Traditional insurers are now faced with joining the digital wave or succumbing to those offering digital solutions fit for a socially distant society
As economies begin to reopen and businesses grapple with a new digital and socially distant landscape, industries as we know them have inevitably changed over the course of the outbreak. While many sectors struggle to tide through this new reality, fintech is in a promising position with S$650 million (US$475 million) invested in fintech firms throughout the first half of 2020.
With the challenges brought forth by the pandemic, digital financial solutions are vital in serving economies and societies of the future. Southeast Asia is actively accelerating the digital financial services sector with the Monetary Authority of Singapore (MAS) urging the use of digital finance and stimulating the fintech sector with S$125 million (US$91 million) to support the digital financial industry to navigate new obstacles.
With new socially distant norms, many firms are now forced to adapt to the new realities. The pandemic has already prompted a 20 per cent increase in Singapore businesses kick-starting their digital journey, and this number is likely to rise further as the outbreak continues.
Amidst the changing business and economic landscape, customer’s demands are also changing. Eighty per cent of surveyed respondents in Singapore has stated that they are likely to continue using online banking after the pandemic.
With more consumers migrating and adapting to digital, they will naturally expect other financial providers to follow suit, and insurance will be no exception. Traditional insurers are now faced with joining the digital wave or succumbing to those offering digital solutions fit for a socially distant society.
Tradition vs technology
Digital by design, today’s fintech and insurtech startups have an operational structure rooted in technology and the agility to continue services amidst business disruptions and limited contact. In contrast, much of traditional insurance is structured around face-to-face contact, and as such, the transition to digital is met with more challenges as they create new avenues for customers to make well-informed decisions without having to physically meet financial advisers.
In addition, new products take an average of six to nine months and close to US$1 million to develop and test. Caught at a technological crossroads, it is slow and costly to integrate into a digital ecosystem.
In a rush to expedite digital processes, many companies have implemented solutions in weeks rather than the months or years it would have usually taken, raising concerns on the long-term impacts that could arise from such quick digital fixtures.
With many traditional insurers taking this digital leap, there is an even greater need to scrutinise solutions from a digital perspective to avoid the pitfalls of quick technological fixes. The transition to digital goes beyond structural changes and involves a re-engineering the mindset and culture of the organisation to think from a digital perspective, from product to customer service.
The future of insurance
With a growing focus on technological transformation, naturally, most would expect that the future of insurance is digital. No doubt, to an extent that is true but I believe that the future of insurance is not just digital, but efficient—being able to connect to our customers more instantaneously, to understand their needs more promptly, and to address their concerns immediately.
Encompassing new technologies from big data and machine learning to robo-advisory and IoTs, digital insurers are built to lower costs for policy administration and improve claims management, streamlining processes more efficiently than traditional insurers.
Having such technological solutions provides multiple touchpoints for customers to connect at any time which is crucial in accelerating processes and creating an efficient customer onboarding process.
In this new economic climate, finances are a concern for many, making it even more necessary to have seamless services that provide clarity and connectivity to customers at a time of uncertainty.
Presented by new challenges, traditional insurers are forced to evaluate old practices and innovate new processes in a bid to stay relevant in an ever-changing economic landscape.
As we look at a post-pandemic world, it will be paramount to embody the nimbleness of a digital insurer, providing the efficiency that the customers of tomorrow not only need but expect.
Reference: e27
