In our previous article, we talked about how the balance of power has shifted to the consumer in just about every market, and how data is the fuel that enables each interaction to be consumer-centric as this transformation plays out.

In insurance and financial services, this manifests itself through new concepts like open banking, where, in exchange for allowing free access to their data, consumers can put themselves in the position of being able to choose the most suitable, best value offer that can be made to them. It offers up a cultural shift in how some customers may choose to think. “This is me, who wants me?” The implications of this are significant in terms of how companies engineer digital services and especially how they plan digital marketing.

The “Show me the best and this is me” paradigm has challenges for all and potential benefits for others, including price comparison. Over the past 17 or 18 years, insurance aggregators have developed from clunky systems to slick, transparent, clear, highly regulated comparison engines. Aggregation and comparison started with home insurance and renter insurance, and now takes in other products and services all the way through to comparing the cost of broadband service in your house, gas prices, and electricity prices.

In a word, this technological capability currently embodies the best hope for entrenched financial services companies to keep existing customers in their orbit. However, it requires a change of mindset, to one that is still a distant destination for most companies in the industry. Beyond thinking of aggregation as a technological tool or capability, companies could adopt an aggregator mindset—aggregating not a single capability or service, but the entire customer journey. Showing customers that they are valued is key.

This type of thinking initially developed in the TV ad space, which promised a free gift for merely interacting with the advertiser. It is beyond-the-horizon thinking for companies that wish to protect their customer base of the future. In my opinion, the direction the industry is moving is such that if companies don't start to adopt a challenger mindset, or alternatively put, the mindset of their challengers, they and their customers will end up in the hands of those challengers. In all likelihood, those competitors may not even supply the product itself, but will aggregate the product better than anyone else in the market. They tell the customer, “You pick.” Their primary, if not total focus is on making the whole user experience seamless, delightful, and easy.

Incumbents need to think like challengers. They have everything to lose, and not a lot incrementally to gain—whereas the new kids on the block have nothing to lose and everything to gain. The only way to keep customers locked in your circuit is by making sure they see the value that they are getting from you, and making sure that the balance continues to tip in your favor.

This is exactly where ecosystems have a role to play. It’s centered on the idea that a company doesn't have to physically manufacture everything it offers to the consumer. If an ecosystem is beautifully controlled and a joyous experience to use, it doesn't really matter that other people supply it, or what is offered on it.

To achieve the tech portion of this goal, there must be flawless interfaces between systems—excellent APIs are critical. Let’s say, for example, that I’ve got some information on you, and you're in my ecosystem. You have made it clear that you love using our beautiful app, and then we launch a new service app offering travel insurance. You, as the new, empowered consumer would expect to be able to skip re-keying in information that we already have on you. Here’s where the API comes in—it’s able to present your data back to you for your travel insurance application. With a few relevant details, my company can make that process easier than you’d expect it to be. Just a few questions, a quick swipe… we know you already, don't we? You’ve been with us a while. And we don't treat you as if you’re a new customer each time you sign on for a new product or service.

This seems so natural that you’d think companies are already doing this. Yet interestingly, nearly all insurance and banking processes have a way to go towards this.
I recently had the experience of moving to a new house. Coming from a senior position in banking for the previous 15 years, and having no mortgage on the house I was leaving, I thought it would be a piece of cake to apply for a small mortgage on the new house through my bank. Well, pages and pages of applications later, necessitating the repetition of all manner of information my bank already has on me, I began to think, “What is it that makes financial services unable to think Uber?” The process doesn’t need to be this tedious and difficult.

Consumer expectations are attuned to the likes of Amazon and Uber, insurance and banking are going to be held to that standard. And that standard demands, You already know me, so I don't expect to be telling you who I am each time.

In order to achieve this, there are some ingredients that companies will need to get right. They’ve got to have good data systems and excellent user experience capability. If they don't want their customers to have to retell them who they are each time, companies have got to have good ATI technology to link to services they might also need.

I am hoping our industry is starting to think like that -- we need to. Next time, we’ll talk more about user experience, and how some players are using disruptive strategies to return value to the consumer.

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Nick Frankland

Nick Frankland

Nick Frankland is managing director of Fintech at Legal and General Insurance.