Other parts of this series:
What can bankers teach insurers about using open platforms?
In this new series of posts, I’ll propose how insurance companies can use the principles of open banking to revolutionize their business models.
What I’m hoping to show is that if carriers don’t embrace open insurance, they will:
- miss out on the platform opportunity where companies like Allianz and AXA are already dominating; and
- fail to meet the demands of consumers, who will go instead to open, digital-native insurers like Lemonade.
Let’s start at the beginning
1. What is open banking?
Being an open bank means operating like a platform company, with a business model that connects people and processes with assets and a technology infrastructure to manage internal and external users’ interactions
Open banking is a platform-based business approach that has transformed the banking industry. It follows the same approach as today’s leading tech giants by offering banks the opportunity to expose data, algorithms and processes through application programming interfaces (APIs).
An API helps provide access to open data (such as a list of products that an insurer offers) and secure shared access to private data (such as personal information about a client).
By using digital technologies, open banking has succeeded in achieving revenue growth, cost reduction and improved talent management. Now, can you imagine what open insurance could do for your business?
2. How data lakes and APIs can help insurers unlock their data log jams
In a previous blog post, I explained how insurers can use two tools—data lakes and APIs—to improve their data management. Here’s a brief summary of the original post:
In today’s increasingly digital world, insurers need to figure out how to manage the huge amount of data their business is generating. Data management is a strategic priority across the entire company, not just the IT department.
They also need to figure out how to extract valuable insight from this huge amount of data, which is often stored in multiple places. Data lakes can store data in different formats and structures, making it more cost-efficient and increasing business agility. But beware of the risks: a data lake is just a big database where you dump all your information. When using data lakes, you run the risk of creating a new legacy application that’s not well controlled, so make sure you have expert help when approaching this tool.
APIs help insurers to open their data sources; to collect data from various sources and to share data with various sources, even third-parties. This allows insurers to share information across digital platforms and digital ecosystems.
To read more about data lakes and APIs, visit the original series.
In this first blog post I’ve set the scene for what insurance companies can learn from banks when it comes to opening up their business models. In my upcoming posts, I’ll provide specific examples and case studies of insurers that are already playing and thriving in the open platform space.
Until then, increase your knowledge with this report on open banking.