Michael Common

Five ways brokers can rapidly digitise and innovate

Almost since the beginning of Nivo, we’ve been proud to support brokers with their digital innovation agendas.

2020 clearly made digital innovation a must, not a nice to have, for many brokers across all sectors and I’d like to share our top five learnings from working with them on how to rapidly digitise and innovate effectively.

1. Buy, don’t build

Being a broker is challenging, often in very competitive markets. Building technology is also very hard, expensive and carries a lot of risk that is impossible to foresee. Being both a broker and a technology company is therefore very difficult. 

Assuming technology differentiation isn’t the core part of your business strategy, ‘buy’ has to be the approach. Never before have so many options been available. We are all fortunate to live in the UK with one of the world’s best funded fintech sectors. Billions of pounds have flooded in to develop solutions for almost every conceivable need, for any financial institution. By sourcing software-as-a-service (SaaS) solutions, you can have a proven, high quality result, operational within hours, and pay a fraction of the cost of self-development as R&D is effectively shared across all of the fintech provider’s clients.

2. Make quick decisions

Making decisions costs time, and time costs money. In the old days, when technology was a huge investment with massive risk (ie when it had to be built), investing in decision-making processes was crucial. The incredible flexibility, selection and cost effectiveness of SaaS creates another opportunity. You will make much higher quality and efficient choices by making more, quick judgements on the technologies you want to try. 

Of course, when making these decisions, not every technology will work out. There are plenty of disaster stories we’ve all heard about. What the speed and low cost of procurement of SaaS technology now means though, is that the risk of any tech decision is much lower. The brokers that we have seen that have the most successful technology programmes are not afraid to try new things quickly, adopt those that work, and lose those that don’t. This leads to much better end technology solutions, because it eliminates so many assumptions from the process. You are making conclusions on real operational learning, rather than through different people debating different theories.

3. Prioritise security

While SaaS fintech has opened up incredible opportunities for brokers, there is one area where no financial institution can be complacent: security. There are already huge security issues with common practice across brokers, using unsecured communication channels like email, paper and post. However, at least we’ve had the opportunity to properly understand the risk of these channels, sometimes over decades. Any new SaaS solution potentially creates a new attack vector for your brokerage, and this won’t have been tested by many years of use. 

The good news is that many SaaS solutions built specifically for financial services will seek to increase security controls as the market rightly demands. Be sure to validate this though, particularly when looking at SaaS solutions not specifically for financial services. Even when making quick technology decisions, a security incident can obviously be catastrophic for any business, particularly a lending brokerage.

4. Invest in operational change

While the capital needs for technology investment have plummeted with SaaS, one part of most technology projects hasn’t. Operational change is still crucial to the success of any project impacting a broker’s team. The importance of this is often overlooked. As a decision-maker focussed on change and improvement, you may well find yourself at odds with the rest of your brokerage on the need to digitise and change. It is easy for people to convince themselves that customers love the way things are done and they should always be that way.

When introducing any technology which will impact staff, be sure to commit the time and effort into operational change. No transformation will be successful without this. It is often good to include the people who will be using new technologies as early as possible in the process. This way they will feel ownership for the decision. Focus not just on reaching agreement on the solution, but also the benefits that could be possible. Once the techn is implemented, take the time to walk through processes and provide clarity through training and communications on how existing processes need to change. Once operational, continue to discuss the change regularly. Determine objectively (ideally through pre-determined measures) whether the change is having the desired impact. Seek to identify operational modifications that can improve and optimise its impact.

5. Prioritise customer experience and integrate iteratively

When thinking about technology, people immediately start thinking about integrations. Rekeying effort between any two systems is boring, time consuming work. Staff will be grateful for anything that removes a rekey activity (and frustrated by any that introduces one). This clear staff demand often leads brokers to put disproportionate emphasis on removing rekeying when considering their digital plans.

In reality, it’s more likely that rekeying is far from the biggest resource drain in any brokerage. We have never come across a market where the dominant brokers had attained that position through the integrated nature of their back office. There are likely non-technical changes that would have a far greater impact on operational efficiency if that is where a brokerage is struggling to compete.

Instead, where we have seen dominance and rapid growth in broker markets, is where businesses have focussed on their digital customer experience. Customer advocacy brings in new and repeat business. When it comes to digitisation, many customers expect it, and the more convenient, quick and clear technology is for them, the more they love it. 

We therefore always recommend focussing on the customer experience first when digitising. Determine what your customers want and get as close as possible to that. As long as you select modern SaaS technology solutions, integration will always be an option afterwards. While integrating different applications is a technical job that will require some degree of ‘build’, the standards of modern SaaS solutions make it many times easier to integrate than in the past. 

The great thing about approaching digitisation this way around is that when it does come to integrating, the amount of effort any rekey is taking is easy to measure. The benefits of the integration are therefore very clear, and the change so small it is likely to be quite easy to provide an accurate cost estimate for it. This means you can iteratively pursue an integration agenda quite rapidly, and prioritise the work to remove each rekey based on those integrations that offer the best return on investment.

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