Have you embraced ‘extreme digitalisation’?

In these days of rapid technological advancement, it is a given that insurers should be embracing digitalisation in their businesses.

But the pace is so fast that we have had to invent new terms just to keep up with the tech! One of these is “extreme digitalisation” which means: the ability to instantaneously identify, capture, and integrate relevant data in an insurer’s information system and turn this data into valuable information to make fundamental insurance decisions (rating, underwriting, claims, etc.) with less or sometimes no human intervention.

With the primary goal of achieving extensive digitisation, insurers have an excellent opportunity to identify areas of concern and eliminate obstacles hindering the process. In this regard, it is crucial to critically evaluate the current system landscape.

The fundamental question to address is whether existing systems and business capabilities are conducive to facilitating a transition toward a more digitally oriented organisation, possibly to an advanced degree. The first step involves defining the essential business capabilities necessary to accomplish this objective.

But what does this mean? Like many commonly used phrases, “digital transformation” has devolved into a catchall term that means different things to different people, which could lead to unaligned visions and perceptions regarding WHAT should be focussed on and HOW to navigate a digital roadmap that will lead to the needs of the company being met.

Digital transformation is critical for organisations not only to compete, but to survive! With a clear and defined architecture, leaders will be able to better understand what digital transformation is—and align their organisation around a specific program.

To fully harness the transformative power of digitalisation and artificial intelligence (AI) in driving business growth, it is essential for the leadership team to embrace the necessary organisational changes, like a surgical procedure, to cultivate a digitally skilled enterprise.

There are no quick fixes or one-size-fits-all solutions. Mere implementation of a system or technology is not enough. Genuine success lies in the seamless integration of numerous technology-driven solutions, both customised and off-the-shelf, constantly enhanced to deliver exceptional experiences for customers and employees, while reducing costs and generating value.

However, achieving this feat at an enterprise level requires a profound restructuring of the company's operational framework. It involves fostering collaboration and promoting innovative digital practices across diverse units, involving various individuals, who must work together and adopt a new mindset to drive ongoing digital advancements.

At its core, a digital strategy is a series of interconnected decisions aimed at securing economic surplus in an uncertain future. Just like any other strategy, it involves analysing current revenue sources, predicting future changes, identifying pathways to success, implementing a range of initiatives, and most importantly, embracing transformative change.

McKinsey, in their latest publication titled "Rewired to outcompete," highlights the crucial role of the "how" in achieving success within the six capabilities as shown here.

But the report also highlights two key points that should be kept in mind when addressing and implementing these six capabilities:

Firstly, no digital and AI transformation can be successful without building a baseline of competence across all the six capabilities.

And secondly, these elements are interconnected and need to be managed that way:
a good operating model, for example, can’t work without the right talent.

Similarly, great technology won’t make much of an impact if users don’t adopt it. Communication with all stakeholders is a key component of any digital transformation process – before it starts, while it is being implemented, and after implementation. Don’t forget the people who have to use it!