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HOW CHATBOTS ENSURE PREMIUM SERVICE IN INSURANCE

Insurance providers, such as AA Ireland, are transforming customer engagement and increasing sales conversion rates using chatbots and conversational AI, explains Cathal McGloin, CEO of ServisBOT (www.servisbot.com):

 

Introduction:

Writing in Insurance TimesOliwia Berdak, principal analyst at Forrester, commented that, among all the technologies that insurers are exploring, “pragmatic AI has the biggest potential to deliver on insurers’ top business priorities in 2019, improving customer experience and generating revenue.”

 

Rules of engagement:

Within the sphere of ‘pragmatic AI’, conversational AI interfaces, such as chatbots, offer a whole new engagement model where customers can obtain a quote, file a claim, renew a policy, request information, and complete onboarding more conveniently and at a lower cost to the insurance provider.

Insurance companies can no longer expect people to engage nine-to-five. Consumers want to interact on their time and using their preferred channels, which may include voice assistants such as Amazon Alexa, or Google Home, messaging apps, SMS, web or mobile apps, as well as the more traditional email, live chat, and phone channels.

 

Cathal McGloin

Premium service:

While price will always be an important factor when purchasing an insurance policy, the customer experience is key. Is the policy information easy to find, or is it hidden in the small print? How responsive is the insurance provider when customers make a claim? The more positive interactions they can provide, the more likely the insurer is to increase loyalty and retention.

Virtual assistants or chatbots that integrate securely with relevant business systems and third-party data, can provide more contextual and personalised engagement that enhances the customer experience. Deploying these task-oriented chatbots drives business results such as higher retention rates through renewals, increased conversation rates on policy quotes, and increased revenue through more effective onboarding.

Besides an insurance company making services more accessible and automated, chatbots also make it easier for insurers to understand the exact intent, or need, of the customer. Chatbots can work across different functions more seamlessly so that, for example, a Policy bot can work alongside a Quote bot to better inform customers on the difference between policies and which one best suits the customer’s circumstances. This leads to greater transparency and personalisation, positively impacting conversion and sales.

 

A friend in need

Since chatbots work 24/7, services are always available when a customer needs them.

A customer reporting an accident and filing a claim on the spot provides a perfect example of the benefits of having a chatbot constantly available to engage at the point of need and in the customer’s preferred channel. The customer may choose to interact via the insurance provider’s mobile app, SMS, or a messaging app, on their mobile device, while they’re stood on the roadside awaiting recovery of their vehicle. A claims bot can request image uploads of a driver’s license, registration plates, and photos of damage, on the spot, helping to shrink the claims filing and processing timeframe. This also reduces a lot of the friction that customers normally have to deal with in filing a claim.

ServisBOT works on the principle of deploying and co-ordinating an army of insurance bots that can do everything from generating a quote, on-boarding a new customer, renewing a policy, collecting payments, and many other use cases: bringing convenience and lower costs, while improving the customer experience.

 

Case study: Using Bots to Win Business

To combat rising digital advertising costs and reduce the incidence of missed webchats, AA Ireland investigated how to employ chatbots to improve conversion rates on incoming quotation requests that came in out of hours, or when call centre employees were busy on calls.

AA Ireland used our conversational AI platform to develop its own Quote Bot, within seven weeks the bot was trained and ready to use. Within twelve weeks AA Ireland Quote Bot had increased conversion rates on online quotes by 11 percent and reduced the number of missed webchats by 81 percent. Additionally, where customers had interacted with the Quote Bot to answer their initial queries online, they spent 40 percent less time on the phone with customer service employees.

AA Ireland reports that the Quote Bot is reaching people who haven’t previously contacted the insurer. Working in combination with the Quote Bot allows customer service specialists to focus on answering more complex queries and overcoming objections to win customers’ business.

AA Ireland Customer Lifecycle Manager, Louise McCormack comments, “Increasing conversion even by one to two percent helps to make the business more profitable. The potential to use AI-powered chatbots to improve our conversion rates, while providing operational efficiencies across customer service, was an opportunity we couldn’t ignore.”

Following the success of Quote Bot, AA Ireland has deployed a customer service bot and a travel quote assistance bot, with plans for additional bots.

 

 

Conclusion:

Lloyds of London has drawn up its six-part transformation blueprint, with five of the areas involving building out a technology platform. The goal is to double the value of insurance business done, to increase the efficiency of processing policies and reduce the cost of sale of premiums which is currently 40p in every £1.

AI in all its forms is becoming integral to business systems, processes, and engagement models. For our part, we are making it easier for insurance providers to implement and launch conversational AI without needing a data scientist or solutions architect. We take away technical complexity so that insurance providers can focus on how they can apply AI to help them engage with customers more efficiently.

In 2020 as more pragmatic AI success stories emerge, we foresee other insurance companies moving beyond tactical deployments and adopting a chatbot strategy that is cross-functional across the whole business and customer life-cycle. This strategic approach will allow them to benefit from the genuine transformation that chatbots can bring.

 

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Finance

WHY SUBSCRIPTIONS ARE KEY TO THE FUTURE OF THE FINANCIAL SERVICES SECTOR

Michael Mansard, Principal Director – Subscription Strategy at  Zuora

 

The business world is wondering: what does post-pandemic growth look like?

A phenomenon known as the “Subscription Economy” might give us a clue. This term describes a new business model where customers pay a recurring fee at regular intervals — weekly, monthly, yearly, or just based on a customer’s usage — to access a product or service.

Unlike the more well-known “Product Economy”, which relies on one-off transactions, subscription business models are built around generating stronger lifetime customer value.

For the financial services sector, this could mean more opportunities to upsell and cross sell services to customers, helping to reduce customer churn and to unlock new revenue streams.  Amid a decade of challenging regulatory frameworks, a wave of digital disruptors, failure to pivot business models accordingly could spell the end for many businesses operating within the financial services industry.

 

Signing up to the Subscription Economy

The subscription economy is just getting started, and use cases are likely to continue evolving as the technology develops to meet demand. During the COVID-19 lockdowns, many digital-based subscription business models fared well due to their promise of convenience and strong business continuity. Research from our recent Subscription Economy Index has shown that companies that embraced subscription-based models grew at 400% on average over the last 8.5 years, outpacing S&P 500 revenues by almost 6x during the pandemic last year.

One of the recurring success factors for these organisations across the board is personalisation – those that embrace customer-centric business practices prevail over those that don’t.

Tailoring a product or service to a customer’s needs in a time of immense change is a sure-fire way to gain loyalty and win over those who previously favoured more traditional financial organisations.

Subscriptions also help cast a wider net to expand an organisation’s addressable market. Financial services companies can expand their addressable market by making their products and services more affordable, not necessarily by reducing the overall cost, but by allowing customers to spread their payments over a longer time period. Given their ability to grow user bases, subscriptions can boost revenue growth in the long run.

 

Accelerating digital transformation with subscription services

Though the transition to the Subscription Economy is still in its infancy for the financial services industry, we are seeing significant traction from organisations in this area, outlined in our recent whitepaper, A new formula for growth for The Financial Services Industry (FSI).

Multinational wealth management and financial advisory company, Charles Schwab, for instance, shifted to the subscription model on just one of their product lines. Charles Schwab automated investing to build and manage clients’ portfolios for $30/ month fee for accounts with at least $25,000, and in doing so brought in $1B in new client assets, primarily from younger investors.

Financial services company Wells Fargo took a slightly different approach, leveraging subscription services to develop a hybrid digital advice platform. The service provides access to both a robo-advisor and human advisor through an annual subscription model which was recently lowered to 0.35%, with the aim to attract more mass and emerging affluent clients taking their first steps into investing.

Insurance provider Metromile, on the other hand, used their subscription model to offer pay-per-mile car insurance through its driving app, basing pricing on usage in addition to a monthly base rate. Metromile claims that the service allows its customers to save on average $741/year.

Meanwhile, in the B2B space, Serai (by HSBC) leverages HSBC’s trade banking client network, connecting buyers and sellers around the world and helping them to simplify the complexities of international trade. For “high touch” B2B offerings, the sales force is a crucial building block of sales strategy.

Since most established FSI players are using the same operating models they’ve used for decades, a shift to a completely new approach can seem daunting. Industry transformations are never fast, and never easy. But the good news is that financial services companies don’t have to dive in and completely change their business model to reap the benefits: new revenue streams, churn reduction, upsell and cross-sell to name a few.

Transitioning to the Subscription Economy can be an iterative, try-and-learn approach. That said, in a time of upheaval and rapid industry changes, financial services companies can’t afford to ponder the relative merits of the Subscription Economy for their business. Industry leaders need to be asking not if, but how they can adopt subscription models to position their organisation for growth and success.

 

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Technology

THE FINTECH REVOLUTION: BALANCING INNOVATION AND SECURITY

By Altaz Valani, Director of Insights Research at Security Compass.

At a time of significant disruption for the financial services industry, a sector forecasted to be worth $300bn by 2022, organisations are facing important decisions when it comes to digital transformation.

Among ever growing customer expectations and the need to comply with changes in the regulatory landscape, fintech companies are under increasing pressure to ensure innovation is properly implemented.

Failure to do so comes with a significant cost; that of security breaches and exposure to new vulnerabilities. From AI and biometric authentication to Robotic Process Automation, the growing adoption of technology among the financial services industry is intensifying the volume of customer data at risk.

Internal and external threats

To mange this risk carries both internal and external challenges for fintechs. Internally, the main challenges are centred around cyber skills, knowledge and expertise; externally, coordination with regulation is demanding.

Balancing an ever-increasing appetite for innovation and growth with robust security and risk management processes is absolutely crucial. Cyber threats continue to grow and diversify, and every new digital product and service carries an ever-evolving array of security risks.

Solving the cloud puzzle

Historically, due to the perceived value of the information held, the financial services industry is one of the primary targets for data breaches. This is why many financial services organisations have turned to the cloud as a solution for their IT infrastructure.

However, migrating to the cloud increases the attack surface of applications. That is why the importance of meeting security and compliance requirements cannot be overlooked in the rush for deploying new apps directly in the cloud or developing analytics-as-a-service or automation-as-a-service capabilities.

Strategically aligning digital delivery and security is one of the most complex challenges facing financial service businesses, and so many are turning their attention to Balanced Development Automation (BDA).

BDA: Aligning DevOps with security

To ensure success and competitive edge in the long run, fintechs need to create synergies between their DevOps, security, and business teams. This is where BDA comes in because it aligns DevOps with security, ensuring the latter is “baked” into the software development process. It acts as a guide through every step of software development, ensuring that security checks are built into the process from the beginning, and ultimately enabling DevOps teams to deliver secure products.

Consider it a three-step process:

1) Security should equip the development team with awareness of what is required from a security controls perspective. The same goes for risk and compliance. Developers need to know from the outset what these parameters are and factor them into their work from the get-go.

2) The next stage is examination of security metrics based on existing controls and emerging risks. The result of this might be the creation of new controls, but they have to be developed with an understanding of impact based on cost and business exposure. Ultimately, it is a business decision to determine the right risk threshold.

3) The third and final stage of the BDA process lies with governance at an audit and board level. Metrics collected from the first two stages are rolled into this and KPIs measured at this level are based on core business concerns around compliance, resilience, reputation, cost, and so on.

Balancing innovation with security

Ultimately, the success or failure of the fintechs of today can hinge on how they balance the adoption of new technologies with maintaining the privacy of their customers and the security of their customers’ data. This is a delicate balance, and one which requires action from the very start to identify and address risks.

Building security into applications from the very beginning of the software development lifecycle enables financial services companies to align security, compliance and risk priorities with business needs. This is ultimately a recipe for success.

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