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Asset management tech for insurers

Test, learn, win: Digital transformation for wealth and asset managers

Digital wealth and asset management technologies are attracting greater market attention, headlines and customer interest alike. Yet when it comes to effective use and integration of these technologies, wealth managers lag behind banks and other industries.

In the past, addressing legacy technology challenges and reducing the cost base associated with existing platforms were top drivers for digital transformation projects. However, as the speed of technological change continues to accelerate, offering digital platforms and services such as self-service apps, omni-channel customer interactions and robo-advice have become more necessary to offer customers increased choice and maintain market share without increasing cost to the provider.

As a result, instead of tackling large-scale, complex transformation projects, some asset managers are now looking at smaller technology investments to see where they can achieve the greatest value. For example, organisations are creating apps that customers can use to view investments and initiate transfers, or providing tweaks to existing apps to increase customer engagement, such as allowing sign-in using facial recognition.

Changing customer behaviour forces innovation

Across the financial sector, new technology and changing customer behaviour is driving change at an ever-increasing pace. Banks have responded by providing online self-service options and more choice for customer interaction, allowing customers to engage however, wherever and whenever is most convenient. In contrast, wealth and asset managers have been slow on the uptake. Traditional models now need to be broken down and refocused on the customer’s journey, with technology used to provide more choices, increased flexibility, and deliver on expectations more quickly and easily.

However, with the myriad ways, technologies and platforms available to achieve these goals, it is no surprise that organisations can get bogged down. From AI and Robotic Process Automation to chatbots and robo-advice, organisations often spend considerable time assessing how and where these technologies can be used, and which options provide the best fit moving forward. Organisations need to avoid these traditional blue sky visions and detailed technology roadmaps in favour of a fast and iterative “test and learn” approach. This approach tests application of technologies to specific process elements through smaller proof of concept initiatives, seeking to prove effectiveness within the business itself—as well as to deliver quick wins.

As companies seek to deal with their legacy applications, they seek to invest in package technology platforms, either as a fresh investment or as part of a re-platforming project. A package platform provides wealth and asset managers with a proven model and out-of-the-box functionality, making it an appealing route forward. However, as seen in the headline-grabbing issues Aviva experienced when moving clients to their new FNZ-backed platform, even use of proven technology is no guarantee of a frictionless experience. When looking at any public-facing implementation, it is important to assess the full risk profile and seek ways to phase implementation to minimise disruption to the client base.

Creating an iterative process for digital innovation

Insurers looking to work with digital wealth and asset management technologies are recommended to:

  1. Use the “test and learn” approach. Many firms spend too much time considering which wealth and asset management technologies may have the greatest impact, and not enough time testing and trialling with these technologies to see which actually fit the business. Fail quickly and fail smartly. It is better for organisations to prove benefits quickly innovate on business benefits, than to get bogged down while aiming for a distant end state.
  2. Seek quick value. When considering what areas could deliver wins, break down complex processes into small, discrete components and see where you can realise value quickly. Recognise, too, that immediate value may not necessarily occur from increasing process efficiency or reducing costs. Improvements to the customer experience, giving greater choice to remain competitive, and other areas can also deliver short-term value. Measuring value beyond the immediate balance sheet is key.
  3. Isolate change. In a highly regulated, risk-adverse environment, recommendations to increase the pace of change may seem counterproductive to the risk-averse. Yet organisations can experiment with innovative technologies within a safe environment and only go live with tested, proven offerings. Risk management need to keep pace with innovation in the modern enterprise. This may require a cultural mindshift within the organisation, or even the creation of an innovation lab or separate organisation that sits outside the main business where learning from failure is recognised as a critical component of success.

While making smart technology investments is always a difficult prospect, delaying decision in aid of finding the perfect solution delivers worse results. By testing new technologies in pursuit of small and quick benefits, wealth and asset managers can help accelerate their process of technological transformation in order to remain competitive in today’s changing market.

For more insights and developments in insurance and InsurTech, please visit KPMG.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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