Although elements of digital strategy are becoming clearly visible in the South African insurance sector, there is still a huge amount to be done to digitise the industry. However, insurers need to tackle this digitisation journey incrementally rather than as a radical business transformation.
Being digital is as much a matter of culture and vision as it is technology adoption. With a step-by-step approach, insurers can retain the strengths gained from years of operating experience whilst moving to an integrated end-to-end digital model.
An incremental approach focused on achieving the highest value wins first makes it easier to think digital and become digital for the benefit of everyone in the business, including customers, prospects, employees and shareholders.
Many South African insurers have already added some digital capabilities. However, in many cases, this digital experience is only skin deep. Beneath the surface of the digital customer processes, the core back end systems are made up of legacy platforms that are creaking at the seams and struggling to keep up.
With the variety of devices and channels that customers now use expanding, this business model needs to change to support end-to-end digital transactions to enable customers to get consistent service across all touch points.
Recent InMobi research illustrated that mobile penetration in South Africa is 128% (this accounts for users with one or more mobile devices including tablets), with an average 114 minutes spent online per day. Additionally, smartphone and tablet usage is growing by an estimated 20% per annum and the internet is accessed more frequently from a mobile device than a PC.
PwC research identifies that mobile technology will have a major impact on the South African insurance industry over the next three years. However, at this time, slow broadband is recognised as a limiting factor for the application of mobile technology in sales and claims processing.
All of this points to a real need for insurance businesses to go beyond reviewing and updating traditional customer journey processes. PwC’s Insurance 2020 report illustrated that consumers are increasingly demanding simplicity, transparency and speed in their transactions.
While the relentless march of online and mobile technology is continuing to fuel this change in customer expectations, attempting to ensure that insurers’ digital channels function across all devices at once is cumbersome and practically impossible. An incremental approach that sees the redesign of each process will eventually create a holistic digital experience.
The key to digitisation is to map out what insurers want the digital customer journey to look like, and to then review this against their existing platforms to identify how they need to evolve to support being digital. The important factor will be establishing which elements of the business’s processes will drive most value in the shortest timescale.
In addition to creating mobile-friendly, self-service applications, a presence on social networks will help drive customer service initiatives. Through social networks, insurers are able to monitor positive and negative sentiment and respond via the same channel their customers choose to use.
By 2020, PwC predicts that the use of unstructured data (from social media, mobile devices, video and audio) will complement the existing structured data (within traditional insurance business processes) to enable insurers to make strategic real-time decisions to drive better customer journeys.
The ever-expanding volumes of customer and market data available open up huge opportunities for insurers to analyse and apply greater intelligence to decision-making across the business. From customer acquisition and retention to fraud prevention/reduction, the automation of decision-making to drive business growth and improve customer relationships offers opportunities for new product development and market differentiation.
However, regulation and compliance around data privacy, security, freedom of choice and fairness should always underpin the decisions and processes within insurance businesses. The Protection of Personal Information (POPI) Act has bought South Africa’s data protection laws in line with those of other countries around the world. It provides strict guidelines around what information can be obtained from consumers, how it can be used and how it should be stored and protected.
As a result, insurers need to ensure security and privacy considerations are at the forefront of their step-by-step change towards a more digitised model.
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