by Samantha Chow, LAH Markets Lead at EIS
1. What problems does the life insurance industry face when it comes to data?
The most significant problem that life insurers face is how they use data and how it is spread amongst multiple legacy systems. Sometimes the data is split over at least 25 different legacy systems all through the business.
This data is also typically defined differently between disparate systems. For example, in one system of record, the policy number may be the key identifier for a policy, and in another system, it could be the national insurance number. This makes it extremely difficult to pull data together to get a clear picture of an individual’s policy life cycle or journey.
Without understanding what the entire journey looks like, tools like AI and ML are only superficial. These tools can only work in situations when it has unhindered access to all the information, during the underwriting and onboarding process, for example.
With modern core technology, life insurers are able to integrate legacy systems through open API architecture and provide an all-around view of the customer.
2. Why is data quality an extensive challenge for the life insurance industry?
The data is often fragmented and stored in separate blocks for each piece of software being used. For example, claims need access to a data centre in order to access underwriting data for the claims review process. With this data often being disparate over various areas, most of it is recorded manually.
We are now starting to see the automation of applications and a movement from paper to electronic, but this isn’t happening enough to improve the not in good order challenges (NIGO) that life and annuity providers experience.
The amount of manual data entry that still occurs creates immediate challenges and challenges that arise later down the line. The mistakes made in the application process will haunt the insurer down the road when it comes to the likes of billing, payments and claims.
However, life insurers can use solutions such as LexisNexis Risk Solutions or Equifax to help with the onboarding process. These are great solutions and can check for any potential inaccuracies in the customer’s address, telephone number and finances. With that being said, insurance carriers’ archaic legacy systems will still leave space for manual errors, with some even leading to fines.
3. How has technology impacted life insurers?
With 59% of insurers upping digital transformation spend this year, it is clear that they understand how important technology and automation are. However, insurers tend to have outdated legacy and modern legacy solutions, which slow down the insurer’s response to product development and changes.
Insurers will need the technology platform that follows the coretech model to enable an ecosystem to meet customers anywhere, any way they wish, with the products that are fitting for their personal needs, and predict and act quickly in the face of unforeseen circumstances. The emergence of insurtechs, spurred by the development and capabilities of new technology, has enabled insurance firms to future-proof their businesses and provided them with the opportunity to create new value propositions based on the modern customer’s needs.
Achieving large-scale cost reduction is a significant aim for life insurers and automating manual tasks and simplifying processes will help them reach that point faster. This way, life insurers can achieve substantial advantages and reduce errors caused by human intervention.
4. Does an ecosystem help life insurers to build their business for the future? If so, how?
Becoming part of a partner ecosystem can help life insurers offer a portfolio of different products and services. This includes capabilities from adjacent industries, technology giants, and the emerging insurtech community. Ecosystems allow insurers to create their own unique fingerprint in the industry while being more flexible to change and evolving as their customers do.
A strong ecosystem provides insurers the opportunity to be proactive, rather than reactive. It gives them to tools that provide the insurer the opportunity to personalise their business to the individual customer and product level and build relationships with their customers. If insurers want to become more innovative, they must continue to produce new products and services for their customers. Transitioning from the “one-and-done” sale to a more interactive, always-on relationship will create expanded revenue opportunities through long-term relationships and brand loyalty.
Q&A: THE IMPACT OF ENVIRONMENTAL CONDITIONS ON BIOMETRIC AUTHENTICATION.
Joël Di Manno, Authentication & Biometrics Laboratory Service Line Manager and Abdarahmane Wone, Biometrics & AI Researcher at Fime.
User adoption of biometric authentication has accelerated in recent years, yet some users are still cautious. Fime is exploring ways to innovate on biometric evaluation to help solution providers to launch reliable and high-performance products. In this interview, Stéphanie Pietri, Communications Director at Fime, speaks to Joël and Abdarahmane about their scientific paper to learn more on the impact of environmental conditions on fingerprint systems performance.
Stéphanie Pietri: What is biometric authentication?
Joël Di Manno: Biometric authentication solutions utilize a person’s physical or behavioural characteristics, such as their fingerprint, face, or keystroke dynamics to verify their identity. Using biometric characteristics to authenticate someone provides a high level of security because these traits are unique to that person. It also provides a good user experience, as there is no need to remember long passwords. This can provide consumers with easier routes to make a payment or access a service.
However, the adaptability of biometric solutions can present challenges, as different conditions have the potential to increase false acceptance or rejection rates. This means that there is the potential for security to be compromised if non-genuine users can be verified, or the user experience will be impacted if genuine users cannot.
SP: What type of environmental conditions can influence biometric authentication?
Abdarahmane Wone: One of the challenges of biometric solutions is that environmental conditions can alter their performance. For example, if someone is using a facial recognition solution, changes in lighting or the background can influence its performance. Similarly, fingerprint systems can be affected when environmental conditions like temperature and humidity change, because the texture of fingerprints alter accordingly. This change can mean that the fingerprint does not match the reference fingerprint that was recorded during enrolment and therefore is not verified.
These environmental changes impact the performance, security, user experience and the trust of biometric systems. It is also important to note that not all biometric systems are impacted in a similar way. However, while we know that there is an impact, very little research has been done to assess the performance of biometric systems in different climatic environments.
SP: What did Fime do?
AW: To find out more about these impacts, Fime undertook some research to understand how humidity and temperature changes affect the performance of fingerprint systems. We tested the performance of three different third-party fingerprint authentication matchers in different climatic conditions. The aim was to see how accurate the algorithms were at matching the fingerprint samples taken during enrolment. The performance of the biometric systems was evaluated in six different conditions made up of a combination of two different temperatures and three different humidity environments. The different humidity and temperature environments were created using climatic chambers. After signing consent forms regarding European GDPR regulation, more than one thousand fingerprint images were collected from 17 volunteers.
SP: And what was the impact of these environmental factors on biometric authentication?
AW: We observed that all of the algorithms performed better when the environment was less humid. Importantly, we saw that the three algorithms were all impacted differently by temperature and humidity changes, demonstrating that the impact of environmental factors is not consistent across biometric solutions.
Also, the environmental conditions of the enrolment of the fingerprint samples made a difference. The algorithms all performed better when the environmental conditions were the same as those during enrolment of the fingerprint samples. Again, we saw that the three products were all impacted differently when the verification was done in an environment different to the enrolment environment. While two of the products differed less than 1%, the third product differed by 24%. This shows that the product could present high security risks and/or a bad user experience for consumers. This study highlights the importance of a comprehensive enrolment guide for vendors and users, to decrease the impact of environmental conditions as much as possible.
SP: What can be done to mitigate the impact of these conditions on biometric authentication systems?
JDM: Fime has now developed a process and identified parameters to evaluate environmental impact, thanks to the research project. The results of this research demonstrate that environmental conditions can have differing degrees of impact on biometric authentication systems. Therefore, testing the performance of biometric solutions in different environments, including different conditions between enrolment and verification, could prevent real-life issues. Certification schemes could introduce this aspect into their evaluation programs to ensure security in various conditions and decrease variance between different biometric solutions.
Biometric solution vendors can use this evaluation during their own quality assurance processes. By performing testing in this area, they can fine-tune solutions to mitigate the impact of environmental conditions. This will verify that their products can be deployed globally and will perform well in different climates. By taking these factors into consideration, they can enhance the trust, security, performance and user experience of their solutions. This may give them the ability to outperform competitors who are not considering the impact of environmental factors when developing their solutions.
BATON SYSTEMS 2022 OUTLOOK
Responses provided by Jerome Kemp, President, Baton Systems
Q. Organisations are forecast to spend nearly $6.6 billion on blockchain solutions this year, an increase of more than 50% compared to 2020, according to a new update to the International Data Corporation (IDC) Worldwide Blockchain Spending Guide. What does 2022 have in store for adoption of DLT?
Since 2019, there has been a doubling of spending on DLT related developments. While the evolution in cloud computing transformed how we now store and access data, DLT has the potential to completely revolutionise collaborative interaction between market participants.
The high levels of funding pouring into this space is fueling unstoppable momentum, and I expect we will see this expressed in a number of ways as we cross the threshold into the new year.
We are acutely aware at Baton that interoperable DLT offers considerable possibilities relative to the existing post-trade landscape – possibilities that are now proving far too compelling to ignore. We’re in a situation today where trillions of dollars of financial assets change hands daily across very complex and aging infrastructures that consume massive amounts of financial and human resources. DLT has the potential to completely transform these aging technology stacks offering flexibility, transparency, security, resiliency and immutability, along with automation and collaboration.
2022 will be the year where we will start to see DLT being adopted by leading global financial institutions to address the long-standing risk, efficiency and transparency issues that have plagued post-trade processing for far too long, delivering a level of transformation that’s well overdue.
Q. What pinch points and obstacles will the post-trade sector still experience in 2022?
The attraction of DLT as a means of transforming post-trade processing is undeniable. However, as is the case with any new approach to an age-old problem, DLT will likely continue to be scrutinised, analysed, and treated with a degree of skepticism by the market given its potential to displace existing platforms and network protocols that play a systemically important role in global market infrastructures.
The pace of technological innovation has outpaced the existing regulatory framework and while we see numerous levels of engagement from regulators around the world, the question of if, and then how, these new innovations should be regulated is now a source of regulatory debate.
Q. With the FX industry being rife with opportunities for modernisation – in what ways should it modernise in 2022 and in what ways will it modernise in 2022?
It’s not so much a question of how firms should modernise, as many are already undertaking multiple initiatives to do so. I think it’s more a case of firms really considering what they need to be doing today as the industry continues to rapidly evolve. The FX market has witnessed significant change in recent years, partially as a result of the significant increase in trading volumes and margin declines – and while the trading ecosystem has benefited from significant technology investment we are now seeing a notable shift to the post-trade processing space.
The focus now needs to switch to building fully-connected, seamless workflows from the point of execution through to settlement, so market participants have at their fingertips the flexibility to automate netting sets and to settle on demand with whomever they wish based on a number of criteria. It will be through the adoption and embrace of new technologies like DLT that market participants will be able to achieve the goal of performing riskless settlement on demand in virtually any currency and with any counterparty they choose.
Q. What are the big opportunities for the sector in 2022 with emerging technologies?
Settlement risk has plagued the FX industry for far too long and I believe 2022 will see the adoption of emerging technologies that for the first time, will really allow firms to take control. There will be an opportunity to improve transparency through the end-to-end process from trade matching to settlement and as risk has such a huge impact on capital usage, eliminating sources of exposure would allow firms to optimise the deployment of funding and intraday liquidity management.
Q. Do you think the CBDCs will play a greater role next year? If so, how?
A growing proportion of the world’s central banks are now actively researching CBDCs and we’re seeing a number of individual experiments with real potential – all of which indicates a very real intention by central banks to systematically move forward with CBDC’s. In the US for example you have the digital dollar project, one of the major initiatives that is underway right now, it’s under the stewardship of J. Christopher Giancarlo, former CFTC chair and Senior Advisor to Baton.
Though I think that we have more ground to cover before we will start to see CBDCs emerge as an integral part of the business as usual (BAU) financial landscape this is an exciting and natural progression in the broader history of money, given the technologies that we are now able to leverage for the greater common good.
I also feel that the CBDC debate will be closely related to the position that regulators ultimately adopt in respect to Stablecoins and how these function alongside the goals and objectives of Central Bankers.
Q. Is 2022 going to be the year that we finally see mass adoption of digital market infrastructure?
I believe it is somewhat naive to expect mass adoption of a fully digitised market infrastructure as some sort of big bang event. As we are well aware, market evolution is predicated upon extensive, iterative analysis relative to, amongst others, the technological, operational, regulatory, financial and human resource implications of changes to the broader infrastructures upon which daily market interactions reside. I expect to see a greater embrace of digitised infrastructures by large global market participants in 2022, but this will be a gradual process, and I expect to see this enhanced participation as the primary catalyst for progress on the regulatory front.
AI-Powered Fraud Prevention for Digital Transactions
By Martin Rehak, CEO of Resistant AI Fraud is on the rise, thanks to the rapid escalation of digital channels...
The future of retail trading
Joe Jowett, CEO of StrikeX The 2020s look set to be the decade of the retail trader. As the...
Dissecting the expansion of online checkouts
Daniel Kornitzer, Chief Business Development Officer Card payments have long existed as the preferred payment method for online consumers....
How bug bounty programs can help financial institutions be more secure
Rodolphe Harand, Managing Director at YesWeHack Financial services have been one of the most heavily targeted industries by cybercriminals...
Resolving the unintended friction of Web 3.0
Marten Nelson, CEO, M10 Networks Media is buzzing about Web 3.0 and the metaverse. Companies and investors are scrambling to get...
Predictions for Alternative Data in 2022
Neil Chapman, CEO of Exabel 2021 saw various firsts for alternative data. The $1.6bn flotation of SimilarWeb evidenced the...
Why Zero Trust and securing the supply chain is key to post-pandemic recovery
Jim Hietala, Vice President, Business Development and Security at The Open Group Banking and finance have grown to provide...
Five predictions set impact the finance teams in 2022
By Rob Israch, GM Europe at Tipalti The CFO now has a very different set of responsibilities in comparison...
Three ways to reduce uncertainty in financial services marketing
By Patrick Costello, Senior Product Strategy Director, Optimizely According to Bain & Company, uncertainty is one of the key factors affecting marketing...
Bringing Automation to Banking
Ron Benegbi, Founder & CEO, Uplinq Financial Technologies Automation is everywhere you look these days; from supermarkets to warehouses...
Why financial services is stepping into a new era
by James Mingard, Head of Retail & Finance at Maintel When comparing industries, financial services has arguably fallen behind when...
FINANCIAL MARKETS IN 2022: INFLATION, ENERGY PRICES, AND THE CONTRASTING PERFORMANCE OF STOCKS
Bob Jenkins, Head of Research, Refinitiv Lipper Anyone hoping for a reprieve from the chaos and uncertainty of the...
FINTECH TRENDS TO LOOK OUT FOR IN 2022 WHICH WILL CHANGE THE WAY WE DEAL WITH FINANCE!
Embedded Finance is estimated to be a $3.6 trillion market opportunity (Matt Harris, Bain Capital Ventures) Embedded Finance means it’s...
THE GREEN REVOLUTION IN INVESTING
It can’t be denied how quickly environmental sustainability has become a focus among everyday consumers, whether they’ve become noticeable through...
INVESTMENT IN INNOVATION: 2022 TRENDS AND OPPORTUNITIES
Author: Michael Kodari, Founder and CEO of Kodari Securities (KOSEC) Moving into 2022, while COVID is still front of...
HOW TO CONSOLIDATE INVESTMENT REPORTING OPERATIONS AFTER A MERGER OR ACQUISITION
By Andrew Sehulster and Abbey Shasore The reason why senior management make an acquisition is to compete better or...
FUNDING R&D IS STILL A PRIORITY FOR COMPANIES DESPITE THE PANDEMIC
By Emma Lewis, Myriad Associates HMRC regularly releases statistics that look at the numbers of R&D Tax Credit claims...
Mitigating the insurance risks of climate change through geospatial data visualisation
Richard Toomey, Senior Manager, Commercial Insurance at LexisNexis Risk Solutions UK and Ireland In the lead up to the...
From compliance to the metaverse: Investment trends to look out for during the year ahead
By Rami Cassis, Founder and CEO of Parabellum Investments In the investment world, the old saying, knowledge is power,...
NutreeLife triples production with finance from Siemens Financial Services
Plant-based snack manufacturer NutreeLife has massively increased its production capacity with the help of a hire purchase solution from Siemens...