How does the digital transformation take place in the insurance and finance sector? Fabian Van Lancker, Head of Customer Processes & BI at Swiss Life Germany in an interview with Avenga.
Fabian Van Lancker is the Head of Customer Processes & BI at Swiss Life Germany. Together with his team, he is responsible for the conception and, – together with the development team – the creation of a consolidated data warehouse for the Swiss Life sales organizations. His tasks also include, for example, the development, setup and maintenance of CRM systems. Since 2016, in cooperation with Avenga, he has been developing a client portal with his team which is achieving double-digit monthly growth rates.
For him, customers are, on the one hand, the end customers, i.e. private individuals who want to take their financial future into their own hands in a more self-determined way. And on the other, they are the 4.200 licensed financial advisors in the sales departments of the four brands: Swiss Life Select, tecis, HORBACH ProVentus and Swiss Compare, who provide holistic advice to people on their finances.
This isn’t simply a matter of selling a product: The primary goal is to understand end customers and their needs, and to accompany them throughout their lives with a sensible financial concept.
Sascha Langfus, Insurance Specialist & SVP Sales Europe and Miriam Birkett, Head of Marketing DACH at Avenga, interviewed Fabian Van Lancker to discuss the digital transformation of both the insurance and finance industry and his own company.
Sascha Langfus (SL): What are the greatest challenges facing the insurance industry today, and what causes them?
Fabian Van Lancker (FVL): I see the biggest challenges in addressing customers and in technical modernization.
Nobody gets up in the morning and thinks to themselves: “Today I’m going to buy an occupational disability insurance”. First, the need for the product has to be aroused. Many schools don’t lay the foundation for financial education. For example, there’s that famous tweet from an18-year-old: “I have no idea about taxes or insurance. But I can write a poem analysis. In four languages.” With this in mind, consultants fulfil a social mandate and explain to people how important providing for a self-determined future is, and what is important for their individual situation when choosing the right products. This is followed by a very long phase in which the customer must understand why he should now spend a significant portion of his income on an insurance product. Following this, there’s the final phase, the closing of the deal.The insurance and financial sector, therefore, operates according to different rules than, for example, the music market, where people, when they feel the urge to listen to music, compare the best providers and then simply purchase it.
Added to this are the challenges in IT. Insurance products are very long-lasting.
This also means that the systems on which these contracts are managed are sometimes 30, , or even 50 years old. From today’s perspective, the questions we can ask ourselves are: What systems were used so long ago? On which back offices do these contracts run?
And then we have this young disruptive industry of FinTechs and InsurTechs which has come onto the market complaining rightly in the “Berlin Digital Declaration” that the concept “interfaces to insurers” does not work at all. As much as the insurance companies want to adapt to this, connecting a 50-year-old system to a three-month-old app is no easy task.
This legacy and the investment backlog which insurance companies carry around with them are the technical challenge.
Miriam Birkett (MB): Besides the technical challenge, companies also face the human challenge. For the last 50 years, sales have been conducted through personal contact with agents. Now the InsurTechs are coming up and changing the sales department. How do insurance companies react to this development?
FVL: I see this as an opportunity for insurance companies! Since insurance products are so complex, a personal contact person is required. Recent studies have shown that customers accept the digital contract, but they need a personal contact person for queries.
Accompanying this, digitization is an opportunity. In the coming years, insurers will become product developers offering interfaces and very efficient products. Digitization will then take place in the distribution channels.
Similarly, as with banks and PSD2, this will be separated from the insurance companies and instead be provided beforehand by FinTechs, InsurTechs, and independent distributors like Swiss Life. It is definitely a challenge for FinTechs and InsurTechs, because they cannot rely on a strong network of expert advisors and intermediaries. However, a purely digital business model is virtually impossible in today’s world.
SL: What are the current trends in Germany and internationally?
FVL: Ping An, a leading insurer in Southeast Asia, can tell from the voice of the customer whether he/she is doing well or badly by means of an AI. They offer fully digital policies and automated risk assessment with systems that can also detect fraud attempts.
In South-East Asia, the laxity of data protection makes it easier to implement such measures. This cannot, therefore, be a model for us in Europe. These companies collect massive amounts of data and can thus, directly assign customers to social profiles and make evaluations. The question remains whether this development will also become established along with the data protection regulations in Europe.
The trend here is towards digitization of the intermediary. At Swiss Life Germany, we call this hybrid offer “phygital” [portmanteau combining “physical” and “digital”, editor’s note]. The Corona crisis has further accelerated this development. Personal contact remains important, but it will change: Agents will no longer come to clients’ homes or nor the client to their offices. Advice is provided digitally via video. Customers who are working in the field, who are moving or who simply need more time flexibility because of their work or their families will benefit from this service. Quotes are sent online, digitally signed and are legally binding. There is also a digital portal for the after-sales area where customers can view their contracts. These offers, which flank personal contact with the agent, are constantly evolving.
MB: How do you see the collection of data by wearables like Smartwatches or fitness bracelets? Will this develop further in the future?
FVL: There is a growing target group which is willing to share their personal data on driving behaviour or fitness level with the insurer in order to have a cheaper car or health insurance policy. However, not everyone is ready for this yet, so there will be offers without this option in the future.
The data protection laws also set the limits. Some citizens see themselves protected by them, while others see their freedom of choice restricted. In Germany, the rule of thumb applies: Good performance should be rewarded, but poor performance should not be punished. This means that insurance products may become cheaper due to the use of smart technology, but not more expensive.
SL: Looking into the crystal ball: Digitization is advancing rapidly. What will the insurance industry look like in 10 years?
FVL: Micro-finance products are becoming increasingly important: Generation Y and Z clients do not want to sign 40-year contracts which do not allow them to access their money for 40 years. Instead, they want to buy variable products which are completely digital and work with an app.
Maturities will be significantly shorter. Imagine you are on a ski slope and your mobile phone asks you if you would like to take out an accident insurance policy for the next 48 hours.
Commodity insurance is being simplified, i.e. products such as motor vehicle, household and liability insurance. When buying a house, household insurance will be included, and car insurance will be included when buying a car. These insurances will disappear from the consultation because this is actually not necessary. The customer will retain full price transparency.
However, there will still be personal contact persons in 10 years. But, it is possible that they will then no longer be clearly assigned to customers and be known by name or picture. An intermediary pool could ensure that insurance companies can react much faster and more flexibly. However, we will not achieve such a simplification of products in Europe so quickly.
SL: Everyone is talking about digitization and digital transformation – what do the two terms mean to you and what is the difference?
FVL: They are two completely different terms!
Digitization happens on and around the product. It is not only about making processes digital. Processes that don’t work well in analog are not going to get better through digitization. You have to look at the product and focus on the needs of the customer.
Digital transformation takes place within the company. Let’s consider the back-office systems mentioned above, which are 40 years old: Accordingly, the developers who have the experience with these systems, need to be taken onto the journey. This means to explain modern working methods such as Scrum and the flexibility which is necessary today in addressing customers.
This also includes the change from classic ABC hierarchies to matrix organizations. This is changing leadership styles for managers: less “top-down” and more team dynamics.
Both only work in combination! You can’t digitize the products without integrating the company and you can’t innovate the company and continue with classic product development.
MB: What opportunities are associated with the digital transformation? How do you communicate these processes to those in the company who find it difficult to accept, or prevent changes?
FVL: There are those employees who think: “It’s been going on like this for 15 years, and it must continue to go on like this. It’s working!” But in the end, almost all of them are convinced, if they are allowed to try out, without any risk, what agility and customer-centric development in the project mean. Often it is the change in the situation itself and not “how” the situation changes, that bothers them.
If we give these employees the freedom to try it out and get a taste of cross-functional team projects, then we almost always get positive feedback. You also get direct customer feedback from our sales department and the delight at fast releases. This is an additional push for the colleagues.
In addition, this feedback is now also being received in every department. Thus, a developer receives direct feedback from sales because he is part of a cross-functional team. Even the classic avoiders feel the desire to further develop. But: Everyone does it at their own pace.
After all, it cannot be simply a matter of blind digitization. In Scrum, there is a good tool for example, with retrospectives, enabling you to reflect continuously. If there’s no-one in a team to critically observe, then team development doesn’t work either. Therefore, it is important to have these employees with you!
But there are also always individual colleagues who don’t go along with the rest. So, you have to look at how you place them in the organization and how you deal with them. At Swiss Life, however, our experience is that we’ve never had an employee who was not enthusiastic later.
SL: Which internal and external factors must be urgently taken into account in order to make the digital transformation a success, and what concrete measures has Swiss Life already put into place to make this successful?
FVL: Many years ago we asked ourselves what is actually Swiss Life’s strength and the advantage on the market. Our answers to these questions were: Culture and togetherness. Although we are a group, we reject silo thinking and want to achieve things together.
Our goal is to achieve the ability to literally throw and catch balls behind our backs, blindfolded. If we achieve this and are confident in each other and in interdepartmental cooperation, then this is an important building block in the company for creating transformation. Being a big team is the foundation for the perspective transformation – no matter in which direction. This has helped us enormously with digitization.
We have, therefore, done a lot of pilot work in cooperation with the employees. We left cross-functional teams free to handle the entire development process. In return, they were given everything they needed and were thus able to test themselves. This also includes a healthy error culture. Mistakes happen in the transformation process, so you can’t punish them right away. Piloting, obtaining feedback, making pilot projects bigger – these are the three parameters with which we at Swiss Life have completed the digital transformation.
In the end, there is always a need for a central person in the company to take over the patronage of the digital transformation. This person makes sure that chaos does not spread. At Swiss Life, this is Stefan Butzlaff, who ensures that we as a company move in one direction.
MB: How does Swiss Life manage to make these experiences and developments transparent throughout the company?
FVL: It is a difficult challenge to keep everyone in the company at the same level of information. We have introduced various formats such as “Lunch and Learn” for this purpose. In-house, we have applications such as an Infothek for our consultants or the intranet for the employees. We are constantly expanding these offerings, which means that more and more employees are joining our process.
SL: What specific challenges did Swiss Life Germany face and how did Swiss Life solve them in cooperation with Avenga?
FVL: We aimed to build a customer portal which wasn’t on the market yet, but which we assumed customers needed. This assumption has been confirmed! To do this, we needed a partner who could understand the customers’ point of view.
We’d never developed applications for a larger group of customers before. Our customer was primarily sales. Now it was about developing an application for more than a million potential customers. This was a big undertaking. With Avenga, we found a partner who masters the customer perspective, mobile design, and the neutral view from outside.
From the beginning, the collaboration has worked very well and the feedback from customers proves that we were right to have taken this step. Especially the topic “design and interface” is something where a company has a certain industry blindness. In such an app, however, you can’t assume that a customer has the same knowledge as the company. Having someone who looks at it neutrally from the outside was very important back then. And the cooperation is still working very well today.
The repositioning of Avenga has added further competencies. Now we are jointly tackling the topic of “strategic customer care”. Again, the feedback is very positive. Avenga has understood our business model and knows how we tick. The human and cultural cooperation is also excellent. In terms of content, we produce very good results.
The customer portal went live last summer and is perceived positively. Our app was in the top 100 financial charts in the first two months. That’s a great compliment to our collaboration.
Recently, we made a survey among our customers. 80% are satisfied or even enthusiastic about the portal and use it at least weekly. The customers see it as their personal finance cockpit. They have an overview of all the contracts they concluded through us with our partner companies. Additionally, there is fully integrated online banking with PSD2. This makes for an incredibly strong app, which in combination with the consulting possibilities is not comparable on the market. 5 out of 5 stars in Apple’s App Store speak for themselves!
On this basis, we want to be on the ball and keep pace with developments, just as we did with micro-finance, for example. After all, we are already in the customer’s pocket and can, therefore, remain relevant for him.
MB: Does the client portal co-developed by Avenga also have direct advantages for the consultants?
FVL: Our consultants can offer a digital touchpoint and this is especially important for younger customers. We hope that, in the future, customers will be able to make their own contract changes themselves, for example, a change of address or bank details. This will take the pressure off the agents.
It also has a positive effect on recruiting. Especially for younger people, the use of the app is a reason to choose us.
SL: What strengths and expertise did Avenga bring to the projects? What was Swiss Life Germany particularly able to benefit from?
FVL: The combination of expert knowledge in customer-centric design and application development, combined with a neutral view from the outside, knowledge of the industry, and a team that can respond flexibly to customers, and ask very critical questions is what makes our joint success.
The cooperation in the teams has always worked wonderfully. This is an essential criterion for success. With Avenga’s new extended positioning, we will certainly be able to add more opportunities for cooperating.
SL: How does Avenga help you to integrate these issues into your processes? Are there any specific models which are used to integrate employees?
FVL: We make sure that all the results of our cooperation can be further developed internally and transferred to our sprint teams in an agile way. We work in a joint Jira and Confluence.
From the very beginning, the developers are involved in the coordination with Avenga. The written code base is stored in our repository. So, we have continual access and can make comments ourselves.
For us, Avenga is a team extension of the agile teams and not a classic external company. It is a cooperation!
MB: That’s a nice ending. Mr Van Lancker, thank you very much for the interview!
Learn more about the opportunities and challenges which digital transformation offers established insurers. We have collected the most important topics – from customer proximity to new technology – in a comprehensive overview of the digitalization of insurance for you.