Singaporean-based DBS was recently named Euromoney’s best digital bank in the world, toppling giant U.S. and European firms that have historically dominated the industry. In addition, DBS recently partnered with Samsung to innovate mobile payment offerings and revolutionize how consumers will use their smartphones in the future.
In comparison, Indonesia is just starting to change the relationship between consumers and financial institutions. Just 22% of its population is financially literate, and only 8% are aware of branchless banking.
But for the entire Asia Pacific region, the rise of fintech competitors in the financial services and insurance (FSI) sector is fuelling development of innovative new products and brands that put the customer at the heart of their strategies, according to the “2017 Digital Trends in Financial Services and Insurance” report by Econsultancy and Adobe (CMO.com’s parent company).
Customer experience (CX) is the lead priority for FSI marketers; 63% said they view CX as the top business issue for their organisations, the report found. And, in recognition of the role data plays in enhancing CX, 53% said they plan to increase their investment in marketing analytics over the next year.
Fundamental Change Afoot
While banks are generally considered to be at the forefront of the FSI sector’s response to digital disruptors, the insurance industry is also turning its attention to these new competitive pressures.
A report released in March by global standard-setting body the International Association of Insurance Supervisors (IAIS) concluded that fintechs could transform the insurance industry in terms of competitiveness, consumer choice, and business-model viability.
Given the scope and pace of change afoot, the insurance industry must consider the potential for the fragmentation of the insurance value chain and big technology firms squeezing out traditional insurers, said IAIS executive committee chair Victoria Saporta.
“Fintech innovations have the potential to change fundamentally the way the insurance sector serves policyholders,” she said.
The report warned that fintechs could reduce insurance market competitiveness over the long term, cause traditional insurers to exit the market, and lead to changes in insurer business models if profit margins come under sustained pressure.
The challenge for insurers now is to create an environment that fosters innovation while also balancing the risks and benefits of innovations, the IAIS report stated.
Marc Fabris, head of digital at Zurich Financial Services Australia since April 2016, said the insurance industry is getting better at providing service levels at fintech benchmarks.
Fabris, who previously was head of digital marketing for Zurich Insurance, described his role as “bringing modernisation to the customer and distributor journey, from online interactions to the use of tools and resources that make for a more seamless and personal experience.” He has embarked on “journey mapping” customer interactions as part of the process of designing relevant digital tools.
With 90% of Zurich’s business conducted through intermediaries, Fabris needed to understand the “adviser experience” as well as the “customer experience” when designing new products.
“Our challenge is to find better ways of engaging with customers through digital–using digital to add value to the customer experience by enhancing the relationship between adviser and customer,” Fabris said.
A recent example is Zurich’s ZLife mobile app. Released in April, the app is designed to provide advisers with secure access to clients’ life insurance information. ZLife places detailed, up-to-date client information at advisers’ fingertips, allowing them to deliver higher levels of service in or out of the office.
In addition to notifications that can be personalised to suit their needs, advisers can also tag VIP clients and view upcoming renewals, pending lapses and cancellations, and changes in client details.
“The VIP tagging allows advisers to be more informed and more proactive in providing a higher level of service to their most valuable clients,” Fabris said.
Big Data For The Better
MLC Life Insurance–80% owned by Nippon Life Insurance and 20% by National Australia Bank–is also responding to a rapidly changing marketplace by beefing up its investment in digital and data science capabilities.
Anand Thomas, chief customer officer of Bancassurance, Digital, and DirectInsurance at MLC, said this follows a December report commissioned by MLC to investigate how big data can be used to revolutionise the sector.
The report, “Big Data in Life Insurance” (PDF), concluded that big data will transform the Australian life insurance industry by enabling deeper engagement with customers, providing a better understanding of risk, and streamlining claims processing and underwriting.
“Our focus is on creating products and services that are based on the concepts of human-centred design rather than being distribution-led and using big data to speed up traditionally cumbersome processes,” Thomas said.
He added that the aim is to provide customers “with an experience they have come to expect from their interactions with other innovative, customer-focused organisations, such as Google, Disney, Apple, and Amazon.”
“The customer must be at the heart of everything we do,” Thomas said. “By improving our digital and data science capabilities and learning from other leading customer-experience organisations, we hope to simplify and transform the experience we provide to our customers, our advisers, and superannuation partners.”