In­cum­bents become chal­lengers

It's bet­ter for in­cum­bent com­pa­nies to take risks in adapting to new cus­tomer ex­pec­ta­tions than be left be­hind as new en­trants ex­cel.

Digital Insurance - - CONTENTS - By Nick Fran­k­land

How Ama­zon and oth­ers are re­shap­ing cus­tomer ex­pe­ri­ence stan­dards, and what in­sur­ers can do.

The balance of power has shifted to the con­sumer in just about ev­ery mar­ket, and data is the fuel that en­ables each in­ter­ac­tion to be con­sumer­centric as this trans­for­ma­tion plays out. In in­sur­ance, this man­i­fests it­self through new con­cepts like open bank­ing, where, in ex­change for al­low­ing free ac­cess to their data, con­sumers can put them­selves in the po­si­tion of be­ing able to choose the most suit­able, best value of­fer that can be made to them. It offers up a cul­tural shift in how some cus­tomers may choose to think. “This is me, who wants me?” The im­pli­ca­tions of this are sig­nif­i­cant in terms of how com­pa­nies en­gi­neer dig­i­tal ser­vices and espe­cially how they plan dig­i­tal mar­ket­ing. The “Show me the best and this is me” par­a­digm has chal­lenges for all and po­ten­tial ben­e­fits for oth­ers, in­clud­ing price com­par­i­son. Over the past 17 or 18 years, in­sur­ance ag­gre­ga­tors have de­vel­oped from clunky sys­tems to slick, trans­par­ent, clear, highly reg­u­lated com­par­i­son en­gines. Ag­gre­ga­tion and com­par­i­son started with home in­sur­ance and renter in­sur­ance, and now takes in other prod­ucts and ser­vices all the way through to com­par­ing the cost of broad­band ser­vice in your house, gas prices, and elec­tric­ity prices. In a word, this tech­no­log­i­cal ca­pa­bil­ity cur­rently em­bod­ies the best hope for en­trenched fi­nan­cial ser­vices com­pa­nies to keep ex­ist­ing cus­tomers in their or­bit. How­ever, it re­quires a change of mind­set, to one that is still a dis­tant des­ti­na­tion for most com­pa­nies in the in­dus­try. Be­yond think­ing of ag­gre­ga­tion as a tech­no­log­i­cal tool or ca­pa­bil­ity, com­pa­nies could ag­gre­gate the en­tire cus­tomer jour­ney. Show­ing cus­tomers that they are val­ued is key. This type of think­ing ini­tially de­vel­oped in the TV ad space, which promised a free gift for merely in­ter­act­ing with the ad­ver­tiser. It is be­yond the hori­zon for in­sur­ers. How­ever, in my opin­ion, the di­rec­tion the in­dus­try is mov­ing is such that if com­pa­nies don't start to adopt a chal­lenger mind­set, or al­ter­na­tively put, the mind­set of their chal­lengers, they and their cus­tomers will end up in the hands of those chal­lengers. In all like­li­hood, those com­peti­tors may not even sup­ply the prod­uct it­self, but will ag­gre­gate the prod­uct bet­ter than any­one else in the mar­ket. They tell the cus­tomer, “You pick.” Their pri­mary, if not to­tal fo­cus is on mak­ing the whole user ex­pe­ri­ence seam­less, de­light­ful and easy. In­cum­bents need to think like chal­lengers. They have ev­ery­thing to lose, and not a lot in­cre­men­tally to gain — whereas the new kids on the block have noth­ing to lose and ev­ery­thing to gain. The only way to keep cus­tomers locked in your cir­cuit is by mak­ing sure they see the value that they are get­ting from you, and mak­ing sure that the balance con­tin­ues to tip in your fa­vor. This is ex­actly where ecosys­tems have a role to play. It's cen­tered on the idea that a com­pany doesn't have to phys­i­cally man­u­fac­ture ev­ery­thing it offers to the con­sumer. If an ecosys­tem is beau­ti­fully con­trolled and a joy­ous ex­pe­ri­ence to use, it doesn't re­ally mat­ter that other peo­ple sup­ply it, or what is of­fered on it. To achieve the tech por­tion of this goal, there must be flaw­less in­ter­faces be­tween sys­tems— ex­cel­lent APIs are crit­i­cal. Let's say, for ex­am­ple, that I've got some in­for­ma­tion on you, and you're in my ecosys­tem. You have made it clear that you love us­ing our beau­ti­ful app, and then we launch a new ser­vice app of­fer­ing travel in­sur­ance. You, as the new, em­pow­ered con­sumer would ex­pect to be able to skip re-key­ing in in­for­ma­tion that we al­ready have on you. Here's where the API comes in — it's able to present your data back to you for your travel in­sur­ance ap­pli­ca­tion. With a few rel­e­vant de­tails, my com­pany can make that process eas­ier than you'd ex­pect it to be. Just a few ques­tions, a quick swipe… we know you al­ready, don't we? You've been with us a while. And we don't treat you as if you're a new cus­tomer each time you sign on for a new prod­uct or ser­vice. This seems so nat­u­ral that you'd think com­pa­nies are al­ready do­ing this. Yet in­ter­est­ingly, nearly all in­sur­ance and bank­ing pro­cesses have a way to go to­wards this. I re­cently had the ex­pe­ri­ence of mov­ing to a new house. Com­ing from a se­nior po­si­tion in bank­ing for the pre­vi­ous 15 years, and hav­ing no mortgage on the house I was leav­ing, I thought it would be a piece of cake to ap­ply for a small mortgage on the new house through my bank. Well, pages and pages of ap­pli­ca­tions later, ne­ces­si­tat­ing the rep­e­ti­tion of all man­ner of in­for­ma­tion my bank al­ready has on me, I be­gan to think, “What is it that makes fi­nan­cial ser­vices un­able to think Uber?” The process doesn't need to be this te­dious and dif­fi­cult. Com­pa­nies have got to have good data sys­tems and ex­cel­lent user ex­pe­ri­ence ca­pa­bil­ity. If they don't want their cus­tomers to have to retell them who they are each time, com­pa­nies have got to have good ATI tech­nol­ogy to link to ser­vices they might also need. I am hop­ing that our in­sur­ance in­dus­try is start­ing to think like that — we need to.

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