Simple, effective and cost effective products have never been more important for the financial services industry than during the current economic downturn. Consumers are cutting back on expenditure wherever they can, regulation is increasing and the industry still hasn’t fully regained the trust of the general public - and financial services is suffering as a result.

Consequently, it is vital that the sector achieves a significant level of growth in order to get the economy back on the road to recovery and retain the competitiveness of the UK in the global financial marketplace. With future growth for the industry progressively emerging in the BRIC economies, the market needs to continue to innovate and respond to market conditions in order to keep up with the changing demands of the consumer. The opportunities available depend heavily on the adaptability and forward thinking of the industry, evidence of which has slowly begun to emerge in the UK marketplace.

A recent report has found that half of people have not taken steps to protect themselves and their loved ones by preparing for the future with comprehensive life insurance cover. This figure formed part of an eight-page study, the third Scottish Widows Consumer Protection Report which claimed that 44% of all people in the UK have taken out life insurance policies. During the current recessionary climate, the insurance market has suffered and a poll of 5148 adults in the UK revealed that during the recent economic crisis, many people have been continuing to ignore protection products such as life insurance, critical illness cover and income protection.

With the economy still way off the CBI predicted rate of growth and the impending threat of rising inflation, everyday life has become increasingly unstable. Consequently, the average consumer spending pattern reflects a need to cut costs in areas such as insurance and payment protection.

There are new entrants to think about too – retailers are looking at financial services and seeing opportunities to enter the market. All of these factors have forced the industry to sit up and take notice of the growing consumer demand for a more simplified and personal product which takes the headache out of lengthy applications and complicated advice. Providers are under increasing amounts of pressure in the current market conditions to create and bring new and innovative types of product to market whilst also keeping up with the consistently changing and heightened levels of regulation.

Let’s look at protection products for instance.

Could these be sold as ‘preserve your lifestyle’ products rather than ‘preserve your life’, for example. Could we reposition protection products to meet the needs of the consumer society? Couching the same products in language which appeals to the consumers, now carrying several hundreds (thousands?) of pounds worth of electronic equipment about their person every day, could be the difference between a successful launch and a damp squib.

So how can providers solve these types of problems in order to deliver the right products to market before the competition? A new way of thinking, as well as new and innovative tools to help them manage the challenges is crucial. What is needed is the ability to involve and integrate all of the different groups which need to have an input into product design and development - IT specialists, product consultants, actuaries, outsourcers and administrators, and, of course, product developers - to manage the product design. If a provider can put the power of product development in the hands of integrated, strategically-minded teams, what can be achieved is a much greater degree of control over product launches.

In practice, all of this means that providers will need to review and alter their policy administration systems – or outsource to achieve the same effect. Legacy administration systems will struggle to adapt to the new world of product lifecycles. In most cases, product engines in existing (and especially legacy) policy administration systems take too long to be easily modified. We’ve met with some clients who take 3 years to get a product to market!

Can you imagine what would happen to Apple’s share price if every new iPhone iteration took 3 years to launch? Furthermore, even if the product engine can be adapted, making the necessary changes requires the IT department's involvement as well as bringing in actuarial expertise to test the products before production, and business users to manage the products once they have been developed. With all of these different parties requiring involvement, product-to-market times clearly are considerably lengthened. Solving this challenge is the key to getting product launches right, first time, every time.