Data, data, data.
A key aspect of targeted support (TS)’s success will undoubtedly be the treatment of existing customer data, alongside the collection of new customer data. That’s why we’ve co-published Targeted Support: the data challenge with Deloitte which draws upon a survey of 10 of our member firms, as well as subsequent, detailed conversations between ourselves, Deloitte and members.
We know that TS is a unique opportunity to transform how DC pensions, investment and savings providers engage with customers. We know there is significant ambition from firms to deliver TS. What we didn’t know until now is the scale of the data challenge and the strategies that firms are employing to plug data gaps.
This blog details some of the main lessons from the report and our call to regulators for greater clarity around direct marketing, sufficient granularity and the FOS redress approach.
Operational readiness
The majority of respondents that are planning to offer or test TS in 2026 are of the view that implementation of the regime will put significant pressure on their resources, operations and systems. And while some are already testing use cases, others await final rules before committing to strategies. This divergence is mirrored in staffing approaches: a third of respondents to the survey are creating agile TS taskforces to drive delivery, while others mobilise product, client experience, and IT teams separately.
The data challenge
Firms need plentiful, detailed, and high-quality customer data to create meaningful segments and suggestions. While around two thirds of respondents rate their existing data quality as good, gaps remain. Self-assessments show data gaps ranging from 20% to 80%, meaning all firms will need new datapoints to deliver TS effectively.
Engagement is therefore key: respondents rank ‘effective customer engagement’ as the top driver of TS success to address these gaps, followed by ‘high quality customer data’ which in many cases will require effective engagement.
Upscaling was identified as the most complex data challenge identified by respondents. Having robust data management infrastructure will ensure that firms can leverage the full value of their existing or new data to scale up safely and build more seamless journeys. Therefore, data centralisation is a critical factor of TS success too.
Emerging targeted support strategies to fill data gaps
Once firms begin to implement TS schemes, they will need to address any gaps in the data. The survey responses reveal two distinct, stylised approaches to overcoming data insufficiencies:
- “Engagement-led approach” - initially using TS to nudge broader segments of customers into short digital journeys, to deliver broad/generic TS suggestions. This approach engages and informs customers about TS, whilst obtaining new data to build a more granular TS offering over time.
- “Needs-led approach” - deploying TS to address well-identified needs of smaller segments of engaged customers (those who proactively ask for help). This approach would likely involve longer and more-data intensive journeys with humans in the loop to provide more value-adding suggestions.
Many firms of course will blend these approaches to balance customer engagement, specificity of suggestions, and compliance.
Regulatory uncertainty
Respondents highlighted Privacy and Electronic Communications Regulations (PECR) and GDPR, a lack of clarity around FOS redress approach, and evidencing ‘sufficient granularity’ in consumer segmentation as the most material challenges to TS rollout.
Uncertainty over PECR is particularly challenging with firms fearing that TS suggestions could be classed as direct marketing, limiting proactive engagement and undermining engagement-led strategies. Similarly, ambiguity around sufficient granularity risks stifling innovation, as firms avoid overly tailored segments to stay compliant, reducing the impact of a needs-led approach.
FOS redress risks add further complexity. TS is designed for cohorts, not individuals, and firms need assurance that well-tested, compliant models won’t attract complaints.
Conclusion
We urge the regulator to produce clear guidance, if not alongside final rules, then in advance of targeted support going live in April 2026. In the meantime, firms will keep tackling the data challenge and considering their optimal approach to plugging data gaps. Together, we are getting ever closer to targeted support becoming a reality, but there are many steps in the journey ahead.