In just about every industry today, there’s pressure to go digital. This means different things to different people, but generally, it’s about using innovative technology to transform the ways we do business, deliver products and services, and communicate with customers.
As such, the digital revolution has big implications for the insurance industry, as well as the financial services sector as a whole. After decades of being sold financial products in a certain way, and communicating with their providers in channels like snail mail and the phone, customers are looking for more modern, ecommerce-style functionality: self-service, portal solutions, mobile apps.
But are insurers in a position to offer that functionality, or will they struggle to meet the expectations of a newly switched-on clientele? A lot of the time, it might depend more on the efficiency and flexibility of their existing systems than on flashy innovations in the frontend, according to some commentators.
Writing for Insurance Innovation Reporter in March, for example, Glynda Gill – digital strategy director for Guidewire Software, one of our core partners since 2005 – claimed that core operational systems “play a foundational role in enabling digital transformation”.
“Insurers burdened with inflexible core systems often settle for a quick fix by building engaging websites that don’t really offer full self-service… Other insurers are forced to recode complex operational logic and duplicate data—not just once, but for each channel solution,” she wrote.
“These types of remedies can satisfy the demand in the short-term, but have long-term TCO [total cost of ownership] implications that can severely restrict speed-to-market when changes have to be made in several places.”
In contrast, insurers that pursue legacy renewal projects and implement modern, integrated policy and claims systems will find it much simpler to deliver a customer experience that satisfies the demands of the digital age – boosting engagement and loyalty, generating sales opportunities, and providing the company with a new competitive advantage.
Ms Gill gave the following examples of interdependencies between core systems and frontend innovations:
According to Ms Gill, a lot of supposedly self-service portals on the web and in mobile apps simply forward form-based customer input to the insurer, where someone has to rekey the information manually to produce a response. To deliver true self-service, core systems need to support “automated underwriting, rating and document generation” – and if the customer can’t get a response in one session, they can always take their business elsewhere.
Digital-age customers expect the ability to access their policy data in any channel, whether the web, mobile or using a more traditional form of communication. For obvious reasons, this means integrating these services so that customer data can be extracted from – and processed in – a central database in real time. Lots of ageing legacy systems are still batch-oriented and policy rather than customer-centric, according to Ms Gill, making this integration impossible.
Finally, Ms Gill identified the difficulty in legacy systems of providing personalised communication at every stage of the customer journey. Digitally-empowered insurers should be able to dynamically adjust their upsell messages and product offerings based on market segment, she wrote, and this requires that same degree of real-time access to customer data in multiple channels. Moreover, without integration, there’s a risk that these marketing efforts end up being built around outdated and inaccurate information.
Are your core systems ready for the digital revolution? Or are you trying to jump on the bandwagon armed with little more than quick fixes and bolt-ons?