Striking up a conversation is good for business

The report ‘Where Are Banks And Insurers On Their Digital Mastery Journey?’ takes a deep dive into the financial services sector based on the all-sector 2018 global research study ‘Understanding Digital Mastery Today’. This latter report found that, despite several years of digital transformation across sectors, organizations are still struggling to turn their digital investments into business successes.

Across all sectors, only 40% of respondents said they believed they had the required digital capabilities for customer experience (CX), just 6% more than in 2012. Banks closely matched this trend at 41%, with insurers trailing behind at just 30%.

With customer experience being a critical factor in business success, this low level of CX digital capability clearly cannot continue. In insurance, for example, the sector-specific report notes that tech-savvy customers are demanding seamless access to personalized services via a range of channels, a host of InsurTech upstarts is ready to fill the digital gap, and emerging technologies are posing new risks.

Digital masters ‘talk’ to their customers

Of course, some banks and insurers are ahead of the game – the ‘digital masters’. The report notes that 79% of insurance digital masters are focused on pushing customized offers that closely meet the wants and needs of customers. This suggests to me that they are getting to grips with the value of ‘personalization’ enabled by digital. In turn, this reflects a key finding in Gartner’s Top 10 Strategic Technology Trends for 2019. Gartner writes: “The way we perceive and interact with technology is undergoing a radical transformation. Conversational platforms, augmented reality, virtual reality and mixed reality will provide more natural and immersive ambient experience within the digital world.”

This validates Sogeti’s own position on the value of using conversational platforms and artificial intelligence (AI) to engage with customers in a more personalized way. Many consumers already use Alexa and Google Home, so are familiar with the concept. Even customers without these smart home solutions will be increasingly comfortable with digital voice interaction as it becomes more intelligent and personalized through the use of artificial intelligence (AI) and self-learning technologies.

Chatbots too are a great digital tool for powering a more personal customer experience. Again, AI and self-learning capabilities will enable banks and insurers to start building individual personal profiles based on the type of query or issue raised during a ‘chat’, a customer’s choice of words, and even their style of writing (e.g. informal or formal). This ‘sentiment analysis’ will be increasingly part of the digital customer experience story in the drive to greater personalization.

Typically, however, banks and insurers are behind the curve when it comes to using digital tech to advance their personalization capabilities. The digital mastery sector-specific report states: “Many banking executives still think of digital as touchpoints or technologies, rather than thinking strategically about how they can create and exploit digital assets to deliver new sources of customer value, improve customer experience across touch points and increase operational agility.”

Who’s leading the personalization race?

That’s not to say some organizations aren’t getting it right. Take US insurer Lemonade, for example. It’s website boldly declares: "Forget everything you know about insurance" as it provides each and every service via a chatbot. Lemonade uses AI and algorithms to understand its customers, enabling it to establish truth and identify potential fraud.

The insurer’s investment in digital is good for the business and good for its customers. It pays out claims in minutes – even seconds, as attested by its bid to enter into the Guinness Book of World Records for a three-second payment. Yes, that’s just three seconds in which Lemonade’s claims bot received the claim, reviewed it, cross referenced it with the policy, ran 18 anti-fraud algorithms, approved it and notified both the bank and the claimant. Compare that with traditional, lengthy claims processes.

Of course, Lemonade is a digital start-up and its digital mastery should not come as too much of a surprise. Elsewhere in banking and insurance we are seeing the first forays into digitally-enabled personalization by more established organizations. For example, Dutch bank Rabobank has launched an application through which customers can check their bank balance via Google Home. While currently the conversation is fairly basic, we can see the future potential of using data analytics to fuel conversations offering personalized financial advice based on a customer’s account usage patterns.

A question of trust

Sogeti is currently working with several clients who are taking these first steps towards greater personalization. Chatbots are already answering questions and blocking credit cards. What next? Part of ‘what next’ must be to instill customer trust in how you handle the data you’re using to build a more personalized experience. I believe the key to this is keeping the customer at the forefront of everything you do. If you’ve captured customer data and want to share it with a third party, make sure your customer knows why – what is the value to them (not you the bank or insurer) of another company seeing their data. If you’re using their data to push a product or service, tell them how they’ll benefit from it.

Only with this transparency in terms of customer data can the true value of personalization be achieved. In many cases, this will require a new mindset: a culture in which personalization is first and foremost of value to the customer, not the provider; and where AI and machine learning combine to create trusted human-like interactions day in, day out.

For more information, on this topic, please get in touch with chris.den.arend@sogeti.com

Read the report ‘Where Are Banks And Insurers On Their Digital Mastery Journey?’

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