Future role of digital technology for financial mutual organisations  

Future role of digital technology for financial mutual organisations  

8 December, 2021

Whitecap Consulting, in partnership with the Association of Financial Mutuals (AFM) and a number of sponsoring partners, recently published a report analysing the strategic landscape for financial mutual organisations in the UK. The Whitecap team is summarising the key findings in this series of blogs.

In this article, Julian Wells and Chloe Thompson of Whitecap Consulting examine the role that digital technology will play for mutual organisations with regards to enhancing member engagement and delivering efficiency gains. The blog also discusses the current approaches to the adoption of technology across the AFM membership and poses a number of questions to CEOs and leadership teams that consider the potential opportunities surrounding technology and collaboration and the potential areas for future investment.

The report highlights a number of themes relating to technology, each of which is discussed in turn below. The full report can be viewed here 

The majority of AFM members appear to have adopted one of three approaches to their technology.

The first observation from this research in relation to technology is that the technology provider landscape is less competitive than we have observed in other markets, for example the building society sector. While there are a large number of tech providers in the markets that AFM members operate in more broadly, there are only a small number of providers that appear to be active amongst the AFM membership. As well as this, many of the organisations build and maintain their own IT systems, a distinct characteristic we identified in the AFM membership. This finding was supported by our online survey which revealed that 63% of AFM members plan to internally evolve their current systems as part of their future tech plans rather than replace them, and only 15% of AFM members plan to outsource IT capabilities to third party providers. Three approaches are utilised by AFM members with regards to their IT infrastructure:

  1. members that have built and maintained their own IT systems generally use inhouse resource.
  2. members that have adopted a hybrid approach, use both inhouse resource and third-party providers to build and develop their IT infrastructure.
  3. members that have completely outsourced their IT solutions to a third-party provider.

When looking at which organisations have adopted which approach, we broadly found that the medium to large AFM members appear to be more likely to either build and maintain their own IT systems or adopt a hybrid approach to modernising their tech, whilst a number of the smaller AFM members outsource their IT solutions to third-party providers.

The degree to which AFM members have embarked upon their digital transformation journey varies.

We also observed that the degree to which AFM members have embarked on their digital transformation journey varies significantly. Encouragingly, a mix of both large and small organisations are well-advanced with modernising their IT infrastructure, suggesting that despite the financial resource constraint that some AFM members experience, progressing with their digital capability still remains a priority. PG Mutual provides one example of a small friendly society that is making significant progress on the journey of modernising its tech. With internal IT systems that have Application Programming Interface (API) capability and an online self-service quote function, PG Mutual continues to invest in improving both their operational efficiency and customer experience, despite having less financial resource than some of the larger providers.

Further developments in technology have been observed across the AFM membership. These include: The Oddfellows which has developed a seamless digital system that allows members to access their matured Child Trust Funds without having to endure a long paper-based process; Cirencester Friendly which is undertaking a complete end-to-end digital transformation project, that will result in a more efficient back-end and an improved user experience for the Advisers that sell its Income Protection products; and Cornish Mutual which is developing an in-house digital tool that measures land more accurately in order to prevent the issue of underinsurance.

Regardless of how advanced each AFM member is along its digital transformation journey, there is a consensus around the future role that technology will play for the organisations.

Regardless of how advanced each AFM member is along its digital transformation journey, the data from the online survey reveals a consensus around the future role that technology will play for the organisations. Particularly when trying to attract a new generation of members who perceive digital as a way of life.

According to Capgemini (2019), 52% of insurance customers placed high importance on mobile, internet, or website channels for conducting insurance transactions and with Generation Z having never experienced a world without smart digital technology, organisations will need to provide seamless omnichannel access to meet the expectations of the new generation. A sentiment supported by the survey which reveals that 90% of AFM members agree or strongly agree that digital technology will be critical for operating effectively in their markets and 88% believe that digital technology will be required to keep pace with other providers and customer needs going forward, suggesting that there is a strong awareness and acceptance from the AFM membership that modernising their tech will need to be an investment priority in order to maintain competitiveness and continue attracting a new generation of members.

Questions for CEOs and Leadership Teams

Throughout each key section of the report, a total of 32 strategic questions were posed for CEOs and their leadership teams to consider and address as appropriate. The questions in relation to technology are as follows:

  1. Can you clearly articulate how your technology strategy is supporting your business strategy and are there any areas where the link is somewhat obscure?
  2. Are you clear about which approach your organisation will take to developing tech going forward, considering the evolving needs of current and future members? (in-house, hybrid or outsourced)
  3. Are you clear on the expectations of your members in terms of offering a modern user experience and self-service capability, and do you have a plan as to how you will meet them?
  4. Are you clear about where you are on your technology roadmap and what your investment priorities are going forward?
  5. Have you considered introducing automated workflow process to improve the user experience and also remove multiple data entry and inefficient workflow?
  6. How are you ensuring that you are aware of the technological innovations being utilised and adopted by key players within the sector(s) that you operate in? Are you exploring the potential opportunities that these innovations could provide to your business and your members?

This is the third in a series of blog posts that focus on key themes addressed in the research. The topics are covered in more detail in the report which you can download via the link below.

Background to report:

Analysis of the Strategic Landscape for Mutual Insurers & Friendly Societies 2021

The research underpinning the report was conducted by Whitecap Consulting in partnership with the AFM and involved a quantitative data analysis of all 43 Mutual Insurers & Friendly Societies, interviews with 31 of the CEOs, and an online survey which received a total of 61 respondents.

The project was conducted in partnership with the AFM with support from industry sponsors including: Altus ConsultingBenenden HealthCirencester Friendly SocietyCornish Mutual, Fidelity InternationalHolloway FriendlyMillimanOddfellows (which includes Unity Mutual), PG MutualRussell Investments, and Royal London Asset Management.



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