By Matt Poll, co-founder & CEO of Neos
Like a pile of laundry or stack of dirty dishes, traditional home insurance can feel like a chore. Home insurance seems detached from everyday life and its role as a supposed ‘security blanket’ is paradoxical because of the stress caused by drawn out admin and unexpected T&C’s.
Today, things are changing – technology has created an opportunity for insurers to step outside of their restraints and provide policies that encourage an authentic relationship between policyholder and policy provider. By utilising smart home technology, such as cameras and sensors, new innovative insurtech businesses are able to offer customers access to ‘smart home insurance’ which renders tangible value not only for the customer but also the insurance provider.
In order to fully understand why the insurance industry is ripe for disruption, we must first take a look at the issues underpinning traditional home insurance in its current form.
A look at the industry pain points
In the current landscape, the distrusting and distant relationship between the consumer and insurer is a major industry pain point. Having worked in the corporate world of insurance for over 15 years, I have seen first hand, the underlying problems that are contributing to the breakdown in the relationship between consumer and insurer.
It is influenced by a number of factors that stem directly from the structure of the traditional home insurance offering. Namely, stand-alone insurance policies promising protection only after damage has occurred.
This means that, for the majority of cases, the only interaction a customer has with their insurance provider is following a negative experience, such as damage to their house through fire or flood, or perhaps theft. As such, it is not uncommon that a customer making a claim may feel vulnerable and upset during this time. The complexity of making a claim and a perceived lack of sensitivity can ultimately add to the sense of distrust between the two parties. Ultimately, this is the last thing a customer wants and needs.
On the flip side, for customers who never make a claim, their insurance provider is completely detached from their everyday life. Customers pay money for a piece of paper that is left in a drawer to grow dusty and untouched until they need to make a claim or renew their policy. In an age where technology has connected so many services and people, the feeling of remoteness is no longer acceptable. Home protection should be built into our lifestyle, not simply a forgotten accessory that we occasionally look to once damage has been done. With technology, our relationship with insurers can feel more personal.
Sense of distrust
Another pain point is that although traditional loyalty rewards sound like a favourable bonus to insurance offerings, the reality is far from exciting. Some incentives, such as a ‘no-claims discounts’, pressure policyholders into not claiming, as they look to secure a discount the following year. Ultimately, this restricts rather than empowers customers, making a claim when they need to, especially as with no claims discounts there’s usually no difference between fault and non-fault claims.
An added disadvantage for loyal customers is evident when it comes to loyalty penalties. Research from Citizens Advice found that 1 in 3 home-insurance customers could be paying up to 70% more than a new customer. Last year, Citizens Advice issued a “super-complaint”, calling on the Competition & Markets Authority (CMA) to bar companies from unfairly ratcheting up premiums charged to loyal customers whilst offering low rates to incoming customers.
Insurance should make you feel safe, not as if the insurer is there to catch you out with hidden schemes and penalties. Loyalty should truly be rewarded, without any T&Cs attached.
Welcome home Insurtech
The good news is that, thanks to technology, the relationship between insurers and policyholders is changing. By leveraging smart home technology new insuretechs are able to provide customers with real value throughout the relationship – not just a piece of paper and a promise – by installing devices such as smart fire alarms, window sensors, leak detectors and smart cameras that enable customers to monitor their home’s activity.
Unlike traditional home insurance, this allows a more proactive approach to insurance that is more beneficial to both the policy holders and insurers themselves. For the policyholders, making use of these devices empowers them to be alerted of oncoming threats before extreme damage has been done and act upon this knowledge. For example, a leak sensor will be able to pick up a slow leak early on. This will alert customers before it becomes a serious issue and can lessen the shocking £707million Brits spend each year to repair damage caused by water leaking into their home from their neighbour’s property.
Other products like smart cameras can be linked to an app on a smartphone, allowing users to keep an eye on what’s going on at home no matter where they are in the world. This equips people with the peace of mind that their home is safe when they’re out and about – whether working late, away on holiday or just out socialising. Rather than feeling like a detached accessory, technology allows insurance to take the form of a hands-on protector that users are constantly interacting with.
Furthermore, insurers who encourage their policyholders to make use of the added protection that smart home technology offers, are positioning themselves at an advantage. With increased preventative measures in place, policy holders are more likely to be alerted and report damage before it happens. This means insurers will spend less money on damages because fewer incidents occur.
Insurers and policy-holiders alike need to recognise the benefits technology is providing to this industry. The insurance industry has the opportunity to step out of its old skin as a complex and far-removed industry for customers, and form an exciting and personal relationship instead. It is time for us to celebrate the mutually beneficial friendship founded on technology which will ultimately deliver better value for customers, and result in fewer claims for the insurer.
Unlocking the potential of APIs
Corporate expectations for fast, efficient and convenient payment services are now the norm. BNY Mellon Treasury Services’s Sindhu Vadakath, Head of Global Digital Channels and Asia Payments Product Management, explores how banks are leveraging APIs to keep pace with these demands and maintain a competitive edge.
The expectation for a quick, seamless and user-friendly banking experience has long been the norm in the consumer space. Today, treasurers expect no less from their corporate banking applications. The gap between this desire for new and improved offerings and delivering greater levels of client service is being bridged by APIs (Application Programming Interface) – a key innovation that banks are harnessing.
APIs are a type of computing interface that enable streamlined, efficient communication and integration between software components. Benefits include operational speed and efficiency and, where process automation is also deployed, rapid – or even real-time – data flows, superior analytics, and real-time visibility over balances and payments statuses.
APIs have become a familiar term in the finance space. In the past few years, regulators and industry bodies have helped drive adoption – with uptake currently varying from market segment to market segment and region to region. Traction has been highest in the US, with momentum building in APAC, EMEA and LatAm.
While many banks have already incorporated APIs into their strategies, the overall progress has been somewhat limited by a lack of standardized, interoperable systems and processes across the financial services industry. But, with upcoming industry initiatives, such as the global migration to the ISO 20022 messaging standard, pushing the industry further towards greater harmonization, the full potential of APIs can be unlocked. Now, therefore, is the opportune time for banks and their clients to invest in their API capabilities.
In today’s fast-paced world, an effective and successful bank needs to deliver optimized payment capabilities, with accurate and efficient processes. This is being achieved through API solutions targeted at specific use cases.
For example, while making a payment may appear straightforward at the point of execution, the underlying processes are complex. Ensuring the streamlined and successful completion of these processes – which include payment initiation, reporting and sanctions screening – is critical for businesses, with any lapses potentially causing financial and reputational damage. As a result, banks are increasingly looking to APIs to provide real-time visibility for the entire payment process – meaning that any potential issue can be spotted and resolved in a timely manner.
APIs can also be used to integrate real-time account balances and transactional data across multiple channels, including Treasury Management Systems (TMS) and Enterprise Resource Planning (ERP). For example, BNY Mellon’s Treasury APIs enables the bank to integrate its solutions with its clients’ internal systems. This allows clients to streamline efficiencies by automating payment processes – with necessary tasks, such as reconciliation, able to be performed seamlessly. Automating previously manual functions via APIs saves time and frees up resources previously spent on repetitive tasks, thereby enabling this capacity to be redirected to value-added processes, such as forecasting analysis, customised reporting and transaction capabilities. Through this solution, clients can also securely access global payment capabilities through a single endpoint to initiate payments and track the status of transactions, from initiation to completion.
Elsewhere, as the Covid-19 pandemic has proved, it is important to have a robust business continuity plan (BCP) in place to offset against the impact of any unexpected events. APIs can be used in BCPs to help create an effective, resilient active-active alternate channel solution for contingency scenarios. For example, if a bank suffers a disruption or outage to their network provider, they will have to ensure they are able to seamlessly switch to an alternate digital channel to process their payments in a timely manner with no financial implications. Traditionally, banks relied on the provider’s online bank portal to instruct payment orders – a process that, to execute accurately and within the cut-off time, uses a significant amount of resources. Depending on the timing and intensity of the disruption, these resource are sometimes challenging to mobilize and activate within a short interval and could lead to serious financial and reputational implications. APIs offer a good alternative to these traditional contingency plan solutions. By enabling a fully functional integration with their network bank providers, banks can process a certain share of daily volumes via an API in addition to their usual channels – allowing for a smooth transition during a contingency scenario.
The next steps for APIs
Though enthusiasm for API adoption is relatively strong, we have only just started to scratch the surface in the B2B space. So far, the biggest strides have been made by Big Techs, which have been particularly adept at delivering API solutions thanks to their nimble business models. While the financial industry is making efforts to evolve – embracing the start-up work culture, breaking silos and developing an open and collaborative work environment – the success and speed of delivery is often hindered by the size and complexity of the solution required. For instance, an API might need to work for multiple parties across various jurisdictions that are each bound by unique regulations in their domestic markets. As a result, consortiums formed by fintech and financial firms, various market network providers and regulators are each working on ways to simplify these processes.
One path forward is increased industry standardization. For example, the lack of cross-border interoperability between market infrastructures and networks currently makes the exchange of data and APIs much less effective. The upcoming migration to ISO 20022 – the new global payments messaging standard – looks set reduce these frictions. With major market infrastructures and network providers each migrating to the new standard, banks looking to leverage APIs and other messaging channels may no longer be required to maintain multiple variations of the message specifications by channels, currency and markets – something that today represents one of the biggest barriers for adoption. Elsewhere, plans are also underway to connect the various domestic real-time payment infrastructures to create an interoperable system for digital payments – one that could eventually support API adoption for cross-border real-time payments.
As the industry standardizes and simplifies its processes, and banks begin to integrate APIs into their own and their clients’ infrastructures, a host of new opportunities, including real-time data feed of balances to drive more proactive functions for treasuries, is set to be unlocked. Importantly, the onus is now on banks to invest in APIs and advocate their adoption to clients.
Sindhu, who is based in the BNY Mellon Singapore Branch, recently took part in the “Executing business strategies with the power of APIs” Sibos webinar. To sign up to Sibos to view the webinar, please click here.
The views expressed herein are those of the author only and may not reflect the views of BNY Mellon. This does not constitute Treasury Services advice, or any other business or legal advice, and it should not be relied upon as such.
Tapping into the right minds
By David Holden-White, co-founder and managing director, techspert.io
The world is awash with information. Analyst house IDC estimated that more than 59 zettabytes of data would be created, captured, copied and consumed in 2020, and that the amount of data created over the next three years will be more than what was created in the past 30. The boom in consumer technology and the rapid improvement in mobile connectivity has meant that the 48% of the globe that owns a smartphone has near instant access to all the digitised, publicly available information in the world in their pocket.
A world overloaded by information
It’s no surprise that people talk of information overload, or how much it impacts productivity. It’s not new either. A 2012 study from McKinsey & Co highlighted that nearly a fifth of professionals’ time was spent searching for and gathering information, half of the time they spent undertaking role-specific tasks. This is only likely to have increased as we’ve become more dependent on digital tools and services.
On top of that is the realisation that, thanks to social media, we’re living in a time when anyone can be an influencer or thought leader if they shout loud enough. It doesn’t matter whether you’re pushing trainers or cloud computing, whether your audience is a broad spectrum of consumers or a niche group of B2B buyers; the tools and resources are pretty much freely available to build a profile and push your message out there.
The result is that it’s becoming increasingly hard to find the value amongst vast and accelerating volumes of online data and noise, and to use that data to make accurate, effective decisions.
This is something we need to be able to do. We’re all expected to work faster, to make better decisions more quickly. The pandemic showed that certain changes don’t need five committees, two working groups and a proof of concept to take place before decisions can be rubber stamped. At the same time, no matter what industry you work in, there will be competitors who are more agile, more flexible, and seem to be much better at making decisions and capitalising on opportunities.
Yet those decisions still need to be backed by evidence, by irrefutable knowledge. What’s more, there’s only so much data can give us. We need the insights stored in the minds of true experts, with lived experiences of the particular problems, markets and technologies in question. In accessing this, we can develop a decision-making edge in businesses that competitors don’t have, that can be used to drive entrance into new markets, or for winning investment decisions.
Limiting risk in investment decisions
As we all know, investments are inherently risk-related, so, anyone making such a decision will do all they can to minimise their risk exposure, especially in volatile post-covid markets.
To do that requires being able to identify, consume and process information quickly. Investment opportunities, particularly in industries with significant growth capacity, come around quickly and get snapped up fast.
Those decisions will incorporate analysing and drawing insights from raw data, using publicly available and analyst-produced information. But there is also an opportunity to draw on human insights, from leading experts in relevant fields, to get a sense of the story that 0s and 1s can’t properly tell yet. Tapping into the right minds is essential to informing investment decision-making in 2021.
In an ever-growing haystack of information, the challenge is finding them quickly. Plus, once they are found, there’s a tendency to keep using them, or to use them as a gateway to others in their network. While there’s nothing inherently wrong with this approach, it leaves investors exposed to a lack of diversity in thought that makes getting to an unbiased view of the world impossible. At the same time, casting their net wide and finding lots of experts is resource and time-intensive, at a point when time is one commodity in short supply.
So, what’s the solution? Ironically, given that the challenge is bringing the right human insight into the process, the answer could lie in technology, specifically artificial intelligence (AI). AI-powered platforms can take a request for expertise and run searches through all available published and credible material to recommend the most appropriate experts for the project in question.
It’s true that there are already services that recommend experts, but they are heavily manual and therefore slow and imprecise. It’s also true, there are also both negative and positive connotations being attached to AI. No technology is without its flaws, and if investors were relying on the AI platform itself to provide expertise then there would be cause for concern. Services that provide access to the experts themselves, however, are providing a fast way through the noise and data – it’s a car to the destination, not the destination itself. Once investors and experts are connected, the former has access to the relevant insight the latter holds in their heads. What AI has done is rapidly scan through millions of people of talent to highlight the relevant knowledge holders with pin-point accuracy.
Using technology to highlight the best human knowledge
Using an AI technology platform to find the most relevant human is a way of taking a resource-consuming process and finding what’s needed in a thousandth of the time. In that way, investors can get fast access to the human insight they need to make the best decisions, allowing them to capitalise on opportunities and not miss the next big growth opportunity.
Australia says no further Facebook, Google amendments as final vote nears
By Colin Packham
CANBERRA (Reuters) – Australia will not alter legislation that would make Facebook and Alphabet Inc’s Google pay news outlets for content, a senior lawmaker said on Monday, as Canberra neared a final vote on whether to pass the bill into law.
Australia and the tech giants have been in a stand-off over the legislation widely seen as setting a global precedent.
Other countries including Canada and Britain have already expressed interest in taking some sort of similar action.
Facebook has protested the laws. Last week it blocked all news content and several state government and emergency department accounts, in a jolt to the global news industry, which has already seen its business model upended by the titans of the technological revolution.
Talks between Australia and Facebook over the weekend yielded no breakthrough.
As Australia’s senate began debating the legislation, the country’s most senior lawmaker in the upper house said there would be no further amendments.
“The bill as it stands … meets the right balance,” Simon Birmingham, Australia’s Minister for Finance, told Australian Broadcasting Corp Radio.
The bill in its present form ensures “Australian-generated news content by Australian-generated news organisations can and should be paid for and done so in a fair and legitimate way”.
The laws would give the government the right to appoint an arbitrator to set content licencing fees if private negotiations fail.
While both Google and Facebook have campaigned against the laws, Google last week inked deals with top Australian outlets, including a global deal with Rupert Murdoch’s News Corp.
“There’s no reason Facebook can’t do and achieve what Google already has,” Birmingham added.
A Facebook representative declined to comment on Monday on the legislation, which passed the lower house last week and has majority support in the Senate.
A final vote after the so-called third reading of the bill is expected on Tuesday.
Lobby group DIGI, which represents Facebook, Google and other online platforms like Twitter Inc, meanwhile said on Monday that its members had agreed to adopt an industry-wide code of practice to reduce the spread of misinformation online.
Under the voluntary code, they commit to identifying and stopping unidentified accounts, or “bots”, disseminating content; informing users of the origins of content; and publishing an annual transparency report, among other measures.
(Reporting by Byron Kaye and Colin Packham; Editing by Sam Holmes and Hugh Lawson)
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