The clear verdict of recent research by McKinsey is that insurance companies with the most advanced digital strategy, capability and culture management outperform their peers. This is a bold claim, but one that everyone in the industry needs to consider carefully.
McKinsey also believes though that many organisations lack a clearly defined digital strategy. Given that digital technology is creating unprecedented change in the way we operate it seems crazy, or even negligent, not to have a clearly defined strategy for your organisation’s future
What is a digital strategy?
The business world uses many special terms and phrases, but these sometimes lack the precision required to carry their meaning. So, it makes sense to be clear about what is meant by a digital strategy. It is simply a plan which articulates how your organisation will compete in the digital world.
The strategy looks at how every part of your business identifies how digital technology can be applied to increase efficiency and effectiveness. It is not limited to short-term and isolated tactical initiatives but takes the long view, and is geared towards investment where it is required. For example, how can digital technology improve the following areas of your business?
- customer acquisition and marketing
- cross sales and CRM
- compliance and record keeping
- management and motivation of staff
- sales management
- financial management
- operational efficiency and processing
Why do organisations fail to implement a clear strategy?
There are many reasons why an organisation fails to produce a clear approach to digital technology, but we believe that there are four main ones:
1.The organisation is busy with day-to-day and short-term activities and has insufficient time to focus on the long-term.
2. Business performance has been strong and there is a reluctance to change what already appears to be working.
3. There is a lack of money available for investment so it is unlikely that any recommendations will be followed through.
4. As the landscape is changing so fast, it is difficult to identify the right investment decisions as the future is so uncertain.
5. Are there any other reasons why your organisation might refuse to devote time to a critical analysis of its digital strategy?
What is the risk of inertia?
While past performance might not always be the best guide, a look at some of the businesses which failed to adapt to technological change demonstrates the risk of doing nothing. Nokia ruled the world in mobile phone technology but failed to adapt to the smartphone revolution. Blackberry suffered the same fate as its leading position was quickly eroded by the pace of Apple and other touch-screen devices. And it’s not just the mobile phone industry where there have been big casualties. Kodak lacked a clear plan to adapt to digital photography, and Blockbuster video failed to prepare itself for the emergence of video on demand from rivals like Netflix and Amazon.
Technology lies at the heart of all businesses in the financial services sector. As the insurtech disruptors shake up the insurance industry, those with a clear plan to evolve and adapt will have the greatest chance of success. For intermediaries, their success will probably depend upon reducing operating costs through the application of technology and increasing the depth and quality of its customer service.
How Premium Credit can help
We will be writing another article outlining how to go about formulating a digital strategy. Although every organisation is different and there isn’t a ‘one size fits all’ approach, we hope to provide some ideas to help you with your own analysis and strategy for the long-term.
All examples provided by Premium Credit Limited are for illustrative purposes only and not to be considered as advice or relied upon by you, your employees or agents. Premium Credit Limited accepts no liability for the content provided. You should consult your own advisors for all advice on your regulatory and legal requirements.
“The building blocks of a digital strategy resemble those of any other strategy: a diagnosis of where and why a company makes money in the present, a forecast of how that might alter in the future, an understanding of the potential pathways to success, a portfolio of initiatives, and then a commitment to driving change.”