Jun 18, 2020

Are digital ecosystems the future of insurance?

Matt High
1 min
Faced with considerable digital disruption, the insurance industry should turn towards a digital ecosystem approach, says Accenture and McKinsey...

The insurance industry stands on the precipice of a paradigm shift.

Digitisation is accelerating at pace, with new and innovative technologies, the greater use of data and a mobile-first approach not only changing how the industry operates, but also how customers expect it to operate.

So too is the competitive landscape changing the playing field for those incumbents in the industry, forcing them towards a better defined, service-based approach similar to that being adopted by many of the larger players in the financial services industry.

According to research by Accenture that analysed close to 20 industries, insurance is among those most susceptible to future disruption.

Accenture explained that, by 2022, carriers that are slow to respond to digital - or ‘hyper-relevant’ - competitors could suffer market share erosion close to $200bn and miss the opportunity to pursue new growth activities worth $177bn.

For insurers to deliver on the technology innovation needed will require the nurturing of digital ecosystems that sees traditional insurers join forces with new, innovative insurtechs.

According to McKinsey, digital ecosystems are already emerging in several sectors worldwide, such as healthcare and finance, driven by the increased use of digital technologies by consumers and the realignment of global markets into one, connected whole.

It explains that there are three key values derived from being an ecosystem player:

  • They can be gateways that reduce friction for customers wishing to switch between related services, to not toggle between different portals or log-in networks.
  • They harness network effects
  • They integrate data across several different services, thus providing better and more personalised solutions to customers.

Accenture, in its The Ultimate Guide to Insurance Ecosystems report explains that “if insurers fail to create their own ecosystems, they run the risk of being limited to the role of a pure risk cover provider.

“Other players may then be in a better position to provide a more nuanced and valuable customer experience, to impose their brand, and to own the customer relationship.”

It is recognised that ecosystems have the potential to open several new revenue streams. They also allow insurers to take up different roles depending on the nature of the ecosystem

A successful ecosystem strategy could, for example, provide opportunity to enter new or emerging market sectors.

It may also allow for faster scaling of business models than if an insurer was working alone.

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May 4, 2021

Last chance: Sign up now for the VGS webinar on security

William Girling
1 min
On 6 May at 10am PT/1pm ET, FinTech Magazine will be hosting an exclusive live webinar with VGS and Quo on security and compliance in fintech
On 6 May at 10am PT/1pm ET, FinTech Magazine will be hosting an exclusive live webinar with VGS and Quo on security and compliance in fintech...

On 6 May at 10am PT/1pm ET, FinTech Magazine will be hosting an exclusive live webinar with VGS and Quo on security and compliance in fintech.

You can still register for the webinar here.

Speaking at the event - titled 'Grow your business by offloading security and compliance’ - will be Very Good Security’s (VGS) VP of Business Development & Strategy, Peter Berg, and Tucker Haas from Quo Finance.

Throughout the session a number of highly important topics will be covered, including:

  • The difficulty of integrating compliance into fintech app development
  • The benefits of partnering with data security experts
  • Practical advice for new fintechs
  • How to reassure customers about the safety of their data
  • Exciting innovations in the personal fintech space

Security and compliance, particularly in the post-COVID finance industry, is set to become much more complex and no less important. Companies will need to seek the advice of thought leaders and sector experts if they are to successfully navigate the continual change.

Do you want to remain compliant in today’s market? There’s still time to sign up for VGS’ webinar here.

This is an event that should not be missed.

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