In this age of customer activism, success of business hinges on satisfying customers’ needs to retain and grow the mind and wallet share. It is very clear that customers want more for less. More of experience - ease, relevance and transparency—from buying to consumption lifecycle. Less in of cost and effort of product ownership and service utilization.
“Continuous innovation becomes CIO’s responsibility to keepup with emerging technology such as Robotics, Virtualization, and Gamification etc. that can become mainstream in the near future”
Taking clue from the customers, CEOs of Financial Services in general and Insurance industry in particular want more for less from CIOs. More in terms of growth, customer satisfaction, efficiency and profitability. Less of operational cost (including IT spending) and time to market. To deliver more from less, the CEOs are willing to allocate higher proportion of operational expenses as IT investments and CIOs are taking larger responsibilities of delivering business results. This is evident in Technology CIO Survey, which provides insight that:
- 80 percent of the CIOs polled have agreed that IT budget is being increased with top priorities being growth and cost reduction with top IT imperative being Drive Digital Strategy
- 59 percent of CIOs have polled delivery of business results through IT services as the top priority While CIOs are increasingly responsible from delivering IT benefits to business benefits, multiple analyst researches (Forrester, Celent, Novarica, Gartner– to name a few) show that they are planning to drive transformation through:
- Embracing digital to drive the efficient and effective realization of business results.
- Allocating lion’s share of their investment to digital to deliver those benefits. With higher the dependency and investment comes the higher risks and related failures, especially in the following areas:
- Non-alignment to organizational objectives due to divisional priorities and process silos
- Unknowns of bleeding edge technology and faster obsolescence
- Compromising effectiveness of customer centricity in favor of operational efficiency
- Paralysis of analysis due to insufficient and inconsistent data • Dynamics of Regulatory Compliance and Information Security interferences.
The following practical doctrines are consolidated based on analysis of experience from insurers commanding digital leadership. These will serve as beacon to help the CIOs to navigate through risks and implement successful digital strategy thereby maximizing return on investment.
Digital Center of Excellence—Delivering Organizational Objectives through Innovation and Agility
Creating Center of Excellence for managing Digital strategy with a clear vision, mission and charter with defined ownership enables alignment of divisional priorities and processes to organizational objectives. About 9 percent of Insurers across the globe (US lagging with 5 percent and APAC leading with 11 percent) creating separate organization with Chief Digital Officer at the helm (Gartner). Digital COE should work in collaboration with CDO and should have charter for consolidating, integrating and standardizing the digital assets in the area of business processes, content and information. Some of the KPIs that COE’s charter shared with CDO include increasing adoption, increasing self-service, reducing customer effort, improving customer satisfaction, improve efficiency and reduce redundancies (apart from the typical IT KPIs of reducing Total Cost of Ownership).
In today’s digital world new technology emerges and obsoletes as fast as daily, initiatives with mature technology will provide results. Continuous innovation becomes CEO’s responsibility to keep-up with emerging technology such as Robotics, Virtualization, and Gamification etc. that can become mainstream in the near future. Even for an Insurer that has a structured innovation program, data proves that 8 out of 10 initiatives fail. But the successful 2 initiatives not only paid for cost of failed initiatives but much higher benefits have been realized. Executive commitment supporting innovation, agility and business case-driven approach helps to realize measurable benefits with fair tolerance to failure.
Customer Centricity and Automation– Delivering Intersection of Experience and Excellence
Building business and technical capabilities woven around customer engagement as central focus increase adoption, experience and advocacy. Insurers should find the segments of customer based on demographics, behavior and social background in alignment with their core belief in doing business with the Insurer and device the Digital Strategy. Ultimate aim of the Insurer should be use the digital strategy to deliver the ‘Brand Promise’ through the relevant business functionalities. Business functionalities to be built for price-sensitive direct contact customers is different from those to be built for advice-centric agent contact customers. Similarly, it varies between transaction a Millennial would prefer versus a Baby Boomer would prefer. Many insurers, though have provided cutting-end functions (through mobility, telematics and social media) have been struggling in driving up the adoption. Without customer adoption, investment made in building the features are money flushed into the drainage. Customer-centric approach drives the adoption up towards the success of the program.
Integrating the business process across products, channels and operations achieving automation improve operational efficiency and effectiveness. On one side the customer-centricity improves customer retention, advocacy and wallet share. On the other side business process optimization helps the Insurer to stay viable and continue to serve the customers. This goes hand in hand with the core customer experience and operational efficiency as two sides of same coin.
Information Integrity and Security– Actionable Insights with Assured Compliance
Many instances when data is used on its own without orchestrating it with the process will only provide partial insight and thus partial action. Proactive Insurers have raised the bar or actionable insight one step further to estimate the loss and get ready for the claims servicing. Insurers with comprehensive digital strategy strives lead by continuously monitoring the weather conditions and engaging with customers at line of catastrophe to prevent claims. Internet of Things with underlying telematics expands the universe of actionable insight further by enabling Insurers to trigger action such as automatically calling security service or fire service based on the monitoring. Though much research is going on in this space, with connected car and connect home, customer adoption is ultra-low due to information security and privacy concerns. Recent financial and personal information breaches of huge magnitude resulted in billions of dollar losses to the Financial Industry. These incidents have increased aversion of the customers in sharing personal data in general and through digital in specific.
Interchange of data through ‘Internet of Things’ make the personal data security and privacy much more vulnerable. This puts pressure on the cost of information management and slows down implementing successful digital disruption.
Thus having a clear Enterprise Risk Management strategy and implementation of highest security standards are highly critical. Proactive Enterprise Risk Management that assure unrelenting commitment to Information Security and privacy reduces cost of compliance and builds trust with the customers. Creating customer awareness through education and strict continuous adherence compliance will increase customer confidence and adoption.
Icing to make it a Self-sustaining Eco-system
The above doctrines supported by structured governance, process and tools will create a culture of collaboration and knowledge sharing across enterprise enable consistent employee engagement and will make digital transformation a self-sustaining Eco-system.