Ecosystems, Innovation and the Digital User Experience
If working from home for weeks on end teaches us nothing else, it may have convinced some of us about the power of digital and the ecosystem. We may have learned something new about ecosystems and their ability to improve the digital user experience.
When you start to dig into “work from home” and “collaborate from anywhere” tools, you begin to see how effective they are at working together. For example, if you are working within Slack (an online co-operative work environment) and you add a link to a Google Doc, the “Slack bot” will ask you if you want to connect your Google Drive to Slack. Click. Do you want to add Trello or Workstream project management to Slack? Click. Would you like to start a Zoom meeting within Slack? Done. If you’re a developer, would it help you to add Zendesk, Jira Server Alerts or Standup Alice? Name your online productivity app and it probably interfaces with Slack.
Can we give a hand for the genius of the ecosystem?
Here is the point. Ecosystems are enablers. They take what should be natural in the way we live, work, buy and learn — and they make it happen the way it should. They do this not only for people, but for companies, systems, for automated processes and the list goes on. Ecosystems capitalize on what is best in features and flow.
Ultimately, ecosystems can help the flow of insurance to align with and match the flow of life. When the two are operating seamlessly, side by side, the power of the ecosystem will be fully unleashed because insurance will be fully relevant. Insurance ecosystems are currently being built that are nearly as useful and easy to integrate as a Slack ecosystem. We would, of course, point to Majesco’s Digital1st EcoExchangeTM as an example. While we are very familiar with all of the reasons that ecosystems are supercharging insurance, it makes sense to take a deeper look at how ecosystems are enabling innovation and the digital user experience.
A few weeks ago, Majesco released its latest thought-leadership report, “Insurance Digital Transformation: A New Era of Core Systems, Next Gen Technologies and Ecosystems.” Within the report, we gathered Majesco survey and report data surrounding InsurTech and Ecosystems and how they accelerate transformation. We also looked at how widely (or narrowly) insurers were applying an ecosystem approach to growth strategies.
Ecosystems and Accelerating Transformation
The lightning-swift advances in InsurTech, next gen technology and ecosystems are challenging insurance to run even faster just to stay in place, let alone get ahead. The demands of agility, speed and innovation are dramatically different today than in the past. To navigate successfully to the future of insurance, insurers need to embrace InsurTech and Ecosystems … with a focus on customer expectations, demands and needs. In this changing marketplace, future leaders will not be those with the biggest inventory or proprietary products and services. Rather, they will be those that have the best access to a vast and growing global inventory of products and services that enable insurers to retain the customer relationship and interactions rather than lose them.
It’s the access that is both the hurdle and the payoff. According to A.M. Best’s recent Innovation Assessment Report,
“The rise of digital platforms and ecosystems will make relationships with customers even more important. Insurers can improve their access to customers and grow their revenue streams by providing additional services.” These new streams and services are the two-way highways of ecosystem flow. In some cases, insurers will be providing them. In other cases, they will be partnering to bring them in.
A.M. Best also warns that this may require insurers to “rethink how they operate and bring their products and services to market,” and that “The most ambitious and innovative insurers will strive to become ecosystem organizers…”[i] Like anything else, the rise of ecosystems will cause some insurers to remain leaders, while others are relegated to roles as followers or laggards. Ecosystems and platform technologies will only be useful if they are rapidly adopted.
Business and Technology Challenges to Ecosystems
A.M. Best’s reasoning is certainly sound. Ecosystems are currently redefining customer engagement, products and business models in terms of the customer.
Based on Majesco research, unfortunately many insurers are not looking at ecosystems and partnerships in this manner, or at all, as reflected in Figure 1. Both Followers and Laggards are well behind Leaders by 42% – 45%, a significant gap. This is putting them at risk, particularly since challengers from outside the industry, are also entering the industry to manage the customer relationship and transactions. Just think of the need to digitally engage in today’s stay-at-home world rather than use in-person, paper or manual processes. Partners are helping some insurers do just that, and in the process, meeting customer expectations and gaining loyalty!
The lack of movement in adopting platform technologies is holding them back. A platform and ecosystem approach is radically different than what insurers have done previously. An ecosystem approach requires platform technologies like cloud, microservices and APIs. In our research, we found that multi-line insurers (those with both P&C and L&A/Group business) were significant leaders in adopting and using APIs. In particular, we found that:
- Multi-line insurers lead in offering an API to embed their products into other companies’ offerings or platforms, by nearly 36%
- They lead in partnering with other companies to embed insurance as a part of their product or service, by 36%
- They lead by 13% in setting up products on a partner platform that shares revenue
Multi-line insurers are also leading the way in engaging at the customer level rather than a product level. Digitalization is revolutionizing how we create customer value – within and across companies and industries. Ecosystems comprising a network of various businesses that provide some type of value – channel, service, data or more – begin to redefine how we need to rethink our businesses and, ultimately, our customers.
Drawing New Borders — Erasing Old Boundaries — Creating New Experiences
Multiple entities continue to reinvent the overall insurance industry and ecosystem – insurers, MGAs, Brokers, Reinsurers, industry organizations, channels, solution vendors, partners, new outside industry players, and more. We are seeing a shift in the power base within and outside the industry by innovation-led companies that are redefining their roles in the ecosystem and how they are going to own the customer relationship and experience. This will reshape other elements of the insurance ecosystem from industry organizations, solution providers, channels and partners to define how they contribute to and participate in a new era of insurance.
An ecosystem, platforms and next gen technologies are the DNA of the platform economy. Just look at the platform pioneers such as Amazon, Google, Apple, Microsoft and Netflix and how they have excelled in a new stay-at-home world! Platforms enable flexible business models that will allow insurers to create a new customer experience, while exchanging and sharing value between their partners and customers to reach markets differently. To meaningfully participate in the platform economy, insurers must move from traditional models and embrace platform and ecosystem models and be prepared to partner with competitors, other industries, and innovative technology-based service providers.
Digital experience and Digital Experience Platforms (DXPs) are a top driver of transformation. The rapid evolution of digital strategies is challenging traditional out-of-the-box portals (both agent and customer), exposing their inability to deliver personalized engagement, support non-standardized products and easily integrate with innovative partners. Undertaking digital transformation begins with customer-centricity and providing the capabilities that deliver the great experience customers increasingly expect. DXPs that offer personalized UIs can do so much more, from basic portal transactions, to interacting with other systems in “real-time” for on-demand products or continuous underwriting, to providing analytics to identify and create user specific digital experiences, and much more.
As we continue forward in this new digital era, the blurring of traditional industry boundaries is being driven by the rise of ecosystems and the platform economy. New technologies and digital ecosystems are accelerating transformative change and offering opportunities to create a seamless customer experience just like Amazon, Apple and other big tech platform companies. It is all about owning the customer relationship. Digital ecosystems facilitate constant touchpoints with customers in simple ways by plugging into capabilities that enable cost-effective growth while bringing insurance coverage closer and more personalized to the customer. This creates tremendous potential for both penetrating existing markets and reaching or creating brand new markets. Ecosystems and embedding insurance within them will expand growth opportunities to reach new and existing customers on their terms.
Today’s and tomorrow’s new business models must leverage a business platform, next gen technologies and ecosystems to redefine the business model with an outside-in view and a focus on continuous customer engagement.
Visionary leaders see the market and technological trends as a many-fold opportunity for insurance — preparing to use new sources of data, reach new market segments, and offer innovative new products needed by customers with platforms, next gen technologies and ecosystems. With a digital platform foundation in place, insurers can focus on optimizing and innovating their business to compete in a new era of insurance.
A few weeks ago, Majesco released its latest thought-leadership report, “Insurance Digital Transformation: A New Era of Core Systems, Next Gen Technologies and Ecosystems.” To gain a more comprehensive view of digital transformation that goes beyond ecosystems, be sure to download and read it today. For an expert perspective on how COVID-19 may affect digital transformation, consumer behaviors and InsurTech, be sure to register for Majesco’s April 30th Webinar, The Future of Insurance Post-COVID-19: Insights, Learnings & Recommended Actions From Top 50 InsurTech Influencers.
[i] Finnegan, Hopper, Imsirovic, Varvaro, Ermakova, et. al, Special Report: The Advent of Innovation, A.M. Best, March 20, 2020