The convergence of financial services presents particular challenges to each segment of the industry. Financial services are in a state of flux, trying to understand both the opportunities as well as the obstacles that must be faced. Immediate challenges include IT hurdles, a new and still changing regulatory environment, and the necessity to broaden the expertise of previously segmented sales forcesnot to mention competitive issues. Opportunities such as immediate access to new markets and expanded product and service offerings are significant. Taking advantage of the opportunities while keeping the obstacles to a minimum are the tasks at hand.

Financial convergence impacts have been slow in coming, but they continue to grow, says Judy Johnson, vice president, insurance information strategies, at New Brunswick, N.J.-based META Group, Inc. Insurers are looking to the future, trying to understand whether they can continue business as usual in a world that is rapidly reconfiguring itself from the ground up.

In facing the challenges posed by convergence, insurers need to stay aware of what is happening in the other financial segments. Banks are developing innovative ways of integrating insurance products with existing and new distribution channels. Not unlike their insurance cousins, complying with the regulatory changes, streamlining processes, and cutting costs are paramount to success. Keeping timely sales opportunities in front of the sales force is another challenge.