The target audience for online financial services systems has dramatically changed since the Millenium with domestic markets proving more attractive and lucrative than the complex offshore market
The future of online financial services systems was looking bright back in 2000 with virtually every offshore life company and bank having web-based systems under development. But the subsequent market downturn and retrenchment within the offshore industry has left us only marginally advanced some five years later.
Initially, the target market was to develop extranets that would allow intermediaries to interface with product providers, and these systems would gradually be expanded to allow private clients to access product information either direct from providers, or via their intermediaries' portals. In some cases, the larger private banks or IFAs offered clients comprehensive unit trust aggregation systems with online access but no online dealing facilities. Online dealing was available from a variety of discount stock brokers but not one organisation was able to really provide an effective solution for clients and intermediaries that included share, fund and insurance company products along with banking.
Domestic markets with specific tax regulations have proved far more attractive for the large fund supermarkets and wrap providers to target, where they can build up substantial assets under management in order to acquire critical mass. As a result, few, if any, have been attracted by the idea of moving into the relatively diverse and complex offshore market.
Banks like Lloyds provide online access to their customers not only to view their accounts but also to view their unit trust portfolios, but without the ability to deal. Royal Skandia takes another approach and provide an extranet (Insite) that allows its 5,000 active registered IFAs to view policies, access literature and do limited switching. They do intend to follow this up with direct client access, which will again relieve the administrative burden on IFAs.
RMB International is one of the few banks to offer a reasonably comprehensive unit trust dealing platform that can be white labelled for intermediaries, allowing them to effectively contract out their back office with product costs being slightly lower than that of insurance company bonds. Fairburn (formerly Gerrards) in the Isle of Man also offers a unit trust dealing system which is primarily for its own clients' use but can, in certain circumstances, be white labelled for IFAs looking to deal for their clients.
The Hansard 'OnLine' system has proved hugely popular with IFAs globally. It is a client servicing tool, which also serves as a marketing and information system, open to clients on a 24/7 basis all over the world providing fast and easy access to current data and analytical information in a choice of customised formats to suit IFA needs and track client portfolios. Several updates per day ensure data is always current.
IFAs report that Hansard OnLine provides them with a powerful marketing advantage and the ability to attract and retain clients, and as a result the service won International Investment 'Best Internet Service Award' in 2003 and 2004.
solving the problem
Ultimately, no-one has yet cracked the issue of providing a complete online aggregation system suitable for both intermediaries and clients. One of the remaining problems is that it is extremely complex to try and combine valuations of different life company bonds on to one independent system, hence the use of unit trusts by most system providers. Notwithstanding that, insurance company bonds remain the dealing system and aggregation platform of choice for the majority of IFAs in the offshore market.
Domestic markets have proved far more attractive for the large fund supermarkets than the complex world of offshore.
Ultimately, no-one has yet cracked the issue of providing a complete online aggregation system suitable for both intermediaries and clients
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