Lessons for Insurers from Banking and Fintech

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At Novarica, we’ve noted that many emerging tech advances are implemented in banking first, followed in five years or so by property and casualty insurers, then after another five year lag they begin to appear at life and annuity carriers. In fact, at the recent LOMA Life Insurance Conference I mentioned that implementation of core systems in the cloud appears to be following a five year lag between P/C and L/A carriers and vendors.

With this in mind, I recently attended a conference kickoff session by Suresh Ramamurthi, Chairman and Chief Technology Officer of CBW Bank and former Google executive. Suresh and his wife, also a tech leader with experience at Lehman Brothers, purchased CBW (Citizens Bank of Weir (Kansas)) in 2009 and have been using the tiny bank as a platform for disruption of the banking industry. Suresh and CBW are on the forefront of the Fintech movement in banking, and the presentation provided some insight into possibilities for the future of insurance and Insurtech. Here are some thoughts from Suresh’s presentation:

  • In the age of Fintech startups, it no longer makes sense to be a “fast follower”. New technologies are being introduced at a fast pace, taking two years or so for implementation. Banks that adopt a “wait and see” approach to innovations in products and technologies are in danger of falling too far behind the curve.
  • We are in the “age of the individual” – companies that can’t personalize the tech experience for customers and for employees risk being considered behind the times.
  • The two most significant opportunities for transformation are in digital and data – companies need to consider not only changing their architecture for digital delivery of products and services, but also transforming their data and data management.

Suresh pointed out that the biggest obstacle to transformation is not technology, but knowing where to start, how to minimize disruption to the business, how to accelerate time to value, and how to ensure both stability and agility.

Suresh and CBW bank are demonstrating the importance of organizational transformation, proving that disruption can be applied from outside by a company inside the banking industry. CBW is a very small bank with relatively few resources, yet it has created a culture that allows rapid change and agility. CBW’s focus on emerging Fintech that provides advanced customer experience with strong data and digital capabilities is establishing them as a new leader in banking.

These lessons are important ones for insurers to note. As many carriers wait for disruption to occur in a risk-averse, slow-to-change industry, the best way to prepare is to create organizations that can adapt and implement quickly. Insurance leaders need to look at personalizing products and customer experiences. To enable these, they need to consider how they are architecting data and developing digital solutions that are stable and agile. Insurance carriers who want to lead in a new age of Insurtech need to prepare for disruption by being proactive, and not just reactive.

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