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Written by Kevin Okell on Wednesday 27 February 2019

This blog first appeared in MoneyFacts February 2019

As we enter the final year of the decade, it is interesting to reflect on how the world has changed since 2000. The rapid explosion in smartphone use (the iPhone wasn’t launched until 2007) has become a popular yardstick to demonstrate the pace of change in technology circles but there have been fundamental changes in many other walks of life too.

In the late 90’s organising a family holiday meant spending Saturday afternoon hopping between high street travel agents to compare deals. Then, in 2000, TripAdvisor launched its social travel site and the steady decline of bricks-and-mortar travel agencies began. Today, according to ABTA statistics, more than 80% of holidays are booked online.

The entertainment industry has been transformed too. Gone are the days of driving to your nearest Blockbusters rental store to flick through their film library, replaced by instant access to virtually any film ever made via streaming services like Netflix and Now TV. HMV is about to experience the same fate as Blockbusters as CD sales plummet. In fact, in most industries where the product can be digitised, it has been, and delivery of the content is now close to real-time.

But it’s not just digital industries that have been transformed. Online grocery stores have replaced the weekly trip to the supermarket for a growing number of shoppers and Amazon delivered 5 billion next-day packages to Prime members in 2017. Even the government has managed to join in with the Internet revolution. Not too long ago, anyone needing to tax a car was faced with a trip to a dwindling number of Post Offices to hand over their V11 form together with an MOT, insurance certificate and usually a cheque. Now, the whole process has gone online and even the awkward circular tax disc has disappeared.

You might reasonably expect Financial Services to be at the forefront of this technology revolution. With no raw material supply chain to worry about, no physical product to manufacture or distribute and a ubiquitous delivery network, our services can be delivered at the speed of light. So why is it that whole swathes of our industry still seem to be stuck in the last Century?!

BACS introduced electronic payments to the UK in 1968 and last year 6 billion payments were processed. Despite 50 years of staggering technology advances, these payments still take 3 days to clear.


M&G launched the first unit trust in the UK in 1931 and 85% of UK assets today are managed in pooled structures that operate in much the same way. Prices are generally calculated at midday so, if you buy or sell in the afternoon you’ll have to wait until tomorrow to see what you’ve got. And, if you want to switch between funds, you’ll likely be waiting 3 days to see the result.

Meanwhile, in the world of pension buy-outs, things are even worse. If you’re a trustee looking to de-risk your scheme liabilities with an insurer, the chances are you’ll be waiting months or even a year for the transaction to complete.

In short, rather than being in the Vanguard of technology change, Financial Services frequently finds itself in the Guards Van. The causes are many and varied, ranging from antiquated systems, to a lack of standards to the purely commercial. But, whatever the reason, it’s about time our industry joined the 21st Century.

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