How to create customer-centric innovation
Banks and insurers often claim to deliver “customer-centric innovation” – but what does this ideal actually mean?
It’s a vital question – and one causing significant difficulty for many organisations.
FintechOS gathered three experts on the subject, to illuminate the way innovation can be centred on customer needs.
- Dominique Roudaut, Head of Asia Insurtech Partnership/Innovation Solutions/Personal Lines insurance, Hannover Re
- Panagiotis Kriaris, Head of Business Development, Unzer
- Paula Costea, Vice President, Business Solutions & Innovations, FintechOS
First, define your goal, says Panagiotis Kriaris, head of business development at fintech payments provider Unzer. And this goes way beyond mere product.
“Customers today expect a different type of experience,” said Kriaris. “It’s got to be seamless, digital, efficient, and very fast, end-to-end. If you look at the big tech world – social media and the GAFA [Google, Amazon, Facebook, Apple] – customers are increasingly used to this kind of experience. And once they are familiar with a standard of service they expect it everywhere. This includes financial services.”
Next, re-evaluate what you are providing. Are you pushing a product? Or addressing a consumer need in the widest sense?
At Hannover Re, for example, the mission is to identify methods of helping consumers make the most of their lives.
“For us the solution is never insurance on its own,” said Dominique Roudaut, head of Asia insurtech partnership for personal insurance at Hannover Re. “Our goal is to provide resilience. This can be done by service, by educating, by prevention, and nudge behaviour. Also by assistance we can provide along the value chain.“
Roudaut offered an example: “We created a user-centric personal cyber insurance offering. This meant first – prevention. Then assistance, if anything were to happen. Last is insurance. So we prevent, by working with a partner who provides a security score for the customer’s laptop, device, or phone. The score comes with actions needed to improve resilience. We offer a hotline so we can do things remotely, if needed. We also provide assistance, so if your account is hacked we can help you get your account back. Notably for social media – no one wants to have to create new social media accounts and start again! Our service means you can get your life back.” It’s a dramatically better approach for all parties. And of course it comes with insurance.
Improving customer experience
Our panel also agreed that CX can be as important as the product itself. Innovation in the aesthetics of the interface, the inclusion of small extras in the CX, and making the customer journey smoother and with fewer steps, matter immensely.
Kriaris stressed that with the right focus on CX it is possible to reinvent entire industries.
“Look at buy now, pay later,” he said. “This is a very, very old concept. But the way it is implemented makes a huge difference. The second biggest fintech in Europe [Klarna] is valued at €43 billion. What matters is how you implement your idea, how you integrate this into the customer journey, and how you make sure all the little details make one integrating experience.”
Naturally, many organisations think they can innovate on similar lines. Roudaut has a warning. Finding out what customers want is not easy. Asking won’t work. “We avoid asking questions,” says Roudaut. “It goes back to what Henry Ford said, if you ask what people want they’ll say faster horses. It’s the same with underwriters, brokers, claims handlers and boards. They just say they want a cheaper product with more commission.”
Roudaut argues the basis for real innovation at Hannover Re is on-the-ground observation and research: “We do have an ‘ethnographic light’ approach. If you want to do proper ethnographic research you need to spend three days a week with one person, and do that with eight personas. We don’t quite do that, but we use a number of tools, looking at the situation, the context, and looking at what people are trying to achieve at a moment in time. It is fact driven and insightful enough to inform the problem that requires a solution, most likely holistic.”
Customer-centric data and insights
There was also agreement across the panel of the importance of data. It’s the lifeblood of innovation. If it can be harnessed.
Paula Costea, vice president of business solutions and innovations at FintechOS, pointed out that the old problem of data silos remains frustratingly common.
“To realise the benefits of data you’ve got to be able to combine and compute different repositories, and make it actionable in real time. But banks are struggling to do so as the data is scattered across multiple internal systems designed around products or lines of business. There can be hundreds of internal systems. One of the imperatives that shine from Amazon is how well they understand customers. And Amazon does that by making optimal use of data. You need a holistic, integrated view on your customers needs, history, demographics, social profile, so that you understand their contextual demands.”
Overall, the picture is one of ambition, combined with mastery of data. A simple manifesto to follow?
Roudaut says –“In insurance, innovation tends to come from the fringes. Digital micro insurance started in Kenya. In the health space the last truly innovative product was critical illness, and that was 40 years ago in South Africa. Over the past 10 years plenty of things have happened with insurtech but what was really brand new? The user centric approach has been resolutely improved, but the core products not so often”.
Cultural factors are a challenge too. Kriaris: “Innovation is much harder to cultivate in a structured environment than a fintech. I’ve been on both sides of the fence, and I’ve seen in established firms how, if you have an idea, you have to convince colleagues about the value of your idea. It might take six months. Then it might take another six months to build a team and get working. In a fintech, six months can be make or break.”
The mission: customer-centric innovation
Conclusion? Banks and insurers need to deliver a service as good as anything offered by Amazon or Google. They need to build innovation on data and ethnographic research. And they need to do so at a speed that matches the fastest in their sector. If a company requires years to innovate means they’ll be overtaken by faster moving rivals. Speed matters.
The end mission of “customer-centric innovation” is to deliver services that meet the life requirements of the families being insured. CX is vital. Services and add-ons are critical. Products – once the main focus – are just parts of a much bigger picture.