Searching for growth opportunities
Progress is impossible without change, and those who cannot change their minds cannot change anything - George Bernard Shaw. While we can never describe the financial services industry as anything but a dynamic industry, the level of change the South African financial services industry has experienced over the past two years has been significant, and this looks set to continue for the foreseeable future.
The question is, are we ready for change?
The changing client
At the recent Pretoria leg of the Financial Intermediary Association of Southern Africa’s Roadshow, Edward Gibbens, Executive Head: Commercial & Personal at Santam, points out that probably the biggest change comes in the form of the client who is in a sense finding their own identity and is expecting a lot from insurers.
“Client’s needs are changing. Not only are needs changing; but their attitude, behaviours and expectations are evolving towards an era where they want simplicity and clarity from the advice that they receive,” said Gibbens.
In an effort to move towards simplicity, intermediaries need to banish its arch enemy complexity. Gibbens points out that there are many process and technologies within the financial services industry that can simplify advice, processes and administration. Blockchain is only one such technology.
Personalisation has become a key role player in the industry and we therefore, according to Gibbens, need to make services easier or more relevant for the use of the client through technologies such as Big Data, cognitive computing or machine learning.
Responding to adversity
Despite the changes that the industry face, it is responding to the adversity that comes with change.
“One of the coping models we have seen is the rise of peer-to-peer insurance which pools the resource of clients to fund claims. The insurer is only approached to fulfil the role that a traditional re-insurer currently fills,” said Gibbens. The world’s first peer-to-peer insurer, Lemonade, will launch by the end of the year in the US and will most likely begin with a travel insurance offering. But the growth of this company will be interesting and will be an indicator on how much interest there is in this model.
The next model is the ability to digitally turn cover on and off as needed and will steadily be accepted in the industry. It will be interesting to see how insurers design their products to cater for this growing demand.
Be dynamic
In order to overcome the adversity that comes as an unintended consequence of change, Gibbens says that we need to create a dynamic financial services industry.
“We need to promote the image of the financial services industry, particularly the short-term industry, as an internationally recognised industry that is filled with professional experts that possess world class skills,” said Gibbens.
There is also significant bargaining power associated with mass engagement. Therefore, Gibbens pointed out that the financial services industry needs to engage with the regulator as a collective.
Finally, insurers within the industry need to drive and facilitate skills development. This will open up new markets for future growth.
Take charge
Building a dynamic industry is merely the first part of changing the industry for the better. The second part, Gibbens pointed out, is that intermediaries need to take charge of their own future.
“Intermediaries need to identify opportunities among challenges. They need to design their future by finding a specific niche and focusing skills on that area. They also need to use technology to their advantage; clients are embracing technology and we cannot fight this. For brokerages, they need to make sure that they have employed people with the right skill set to cater for client’s needs,” said Gibbens.
The final component is that insurers need to show the same dynamism as the industry. They need to do this by having a diversified balance sheet which has strength in a multitude of areas. Insurers should also have a strong brand presence and a client centric approach which embraces outcomes highlighted by Treating Customers Fairly (TCF).
“Finally, insurers need to make sure that there is an ongoing investment in technology and client relationship management (CRM) platforms that show strength in engagement through social media. Insurers also need to have a value adding distribution model,” said Gibbens.
Editor’s Thoughts:
If we want to effectively adapt to change, we need to be adaptable, dynamic, and able to take a hit on the chin knowing that it is a learning lesson. The industry is far from one that doesn’t hold opportunities for growth. As Gibbens points out, it’s about finding these opportunities. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
