Pension Reforms: The Impact on Providers and Customers. Alan Walker. Capgemini Consulting UK

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1 @uktisa Alan Walker Capgemini Consulting UK Customer Experience A New Requirement for Pensions Companies Alan Senior Vice President Head of Financial Services, Capgemini Consulting UK Transform to the power of digital 1

2 As we all know, we are living through a period of change in UK Pensions unmatched in over 50 years Regulatory reforms are fundamentally changing the relationship between customers and pension companies a Perfect Storm Defined Ambition Encourages active engagement Parties share the risk, costs and rewards RDR Retirement Flexibility The post RDR world contains a large segment of people who can t / won t pay for Advice but don t know what to do Pre April 2015 limited flexibility April 2015 onwards almost total flexibility Raised awareness Retirement flexibility has also raised the profile of pensions......and highlighted the 40 years of retirement challenge There is a significant threat for Pension and Annuity providers and an opportunity for other providers (including new entrants) who can meet the increasing expectations of pensioners 2

3 The attractiveness of the customer proposition will determine the movement of funds Opportunity to AttractFunds Importance of Attractive Customer Proposition Threat of Funds Leaving Unfortunately, our World Insurance Report suggests there are significant challenges ahead for providers Only 32% of customers say they receive a positive customer experience from their insurer 2x Customers with positive experiences are nearly as likely to refer their friends or buy additional products Nearly 70% of customers remain a flight risk for switching carriers 3

4 What does an attractive customer proposition require? The All-Channel Proposition: Driving Value for Customers and the Business Transform Effectively Know your customers. Develop the vision, proposition, business model, Pi Price Competitively roadmap and business case to re-build See Completely your insurance company around the customers needs Use a single view of data for all Manage pricing across strategic, tactical and operational all channels to drive profitable sales decision-making to improve accuracy, avoid duplication and increase insight Connect Elegantly Maintain an informed personal dialogue with individual customers, across communication and distribution channels, so as to understand them better Measure Relentlessly Monitor and optimise the performance of your business across all channels to improve efficiency enabling higher profitability and margins Engage Regularly Use high-quality, rich and inspirational content, together with sophisticated engagement strategies, to drive high customer engagement Deliver Perfectly Deliver underwriting, claims, fraud management and investment services efficiently and effectively, improving customer experience Insurers told us they have to change their proposition radically to meet the challenges presented by the changing marketplace elements in delivering an excellent customer experience Essential Now Must do by 3 5 years Digital Maturity Capability Minimal Basic Median Advanced Leading Price Competitively Connect Elegantly Engage Regularly Deliver Perfectly Measure Relentlessly See Completely Transform Effectively The industry recognises that significant changes have to be made in the next couple of years in order to retain existing customers and win new ones Source: Capgemini World Insurance Report,

5 Revised propositions will, of course, need to vary by segment Informed Customer segmentation and insight Passive Informed but inactive stay here or become active Planning and participation deliver good member outcomes TPAS Active CAB Remain uninformed and inactive Potentially dangerous Risk of unintended consequenc es andpoor outcomes Unaware Customers appetite for engagement and ambition for retirement will lead to different experience propositions from providers Done well, providers can capture customers early and retain them for life Bank accounts Student loan Education 22 Renting Insurance Employment 28 Mortgage Marriage / Partnership 35 Owning Protection Buy a bigger property Investments Start a family Pensions Children leave / Go to University Pay school fees Equity Release Retirement 55 Able to draw a pension 67 State Pension Age 75 Suspension of tax relief and the Trusted Adviser to escort customers through this journey can be a brandas easily as an individual 5

6 In summary Regulatory reforms are fundamentally changing the relationship between customers and pension companies This has created tda threat t that t providers will lose existing iti customers and an opportunity for providers to grab new customers The attractiveness of the customer proposition will determine success or failure There is a long way to go to make existing providers propositions attractive But the industry recognises that, and many intend to invest in significant changes over the next couple of years It s an attractive opportunity for those that make the necessary changes But there s the threat of an unusually swift decline for those that don t Thank you! 6