The state of digital transformation for insurers
Some consider financial services firms to be at the forefront of innovation when it comes to digital transformation initiatives.
Although the emergence of fintechs have resulted in incumbents transitioning into a technology-centric environment even faster than before, the challenge many of these incumbents face is to identify the most relevant of the current innovations, and the evolutionary path of technology innovations in the future. Ben Burger, managing executive at SilverBridge, believes the customer will ultimately benefit from this more dynamic market.
"Of course, depending on the level of technology sophistication at an insurer, digital transformation could translate into vastly different things. The more advanced organisation could use digital as the enabler for wholesale change on how it engages with customers by using artificial intelligence data analysis algorithms connected to big data sources. Similarly, those just embarking on a digital journey might take a more phased approach, starting with something like taking away paper-based applications in favour of digital client onboarding," said Burger.
Irrespective of how this transition is embarked on, embracing disruptive technologies is fast becoming standard business practice from an insurance perspective.
Insurers are gradually increasing budgets to find effective ways of harnessing technology innovation. This encompass everything from artificial intelligence to entry-level digitisation of sales processes.
The already blurry imaginary line between insurance and banking is also starting to disappear as technology is making it easier to re-use financial processes and skills across different disciplines. This means that certain new business models are easier to implement once understood.
"Some larger organisations are making additional resources available for strategic outreaches across digital platforms. These are considered integral to competing against smaller insurtechs and even fintechs for the hearts and minds of a wider and discerning customer base. However, digital transformation must be an organisation-wide initiative, and should be accompanied by a comprehensive internal adoption process to ensure that there is a golden thread tying all customer-facing approaches together, and that all staff understand how to leverage new technology," said Burger.
This unified approach is designed to integrate departments inside the organisation more effectively, enabling the business to grow in both volume and share of individual client wallet. Offering a more comprehensive solution is becoming essential in the retention of digital customers who grow ever more demanding.
Throughout this, it is important to remember that digital transformation is not a once-off process.
Burger said, "If anything, an insurer should view digital as a continuing (and ever-evolving) strategy that is as agile as customers are demanding when it comes to bespoke solutions".
More than tech
One of the mistakes some companies make is to view digital transformation as a purely tech-centric exercise. The actual technology is only a piece of the puzzle. Real adoption of this technology throughout the institution, and the change in process that goes along with that, is equally important.
Burger said, "Transformation talks to all levels of the business across the entire product (and customer) lifecycle. Ownership of these initiatives is no longer limited to just the C-suite. Instead, cross-functional, collaborative groups inside the insurer are helping drive a new way of thinking that is focused on long-term change".
One of the exciting things throughout this is that digital transformation is no longer limited to simply being positioned as a transition to the cloud. Even though many of the disruptive forces taking place in the insurance market are driven by IT departments, human resources, financial, and administration all drive strategic directives to create a more digital-centric insurance environment.
"Inevitably, this will result in the establishment of a culture of innovation at an insurer. From teams to solutions, this innovation will permeate all aspects of the business to potentially deliver significant strategic value. As sophisticated technologies become more accessible to insurers at different stages of transformation, so too will the market harness the opportunities created through these technologies," concluded Burger.