Navigator prepares to take on the world

Norwich Union’s Navigator is to become a global product, with plans to launch the electronic administration service in Asia and expand the European operations.

Norwich Union’s Navigator is to become a global product, with plans to launch the electronic administration service in Asia and expand the European operations.

Navigator managing director Mat Walker says the recent upgrades to the product will enable it to handle the volumes of traffic expected from an Asian launch.

“Earlier this year we launched Navigator in Spain as part of the European initiative and the recent upgrades will give us a platform to go into Asia,” he says.

Navigator is being administered out of Dublin for the European operations and Money Management understands the service will be launched in Italy soon.

In Australia, Navigator has been enjoying record inflows, Walker says.

“In March we had inflows of $186 million, our best month to date,” he says.

The service is still the second-largest in Australia, with $5.2 billion of funds under administration, however the recent $25 million upgrade of Navigator is part of a push to be number one.

The upgrade, called Project Greenfield, has turned Navigator into a reporting and administration system that has an Internet-based system as its heart.

The Navigator master fund with its investment options remains, but the new system is designed to give planners a more robust and flexible administration program. The three components of Navigator, FPI Desktop, NavLink and Navigator Administration have all been upgraded and linked together to produce one system.

The FPI software has new modelling tools that include month-by-month projections, customised review and workflow processes and dealership management tools.

NavLink now allows online access to Navigator’s administration system, electronic lodgement of applications and online unit pricing.

The Navigator Administration System now includes dividend reinvestment options, multiple payment options and multiple-fee options.

Walker says the upgrade of Navigator has become essential to maintain the product’s strong following.

“We have the largest usage by independent advisers and we want to maintain that strong position,” he says.

In the very competitive master trust business, Norwich knows that the winners will only be the top few products and the rest will face merger or extinction.

“Survival is going to be a scale issue and only a handful of the major players are going to be successful,” Walker says.

Lesser players can be caught in a vicious circle. They lower fees to attract more business and this leads to more pressure on the administration to handle the volume. Walker says they will then be faced with increasing transaction costs and falling inflows due to poor service, so they will fail.

He argues that larger players have the scale to maintain margins despite falling fees.

“Everybody wants full electronic transactions, but smaller players have to give this cost away to win distribution, and that means they become part of the vicious circle.”

Walker also believes it is now too late for companies to develop this electronic administration platform from scratch and expect to win a lion’s share of the business.

Norwich accepts that the years of building business for Navigator have positioned it well for selling to a receptive audience.

“With this sort of acceptance by advisers, it will be very hard for a new entrant to develop a system that will become a major player in the industry,” Walker says.

Project Greenfield is an example of the major commitment needed to keep the product in the top five. Norwich started work on the upgrade of Navigator 18 months ago. It is Norwich Union’s biggest IT investment outside the UK. Walker is quick to point out that the spending on upgrading Navigator is now ongoing, to ensure the system remains up-to-date.

“The development of the platform is now a long-term program that continues to refine the consolidating reporting structure,” he says.

There are about 100 people working on Project Greenfield, together with external advice from PricewaterhouseCoopers.

“We are building a robust system designed to take a substantial volume of business,” Walker says.

The ‘substantial volume of business’ is defined as inflows of $200 million a month, which Walker says is not too far away.

“We need the higher volumes to achieve the productivity gains to cope with the margin squeeze which is going on at present.”

The new system will also allow new services to be added like direct share trading, credit cards and mortgages.

The economies of scale means Norwich can talk to major players about adding these services, something which will place smaller players at a disadvantage. Walker admits that when Navigator goes searching for new products, all companies give the master trust a hearing because of its position in the marketplace.

This bargaining power will be strengthened when Navigator becomes a global product, says Walker.

However, he emphasises the adviser will remain in the driving seat with the integrated system. The transparent pricing in the system will allow the adviser to determine how they handle fees.

“The adviser has flexible approach administration costs and their remuneration has never been simpler,” Walker says.

Loyalty programs are also being looked at for advisers as part of the push to ensure they feel in control of the system.

Because the upgrade of Navigator is on-going, the rollout of the new services will be continual. It has, in effect, jumped over the traditional wrap account. The recent move will allow the advisers to become fully involved with e-commerce as part of the integrated package now being offered by Navigator.

“The technology is changing so rapidly that we have to change Navigator on an on-going basis to remain ahead,” Walker says.

Walker makes no secret that Norwich is gunning for the number one spot, currently held by the Asgard master trust, but he wants to achieve it on his terms.

“We are not measuring the number one position in size, we are looking at achieving this position through our service levels and inflows. That will make us the market leader,” he says.