The digital revolution in banking that we take for granted today didn’t just happen overnight – it took more than a decade to become the norm.
In the 1980s, the first financial institutions tried their hand at Internet banking. It was eventually Bank of America, in 2001, that became the first U.S. bank to gain over 3 million Internet users, making history.
Twenty years later, banks are constantly striving to keep pace with technology and develop their next breakthrough digital service. In contrast, the insurance industry is just taking its first steps to undergo the same digital transformation process.
The advantage for insurers is that it is no longer necessary to start from scratch. Technologically, they can learn a lot from the banks. So what specifically can they learn from the banks‘ digital revolution to apply to the insurance market?
Below, we highlight five aspects of banking from which the insurance industry can benefit:
Financial institutions such as banks and insurance companies traditionally focus on product-related triggers such as major life events: the birth of a child, starting a business, getting married, buying a property, the occurrence of an accident, and so on. The high-tech approach, on the other hand, focuses on customers completely independent of their life stage. This approach allows for more touch points with the customer, combined with greater engagement and trust, which will make any traditional approach obsolete.
When the customer is at the center of the entire process, they no longer have to deal with a multitude of departments, contacts and paperwork. Im also not lacking access to information and transparency.
Digital transformation means centralizing the entire process on a single digital platform that is consistent throughout the customer journey. Many insurance companies are beginning to take a customer-centric approach and develop a comprehensive digital ecosystem. However, few are realizing the full potential of a new customer experience by, for example, integrating a customer journey builder and API configurations. With these capabilities, insurers can quickly and easily add new customer journeys and configure existing ones.
A paperless culture puts the customer-centric approach into practice. All processes take place on a single, consistent digital platform. However, establishing a paperless culture goes far beyond paper and sustainability. This is where digital transformation begins. This is where innovations like mobility, apps and online services thrive. Getting rid of „paperwork“ is at the heart of any technology-based, customer-centric business. This is where omnichannel interaction, end-to-end and two-way communication are enabled, with consistent answers everywhere, all the time.
Before digital transformation, more money meant more paperwork. Banks have made a conscious decision to follow the money, not the paper. To do this effectively, new tools and a new digital ecosystem must be developed. Accelerated and automated underwriting processes will pave the way to a paperless insurance culture. They will streamline the underwriting case flow and speed up and improve the entire process for insurers and their distribution channels. We need a system where all stakeholders can digitally align functions and underwriting rules with business needs and make informed underwriting decisions.
A paperless culture that follows the money and is customer-centric uses a provider’s digital touchpoints as a business model. And online banking usage is expected to increase between 2021 and 2024, with the number of online banking users expected to reach 2.5 billion.
In Asia alone, the number of digital banks has increased by 190% since 2015. In most cases, a portfolio of digital touchpoints includes mobility, apps, and online services that make the customer experience convenient, seamless, user-friendly, and personalized.
Accordingly, a digital engagement platform offers insurers the opportunity to grow their business and make it accessible in a manageable and controlled way: with low risk via user-friendly tools, with no-code or low-code. Such a platform enables fast and flexible integration of solutions that complement and complete each interaction channel.
Thanks to AI and machine learning, as well as the use of Big Data and analytics to tailor customer engagement, banks can understand their customers‘ needs and cater to each one. Chatbots have quickly taken over as the simple, first touchpoint, serving as an automated sender that provides quick responses and directs customers to relevant information, contact details, etc. A customer-centric approach was used to establish the banking workflow, taking into account customer profiles and the customer journey. Other benefits include less time spent on customer service, less manual work or transactions, personalized loan applications, and manual risk assessments, resulting in improved efficiency, less labor, and lower costs. The integration of innovative analytics solutions will provide actionable insights about each customer. Optimized data will allow each customer to be targeted on a personal and relevant level. Actionable insights are based on data that is always current and automatically complies with changing regulations.
Digitization is only as strong as its back-office technology and platform. An important development in this regard is the transition from legacy on-premise to cloud computing. This enables rapid scalability with seamless real-time database updates, maintenance and development. In addition, cloud-native computing promises virtually unlimited data storage and on-demand processing to meet the enormous data demands and algorithms of AI.
Digitization is no longer a luxury. The insurance industry does not have two decades to plan and develop its digital evolution. The competition is on!