More industries today have been disrupted by the current wave of transformation than have ever been disrupted in history. Some industries have been quick to accept the new realities and change at the earliest while most others have reconciled themselves to the need for transformation at some point in the future — when they are left with no option, but to change. Banks and insurers although in the same financial space have adopted quite different approaches to transformation. Currently, the markets that banks and insurers are competing in, typically have strong challengers, changing market dynamics and are highly disrupted. In addition, both banks and insurers bear the burden of legacy systems and applications that inhibit growth, result in delays in time to market and hamper the ability to compete effectively. Banks are confident about the future in a transforming industry landscape with a greater adoption of cloud and a lesser legacy spend. They are also increasing their use of AI and automation but have concerns with regard to in-house security and DevOps skills. Insurers on the other hand, have struggled to keep pace with transformation. They have been found lagging behind in all areas from cloud adoption, use of AI and automation, legacy spend or even agile and DevOps approaches.
The challenges faced by banks
- Legacy systems and applications — Banks absolutely need to unlock value from legacy systems and applications if they are to be ready to keep pace with transformation. A focus on microservices and APIs is essential to digitally decouple and increase their agility. This will result in efficiencies of a lower spend on legacy.
- Cloud environment — While banks are keen to adopt a cloud environment, they need to carefully analyse and decide on the best cloud platforms for their business and how they will manage their service providers. This will be a major step forward in their efforts to adapt to the shifting market dynamics.
- Security — Keeping in mind the need for remote working, banks need to closely examine cloud security. Also, given the ecosystems developed around Open Banking, banks need to conduct an in-depth review of the security status of their partners.
- The need for DevOps skills — The improved productivity that is an outcome of investing in DevOps skills is the basis for the business case itself.
- AI and automation — Banks need to realistically examine the amount of time that it would take to move from a pilot to a fully integrated status and how cloud can support such a transition. Developing ‘clean’ data takes time and must not be underestimated.
The challenges for insurers
- Legacy systems — One of the foremost priorities of insurers is the assessment of their legacy systems. The systems and processes for policy administration, claims and billing are key areas of focus. This is critical to the growth of the industry in areas like innovation and the use of AI and automation.
- Scaling up of AI and automation — Strategic planning for the implementation of AI and automation across business segments is essential to retain a competitive edge in the market. This will bring insurers the much needed benefits of reduced operational costs, reduced time to market and reduced risks.
- Cloud adoption — Cloud adoption by insurers is still at a nascent stage and there is no drastic change envisioned over the next three year period. However, in order to transform their business model into one that is agile and responsive, insurers need to accelerate their plans to move to the cloud and invest in cloud-native applications.
- Application of DevOps and agile — Despite both a need as well as a desire to apply DevOps and agile approaches, insurers have not yet seen their wide implementation. There is a very strong business case for insurers to apply DevOps and agile and these center around significant productivity and efficiency improvements — both of which are critical to the insurers bottom lines.
The way forward
- For banks — While banks might imagine that they are in a good space, there are still plenty of challenges to be resolved before they can consider themselves digitally ready. Banks are confident when it comes to their outlook for the future as they have a greater adoption of cloud and an expectation of a lower legacy spend. And, while AI and automation is being scaled up, security and DevOps still need significant focus and attention.
- For insurers — The areas that Insurers need to seriously focus on are implementation of cloud, the use of AI and automation and legacy spend or DevOps approaches. Strategic planning for a time-bound transformation is an absolute priority.
Neutrinos helps insurers move to new digital models as a part of their digital transformation journey. Our solutions are holistic in nature and help clients to improve their business agility. We help clients achieve faster time to market and always ensure that our clients are able to quickly adapt to changing market dynamics and are well poised to ride the wave of disruption. Find out more about our approach to business transformation. Talk to our experts today.