Digital technology is reshaping the banking and insurance sectors at an unprecedented rate as basic transactions in traditional banking continue to migrate from physical to digital channels and banks downsize their branch networks. In the insurance space, customers have gained control on how technology reshapes their experiences and behaviour.
However, according to new research from Accenture, technology alone will not determine financial services providers’ success in the digital future.
Tomorrow’s winners will be characterised not only by their technological prowess, but also by their ability to use that technology to become trusted advisors to their customers and empower their staff. “It is a combination of people and technology that will truly create competitive advantage in the industries of the future,” says William Mzimba, chief executive of Accenture South Africa and chairman of Accenture sub-Saharan Africa.
In the banking sector, Artificial intelligence (AI) is not new, but the move of AI beyond process to interaction with customers is new. AI is coming of age, tackling problems both big and small by making interactions simple and smart. “It is becoming the new user interface and underpinning the way we transact and interact with systems. Nearly two-thirds (63%) of South African bank respondents agree that AI will revolutionise the way they gain information and interact with customers.”
The Accenture research further shows that platform companies that provide a single point of access to multiple services have completely broken the rules on how companies operate and compete. It states that banks don’t just need a platform strategy, but a rich and robust ecosystem approach to lead in this new era of intelligence.
In the insurance space, Mzimba says that the biggest innovations over the next three years will not be in the technology tools themselves, but in how we design them with employees, customers, intermediaries and other partners in mind. “As technology shrinks the gap between effective human and machine cooperation, accounting for unique human behaviour expands not only quality of the experience, but also the effectiveness of technology solutions. This shift is transforming traditional personalised relationships into something more valuable: partnerships.”
About 88% of South African insurance executives say their organisations are under competitive pressure to extend innovation into their workforce and corporate structure. Yet they do not fully appreciate the impact of key digital technologies, such as AI. They are also slow to recognise the competitive advantage ecosystem participation can deliver, a response that may reflect the local insurance sector’s pace of digital transformation.
AI is about to become an insurer’s digital ambassador to its customers, agents, employees and business partners. Moving beyond merely serving as a back-end tool for the digital insurer, AI is taking on more sophisticated roles within technology interfaces. About 58% of South African insurance respondents agree that AI will completely change their interaction with customers.
“We also found out that insurers are starting to integrate their core business functions with third-parties and their platforms. But rather than treating them like partnerships of old, forward-thinking leaders are leveraging these relationships to build their role in new digital ecosystems, a move that will be instrumental in unlocking their next wave of strategic growth. About 61% of South African insurers surveyed agree competitive advantage will not be determined by their organisation alone, but by the strength of the partners and ecosystems they choose.”
As technology continues to forge pivotal changes in banking and insurance sectors, it is also offering sectors a perfect window to a thriving digital future. Now is not the time to wait and see what happens. Financial services providers can direct today’s technology innovation to shape their sectors, their workforce and partnerships in ways that find value in the disruption and deepen their role in consumers’ lives.
Progressive providers are not just creating new products and services; they’re shaping new digital industries. From technology standards to ethical norms, to government mandates, in an ecosystem-driven digital economy, one thing is clear: a wide scope of rules still needs to be defined. To fulfil their digital ambitions, providers must help shape the new rules of the game. Those who take the lead will find a place at or near the centre of their new ecosystem, while those who don’t risk being left behind.
