Connect with us

Technology

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

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.

 

Banking

HOW BANKING IS USING AI TO PROCESS CUSTOMER FEEDBACK

By Dan Somers, CEO of Warwick Analytics

 

More banks are turning to practical AI to rapidly analyse customer conversations for sentiment and emotional intent to get the insight and automation they need to transform their customer service and operations.

Here we look at 5 ways in which banks are using AI to process their customer feedback more effectively:

 

Processing incoming queries more efficiently

AI can remove the need for manual review of each incoming query and enables banks to handle them effectively from the outset.

The analytics can facilitate a much smoother omni-channel experience for the customer by: identifying which channels your customers are best suited to – and which work best for specific types of interaction; understanding the causes of channel failure and what drives customers to switch; and reducing customer effort by delivering service in the customer’s preferred channel first-time.

As a recent example, at one bank we were able to reduce the maximum time to respond to a customer from 3 weeks to 5 days. The solution used AI and machine learning to automatically analyse and prioritise all customer emails in near real time and routed high-priority cases to a dedicated work queue for fast action.

 

Automatically identifying customer intent and emotion

When different people are voicing different issues, they will use different words and sentiments. Vital data is often missed with traditional models and manual processes. For example a customer at a bank might say ‘by the time they called back, the bank was closed’. The keyword would be flagged as ‘closed’, when in fact the main issue was the call back. There are also other limitations with using just keywords such as sarcasm, context, comparatives and local dialect/slang. The alternative is to analyse text data using ‘concepts’ instead of ‘keywords’. This can be done effectively with AI.

 

Fast tracking customer complaints and issues

With AI you can send complaints straight to the relevant team for a faster resolution. We’ve helped banks reduce resolution time by up to 3 days which really boosts customer retention.

Dealing with specific complaints manually involves using more and more case handlers. Routing complaints automatically and prioritising by issue and category is also difficult due to the nature of complaints i.e. unsolicited, long and sometimes multi-topical. As a result, manual classification is often impossible within an acceptable time frame for the unhappy customer.

Using the latest AI however, banks are now automatically classifying unstructured data to provide an early warning of issues that need resolving fastest. This can lead to better and quicker outcomes at a much lower cost.

 

Spotting vulnerable customers early

Under the Financial Conduct Authority (FCA) front-line staff need to be able to spot different types of vulnerability in customers and support them accordingly. However, the volume of communication is just too much to carry this out manually.

The latest in AI speech transcription and text analytics is able to automatically detect hints at vulnerability from conversations with customers. The conversations are automatically analysed by to detect emotionally-driven comments that indicate vulnerability such as a basic lack of understanding, likelihood of a disability and circumstances. These vulnerabilities are flagged to the relevant members of staff for action. Regulated firms can also accurately understand the drivers behind the vulnerabilities so products, services and communications can be reviewed accordingly.

 

Banks using AI during Co-vid 19

During Co-vid 19 many banks have customer service agents working from home and/or in strict shifts. There has been a move from voice to webchat for many to cope with these changes which brings its own challenges and opportunities. Post-C19, many of these situations are expected to stay in place or at least not revert 100% back.

AI is helping to serve customers better focusing on taking cost out whilst keeping CSat up and channel switching down by improving chat optimisation, email, complaint handling and chatbot supervision.

 

Case study: Improving customer loyalty

A major UK bank was looking to improve its customer loyalty. It was already using the latest

analytical tools including social listening, sentiment analysis and a large data science team

but they were experiencing limitations and not making enough progress. They were also interested to see what online feedback their main competitors were receiving.

 

A number of key recommendations for the bank were identified using AI analysis:

  • A 10% increase in CSat (c. £200m pa revenue) from operational improvement
  • Comparable best-in-class churn e.g. Nationwide is 25% lower
  • Online and mobile banking is a key issue, and is causing direct churn
  • Drivers of churn are mostly customer service, branch closures, marketing offers, interest rates and vulnerability issues
  • Early warning can help predict churn tactically and intercept likely churners
  • 28% of Tweets and potentially all non-voice queries can be automated. This could be a £20m pa saving
  • Business banking, current accounts and ancillary services have the highest churn, and insurance the highest negative advocacy
  • Mortgages, current accounts, savings and overdrafts cause the most attritional set-up
  • There are distinct patterns and opportunities to adjust customer services resources to reduce churn and costs

With AI, this level of insight can be set up in a matter of days, delivered in near real time and without the need for a data scientist to maintain the model.

 

Continue Reading

Banking

BANKING’S SECOND WAVE OF TRANSFORMATION: INTEGRATING THE CLOUD-ENABLED FUTURE BANK

Keith Pearson, Head of Financial Services EMEA, ServiceNow

 

The last six months have seen significant changes to the financial services landscape, with operational resilience, economic recovery, cost reduction and an acceleration of digital transformation key themes emerging from the industry.

At the start of this crisis, much of the banking industry was in a different position to many businesses. The 2008 recession spurred a need for improvements and combined with the emergence of tech-savvy fintechs, the industry has seen a major shift as customer expectations have adapted. The pandemic has forced organisations to accelerate innovation already part-underway in the banking industry.

As banking experienced its first wave of transformation, institutions focussed on customer engagement, uniting physical and digital channels for an improved customer experience. Banks invested heavily in front office digital technology, creating visually appealing mobile apps, engaging online banking experiences and technologies for bankers to personalise customer engagement.

However, this digital engagement layer is not enough. Regulations like PSD2 reinforce the necessity to remain compliant, adding additional pressure to the digital transformation process which in turn has been accelerated by COVID-19. Banking is therefore in the midst of its second wave of transformation, where financial institutions are creating and seeking out critical infrastructure to better connect underlying middle and back office operations with the front office, and ultimately, with customers.

 

Keith Pearson

A disconnected operation

Many financial organisations are still struggling because they have yet to streamline, automate and connect the underlying processes that are enabling customer experiences. Which poses the question: why is connecting operations so difficult?

In most cases, multiple systems are still glued together by email and spreadsheets to track end-to-end status. Around 80% of a middle office employee’s time is spent gathering data from systems to make a decision, with only 20% spent actually analysing and making the decision.

The disconnect negatively impacts customers. For many, experiences like opening a bank account or getting a mortgage involve clunky, manual processes riddled with paperwork and delays. When front and back office employees lack the ability to seamlessly work together, customers can be asked for the same data multiple times, elevating frustration.

Customers have little patience and can be inclined to publicly broadcast problems when left unresolved. In a world of social media and online reviews, this could be detrimental to a company’s reputation.

With digitally native, non-traditional financial services players gaining market traction by offering a seamless customer experience, maintaining satisfaction is crucial for traditional banks to ensure that customers don’t switch. Banks must focus on making it easy for customers to do business with them by offering faster cycle times with more streamlined operations.

 

The fintech effect

Fintechs and challenger banks like Starling have shown what connected operations can do, having been built with digitised processes from day one. Modern consumers expect round-the-clock service from their bank. As financial institutions look to the future, developing a model of operational resilience that is capable of withstanding unforeseen issues, like power outages or cyberattacks, is critical to minimising service disruption. Having connected internal communications between front and back office staff means customers can be notified about any problems, how they can be fixed and when they might be resolved, as well as receiving continuous progress updates instantaneously.

Automation can go a step beyond this. Today, customers expect companies to not only do more and do it faster but to prevent problems arising in the first place. With connected operations and Customer Service Management (CSM), banks can proactively fix things before they happen and resolve issues fast, enabling frictionless customer service and replicating the ‘fintech effect’.

 

What about compliance?

In the European Union and the UK, PSD2 and the Open Banking initiative are giving more control to the customer over personal account data. Digital banks such as Fidor and lenders like Klarna are seeking to reinvent banking by offering customer-centric services. But the process of streamlining underlying operations is not simply about providing customers with the fintech-esque experience. More than 50% of a financial institution’s business processes are also impacted by regulation.

Financial services leaders are focussing on streamlining and taking cost out of business operations while also placing importance on resilience. Regulators are pushing banks to have a firmwide view of the risk to delivering their critical business services.

Banks must invest in digitising processes to intuitively embed risk and compliance policies, which are generally managed separately and often manually from the business process, leading to excessive compliance costs and risk of non-compliance. With the right workflow tools for monitoring and business continuity management, banks can minimise disruption by gaining access to real-time, actionable information about non-compliance and high risk areas, encompassing cybersecurity, data privacy and audit management.

Increasing openness of financial institutions to regtech solutions, or managing regulatory processes in the industry through technology, will prove key during this second wave of transformation. Banks will increasingly move away from people and spreadsheets and toward regulatory solutions that provide a real-time view of compliance and provide an end-to-end audit trail for Heads of Compliance, Chief Risk Officers and regulators.

With a unified data environment aided by technology, financial institutions can drive a culture of risk management and compliance to improve business decisions.

 

Riding the wave

The banking industry is still in the midst of its second transformation, and the pandemic hasn’t made it any easier. But riding this wave and successfully digitising processes to connect back and front office employees will present a profound difference to customer service.

The bank of the future will be frictionless, digital, cloud-enabled, and efficient; interwoven into the fabric of people’s lives. It will continue to be compliant and controlled but will deliver those outcomes differently, with risk management digitally embedded within its operations.

Demonstrating the operational resilience of its key services will not only drive customer confidence but will also provide a greater indicator of control to regulators and the market, adjusting overall risk ratings and freeing up capital reserves to drive more revenue and increase profitability.

The institutions that will thrive in this increasingly digital and connected world are the ones that are actively transforming themselves and the way they do business now, by taking learnings from fintechs, following regulations and paving the way in defining the future of financial services.

 

Continue Reading

Magazine

Partner Events

Trending

Business15 hours ago

WHY AUTOMATING CAN FUTURE PROOF YOUR BUSINESS

By Ryan Demaray, Managing Director SMB EMEA at SAP Concur   Every business has administration duties that can be considered...

News16 hours ago

VIBEPAY SETS SIGHTS ON GROWTH WITH INTEGRATION OF MORE UK BANKS AND NEW BUSINESS ACCOUNTS

VibePay is continuing on its ambitious path of growth, with the integration of more UK banks and payment providers via...

Banking16 hours ago

HOW BANKING IS USING AI TO PROCESS CUSTOMER FEEDBACK

By Dan Somers, CEO of Warwick Analytics   More banks are turning to practical AI to rapidly analyse customer conversations...

News16 hours ago

BOARD REPORT HIGHLIGHTS COMPLEX DECISION-MAKING PROCESS ACROSS BANKING AND FINANCE SECTOR

‘The State Of Decision-Making’ report from Board, reveals business decisions made in silos without modern planning tools A third (33%)...

Business16 hours ago

COULD GRAPH TECHNOLOGY BE A POWERFUL WEAPON AGAINST CORONAVIRUS FRAUD?

Crisis funds and loans put in place to help support businesses during the health emergency have become a prime target...

News16 hours ago

THOUGHT MACHINE JOINS THE BANKING INDUSTRY ARCHITECTURE NETWORK (BIAN)

Thought Machine, the cloud native core banking technology firm which builds Vault, today announces it has joined the Banking Industry Architecture...

Wealth Management4 days ago

DON’T RISK IT ALL WITH NON-COMPLIANCE

By Paul Sleath, CEO at PEO Worldwide   Did you know non-compliance costs more than twice the cost of maintaining or...

News4 days ago

BANKIA TRANSFORMS THE CUSTOMER AND EMPLOYEE EXPERIENCE WITH BIANKA BY IPSOFT

Developed with cognitive artificial intelligence, IPsoft’s conversational agent can carry out transactional tasks, perform different roles in customer service and...

Finance4 days ago

FIDUCIARY MANAGEMENT

by Devan Nathwani, FIA and Investment Strategist at Secor Asset Management   Defined Benefit pension schemes are one of the most significant institutional...

Business4 days ago

TOUCH-FREE AUTHENTICATION FOR ALL: WHY WE NEED A SAFER PAYMENT METHOD IN THE ‘NEW NORMAL’

David Orme, SVP, Sales & Marketing, IDEX Biometrics ASA   Ever since March, when the World Health Organization encouraged people to...

Banking4 days ago

WHY BANKS NEED TO EMBRACE OPEN SOURCE COMMUNITIES

Nikolai Stankau, Director Business Development, EMEA Financial Services at Red Hat, the world’s largest enterprise open source solutions provider.  ...

FINANCIAL MARKET FINANCIAL MARKET
Wealth Management4 days ago

FOR PE TO SNAP UP “GOOD” COMPANIES, THEY MAY NEED TO WADE INTO “BAD” ECONOMIES

By  Martin Soderberg, Partner at SPEAR Capital   There’s no shortage of global challenges for investors currently, especially for those...

Business5 days ago

THE BASICS OF BUSINESS FINANCE

When you’re starting your business, you’ve got a lot to be thinking about. You need to find affordable suppliers, market...

Business5 days ago

HOW THE IMPORTANCE OF E-COMMERCE PLATFORMS GREW DURING THE PANDEMIC

Never in history has the world relied more on the internet than during this Covid-19 pandemic. With governments imposing lockdowns...

Business5 days ago

UNBANKED AND UNCONNECTED: SUPPORTING FINANCIAL INCLUSION BEYOND DIGITAL

Darren Capehorn, Director, Icon Solutions   Many of us take it for granted, but accessing basic financial services is fundamental...

Banking1 week ago

MORE THAN REGULATION – HOW PSD2 WILL BE A KEY DRIVING FORCE FOR AN OPEN BANKING FUTURE

Ralf Ohlhausen, Executive Advisor, at PPRO   Whilst initially seen as simply a regulation exercise, the second Payment Service Directive,...

Top 101 week ago

TIME TO THINK OUTSIDE OF THE BLACK BOX

Mike Brockman, CEO, ThingCo   If you have the unbridled joy of parenting a teenager you’ll probably know what telematics...

Banking1 week ago

BANKING’S SECOND WAVE OF TRANSFORMATION: INTEGRATING THE CLOUD-ENABLED FUTURE BANK

Keith Pearson, Head of Financial Services EMEA, ServiceNow   The last six months have seen significant changes to the financial services landscape, with operational resilience, economic recovery, cost reduction and an...

News1 week ago

RISK AND INVESTMENT SPECIALIST, CARDANO, TAKES TO DOCUMENT AND EMAIL MANAGEMENT IN THE CLOUD WITH ASCERTUS AS IMPLEMENTATION PARTNER

Ascertus also providing document comparison tool, compareDocs    Cardano, a privately-owned, purpose-built risk and investment specialist, has chosen Ascertus Limited as its implementation...

Wealth Management2 weeks ago

HOW SALARY SLIPS HELP YOU UNDERSTAND TAX DEDUCTIONS ON YOUR SALARY

A salary slip is defined as a document that is provided by your employer which contains the breakdown of your...

Trending