Seven Ways Banks and Insurers Can Power Dynamic Growth With Data

Financial services firms are feeling tremendous pressure to deliver dynamic growth in 2021. The realities of COVID-19’s economic impact – low interest rates, loan defaults, new claims, etc. – pose a threat to banks and insurance companies. Meanwhile, fintechs have increased customer demand for new, enriched experiences.

In collaboration with the Financial Times, experts from leading digital transformation and insurance companies – Publicis Sapient, Google Cloud, Travelers Insurance and Western Union – explored how firms in this space can stay competitive and even prosper during trying economic times.

We see an exciting opportunity for banks and insurers to reimagine their business and operating models. By accelerating technological development and leveraging data, they can position themselves to truly thrive once the still-fragile economy roars back. In total, we have identified seven ways banks and insurers can power dynamic growth with data.

Sean O'Donnell, the chief technology officer for financial services at Publicis Sapient, said there’s a huge opportunity for businesses to maximize their datasets. For instance, insurance firms may have more first-party data on individuals, but true innovation lies in combining this treasure trove with external data sources. Additional insights can come from any industry collecting its own data – automotive, fitness, health, retail, etc.

He explained that financial services firms essentially have three types of data on their customers: identifiable information, current product sets and live transactions. This final type is where finance firms are truly struggling to compete with new entrants that have more advanced engines and machine-learning technologies, which can identify relevant products for specific customers at the right time.

“The challenge is that comprehensive nature. It’s the utopia still in terms of sucking up all of these data siloes into a location, into a kind of form that you can actually do that with. There is lots of innovation happening, but I think there’s a long way to go in terms of the types of use cases that can be opened up,” O'Donnell said.

Piazza said it will be imperative for professionals in this space to identify distinct opportunities to prove these ideas, so companies don’t wind up with gigantic, unwieldy balls of data with no application.

She pointed out that data now includes video, imagery, chat and much more. The nature of data is fundamentally different from how it was years ago.

Pavan Yerra, senior director of data products and conversational AI at Western Union, said breaking siloes within organizations and giving a consistent 360-degree view of a customer is important but extremely challenging. Without it, companies across industries struggle to figure out what customers want.

But, Yerra continued, the data need to be validated by their owners, and integration issues needs to be eliminated through intelligent processes. That’s what his team focuses on day in and day out.

“We rely on cloud journeys a lot to make data available everywhere globally, but the majority of the time is more around how to make that information available,whether a dataset or multiple datasets across the entire organization,” Yerra said.

Piazza said companies have traditionally organized around products because they lacked the tools to create 360-degree views of customers. Businesses need to shift from viewing people as customers of a product to viewing them as customers of the organization. They would benefit from understanding their total relationship with a customer across various products and divisions.

"By moving into a cloud environment, it enables you to do that type of stuff at speed, but also adjust at speed – what’s working, what’s not working," Piazza explained.

She suggested businesses will need to reconsider how they make connections after they reorient around the needs and expectations of customers rather than products.

Piazza sees embedded finance, banking-as-a-service (BaaS) and open banking as major components of finance’s future. Ecosystems will connect health, wealth and other aspects of life so that customers will enjoy “one-stop shopping,” she said.    

Maerz said insurance will be purchased and delivered much differently in the future and that firms will need to have the appropriate infrastructure and capabilities to deliver – whether selling insurance directly or embedded in something else.

“No one wakes up in the morning and says, ‘I want to buy home insurance.’ They wake up and say, ‘I want to buy a home. I want to buy a diamond ring for my fiancée. I want to buy a car,’” Maerz said. “So, the idea of embedded insurance — it comes along with the underlying asset – I think we’re all recognizing.”

O'Donnell said the move to cloud and embedded services enable a reinvention of data and service. Rather than focusing on product or even customer journey, he said, companies should think about satisfying the end-to-end need.

In the past, O'Donnell said, virtually everyone wanted to “own the customer” – e.g., to control the customer’s data and take responsibility for their experience – but now people are starting to understand the separation between data and service. The data will come when it’s necessary for accomplishing a goal, but it will only be temporary, and one may even hand some of the data over to a competitor down the line.

“That type of innovation and these types of embedded services are frankly more than welcome,” O'Donnell said. “I think it’s really innovating the data space because you don’t have this siloed sort of problem that we’ve been struggling [with] for years.”