Insurance companies are very much aware of the FinTech revolution: 74% of respondents see fintech innovations as a challenge for their industry, says a report by Pricewaterhouse Cooper on Global Fintech Survey 2016. The survey was carried out in 46 countries across Asia, Europe, Latin America, North America and Africa and received 544 responses primarily from CEOs, CIOs and top management involved in the digital innovation.
Although every organisation is aware about the fintech revolution, only 43% have adopted it as a part of their strategy. Also, 28% explore partnerships with fintech companies and even less than 14% actively participate in this revolution. Insurers see this revolution as a threat and are concerned about the pressure on margins (73%) and loss of market share (69%). Concerns related to an increase of customer churn are also high on the insurance agenda, 59% of insurance survey participants deem it challenging.
From the insurers’ perspective, the most significant gain from fintech is cost reduction, says 81% of the respondents.
The report states that while insurance is indeed heading on the path of disruptive innovation, such as ability to improve operations using artificial intelligence (AI), there is still disconnect between the amount of disruption perceived and insurers’ willingness to absorb it. Only 28% of the respondents said they explored partnerships with fintech companies and less than 14% actively participated in ventures or incubator programmes.
So how can fintech revolution help insurers? The key solution that insurers expect from fintech firms is the challenge of meeting changing customer needs and the ability to match new offerings with their expectations. Clients now expect personalised insurance solutions and adapting to this change can help insurers to fulfil this.
Insurers also expect to see a growing need to enhance interactions with clients and introduce sophisticated solutions. For example, well-established players could benefit heavily from fintechs by leveraging their ability to provide a seamless customer experience – often using new service concepts.
Insurance is the most call-centre reliant of the whole financial sector, with 78% of clients contacting the companies by phone. But even though industry players expect significant changes in client habits, they are still rather reluctant to establish strong relationships with fintech firms. The report states that insurers lag way behind the banking sector which is much more active in addressing fintech.
