Our Profitable Customer Growth in Financial Services podcast series explores the role of innovation and the disruptive technologies that will enable firms to transform and optimise their businesses for growth.

In our third podcast, I was joined by journalist Lindley Gooden and David Vanek, Co-Founder and CEO of Anorak Technologies – a company that’s building a new model for buying life insurance, enabling customers to make the best possible choices. Our goal for this podcast was to zero in on data and debate how companies can tap into new revenue streams in the data-driven economy of the future. The discussion built many of the key themes from our first two podcasts: episode one, on how financial services firms can deliver customer excellence by serving “a million markets of one”; and episode two, on how insurance companies can drive growth through advanced personalisation and value-added services.

Data is now a highly valuable commodity across financial services—and today’s new technologies are seeing the availability of data increase exponentially. But this expansion is goes hand in hand with rising customer savviness on how much their data is worth. A recent Accenture survey – the 2019 Global Financial Services Consumer Study – found that 67 percent of consumers globally would share more data with banks in return for new benefits, and 57 percent said the same about their insurers.

The data led economy: what constitutes a reasonable exchange of value?

But in an increasingly data-led economy, this trade-off raises questions about what constitutes an appropriate and reasonable exchange of value. Firms must also be able to pinpoint revenue opportunities amid the rising volumes of data and deliver real value through analytics—while also balancing innovation with compliance. And to use data successfully to open new revenue sources, financial services providers will need to retain their customers’ trust and ensure mutual value is created in a transparent and ethical way. But how is that value created?

To kick-start the discussion, Lindley asked why and how data has become a key differentiator in financial services. David summed up his own view of the answer. “Data enables you to build services that are far more relevant and personalised to people,” he explained. “With data we’ve entered the age of assistance. Google named it that way—and I think they were right. It’s the capacity to give to someone exactly the answer they need to solve the problem they have, rather than letting them skim through endless search results.”

But having the data is just the start. The competitive battleground over the next business cycle will be around creating and delivering offerings that take advantage of the information that customers have shared. However, if people are going to key their data in and share it, they first need to be sure that they are getting something valuable in return. Creating that proper exchange of value will be a major focus in the marketplace in the next few years.

So, what does a proper exchange look like? While Accenture 2019 Global Financial Services Consumer Study finds that people are increasingly happy to share information so long as they can see a return, it also shows that 40% of customers are concerned that their data is being misused. People’s idea of ‘misuse’ may include using their data just to cross-sell, up-sell and push products. However, there’s also the issue of data being used in ways that are ‘creepy’ or ‘cool’. If the use of data augments the personal experience, it’s perceived to be a cool—but if it feels invasive, it can be creepy. So, there’s a balance to strike.

A prerequisite for getting this balance right is creating value for the customer by fixing a problem they have. But are insurers currently missing any opportunities to do this? Anorak’s, David Vanek reckons they are. “Currently, mostly the P&C market, data is used to bring the prices down, lock in a customer and then increase massively the prices along the retention time of the customer,” he commented. “This is massively wrong. So, I don’t know how they should be using data. But what I do know is that they are struggling to use data for the benefit of the consumer.”

A customer-centric approach to use data

This issue points to a need for the industry to take a new, customer-centric approach: one that’s not just about the next transaction, but about using data to create services that help the customer beyond the initial purchase. This means looking further than the core insurance product to service a wider range of needs around life events and tapping into more sources of data through partnerships. It also means being rigorously ethical and compliant in collecting and using data, thereby maintaining customers’ trust so they’re happy to continue sharing it.

But how do financial institutions reinvent the business and operating model to make the most of the data opportunity? This is about pivoting the organisation towards a data culture, and thinking of data as a product or service, subject to the same disciplines. For insurers wanting to see this future in action, David had some very specific advice: “What we would advise them to do is book a flight to China and have a meeting with Ping An, which is a very, very innovative insurance company that happens in fact to be a tech company. They will see the future of insurance—and they can then come back and start investing money.”

Adopting the mindset of a FinTech and acting like a tech company is a transition that banks are already going through. Now the time has come for insurers to do the same.

This closing message in our third podcast provided a great segue into our fourth episode—on examining how insurers can advance from “one-size-fits-all” approaches to engage customers in personalised ways across an increasing array of channels. It will feature Accenture’s Rowena Maxwell, MD Financial Services Customer Insight & Growth, in discussion with Warren Buckley, Global Head of Channel Optimisation and Contact Centres with HSBC. If you’ve found this series interesting and informative, you’ll love the final instalment. It’ll be posted soon…so watch this space!

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