Other parts of this series:
The Internet of Things (IoT) is evolving at a rapid pace, with new opportunities emerging daily. The availability of huge quantities of real-time data from embedded sensors, along with advanced analytics, is enabling organizations in financial services to transform their business models and offer new products.
The insurance industry, in particular, is likely to be impacted significantly in the next few years by the IoT, which will bring the customer experience to the forefront; open the door to an entirely new class of risk management services; and reduce payouts. In fact, a recent Accenture survey found that 45 percent of insurers cited connected devices as a driver of revenue within the next three years.
In life & health insurance, wearable connected technology is radically changing the market. Because it can constantly record and share consumers’ health-related habits with insurance providers, whether it be exercise, quality of sleep, diet and other lifestyle factors, the IoT enables insurers to offer highly personalized discounts and other incentives for customers who pursue healthier lifestyle choices.
This is in fact already happening – Generali and John Hancock, among others, have partnered with the South African insurer Discovery to incorporate a reward-based program for healthy behaviors. In Asia Pacific, Manulife Asia introduced an activity-tracking program, Manulife Move, with insurance solutions that reward customers who maintain active lifestyles. AIA’s Vitality, similar to Manulife Move, has already expanded to five key markets: Singapore, Australia, the Philippines, Hong Kong, and Malaysia.
We are seeing the same trend in other areas of the insurance world, such as the auto and home insurance sectors. A growing number of carriers provide their customers with telematics devices to record their driving patterns, and reward less risky drivers with lower premiums or other benefits. State Farm harnesses both the IoT and artificial intelligence; it has partnered with home-monitoring start-up Canary to provide customers with intelligent home-monitoring solutions in exchange for lower insurance rates.
FInancial Services IoT Future
As FS organizations around the world begin to engage their customers through the IoT and create personalized offerings, it is critical that they also identify ways to manage, store and analyze all the connected data so that they can use it most efficiently to create better offerings and services.
They will need to create new operating models and workforce structures to leverage the dynamic new business models that will arise.
The customer experience will become even more critical than it is today, given that it will occur much more frequently, will be more diverse (ranging across the spectrum of risk protection) and will be more personalized. This will demand not only a larger service team, but also one that is equipped with better interpersonal skills.
The IoT will also force FS organizations to function optimally within an ecosystem of partners. Just one aspect of this is firms’ willingness to share not only their customer data, but also their customers themselves. This has always been a strategic issue for FS companies, and is likely to cause internal disruption. But if the new ecosystems are to function effectively and generate real value, the companies – and their people – will have to embrace this new openness.
To learn more, register to download the report: