Celent Expects More Apps To Incorporate Payments Like Uber Does
With the exception of EMV chip cards, the retail payment business has smoothly grown #more digital.
Tom Groenfeldt – Financial Technology
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Let’s do it…if you trust on InsurTech
I had shared my bold view on #insurTech since a while and I’m currently doubling down on my beliefs
It is not a secret that I’m an insurtech enthusiastic: I have shared my view about the need for any insurance player (insurer, reinsurer, distributors, etc.) to become an insurtech-player during the next several years. This will mean: organizations where #technology will prevail as the key enabler for the achievement of the strategic goals.
It was only 12 months ago when I published my four Ps to assess the potential of each insurtech initiative. My approach is based on four axes related to the fundamentals of the insurance business:
1. Productivity: Impact on client acquisition, cross-selling or additional fee collection for services;
2. Proximity: What an insurtech approach can do to enlarge the relationship frequency, by creating numerous touch-points during the customer journey — a proven way to increase the customer’s satisfaction;
3. Profitability: What can be done to improve the loss ratio or cut costs without an increase in volumes;
4. Persistence: Increasing the renewal rate, and, thus, stabilizing the insurance portfolio.
InsurTech will make the insurance sector stronger so more able to protect people [ Click to Tweet]
The insurtech ecosystem has shown terrific growth in the last 20 months, after many VCs complained about the absence of insurtech startups. The updated Venture Scanner’s map shows more than 1,000 initiatives, with more than $17.5 billion invested. The needs for a pragmatic approach, the ability to prioritize the initiatives and a stronger focus on innovation have become more and more relevant.
I strongly believe in the effectiveness of the aforementioned four axes to evaluate a business. In the last few months, I followed this view to make #investment and career choices.
At the beginning of the year, I invested in Neosurance, an insurtech #startup currently accelerated by Plug & Play in Silicon Valley, and I’m supporting the company as a strategic adviser. This company developed a platform to enable incumbents to sell the right product with the right message at the right time to the right person. By using artificial intelligence, Neosurance aims to become a virtual insurance agent with the ability to learn and improve how it sells. I fell in love with its model because of its productivity angle, the first of the four Ps.
Let’s consider all the non-compulsory insurance coverages. The large part of the purchases have been — and still are — centered on a salesman’s ability to stimulate awareness and to show a solution. In a world that is getting increasingly more digital and is becoming less about human interaction, I’m skeptical about the ability to cover the people’s risks with the current approaches of online distribution, comparison websites and on-demand apps. All three of these approaches require a rational act and a lot of attention. But many customers look like more to Homer Simpson than to Mr. Spock.
Those are the reasons I’m optimistic about Neosurance’s business model. On one hand, its B2B2C model aims to be present where and when it matters most for the customer. And, its “push” approach is able to preserve underwriting discipline, which is the only way to continue in the middle term and distribute a product that keeps a promise to the customers. My investment choice was based on the business model evaluation, the company’s pipeline and the quality of its team. I hope to be able to make more investments.
I also decided it was time for a job change at the end of 2016. After 11 years, I left my career with Bain & Company, where I advised the main insurers and reinsurers on the European market. I had focused my activity on the single insurtech trend I’m passionate about: connected insurance. In the last several years, I have advised more than 50 players on this topic — from insurers to reinsurers and from service providers to investors. I consider the use of sensors for collecting data on the state of an insurable risk and the use of telematics for remote management of the data collected to be a new insurance paradigm. For years, many of the use cases we have seen globally have only somewhat used the potential of this technology to support an insurer and achieve his or her strategic goals.
My belief could be well understood by observing the best practices of auto insurance telematics and their performance regarding the other three Ps:
- Let’s start with the proximity angle. Insurers have provided telematics-based services that have reinvented a driver’s journey. More and more players are focusing on this opportunity to create an ecosystem of partners to deliver their suite of services. Discovery Insure is one of the best at doing this because it is able to reward clients with a free coffee or smoothie for each 100 kilometers they drive without speeding or braking hard. Is there a way for you to be closer to your client?
- The Italian market shows the potential benefits in terms of persistency. There are more than 6.5 million cars with a device connected to an insurance provider in Italy, and the telematics penetration reached 19% in the last three months of 2016. On average, the churn rate on the insurance telematics portfolio is just 11%, which is lower than the 14% churn rate on the non-telematics portfolio.
- Last — but definitely not least — is the profitability side. The Italian telematics portfolio shows a claims frequency that, risk-adjusted, was 20% lower in comparison with the non-telematics portfolio, as I mentioned in a paper last year. The best practices were able to achieve an additional 7% average claims cost reduction by acting as soon as a claim happened and by reconstructing the claims dynamic. These savings let insurers provide an up-front discount to the clients. This makes the product attractive and achieves higher profitability.
My day job is now to run an international think tank focused on connected insurance. More than 25 companies have joined the European chapter since the beginning of the year, and eight players have joined the North American chapter since March. This initiative is developing the most specialized knowledge on insurance IoT, which is based on a multi-client research. I personally deliver the contents through one-to-one workshops dedicated to each member. Throughout the rest of the year, I will host plenary meetings with all the players to discuss this innovation opportunity.
I felt honored and privileged last spring when former Iowa insurance commissioner Nick Gerhart invited me to present my 4 Ps at the Global Insurance Symposium 2017 in Des Moines, but I did not realize how this framework would so deeply influence my life decisions.
It is definitely an interesting time to be in the insurance sector.
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Popularity of Customer Engagement Tools Reveals Weakness of Cores
SAN JOSE, Calif. — One of the major themes in the first day of Finovate Spring (aside from perennial favorite authentication) was #customer #engagement &8212; having better discussions with customers in a digital environment in order to deliver more relevant products and services. Layer, Eltropy, SaleMove, Flybits, and CallVU all took on this problem in different ways. Layer […]
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New channels, new voices: Customer engagement goes digital
Leading Accenture’s #FinTech programme is one of the most exciting jobs in the business. It gives me a great ringside seat on the latest innovations in this space and the #digital trends that will transform every area of banking in the next few years. In this, the second blog in my ongoing series, I want to focus on the new #channels that are opening up, and what they mean for how #banks engage with their customers.
Channels are critical. They’re nearly always the first point of contact between customers and financial services providers and, as such, they set expectations around the type of service that’s likely to be provided from then on. Over the years, we’ve seen many startups in the labs looking at this area. No surprise. Digital affords unprecedented opportunities for completely reinventing the quality of experience that customers receive.
Banks are adopting various different strategies for evolving their traditional channels. Some have focused on the branch as a primary point of contact, and branch network optimisation has been a theme for many of our clients, maintaining branches where they identify value and pulling back where they’re either unused or not economically viable.
Some new challengers are going mobile-only. But many in the middle are looking at a whole range of approaches. With #customer #engagement of such high importance, a key priority is enhancing channels to make them easier to use: making use of voice as an authentication tool, for example.
Whatever the course of action, all the initiatives we see have one primary objective: providing an easier and more convenient customer experience. The latest leap forward in this regard is the use of chatbots. These are like ‘live chat’ services that let people interact in real time with online services. The big difference? There’s a robot not a person at the other end of the proverbial line.
Chatbots have been around for years in many different forms. Old-school messengers like ICQ, for example, had a simple version of this #technology that exercised call and response based on hard-coded logic and/or guesswork.
It might seem counter-intuitive that a command line-based interface would be the next big thing. But it’s a trend that’s been prompted by platforms. Facebook’s chatbot platform, for instance, has proved particularly popular with some sectors of the population. So have the platforms offered by WeChat, Snapchat and WhatsApp. The ease of interacting with all of these via mobile has been a major factor in their uptake.
The chatbot model has evolved from answering relatively simple questions to leveraging machine learning, artificial intelligence (AI) and textual analysis APIs to answer more complex ones. These models learn over time, getting better at interpreting our intentions and executing them quicker.
Some chatbots are standalone apps. London-based startups in this space include Plum, Chip and Cleo . Plum’s been promoted as the first AI-powered Facebook chatbot that lets customers ‘micro-save’ small sums without having to think about it. It does this by connecting to users’ current accounts, learning their spending habits, predicting how much they can afford to save and automatically depositing small amounts into their Plum savings account on a regular basis.
Chip’s another micro-saving chatbot. The startup’s USP is that it opted to develop its own iOS and Android chatbot, rather than depending on an existing messaging app. Cleo, meanwhile, is an AI-powered chatbot that lets users check all their bank account and credit card data in one place. By allowing them to keep tabs on their spending, it helps users improve budgeting and get smarter with their money. The chatbot also suggests ways to improve saving, whether that’s rationalising subscriptions or identifying better value financial products.
The next big trend could see people engaging with a bank’s/partner’s third-party proprietary chatbot as a servicing platform (“tell me my balance”, “send money to X”, “tell me when my repayment is due”…etc). A number of players have been looking at how services might be provided through other people’s channels.
But will incumbent banks be willing to provide APIs so they can form part of other people’s bots/platforms (like Monzo’s done by enabling its service to be used on Amazon’s Alexa)? It’s an interesting question. Will they be comfortable with sensitive customer data being relayed through other peoples ‘walled gardens’? In some respects, PSD2 may answer this question for them.
With 2017 being touted as the ‘year of voice’, expect to see more vendors seeking to launch similar propositions to Amazon’s Alexa. As that happened, perhaps we’ll leap from text to voice even quicker than we think. For banks, this will add momentum to their push to reduce the number of calls real people need to answer.
There’s a lot of opportunity right now. But banks should exercise caution in how they expand the channels through which they engage—and as they move forward, do so consciously and strategically. Otherwise costs will continue to go up, with customers fragmented across both low- and high-cost channels. Leaders in this area will have a clear point of view on their channel strategy, and they’ll apply this thinking to their response to PSD2/open banking.
That said, people still like to talk to people. And that’ll never change. We’ll be watching closely to see how this space evolves.
Thanks for reading.
The post New channels, new voices: Customer engagement goes digital appeared first on Accenture Banking Blog.
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European ‘Real Tech’ Badly Lags US Because It Lacks Later Stage Funding — Magister Advisors
Europe needs more #later #stage #funding if it is going to grow its #tech firms to billion euro unicorn scale, according to #Magister #Advisors‘ Victor Basta.
Tom Groenfeldt – Financial Technology -
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JPMorgan Chase Latest to Leave R3, Consortium Confirms
#JPMorgan #Chase just became the #latest bank to #leave the R3 #Consortium behind, due to “technological differences,” which went against R3’s roadmap. Charley Cooper, managing director at R3, told Bank Innovation in an emailed statement: JPMorgan parted ways with R3 to pursue a very distinct #technology path which is at odds with the one chosen by […]
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Consumers Want to Know the Social Impact of Their Spending, Aspiration Says
“Where is my money going?!” is a common enough shopping refrain, but #consumers might be doing more than lamenting bad #spending habits. According to “socially conscious” bank #Aspiration, consumers are legitimately asking where #their money is going—that’s why the startup launched its new Aspiration #Impact Measurement (AIM) feature earlier this morning. The feature, live today and offered […]
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China Leads On Mobile Wallets — Will Others Follow?
#Mobile #wallets, which are proving popular in #China, are less popular in the U.S. where consumers don’t find them more convenient that credit or debit cards.
Tom Groenfeldt – Financial Technology -
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Why bank branches—and human contact—are not going away any time soon
For years, we’ve heard people proclaiming the demise of the bricks-and-mortar #bank branch, supposedly swept #away by customers’ mass-migration to online and—increasingly—mobile alternatives. But as our latest UK banking consumer survey—Beyond Banking—confirms, there’s still plenty of life in the bank branch. Put simply, customers still want to be able to visit branches and experience the face-to-face contact they enable.
In fact, a major theme of our findings is how highly customers still value #human interaction, and how much they want to have a conversation with a real live person about their major financial decisions. What’s more, this desire isn’t limited to older people. Quite the reverse: As our research demonstrates, the younger you are, the more likely you are to be a regular user of a branch.
Given that this trend is coinciding in with an ongoing shift by younger consumers towards more innovative channels—the likes of wearables, social media and instant messaging—it’s possible that the continued strong usage of branches is a transitory effect. But our study gives no indication of that. And the findings will certainly give #banks pause for thought as they plan out future strategies for their physical branch networks.
So, what does the research tell us? As Figure 1 shows, while use of mobile banking services is surging, branch usage by all customers remains remarkably consistent year on year—and indeed in 2016 edged up to its highest level since this research began in 2010.
Figure 1: How often do you use the following? (% Regular use)[1]
A breakdown of the 2016 findings by age (see Figure 2) reveals what many might regard as a surprising outcome—with millennials being by far the heaviest users of branches, tapering down to OAPs as the lightest. While this age profile is probably affected by factors such as millennials’ higher numbers of financial transactions and the fact that it’s easier for them to physically get to branches, the correlation between youth and higher branch usage is clear and undeniable.
Figure 2: How often do you use the following? (% Regular use)[2]
And what are customers using branches for? The answer—as Figure 3 shows—is activities like seeking advice, accessing services and fixing issues. Indeed, branches far outstrip all other channels for advice and service access.
Figure 3: How often do you use the following for each type of service? (% Regular use)[3]
What’s more, the use of branches for research and advice is becoming more frequent, with a significant step-up since last year in monthly interactions for these activities (Figure 4). And a comparison with historic data from previous years shows that self-service initiatives in branches are gaining traction, underlining their evolving role as service hubs.
Figure 4: How often do you use the following for each type of service? (% Regular use)[4]
All of this leads us to the million-dollar question: What kind of banking model do customers actually want? The answer, as Figure 5 shows, is a blend of physical and digital channels—a proposition they find much more attractive than a pure digital bank with no branches.
Figure 5: Would you be interested in using the following banking models?[5]
The message is clear: Banks should create strategies that accept and optimise branches’ ongoing future role, while also looking to harness ongoing digital innovation to deliver better service experiences at lower cost. But the shift towards computer-generated services for customers cannot be at the expense of access to human services at their local branch.
In my next blog on our UK banking consumer survey, I’m #going to look at the findings on a key focus area for digital innovation in banking: so-called ‘#robo-advice’. Stay tuned.
[1-5] Source: UK findings of Accenture 2017 Global Banking Distribution & Marketing Consumer Study—Beyond Digital
The post Why bank branches—and human contact—are not going away any time soon appeared first on Accenture Banking Blog.
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Are FIs Ready For Banking as a Service?
The pay-as-you-go model of SaaS — software as a #service &8212; has certainly gained traction in the world of #banking. SaaS has helped #banks and other traditional financial institutions to take advantage of apps or software offered (commonly) by fintechs, without having to buy or build out the #technology. But as fintechs are getting bigger, […]
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