergers and acquisitions (M&A) as insurers focus on core competencies. This includes the growth in run-off of non-core books.
Impact technologies
CRM and Business Intelligence are popular for understanding customers and building relationships.
Added to this, Master Data Management can help to provide a consistent single view of the customer across multiple systems. Enterprise Content Management and Identity and Access Management will ensure that secure content is accessed only by those entitled to view it.
There will be increasing Legacy Management to move from costly, monolithic systems to loosely coupled, more agile systems, namely Service-Oriented Architecture.
Innovation management will go a long way to ensuring the best innovative ideas are brought to maturity swiftly.
Mobile applications enable access to real-time information from anywhere for individuals working outside of the office.
Social software can help organizations reach consumers, in particular those of Generation Y, gather their thoughts and opinions.
Mobile advertizing is becoming increasingly important.
Platforms for governance, risk, and compliance can help address regulatory pressures.
Web 2.0 will enhance the areas of knowledge transfer and collaboration, both internally and externally.
Grid Computing and virtualization can provide agility and help to reduce costs whilst reducing energy consumption.
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