What the Phygital?! Quick wins from hybrid advice
The best way for insurance intermediation to thrive is for stakeholders to leverage technology to bring advisers and brokers closer to their clients, even if this means offering them a complex combination of human and digital interactions. Omni-channel distribution that allows customers to interact with financial services providers (FSPs) entirely on their own terms may be a ticket to play nowadays; but that does not mean that human touch is redundant. These were some of the observations shared by Howard John, CEO at Brolink, during his graveyard shift presentation to the 2021 FIA Virtual Advice Summit.
Nothing replaces the human touch
“Intermediaries will need to develop new capabilities and future-fit minds to thrive in a challenging distribution landscape,” said John, as he launched into his talk on ‘embracing hybrid advice models’. An important early observation was that the need for human touch will remain, despite many human interactions taking place in a virtual world. Hybrid advice, or the combination of digital and human advice, must thus be ingrained in future-proof advice practices. According to John, offline channels such as intermediary consultations were, and always will be, crucial for customers.
It helps to think of the digitalisation trend as the industry’s response to evolving consumer needs. Consumers want to buy insurance via a channel or channels that offer them the same access, efficiency and flexibility that they get from their favourite online retailer… They also show scant concern for whether their financial product purchases are made with a recognised insurance brand, or via a totally different business. This is not a new development, as they have been able to buy insurance solutions from retailers and telecommunications firms for years. And it does not require much imagination to replace an MTN or Vodacom with an Amazon, Google or Tesla insofar insurance product distribution.
Advocating for a best of both worlds
Customer centricity and ‘customer first’ are catch phrases for 21st Century financial services stakeholders. “Clients are demanding that we prioritise their needs; that we offer them innovative new products; and that we offer them more variety, coupled with value,” said John. To meet these demands requires a best of both worlds approach to advice. For example: we know that digital channels offer convenience, whereas human channels are good for advice. A purely digital channel offers the benefits of reach and scale, but may leave customers ‘hanging’ when they need advice. “Our distribution channels need to be retooled, and from an intermediary perspective, we have to find those tools that will make us the number one channel for insurance buyers,” he said.
The old school single channel distribution model, in which brokers give face-to-face advice to clients, will gradually disappear. It will be replaced with a multi-channel solution in which clients will choose the level of engagement and interaction that suits them. “This mix of touchpoints will make the customer engagement more complex,” explained John, before offering an illustrative example of this journey. You future client will jump between channels for different information. They will find product information online or conduct some basic research using a financial advice chat bot; but they will still need personalised advice from a trusted adviser to make an appropriate insurance choice.
The emergence of Digi-intermediation
“Advice remains the cornerstone [of insurance distribution] and it is going to be up to intermediaries to find the right mix of technology and human touch to ensure that they take the lead in selling policies,” said John. Success will require intermediaries to be better at customer engagement; achieve shorter response times; reduce costs; extend their reach; and offer personalised advice. Digital tools that can help intermediaries stand out from the crowd include digital CRM solutions that provide rich client data, plus a mixture of robo-advice, for personal product recommendations, and chatbots, to assist in resolving queries at scale. The move is towards Digi-intermediation, which John described as personalised customer engagements that augment the value in the customer journey.
Digitalisation should not be viewed as a threat; but rather as a mechanism that allows for the automation of time-consuming administrative tasks, thereby empowering advisers to add real value through the advice process. You can, for example, tackle the lead generation challenge by combining rich customer data with automation and chatbots. Further gains can be made by scaling up operational capacity by offering automated quoting; self-service and chat-based customer support. Where too from here? John said that the next step on the evolutionary track was the seamless blending of digital experiences with physical ones, something he referred to as Phygital. PS: This writer almost lost a sip of coffee upon hearing this word.
The combination of physical and digital
It resonated with industry stalwart and FIA Virtual Advice Summit MC, Caroline da Silva, too. “This is something new to me, Phygital, I have never heard that before,” she said, immediately following the presentation. But John maintained his composure: “I view it as completing an entire insurance sales process via video chat; so you are still in physical contact with the consumer, but you complete the transaction entirely through digital mediums”. In this context, future insurance sales processes might be built around a combination of web chat tools and co-browsing in order to connect with and collaborate with clients on their insurance needs.
Tomorrow’s digital intermediaries will have access to connected channels, digital disruption and ecosystem based-distribution. “This will enable us as brokers, as intermediaries, to rapidly expand our reach, and to facilitate true end-to-end digitalisation of distribution,” concluded John. “In order to embrace the new distribution or advice models, intermediaries will need to develop new capabilities and future fit mindsets to thrive in a changing distribution landscape”. It was left to Da Silva to summarise proceedings. “I imagine a lot of intermediaries are thinking they will have to be half human, half robot to survive in the new world,” she said.
Writer’s thoughts:
The latest presentation on hybrid advice got me thinking… Have we missed a point in the digital versus human debate? Is it not better to define financial advice as the face-to-face process of imparting valuable financial knowledge to a client, and shift all the digital ‘bells and whistles’ over to the ‘efficiency and scale improvements’ pile. Just a thought; I would love to hear your views. Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za
Comments
Howard John's thoughts on the other hand encompass a sufficient and to some extend a clean break from the old and trusted delivery system without departing from the principles. In order for such a Hybrid system to work it should not add to the present system's time constraints but should combine and streamline . Report Abuse