Other parts of this series:
Insurers well understand the benefits of going digital in terms of improved efficiency and reduced costs. But looking to the future, they intend to redirect their technology investments toward improving employee retention and strengthening relationships with customers. So say the results from a recent joint Oxford Economics/Accenture survey of 90 financial services executives (one-third of whom represent the insurance sector).
In my previous post, I highlighted key insights from the survey results that indicate insurers are interested in maintaining a high personal touch with customers and retaining valuable talent― and plan on leveraging digital technologies to meet those strategic imperatives. However, that effort doesn’t come without some challenges. In this post, I’ll bring these challenges to light and share some key steps insurers can take to overcome them.
Overcoming common obstacles in the journey to digital
According to the survey results, many insurers encounter the following common obstacles when attempting to implement digital technologies:
- Siloed IT―Of the three groups surveyed (retail banking, capital markets, and insurance), insurers harbor the greatest concern about the squandering of IT expertise because IT is so often walled off from the rest of the organization.
- System incompatibility―The lack of systems integration and compatibility is another significant IT-related obstacle. Forty-seven percent of the respondents site both integration and collaboration issues as significant hurdles.
- Headcount reduction fears―The insurance workforce is changing. Ninety percent of the insurance executives surveyed expect headcount to shrink significantly in their industry over the next five years, in large part due to digital innovation. Half of them believe headcount reductions will similarly stall digital transformation across the entire financial services industry.
By taking the following actions, insurers can do a better job at successfully leveraging digital to meet their objectives of higher employee retention rates and increased customer loyalty:
- Evaluate the workforce. Despite anticipated headcount reductions, 43% of insurers also believe digital will be a boon to employee retention by improving employee satisfaction and reducing traditionally high turnover rates. Artificial intelligence holds great potential for helping employees more successfully manage their responsibilities and creating a stronger connection between the business and its customers. The first step to turning these strategic imperatives into a reality is to make sure the organization is employing the right people who can get the most value from the digital portfolio. The focus should be on attracting and retaining employees who can apply digital capabilities to gain a competitive advantage.
- Consider changing the operating model. Traditional insurance business models are not the most effective ones for the digital world. Insurers should examine their operating model and make the right adjustments to be more competitive in an ever-changing market landscape.
- Examine digital applications and partnerships. Who and what you work with matters in the digital world. Insurers should conduct a complete audit of all their applications to make the best judgements on which alliances, partners, and vendors will yield the greatest savings and efficiencies within their digital ecosystem.
- Make seamless legacy integration a priority. Legacy system integration is a significant challenge to the financial services industry and should be the number one priority. Effectively leveraging innovative and powerful technologies depends on an insurer’s ability to successfully manage legacy system migration.
Finding the balance
Going forward, insurers should take steps to continually balance the adoption of new technologies with maintaining the high personal touch the industry is known for. By addressing common obstacles with the right corrective measures, insurers can side step these obstacles to create a smoother transformational path. Forward thinking insurers who recognize the value of and properly prepare for a digital transformation that achieves this balance should reap the benefits of improved employee retention and stronger customer loyalty.
For more information on how the digital transformation is remaking the insurance industry, please see Insurance: Digital Transformation Remaking an Industry