In 2016, Henri Arslanian, PwC’s FinTech and Crypto Leader for Asia, predicted that financial platforms of the future are not going to be the traditional providers, but rather technology firms. Today, this prediction is rapidly becoming a reality. Tech firms are edging more and more into the financial services sector, with easy-to-use apps and software designed for mass-market consumption. For example, the online-only bank Monzo has distinguished itself in a crowded market by emphasising the ease of use and interactivity of its services.
According to Arslanian, the momentum behind this trend comes as a direct result of the close relationships that companies like Facebook and Amazon maintain with their customers. Having daily touchpoints with their audience allows tech firms such as Monzo to develop and manage relationships that exceed the principle service offering. Within the finance industry, conventional insurance providers simply do not have this level of customer engagement, which poses a threat to their position in the sector.
A study by Accenture covering more than 30,000 customers found that 57% of people are willing to share more information with insurers if they perceive that they are receiving additional benefits. For insurers, more information necessarily means better analysis and better risk management. Given the high level of price-based competition within this industry, and more than half of customers basing their insurance purchase decisions solely on price, getting customers on side may mean offering a more competitive, less risky product.
Tech companies drive their customer satisfaction by encouraging frictionless, enjoyable customer journeys. Allowing people to use any channel of communication they desire, gives them the ability to steer and control their own experience, putting the customer in charge. If traditional insurers are going to keep hold of their customer base, it is imperative that they follow suit. They must match the offerings of their tech company counterparts, and meet the evolving expectations of their changing customer demographic.
Enhancing customer engagement will also carry with it many benefits beyond simply warding off external threats. If insurers can be modern and adaptable, and position themselves as pioneers of customer service, they open up the opportunity to gain a competitive edge over other, more established firms. In today’s hyper-competitive marketplace, recognising the value of commercial differentiation is a strategic necessity.