I am going to ask you to forget about next quarter for a moment and even next year. Instead, I am going to ask you to fast forward to 2012 and to what the ‘typical life’ and pension organisation will look like.
More specifically, I would like to look under the hood of the Life and Pensions organisation of 2012, in terms of the IT systems and infrastructure likely to be in place.
Where to start? Well with the market I guess. So first, let’s look at two key predictions as to how the industry itself will change between now and 2012.
Firstly, pretty much all the industry experts predict that there will be fewer players in 2012, with consolidation occurring at a global level. I would go as far as to predict that the Western European market is likely to consolidate around less than 30 major players, with an array of innovative and specialist niche players operating at a national level.
Secondly, most people also agree that the industry’s products will be more innovative and diverse, a trend reinforced by the blurring of the distinction between the various financial products available to customers. I believe that new products will shape the future of the industry.
So, if that is the big picture – a future of fewer competitors and more products - then what is the detail in terms of the IT systems and infrastructure required by life and pensions organisations in 2012? Well, here are our predictions:
1. In line with others, we predict that over 50% of policy administration in 2012 will be outsourced, as organisations focus on customer relationships, marketing and product innovation, as opposed to administration and IT.
2. The majority of those that have not outsourced will have rationalised core systems by 2012, with mergers and acquisitions being a major factor here. However, the promised benefits of this systems rationalisation will not have materialised for many. The new systems implemented will prove to be a step in the right direction, as opposed to the total solution in terms of agility, efficiency, reporting, etc.
3. Any remaining legacy systems will be marginalised to the administration of closed and aging books of business.
4. A more agile approach to IT implementation will be employed by up to 75% of the industry with the waterfall methods becoming out-dated.
5. The industry will have got better at buying IT, adopting a much more discerning and rigorous approach to vendor and solutions selection.
6. There will be a trend towards fixed price IT and in-sourcing as well as outsourcing administration and IT services.
7. SOA will be the dominant standard within the industry.
For our part at Exaxe, we like to think our solutions, such as Income Plus and Invest Plus, represent the future of life and pensions policy administration today, enabling maximum process efficiency, rapid time to market for even the most sophisticated products and optimal business agility, or responsiveness.
That is thanks to true the SOA based architecture that makes it open and flexible in response to a fast changing marketplace.
Norman Carroll, CEO, Exaxe