Providers need to streamline legacy data in preparation for digital change – ITM

Pension providers and schemes are being urged to streamline legacy data and client information to prepare for the digital change in the industry such as the creation of the pensions dashboard.

A report by ITM argues that pension and life companies can free up significant capital and reduce operational costs through efficiencies by working with an external data provider.

It noted that due to regulation, complexity of products, disconnected legacy systems and inefficient data infrastructure, the financial sector generally, and the pensions sector specifically, have been too slow in adapting to the connected-data world that is taken for granted in other areas of our lives. As a result, ITM said “the pension sector has stopped well short of the data standard that customers might reasonably expect in 2017”.

As one of only six technology development partners selected to deliver the Treasury backed pensions dashboard prototype, ITM has identified three key challenges to the life company landscape that will have a direct impact on how these businesses handle data.

For example, with unprofitable legacy products, ITM has said further pressures on top of Solvency II have made certain legacy products too unprofitable to continue and accurately identifying these requires extensive legacy reviews.

ITM also identified maintaining margins as a key area as it said competition, regulation and government intervention has led to pricing pressures. Therefore, careful reviews of operational business costs are key for life companies to keep up.

In addition, ITM said greater choice and quick transfers are just some of the many things digital customers have come to expect. Therefore, it said key information must be easily accessed at all times, a top priority for the pensions dashboard.

Commenting, ITM director Duncan Howarth believes now is a time of tremendous opportunity: “Data itself can be a hard thing to get excited about – but when you think about the tremendous opportunities that connected data can achieve to make our lives richer and simpler; well that’s something I think most people can get on board with.

“We’re all too aware of the complexity and volume of data that’s out there but the results of cleaning up your data are also undeniable. When it comes to delivering streamlined data to third party aggregation services in particular, such as pensions dashboard, the opportunity cost of not standardising data is simply overwhelming. If you are not making your customers’ lives easier, you’re not doing much good.”

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