The deal delivers security and certainty to the many thousand TrigoldCrystal users who must inevitably have had some questions over the future of what for many will be a key supplier, since Mortgage Brain withdrew from its previous takeover attempts in March last year.
Although TrigoldCrystal had been reporting significant profits – £1.2m in 2010, this was down from a peak of £6m in 2004 (2011 figures have not been published to date) – there were inevitably questions to be asked over the long term future of the business.
By becoming part of the business which includes, amongst other things, the largest life and pensions quotations and new business portal and one of the leading investment adviser client management systems, the company fits neatly into an expanding portfolio of offerings that can now boast an unparalleled range of technology propositions for investment, protection and mortgage advisers.
This deal also brings the prospect, for the first time, of a truly integrated life, protection and mortgage portal.
The major quotation services for the life and mortgage industry grew up separately, even though large numbers of their adviser users operate in both business areas. For Avelo to optimise the return on this acquisition it will be crucial for it not to let the mortgage related services become the poor relation within its business.
Given other major relationships it has in the mortgage market it has a strong incentive to avoid this risk and there is therefore a real opportunity that we will see the emergence of a single portal service that is suitable for investment, protection and mortgage business.
In many ways it is hard to see any area where the TrigoldCrystal offerings are not a good fit with Avelo. Avelo has a quotation portal, with new business capability, multiple client management offerings, both Adviser Office and Office Web (an industrial strength administration and payment processing systems for large networks) and specialist tools for building adviser websites. TrigoldCrystal has equivalent offerings for each part of the mortgage process.
As identified above The Prospector sourcing engine is an obvious candidate for even more detailed integration with the The Exchange life quotations engine. It is hard to see how this cannot bring major benefits to the users of both systems.
With the pending introduction of gender neutral protection rates TrigoldCrystal customers will benefit from The Exchange’s greater expertise in the protection area over the crucial change over period. It is no secret that The Exchange is by far the dominant portal in the protection market and as such any insurer has to prioritise development with them.
This is not to say that there will not be some conflicts that arise from the merger. Historically Investment Client management systems had tended to integrate equally with both Mortgage Brain and TrigoldCrystal; with the latter now part of Avelo it is easy to imagine that some of these organisations may be less keen on detailed integration.
That said the footprint of TrigoldCrystal amongst those advice firms that practice equally in the investment and mortgage areas is probably such that failing to optimise such integrations would probably be counterproductive were other client management systems now to give preference to Mortgage Brain.
In any event this situation mirrors a similar situation in the investment, life and pensions arena where both Avelo and Capita with their Exchange and Webline offerings respectively also have competing client management propositions; Capita are known to be developing an extended new client management suite for delivery later in the year.
It will be fascinating to see how Mortgage Brain, Capita and iPipeline, the new owners of Assureweb, react to this deal. It is generally accepted that Assureweb will benefit substantially from having a focused technology business as its new owners as distinct from a group of life offices whose core business is a long way removed from building an entrepreneurial e-commerce business.
Many would argue, I would certainly be among them, that it is to say the least questionable if the mortgage broking community has been well served by Mortgage Brain being owned by a group of the largest lenders. Whilst TrigoldCrystal may have been undercapitalised and lacked the resources for a major systems rebuild, the synergies outlined above provide an obvious momentum for significant innovation. An opportunity I would expect Avelo to look to capitalise on.
Against this background this might possibly be a good time for the lenders who collectively own Mortgage Brain to cash in their chips and put the business effectively into an auction between the owners of the other life and investment portals, with the loser facing the prospect of being severely constrained in their ability to operate in the mortgage area which in practice delivers the vast majority of protection life cover.
The main challenge to Avelo, as it is with the rest of their portfolio, is to bring all the constituent parts together to be able to operate seamlessly to meet the needs of business sectors that increasingly have an essential requirement for technology to reduce cost and improve efficiency. The extent to which they achieve this will probably define their ultimate success or otherwise.
Ian McKenna is director of Finance & Technology Research Centre- see here for a longer version of this blog