Blog: 1st - The Exchange on the acquisition trail again

M&A amongst the tech suppliers to IFAs shows no sign of slowing down, with 1st Exchange & N4 today announcing it has acquired website provider Screen Business Limited.

Screen Business provides self-service websites to IFAs which enable them to automate key client servicing and administration business processes. Over 150 bespoke Financial Services websites and integrated online systems have been developed by the team during the last ten years.

For larger firms and financial services product providers, Screen Business delivers data feeds, dynamic fund factsheets, past performance documentation systems and a range of other business-specific services.

Intermediated consumer solutions from Screen Business include Annuity quotes, integration with Fund Supermarkets and employee benefit services.

Screen Business' clients include distributors and providers, such as Origen FS, Chelsea Financial Services, Greystone, AEGON, JP Morgan, and Legal & General.

The acquisition of Screen Business is smaller than last year's acquisition of N4 but none the less it points at some key strategic intentions. In this acquisition is a recognition that many IFAs will want to adopt a multi-channel distribution and service strategy as they move past the hurdles of RDR and the deadlines of 2012.

Costs need to be driven out of servicing clients, especially in the mass market where e-commerce has a large role to play in achieving this. The acquisition shows recognition to the importance of having a strong B2C capability.

1st Exchange & N4 has a long history of supplying IFA solutions to the market but has had more limited success in helping IFAs with their Business to Consumer (B2C) systems. The company announced its intention to add Client Portal (which is intended to enable end users to access Adviser Office) to its flagship product ‘Adviser Office' a while ago and this is in development but it is yet to come to market.)

To date its approach has been to rely on partnerships with the likes of Screen Business, Sammedia and IFA System to provide IFA websites. Its quotation service Exweb, while dominant in the B2B world hasn't had the success of competitors like Webline in the consumer space.

Screen Business on the other hand has a strong track record and brand in both delivering client facing websites and client facing quotation sites (especially in the specialist annuity market). The synergies between the two companies could be substantial.

A few challenges do exist along the way. 1st - Exchange N4 has just got its act together with its client portal and I understand it is now progressing well and due for pilot. Early indications are that it is functional and will be a big step forward. The solution has a client communication platform and document store as well as online portfolio creation. Although these clearly overlap with offerings from Screen Business, early indications are that 1st - Exchange N4 will take the best parts of the Screen Business applications and add them to its Client Portal offering, and it will also keep the Screen Business application stack running alongside.

While we understand the acquisition strategy, and appreciate the need to look after the existing clients of Screen Business, the lack of a clear product retirement strategy from 1st - Exchange N4 continues to confuse the market.

Screen Business might be a well-conceived acquisition but the key to its success will be the integration of the businesses post purchase. A clear integrated product strategy needs to be put in place along with a clear brand and naming convention.

We are told that the rebranding exercise will complete in March and this will resolve much of the confusion. If this is matched with a clear product strategy, it could create a powerful multi-channel solution provider that is able to serve the needs of the wider financial services community.