By Daniel Biondi, CTO, Insurance and Wealth Management, DXC Technology, Australia and New Zealand
Technological innovation and non-traditional challengers are reshaping customer expectations, transforming the competitive landscape and forcing insurers to rethink and reinvent their offerings and delivery capabilities. The future is true customer engagement in key life events supported by “anywhere, anytime, any device, any channel” … and not everyone will be successful.
Insurance has long been viewed as a relatively stable business within the financial services sector. Not with standing legislation changes, people paid their premiums on a regular basis. Recently the underlying assumptions and the core business models of insurance have shifted to the point where it will be forced to undertake significant change driven by a range of key market challenges that stem from:
• Elevated risks associated with an unfamiliar, post-Global Financial Crisis, economic environment;
• Stronger mandates on risk management, regulatory and compliance
• Heightened global tensions and cyber security influence the debate relating to how our data should be shared;
• The accelerated adoption of technology that disrupts current jobs via automation while creating new ones;
• The overall increasing digitisation of the financial services we consume;
• The changing demographics and preferences of insurance customers;
• Rising operational costs and reduced efficiency due to the reliance on rigid, aging infrastructure.
As an industry, we cannot wait to innovate. This is now an imperative. The real question is: how do we innovate to transform the insurance sector in a sustainable fashion to best leverage our current strengths in the sector to better fit rapidly changing customer needs?
Technology and Innovation: Tomorrow is already here
Unfortunately, the insurance sector has been slow to adapt when it comes to adopting new technology.
Insurers must evolve to ensure that they remain relevant in a rapidly changing, customer-driven environment
This is coupled by constraints on the reliance of legacy systems that are usually expensive to modify and integrate. Moreover, to accommodate for continual legislative changes, the ability to innovate is constrained by the need to focus efforts on compliance.
Overseas, technology companies are at the forefront of leveraging the latest financial technologies and these are ripe to replicate in our region. This means that the insurance industry battle for survival will not be waged against traditional financial institutions but against other enterprises which customers engage on a frequent basis, the likes of; Facebook, Google, Amazon and Apple. Not only is more information being shared with these organisations, knowingly and unknowingly, these organisations have set the standard of customer service that customers have come to expect from all organisations.
In the future, there is significant opportunity for InsurTech, FinTech and RegTech companies to enhance back office efficiency, reveal customer insights and enhance the customer experience. Automated solutions to regulatory challenges are needed to manage the cost of regulatory change as it is no longer affordable to throw project teams of people to implement change programs. The utilisation of technology solutions including open API’s, data analytics, blockchain, cognitive computing, Artificial Intelligence (AI), digitisation and customer communications management, digital platforms, and Robotic Process Automation (RPA) will assist the industry.
In essence, there is a need to look outside the traditional domains of this industry and to start adopting new technology solutions to be consistently successful in the future.
What business leaders need to do today, to prepare for tomorrow
Insurers must evolve to ensure that they remain relevant in a rapidly changing, customer-driven environment. No longer are insurers in the driver’s seat as it has never been easier to change between companies than it is today, thereby overcoming a previous historical cause of customer “retention” or lock-in. Customers know what they want, when they want it and, just as importantly, how they want it. A lack of attention to the “anywhere, anytime, any device and any channel” mantra will ensure that customers move their business to those organisations that do understand this need.
How service is delivered to the customer–the customer perspective view of service delivery–should be front of mind for all insurers. Customers will not care what it takes, internally to an insurer to deliver that service. They do care that the service is delivered with high quality in a simple fashion. Insurers that use a customer-centric approach, focusing from the outside-in, will derive a better understanding of their customers’ needs, and better cater to their needs to foster customer loyalty.
In the end, the way to the customer’s mind is all about context. Provide your customer with a simple, intuitive and, most importantly, relevant experience. It might not be an impersonal online interaction that a customer wants, but rather a face-to-face one. A flexible, customer focused insurer will know this and be able to predict what a customer will want and react to that customer in a unique, relevant and satisfying way.