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How Tech Helps Personalise Mortgages

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Micha Helbig, VP & Regional Head, Financial Services, Infosys

 

Mortgage providers rush to digitise

With interest rates remaining low and fewer houses on the market, mortgage providers need to find ways to win the attention of their customers. Competition is on the rise and those providers that don’t move fast enough risk being forced out.

Banks are feeling the heat, as Swedish lender Swedbank reported. It said it had been slow to respond to customer needs and was finding it difficult to defend its market share in mortgage lending.

Swedbank isn’t alone in this. When Infosys surveyed mortgage providers in 2021, nearly 97% of the 300 lenders who responded told us they wanted to pick up the pace of digital transformation, and fast. And that is happening: nearly a fifth were transforming four times faster during 2021 than the previous year.

This pace of change may be hard to sustain despite the urge to quickly transform. In the Netherlands, for example, a decade of low mortgage interest rates that saw rates fall to an average of 2.5% has ended. Rates have begun rising as inflation peaks in nearly 40 years. Housing prices (owner-occupied houses, excluding new constructions) rose 21.1% year-on-year in January 2022, the largest rise since 1995. This pushed the number of transactions down by 21% year-on-year in the final quarter of 2021. With a shortage of homes in the country, forecasts suggest that property sales will fall over 10% in 2022, pushing property prices further by 12.4% in 2022. Houses are becoming unaffordable for new home buyers.

Lenders need to boost their digital offerings to attract and retain customers, and investments in personalisation tools and digital platforms can help differentiate mortgage providers in a competitive market while keeping costs low.

 

Digital investments need to continue

Customers of this digital era expect the same level of ease, speed, and personalisation across all companies they interact with. While taking out a mortgage should be a highly personalised experience for customers, this is far from true: mortgages are still arguably the least digitised financial product, with limited digitisation and personalisation. After the accelerated pace of digital transformation in 2021, the sombre outlook for 2022 may mean less investment in personalisation and digitisation tools, despite the need for more, not less. And to be competitive, mortgage providers will have to develop more products and tools in order to be more attractive to customers.

 

Personalisation in mortgage is tough and complicated

Mortgages being a lengthy and complicated process is not new. But even if mortgage providers do go all-in on digital and simplify the process, borrowers still don’t want a completely digital experience: in this case, the personal touch needs to be human, not digital. Research from J.D. Power in the U.S. shows that customers still value in-person exchanges, especially for large life decisions such as purchasing a house. Customers don’t want to make such a decision on an app without any physical interaction. And this further complicates the mortgage customer journey.

Mortgage providers are perhaps reluctant to put in money when their topline isn’t expected to grow much, costs are rising and they aren’t yet sure which customer journeys they should focus on. They need to first better understand their customers’ demographics, their needs and preferences, and then design experiences that their customers find easy, simple and seamless, whichever the channel.

Mortgages involve a lot of regulatory paperwork. The Infosys survey in 2021 found that 10% of mortgage providers have a high usage of paper in their mortgage application process, while 34% have an equal mix of paper and digital. A few mortgage providers also require in-person verification for identification and other key aspects. This goes beyond the credit score. Until recently, identities could not be proven virtually.

 

How technology can help personalise mortgages

Different mortgage providers are going to want to personalise their offerings in different ways. But there are two ways that mortgage providers can tailor the experience for customers.

One way is to create or use a platform that enables different customer journeys that are 100% digital, 100% face-to-face, or a hybrid mix of both, using the same data underneath and all using the same system. APIs help to bring the internal and external participants in the ecosystem together, allowing for maximised digitisation and straight-through processing of customer journeys. This means customers can personalise their own journey, choosing which parts they want to experience digitally and physically.

Another way to personalise mortgages is to use big data. This helps make sense of customer information obtained from multiple sources to accelerate decision-making, provide a better price or a better set of services. AI and ML can help in making sense of the gathered data, equipping mortgage providers with deeper insights into their customers. This helps in personalising offers for each customer based on their repayment history, credit records, employment records, etc, but also to create early visibility of any risks, such as default. When interest rates rise, insights gained via big data can help with identifying customers that could potentially default on their loans and step in early to offer help before they run into payment problems. Historically there has been a lot of concern around bias creeping into decisioning. Lenders need to be mindful of not only avoiding discriminating unfairly against some customers, but also because of the risk of reputational damage. Adopting AI that is “explainable” can help.

Either way, digital investments in personalisation needs to be done because with the market slowing, mortgage providers must find ways to stand out among their competitors. Decisions made now are going to help mortgage providers succeed in the long term and add business value.

Technology

How Digital Adoption Platforms can enhance digital transformation and customer experience in the insurance industry

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By Vara Kumar, CPTO & Co-founder, Whatfix

 

Like many industries, the insurance sector was prematurely hastened towards digitalisation due to the Covid-19 pandemic. Now, digital adoption continues to be a key focus of many organisations to strengthen their fully or partially remote workforce with nearly 50% of IT spend being put behind the growth of core applications and infrastructure, and an additional 25% being invested into digital solutions.

But with millions of claims processed every year, needing to provide superior customer service to drive retention, complex procedures and processes to navigate and both internal rules and external regulations to follow, digital transformation plans for insurance organisations are filled with challenges.

Increasingly digitalised workforce

With the pandemic came an overhaul of how we work. Remote and hybrid working is now the norm, and across most industries, there’s been a huge expansion in both the number and type of digital applications used to communicate, collaborate and enhance productivity across an organisation.

For the insurance industry, this has meant that every employee, from underwriters to customer service agents, has had to adapt to handling their steps of the process, from setting up coverage to filing a claim, remotely, and across multiple platforms and tools.

The challenge is ensuring this more digitalised workforce fully understands how to successfully navigate each application effectively and efficiently to ensure they can deliver on their services and customer experience (CX). But putting together a skilled, high-performing IT team can be difficult – according to an enterprise study, 54% of organisations said they’re not able to accomplish their digital transformation goals because of a lack of technically-skilled employees. This is further complicated by the fact that, in an age of labour shortages, the sector is forced to get creative and find ways of managing the workload and navigating new technologies with a smaller workforce.

Changing customer expectations

On top of the challenges that the increasingly digitalised workforce is experiencing, the tech-savvy customer of today also expects more from their insurers. Indeed, the pandemic forced customers as well as organisations to become more IT-literate, and in the customer service space in particular, customer expectations are high.

Customers today want and expect to be able to make maturity or house insurance claims in an efficient and straightforward manner, across multiple platforms, from phone to email to social media, preferably in a matter of minutes.

McKinsey observes that improving the value chain from the customer’s point of view is an important step within digital-ecosystem efforts, and HubSpot found that 90% of consumers expect an immediate response to a customer support issue, with 60% defining ‘immediate’ as under ten minutes. Even pre-pandemic 44% of customers were comfortable utilising chatbots for insurance claims, and 43% were comfortable using them when buying insurance policies.

Undergoing a digital transformation on the customer side is crucial then, as insurance providers that can meet these changing customer expectations are more likely to attract and retain customer loyalty now and in the future. However, just 30% of insurers believe that they have the capabilities to fully digitalise their customer experience.

So, what can insurers do to meet the technological demands of a digitalised workforce and a multi-channel CX for tech-savvy customers?

Using DAPs to boost digital transformations and CX

In a rapidly changing market, Digital Adoption Platforms (DAPs) can be a huge advantage to insurers looking to manage the challenges of today and come out on top. A piece of instructional no-code software that sits as an additional layer on top of other software applications, such as Claims Management or Policy Administration Systems, to help train and guide users on how to best use the software, DAPs can massively improve the agility and effectiveness of business processes across an organisation.

On the employee side, for example, DAPs can help insurers to manage challenges of a frequently changing workforce by making it easier for employees to get to grips with new digital applications. With the likes of  guided walk-throughs and task lists, which help employees through each step they need to know and just-in-time nudges to reduce policy administration, claim, or underwriting processing times, employees are more efficient and technology adoption is streamlined and accelerated. Easy to integrate into existing systems, DAPs can be used to not only train and onboard new employees but also upskill veteran workers, training the workforce as a whole on the latest technologies being used across the industry. As a result, everyone from underwriters, claims, and service representatives will better understand insurance tools that will enable them to be more productive and better deliver customer experiences leading to better business outcomes. Indeed, from the customer perspective, DAPs can enable companies in the insurance industry to keep CX positive and smooth. Firstly, by training on near real-life scenarios and secondly, by being able to more easily navigate applications, processes and systems internally, customer service representatives will be able to spend more time and focus on the customer and on resolving their queries, without being hindered by technological hurdles. For example, errors made in policy or claims processing can be reduced if employees can use self-help elements of DAPs to mitigate issues and solve queries themselves, in real-time. As a result, customers will be happier with their service, and more likely to stay loyal to that brand.

Customer-facing platforms can also be improved using DAPs. Typically, legacy apps whether on our phones or online, can make it difficult for users to complete their tasks, leaving them frustrated. With DAP user-specific content and just-in-time support, such as pop-ups, automated walk-throughs and user guides for every part of the user journey, customers can experience a smoother journey and have their queries and issues resolved more efficiently..

Drive efficiency and customer satisfaction

DAPs are already growing in popularity, with Gartner predicting that by 2025, “70% of organizations will use digital adoption solutions across the entire technology stack to overcome still insufficient application user experiences.”

So, now is the time for insurance providers to leverage this technology to facilitate their digital transformation plans. By ensuring their increasingly dispersed and digitalised workforce can use the latest applications to their full potential, and that their customer journey is as efficient and easy-to-use across the multiple channels customers expect, insurers will see huge benefits, from increased efficiencies to improved customer satisfaction.

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Technology

Are cyber insurance and incident response budgets the same thing?

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Dominic Trott, head of strategy – UK, Orange Cyberdefense

 

Cyberattacks on businesses increased by 13% in 2021 compared to the previous year. Yet while it’s not necessarily the case that the number of bad actors is increasing, it is the scale on which they’re operating that has broadened exponentially.

In addition, the manner in which cyberattacks are being carried out has also evolved. While some cybercriminals hack for fun, the vast majority of malicious activity is, unsurprisingly, conducted for financial gain and targets organisations on the basis of two simple principles: first, where there is the most value to be targeted; and second, where the attacks are most likely to be successful.

It’s also likely that the full extent of the cybercrime landscape is hidden. Accurate data on the impact of cyberattacks is often hard to come by because, in many cases, the breached organisations are unaware of the full extent of the attack – or even that one took place. They might genuinely not know this information if they don’t have accurate oversight of their digital estate, or keep quiet for fear of incurring legal liabilities or causing reputational damage.

The current security landscape has created the perfect storm for cybercriminals, as cyber insurers and Computer Security Incident Response Teams (CSIRT) often end up fighting over the same budget. Traditionally, it has been relatively easy for firms to obtain cyber insurance coverage at low premiums. However, the heightened cyber risks and exponential growth of ransomware attacks in recent years has led to premiums rising.

The question that businesses often ask, therefore, is ‘why do I need an incident response retainer when I already have cyber insurance? Surely, it’s a waste of money? If the worst does happen, the insurance company will pick up the bill for any damage done after the event’. I would argue that is a short sighted and potentially dangerous approach. Let’s look at the different roles of incident response and cyber insurance.

  1. Cyber Insurance: like other types of insurance, this aims to give businesses a way to ensure that if the worst happens, they can recover some of the costs. Cyber Insurance will likely cover you for some of the tangible costs associated with a breach, but it probably won’t cover all of them. By acting quickly and limiting the scale of the breach, you may be able to reduce the full impact. In addition, some insurance companies will expect you to have demonstrated a level of preparedness before accepting your claim – a bit like having a burglar alarm or dead-bolt locks on your house before a house insurance claim is accepted.
  2. Incident Response Retainer: aims to provide rapid, on-demand expertise in an emergency if the customer calls them immediately after an incident. The key to mitigating the impact of any cybersecurity incident is the reaction time between detection and response. Many companies lack the infrastructure needed to react in a quick and secure manner. Having an incident response team available 24/7 to identify, contain and eradicate threats and to get businesses back up and running as soon as possible may be crucial to their ability to continue successfully trading.

 

Cyber resilience

But isn’t incident response included in the insurance policy? In many cases, it will be. And perhaps this is where the confusion comes. Cyber insurers will often pay out, but only as long as the incident is covered by an incident response retainer. Their objective is of course to help cover the financial losses that result from cyber events and incidents and in numerous policies, the presence of a retainer agreement with an external incident response provider can help prevent severe losses. This will often bring down the premium of the insurance policy. Having a retainer also means you get to choose the CSIRT team that you are going to be working with in advance. You can assess their credentials, their experience, talk to their other customers – all before an incident occurs.

The key thing here is building cyber resilience. Of course, there is no such thing as complete security. For starters, incident response alone is insufficient to deliver cyber resilience from either a technical or procedural perspective. Good practice advocates that solutions should be in place across the full threat lifecycle. For example, the NIST framework recommends that organisations identify their threats and vulnerabilities; protect against them with security tools and operations; detect threats as they address the enterprise; respond to contain and remediate an incident as it occurs; and recover to take lessons learned from incidents and improve ‘business as usual’ appropriately.

But, leaving an end-to-end approach to threat lifecycle management to one side, having both cyber insurance and an incident response retainer working seamlessly together will at least provide organisations with a fighting chance of continuing their core business functions if and when disaster strikes.

 

Making cybersecurity a joint enterprise

There are worrying trends emerging in the cybersecurity market. While attacks are becoming more sophisticated and ransoms are rising, there are concerns that there might not be enough money in the still-emerging sector to cover everyone’s needs. So, what can companies do? They should still invest in insurance coverage, but they also need to look for other ways to cover their potential exposure, including CSIRT rapid response teams.

It cannot remain a budgetary decision for a CTO and a CFO to fight over whether to firefight OR recoup what has been lost in cyber-attacks. Both are important. An incident response team is the first port-of-call to help respond to any cyber accident or incident. Then and only then – once the breaches have been made safe – should you call in the moneymen.

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