The FinTech industry has already made a name for and established itself, and emerging and InsurTech startups are steadily following suit.
While the insurance industry has stuck to a firmly rooted, traditional structure, it has already begun to undergo changes in its business operations, in a manner that is reminiscent of the ways in which the banking industry has revolutionized its approaches. In this day and age, of increasingly digitized financial systems, there is more opportunity than ever to introduce and provide better customer value through digital products. The FinTech industry has already made a name for and established itself, and emerging and InsurTech startups are steadily following suit.
The majority of insurance carriers face problems when it comes to seeing actual, profitable growth. Most of the growth seen within the industry is not because of new customers, but because existing market shares have been captured by stronger, bigger companies; real growth remains evasive, and for a reason. Simply put, insurance is not something people look forward to buying.
In the process of acquiring insurance, customers are by default forced to have to consider and face difficult realities, and on top of that, they are subject to numerous invasive questions regarding their finances and medical conditions. They have to undergo this process before they are informed on just what exactly the product will be covering, and whether or not it is something that they will actually be able to afford.
In the end, the product that is available is often based on what the companies can actually provide, rather than what is both needed and preferred by customers. This entire process goes against the vast majority of customer expectations. Customers expect and appreciate ease and straightforwardness when it comes to both the product itself, as well as the service interactions that lead them to it.
As mentioned, the banking sector has already seen significant growth and refinery through the implementation of FinTech, and one of the biggest problems within the industry—attracting and providing value to a younger clientele—has seen significant improvement. This is because, what FinTech does and does best is create a frictionless customer experience.
Mobile devices are not only an essential element of everyday life, but an essential. Over the course of the past few years, in the wake of Covid-19. Customer demands have shifted. They are no longer simply seeking services; instead, they are looking for solutions which are able to effectively integrate several different areas of assistance onto a single platform.
The pandemic has significantly accelerated the digitization of financial transactions as businesses have quickly come to recognize the pressing demand for digital platforms, digital banking, and all other FinTech related services. FinTech, and by extension InsurTech startups, have seen the potential in the growing technology space and have hence made substantial investments and partnerships. And it is these startups that are the catalyst for innovation, something which many insurance companies are both aware of and have embraced.
Shifting customer demands, and the way FinTech has been able to meet these demands, mean that the bar for the insurance industry has been set and must be cleared if they expect to attract new customers. A smooth, high quality digital experience is a default expectation now, and customer experience is where insurance companies need to redirect their efforts towards to keep up with other industries.
There is no doubt about the fact that millennial customers favor mobile channels for financial transactions. In addition to this, they tend to be less loyal to companies the same way that older generations are, and will not hesitate to switch financial services and insurance policies to fulfill changing needs. This itself is a testament to the fact that clientele that fall in younger age groups value convenience, and convenience today means remote transactions.
In the long-term, it is much more beneficial for insurance companies to target younger generations, Younger demographics are far more amenable to adopting new technological advancements into their lives. By optimizing InsurTech, traditional insurance companies can offer these potential customers better mobile solutions, which is how they will be able to gain their loyalty, and potentially lifelong business.
Hundreds of InsurTechs have surfaced on the global insurance scene over the past few years, and many others are on their way. They are all using technology and customer-centric approaches borrowed from FinTech.
These InsurTech companies has been able to win more of the insurance market by focusing on what their customers want and then following through by actually providing them with it. The two main areas where customers struggle with insurance companies are the purchasing process, and the products themselves. Insurance companies need to not only implement digital means of purchasing, but to introduce customizable products as well.
Flexible products provide a much better fit for customers’ different work and lifestyle lines. Customers have different needs at different states in their lives, and accommodating those needs within different stages based on the utility that they will be able to make proper use out of is the quickest way to improve customer value.
The insurance market is rousing with innovative InsurTech startups which are aiming to address a range of specific unmet needs and areas of discord among consumers. These startups are agile and adaptive. Some use AI technology to help offer targeted products to customers who prefer the flexibility of purchasing very specific insurance, and want to be able to decide when to purchase it and how often they will need it. Others allow the option to only pay for a specific time frame, and to turn it on and off whenever it is suitable for them.
And what almost every single one of them offers is an exceptional digital customer experience. FinTech and InsurTech startups are successful because they address the key points of concern that customers have with financial transactions and eliminate them., and in doing so they raise customer interest and encourage their interaction. Advanced technologies such as blockchain and robotic process automation provide ample tools to transform stifling, traditional industries and bring on systematic change.
Insurance companies need to build partnerships with FinTechs and InsurTechs if they wish to integrate with new platforms seamlessly. For example New York-based CoverWallet is working with Zurich Insurance to provide a digital platform which is aimed at helping customers find coverage in minutes.
Traditional insurance companies are able to offer capital, market reach, infrastructure, and brand recognition, and in return, InsurTechs provide quick, innovative responses to market dynamics. The outcome of this is a reshaping of the traditional insurance value chain, which will gain the core capabilities of both sides—something which is necessary in order to adapt to the rapidly-changing environment of customer needs and preferences. The resultant is an industry that is much more flexible, up to speed, and most importantly, more attuned to the customers’ specific needs.