The setpiece debate at our recent HomeGame 3 event in Edinburgh looked at where change and innovation comes from in the platform market.
Seccl chief executive David Ferguson opened the session with a pretty withering attack on the current state of the platform market, arguing that established platforms have proved they can’t by their nature be the drivers of change.
Scottish Widows managing director of pensions and distribution Jackie Leiper took the opposing argument, making the case for what larger organisations bring to the table.
The debate was often spiky, but well argued throughout and provided an interesting take on where and how platforms and the wider sector can change for the better.
Here’s a snapshot of what they had to say.
Laying down the gauntlet
David Ferguson, Seccl
“I suspect if [Transact founders] Ian Taylor and Mike Howard hadn’t come along in 1999, things would have carried on pretty much as they were, because it suited the incumbents. Innovation is ultimately a culture issue, and a leadership issue.
“The reality is big organisations are heavily invested in minimising risk, and I don’t think truly disruptive ideas can really take hold in that environment. Big companies tend to be run predominantly for shareholders, rather than for customers.
“For all the progress that’s occurred here, we know big companies can’t do this because we’re now in a position where satisfaction with the platform market is lower than it’s been at many points in the last 20 years, which is not a positive thing.
“Innovation is not a 19th century brand on top of FNZ and an inability to answer the telephone. And it doesn’t become that if you’ve got a cool promotional video. Innovation is about making things materially better on a continuous basis all the time… I think it’s an accident of history that we’ve got here, and I don’t think it’s the future.
“Doing the right thing when no one is watching, that’s what innovation is to me.
“Interestingly though, I think big companies can be a catalyst for change. Ian [Taylor] frequently mentioned the fact that Standard Life was one of the big drivers of Transact’s early success, because they made the concept of a wrap platform credible. … But it can also lead to the stagnation we’ve got now.
“Some big companies innovate massively. Look at Vanguard…. But it’s not a case of small companies don’t do things properly and big companies do.
“Mike Barrett made the point in a recent TCWU about the FCA’s Dear CEO letter to platforms. When that letter landed, I suspect a lot of the disruptor firms were super excited, and that none of the incumbent firms were. I think that is a symbol of what’s going on here.”
In defence of scale players
Jackie Leiper, Scottish Widows
“Being part of a big organisation gives you the chance to invest in the business, you’re not having to worry about issues like raising capital, that investment is there. You’ve got access to a lot of resources and expertise.
“In my business I’ve got the workplace business with 4 million customers, the share dealing business, the intermediary platform, the annuities and protection businesses.
“I think us bigger businesses could do a much better job of how we could bring things together in an easier way for advisers.
“I do agree though that the disruptors bring some real creativity and real challenge. Look at banking, when digital banks were being set up and we saw the Monzos of the world. I think they really were transformational in pushing the big banks to really accelerate digitisation. Being part of a big bank, we’ve got 21 million digitally active customers now, who visit their online platform almost every single day.
“When you think of the experience and expertise that a big business now has in consumer behaviour and the way they access and think about money, I think it gives you a whole different perspective on how you design your platform business, your proposition, your communications and so on.
“You can take some of the learnings from smaller businesses, and I think big businesses have found a way of accessing some of that creativity.
“Big organisations do have more governance, it goes with the territory. I probably speak to the FCA every week about things. That’s just how it is – they take their lead from big businesses. And I don’t mind it, it can be beneficial, as it can create influence and give opportunity.
“The good thing is in my day-to-day role is I’m not thinking about how I can sell my business, I’m not trying to get value from an IPO perspective. I’m trying to grow the business for the parent company.”
