Many consumers in the United States — especially younger ones — are relying more than ever on technology to help with their personal finance needs, including bill payment. And with the rising popularity of mobile devices, people expect to be able to conduct transactions wherever they are.
To serve their increasingly mobile base of customers and remain competitive, insurers are putting technology in place to support mobile billing and ensure that clients receive consistently high-quality customer service through the entire process — from quote to claim — regardless of what channels they use to interact with their carriers.
Insurance industry research shows how much the landscape is changing; 60 percent of respondents said they use technology to simplify and automate financial tasks such as banking and bill payment, according to a survey conducted by TheMint.com, Northwestern Mutual's financial literacy website, earlier this year. Using technology for daily finances is particularly popular among younger people. Among those using technology for daily finances, millennials lead the way, with 62 percent using online banking or automated bill payment, versus 60 percent of generation X and 37 percent of those aged 60 or older, according to the report.
P&C and life insurance firms are tasked with the challenge of supporting this rapidly growing mobile environment, but they must address some key challenges, such as the need to offer multiple payment channels including iPhone and Android smartphones, iPad tablets, texting, mobile browsers on other Web-based platforms; as well as dealing with security and compliance issues.
"This is certainly the direction" the P&C and life insurance markets are going, says Chad Hersh, a partner in the insurance practice at Novarica, an insurance and banking research firm. "Carriers want to make paying premiums as little hassle as possible, because the less the customer has to deal with paying the bill, the less likely [he or she is] to think about switching carriers."
Billing is the most frequent touch point with customers, Hersh says, and making or missing a payment causes a customer to give thought to how much they are paying, what kind of customer service they are getting, etc.
"Carriers also like to be the easiest to do business with, especially when there's a nice ROI [return on investment] involved, such as reducing call center volume, reducing paper check processing volume, and reducing print and mail for bills," Hersh says.
USAA, which provides insurance, banking, investment and retirement products and services to 9.4 million members of the U.S. military and their families, has made support for mobile devices and platforms a key part of its business strategy.
For example, the company in 2012 was among the first insurers to offer members the opportunity to quote and buy life insurance from a smartphone, and its members had downloaded the USAA Mobile App for iPhone, Android and iPad devices more than 5.2 million times by the end of 2012, up from 3.3 million downloads at the end of 2011.
USAA members made 13.3 million check deposits via the firm's Deposit@Mobile program, totaling $7.4 billion in 2012, both up more than 70 percent compared with 2011. Since the program's inception in 2009, members have made more than 28.4 million deposits, totaling more than $16 billion.
USAA offers products such as auto insurance, auto loans, renters insurance, valuable personal property insurance and credit cards through its mobile platforms, and its members can leverage mobile devices for a range of activities, from using accident animation — which enables members to explain and add narration of their accident using animation and voice capture technology during the claims process — to helping with the claims reporting process by interacting with their claims representative on the USAA mobile app, says Neff Hudson, AVP of emerging channels at USAA.
Supporting mobile billing on multiple platforms, including iPhone, Android, iPad, text and mobile browsers, is a key part of the mobility strategy, Hudson says. "We look at mobile bill payment as a core functionality," he says.
USAA's push to support mobile billing began about five years ago. He says 80 percent of all bills are now handled through self-service processes, including mobile and Web-based apps, and the firm expects this eventually to climb to more than 90 percent.
"The bulk of the [billing] volume is shifting to mobile," Hudson says.
To maintain consistency and control while offering these various billing channels, USAA supports mobile and Web apps through a backbone of Web services that the firm created in-house.
"There are some differences in presentation. For example, if [a customer pays] a bill on our iPad app or iPhone app it's a touch experience," Hudson says. "We try to follow the same design standards as Apple. But in general, the process itself remains the same regardless of the device."
Support of mobile billing has brought challenges, not the least of which is ensuring compliance with a growing number of government regulations, mostly at the state level. Making sure all data is secure is another concern.
"Staying compliant is a big IT investment for us every year, mainly around reporting," Hudson says. "Security is table stakes; you have to have anti-fraud measures and security systems in place."
While it's difficult to draw any correlations between the support of mobile billing and gaining new business, there are clearly benefits in terms of improved customer service, Hudson says.
"The reason we're investing so heavily in mobile is we want to be with our members wherever they are," Hudson says. "We want them to have apps in the palm of their hand and make their lives a little bit easier." The long-term payoff for USAA, he says, is customer retention and member satisfaction.
There are also cost benefits. "The more people pay their bills electronically the cheaper it is for us," Hudson says. "There's no mail involved and we're driving paper out of the system. The more efficient we can get, the more we can keep costs down for our members."
USAA will continue to roll out new mobile tools that make transactions easier for members, Hudson says.
The Motorists Insurance Group also supports mobile billing. "We are adding the option for customers to make payments to our mobile app, in addition to being able to do so through our website, at an agent's office, over the telephone via an interactive voice system or through traditional means," says Ralph Smithers, VP, MAX Service Division, at Motorists Insurance Group.
The firm has partnered with Fiserv Inc. to build electronic billing capabilities using Fiserv's Biller Solutions offering for Web, mobile and phone-based - via interactive voice response - payments. Using the same service provider for all the billing channels provides consistency and control for each, Smithers says.
"The mobile payment capabilities accessible via our mobile app share the same foundation as our website payment capabilities," therefore they do not require additional infrastructure, Smithers says. "Because the mobile payment solution is an Internet-based system at its core, there are no unique issues with security, consistency or control compared to the tried-and-true website-based payment options."
In fact, Smithers says, the mobile platform provides more security because payments are time and date stamped the moment the payment is made, and are significantly less susceptible to being lost or misdirected as is possible with traditional mail.
Regarding protection against hackers, other security threats and compliance issues, the company is relying on Fiserv, and expects that these concerns are handled within its services. "For example, we don't collect any credit card information; that is handled within Fiserv," Smithers says.
With as much as 65 percent of the population expected to have smartphones by 2014, Smithers says, a mobile payment solution is essential for today's consumer.
"Customers want to be able to make payments 24 hours a day, seven days a week, regardless of where they are, in a simple, easy-to-use interface," Smithers says. "Our customers are accustomed to being able to do transactions with other financial service organizations while on the go, and we are no different. These solutions provide peace of mind, which is our core purpose as an insurance organization."
Future plans call for adding more mobile policyholder services, including access to policy documents; access to billing information such as invoices, past payments, balances and payment schedule; the ability to view basic claims information such as adjuster name and contact information, date of loss, claim status and payment amounts/dates; and the ability to submit policy revision requests.
Many companies are building and deploying applications for iPhone and Android devices that feature a variety of capabilities, including billing and payment, says Eric Leiserson, senior research analyst at Fiserv.
"Other technology companies are offering to facilitate customer control over payments are text and e-mail bill alerts and reminders," Leiserson says. "These communications technologies alert customers when a new bill is available and can remind customers when a bill is due and a payment has not be scheduled."
The loss of the physical reminder to pay — the paper bill — is the top barrier to paperless e-bill adoption, Leiserson says. "Smart, contextual and timely alerts and reminders can effectively neutralize that obstacle, thereby facilitating higher levels of e-bill adoption," he adds.
As the use of mobile technology for billing and other transactions grows, IT vendors are developing products and services that can help insurers build better environments to support these new channels.
"There are services and software vendors that offer solutions for cross-platform app development that help ensure consistency and control by allowing mobile solutions to be developed once and deployed across platforms," Hersh says.
One example is Verivo (formerly Pyxis Mobile), which provides a platform for developing applications. It enables companies to deploy apps as a HTML5 mobile browser or native Android, iOS and BlackBerry apps, Hersh says. Another vendor, Kony, offers similar functionality, he says, and both vendors have a "decent insurance focus."
But Hersh cautions that developing mobile solutions once and deploying them across platforms can lead to a false sense of security around compliance and security. "As these write-once-use-anywhere solutions are not optimized for any one platform [they] are not a substitute for in-house mobile expertise, compliance and security reviews," he says.
Certainly expertise in all things mobile will be a sought-after commodity for insurers going forward, as offerings such as mobile billing become ever more important.
"It is a retention tool, and a customer satisfaction tool," Hersh says. "A significant percentage of younger drivers find it hard to believe that they can't pay their bills via a mobile device, and are absolutely astounded when they can't pay their bill online."
Bob Violino is a business editor and writer who covers a variety of technology and business topics.
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