I'm tired of hearing the insurance industry lags behind the banking industry when it comes to technology adoption and use, so I can only imagine how insurers feel. It's like being compared to a sibling. Sure, we come from the same parents, but we're very different people. Sure, we're both in the financial services sector, but they are very different types of operations.
Competition can be healthy and lead to improvement, so I was excited to see a report from research and consulting firm Celent that concluded insurers are slightly ahead of banks in their use of big data.
According to the report, "How Big is Big Data? Big Data Usage and Attitudes Among North American Financial Services Firms," big data maturity levels among insurers are perfectly split, with 25 percent falling under each category: exploring, experimenting, deploying and expanding. Of banks surveyed, 38 percent are reportedly still exploring big data, and only 13 percent are expanding its use.
Given that about half of all respondents "somewhat" or "completely" agreed that the promise of big data is overblown, these numbers may not be worthy of a trophy. Specifically among insurers, the number of skeptics was even higher (60 percent). Meanwhile, banks are of the opinion that big data "is a trendy term for what we've already been doing" (58 percent) and "is too poorly defined to be useful" (42 percent).
So, wait. Are insurers slightly ahead of banks in the use of something that is "overblown?"
The skepticism may be a result of the varying definitions of, and inexperience with, big data. The predominant line of thought is that big data is semi-structured or unstructured data. Others define it as large volumes of data that can't be accommodated with traditional relational database management systems. And many respondents, particularly among those with hands-on experience, associate big data with predictive analytics/modeling and real-time analysis.
Celent concludes that big data experience is closely tied to the value placed on data, and adopters' ability to derive competitive advantage from it. According to the report, early-adopters indeed are deriving a competitive advantage with big data. Among financial institutions with more than one year of experience, 70 percent of projects have met or exceeded business case expectations, and nearly all respondents—90 percent of both banks and insurers—think skillful use of big data will define the future winners in financial services. It feels good to be able to write that insurers are on their way to being the winners.
Next up: Finding the right categories to win. Where do you think insurers will see the most success with big data—improving sales results, reducing risk and fraud, elsewhere?
