Customer Relationships & IT - The touch of success

It is an odd paradox that so much of the new technology we have become familiar with has the potential to amaze and irritate at the same time. The speed and flexibility of today's websites and transactional engines represents a quantum leap in terms of the ability to satisfy customers' needs compared with what was available only five to 10 years ago. However, all too often, this miraculous technology has the ability to throw up a succession of dead ends and frustrating options that drive us to distraction.

For example, on one hand, it is wonderful that calls can be made to BT late in the evening to enquire about a problem with a phone bill. On the other, it is incredibly infuriating to be required to deal with an automated call-handling system that routes the caller through five different 'phone trees' and then - astoundingly, considering the call is to the UK's major telecoms provider - getting an engaged tone.

The IT challenge

This, then, is the great dilemma that businesses face at this early stage of the 21st century. We have technology at our fingertips that has the power to delight our customers, yet, equally, it can be the source of many of the complaints we deal with and trigger that much-heard denunciation: "I'll never do business with those people again."

This dilemma relating to the deployment of new technology has been known and observed for some years. Back in 1982, a then-obscure futurologist named John Naisbitt wrote a best-selling book on major developments in the world's culture, opinions and ideas, entitled Megatrends. One particular chapter in this book was called High Tech/High Touch and, in 1999, Naisbitt expanded this into an entire book of the same name. In summary, High Tech/High Touch examines the problems being created by the advent of radical new technologies when they begin to interact with customers, for example.

'High-tech' is a term with which most of us will be familiar, but 'high-touch' is relatively unknown. High-touch in this context relates to the concept of human relationships and communication. In Naisbitt's lexicon, a high-touch business is one driven by personal relationships, while its low-touch counterpart will be based on some form of remote transaction. Now, if it is also a low-tech business, that could mean written orders being sent; however, with a high-tech business, we know we are in the realm of call centres, e-mail and other forms of electronic transactions.

Naisbitt's principal stance is that high-tech businesses tend to be low-touch. A website may very work fantastically but, when something goes wrong or does not quite conform, we cannot find the telephone number to ring or the helpline only operates in restricted hours and charges an astronomical sum for every minute spent on the line.

So, how does this issue of tech and touch relate to the premium finance industry? Like most sectors in the UK, the premium finance industry has undergone a massive change in terms of the technology that underpins its infrastructure and business processing.

As something of a technological laggard, it was not until 2000 that things really began to happen in premium finance. That was when a desk-based PC system for brokers was first offered by one of the larger players. Since then, every premium finance provider has developed its own online solution while the continued growth of the big broker systems likes Acturis, Misys and Sirius, with their premium finance bolt-ons, have altered our particular niche of the insurance market in just three years.

But it is not just the premium finance providers that have leapt onto the technology bandwagon; brokers have made considerable progress in their use of IT and the quality of their platforms. Back in 1999, when a premium finance provider was experimenting with what were called 'semi-automated documents' - these were Microsoft Word documents containing autofill fields - not all the brokers we were working with had a PC. We would send out documents in Microsoft Word 97 format, only to discover that large numbers of our brokers were using older versions of Word and the older Windows operating system, which were incompatible with our version. Today, this sort of thing does not present the issue it once did. Virtually every UK broker now has a PC on every desk, with internet access and e-mail provided through compatible and up-to-date platforms.

Why has our industry and its broker partners made the leap to the adoption of robust new technologies so quickly? Certainly it is cost-driven - we all know that technology can save time, reduce head counts and increase accuracy. Technology means a premium finance provider has the ability to review deals hourly or daily and make adjustments that, in the past, would have taken days. Technology can also increase consistency - transactions will always be handled in the same way and take the same amount of time, plus it gives management greater control in terms of setting parameters and understanding the business.

The technological revolution

While this technological revolution has doubtless been a major factor in the premium finance industry's continuing success, it is not without its problems - and this is where we see the low-touch threat that can develop in so many of these businesses become apparent.

Another broker has reported that, when he accesses one of his premium finance providers through a software house's system, it actually takes considerably longer for the system to respond than when he simply sends the information via e-mail or to the finance provider direct. The problem here is that the system is only quasi-automated so when it polls insurers for quotes, it only polls those with full-cycle electronic data interchange. Any other quotes await manual intervention.

Another classic problem is that these automated systems are fine at handling standard business but, as soon as a deal is found to be anything other than simple and ordinary, it seems to fall into an administrative 'black hole' where it languishes until the broker makes enough telephone calls and wades through enough phone trees to reach the right person to prompt some action.

Some of the automated systems are undoubtedly high-tech but have been built in very rigidly efficient ways, which makes them very low-touch. Regularly expiring passwords, unnecessary sign-in steps and even systems that, once logged out, cannot be logged back into for another 30 minutes, are examples of low-touch or even 'no touch'.

The overall problem is a simple one and its origin is not difficult to fathom - business technology at its best is designed and built to support a process but, in too many industries, the norm is now that the technology is the process, and the personnel have merely been cast in a supporting role.

What is intriguing is that, while many of the premium finance providers have, by design or not, become high-tech/low-touch businesses, their broker partners are undoubtedly high-touch organisations. Think about it: brokers sell through personal relationships and one-to-one contact. They are companies dominated by meetings, telephone calls and regular correspondence. Yes, they use technology, but the vast majority of those brokers use their technology to support their high-touch relationships.

If brokers become high-tech/low-touch, they begin to look and feel more like a direct insurer and the customer will wonder what value the broker is adding to the transaction. Brokers are high-touch and must remain high-touch if they are to survive. Why, then, does the premium finance industry believe that adopting a low-touch approach will win their business?

Getting the balance right

The high/low-touch dilemma faces all premium finance providers and they must get the balance right between the two. Some have opted not to use call centres in pursuit of this; creating instead a team of office personnel that handles all client calls. This deliberately high-touch approach is designed to replicate the level of contact that many brokers like to provide their own customers. This can also be facilitated by having staff on the ground to maintain active high-touch with the brokers served by a provider.

However, this needs to be backed up and balanced with efficient processing, as providers cannot afford to be high-touch but low-tech. For example, aascent's automated system, Aapex, has been designed to overcome as many of the classic low-touch problems as possible. It monitors deals constantly so they can never fall into that administrative black hole mentioned earlier. However while aascent would, in high economic theory, function at its most efficient in cost terms if the firm insisted that all business placed be done so through Aapex, aascent allows brokers to submit business in other ways - by e-mail or fax if that is what makes them comfortable. It is a trade-off in that, while this may not be maximising efficiency in technology terms, it is doing so in touch terms.

If the premium finance industry wants to look for solutions to the high-tech/high-touch issue, then examples lie in sectors such as retail banking and some of the major online service providers.

An organisation such as HSBC's First Direct can be dealt with through a very easy-to-use website, but there is also the option of speaking to someone over the telephone 24 hours a day or by visiting an HSBC branch. For example, online retailer Amazon combines a sophisticated site with extremely high standards of customer service such as constant updates on the progress of an order and the fastest replacement of faulty goods I have ever come across. This, without a doubt, is the level of service we should be aiming for.

Broker priorities

Some commentators may suggest that the premium finance industry is too highly commoditised for high-touch service to matter in the great scheme of things. Brokers, they argue, are concerned about one thing only - price. But we would argue that is not the case. A recent survey of brokers conducted by aascent shows that three things matter most: rates; ease of use; and quality service. Of these, ease of use and quality service are high-touch in nature.

Brokers are naturally a high-touch business. Premium finance providers need to bear that in mind when structuring their business processes and service levels. In the recent past, too many premium finance providers have been guilty of overlooking this point. The businesses that succeed in the premium finance market in the next few years will be the high-tech/high-touch companies. As an industry, we need to stop thinking of technology as the core of our businesses and see it more as the tool that supports the real process. The insurance industry should adapt a maxim from another industry because it is all about relationships. Only then can we be assured that our technology and customer service work in tandem to delight rather than disappoint.