This article was originally published in financialexpress.com and has been reproduced here with permission.
Insurance companies have taken a hit, too, suffering a decline, particularly due to the inability of brokers to meet with customers, paired with the complex nature of the instrument.
The disruption caused by Covid-19 has left most industries reeling. The financial services (FS) sector is a case in point. Having shouldered the weight as the backbone of the economy, it won’t be able to sustain itself without reforming cost structures and accelerating digital innovation.
Covid-19 has shifted attention on two aspects—the need for faster digital transformation of the sector, and renewing focus on customer experience. In the digital realm, the low availability of banking services on digital channels, and service disruption due to high bandwidth requirements, can lead to friction and trust issues among customers. In simple terms, resolution of one can address the other challenge.
This may well be happening. A recent survey by Capgemini Research Institute says Covid-19 has accelerated the shift to digital payments, with over 30% increase in the adoption of digital payment channels across all age groups. The rise in call volumes and customer queries means consumers are seeking greater personal interactions, leading to banks redefining their existing virtual assistants.
While digital channel adoption is rising, physical touchpoints continue to be popular. The way FS firms handle the crisis will influence consumer loyalty, given that over one-third of consumers have found a new provider they plan to stick with in the future. Therefore, FS companies should prioritise consumer needs and exhibit operational resilience as they respond to the situation, today and in the long term.
Insurance companies have taken a hit, too, suffering a decline, particularly due to the inability of brokers to meet with customers, paired with the complex nature of the instrument. But we do see some exceptions to the rule. Despite increased payouts amidst investment losses with travel, business cover and life insurance, Digit Insurance, a general insurance company, has seen 50% rise in sales in these testing times via its digital onboarding processes.
As the Covid-19 impact builds, insurers need to step up to narrow the coverage gap and make changes to contract clauses. Capital markets are going through reduced investment activity, accompanied with lower interest rates and impaired global trade. A phase of regulatory relaxations allowing flexible operations may be of great help to offset business challenges in the current situation.
At an operational level, workforce issues are often overlooked. Operational resilience is crucial in ensuring business continuity and preparedness. This includes ensuring the well-being and optimal management of employees; prioritising core responsibilities and enabling them with collaboration tools and platforms to ensure seamless service delivery; and improving engagement by frequent, consistent and reliable communication with all stakeholders.
Innovation, the way ahead
These challenging times may well be the harbinger of robust reforms for the future, enabled with technology and innovation. China’s Alipay is leveraging emerging technologies to simplify claims processing in insurance. Its online mutual-aid platform (Xiang Hu Bao) is using blockchain technologies to reduce paperwork and speed up processing of Covid-19-related insurance claims.
As new consumption patterns emerge, organisations are compelled to make product/service innovations focused on customer experience. Starling Bank, a mobile-only bank in the UK, has introduced a ‘connected card’ that can be transferred to trusted parties to aid self-isolating customers to procure essential items with the need to handle cash.
Covid-19 highlights the need for sustainable response measures, balancing continuity with growth, aided by data analysis. The response to the crisis will shape customers’ perception of this sector. As consumers cope with financial uncertainty, FS firms should accelerate their digital transformation. A robust front-, middle- and back-office linkage will deliver a seamless digital customer experience for today’s fast-changing customer needs.