Legacy technology, product and organization silos, and culture are major obstacles to insurers’ realizing the full ROI of their digital investments.
There’s a simple reason why digital technology is attracting a lot of investment. It boosts the bottom line. Effective digital services significantly enhance the customer experience, and this is critical to retention and growth.
Insurers have been quick to grasp this. When Forrester Consulting recently asked insurers around the world to rank their main drivers for digital transformation, improved customer satisfaction (63 percent) and increased profitability (53 percent) came out top, ahead of greater ease of doing business (44 percent) and quicker time to market (37 percent).
Improving the customer experience was also cited by the largest number of insurers (24 percent) as their top strategic priority. Growing revenues (19 percent) was next.
The Forrester study, which was commissioned by Accenture, found that while most insurers are developing their digital capability, few believe it has given them a competitive advantage. In addition, many are struggling to determine how to digitally transform their business.
Most of the insurance leaders surveyed “somewhat agree” that their company is ready to execute their digital strategy. However, only a minority “completely agree” that they have the technology (38 percent), operational processes (25 percent) and organization (30 percent) to achieve this goal.
Forrester believes this suggests insurers are trying to implement digital technology within traditional business silos. They’re focusing on upgrading customer transactions and deploying new digital capabilities. But, they’re neglecting to integrate and align digital technology throughout the business. This is vital for the development of customer-centric relationships and innovative business solutions.
It seems the digital strategies of many insurers are still focused on traditional product portfolios. Their customers, however, want new-generation “living services.” They want to be able to choose from a bundle of highly flexible on-demand services that meet their changing needs and preferences.
Recognizing what customers want is the key to understanding digital transformation. Success requires insurers to think like their customers. Expectations are no longer set by traditional insurance providers but instead by digital services companies that are offering consumers an array of flexible, personalized and on-demand services – we call them “experiential competitors”.
In my next blog I’ll examine another big hurdle insurers need to overcome on the journey to successful digital transformation. In the meantime take a look at the full report. I think you will also find these other links interesting.Beyond Insurance: Embracing Innovation to Monetize Disruption