The insurance industry was slower than most to adapt to the digital era, but it is making up for that now. Digitalisation is front and centre in insurers’ strategies, as they have recognised that it is the key to increasing the level of personalisation that can be given to the consumer.
Digitalisation lies at the heart of innovation in products and services supplied to the market. It is a core component in cost-reduction by increasing the efficiencies inherent in the business processes of the organisation.
However, we are reaching a stage where more organisations have gone digital than not. Digital is quickly becoming a standard, rather than a differentiating factor. So, whilst many insurers are focusing on completing their digital strategies, already those with vision are looking beyond this to the post-digital era. In the post-digital era, companies will need to recognise that individual’s needs change at a moment’s notice.
Across many industries, customers are expecting goods and services to be delivered on demand and in the moment. As a result, strategies need to keep evolving, in order to exploit new and emerging technologies that can deliver the instantaneous services that are required to meet customer expectation levels. It is not just the rate of technological change that is picking up; it also the rate at which people are adopting these technologies.
Post-digital consumers could even be said to be outpacing corporates in their adoption of technology. As was pointed out in a recent Accenture report, Facebook reached 50 million users in four years, while WeChat took one year and Pokémon Go took a mere 19 days to reach the same size audience.
This new era will be underpinned by what is being referred to as DARQ technologies - Distributed ledger, Artificial intelligence, extended Reality, and Quantum computing. It is these technologies that will drive the post-digital age, an age where every moment will represent a potential new market of one. It is in fulfilling these individual markets that would represent the biggest opportunity for companies.
However, there are many difficulties inherent for an organisation to achieve this goal. Firstly, these are very complex technology areas and getting hold of expertise in them is not going to be easy.
Secondly it is not purely about technology; it is about reimagining the business in the post-digital age. And to do that, some prioritisation has to be made. Extended reality, while a very useful technology, doesn’t seem to have many obvious applications in the field of financial services, whilst quantum computing, as perhaps the newest of the technologies, is therefore the one with the least practical application at this time.
But distributed ledger is one of the areas that can be imagined as useful within the insurance industry quite quickly. Embedding contracts in blockchains will eliminate the need for trusted third parties and ensure that all parties are always working on the most recent version of the contract and that the history cannot be modified by unauthorised operatives. The use of blockchain to support “smart” contracts, where real-time information can trigger processes such as claims and payments, will bring greater accuracy at a reduced cost.
Similarly, artificial intelligence will play a hugely important part in the life and pension sector at an early stage, whether by round-the-clock monitoring of investments, automated trading according to pre-defined rules or the provision of alerts and even advice to the consumer. In the future, it can be even be envisaged that customers will give their own personal bots agency to act on their behalf, so that the bots can take decisions based on the information available to it without seeking consent from the client. This a long-distance play but it is one that insurers should be seeing as the ultimate endpoint.
While many life and pension providers have still quite a journey to go to fully embrace digital as part of the strategy until making part of their DNA, nevertheless at some level, strategies should be focused on what comes next. Although DARQ technologies are still in their infancy, the future belongs to those who are the quickest to adapt to these technologies to meet the evolving needs of the consumer. This also means identifying those technologies which whilst new and exciting, contribute nothing to the financial consumers environment and should be rejected.
Their pace of technological change is not going to slow down and insurers need to embrace these technologies as they mature, if they wish to stay at the forefront of the industry. Grasping the potential of the technologies that will anchor the post-digital age is going to be key to survival and to thriving in the future marketplace. There is no need to be afraid of the DARQ.