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FOR A DIGITAL INVESTMENT PLATFORM SHOULD YOU BUILD YOUR OWN OR GO WITH A SAAS OPTION?

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By Chantelle Arneaud, Envestors

 

During Covid digital has grown in the early stage investment space. With face-to-face meetings, and other events on hold, networks are now recognising the benefits of digital investment platforms.

For those networks ready to adopt a digital platform and offer an enhanced experience for both their companies and their investors, the question looms: should you build your own platform or buy one?

 

Let’s look at three key reasons why, for a digital investment platform, the decision to buy may be the best way to go.

1. Technology is not your specialist area

Malcolm Gladwell popularised the principle that it takes 10,000 hours to be good at something. It is generous, in this context ‘good’ means a baseline grasp. In reality it takes much longer to master any skill.

So, if you’re an investment firm or an accelerator, how many hours will it take you to be good at technology development?

The short answer is – too many.

You need an array of skills and resources to design, build and run an investment platform.

While you may have an idea of your requirements, turning that into a high-functioning product is a difficult task. There are many decisions to be made – all of which require subject matter expertise. For example, how much of your budget should you spend on design versus build versus testing? How can you ensure data security? What language should you build the platform in? How can you future-proof it? These are all questions technology businesses have the answer to but, starting out, you’ll have to learn as you go and that will be both expensive and time consuming.

2. Creating a technology platform will be very expensive

Building a technology platform is an expensive endeavour. If it weren’t, surely Software-as-a-Service (SaaS) wouldn’t be a multi-billion-pound industry? But perhaps you feel the level of control you’ll get from creating your own system is worth the cost. But how much will it cost? That, of course, depends.

You’ll need an expert team of software designers, developers, and QA analysts to turn your concept into a Minimum Viable Product (MVP). Depending on the emphasis you wish to put on user interface design, you may also need to bolster that team with Ux (user experience) designers. The MVP stage is only the beginning. Once you have a functional product, you need to go through a process of user testing and refinement before you’ll have a product good enough to launch.

On top of this, you need to consider system maintenance. This cost can be considerable. Nothing exists in a vacuum and you’ll need a tech resource on call to assist with bugs, outages, security threats and software updates.

3. You’ll get more than just the software with a SaaS provider

Working with an expert software provider, you will get much more value than just the technology itself. Depending on the partner, you’ll get additional support in a number of areas which can benefit your business.

 

Regulatory cover

Promoting and brokering deals are activities regulated under the Financial Conduct Authority. While there are some exemptions, it is a good idea to follow the baseline rules where possible to protect your organisation.

A good off-the-shelf investment platform will have this built in. Typically, this includes investor self-certification, appropriate risk warnings and audit trails.

You also need to comply with GDPR, KYC (Know Your Client) and AML (Anti Money Laundering) requirements. Again, off the shelf products, will include this and ensure the system stays current with changing regulatory requirements.

 

Deal sharing and distribution

Many of the SaaS investment platform providers include options to share your deals with other networks on the platform. This offers myriad benefits in terms of increasing the number of investors who have access to your deals – and thus your chances of closing a round of investment. You also have the option of accepting deals from other networks to share with your investors. This can reduce the burden of sourcing deals and provide a mechanism to keep investors engaged.

 

A community

Being part of a connected digital network allows for shared learning and resources. In addition to guidance on how to launch your digital platform and on engaging investors, you can benefit from shared knowledge, whether that be on deal marketing, setting valuation or investor relations.

On top of this, many providers provide community events. Again, this allows you increase investor engagement and eyes on deals.

 

The addition of new features on a regular basis

SaaS providers regularly roll out new features. For most this is monthly, while some will do so less frequently. This is a huge benefit to subscribing to such a service. For no additional cost or effort, you will find your platform getting richer and richer with new features. Many will also allow customers to request features and good providers will dedicate a percentage of all development time to implementing customer requests. Of course, your specific requests are not guaranteed, but if your ideas gain traction with other users there is a good chance they will be added to the roadmap.

Your might want to create your own platform but as you explore the complexity you may change your mind.  Subscribing to a Saas investment platform may be the best approach, leaving you to focus on your own areas of strength.

 

ABOUT THE AUTHOR

Chantelle Arneaud is from Envestors. Envestors’ digital investment platform brings together entrepreneurs and investors across geographies, communities and sectors – creating the single marketplace for early stage investment in the UK.

Envestors partners with accelerators, incubators and angel networks to provide a white-label platform empowering them to promote deals, engage investors and connect to other networks.

Founded in 2004, Envestors has helped more than 200 high growth businesses raise more than £100m through its own private investment club.

Envestors is authorised and regulated by the Financial Conduct Authority.

Business

OUTSOURCING YOUR IT SOLUTIONS CAN SAVE YOU FROM COSTLY DOWNTIME

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Cloud Services

Amir Hashmi, CEO and Founder of leading IT and Cloud services provider Zsah, discusses why you need full-time professionals if you want to avoid the money pits of IT downtime

 

A lot of wealthy business owners will uphold the following infamous statement – time is money. Many CEOs believe that it should be at the heart of your business strategy. They aren’t wrong, and it is no different when it comes to IT. Therefore, it is high-time that businesses consider the real risks and costs associated with IT downtime, and do all they can to avoid it

In the midst of a post-pandemic technological revolution, it’s now more important than ever to carefully consider who manages your technology. It is essentially the motor that drives productivity, efficiency and growth, and if therefore, if there isn’t a thorough and dedicated system in place, businesses risk system failure, which can risk everything.

Something so essential to a company deserves to be taken more seriously than just to deploy the services of an IT help desk when there’s a significant issue. The answer isn’t necessarily to consider ways in which you can fix a problem once it arises, but instead to ponder upon ways of preventing an issue from occurring in the first place. This is what leads us to managed IT support services: your personal, dedicated team of IT experts that not only fix issues when they occur, but that also constantly improve the software and hardware so there is less chance they ever take place.

 

The real cost of downtime

Whenever your IT isn’t functioning at its full capability, you are losing money. Even the shortest of gaps in service can severely impact the customers’ experience, your reputation, and the output and efficiency of your entire staff.

In 2017, ITIC sent out an independent survey to measure downtime costs. It found that 98% of organisations say that a single hour of downtime costs over USD $100,000, with 81% putting the figure at over $300,000. For 33% of businesses, 60 minutes of downtime would cost their firms between $1 million and £5 million.

Figures from Statista.com reveal 24% of organisations worldwide reporting average hourly downtime costs amounting to between USD 301,000 and USD 400,000, with 14% reporting greater than USD 5 million in costs.

Elsewhere, IHS Markit surveyed 400 companies and found downtime was costing them a collective USD 700 billion per year – 78% of which was from lost employee productivity during outages.

 

Managed IT solutions are the key

Though we may never know the full cost of downtime, it is evident that it costs individuals and businesses a large amount of money. Don’t wait until your next emergency to remedy a problem; get the professionals in now to prepare for the future, rather than just fix problems in the present.

When you work with a managed technology services provider, your network and infrastructure are supervised 24 hours a day, all year round. As with any IT service, this means that issues will be fixed – however the real advantage is more long-term. As technology service providers perform regular proactive upkeep, there will be a reduced chance of suffering from issues in the first instance, and when (or if) they do occur, it will be far simpler to recover data thanks to full cloud integration.

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HOW TRADITIONAL INSURERS CAN USE TECHNOLOGY TO IMPROVE THEIR RELATIONSHIP WITH CUSTOMERS

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The customer experience with insurance is anomalous, in that one is only required to engage with their insurer if things are going wrong for them. To add value to the relationship, new technology and methods should be adopted, in turn driving loyalty and business growth, writes Oliver Werneyer, CEO and Co-founder of Imburse

Oliver Werneyer

Insurance is one of the oldest industries in the world and it is still, to this day, considered a grudge purchase. Looking back, insurance has a history of having a challenging relationship with its customers. According to an IBM study, in 2008, only 39% of consumers trusted the insurance industry. This percentage has stayed largely similar over the years, having reached only 42% in 2020. For any business with growth ambitions, good customer relationships are crucial.

I believe that now more than ever, the insurance industry not only needs to continue investing in improving relationships with customers, but to really think about new ways of doing so. At a basic level, the moment of truth for an insurance customer is when either they need to pay or are getting paid. Insurers can have the best policy wording, quick claims processes, apps and advisors, but if the experience to pay premiums or to receive a claim is bad, the customer immediately loses trust.

The pandemic has exposed this tenuous relationship between insurers and its customers. The need to move everything online and provide personalised services has exposed significant shortcomings in the service insurers provide. The industry has been too slow to adopt newer technologies and move engagements closer to the customer (self-service and empowered). This is largely due to the legacy systems and processes that insurers failed to modernise over previous years.

This means that the better-positioned incumbents have stronger customer relationships and benefit disproportionately from the pandemic, as they are able to win more new customers and convert customers from other insurers. They also benefit from significantly lower customer acquisition costs and much better growth, as illustrated in this McKinsey report. Even new entrants or InsurTechs are benefitting massively by focusing on improved customer experience and customer relationships.

However, it is never too late for insurers to build better relationships with customers. The main way to build a good relationship with a client is to make life easier, live up to promises and add value through the relationship with them. By working on these key elements, insurers can start building strong relationships with their customers, and, through the right partners, deliver this in a timely and non-disruptive manner.

 

Embedded Services

Insurance products often get a bad reputation because they cost money, but the benefits might only come much later, or never. Customers don’t get to experience a positive relationship with insurance products, either because they never claim and feel like they lost out, or they claim and they’re in a bad situation. By either embedding other services into the insurance experience to deliver a more transactional engagement, or embedding insurance products into general customer experiences such as online shopping or rewards, insurers can enrich customer relationships to generate value.

This way, insurers become a value-adding part of the customers’ everyday activities and not just a product that they have to pay for and may never get anything back from. One example is to embed micro-savings capabilities, often found in banking, into pension savings and insurance products. This can allow customers to save more for pension, attract younger customers and build a portfolio of fiscally disciplined customers.

 

Tailored journeys and personalisation

Customers have come to expect personalised journeys and engagements from product providers. Streaming services, social media, e-commerce or mobility services have shaped the customer expectations. Now, customers are also expecting personalisation for insurers.

Insurers need to invest very heavily in delivering personalisation and customisation to customers as they engage with their products. Failure to deliver this puts renewed strain on the value perceived by the customer and their relationship with the insurer. This applies not only to customer interfaces, but to aspects such as payments. Insurers should make it easy and pleasant for customers to pay and get paid. As the main moment of truth, payment experiences need to work optimally.

 

Perceived customer value metrics and delivery

The value customers derive from insurance products is, generally, monetary. Therefore, insurers must invest in product enhancement to increase its perceived value. Perceived value is not tied to a monetary value. By being able to choose between multiple payment options, such as a $300 pay-out to a bank account or a $320 Amazon voucher, the customer has a higher perceived value of the payment. This can be achieved by leveraging non-insurance products that can be purchased at a discounted price, exclusive access that the customer would otherwise not have or conversion into a form that is more useful to the customer.

Payments, for collection and pay-out, are at the core of delivering this value. An excellent payment experience immediately influences the customer to be positively inclined toward a product (PwC report). In order to offer this, insurers need to leverage multiple technologies and providers, offer any speed of transaction in any market, and deliver faster automation and better risk control. The key is to transform insurance products into transactional value-adds to customers’ lives and use this opportunity to continuously build on relationships with customers.

The main roadblock for insurers is still the operational implications of these activities and the costs that arise. In looking to build a better customer relationship, insurers need to look at partners that are operational enablers to deliver this. Partners that can solve the integration and speed-to-market problem so that insurers are enabled to deliver new capabilities, not bombard them with new ideas and no path to delivery.

Imburse, for instance, enables insurers to access all the global payment providers and technologies available in any market. Through a single connection, insurers can deploy any payment capability into any channel, for collection and pay-outs, without ever again needing to build a direct operational integration to the providers. This gives them full freedom to leverage payments as a key value driver and customer experience enhancer.

Building a better relationship with insurance customers is key for the insurance industry to close the protection gap. Incumbents are in the prime position to look at Insurtech and Fintech partners to rapidly and significantly modernise, digitalise and transform their own capabilities to deliver major enhanced value to their customers.

Imburse is an advanced universal payment connector that enables businesses to gain cost-effective access to complete global payments technology, regardless of the service provider. To learn more, please visit www.imbursepayments.com.

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