Modifying processes and adapting services to meet the needs of customers has always been a guiding principle for banks and insurers who rely on clients to drive growth. Pre-pandemic this meant financial services focused on providing customers with digital tools such as mobile apps and self-service kiosks. As a result of the pandemic, however, the financial services landscape is changing even more rapidly than before. Banks and insurers must now anticipate customer needs and develop solutions that mitigate disruption, while also building agility and resilience into internal processes. In order to do this, financial institutions have to tap into data sources that have historically been siloed and underutilised.
The question becomes, how do banks and insurers start to turn data into services and, therefore, value and money?
Brace for change on the road to agility and recovery
Like in many industries, financial services companies have needed to remain agile while preparing for looming threats. During the disruption of the last 18-months banks, for example, they faced the possibility that millions of their customers could default on loans as lockdown forced many businesses to close. To negate these risks many banks put lending relief programmes and payment holidays in place. UK automotive insurance firms, such as Admiral and LV=, also offered refunds ranging from £20 to £50 as a thanks to customers who were staying home to save lives. Doing this secured ongoing goodwill, and likely protected their business from customers cancelling policies to save money.
The disruption and uncertainty caused by COVID-19 is far from over. As countries come out of lockdown, consumer behaviour will continue to change in unprecedented ways. Banks and insurers, in turn, will need to continue to adjust their businesses to meet the needs of their customers. To be able to do this, banks and insurers will need to reorganise and start to rely on data and scenario modelling to prepare for every eventuality. It will mean looking at whether legacy technology, that keeps data siloed and often lacks the sophistication to turn data into insight, is still fit for purpose.
Big data to real insights
Big data is synonymous with banks and insurers. However, like many businesses, banks and insurance companies struggle to create forecasting models, or gain meaningful business insights, because they are incapable of extracting the data, whether that’s in a data warehouse, another database, or an operational system. In fact, according to Forrester, an estimated 73% of data at a company goes unused.
To make the most out of the vast volumes of data banks and insurers have, financial services companies need to focus on adopting three key technologies namely, cloud, machine learning and artificial intelligence. In doing so, they will gain the ability to ingest and analyse high volumes of operational data easily, add simple or complex calculations to enrich that data, and create associated forecasts. Each of these technologies are necessary to gain data-driven insight into how disruptions are impacting customer behaviour, and consequently, how that impacts the business.
The road to recovery begins with data
What’s clear is that banks and insurers can no longer rely on individual data sets from just one department to create a forecast or scenario model for the business. They’ll have to blend a multitude of data types, including data across multiple systems — such as regulatory reporting data or customer transaction data — and analogous events, such as national unemployment rates, to create a complete picture of the path forward. This is evident within insurance companies. By using data to evaluate the risk, and analyse a blend of policy, claims systems, insurance premiums data, and finance and operational data, insurers can have a much more comprehensive view of their investment, pricing, and customer coverage.
Take Aon, a British multinational professional services firm that sells a range of financial risk-mitigation products, including insurance, pension administration, and health-insurance plans. It’s business is to mitigate risk, prepare for change, and to help customers to do the same. Aon recognised that to stay ahead of the rapidly changing landscape, it had to start with itself. The company brought together data from across the business to extract the real value they needed, creating a single, worldwide system for finance and HR. By collaborating across departments, siloes and systems, Aon now has real-time data on how the business is running and how small changes in customer behaviour influences profit and expenses.
Turning data into money – getting real value from your data
Amid all the uncertainty brought on by the pandemic, one constant remains integral to business success: staying on the pulse of changing consumer behaviour. Banks and insurance companies don’t need to look far to achieve this. They already have the data to understand the cause and consequence of disruptions and spearhead their organisation through uncertainty. By embracing the right technology and putting data at the centre of their business strategy, leaders can have the insights to do more than move forward. They can turn data into money and create customer experiences that will last the course. Driving growth and prosperity, now and into the future. Discover Workday Accounting Center for more information on how your business can leverage the true value of data.
Workday is a leading provider of enterprise cloud applications for finance and human resources, helping customers adapt and thrive in a changing world. Workday applications for financial management, human resources, planning, spend management, and analytics have been adopted by thousands of organisations around the world and across industries—from medium-sized businesses to more than 45 percent of the Fortune 500. For more information about Workday, visit workday.com.