Jean-Michel Franco highlights the importance of being data-driven in the pensions industry in order to modernise and implement a successful digital transformation strategy
At the start of the year, former Minister for Pensions, Ros Altmann cited research from Pensionsync which highlighted the pensions industry as being behind in its digital transformation journey, with Altmann adding that the industry is “light years behind” in the way it manages its data. The findings of the research noted the long-term impact of the pensions sector failing to address its use of data, inevitably endangering transparency and hindering the industry’s drive for modernisation and digital transformation. This, in turn, has significant repercussions for the industry’s roadmap and future.
Organisations in all sectors are beginning to understand that respectful handling of customer data can offer a competitive advantage through increased customer trust, leading to loyalty. This forces companies to be smarter about the data they choose to process and store, and how it is used to enhance the services provided to customers.
Every sector is affected—but some are changing faster than others. Alongside the pensions industry, the energy and utility industry has been slow to adopt the management of data into its business models due to the sheer volume of data and the complexity of fragmentation within the market. Many utility companies are now in the early stages of innovating around the management and use of data, while others have accelerated, launching digital factories and building in-house applications to tap into the potential of automation and analytics.
For example, international energy company, Uniper is leveraging cloud computing, automation and multichannel communication to transform its back-office systems. These technology-driven approaches are improving the way that utility companies engage with residential, commercial and industrial customers to move them beyond outage map and bills online to provide operations updates, resource efficiency programmes and tailored rate structures.
The complexity of the utility space is equally present in the pensions sector, and perhaps it is not surprising that companies in highly-regulated industries have been more cautious around their use of data. Consumer trust towards data protection is at a fairly low ebb, and more and more businesses are being scrutinised over how data is stored, collected and used – the most public drivers of which are data breaches which receive a consistent stream of media attention. Failing to manage the impact of a data loss incident will create a flurry of headlines and can incur a substantial regulatory fine, but just as damaging to the company is the impact on the brand’s value, reputation and consumer trust.
The GDPR has focused attention on how businesses need to prepare for and respond to data breaches. Consumer reactions and understanding of the outcome relating to data breaches are determined by two major factors – the speed of notification and the quality of response. For example, following the British Airways data breach in August, BA was able to execute its data management plan by announcing the breach within a day of its discovery and mitigating the initial panic from customers by publishing a timely statement. British Airways continued to support those individuals affected by contacting customers who were at risk, advising them to ask their bank or credit card provider how best to mitigate the impact of the breach.
The pensions industry is strongly dependent on consumer trust. When the product in question is as important as a pension, consumers need to have a high degree of certainty that the company looking after their future is secure. For this reason, the pensions sector, in particular, can ill-afford to have that trust damaged by data breaches or mishandling. But at the same time, companies rely on their ability to capitalise on data to offer customers more tailored services and improve the bottom line.
Moreover, by incorporating data industries will undoubtedly benefit from the data-driven insights that will inform decisions and ideas, transforming business and continue to drive growth.
There’s a clear tension between the need to do better business and improve customer service on the one hand, and on the other to improve the security of data and data handling processes. The good news for pensions companies is that these two positions are not mutually exclusive, and customers will benefit from the better use of data.
The customer experience is changing dramatically and will continue to do so in the coming years. We’ll continue to see industries that once thought data played no part in their businesses adopt and leverage data in new ways, increasing efficiency and driving business growth. The good news for pensions businesses and their customers is that with the right controls in place, both sides of the relationship stand to benefit from the industry’s increased focus on data.
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