The need to go digital:
The financial needs of consumers are growing more complex with each passing day and bancassurance needs to stay relevant in order to meet the holistic needs of consumers. Banks and insurers need to work together to avoid the pitfalls of operating in silos and holding on to tedious sales and compliance procedures. The tectonic shift seen with consumers embracing digital channels, makes it imperative for banks and insurers to combine forces seamlessly, refine their partnerships and provide integrated and comprehensive solutions to consumer demands. This will allow them to expand their reach, cross-sell their services and pool their customers, products and technology expertise so that they can transform the way they meet the growing needs of their shared customer base.
The growing adoption of digitisation
Digital technology is fast gaining momentum in the insurance and banking sectors as it plays a crucial role in improving the customer experience and streamlining insurance business processes such as product consulting, premium collection, policy issuance and claims processing. The drive towards digitisation bodes well for the bancassurance sector and it is expected to showcase a positive outlook over the next few years.
According to McKinsey, from 2011 to 2017, the growth of the bancassurance channel outpaced other channels in both life and non-life products.
Digitisation was also highlighted by the findings as one of the core components of growth. The above McKinsey assessment was able to identify a distinct number of European “growth champions” whose annual digital channel sale of non-life products was twice the average of their European counterparts. In the two years from 2016 to 2017, when many European businesses were stagnant and did not grow, the new business sales by these growth champions increased by an astounding 17 percent. This is a clear indication that today’s digitally aware, “always on”, customers have gravitated and been drawn towards the bancassurance experience that only digital products can provide.
Where bancassurance stands today
Life insurance products tend to have higher average sale prices and profit margins than most of the non-life products available in the market today. And, many banks especially in the Asia-Pacific and Latin American markets have used the bancassurance channel to sell life insurance products. This is because life products are more closely in line with financial products and where banks have access to their clients’ personal financial assets, they are well placed to offer life insurance policies to their customers as an alternative type of investment with the added lure of tax benefits. Not many banks have made use of non-life products as an alternative source of non-interest revenue. However, due to the historically low interest rates in the market, banks have been looking out for additional sources of non-interest income and are slowly beginning to recognise the potential that non-life products like auto and commercial lines might hold for them.
The overall trend in bancassurance sales is one of growth across all regions. Led by Latin-America, where bancassurance premiums expanded by 12 percent, Asia Pacific sales also grew fairly well and were up by 9.2 percent (with China accounting for two-thirds of that growth). This was clearly driven by the need for banks to put additional sources of revenue in place to offset the outfall of steadily reducing rates of interest.
The way forward
From the data available, it is amply clear that the way forward is through digitisation. The McKinsey study and assessment of the evolution of digital in the bancassurance domain coupled with the year on year growth achieved in bancassurance by a certain group of European insurers showed that this group of ‘digital champions’ achieved above average annual digital sales of non-life products as well as increased digital sales of other banking products. The banks and insurers who take the following steps will ensure that they are at the top of the game in the fast changing world of digital transformation:
1. Personalisation
Bancassurers have a great advantage at hand — the ability to see what their customers are spending money on. This data gives banks the opportunity to analyse the data they have to provide timely offers to their customers. Event triggers — for example, the purchase of jewellery, a maternity hospitalisation or a change of address are event triggers that can be used to make relevant offers to clients. Such propensity models can boost outcomes by 20 to 40 percent. Contextual information can also be utilised by banks to reach out via the internet or messaging to customers following a card transaction at a distant geo-reference to offer travel insurance or a relevant assistance product. Personalisation also involves differential pricing where possible. Based on an accurate analysis of risks, differentiated pricing makes products competitive and gives the customer the incentive to buy. Credit card scores are one way by which bancassurers can target customers who are clearly in a less risky category. The use of optimised quotes can increase the conversion rates of customers by up to 30 percent.
2. High quality digitally enabled customer experience
A complete revamp of the sales funnel is required in order to improve customer experience and conversion. A clear and simple, automated and end-to-end process that eliminates obstacles in the digital sales channels will minimise the need for paper based processes and underwriting that is manual. Pre-filling applications with relevant customer data from either the bank or the insurer will ensure the simplification of the process and encourage customers to buy with one-click. One of the banks that set out on the path to provide high quality digitally enabled customer experience was able to reduce the amount of time that it took to sell car insurance to just a few minutes. This was done by an auto retrieval of customer data from the banks’ databases and pre-populating the forms that needed to be filled out by the customer. This was followed up with a strong and efficient sales pitch which answered all customer queries, and contributed to a further reduction in time.
3. Omnichannel customer engagement
By leveraging all their sales channels with complete coordination, bancassurers can increase sales. One of the first steps is to enable the sales of their insurance products across secure site, public site and mobile app channels — preferably in that sequence. While most banks start off with secure sites, Finalta data shows that at least 50 percent of sales opportunities are generated from public sites. Coupled with a strong call centre support that will bolster omni channel offerings, these channels will be ideal for products marketed to customers in the higher income groups as they look forward to more personal human interactions. The need for all products and experiences to be seamless across channels is an important aspect of customers expectations that bancassurers will need to keep in mind. Customers will expect to initiate the query for a quote online and follow it up with a personal visit to the bank. However, banks have been slow to integrate their data and not all of them are fully connected to be able to meet these kinds of expectations. The ability to provide, save and retrieve quotations easily across channels are essential to avoid the frustrations and delays of repetitive data entry. Proactive and holistic engagement with customers envisages physical as well as digital channels to work together seamlessly from initial expression of interest to the issuance of a policy and efficient and a hassle free claims experience whenever it is needed. Banks and insurers must work strategically towards implementing fully integrated data models to be able to provide customers with the truly omnichannel experience that they seek.
The future of growth in the insurance industry belongs to bancassurance. However, the key to unlocking the potential that lies within, is in relevant digital implementation and insightful analytical excellence that will enable personalisation, provide superior customer experiences and give customers a truly omni channel offering. The rewards for getting this right are significant and in all regions, the best pickings will go to those who reach there well before their competitors.
With specialised solutions for the insurance industry, Neutrinos is helping leading insurers take impactful digital transformation decisions. Leveraging on inherent technical experience and expertise along with a deep understanding of client requirements, Neutrinos solutions are robust and high impact solutions. The solutions are effective and efficient and resonate with the need of the hour — and are easier and quicker to develop and implement than you may think! Neutrinos is excited to help clients make their digital journey an ongoing success. Talk to our experts today!
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