The rise of neobanking
Five years ago, if you wanted to open up a bank account you had to get in your car, drive to your nearest branch and fill out a tiresome amount of paperwork. You’d be given introductory savings rates that would fizzle away to practically nothing after a few months. If you wanted to close your account? You’d have to hop back on the phone and wait for an hour in queues or, worse, write a letter. As a society, that was how the banking system worked and we just accepted it.
Fast forward to today, and much of these legacy issues with banking have been cast aside, making way for new entrants to enter the market.
Neobanks like Up, 86 400 and Revolut have made the sign-up process simple. You download an app, fill in your details and can sign up in less than two minutes. You don’t even have to leave the sofa. Those saving rates they mention on day one? They’re the same if you’re a new or existing customer. Customer service, checking your balance, or making payments are all done in the app – instantly.
That’s what customers expect today: their entire financial world easy to navigate through an app. There are other industries that have seen the same revolution: music, taxis, payments – just to name a few.
Insurance is yet to see a similar tech-driven transformation
Other than the added option to obtain a quote online, not much has changed in insurance space since the 1960s. This is largely due to high barriers for entry resulting in fewer businesses and less competition. There’s also been a huge lack of tech focus and businesses operating with an if it isn’t broke, don’t fix it mentality.
Thankfully, there are signs that this is starting to change. A new, tech-driven insurance industry is beginning to take off and promises to shake up a market that is ripe for disruption. A neoinsurance industry.
What will this look like?
The foundations are already being laid, and the infrastructure is there. Think instant claims experiences, AI-driven policy building assistance and self-service policy management – all of which provide customers with the right tools and confidence to buy, manage and make claims online. We’re talking whole ecosystems of mobile-first services with greater use of data and fancy back-end algorithms, powered by bots and machine learning, to provide front-end systems that are simplistic in every form.
There’s a lot that the insurance sector should learn from the financial services sector. Better value infrastructure and seamless AI-driven customer experiences are among the most valuable lessons: time-poor customers have grown accustomed to seamless services at their fingertips and as an industry, we must utilise and replicate this knowledge as we work to become fully digitised.
Digitally led businesses have a huge opportunity to pioneer positive change across the insurance industry and there’s already some genuinely revolutionary activity in the pipeline. The traditional purchase, management and claims experience will no longer be the acceptable norm. It’ll follow in the banking or taxi evolutionary footsteps: accessible at a tap of an app, where we will welcome concerns if customer expectations aren’t met.
And that’s just the beginning
Take a look at the US and the UK who have the likes of Lemonade and Hippo revolutionising the direct-to-consumer insurance industry. Aussie brands are only just beginning to scratch the surface of what powerful tech can unlock in the insurance world. The sector is about to be transformed for the better, with customers set to be the major beneficiaries, as we learn from our international counterparts. For too long, the insurance industry has been one of our biggest sectors yet the least invested in – this year we ignite the change.
Consumer needs are undoubtedly changing and it’ll be those businesses that provide frictionless, digital customer experiences that will lead the pack. Every insurance brand will need to join the digital revolution in order to stay relevant.
After all, we’ll all be neoinsurance customers one day.