Hugh Terry, The Digital Insurer

Asian Insurance Review, 3rd Annual CIO Conference

21st November 2014, Mandarin Orchard, Singapore

A CHANGE MANIFESTO FOR THE CIO: A BUSINESS PERSPECTIVE

1 Becoming more customer centric

2

2 Becoming more Agile

3 Data: stop talking “Big” – start collecting &using it

4 Be prepared to change your organizational structure

Discussion Agenda: CIO manifesto for change

Becoming more customer centric

3

Asian Insurance Review, CIO conference, 21st November 2014, Mandarin Orchard, Singapore

1

The Digital Revolution: “It will not be televised”

DIGITAL

CONVENIENCE

DIGITAL

CONNECTIVITY

DIGITAL

EXPECTATIONS

Always on

Always there

Universal

Almost free

Access to information

(Google)

Access to each other

(Facebook)

Access through

devices (Apple)

Location-agnostic

(cloud services)

Data “on demand”

Desire for clarity

& simplicity

Dialogue not

monologue

Easy to promote a

product .. And

complain

4

Change, Change, Change….

Two digital “Mega” trends: forces beyond our control

Changing consumer behaviour –

they are more demanding and

looking for a different experience

2

Technology is cheaper and easier to

implement than ever – it is the fulcrum

to meet consumer needs, reduce

operating costs and to change your

culture

1

5

66

A different world

A real-time and rapid

change in the way we live

Our Digital World in 2014: Every 60 seconds we…

Source: blog.Qmee.com

777

3. Less Trust in Financial

Services brands

2. Multi-channel service

1 Research on-line and purchase

anywhere

3 Changes in customer behaviour: Transforming our industry

Around the world 69% of the online population researches on-line before purchasing a product or service

15%8%

19%27%

23% research online / purchase online 46% research online /purchase offline

Global- % of purchasers who did research online

only before purchasing online

Global- % of purchasers who did research both

online and offline before purchasing online

Base : People who purchased the product / service and are part of the online population

Global- % of purchasers who did research

online only before purchasing online

Global- % of purchasers who did research both

online and offline before purchasing offline

Source : www.consumerbarometer2013.com. 8

Consumer’s research on-line: …& then purchase anywhere

All Products

9

9

Multiple sources of information: but digital has won

Source: Swiss Re Sigma 02/14 9

Percent of survey respondents

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8

Emerging AsiaDeveloped Asia

Legend:1. Internet

2. Family friends and colleagues

3. Insurance agent

4. TV

5. Bank

6. Independent financial adviser

7. Internet enabled mobile

phone

8. Social media

10

Welcome to digital customers: “they are multi-channel”

10

Myth #1: Digital is a new distribution channelReality : Digital enables customer (& distributor) engagement

Online

Face To Face

Phone

The multi-channel customer is…

Better informed

More demanding

Uses multiple customer touch

points for both sales & services

Will jump channels at any point –

catch them if you can!

11

11Source: Swiss Re Sigma 02/14 11

The cross channel journey ”mono” communication channels are going the way of the dinosaur

Online

search

Compare

quotes Browse

reviews

Targeted

advert

Receive quote Check with

friends

Buy online

Text/email

confirmation

Online customer

surveyFill out on-line

claim requestPost rating and

review

Tweet

reviewLike

Renewal

notification

Tweet

review

Referrals to

family/friends

Follow-up call

Buy through

agent

Approach

agent

Product

related call

Request further

information

Report claim

Gather

InformationSeek advise Purchase policy

After sales

serviceMake claim

Internet

Mobile

Social media

Agent/broker

Call center

Retail

branch/bank

Note: The red line shows an example buying journey initiated by a mobile advert, and the blue line a purchase experience via

online search.

1212Source : McKinsey Study

Customers prefer digital customer service: Telco example

The more digital the journey, the higher the satisfaction (and the lower expenses are)

Channels Customer service journey1 Share of

transactions

Customer

satisfaction,2 %

Traditional

Phone

Vendor

Mail/fax

E-mail

Click to call

Starts Ends

57

Digital

E-chat

Forum

FAQ

Personal account

Virtual assistant

Social media

Traditional

Only11%

Digital to

Traditional

Traditional

to digital

41%

41%

Digital Only 15%

61

76

62

Dig

ital o

nly

= +

33

% o

ve

r trad

ition

al o

nly

1Telecom example, Western Europe; 4 service journeys were identified based on an analysis of 11 touch points spanning traditional and digital channels. For

traditional-to-digital journeys (and voice versa), the first channel switch was used to allocate the journey. 2Respondents who ranked their satisfaction in the top 3 on a 7-point scale, where 7 = most satisfied.

Also > 25% cheaper

Source : Edelman 2014 Trust barometer

71% would rather go to the dentist than listen to what their banks are saying to them

Source: survey by Viacom

…..We have a TrustChallenge

13

Trust is at the heart of financial services: and…

78%69% 67% 64% 64% 61% 59%

55% 55% 52% 49% 48% 48%

32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Tech Co.1 Pharma

Co.1

Tech Co.2 Food &

Bev Co.1

Food &

Bev Co.2

Energy

Co.1

Energy

Co.2

Food &

Bev Co.3

Pharma

Co.2

Tech Co.3 Food &

Bev Co.4

Pharma

Co.3

Financial

services

industry

Pharma

Co.4

48%

52% 52%

47%46%

42%

44%

46%

48%

50%

52%

54%

Financial services industry Banks Credit/Payments Insurance Financial advisory/asset

management

Personal view: 3 core strategies

Transform existing face-to-face models

2

Create or participate in new models

3

Manage existing models for profit – “business as usual”

1

14

Customer Portal / App

Policy Systems

Advisor Portal

Lead/Prospect Management

Sales

Opportunities

The Digital Advisor Business Model

Tablet

15

Transforming face-to-face insurance

Would a new insurer establish a distribution centric model?

Agency Channel

Incumbents have scale

Operations are complex and inefficient

Models don’t deliver value to the consumer on the investment component

Part-time sellers – very hard to manage

Low productivity

Product range is too narrow

BancassuranceHas a lot of advantages but….

Banks have consistently chosen $$ over customer centricity

Lacks the personal touch on servicing

Technology hard to deploy in banking environment

Agency is a cash cow that needs renewal

Bancassurance is an increasingly expensive game – and banking is going digital

Existing models are ripe for disruption:

A personal view for life insurance industry In Asia

16

There are untapped opportunities

Seriously shopped but didn’t buy life

insurance (10%)

Didn't shop for life insurance (78%)

Seriously shopped and bought life insurance

(12%)

Figure 6

Buyers and non-buyers of life insurance, US households(%), 2011

Can digital Strategies change the paradigm that “life

insurance is sold not bought”?

Source : To Buy not to buy life insurance, LIMRA 2011

Extracted from Swiss Re Sigma 06/13

17

78%

12%

10%

7 operating models for Asia: breaking down the value chain

18

Acquire New Customers Selling to Customers Servicing Customers Taking Product Risk

2. Bancassurance InsurerBank

1. Traditional Agency Insurer

3. Digital / Direct Insurer

4. Digital Managing Agents Single Insurer

5. Price Comparison Sites Multiple Insurers

6. Digital IFA Multiple Insurers

7. Digital Affinity Marketing Co. OR

Brand Financial Service Co e.g. TESCO BankMultiple ProvidersAffinity Partner

NO

WE

ME

RG

ING

IN

AS

IA

Becoming more agile

19

Asian Insurance Review, CIO conference, 21st November 2014, Mandarin Orchard, Singapore

2

Agility in action

Q1: Does you

company still think

it can produce

world class

software in-house?

Configurable techfrom partners

Q2: Are your

specification

processes and

approval gates an

iteration of the

mainframe world

of the 1970’s?

Rapid Pilot focused on the used

Q3: Do you have

internal vested

interests that

prevent you

using cloud

solution?

Embrace the cloud

20

Data: Stop talking “Big” and start using it!

21

Asian Insurance Review, CIO conference, 21st November 2014, Mandarin Orchard, Singapore

3

BIG data for sales generation: what is it?

22

Customer service data

Policy Data

Distributor customer interaction data

% available in AsiaData Source

<50%!

0-100%

0% common

Marketing offer information 0% common

Social Data Not yet

Actions:

Send info

Make a call

Send an offer

Warren Buffet’s Advice on black box complexity is very sound !

Black Box

Analytics

Making better use of data

Q3: Are you

digitizing all of your

data? Are you

striving to get the

data to

communicate with

customers?

Collect it

Q2: Can you

translate insight to

sales quickly?

Analyse, Action &

Communicate

Q1: Is your

organization

waiting for the

delivery of a

mega data

warehouse

project?

Data Warehouse

Nightmares

23

Change your organisational structure

24

Asian Insurance Review, CIO conference, 21st November 2014, Mandarin Orchard, Singapore

4

Current state: will it work in our digital world?

25

CEO

Distribution

(CDO)

Marketing

(CDO)

Project

Management

Office (PMO)

Operations

(COO)

Technology

(CTO)

Is the current organization structure broken?

Designed for “ business as usual” not constant change i.e. stifles innovation

Distribution centric

Command and control doesn’t resonate with digital natives or Gen Y

Change your company: revolutions change the “natural” order

Q1: Can the CIO be

a transversal leader

to co-ordinate

digital & customer

centric strategies?

Is legacy managed

separately?

CIO moves to a transversal role?

Q2: Are CIOs in a

good position to

become customer

advocates?

Advocate customer centricity

Q3: Is it better to

setup “New Co” to

innovate rather

than try and

change “Old Co”?

Will innovation labs

work- or are they a

distraction?

Space to innovate

26

27

Future state: could this be the new best practice?

27

PMO

CHANGE

AGENDA

Are the traditional power

centres willing to give up

some power for the

collective good?

Is the CIO the best person

to lead the change agenda?

Or CIO + Chief Customer

Officer?

28

Concluding: “business as usual” is the most dangerous path

Be radical

Now is the time to embrace change and start building digital models.

Be cautious

You don’t need to “bet the bank”. Learn from fast and strategically well thought our pilot

projects. Find people with the skills to transform.

Beware

If you don’t utilise digital thinking, plenty of others will continue to do so. CIOs have a

unique responsibility to be digital advocates within their companies

POS Tablet Toolkit drives

agency renewal

10 million connections

on Line

Content anchored on

health & wellness

MULAN mobile

customer service

Direct model exploiting

Airline affinity

Asia’s first dedicated

direct channel

iGenius

content strategy

Digital worksite /

flexible benefits

On-line Life insurance Aggregator model

29

Digital business models: moving beyond theory

30

About The Digital Insurer

30

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