Do we really understand importance of Digital Transformation Initiative?
Digital transformation has been changing the face of the industry and is the buzz word doing rounds in all industries. But do we truly understand the meaning of the digitizing the systems/applications which has been here for many decades or at least a few decades. Digital transformation is catching up with insurance industry as well but the pace at which it is transforming the insurance industry has been very slow. As newer insurtech digital disruptors step into the space, larger insurers are also following the suit of digital business models to cater to next gen customers . Having said that these transformations are easier said than done.
When it comes to digital transformation, it becomes necessary to be cognizant of certain aspects. Let’s go ahead and try to understand it in detail
Digital transformation across the insurance value chain
Digital transformation strategy is applied in all parts of the insurance value chain, for both P&C and life insurance. The transformation ideally starts from the admin level to the enterprise level operationalization in the insurance business. The complete transformation technically involves both, the third-party partners and the core business, thus creating tremendous value to the business. Some of the key aspects of the business such as seamless flow of information, process efficiency, responsiveness, scalability and customer experience show significant improvement with the successful adaptation of digital transformation.
The probable use cases across the insurance value chain would be on the self-service portals for the distribution channels, sales through mobile devices (digital medium of selling), instant acceptance of standard risk through automated underwriting, digital certificate of contracts/policies, self-service access for the end-customers, insured/policy holders and other beneficiary, interactive portals for the employees/ customer care representatives, reporting and analytics, etc. These can eventually be extended to predictive underwriting, risk analysis, fraud analytics, etc.
Downsides of digital transformation
Some of the reasons why the digital transformation engagements fail are due to improper alignment of the digital strategy with the vision of the organization, Communication lapses with the internal/external customers which leads to failure in understanding need for digitalization. Improper due diligence, inaccurate analysis and understanding of actual business flow and interactions between the systems/applications. Mistakes seen in choosing the right technology. When it comes to implementation there are integration issues, increasing number of defects/issues and mishaps in prioritizing the implementation plan and finally hostility seen in stakeholder adoption
Best practices for successful implementation
As we have seen the different points of failure during a digital transformation, it is essential to understand the solutions that will enable us to overcome these setbacks. Here are some of the best practices to follow for successful implementation:
- Understand the real need for digitalization for your business. A careful strategy and benefits need to be drafted, considering the growth of the business in the digital world.
- Prioritize the areas which need most focus and unearth the needs & expectations of end-customers.
- Evaluate the benefits achieved by the transformation, and constant communication with the internal/external customer needs to be in place to create awareness and instill the usefulness of the digital transformations.
- Organize smaller demos and workshops regularly to help the internal customers experience latest technology, even before it is deployed into the core systems. This will help them acclimatize to newer and developing technologies.
- Provide a simple, consistent and user-friendly interface for customers to enable quick adoption of the new applications.
- Abide by the plan that is flexible to respond to the changing needs of customers and trends of the technology. An overall vision of the leadership plays a leading role in successful digital transformation.
Impact on organizations after successful implementation
Industries that have focused on Digital transformation initiatives across their enterprise are foreseeing some of these improvements post successful implementations such as: A steady increase in the top line and bottom line numbers, Increase in areas of employee satisfaction, customer satisfaction, Digital usage and market share. The percentage increases seen in these areas are of course dependent on level of adoption of both internal as well as external customers of these organizations.
Thus it is essential to truly understand your digital strategy and plan accordingly to stay ahead of the competition.
Keep watching this space for next set of blogs with details about the impact of transformation on various insurance functions and how the above factors are witnessing a change accordingly