The market challenge: Consumer Direct
Consumer Direct, the insurance market joint venture between Capita Insurance Services and Capgemini, is helping to change the face of the financial services industry through the use of configurable, virtualised IT resources based on a Services Architecture framework.
- Industry
- Financial Services
- Alliance partner
- IBM
- Solution
- CRM
- IT Transformation - Strategy and Architecture
A changing landscape
The retail insurance market is intensely competitive and becoming more so. Financial services companies are constantly seeking ways to tailor services more precisely to individual customer needs, to deliver with the utmost speed and efficiency, and yet to protect or enhance their margins as they do so. Achieving this desirable goal is not at all easy, and many established insurance companies have been feeling some pain recently, as a result.
In addition, the growth first of telephone and then of Internet-based sales channels has changed the relationship between vendors and consumers. New channels have certainly reduced average cost of sale, a key goal of early adopter companies, but they have also made it far easier for consumers to compare offers and shop around. Loyalty levels have gone down as a consequence and rates of churn are higher than ever before.
Specialised partnership
In this very different market context, back office activities are being increasingly designated as “non-core” for market leaders, whose key differentiators are product design, customer service and trusted relationships with partners and customers, alike. To achieve the combination of speed, quality and cost effectiveness that they need, most leading players are aiming to offset risk and reduce overheads by seeking innovative new ways to handle many aspects of technology, administration and data management.
This has fuelled a growing trend towards partner-based operations, which potentially opens up great opportunities for new entrants to the market. They can rapidly build a presence for themselves through creative use of low risk, low cost virtual insurance capabilities, based on collaborative relationships with specialist partners. It also offers traditional insurers the possibility of transforming their competitive position through divesting themselves of many back office functions.
This approach is a challenge to established methods and requires an adaptive vision to make it work. The ability to partner flexibly and the confidence to use high quality virtual resources are essential for success. The rewards, in terms of speed, efficiency, reduced risk and lower cost base are potentially very exciting.
The project
Consumer Direct was one of the first services designed and built specifically to provide effective virtual technology services to serious players in a rapidly changing marketplace. Based on a partnership between Capita Group, one of the UK’s leading business process outsource specialists and Capgemini, this is a ground-breaking, service based approach that is already delivering competitive advantage today.
The intention from the start was to make sure that virtualised technology resources are always perfectly aligned to the service provider’s business vision. This meant adopting a true build to run approach, designed for operation from a Capgemini data centre and combining skills from both project and services organisations. Doing this successfully meant overcoming some significant challenges. For example…
Channel management
Customers now buy insurance products by phone, through the Internet, interactive television, various intermediaries and bundled with other products and services. To provide top quality service, it is now seen as absolutely normal for all account details and information concerning transactions to be instantly visible and updateable across all channels. All this has to be done at high speed and with complete security. As new channels open up (through mobile devices, to give one example), the same level of service will need to remain accessible, secure and reliable.
Choice and targeting
It is no longer necessary for customers to accept products and services that only approximate to their needs. They increasingly expect offers to be customisable, and this means that for the service provider, reconfigurable components are needed as the basis for their products. All the risk management implications of “on the fly” configuration of offers have to be factored into their systems and the risk shared in order to keep their own commitment within acceptable limits.
Consumer Direct enables market-facing clients to do what they are best at: provide a wide range of flexible offers and support them with excellent customer service. Consumer Direct guarantees technology availability and quality of service, data management and adherence to regulatory frameworks across all relevant channels. Rapid scalability and effective process management is built into the offer from the outset.
How it works
Consumer Direct is more than just another traditional outsource contract. It is a highly flexible, virtual technology service. It has been built using adaptive IT techniques that ensure maximum responsiveness today and clear development paths for the future. The essential ingredient for ensuring that the virtual back office service works effectively for all clients, at all times is a clear services architecture vision. The design of the service was architecture driven, not just at a conceptual level but also in the logical development and physical structure of the systems driving the service.
The architectural advantage In a service architecture based environment, different technology resources are maintained in autonomous layers, with standard interfaces enabling them to be rapidly configured in exactly the combinations needed to handle specific user requirements. The Consumer Direct solutions architecture is consistent with Capgemini’s services architecture vision, with special emphasis on the need to provide highly effective multi-channel integration. That is how our virtual support infrastructure is able to act as the all-important link between customers demanding growing flexibility in the way that they buy, and a potentially unlimited range of different service providers, not just in the insurance field but in other market sectors, as well.
Multi-channel integration
The architectural design approach begins with the end user customers, who can access the service using any one of a growing range of channels. They currently include branches, face-to-face meetings with brokers, call centres, kiosks, via a web browser, using interactive digital television or mobile devices. In all cases, the customer goes through the same authentication and security procedures within the Consumer Direct service delivery framework.
Interfaces are provided to service provider systems, such as CRM, customer databases, data warehouse and workflow, while separate interfaces enable access to external specialist services, such as rating engines and validation of banking details and payments. The result is an architecture that ensures strict security and customer confidentiality, while enabling new levels of speed and agility in the processing of transactions.
Business process orchestration The key to the success of Consumer Direct is Business Process Orchestration, the architectural service that enables technology resources to be aligned with continuously changing business needs. In this way, Consumer Direct ensures that…
Straight through processing is the norm, simplifying processes, reducing the time and resources needed for any transaction and playing a major part in reducing costs. BPOA drives access to technology resources from the transaction down to the administrative layers of our virtual technology infrastructure.
There is a single view of the customer, enabling information to be accessed via any channel, while enabling consistent update of information across all relevant applications and databases from a single point of access.
Resources are highly scalable, supporting rapid fulfilment and unexpected shifts in usage patterns. This lowers the barriers for entry to the marketplace, enabling client companies to keep their risks low while knowing that they can nevertheless successfully deal with sudden growth spurts.
Development Consumer Direct is a flexible solution built using many of the key components of Adaptive IT. The development process was largely carried out within Capgemini’s unique network of Accelerated Delivery Centres (ADCs), which specialise in developing and bringing to market reconfigurable solutions using standard components linked to advanced architectural and design skills.
Technology components Key elements within Consumer Direct are best in breed Java 2 Enterprise Edition technologies, including IBM’s WebSphere and Versant’s object database: enJin.
Build to run A key factor in the success of the project is the way that operational considerations were built into the design from the start. This was always conceived of as a build to run project and there was great attention to detail over all operational processes, including monitoring and support functions, in order to cut out as much risk as possible.
Long-term management Consumer Direct is not simply a standalone solution: it is also part of a ten year business process outsourcing contract with the major retail bank that has become the launch client for the system. The system is managed by a multi-disciplinary team uniting architectural design, technical services, delivery and sales specialists ensure both the technical excellence and market relevance of this virtual environment into the future.
Results
Consumer Direct was adopted by Abbey National Bank Plc, one of the largest retail financial services companies in the UK, for administering the more than one million household and motor insurance policies it sells each year through all channels. Abbey National is also one of the UK’s largest mortgage companies and the latest release of Consumer Direct enables mortgage transactions to offer a relevant cross-sell of household insurance to each applicant.
Benefits Both established and new entrants to the insurance market share key benefits from the Consumer Direct approach. These include:
Fast, low-cost start up , enabling newcomers to enter the market at low risk to themselves and permitting established players to test precisely targeted new offers with outstanding flexibility.
Scalable environment , enabling dynamic response to market changes and highly competitive, volume based pricing, even for an exceptionally broad product range.
Consistent quality of service , based on reliable, single views of the customer across all channels, leading to more exact knowledge and faster, more responsive customer service.
Higher system integrity , with resilient, scalable and future proofed systems that are always secure and available.
The future Consumer Direct was developed to address specific needs within the insurance marketplace, but its potential is not confined to this area alone. The architectural design and technology components are relevant to all similar applications across many different market sectors. The Services Architecture design approach implies the ability to reuse components and systems for a variety of uses. Consumer Direct is now ready to help reduce costs and speed up time to market in other markets, as well.