Pandemic woes in the midst of change: Legal & General's digital transformation notebook

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Like most other major insurers, over the last 20 years, Legal & General had been taking evolutionary steps toward becoming a digital enterprise. We invested to keep pace with the latest technology, replaced outdated website templates designed for desktop and reconstructed content around users rather than business units, etc. The process was steady, gradual, and necessary. Yet the current pandemic crisis has acted as a radical accelerant to becoming an intrinsically digital enterprise.

Innovators talk about the importance of disrupting your own business model. In the Deloitte paper Can CEOs be un-disruptable?, the authors explain the concept of embracing ambidexterity, taking care of today’s needs while reinventing for tomorrow’s. On the one hand, you need to keep the enterprise speeding along, and on the other hand, you’re changing it from the ground up. The analogy that comes to mind is converting your car from an internal combustion engine to an electric drive train… while driving it at top speed.

Among big insurers and other institutions, legacy systems are blamed for slow change. In the illustration above, the automobile needs to keep moving forward – the churn of daily business from writing new policies to servicing pensions and paying claims. Hence, the importance of your “legacy” system. It keeps you going at the same time that it’s decelerating progress on other fronts.

But being held back by legacy is only half the story. The other half, simply put, is, “If you build it, will they come?” With a large part of our customer base in an aging demographic, many of them were reluctant to move their financial services activities online. Older customers especially may have felt that, digitally speaking, they were operating with two left feet.

I could speculate that this was because they distrusted online security or simply were unwilling to give up the person-to-person contact they had with their insurers. Probably closer to that latter reality, however, as per this McKinsey article, is that the agents were reluctant to let go of their personal relationships with the customer. After all, if you have a customer in the room with you, why would you ever want their attention to wander to that little screen in the palm of their hand?

Disruption can come from the inside or the outside. In this case, it came from outside. COVID-19 was that catalyst for fundamental change. It served as a warp-speed accelerator toward being digital to the core. It broke the existing mold.

True, in a COVID-19 environment, personal relationships have mattered more than ever. Insurance is a complex, intricate industry and getting more so all the time. A high degree of inside knowledge has heretofore been necessary to navigate the various plans and products as they’ve changed along with consumer demographics and needs. The end-users of these policies, to a large extent, had been going along with this program, letting the agents make sense of it all and selling them what they believed to be the best product for their needs. Many still do.

To address the towering need for information to be delivered quickly and efficiently, we made artificial intelligence (AI) an integral part of our transformation. In 2020, we implemented AI services across all of our core business units through our Bold AI 360 program servicing 25 knowledge bases across customer and business websites – it touched all products, automating responses, learning from the questions people asked, enhancing the online experience. By using machine learning to improve the self-service experience, these sites went from addressing 10,500 customer questions a month in 2019 to addressing 159,00 customer questions in 2020—a 15-fold increase.

The younger demographic is by nature more inquisitive, value-minded, and technologically capable, which has changed the cycle of agent/customer interdependence. Customers began to demand that every online interaction have the transparency and comparison features they were finding on Amazon. We found that with AI embedded across investments, life insurance, workplace pensions and retirement, we were able to provide online support to quickly resolve hundreds of thousands of customer inquiries.

However, with the COVID-19 crisis shutting people up at home with their mobile devices, suddenly it wasn’t only the younger customers looking for these kinds of digital solutions. Everyone was being pushed to take that leap of faith into the world of digital transacting so that they could remain at home and stay safe. If they didn’t expect Amazon-level seamlessness right away, our customers suddenly wanted to interact with us, at minimum, in the same way that they interact with their online retailer. They wanted to be able to use our services 24/7 in the comfort of their own home, or while out and about under their masks. If they aren’t already, customers will soon be asking, “Is there an app for that?” COVID increased everyone’s appetite for technology—all consumers are now far more ready to interact digitally and remotely. Our industry too, was responsible for catching up and meeting that need.

In all of this, what was our mindset as we set about to digitally transform a massive insurance company?

For us, it was all about taking a customer-first approach. Starting from a consumer perspective—that is, keeping in mind that the strictures of COVID-19 have rendered this from a “nice to have” to a “must have”—we digitized many of our legacy paper-based processes. One good example is for our life insurance product. Normally, a customer filing a death claim must send a physical copy of the death certificate; but with the lockdown this was not possible. We implemented a digital chatbot capability along with ID authentication technology that allows customers to take a photograph of the documentation and send it to us.

This kind of digitization of our products and services is only the beginning of what our customers will expect, and happily for them, the COVID-19 experience should speed up the delivery of our digital strategy.

The pandemic event marked a dramatic rise in the use of our digital capabilities from our clients and customers. As we move forward into our full digital transformation, we need to ensure that our processes and procedures, our operating models, and the way we use our data are scalable and resilient—and are constantly updated to ensure that we can continue to evolve with our customers. But it’s important to bear in mind that while we’re working with the latest technology to deliver the best service we can, it’s clearly not just about technology.

In our next article in this series, we will look at some examples of how digital transformation can move a financial services company toward a frictionless, highly streamlined, user-friendly approach.

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Digital transformation