Q: What do they call Indian food in India?
Reason: Because when you’re in India, the word “Indian” becomes redundant, right?
So, why then, in this world of “tech”, do we still need to refer to “fintech” and “insurtech”? Why can’t we just go back to the old monikers of “finance” and “insurance” and take the “-tech” bit as read?
To try and get a measure of clarity around the issue, we put some questions to a few of the industry’s top “techxperts”:
- Andre Symes, COO of Genasys Technologies RSA
- Charles Savage, CEO of Purple Group
- Claire Wood, MD of Innosys
- Gavin Kandier, CIO of Constantia Insurance
- John de Bruyn, Digital Community Manager of Constantia Insurance
- Pieter Erasmus, co-founder and head of marketing at Ctrl
- Volker von Widdern, CEO of Constantia Insurance
Here’s what they said*:
How do you and your business define fintech/insurtech?
Andre: In our world, insurtech is what we have been doing for 20 years: using technology to improve the insurance proposition all along the value chain and enhance the lives of policyholders. They are, after all, the ones who matter most.
Charles: To us, fintech and insurtech can be defined as the enablement of financial products and services through scalable digital channels that leverage technology to deliver a more engaging and rewarding user experience, delivering low-cost, transparent products and services that democratise access through digital channels.
Claire: We’re not fans of the fintech/insurtech labels. For starters, I never know whether or not insurtech should have an ‘e’ in the middle. Seriously though, buzzwords are never especially constructive. They’re wide open for misinterpretation and can be quite exclusionary. Sure, it’s convenient to describe the technology used in financial services as “fintech”, but with such a wide range of technologies and uses thereof, these terms don’t really tell you anything. Technology is simply that – technology.
Gavin: I would define it as a new way of doing business that is more convenient to customers, offers them better value and more innovative products, while running on a digital platform that is lower in cost and operates in real time.
John: At Constantia we separate the two. Internally, financial services and related (fin)tech platforms serve the client on a transactional level. This is done with a “broker first” focus and offers easy access to financial transactional platforms. Insurtech, on the other hand, refers to our new direct-to-client, -broker and -other product and service apps.
Pieter: Technology is becoming more and more relevant in both the financial and insurance sectors. It is an enabler. It augments and improves services and products beyond what is humanly possible. So these terms simply refer to ways in which technology improves the finance and insurance industries. We can highlight three advantages in particular:
- By combining artificial intelligence and actuarial algorithms, risk analysis can be improved and individualised even more and that, in turn, will improve pricing for customers and reduce the risk for service providers.
- More flexible and tailored products are made possible by technology, which allows clients to choose cover based on certain events, times, life stages and their changing needs.
- It has an extremely favourable impact on the cost and ease of distribution. In our experience, insurers are excited about the possibility of partnerships between themselves, as product providers, and advisors/digital insurance brokers such as Ctrl.
Volker: The “tech” elements distinguish legacy (transactional) systems from new platforms and techniques to engage and service clients. They seek to be individualised and more easily accessible
Is it all that it’s cracked up to be? In other words, is it really such a big deal?
Andre: With the creation of quirky labels, which various sectors use as marketing tools, it’s a difficult question to answer. Using technology to improve insurance is a massive deal. Technology can change the game completely if a real user case can be identified. However, using tech purely for tech’s sake is a bad and expensive idea.
Charles: For sure! It’s challenging and disrupting old-world business models at every level, repricing the landscape and democratising access. It speaks to a new generation of customers, delivering superior products and services at a better price, while educating and engaging consumers to take more control of their finances.
Claire: Yes and no. It is because of the range of opportunities modern technology can unlock for a business but, at the same time, the technology is still just a tool. If we put too much focus on the tech, we lose sight of the fact that the so-called disruptors have come up with a smart business idea, one that just happens to be enabled by technology.
Gavin: Not yet, no. But over the next few years as more customers move more of their lives into the digital realm, it will be a game changer and will eventually become the norm.
John: While we continue to believe strongly that our most important relationships start with our broker network, being hyper-relevant to our clients is also key. When built correctly, insurtech and fintech ultimately benefit the client by being always on, searchable, accessible and driven by accurate data.
Pieter: We believe so. When something new comes along that ticks the boxes of being safer, easier to use, more convenient and a logical alternative, it will definitely replace archaic ways of doing things. Payment methods are a good example. The credit card replaced cheque books — and these days we have a variety of mobile payment options that might even replace credit cards in the near future.
Volker: The big deal is to make your business and client propositions more attractive to channels and markets. Quick and effective product deployment must be part of your business’s DNA in order for innovation to work.
Can the financial services industry – local and global – survive without it?
Andre: No industry can service without technology and innovation. Charles Darwin said it’s not the biggest, the brightest or the best that survive, but those who adapt the quickest. We innovate. It’s what we do. We don’t need an over-hyped label to attach to it. The idea of having thousands of little startups all vying for the same funding, all making small changes to a very specific part of the value chain sounds fun. But is it effective? We need to think more broadly. Most success stories in the tech world use a multitude of technologies that combine to deliver something new and game changing.
Charles: No, if you’re not embracing fintech you’re going to go extinct. While fintechs may not be targeting your customers just yet (they typically embrace a younger audience) it won’t be long before they do. When that becomes a reality, everyone of all ages will start demanding more from their service providers
Claire: Nope. The days of underwriting on the back of a cigarette box or administering claims on a spreadsheet are over, never to return. Customers enjoy the efficiency of technology-enabled businesses in so many other aspects of their lives, you can hardly expect them to step back 20 years just because they’re dealing with their insurance. It’s also key for insurance businesses to appreciate that they don’t operate in a vacuum; as other industries embrace digitalisation, remaining as-is will test the relevance of insurers and intermediaries alike.
Gavin: I believe that the traditional business models will be around for some time. However, for businesses to stay relevant as well as to grow and expand, they will have to become tech focused. This change will happen slowly at first, and then speed up exponentially over time.
John: It will be hard to serve clients the way they deserve to be served without applying fintech and insurtech strategies. Without serving clients the way they expect to be served, certain players in the financial services industry will not survive.
Pieter: We’ve been following the rise of digital solutions in the insurance sector globally and it has leapfrogged traditional models in the past three years. To us this is a clear indication that people are not only adopting technology when doing their insurance, but increasingly prefer it — and even insist on it.
Volker: These markets need the combination of industrial scale processing and data preservation capacity, together with the greater nimbleness and responsiveness of the new tech platforms.
What role do humans play in the –tech world?
Andre: We make it, we own it and we run it. Humans buy policies — for now — and we must never forget that.
Charles: It’s a human-led, digitally enabled world. While the tech continues to do more of the heavy lifting on the process-orientated workload, humans are moving more and more towards creatively enabling and differentiating their digital offerings, adding value where the machines can’t, enriching the human experience and placing people’s desire to make human connections front and centre of their strategies. For any fintech to be successful I believe it’s 50% about the lines of code that stack up your platform capability, and 50% about the culture and the people that you work with and for — the latter being the real differentiator and by far the more difficult to replicate.
Claire: We are asked this question so often. I guess with a long tradition of rooms full of administrators, slaving away over piles of paper, it can be hard to see how the fourth industrial revolution is going to leave place for people. In reality, we are still a very long way from full-blown artificial intelligence. Technology handles problems of logic exceptionally well, but there are ingredients for a successful business that only people can bring: creativity, empathy and nuanced decision-making, to name a few. And of course, we do still need someone to give instructions to the machines!
Gavin: There is always a place for humans; firstly as customers and secondly in the creative space of creating products that can be taken to market. Technology such aws AI and big data will augment human creativity and entrepreneurial thinking, not replace it.
John: As a client, being merely a number in a large corporate is the norm. However, clients want to place trust in a relationship. This relationship needs to remain a real one. Serving clients’ needs responsively thereafter is key. This part of the relationship can be managed by fintech and insurtech. It will then give an edge because the client engagement model is changing from periodic, calendarised interaction, to much more fluid and proactive engagements.
Pieter: In his book The Most Human Human, Brian Christian points out that communication between humans is incredibly complex and the fear of machines replacing humans is not as imminent as once believed. At Ctrl, we believe that the optimal solution is a combination of human and technology, where the strengths of both are utilised. One should allow for the heavy lifting and super-structured functions to be performed by tech, leaving the unstructured functions and those that require warmth and empathy, to be fulfilled by humans.
Volker: The tech provides greater client individuality and choice, quicker access and self service. Although this means it can enhance client relationships, it can never take the place of human contact.
What will happen to businesses and individuals who don’t keep up?
Andre: As in nature, the herd will thin.
Claire: Your existing customers will probably not ask more than once for you to align your products or distribution and service channels to their requirements. Potential customers won’t even do that much. And it’s most important to understand that this is not about having technology in your business for technology’s sake. It is about keeping your business competitive with other market players who are using technology to better meet customer expectations, or even setting the standard of new normal yourself. If you aren’t offering what the customer wants, in the way they want it, the writing is on the wall.
Charles: They will simply go out of business our be bought out by their disruptors.
Gavin: A steady slide into irrelevance.
John: Businesses will not survive without the application of fintech and insurtech. Individuals will not be affected as long as they can find businesses that keep going in the old way and serve their needs in this way.
Pieter: I wouldn’t want to take the risk by waiting to see what happens. We’re certainly not banking on tech taking a back seat anytime soon. In fact, quite the opposite. Companies that do not embrace technology run the risk of losing out and becoming redundant.
Volker: The new techs are a common case for the need to constantly innovate…
Should we be afraid?
Andre: Not in the slightest! On the contrary, we should be super-excited. Tech is changing the world, how we see it and how we participate in it. For an industry that hasn’t changed much in the last few hundred years, this is a pivotal but very positive time for us. Innovation is a good thing!
Claire: Definitely not. The technology available today is the most powerful enabler of new and better business models. Yes, it is a space that moves quickly and yes, it does require more effort to keep up with the latest trends. But the reward is opportunity that is — quite literally — endless.
Charles: No. We should be excited, engaged and plugged in.
Gavin: Afraid? No. Aware and forward looking? Most definitely YES!
John: If simple, strategically focused execution of fintech and insurtech is applied to serve clients better and more efficiently, there is not need to be afraid.
Pieter: Change driven by technological advances has been part and parcel of life in the past 100 years. What we have learnt is that the long-term benefits outweigh the short-term pain. So, there is no need to be afraid, as long as there ar e brave souls prepared to venture out into unchartered territories to seek new ways of doing business and new opportunities. In the end, society as a whole benefits from doing things smarter.
Volker: The early years of big data and unintentional sharing of data has created concerns with consumers and regulators. However, the -techs have accelerated data analytics from transactional and behavioural sources, which should allow consumers control over what is mined in relation to their personal data.
*The first three Q&As were featured in the January 2019 edition of FIA Insight magazine.