The outbreak of the Covid-19 pandemic has accelerated a process that was already underway, but which is now moving forward by leaps and bounds. Digitalisation, both in banking and insurance, is a reality that both sectors are going through, based on the use of increasingly sophisticated technologies that seek to improve the efficiency of companies on the one hand, and make life easier for customers on the other.
It is not only companies that are transforming; in recent years, a type of consumer with a more omnichannel profile has begun to emerge more strongly. In this context, chatbots play a key role and, although they are increasingly used, they do not replace the human component, which continues to play a fundamental role, especially in providing answers to those sectors of the population that are not yet fluent in technological tools.
It is safe to say that the banking, insurance and payment industries are facing transformational changes in their business and organisational models, with digitalisation acting as the lifeblood of all change processes.
In terms of data, Coelsa, the clearing house for payments and transfers used by both banks and major fintechs, revealed weeks ago that there are 100 million bank accounts and 30 million virtual accounts in Argentina, statistics that show the potential of a sector that a year ago had only 93 million CBU accounts and 12 million accounts.
In this context, we can identify some trends that are beginning to establish themselves as the most powerful in 2022:
SuperApps: centralisation for the user, anticipation for banking
When we talk about "SuperApps", we are referring to virtual platforms where customers centralise everything they need in one place: bill payments, account transactions, etc. Currently, these tools have the potential to expand even further and be integrated into new businesses, such as buying, selling, renting, booking, recommending, among others. In this way, users today have several things at their fingertips, and may soon have many more; on the other hand, banks have access to a wide range of data that provide greater predictability about the movements of their users, and thus have the ability to anticipate and offer new financial services that are attractive.
As noted above, while chatbots are widely used, leaving out the human side of the technology is not an entirely advisable option. That is why artificial intelligence and data analytics are also implemented to gain a deeper understanding of people's financial and emotional circumstances, so that the ability to predict scenarios and respond to their demands effectively will help ensure their loyalty.
Artificial intelligence is also the great tool that insurers should have to face the dangerous contexts in that area such as identity theft, monetary loss, digital commerce fraud and all the upcoming update, as it helps to discover data "anomalies" through the analysis of transactions and identifies fraudulent transactions, through data and user behaviour.
Although its usefulness is very varied depending on the field in which it is implemented, in this sector the key will be to create products that people can use safely, and that know how to react to what the population wants at each stage or in the event of a sudden change. The main thing to ensure is the security of the information; no human being wants their data to be leaked or breached.
The advantages of Big Data
It is another tool designed to understand the profile, needs and feelings of customers. The revolution in communications technologies has led to the unstoppable growth we are experiencing in the amount of data and information produced in real time.
As a result, insurers have realised that they need a Big Data strategy for a variety of purposes, including the fight against cybercrime. Because while technology evolves, so do the "fraudsters".
However, since traditional relational databases are not able to process new sources of information (unstructured data, mostly from social networks), the creation and adaptability to Big Data technologies has become essential, with benefits that we mention below:
Big Data provides management systems for business intelligence to improve operational efficiency and reduce costs. Through the use of data technologies such as Hadoop, companies can save costs in relation to information storage, as these techniques allow for massive data storage.
The increasingly rapid processing of Hadoop technologies means that companies can instantly process and analyse the information they already have, in order to make predictions about the future and establish an appropriate strategy.
Offering a more personalised product
Understanding which products or services perform better or worse, and the why behind each purchase choice, allows estimating factors such as customer satisfaction and needs.
In the case of banks, it is common to lose customers due to a lack of personal interaction with them, i.e. due to a lack of emotional connection between both parties. With the use of big data techniques, the collection of information in real time and the historical analysis of this information makes it possible to take measures ahead of time to avoid potential losses, and to offer a service that provides a solution to a real need.
Big Data analytics helps companies automatically uncover fraud attempts to hack into their organisation's systems. If insider threats are detected, organisations can keep their confidential information secure by storing it in compliance with regulatory requirements. This is undoubtedly the main problem facing the banking sector today.
To close the list of trends that are leading the way today, we are talking about Open Insurance (OI), a relatively new concept that gives customers full control over their data and personalised services..
In itself, it implies a new way of doing business that represents a great opportunity for insurers to increase sales and efficiency. This is of vital importance when one looks at how far the industry has lagged behind the banking industry in terms of technology and innovation.
With OI, it is about opening up data access to other organisations and sharing data across industries: this translates into a wider choice of products, services and, above all, a more innovation-friendly environment.
The impact of Open Insurance is expected to lead to a more inclusive, empathetic and democratic market with the customer, which is not to be underestimated. And while it is here to stay, as the OI process is still at an early stage, early adopters will be able to dictate the rules of the game.
Adapt or die
The scenario is well defined. The constant challenges in an increasingly globalised society force the different sectors to adopt digitalisation processes, understanding them as an investment and not as a cost.
It is clear that there is no longer a place for the comfort zone. We are going through a transformation of the business world in which adaptation to the new ecosystem is vital if we are not to be left behind. And while access to digitalisation in some societies is characterised by inequality, it is impossible to deny that greater competitiveness will depend on how each company is able to carry out this metamorphosis. It will be adapt or die.