Evolution is a force of nature and trying to work against it is never a good idea. As in the natural world, commercial enterprises that can adapt to their changing circumstances will be best placed for the future.
However, for those that really want to distinguish themselves, mixing the best of the old with the best of the new is the ideal recipe for success.
As things progress, we are often too ready to consign good working practices and procedures to the bin for the sake of change. We should only change things if they are genuinely going to deliver improvements and in many cases, we could do a lot worse than sticking by the adage, ‘if it isn’t broken, don’t try to fix it’.
We also have to be sensible to the fact that while change may solve old problems, it very often creates new ones and so the challenge in making alterations is to always take more steps forward than we are forced to take backwards.
One of the biggest challenges
This is something we are seeing in the payment protection insurance (PPI) market at the moment, which is in a state of flux. Like many other markets, it is striving to offer the best to its end users and in doing so product design, pricing and distribution channels are all being reviewed.
The internet has made a significant impact to the way PPI is bought and sold and making sure the online community works to the advantage of the consumer is one of the biggest challenges facing the PPI and wider financial sectors.
There is no doubt that the internet is a very positive thing for the PPI market when taken as a whole and it has created a cheaper and leaner operating model for many providers and brokers.
This in turn has led to cheaper premiums for consumers and more independent providers coming to the market, generating greater competition and choice.
In the past PPI was seen as a secondary or even tertiary purchase and was indelibly linked to the sale of a loan, a mortgage, or a car. People took out credit and then looked to safeguard it with PPI.
Offering borrowers this type of insurance at the point of sale was convenient for everyone, especially at a time when access to products was more difficult and searching out independent PPI products was almost impossible.
This is not now the case and although the cultural change is slow, more consumers are seeing PPI as a standalone product that they should seek out independently of their credit arrangement to ensure they get the best deal available.
A direct approach
The internet has become the first port of call for those carrying out research and the problem is that consumers are increasingly looking only at direct providers when it comes to their PPI needs.
They have got used to buying home, travel and motor insurance direct over the internet and are doing the same for PPI.
There is no doubt that consumers can get good products by going direct, but they are also doing themselves out of the expertise that a broker can bring to the process and in a market where there is such a vast difference between the best and worst policies, they could be making a costly mistake.
The internet is not only about being able to access providers direct or using comparison sites to throw up a number of different names to compare.
The comparison sites can be misleading as they may not provide access to all of the PPI policies in the market, and so they are rarely representative of what is actually available.
In the same way, going to two or three of the big brand providers will not necessarily give consumers a genuine idea of the best value products that are available.
If consumers work with an intermediary, they can still benefit from the efficiencies that the online distribution channel offers, while also getting the benefit that the broker’s knowledge of the market delivers.
Flying solo
In many walks of the financial world there has been an assumption that because people can go direct over the internet, this is the best way to do things.
In certain circumstances it is, but in many others all it means is that consumers are flying solo through a market they do not perhaps understand, while looking at a selection of products that are not representative of the best that are available.
The internet is an amazing disseminator of information. It generates efficiencies that have a direct impact on the price of financial products and makes buying and selling them faster than ever before.
However like all tools, its full potential can only be realised when used properly. Putting the internet to best effect is part of the evolutionary process facing the PPI market and as it continues to change, let’s hope we can do this and avoid creating new problems that simply replace the old ones we have dealt with.
