For years, industry analysts have been touting the virtues of core systems replacement using flexible, configurable, modern systems. Insurers have finally heard this message and are working diligently to make the business case for the change, select and purchase a system or systems, and implement them. It’s a good time to reflect on something that is discussed much less frequently when talking about core systems replacement: customer experience.
First, it’s important to understand that while recent implementation results have been fairly positive, particularly compared to the monolithic systems of yesteryear, there are still failures and implementations that lead to less-than-ecstatic insurers. A better vendor- selection process is a good start, but contemplating customer experience, which is largely intangible, and process redesign, which is very tangible, up front can potentially lead to even better results.
Customer experience may seem unrelated to the success of a core-systems project, but each and every one of us, including insurance agents, is a consumer. As consumers, we are presented with an ever-increasing array of choices when it comes to technology. From laptops to tablets to smartphones, and in the next few months smartwatches, we have an amazing selection of technologies to choose from. The last few years have shown, however, that consumers value user experience above nearly all other attributes. If you look at the success of Apple, it has largely been on the back of user experience, including the design of OS X, iOS, the industrial design of devices ranging from the iMac to the iPhone to the iPad, and even to the direct sales model of the Apple Store.
Why should an insurer care about Apple’s success and the model behind it? Because that model has triggered a major shift in consumers’ expectations. Apple’s strengths include the control provided by the direct-to-consumer approach and the end-to-end ecosystem; the simplicity and ease-of-use of the assorted devices and software; and designs that are often described as “striking” and even “beautiful.” Few thought the iPad would live up to the hype, as plenty of tablets had tried and failed to grab the attention of consumers and businesses, yet the iPad went on to be the fastest-adopted consumer electronics device in history. As an insurer, your customers’ expectations are not being set by other insurers, but rather by Amazon, Google, Apple and other companies whose focus on user experience is light-years ahead of what we in the insurance industry are offering in most cases — with some notable exceptions, of course.
New core systems need to give users the kind of real-time, transparent access to transactions and data to support everything from a 24/7 customer portal with easy-to-understand bills, declaration pages and service options, to beautiful apps and smartwatch notifications. If you haven’t seen it, check out the “Android Wear” video on YouTube. The same is true for the agent’s experience; systems need to offer agents even more full-featured portals, apps and other tools with intuitive user interfaces, responsive designs, etc.
Remember that consumers and agents don’t understand or care about what’s keeping you from accomplishing this today; they just know that the apps and websites they use for banking, airlines, hotels and shopping all seem to work just fine. Replacing core systems is frequently a necessary step to support the work needed on the front end to meet consumers’ changing expectations.
Internally, the story is both the same and different. It is the same in the sense that employees are also consumers in their day-to-day lives and have their expectations set by Google, Amazon, Apple and others. It is quite different in that the user interface that comes with the system is typically used by employees directly. Having a modern but inherently flexible look and feel can keep a system engaging for years to come, aid with recruiting, improve morale and potentially improve productivity.
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Finally, a note on process redesign. All the technology and design changes in the world won’t improve the user experience if processes aren’t properly designed to take advantage of the improvements a core-systems replacement can provide. As insurers start the selection process, and all the way through to the proof-of-concept, they should start the process design with the processes that are inherent in the new system and modify them, rather than starting with existing processes and heavily modifying the system. Not only is this likely to be less expensive and lead to a better long-term vendor relationship, it is also much more likely to result in fewer manual processes, workarounds and unnecessary approvals. This in turn is likely to result in a much better customer experience.
As Apple would say, insurers need to “think different,” and consider ways in which their new core systems can support different processes, products and more, such as declining deductibles, video appraisals, and ongoing life insurance discounts for annual checkups. Core-systems replacement is disruptive, expensive and necessary. Insurers need to get the most out of their replacement projects by improving user experience and capabilities for customers, distributors and their own teams.
