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DIGITAL TRANSFORMATION IN INSURANCE: WHY LOW-CODE IS THE RIGHT POLICY

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David Kuhn, Insurance Solutions Director at Mendix

 

What is digital transformation? This is a term that countless CTO’s have battled with in every industry.

Essentially, it can be viewed as the process in which you capitalise on the power of technology to enhance your business model, acquire customers, and most importantly, create meaningful experiences. For insurance companies, digital transformation is also a response to new competitive threats, aging technology, evolving regulatory requirements, and emerging service-based product offerings. Today, digital transformation holds the key to a radical change in the industry, which will enable carriers to roll out products faster, respond to customer needs, and enable its employees to stay productive.

 

Changing dynamics within insurance

The insurance sector is under huge pressure to offer its customers the kind of services that they want. This includes a wide portfolio of products, a high level of personalisation and pricing transparency, combined with the need to know what factors are under consideration for the premiums being quoted to prospects. Unless an insurer is matching those expectations, there is nothing that will sway a prospect in the first place. But not reaching prospects isn’t the only challenge insurers face. Existing customers also expect this level of transparency. If it’s not met, they will switch providers without a second thought. Insurance has been ranked as the hardest to gain new customers so if current customers are also leaving, this is a serious challenge.

David Kuhn

But this is only the tip of the iceberg. Insurance companies have always had a large amount of claims. This has been amplified by the current coronavirus pandemic, which has led to a surge in claims that clog insurers inboxes. These new claims, arrive in such volume that customers find themselves waiting for hours, if not days, to speak directly with someone who can explain how the outbreak affects their policy. If smaller claims are not automated, this forces the claims team to spend time on claims that do not require the human interaction. Agents are overwhelmed; and it has become clear that the industry needs to automate processes to mitigate loss to revenue growth and improve experience.

But that is not all. In addition, market leaders are coming head-to-head with new entrants that are planning to transform insurance in much the same way Uber has changed ride-hailing or Amazon has taken over ecommerce. The combination of data-driven technology features with insurance products, called “Insurtech” has become successful because the capability enables companies to diversifying their offerings. Some of them are even offering data services and moving away from traditional insurance methods. This is changing the rulebook for large carriers who are looking at their own strategies to keep existing customers, attract new ones and provide them with the experience they demand.

With this, it quickly becomes apparent that digital transformation isn’t something that the sector can afford to wait on – it needs to happen now. So why is it not commonplace yet?

 

Inhibitors to innovation

The first culprit in insurance’s slow rate of adoption of innovation is the large footprint of legacy systems. These rigid, cumbersome enterprise systems plague the insurance industry more than any other economic sector. Due to this, adopting a radical approach is rarely possible. Instead, insurance companies prefer to incorporate new solutions that integrate easily with core and legacy systems. This approach doesn’t continue to push the enterprise forward, it is just adding technical debt.

This is an area where large carriers can take a leaf from the “insuretech” book, where microservices architecture is the norm. This type of distributed computing enables IT professionals to update and deploy one application of function at a time, without any impact on the wider business. Luckily for large carriers, they don’t have to choose between their legacy infrastructure and this more agile take on operations management. Using the right kind of technology, they can combine both to offer the best level of service, regardless of their internal challenges.

Then there is the age-old issue that all industries face: a lack of appropriate resources. Too often, businesses have the willingness to innovate, but their limited talent pool prevents them from turning their ideas into real-world solutions. Whether it’s a limited number of developers in the IT team or a lack of communications between the divisions coming up with new services and improved solutions to their business challenges, important projects often end up being pushed back simply because the company doesn’t have the right people to deliver them.

 

Betting on low-code – it’s a no-brainer

So how do insurance companies get themselves out of this conundrum?

First, the industry needs to change the way it looks at digital transformation. Too often, insurers focus on speed when it comes to digital transformation. But that need for speed is not a goal in itself. Being able to process information faster and deliver a better service to customers at speed is simply an outcome of successful digital transformation. Instead of focusing on pace, insurers need to assess what the objectives of their digital transformation really is. Do they want to compete with new entrants? Do they want to arm their staff with modern data-driven tools to attract tech-savvy talent and find new customers? Do they want to automate manual or paper-based processes to increase the productivity of their staff?

Once they’ve identified their objective, they will be able implement the biggest mindset shift associated with digital transformation: that it is not the sole responsibility of the IT team, because the IT team is seldom on the frontlines when it comes to assessing the needs of customers and staff. Instead, insurers will benefit from greater collaboration between IT and the various business divisions. Insurance companies that are already embarking on this mindset change have an ace in the hole: low-code, a technology that enables employees who have little to no technical experience to turn their ideas into real-world applications. This is a tremendous benefit when it comes to experimenting with ideas that could have a significant digital impact on the business. Paired with traditional software engineers, these teams can challenge market differentiation at a pace envied by others.  By empowering employees across the whole business with tools to collaborate on software development, insurers can tap into huge creative potential to turn ideas into applications that support the business’ long-term ambitions.

Crucially, the real problem isn’t that there is a lack of digital skills in the insurance sector; what we truly lack is activating digital mindsets across all employees. Today, every graduate coming out of university is tech-savvy and has the technical ability to code. They only need to be given the right tools in order to significantly contribute to the business.

This also helps ease the burden on the IT team, which often starts working on projects without full visibility of the implications for the business and any governance issues. For an industry that is wary of risks and keen to mitigate them, this may come as a surprise. Fortunately, with low-code, this problem can be eradicated. To ensure the highest level of transparency, low-code is a way of self-document everything IT is working on, providing a holistic view of every project within the business. This means that compliance with regulation becomes a whole lot easier, especially in an industry where changes occur frequently, and audits are commonplace.

The insurance industry is already embracing digital transformation – it just needs the right tools and mindset to ensure it empowers all employees to participate in this major change for the industry.

 

Technology

WHAT TO KNOW ABOUT ENHANCING THE ORDER-TO-CASH PROCESS WITH ARTIFICIAL INTELLIGENCE

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Mark Sheldon, Chief Technology Officer, Sidetrade

 

The global pandemic has meant companies everywhere have woken up to the fact that cash is king, leading to a renewed prioritisation of liquidity generation and cash conservation to survive.

One of the ways that companies have sought to secure cash flow is through improved Order-to-Cash (O2C) processes – helping enterprises minimise risks and maximise returns in their financial dealings.

 

But not all O2C processes are created equal. In fact, I see the current O2C market split into three segments:

  1. The first being the companies that employ manual siloed systems, who continue to work predominantly with Excel spreadsheets and even the postal system, and they continue to manually process customer data across a variety of siloed functions (sales, support, finance, etc.).
  2. The second segment, and where we start to see technology being leveraged, is a more digitised approach, whereby the basics of automation are employed, or digital collection media such as email is the norm. Firms taking advantage of these kinds of technologies can expect to benefit from improved efficiencies across the whole O2C process.
  3. The third and most mature segment however, and where the full benefits can be reaped, is when AI capabilities are built into the O2C process.

Mark Sheldon

In overlaying AI into this process, firms are able to leverage data and intelligent insights to supercharge their efficiencies even further. Teams can benefit from AI-powered recommendations that lead to optimum results, improved customer retention and overall streamlined O2C workflows. Customers can enjoy a much more sophisticated and effective end-to-end experience with their suppliers. And the business at large can benefit from significantly healthier cash flow, reduced bad debt and the enhanced ability to better forward plan.

But where to start when implementing AI technologies into your O2C process and what are the most important things you should be aware of?

 

Top tips for implementing AI-powered O2C systems

Firstly, it’s important to look past the hype of AI. It’s become a bit of a buzzword across all industries, and there are many vendors out there that label themselves as an AI provider, but simply don’t have the creds for it.

Fundamentally, without historical data, there is no AI. A company just starting out for example, might have the technical abilities to build an AI platform, but is highly unlikely to have the data sets required to feed it, and make it truly “intelligent”.

Secondly, it is critical to clarify the difference between robotic process automation (RPA) and AI. Many RPA vendors talk about AI and RPA interchangeably, but they’re not the same thing.

RPA is generally concerned with automating everyday processes – using software “bots” that you can set up to emulate a particular task; so it’s very much focused on automation of existing manual processes. Whilst there are some similarities in terms of efficiency benefits, it’s very different from what we do in AI. In AI, we use algorithms to intelligently recommend the best course of action, by taking the human thinking out of the system.

The risk with a purely RPA-based solution is that you end up automating ineffective or even damaging processes. For example, missing insight into where bottlenecks lie, or where siloed systems further amplify cash flow problems. So you could argue there is nothing truly intelligent about RPA.

Thirdly and finally, one of the biggest barriers that still exists today for anyone looking to employ AI in the O2C process, is the cultural challenges. Wherever we deploy AI, the number one challenge in terms of the rollout is the cultural belief and trust that AI is going to do a good job.

Fundamentally, AI-powered O2C software has been proven to improve key business metrics. With AI solutions, you can expect significantly reduced DSO, faster cash collection, and improved efficiencies by up to 50%.

What’s more, with AI, businesses can enjoy far more in-depth insights: understanding which suppliers aren’t paying fast enough, where to get cash into the business more efficiently, or identifying where the business opportunities for growth lie. All of this is powerful ammunition for CFOs looking to implement a cash-to-cash culture across the entire business, and a valuable aid in demonstrating the significant impact that AI in the O2C process can have across the business.

 

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Business

DIGITAL TICKETING: THE CHALLENGES AND OPPORTUNITIES FACING PTOS AND PTAS.

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Arnaud Depaigne, Product Manager, Smart mobility at Fime.

 

Transport ticketing has rapidly evolved in the digital age. As recently as the 1990s, closed loop systems based around paper tickets or tokens were the norm. This resulted in a poor user experience. Lines to purchase tickets were often long, and turnstile throughput was inefficient. Today, passengers can use a smartcard or even their phone as their ticket, utilizing contactless and Near Field Communication (NFC) functionality to tap-and-go.

This proliferation of digital ticketing has only been further accelerated over the last 18 months. The pandemic has presented Public Transport Operators (PTOs) and Public Transport Authorities (PTAs) with an urgent need for hygienic contactless solutions. As passenger numbers slowly begin to return, the ecosystem is presented with a unique opportunity to advance urban mobility and move towards a Mobility-as-a-Service (MaaS) model. However, with this also comes a series of challenges.

 

Reacting to changing user behavior

Arnaud Depaigne

Today’s consumer world is digital, global and on demand. Passengers want seamless integrated solutions that allow them to plan and pay for their transit using only the device in their pocket. Furthermore, the urban mobility ecosystem is seeing a rising demand for interoperable MaaS solutions that provide end-to-end transportation on a single ticket. Mobile ticketing must deliver on these expectations as well as being user friendly, reliable and secure.

In part, this is being achieved by changing the focal point of urban mobility from the station to the passenger themselves. This consumer-centric approach allows PTOs and PTAs to reconfigure their sales and distribution channels to meet the growing demand for digital solutions.

Mobility providers can achieve this by integrating Host Card Emulation (HCE) and NFC technologies into their ticketing solutions. More technologically literate passengers will already be familiar with digital wallets and contactless payments. This mitigates concerns about achieving widespread user adoption and means that any digital urban mobility solution could be rolled out at speed. Another benefit to this is that it significantly cuts costs for providers. As passengers no longer require mode-specific travel cards, everything is instead accessible on one device. Providers can therefore cut their expenditure on manufacturing the cards themselves. They can also scale back the on-the-ground resources allocated to support issuance.

 

Context is key

When rolling out a solution, providers must be mindful that each individual passenger has different needs. Cities have unique transit networks of varying sizes that require different approaches. Furthermore, any solution must be accessible to all demographics, from digital natives to those who are less technologically adept. They must also remain aware that not every passenger will have a bank account. Solutions must not exclude people. They must offer customers a range of options to make their payment.

Account-based ticketing (ABT) manages the consumer’s funds in the back-office account, making the payment automatically. This gives users flexibility to move between several fare media to make payments depending on what is most convenient at the time – be it by smartcard, mobile device or wearable. To this end, ABT solutions simplify maintenance logistics, improve security while also ultimately reducing the cost of urban mobility.

By moving from a stored value card system to an account-based approach, PTOs and PTAs can achieve “the holy grail of ABT” as it has been described by Visa. This system opens the door for future adjacent services by achieving interoperability between different fare media.

 

The importance of open standards

Open standards can offer a pathway to truly realizing seamless transport ticketing. With open standards, PTOs and PTAs remain in control of their ticketing network as the supply chain remains open to multiple solution providers. Providers can therefore avoid vendor lock-in and the issues that can present. Furthermore, an open standards approach means that PTOs and PTAs can evolve organically with the technology as it is rolled out. This allows them to remain agile and prepared for future challenges and developments.

 

The need for expertise

PTOs and PTAs will need to continue evolving with future technological developments. By remaining aware of the challenges that may lie ahead, they can put themselves in the best possible position to capitalize on opportunities. Infrastructure migration does not necessarily require huge investments, and with the right support, the transition can be made as smooth as possible.

Fime’s global expertise can help demystify and simplify ABT deployment. With over 20+ years of experience ensuring the efficient and successful implementation of card and mobile transaction services. Fime is well-equipped and experienced in supporting the transport market in delivering the next generation of transit ticketing solutions in a complex market.

 

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