By David Northmore, Vice President EMEA at MarkLogic
Transformation has swept across industries globally since the dawn of the digital age, with innovation being a key driver. ‘Going digital’ was revolutionary in insurance, with much of the manual work involved in creating and locating files being removed to allow more time for insurers to focus on customer service.
The amount of data being collected and stored today is creating demand for similar solutions through the likes of automation, machine learning and artificial intelligence. Legacy IT systems are beginning to buckle under the pressure of effectively storing and retrieving information from more complex datasets.
The adoption of new solutions has been intermittent across the insurance industry to date as there are still many barriers to effective roll-out. The need to embrace technology and analytics to help overcome challenges in insurance is clear, though the industry overall has been historically slower than other sectors to acknowledge this and act.
The primary driver for insurers is customer engagement for the purposes of loyalty and retention.There are always going to be challenges in this space as expectations fluctuate and the ‘average customer’ becomes harder to define, with customer experiences becoming more and more complex. This focus area for insurance has seen more competition in cost and value-added services, though the adoption of predictive analytics is a newer phenomenon that insurers have begun to explore.
An effort to develop and maintain a drive towards innovation in insurance is evident, but more often than not, insurers are falling down as they lack the agility to keep up with an ever changing landscape. Regulation is one key factor at play, with GDPR for example creating a need for the adoption of enhanced security features that can aid insurers in mastering and sharing data, as well as keeping customer data safe. This acts as an important area to be tackled by insurers in their effort to pursue customer engagement and loyalty as services in the space evolve.
Automation, Artificial Intelligence and Machine Learning
Automation can be supported by both machine learning and artificial intelligence, so long as high quality data is leveraged in its introduction and maintenance. By integrating machine learning into a central platform, insurers can automate ‘lower-value’ activities so more time can be spent building sophisticated algorithms for areas such as underwriting and customer engagement.
AI enables pattern recognition at scale and performs repetitive and mundane tasks with ease, meaning the workforce of claims processors and other insurance personnel can focus their efforts on more people-centric tasks. The problem is that legacy IT systems often result in the build up of huge silos of data, and as the years pass we often see that several layers of tech exist on top of one another among insurance organisations. These layers need to be stripped back and the data effectively organised into an operational data hub that provides a 360-degree view of all the data across the organisation, while remaining completely secure.
Increasing the chances of success
Many insurers have incorporated Master Data Management (MDM) systems into their day-to-day operations in order to support the drive to gain a holistic view of their data. However, all too often speed and accuracy pose problems with these MDM tools, which is where ‘smart mastering’ using a data hub platform can make a difference.
Smart mastering is the process that enables the effective organisation, protection and retrieval of datasets, meaning insurers can master data quickly and automatically. It involves taking all entity information and standardising it to improve quality and accuracy, thereby enabling the linking of data across various existing databases. An advantageous use case for this would be the linking of policyholder and transaction data across different policies to provide a complete, 360-degree view of customers.
Implementing this process successfully requires the underlying data architecture to be designed in a way that means data is not siloed across the organisation. In fact, when it comes to technologies such as AI and machine learning, this set-up is a prerequisite for insurers seeking to incorporate these solutions into their operations.
Modern data hubs are instrumental in supporting insurers as they embrace technology that seeks to automate and streamline processes. By quickly integrating vast quantities of data from across the business, these platforms generate quality data sets which can be used to feed machine learning algorithms and drive automation. They also provide insurers with the tools needed to adapt and demonstrate flexibility when tackling their customers’ ever changing needs and make headway on the path to digital transformation.
THE END OF YEAR TAX CHECKS THAT COULD SAVE YOU THOUSANDS
Charlie Reading, Founder and MD of Efficient Portfolio
After HMRC’s tax return deadline at the end of January, it can be tempting to drop your guard, believing that your new tax bill is a long way away.
It’s true, you’ve got a whole year until the next bill is due. What most don’t consider, however, is that there is a range of checks that you can do reduce that bill significantly.
Astute investors make use of their tax-free allowances every year and save thousands of pounds in the process. With such massive savings on the line, it’s a strategy to certainly consider.
With that, here are some easy checks and tips from Charlie Reading, Founder and Managing Director of Efficient Portfolio chartered financial planners, that could start you on your way to a much leaner tax bill:
1. Maximise Your ISA Allowances
Good returns, flexibility, diversity and tax efficiency should be key components in your financial strategy, and the ISA helps to deliver all of these. Historically, ISAs have been at the cornerstone of tax-efficient saving and are often referred to as one of the essential steps in your strategy, as they can help your wealth grow without you being penalised by heavy tax charges. They are an incredibly useful way of saving, and, as such, it is generally encouraged that people take advantage of their benefits. However, the ISA allowance is offered on a ‘use it or lose it’ basis, so if you fail to maximise it, you can’t make up the funds later on.
Up until 5th April 2020, you can contribute up to £20,000 into an ISA, and a further £20,000 from 6th April 2020, thereby sheltering up to £40,000 per person, as long as you’re over 18.
2. Top Up Your Pension While You Still Can
At the time of writing, the highest level of State Pension you can receive is £129.20 a week, which is frankly a paltry sum to live on. That’s why saving for the future is so important. It might seem wise to enjoy life now and worry about retirement later, but you’d only be damaging your future quality of life.
Pensions are a highly tax-efficient way of saving and now offer a great deal of flexibility in retirement, as when you retire you can gain access to 25% of your pension pot as a tax-free lump sum, with the remainder taxed at your marginal rate.
The current pension annual allowance is set at £40,000, so if saving for your future is a priority, it is worth investigating which pension is right for you, sooner rather than later.
3. Protect Your Estate from Tax
Inheritance Tax (IHT) is a concern for people from all walks of life. If you are hoping to leave a legacy to your loved ones, the last thing you would want is for that legacy to be taxed at 40% and lost to the Government.
One simple way of combatting this is to consider using your annual IHT allowance. During your life, you are allowed to give away £3,000 per year without incurring any IHT charges upon your death. There are of course downsides to this, in that you lose all access and control over the money, but it may be a tax-efficient strategy to consider.
4. Don’t Overpay Your Capital Gains Tax
The final tax consideration at this time of year is Capital Gains Tax, which is also given on a ‘use it or lose it’ basis and is currently set at £12,000. The issue of Capital Gains Tax is most acute if you hold investments which have grown above your tax-free allowance.
To ensure you make the most of your Capital Gains Allowance, it is generally recommended to sell down a portion of your portfolio to realise the growth made, but only enough to maximise your allowance, is the most prudent strategy.
These funds can then be used to fund any outstanding allowance on your ISA, for example. The advantage of doing so is that by placing your money from a taxable to non-taxable environment you have the potential for further growth, and you benefit in the longer term by potentially reducing a future bill.
There’s plenty of time left before the taxman comes knocking once again, but there’s no better time than the present to start looking into how you can save you and your business thousands of pounds simply through tax allowances you might not have previously been aware of.
HOW TECHNOLOGY IS FUTUREPROOFING STOCK MARKET TRADING
Tony Shaw, Executive Director, London Office and Head Sales UK & Ireland at the Swiss Stock Exchange
Markets are shifting, there’s no doubt. Amid all the disruption and volatility from the past year, the Swiss Stock Exchange asked traders about what they expected in 2020 and beyond in our industry survey. The findings point to a rise in digital to help traders content with external forces.
First and foremost, traders are enthusiastic about what digital assets can offer.
Two thirds of traders polled said they’d had a marked rise in interest from their clients for digital assets and crypto-products. Given the interest, traders are increasingly bullish about the potential of these products – so much so that 80% have predicted an increase in overall demand in the long term. Market users believe these assets will help generate cost synergies and streamlining trading and settlement processes by creating efficiencies and ultimately reducing costs.
Our 2019 results reflect what traders have told us when it comes to digital assets and products. Last year, we saw significantly higher trading volumes from products with crypto currencies as underlyings. Overall volumes grew by +8.5% over 2018, but the increase in crypto products alone was +17%, reaching CHF 518.2 million ($534.54 m). There was a year-on-year increase in the number of transactions, as well (+21%): 19,636 trades in total.
The potential digital assets hold is clear – evidenced by the building of the SIX Digital Exchange (SDX), a fully integrated issuance, trading, settlement and custody infrastructure for digital assets.
According to traders, artificial intelligence (AI) is expected to bring further benefits to market operations.
Two thirds of our survey respondents anticipate AI will create more opportunities for the traditional equities business, while a similar number expect it to reduce the cost of trading. Innovation in AI is already – and will continue to be – a key driver in making our industry more effective at withstanding future risks and challenges both within and beyond the market itself.
In Europe, there is growing momentum behind calls for shorter trading hours – this trend was reflected in our survey as well.
Industry groups such as the Investment Association are advocating for stock market trading hours to be cut from 8.5 to 6.5 hours to open the industry to working parents and women who cannot commit to such long workdays. We found traders were largely supportive of this, with many saying that it could even facilitate operational benefits. The roll of AI is clear here in improving efficiency while minimising time wastage: 36% of traders said the introduction of shorter trading hours would prompt greater market liquidity.
Beyond the market itself, geopolitics continue to shape wider market sentiment.
It comes as no surprise that four fifths of traders said their strategies have been – to some extent – influenced by Donald Trump’s tweets. Interestingly, only 39% of those polled viewed Brexit as an influencing factor in trading activity, while three quarters believe the US election will drive trading activity in 2020 and 65% acknowledged trade wars would also have an impact.
More broadly, traders are split on the state of the global economy – 58% are bracing for a global recession while 42% predict stable macro-economic conditions over the next three years. What seems clear is that whatever happens in the wider economy, traders are making headway with new technologies that can improve their strategy, efficiency, and overall market health.
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