By James Turnbull, Chief Digital Officer, Reassured
There’s no doubt that digitalisation has transformed swathes of business practice. Today, for example, manual underwriting of an insurance policy has largely been replaced by digital processes.
While this makes things easier for the company, it has also led to an expectation from consumers of instant gratification. This has typically been seen in B2C services (think of the service people get from companies like Amazon). However, continually evolving technologies, such as Artificial Intelligence (AI) and the Internet of Things (IoT), are promising to revolutionise the way we work further still. We are fast approaching a future where consumers expect companies in all sectors to use data innovatively, and thus offer hyper-personalised services.
The rise of fintech is offering consumers greater choice in how they manage their money. It is also increasingly allowing them to obtain expert financial advice from the comfort of their home, and from the convenience of their smartphone. In an increasingly digital world, one in which customers expect to have instant satisfaction in all of their dealings, fintech offers an unrivalled opportunity for firms to maintain a competitive edge.
However, many businesses that operate in the financial services sector are still lagging behind when it comes to implementing this technology, and this includes insurers. In part, this is because many firms simply do not have large amounts of capital to invest in expensive tech, or the in-house expertise to develop it themselves.
Ultimately, those insurers that fail to leverage the power of fintech, will lose out to those that do. That’s because adopting fintech solutions allows companies to diversify their services and offer a great range of choice to customers. New technologies help firms offer even more personalised services, allowing them to more easily understand their customers’ needs and circumstances, and operate with greater agility. Ultimately, this all feeds into improved customer experiences and client retention.
All about the experience
From an insurer’s perspective, deploying fintech to create customer-first experiences is all the more important because providers now have less scope to compete on the grounds of price. Increased market competition, and the widespread use of price comparison sites, has narrowed how variable quotes can be. This trend will be reinforced as the greater use of AI makes quoting even more accurate. The battleground for insurers will be on how they manage customer relationships, and how they offer useful and convenient services.
Engaging with customers is critical, and it is here that fintech can add great value. Traditional insurers are often at risk of slipping into distant relationships with customers. Even now, they have to go through long, drawn-out and complicated telephone conversations with their insurers just to lodge a claim. Sophisticated digital platforms can help avoid this, by offering fast and seamless interaction: whether that is with expert financial advisers or advanced AI-enabled chatbots. Customers should be able to enrol in policies, claim money, and view products at the click of a button. Data should be examined in advanced ways to offer personalised products at the relevant times – such as offering life insurance policies immediately after a birth. Ultimately insurers should work to analyse data in similar ways to tech giants – and thereby offer similarly personalised and customer-centric experiences.
Moving at a faster pace
Another issue that should be addressed is speed. Digitalisation has increased customer demand for speed and efficiency. Technologies such as electronic document capture and processing allow applicants to submit documentation online – and for a decision to be reached within seconds. For advisers, this reduces the need to continually ask clients for documentation when it comes to applying for insurance or investment products or reviewing their financial situation. For insurers, life policies can analyse the data stored on a phone’s health app and be issued shortly afterwards. Payments for claims can be made automatically and within minutes.
AI and predictive analytics are also helping firms completely rework business practices. Rather than operating on compensation-based models – giving the customer money when something goes wrong – the power of fintech can stop these things from going wrong in the first place. Insurance professionals should work with fintech cybersecurity firms, for example, who can analyse user data to act upon suspicious activity and prevent fraud. Machine learning technologies can also sift through massive data sets to manage and minimise financial risk. Why compensate for loss or inconvenience when you can prevent it from happening altogether? As reactive insurance policies are replaced with proactive ones, this is just one example of how fintech can radically transform the sector – to the huge benefit of both consumers and users.
Financial professionals and insurance experts will always play an important part in ensuring their clients remain financially healthy, but today they must do so in a way that meets customer expectations, in an ever-more digitalised and fast-paced world. By embracing new digital realities, and leveraging the power of fintech, insurance professionals can continue to play a crucial role in protecting their clients’ financial wellbeing.
