How Nationwide’s digital transformation strategy is enabling emerging businesses

Nationwide is an insurer that has fully bought into the idea of meeting its members where they are. We talk transformation with a CIO exploring uncharted territory in emerging businesses...

If you have a Nationwide policy or benefit, you are not merely a customer: you are a member. One of the largest insurance and financial services companies in the world, established nearly 100 years ago, it’s a mutual-ownership company focused on the complex needs of its members. It evolved from providing low-cost motor insurance to Ohio farmers in the 1920's to a household name across the country, without losing the essential mission of protecting what matters most to its members. Property, casualty and financial services are among Nationwide’s biggest sectors but today its attention is focused on joining up product portfolios in ways that suit people’s changing needs, above all ‘meeting them where they are.’

This is a simple, though transformational concept in the traditional-minded insurance industry where the accepted route to market is through insurance agents. Agents will always be part of the ecosystem, a useful word to describe modern day ways of managing risk and selling financial services, but the disruption that technology has brought to retail, entertainment and communications reaches every experience. 

As yet unimagined markets

Investment in digitization and IT is nothing new at Nationwide, and two people who have been helping to lead this change are Terrance Williams, President, Emerging Businesses Group and Chief Marketing Officer, and Michael Carrel, SVP and CIO of Marketing & Emerging Businesses Group IT. Both are long-term Nationwide executives who have experienced every aspect of the business. “In this role, I am responsible for helping Nationwide drive our strategy through digital efforts,” explains Carrel. The role of CIO aligned to the Emerging Businesses Group was recently created, with Carrel acting as leader of a newly formed organization underneath. The group was developed with the aim of providing a more robust, direct support structure and affording IT additional thought leadership and a greater voice within the business’ core strategy. “The Emerging Businesses Group is a combination of several businesses that will enable future growth for Nationwide,” he adds.  Pet Insurance, Specialty Insurance (travel, accident medical, specialty liability, etc.), and the new products being developed to meet future realities can only be grown by a fully data- and digital-ready organization.

“Within the Emerging Businesses Group also sits an innovation team that not only partners with our existing business units to drive innovation within their teams, but also drives new business innovation that is transformational for our company,” Carrel continues. “On the transformational innovation side, we work together to explore, design and launch solutions that are often disruptive to what we see in our more traditional business model.  In this innovation process, we are focused on delighting customers in solving their needs, in ways they can’t even imagine. The Emerging Businesses Group was formed to explore and design new products and experiences for emerging customer needs: to develop, deploy, and ultimately scale these.”

SEE ALSO:

• Managing General Agency Azur: The Fourth Age of Insurance is coming

• David Sexton of Cognizant on the imperative for AI adoption in the insurance industry

• Insurtech startup to provide affordable insurance for farmers

• Read the latest issue of FinTech magazine 

IT is critical to this process. “In order for our businesses to be great, technology has to be great,” says Carrel, emphasizing that this is especially true for the emerging businesses which are focused on meeting members and partners wherever they are. “Our products are not physical. We offer promises that we’ll be there when a member needs us – and keeping those promises is enabled through technology.  I tell my team we need to think of ourselves as business professionals with deep, IT expertise. Innovation is our day-to-day job, building large and small opportunities across the entire business, and IT is at the heart of that innovation.”

APIs enable developers’ apps

Increasingly, customers are embracing non-traditional routes to financial and risk management in their lives. Acutely aware of risk, insurance companies are by nature cautious, but Nationwide also acknowledges that the traditional linear business model is not the only one that customers prefer. “Technology enables us to meet customers where they are and make it easy for them to not only purchase but also to interact with their products and services in diverse ways,” Carrel explains. An example from a partnership between Property & Casualty and IT includes Nationwide’s new SmartRide program, which offers a way to reward safe drivers by providing individualized discounts based on a member’s own driving performance. The program also gives personalized feedback on driving behavior earning them up to 40% lower premiums.

Interacting with telematics is just one of the ways data can be leveraged to make insurance more relevant. “Imagine,” says Carrel, “if when you’re interacting with your connected car mobile app(s), you could add or change insurance with just one click.” The same principle applies when purchasing through digital marketplaces like Amazon and insuring that product, or to travel insurance when booking a cruise. Additionally, life insurance and medical insurance can utilize information from wearable monitors. “The world is changing, and our customers want frictionless experiences. We must be able to meet customers where they are and make it easy for them. The Internet of Things (IoT) is another opportunity to break with the reactive model, where insurance only becomes of value after a loss has already occurred. We want to be hand in hand with our customers in helping them to prevent losses rather than just reacting to a loss. The IoT gives you information that can help to mitigate a loss before it occurs. Some of the largest homeowner claims we deal with are around water. Being able to detect water leaks when they are small and react quickly has a huge impact not only on the impact of the loss but also on the disruption to our member’s lives.”

Establishing platforms, Application Programming Interfaces (APIs), and partnerships to create this new world, is precisely what Carrel’s team is working on. Selecting and interacting with those partners is approached by reaching out to them where mutual value can be seen – ultimately, the touchstone is customer value. “We always look for a win-win, based on understanding the customer and the partner’s willingness to engage with us to create that experience. Nationwide has selected partners based on what we know about our customers and what ecosystems in which they prefer to participate.” 

The fast way to establish a link between, say, a company whose core business is travel planning, and an insurer, is through APIs. “I am passionate about extending our capabilities externally so the art of the possible is not defined by the walls of the company but by the larger ecosystems out there. Our developer portal allows third parties to integrate with our technology capabilities – or they can find all of our APIs on ProgammableWeb.

To take an example from an emerging business area, the Pet Insurance Quote V1 API allows quick and easy real-time quotes for pet insurance. “We continue to grow – there are huge opportunities for Nationwide to extend innovation of this kind beyond the walls of our company. As well as the partnerships that are already established, I can see us extending to partnerships that we can't yet imagine!” Application developers using Nationwide APIs, he adds, can be confident they will perform as promised. 

Transforming while performing

The ability to analyze and predict loss is core to insurance. “We’re a company built on data and analytics and now we’re leveraging data and AI to enable personalized customer experiences as well as developing broad based APIs. To do these things successfully we’ve had to transform how we do IT. We’ve been using Agile methodologies in our design-develop-implement space for many years and we’re expanding that outwards into the development process including planning. That often includes a product rather than project mindset. As I often say, rapid delivery of value is our goal: ‘automation of everything’ is a key mindset change that we've had within our development teams to help us get there.”

People who are naturally curious drive innovation, and Carrel encourages his team to be lifelong learners who take responsibility on their own shoulders. Nationwide provides the tools. There are numerous online courses, on-the-job resources and mentoring opportunities open to associates. Pluralsight is an online resource for IT professionals that gives unlimited access to courses, while Cornerstone OnDemand provides business and additional IT training. Nationwide also offers educational reimbursement to encourage associates to enroll in external training, and the company has a partnership with Columbus State Community College to access tailored training on topics like data analytics, application development and security. 

The opportunities are there, but people have to seize them and see themselves as responsible for their careers, Carrel believes. “Because technology changes so quickly, our associates need to keep up to date for the benefit of our businesses and equally importantly for their own career progression. We also want to push Nationwide forward by seeing risk as an opportunity and failure as learning.” That’s a radical mindset change for some. Rather than always seeing risk as something to be avoided, a successful insurer should now see it as concomitant to embracing new markets. Similarly, failure will attend some promising development ideas: learning from these experiences turns them into a positive. A high profile example is Nationwide’s decision in 2018 to cease its retail banking operations when it became clear it couldn’t compete successfully without massive investment. 

“Our company is willing to swing big with high-risk, high-reward opportunities. In this fast-moving world if you don't swing big, if you think about things for too long, you could miss the opportunity to be a part of shaping an industry and a customer experience.”

Carrel really didn’t think when he joined the company in 1995 that he’d still be here 24 years later. He has seen a cross-section of the businesses of Nationwide and led transformation initiatives which he feels were the perfect preparation for his current role. “This is a company with heart,” he notes. “One of the many things that I love about the company is that IT is seen and treated as a critical function within the organization. We don't make cars or microwaves but we make promises, and those promises are stored digitally. The company invests not just in IT projects but also in the IT function. It’s a company that has continually presented me with challenges and great learning opportunities to become a better IT professional.” Carrel is busy outside of his office too, representing Nationwide on the Computer Science Advisory Board of Bowling Green State University where he graduated in 1995 and sitting on the board of The United Way of Delaware County, a social and educational enterprise in one of the fastest-growing counties in the state of Ohio.