The insurance industry can learn lessons from the successes and failures of the banking sector and the challenges it has faced with the rise of technology, an expert has said.
Banking has encountered much of the disruption that is currently at play in the insurance industry with many new competitors rising in different areas of the industry to challenge the established order. Shane Baker, CEO at TAS, said that banks have already faced questions of relevance and have focused on customer engagement and service, alongside add-on benefits, to help address issues, which the insurance industry could look to replicate.
“The number one thing for me certainly in the learning through the banking sector is you need to address the changing market,” Baker told
Insurance Business. “You must make sure that you don’t lose your identity, you know what your strategy is and you know how you want to engage with your consumers… rather than reacting and saying ‘someone else has got one so I better have one,’ or ‘insurtech is doing this so I better react.’”
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Avoiding merely reacting to technology and changes in consumer behaviour is key, Baker said, as many in the banking sector lost their identity and strategy this way and became “one of the crowd,” in their offerings.
“Where we see the challenge is rapid take-up of online and disruptive technology, that hasn’t had deep thought and has then required a sort of retrofit or a move back and rethink ‘what am I trying to achieve’?” he commented.
Baker added that if just one thing is to be learned from the banking sector it would be that changes will occur quickly, simply due to the pace of change going on in the wider world.
Baker also noted that, for those looking to partner with insurtech firms, the idea of cultural fit is vital. As a corporate entity joins with a start-up in the tech space, merging the two cultures presents a big challenge.
“We’ve seen a lot of these organisations now that have had to adapt to that cultural shift and mindset and put teams of people in place or use external organisations that can be the conduit through to the fintechs,” Baker said. “I suspect that will need to be the same with insurance.”
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