Embracing the world of digital

The world is in the midst of a technology driven process revolution. This is not just another modular or incremental change in business processes; this is a transformation to a technology enabled world with many facets and ecosystems that will yield itself in a constant state of evolution or change.

This is becoming evident in every aspect of society as the generation that grew up with this technology are now entering into the workplace. If the financial services industry wants to take advantage of the opportunities this new pool of business presents, insurers – as well as advisers – will need to embrace technology.

Key focus areas

This is not something new, but how do we embrace technology effectively? What level of engagement needs to take place in order to achieve this?

Chris Nigiba, Senior Consultant: Management Consulting Tech Enablement at KPMG points out that digitisation allows enterprises to collect more information on their customers, which will allow them to tailor their products and services to the specific needs of these customers.

“The customer of today, whether they are customers in the telecommunications or insurance services, is looking for that personal touch from their product suppliers. They expect their needs to be understood and met at an individual level,” says Nigiba.

In 2015, it is estimated that 70% of the world’s population has a mobile phone while only 28% have a bank account. There is a distinct global move by customers from using conventional online channels to mobile channels. Due to the increase in the mobile and online population, there is an increase in online transactions which leads to a transformation in the payments space.

Loyalty programmes in the telecommunications and banking sectors has resulted in greater client interaction. Through gamification, it was found that companies could use the concept to target a specific consumer segment.

Mind the P’s and Q’s

While digital is the distribution channel of the future, it may prove to be the most challenging channel advisers will do business in.

As much as information is freely available and accessible on the internet, consumers are continuing to be educated by themselves and other enterprise driven campaigns on the dangers of having this information out in the open. Privacy will be a major issue and the Protection of Private Information Act will govern the industry with a tight leash approach as South Africa is among the top countries in the world when it comes to cyber-crime. 

“Data breaches are becoming a major concern for clients, and as it is the foremost concern on their minds, insurers need to assure them that everything is being done to keep their information under the virtual lock-and-key. Insurers also need to put these concerns to rest by openly sharing with consumers the steps that were taken to limit the risk of information leaking,” says Nigiba.

Another challenge of the online universe is that it is never static and is not bound by traditional geographical borders. A client in South Africa can potentially purchase an insurance product in the UK or the US, where they will have to share their personal information. The opposite is also true whereby a client in the UK or the US may want to purchase a product in South Africa.

Nigiba adds that the cross regional regulation is fast changing and enterprises need to be aware of the changes as they happen in order to ensure compliance. The revolution will require that enterprises know where it is cheaper to host certain operations, but also be well aware what that entails from a risk management perspective.

Change your thinking cap

Because of the dynamic nature of the risk associated with embracing a technology based distribution platform, company executives need to rethink the traditional strategies they used to have regarding product distribution.

“There needs to be a closer collaboration among the senior executives in harnessing the ability of these digital channels and trends. As these senior leaders advocate for innovation and collaboration, they need to break the mental and structural silos that exist in order to create an agile environment,” says Nigiba.

He adds that this agility will result in faster time to market which makes for a competitive advantage in fiercely contented markets like insurance.

Editor’s Thoughts:
With the various waves of the technological revolution taking hold of the industry, stakeholder commitment remains essential, followed by useful insight of the customers and the market. Allocation of time, budget and resources needs to be taken to a whole new level if this distribution channel is going to prove effective for insurers. Are we ready to be active participants in the digital revolution? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].

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