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Blog by Rakesh Shetty, VP, Strategic Industries, Industry Business Solutions, SAP

Conventional wisdom

As a customer, I am always impressed by how effective retailers are in understanding our household needs and offering relevant and timely products and services to meet the same. In other words, a few of them can almost predict what will likely appeal to me based on past history and presumably the digital footprint left by me on digital channels. Interestingly, banks and insurers, some more effectively than others, are realizing there is a lot to be learnt from the retail and consumer products industries. However, the jury is still out about how effective insurers and banks have been over the past few years since the financial crisis in 2008-2009, in rebuilding trust with their customers and investing in innovations to better understand their needs to serve them effectively.

Putting Customers First Enabled By Innovation

The plethora of terms used by financial firms to showcase how they are putting customers first enabled by innovation is a bit dizzying. One hears terms such as digital, omni-channel, mobile channel, social channel to name just a few. It raises the question: what do these mean to the consumer? Is the choice of channels with tailored offerings delivered on the preferred channel potentially more confusing where the customer is left to fend for himself / herself to figure out what best suits his / her needs?

In early April, I had the opportunity to attend an Innovation & Insight Day hosted by Celent in New York City where they featured “model banks” and “model insurers” and shared some very compelling stories about how these financial institutions has invested in people, process and technology to better serve their customers.

Richard King, CEO of ingenie, deliver tailored auto insurance services in the UK to win over young, digital savvy audience who demand a personalized one-to-one experience. Richard shared how they had developed the algorithms to analyze large data sets and then model driver behavior behind the wheel in real time. The insights are then delivered via a mobile app to first educate and then offer incentives via lowered premiums adjusted quarterly for safe driving. 90% of their customers are under 21 years old with 70% receiving discounts for safe driving since they first joined the community. Richard mentioned they will launch in Canada in the summer of 2014.

What about the incumbents

In case you are wondering if this is just about new and nimble entrants disrupting the industry, the answer is both a Yes and No. Companies like ingenie are clearly raising the bar by delivering a product that addresses the needs of young drivers. It was also encouraging to learn that insurers and banks continue to invest in innovations to better serve their customers.

The Climate Corporation acquired by Monsanto is one example of a Big Data provider which uses machine learning to predict the weather and other essential elements for agribusiness to help both insurers and farmers to plan for the future and thereby potentially enable insurers to offer tailored services to the farming community. mBank based in Poland highlighted how they have revolutionized the customer experience by offering solutions that are comparable to best in class consumer products companies. Standard Bank based in South Africa was featured on their Financial Inclusion program and how they have delivered banking services to remote areas leveraging mobile applications.

Share Your Experiences

At SAP, we are working closely with leading insurers and banks to deliver innovations that can enable financial institutions to better serve their customers. To learn more about how banks have improved lives for their customers visit here or how insurers have improved lives for their customers visit here.

What are your experiences? I would appreciate any insights that you can share and would be happy to engage our experts to jointly explore use cases that are relevant for your business in banking and insurance.