Banking & Insurance

A rapidly changing environment

Financial institutions are currently faced with new challenges, the effects of which conspire to undermine the very foundations of traditional models.   

As in so many other areas, it is clearly technology that is sounding the charge. This is precisely how, on the one hand, its democratisation opens up new business opportunities (new offerings, enhanced customer experience, financial gains…) and how on the other, it poses a threat, in particular through the competitive edge of newcomers, the potential disappearance or transformation of certain elements of the value chain and more generally, a calling to question of business models.

In addition to the disruption of technology, there is a slowdown in growth and pressure on margins that, amongst other things, lead to a long-term, lower rate environment; stiff competition from traditional players and the arrival of new players that disrupt the value chain, forcing the creation of new partnerships; and finally – or perhaps we should say, first and foremost? – the consistent and increasingly demanding expectations of customers (constant accessibility, omni-channel access, transparency …), influenced by high quality experiences in other sectors.

 In this new world, innovation is no longer optional.

In the insurance sector:

Economic conditions mean rethinking the business model and migrating towards alternative investments;  

Demographic changes, socio-economic constraints and changing consumer habits all apply pressure on revenues, increasing the need to optimise operational performance and underwriting;

New competitors and business models lead to the trivialisation of insurance products, forcing major transformations and notably the need to address the transition from an insurance-based model to a service-based model;  

Technological advances are disrupting distribution and, more generally, the customer relationship, intensifying the need to enhance the customer experience as well as investment to allow an omni-channel interaction with customers;

 « Cheap » and easy data access weakens the entry barriers to the insurance sector, raising the issue of how pricing models will evolve. 

The consolidation of the sector forces insurers to redefine their positioning by investing in new, innovative modus operandi and makes it imperative to give meaning to these new, major entities while maintaining both agility and effectiveness;

Finally, the ambition to personalise offerings and the desire for segmented approaches, calls to question the historical, sharing-based insurance model.

In the banking sector:

Cost rationalisation will soon have reached its limit, increasing the need for revenue growth and operational efficiency;

The reduction in revenues due to the arrival of newcomers, is forcing the banking sector to enhance the customer experience, to heighten digitalisation and omni-channel distribution. The time has also come to devise and implement diversification strategies to underpin growth, capitalise on client assets and absorb the cost of distribution networks in a market that has been consolidated now for a number of years.    

Against the backdrop of product trivialisation, acquiring shares of the market will require strong segmentation skills and a customer-centric organisation.  This challenge is all the more important as the battle between the banks to win over customers is likely to intensify, fuelled by the growing interest of the Millennials for alternative offerings from non-traditional players.

To meet these challenges, to ensure their sustainability, support their development and preserve their margins, financial institutions need to address 4 key challenges :

Meeting customer expectations

• By developing the customer experience in-line with the standards to be found in other sectors and meeting client demands, in particular with relation to omni-channel access, providing flow, not friction and a more personalised service.
• By meeting the steadfast customer demand for simplified, clear and transparent offerings.

Upgrade the customer “promise”

• Anticipate the risk that, by ignoring customer expectations increasingly geared towards services, financial products become mere « commodities » and purely accessory to the services and goods.
• Reassess the business core in harmony with the advent of Big Data, artificial intelligence, blockchain and the IOT

Optimising business models

• By rethinking distribution as a function of digital technology with a view to modernising it, making it more targeted and less costly.
• By always being more competitive against a backdrop that is aggravated by fewer and fewer significant entry barriers and the arrival of non-traditional players.
• By taking advantage of new technology and by rethinking the value chain as a whole.

Supporting the transformation of skills and managerial cultures

• By reflecting on the way skills and profiles have evolved and by assisting teams in securing new practices and tools.
• By assisting organisations to adapt to an environment where the scales of time and space are radically changing and where individual aspirations call for the implementation of a different type of management to rally the latest generations around a collective project.