As the pandemic continues, retirement services providers are finding it a challenge to modernize core systems while also addressing new data and digital needs. At Aite-Novarica’s most recent Retirement Services Research Group meeting on January 27, my colleagues Nancy Casbarro, Mitch Wein, and I led a discussion that covered topics like this.
The meeting centered on major issues facing the industry today, such as integrating and/or replacing legacy platforms, improving data quality, and meeting changing customer expectations.
Consolidating Legacy Platforms
Many research group participants mentioned the consolidation of legacy platforms as a goal for their organization, but integrating legacy platforms is difficult and can be costly. Such endeavors require a multi-year effort with a dedicated team; plan providers should take a step back and develop a future state roadmap before launching major transformational initiatives. However, successful consolidation efforts have positive operational and financial outcomes for the business.
One research group participant shared that modernizing their tech platforms has helped them be more responsive to the acceleration of leveraging new product and distribution opportunities. Updating tech platforms also allows for more efficient integrations with external partners and getting away from file-based integrations. As one participant put it, when tackling platform consolidation, “there is a threshold of pain the organization has to endure, but once you get to the other side a lot of doors open up.”
Improving Data Quality
Updating technology platforms alone will not address all the modernization issues facing retirement services providers. Data challenges can create an array of problems for plan providers as they work with product offerings which have narrow margins and can be very sensitive to unit cost shifts.
One research group participant emphasized the importance of addressing data quality when attempting a system update: “We are seeing that if we overlook data and start a major transformation for any kind of source system or admin system, it can have unpredictable results.”
Retirement services providers should develop a data governance practice in conjunction with a system update. Data governance requires business-led sponsorship, established data ownership, and company-wide acceptance. Companies should also monitor data quality and hold business data owners accountable for improving the quality of their data.
These best practices can help an organization use their data to deliver new insights and create opportunities to expand relationships with plan sponsors and plan sponsors alike.
Meeting New Customer Expectations
Good data and updated tech platforms can also help address changing customer expectations. Aite-Novarica’s perspective at the outset of the pandemic was that in the first three to four months we would experiences five years’ worth of acceleration in digitization and virtualization. In retrospect, this appears to have been a pessimistic assessment.
Retirement services providers saw a significant increase in digital tool usage when interacting with plan participants as well as employers/plan sponsors, and customers now simply expect that business will be done digitally. Creating a digital experience is a challenge when dealing with underlying core and data issues.
Customers have expectations that legacy systems were not designed to accommodate, and while modernization and digitization will be a heavy lift for the insurance industry, providers should capitalize on the digital acceleration the pandemic has brought to our industry.
We look forward to exploring more topics like these at the next Retirement Services Research Group meeting on April 28th. To register for the meeting, please email me at [email protected].