IFAs are still in the age of the quill pen, was the shocking conclusion of a recent survey by IT solutions company, Sherwood International.
The survey aimed to discover how the Internet was being used in the financial services industry. But the results indicated that a high number of IFAs and intermediaries are being left behind when it comes to IT.
Of the 225 respondents, 42% did not use a computerised back office system, 34% do not have computerised quotation/product analysis system, and 15% did not even have a computer.
“I find these results remarkable,” said Brian Heale, retail marketing manager for Sherwood International.
Cost was cited as the main reason why intermediaries were reluctant to invest in IT. But the report also indicated 76% of IFAs who had invested in computer technology, believed that, in the long run, computerisation was proving cost effective.
But those who have resisted change could soon be left behind by the wave of Internet development expected over the next 18 months.
The Sherwood survey, Use of the Internet/WWW by IFAs and Providers in the Insurance Sector
, found that while one in three providers already have a Website targeted for intermediaries, nearly three-quarters of those who do not currently run such a site plan to launch a similar service within 18 months.
This could lead to a sea-change in the way business is currently transacted between provider and seller. It is expected that the Internet will no longer just be used to retrieve basic product information but will soon be used for more interactive functions, like obtaining quotations and processing proposal forms.
At the moment a third of insurers provide product information on the web, though this proportion is expected to double over the next 18 months. It is anticipated that 52% of insurers will provide quotes online by the middle of 1999, compared to only 13% at the moment.
It is expected that there will be an even more dramatic rise in the number of insurers processing application forms and proposals online. Currently there only 6% of providers use the Internet for this purpose, but in future it is predicted that this will rise to 57%.
But one of the most significant developments will be the emergence of the “virtual branch”, where intermediaries and their clients will be able to browse through products and services on offer. Just 2% of those polled for the survey said they currently have a virtual branch, but 73% said they expect to offer such services in 18 months.
Heale said: “Not surprisingly the vast majority of providers believe that IFAs who do not embrace the Internet will be placing themselves at a competitive disadvantage over the next two or three years.”
He added: “The tendrils of the Internet will extend right into core business, back office and support applications. Those providers who are unable to keep pace with the rapid pace of technological change will inevitably suffer.”