I read an article recently from McKinsey about the banking industry in the United States which made me think about the insurance industry, and how there are many similarities.
The article described the next generation of banking on the other side of the pond, detailing the challenges faced in customer service, innovation, and maintaining profitability in a changing world.
It predicted what banking would look like in the future, considered countries already adopting new ways of operating, and warned that American banking risks being left behind unless it alters its course.
It was a fascinating read.
The future of financial services
McKinsey believes that the next objective for US banks is the development of ‘ecosystems’. In a banking context, an ecosystem is an integrated and personalised proposition offering much more than a range of banking products, bringing together a whole range of different services. According to McKinsey, business-to-business ecosystems generally revolve around particular functions, such as marketing, sales, operations, procurement or finance. Ecosystems typically provide three types of value:
• they act as a gateway, reducing friction as a customer accesses related services.
• they are competitive, owing to the strength of the network.
• they integrate data across a series of services.
US banks are used to offering individual products based on individual transactions, rather than a broad set of services. Asian banks with ecosystems have improved their economic performance. This new approach has led to increased sales and conversion rates, better customer retention and improved margins. The paper concluded by discussing why US banks have been slow to innovate, with the largest problem being a reliance on legacy systems rather than technology that is quick to adapt.
What’s this got to do with premium finance? Well, I believe that the insurance industry and finance providers are encountering the same challenges, and I wanted to share with you what we are doing at Premium Credit to overcome them and develop a different way of working.
Our innovation programme
We strongly believe in working as closely as possible with our partners and customers to develop efficient ecosystems which deliver for everyone involved. A few years ago we went through the painful exercise of removing our existing operating system and building foundations from which we could develop dynamic new propositions. With those in place we were able to launch new services such as EPICC, FITS and mobile applications. If you haven’t heard of these then please email us at marketing@pcl.co.uk to find out more, as these services are improving the performance of many of our partners.
With the technology in place, we are able to deliver tangible benefits in the form of:
• reducing cost by improving the management of regulatory requirements
• an enhanced, automated sales process, offering choice in payment options
• increased profitability as more people take out finance at the point of sale
Sharing information
This innovation has enabled us to become more scientific in our approach, and we regularly use the data we collect from over 2.2 million customers to help our partners. For example, we can provide data to help underwriters with pricing decisions, and to help brokers to negotiate with corporate customers. We can highlight regional performance, and put in place support for underachieving areas.
This improvement in analytics has enabled the people we are working closely with to make their operations even better.
Our people
In addition to investing in our infrastructure, we have invested in our people and the way we work. Our capability and performance managers visit our partners with the sole aim of understanding their business. From this point we can do two things. The first is to use this knowledge to improve our ability to serve our customers and evolve our own capability. The second is to look for opportunities where we can provide assistance, training or products and services to help.
The objective of being able to understand fully how our partners’ operations work has led to a change in our recruitment policy. We now search beyond our own industry to find people with the right skills and experience to analyse and produce solutions, rather than solely to talk about premium finance.
Evolution of ecosystems
We believe that our industry will benefit in the future from developing highly collaborative ecosystems. We have structured our front line teams so that they can support you in the development of your business. If you want to find out how we can help you grow, please get in touch with Robert Pereira Luiz by calling 0779 515 3956 or email robert.pereiraluiz@pcl.co.uk.
Peter Abel
Sales Director, Premium Credit
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