Mark Broadhurst, Vice President, Intellect SEECMy recent conversations with the drivers of black taxis made me reflect on the similarities to the welfare challenges facing the government and financial services industry.
The industry already faces strict regulation by Transport for London (TFL), a problem which will likely be exacerbated by changes to emissions standards. Recent dramatic changes to the road designs to accommodate bus and cycle lanes have only compounded the traffic problems around the capital. Higher fares due to longer travelling times and excessive traffic delays when looking for the next customer have had a significant detrimental effect on the industry.
What really struck me was the extent of the new ‘digital’ revolution within the industry. They have had to embrace electronic payments including contactless and iPay, and have had to stay ahead of technology with emerging applications such as GetTaxi and Hailo apps which connect them with their customers. New Uber drivers flocked to London from all over the UK in search of ‘streets paved in gold’, and unlike Hackney Carriage drivers, they could enter the market with lease purchase hybrid cars with satellite navigation at comparatively minimal cost.
The majority of Hackney Carriage drivers I have spoken to are extremely pessimistic about their future. They believe that the black taxi will soon become extinct and only then will the customer realise what they have lost. This made me think that our industry is somewhat more accommodating than the one they are facing.
I wonder if the lessons can help to provide the financial services industry with enough insight to change the current welfare challenges into opportunities. We all appreciate the government is trying reform our welfare state in order to save cost and reduce long term risk. The need to deliver innovative solutions combining state and private insurance has never been more prevalent. It is more of a requirement to find a sensible palatable solution than an option.
Recent studies have identified that the average UK employee can only survive financially for a few weeks without income, and yet the majority have no personal provision in place to cater for unexpected illness or injury. Statutory Sick Pay (SSP) & Employment Support Allowance (ESA) would fail to provide adequate provision to around 11 million vulnerable families who would be adversely affected by a long term illness or injury, and yet most people believe that they will be catered for within the welfare state.
The inertia in the market is driven by perception that private income protection claim payouts are in the region of 40-50%, when in fact the latest ABI report shows that the actual payouts exceed 91% of all claims. It is only though education that this misapprehension will change, and this needs to be simple and easily accessible to the consumer.
The financial services provider market could be described as being traditional and old fashioned, and openly acknowledges the lack of investment in information technology and infrastructure for over 20 years. Providers have the opportunity to embrace the government welfare reforms by providing new digital enterprise solutions to their consumers. Modern platforms that are uniformly shared by the company, intermediary and client are commonplace in the wider market. Uber, eBay, Amazon, Apple, BMW, Mercedes and many other successful companies share the same universal digital platform blueprint for engaging their customer and providing world class service.
What this show is we can learn by the mistakes of other industries. It is the way we engage customers that lies at the heart of the problem, and the education, information dissemination and solutions can only follow once this infrastructure is in place. The time has come to stop reviewing what we do well and start thinking about what we need to become. If black taxis become a dying breed it will be a sad day for London, but the financial services market cannot afford to rest on its laurels in such a fast moving and exciting market.
Mark Broadhurst is Vice President at Intellect SEEC, and was a panellist on the Protection and Health breakout session at the ABI Biennial Conference on 3 November 2015.