About five years ago I remember discussing the IntelliFlo proposition with some industry contacts. A new approach to software delivery in Financial services – an ASP back office service. Would Advisers be ready for such a solution? How would it work in an offline world? Will Advisers trust a 3rd party to host their systems and indeed their data?

Five years on, IntelliFlo have held true to their core model and have taken a substantial share of the market. Indeed at the recent Adviser 2008 show their stand was the busiest of all the software vendors. They challenged the norm and benefitted commercially as a result.

It’s always refreshing to see a new business model take on established ideas and approach the market with a fresh pair of eyes – especially when it works. True Potential now seem to be challenging the norms in the same way Intelliflo did five years back. They not only have an ASP model but also an all you can eat pricing model covering front office, back office, portal services, help desk and training. Excitingly the charges are not based on upfront fees but on a percentage of business written. Again the sceptics have been dismissive but their business model is beginning to take hold and I expect them to be a major player in the coming years.

So where will the next new business models come from? Well, the more generic CRM market has four new models that may be worth considering:

• Open source CRM vendors such as SugarCRM – due to the opensource nature the price points are drastically reduced;
• Freemium Services – where the vendors, like Zoho, offer the service free to certain sizes of user base, market segments or indeed to all users for a time limited period;
• Free services such as FreeCRM which make money out of advertising and add on services;
• Platform as a Service (PaaS) models such as provided by salesforce.com that provide 3rd parties with the development capabilities to build customised versions the core products.

The generic ‘On demand CRM’ vendors are currently in high growth mode but often lacking in the profit margins they crave. As a result they are considering targeting vertical markets that show a characteristic, from their perspective, of exhibiting far higher margins. If they take aim at the Financial Services marketplace the outcome will be interesting to watch. The specialist nature of this segment should not be underestimated, especially considering the ever changing regulatory challenges. However if the vendors partner wisely and market effectively this can be overcome. However even if their attempts fail they will still almost certainly bring new and fresh thinking about the way business is conducted and the impact will be felt by all.

Recently, we’ve been looking at the Annuity services on offer from the quotations portal providers and seeing how these facilities have improved.

In the past, obtaining an accurate illustration, for example, for an Open Market Option (OMO) has proved relatively difficult. Primarily, the difficulty has revolved around the annuity provider needing to be able to flex the rates at short notice (as result of competitive or financial issues) and so being reluctant to distribute large rate tables to third parties. The result of these inhibitions meant that the comparative engines tended to use illustrative results rather than penny accurate, individual quotations.

With the advent of real-time gateway links to insurers, annuities have been added to the portals’ repertoire – this trend has increased recently with new services on offer from the major providers like Assureweb, Exweb and Webline extending their services to take into account impaired lives products etc.

What is surprising from my perspective is the lack of the ability to write the business electronically – there are, admittedly, a couple of issues here:

1. There are no industry standards for the collection of data for annuity business;
2. A number of the providers have not built any ecommerce links into their annuity processing systems;
3. Still a large percentage of OMO business never leaves the providers’ premises and so doesn’t warrant ecommerce investment.

But what it does show, is there is still way to go in trying to change business processes, both by the provider and the intermediary, to embrace cost-efficient, electronic routes to market – isn’t it about time these sorts of facilities are a matter of course?

“When will things get back to normal?” is a common cry amongst the mortgage market at the moment. At the recent “Mortgage Event” conference it was interesting to hear Martin Reynolds of PMS take this question head on.  His position on the matter was refreshing – the last 5 or 6 years were the abnormal times and we are just returning to the “Norm” now.

Once the media hype and hysteria is stripped away there is some evidence to support Martin on this. For example, if gross lending falls back to around £250 billion it will still be probably the 6th largest on record.  The removal of 100% plus mortgages and the sharp reduction in the sub prime and self certification mortgages leaves the market in a similar position to the market of the last decade.  While clearly these changes remove the boom times of the last few years it doesn’t kill the mortgage market.

The difference this time around however is that  the distributors are smarter and fitter.  Market conditions have been tough in 2008 as we have been diving back to the “Norm”, and this has forced a leaner breed of broker.  Lenders have been selective with which brokers they deal with, encouraging investment in new processes and technology to improve the quality of the business submitted and the accuracy of the applications.  Brokers have been driving to meet the TCF guidelines again embracing technology to help them on the way.  So while the market conditions may return to the long term “Norm” soon, the distributors are better placed to work this “Norm” and benefit accordingly.