EXL, a global analytics and digital solutions company, discusses how open finance signals ‘a new spirit of partnership’ between consumers and carriers
By Mohit Manchanda, head of insurance, UK and Europe at EXL
The concept of ‘open’ has transformed much of business and public life – open source software and content has created the internet we know today.
Open banking has enabled people and businesses to share information and possibilities to new levels. Open finance is now extending those benefits, almost certainly creating endless possibilities for insurance. We too have to be open in many ways.
1. Open to potential
The democratisation of finance is underway - deregulation, smarter competition and fintech are building momentum and disrupting traditions.
As consumers become more aware of the choices available to them - and the control they have in exercising those choices - they will create new demands for insurers to meet.
2. Open to change
Insurers have achieved unparalleled change through the Covid-19 pandemic, but they must now adopt this shift as ‘business as usual’. Central to this is a commitment to a digital strategy because data is the real currency and enabler of open finance.
3. Open with information
Insurers will be able to improve their product and service design and revolutionise their customers’ experience when they know more about them.
Customers will embrace tailor-made solutions that suit their lifestyles. Insurance will rapidly become more fluid and immediate. But, this relies on having the best, most relevant and timely information.
Open finance makes it possible for people to see all their policies in one place, alongside their other finances, and to understand their level of cover.
It enables flexible, personalised pricing and makes renewals or switching easier. It can also detect potential fraud and help take that distortion out of the market.
Affordability checking and underwriting will become opportunities for smarter decision-making and positive engagement with consumers.
4. Open to scrutiny
Open finance will depend on trust - consumers will need trust that their personal data will be secure and treated sensitively. Insurers and partners will constantly require permission from consumers to share their information, meaning they must be prepared to prove their trustworthiness.
Many customers already suspect insurers of misusing their position of trust to hide overcharging. Open finance systems will confirm businesses that are doing this, provoking greater customer churn.
The smarter insurers will identify these at-risk customers, proactively build ‘rewards’ and avert that defection.
5. Open to collaboration
An exciting prospect of open finance is for consumers to engage more richly with insurers.
A traditionally ‘necessary evil’ purchase with minimum personal involvement and little residual thought can now become a dynamic enabler of personal choice.
With such constant adaptability and responsiveness, we envisage a new spirit of partnership between the customer and the carrier. As each participant invests more in that relationship, the mutual experience and benefits will increase.
The same goes for suppliers of the service. We must all be prepared to work differently - that attitude is exemplified in our own developing relationship with open finance platform Moneyhub.
It’s a meeting of unrivalled insurance knowledge, digital capabilities and an open finance platform that demonstrates how vital open collaboration is now.