By Tom Murray, Head of Product Strategy, LifePlus Solutions at Majesco
While there will likely be minor disruptions to our lives still to come from COVID-19, these appear to be becoming more manageable, and people are planning their future with far more certainty.
Firms operating in the financial services sector need to prepare to help people make these plans. One of the longest-lasting results of the pandemic is likely to be the acceleration of changes in communication and commerce.
Whereas before, many felt more confident dealing with businesses in face-to-face environments, the enforced use of video communications, such as Zoom, during the pandemic has resulted in people being far more comfortable engaging with businesses via digital channels. Given the convenience that digital channels provide, it is unlikely that the majority of people will revert to face-to-face meetings in the future and will prefer to continue to deal with as much business online as possible.
For life insurers, embracing a fully digital strategy is not easy, and many financial services companies have a long way to go to achieve a true digital strategy. Becoming a digital player means far more than just enabling purchases off one’s website. Companies must reorient all their business processes to support a digital-first approach, which can be counter-intuitive. Pre-pandemic, the aim was to keep networks guarded against all external intrusions, whereas now the challenge is to keep them secure whilst welcoming customers and engaging with suppliers directly over the Internet.
Companies should not underestimate the challenge of protecting data and systems from external attacks. However, modern cloud-native systems have an advantage as they were designed with data protection as a core feature. The challenge for life insurers is that many of their legacy backend systems are older technology and were never designed to cope with external access securely. But these systems hold vital customer data. Yet, the task of migrating completely away from old legacy systems is a huge one that should not be undertaken lightly. Most large companies have a history of failed “mega” projects, which were costly, time-consuming and hindered the ability of the company to react to challenges in the marketplace whilst they were happening.
Investing in modern cloud-native digital platforms can protect existing legacy systems from needing to support direct access by external parties. Digital platforms are designed to be secure and to provide the interface between the end customer and the company's core systems. Theis architecture also offers a cost-effective way to launch new products and services on a trial basis, avoiding the need for “mega” projects, with all the risk that those projects bring.
The dominant life and pension companies of the 2020s will be those that can supply a complete digital experience for their customers. Strategies need to centre around software solutions that enable companies to produce new services and make their existing products and services digitally available whilst leveraging their existing customer data. 2022 will see the consolidation of digital demand for life and pension products and services. Successful companies will be those that can innovate at speed whilst delivering on price by keeping their cost-base low. To successfully deliver, digital transformation is required.
The use of a digital platform should lie at the heart of any digital strategy. This is the only way that the company can deliver innovative products and services, while protecting both the customer’s data and the company from the risk of loss by securing access to the company’s core systems behind this platform. Without this protection, the company is taking a huge risk in exposing systems to the Internet that weren’t designed for that type of access.
The pandemic accelerated the pace of technological change. But as the market shifted, techies rose to the challenge of dealing with massive disruption in the traditional marketplace. Life and pension companies need to adopt digital technology to meet the needs of today’s customers and continue to thrive in this new era. There is no going back.
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