Big Friends: business analytics and big data become big friends in the banking & insurance secto
Seen the latest statements on current priorities of the banking and insurance sector? Have a look here. "Making big data actionable", it's header says.
Bank and insurance companies fight a big struggle around the customer. Customers that are way better informed these days and are - luckily - more critical on the products the consume from the financial sector. To keep their customers are even enlarge the customer base, banks and insurance companies need better Customer Insight.
Understand your customer
Insights in the customers needs and behavior that are so urgently needed. Recent surveys show a lack of confidence with customers: over 50% of them feel not understood very well. Personally I have the same feeling; the product they offer are difficult to understand, I am hardly ever pro(!)-actively contacted to optimize my product-mix, nor do I ever have the feeling of an individual, tailored "care" either my bank or insurance company.
Banks and insurance companies urgently need better customer insights to be competitive in the market. To do so, they have a very good option be exploring big data and make the results actionable. Let me explain what I mean by taking the Insurance sector as an example.
Insurance sector: Digital Transformation is on right NOW!
If we look at the Insurance sector today, we can conclude a few things do not work very well:
the customer relationship is one of between customer and broker; not between customer and insurer
insurance products are just difficult to understand to a customer, especially when it comes to interdependencies and relationships between the products in a customer's basket
the differences in Insurance products is mainly through image or price
tailored risk analyses on an individual level does not exist
the broker or insures has hardly a connection to the insured object and as such to its behavior
due to a whole variety or regulations, insurances are primarily a local business
In tomorrow's world (read tomorrow as "please insurance & banking sector: start today!") that is heavily driven by Digital Transformation, this might be fundamentally different:
sensor technologies or IoT allow insurers to have a direct connection to the insured object. They can follow it's behavior and adjust product-portfolio to their customers in real-time. The same technologies allow for new business models where they could for example partner with the supplier of the insured objects and agree on maintenance levels for example
Action upon big data insights will shorten the insurers distance to its customer. Combined with in-memory calculation power, it will allow to weigh more directly follow the customer's behavior and needs. This opens tailored, real-time customer treatment. Related to this big data initiates and in-memory computing provide the insurer to do sentiment analyses and action upon the customer's thoughts and feelings about their products
In a sense the above leads to a customer-centric approach: new partner models based upon connected networks allow the insurer to dismiss the local character of his customer relationship. Customers can now be kept while moving around the globe, based upon the new partner models.
The above are just a few examples of the change Insurance companies and banks have to go through if they want to survive the ever better informed customer base. A littlest "closer to home" the sector needs to seriously consider their accuracy: if I just mention a simple bank-transaction between different banks easily takes 2-3 days (my own day to day experience), I have said enough, don't I?
Prerequisites for Banks and Insurance companies to adapt to Digital Transformation
To jump the train of Digital Transformation banks and insurance companies simply need to obey 2 pre-requisites:
Adapt to change: they absolutely need to be prepared to fundamentally change and open up initiatives into big data exploration, in-memory computing and integrated real-time platforms. Agility is core . Only these allow for better customer insights and thus manage customer retention
Be agile: agility is core; it regards to integrated operational and analytical platforms being available for insights and action in real-time. Here agile business analytics play a huge role! As an required extension to that, banking and insurance organizations need to adopt the closed loop portfolio allowing to immediate and permanent interaction with their customer: Customer centricity!
Have look at below video that summarizes the fundamental change banks and insurance organizations will go through. Do they have a choice? Hmmmmm, don't think so !