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The digital future: Necessity breeds innovation

  • What does the future of work look like after the pandemic? David McKnight from Applied Systems examines the promise of truly digital workplaces

    Virtually overnight, the pandemic changed the way companies in every industry do business, challenging businesses large, small and everything in between to re-evaluate their processes and their paths forward. 

    The strategies that worked before may not work best today or in the future. In the current climate, companies from all industries are looking to technology to innovate, to optimise operational workflows and ensure premier customer experiences.

    As we look to the future, it is important to remember lessons from the near past that can help guide us. In 2008, we saw the start of the Great Recession triggered by a global financial crisis. Global GDP went from 4.3% in 2007 to -1.6% in 2009. While the economic upheaval was a global crisis, there were positive aspects that resulted. Companies had to find new, lower cost ways to run their businesses and as a result, the world saw the birth of cloud computing. 

    The old way of doing IT was expensive, rigid and slow-paced. The economic crisis spurred demand for a new way to access computing power. This paved the way for Rackspace, Amazon, Microsoft, Google and others to pioneer novel and less expensive ways for companies to digitise and quickly scale their businesses in the cloud.

    Cloud computing unleashed unprecedented innovation, creating new business models and reinventing old ones. Millions of jobs were created and unemployment quickly declined to less than 4%. Productivity gains increased significantly as people learned to use technology to do more in less time. Shares of leading cloud companies became more valuable, driving a record bull market. 

    Ultimately, cloud computing – and the cloud platforms we rely on today – brought the power of at-scale R&D investment to main street companies that couldn’t do it on their own at an affordable price. Out of the initial fear and economic devastation that started in 2008, came world-changing innovation and digitisation that made businesses more: 

    Productive: Lowering the cost to produce, market, distribute and sell.

    Intelligent: Capturing the power of data to compete more skillfully.

    Simple: Knowing customers better, simplifying the customer experience.

    Valuable: Growing more profitably by meeting more of your customers’ needs. 

    Digital adoption today

    In 2020, the pandemic spurred a similar digital inflection. Within a matter of months, companies accelerated their digitisation strategies in what would have taken years pre-pandemic. According to a McKinsey survey, “responses to COVID-19 sped up the adoption of digital technologies by several years – and that many of these changes could be here for the long haul.”  Microsoft CEO Satya Nadella confirmed this sentiment. At one of the company’s quarterly earnings calls, he shared that Microsoft saw “two years’ worth of digital transformation in two months.”

    Like so many other industries, insurance is at a technology turning point. Insurance brokers have had to speed up digital adoption timelines in order to create new digital experiences for both staff and customers. Investing in digital technology has enabled brokers to: 

    • Build stronger bonds with customers
    • Equip employees with the tools they need to work more intelligently and productively
    • Build more resilience and value into their business

    Today’s winning brokerages offer the digital experiences their customers are accustomed to. If they don’t, they risk losing that business to another that has invested to create simpler, more convenient experiences. Technology can lower the overall cost of growing and operating a company, making the business more profitable and valuable – and the numbers prove this in big ways. 

    Data shows that digital brokerages generate 156% higher revenue per employee compared to brokerages that are not digital. Another recent study from McKinsey that examined the opportunity for technology-driven productivity within the insurer side of the ecosystem echoes this research, showing that the benefits of adopting modern technology include a 40% reduction in IT costs, a 40% increase in productivity, more accurate claims handling, increased profitability and reduced churn.

    Clearly, technology investment, when done wisely, creates strong returns.  

    Three principles for digital transformation

    For insurance brokerages, the time is now to take the necessary steps towards becoming a digital broker. Applied is enabling brokers to optimise operations and deliver exceptional customer experiences through technology that is defined by three principles: openness, velocity and user experience. 

    Openness: The days of closed systems are coming to an end, and technology must become more open and “integratable,” creating flexibility for insurance brokers to harness its power to support their business as it evolves and changes over time. Software built on component-based architecture with open APIs creates simple ways to integrate the management system with other critical business applications, and quickly gets information in and out of the system of record. Technology must work for each broker, allowing business processes and workflows to change at the increasing pace of innovation happening in our industry.

    Velocity: One of the most beneficial outcomes of using open and modular components is velocity. When technology solutions are built on flexible API-based architecture, more frequent real-time updates can be made to core software versus an annual or semi-annual update. This means new capabilities focused on specific roles or functions within a brokerage are released faster and are less disruptive to businesses while creating incremental value.    

    User Experience: Among the many reasons people love the brand Apple so much is because they make products that are extremely intuitive and easy to use. Apple’s mantra was simplicity, and fervently preached by Steve Jobs, “Let’s make it simple. Really simple.” In addition to Apple, companies like Amazon, Uber, Airbnb and others have redefined user experience (UX) and the bar is high. No business should be bogged down by software that’s complicated and frustrating to use. The UX of your brokerage software should be simpler, with fewer screens and clicks, and should eliminate redundant data entry. A clean, elegant interface across all devices improves productivity, simplifies training and on-boarding of new team members, and overall creates happier employees.

    By adapting to the new norm and adopting the digital technology necessary for digital transformation, brokers build stronger bonds with customers, equip employees with the tools they need to work more intelligently and productively, and build more resilience and value into their business.

    A promise for the digital future

    While 2020 was a year like no other, we can conquer adversity to make the insurance industry better. As the old saying goes, “necessity is the mother of invention.” We saw that ring true following the last global crisis and we see the opportunity today to be even greater. The insurance industry is a unique community of great people with a strong mission to safeguard and protect what matters most. It’s up to us to put lives back together, restart businesses, rebuild communities, and make new realities – guided by technology. Working together, we can make the change of yesterday an opportunity today for a stronger tomorrow.

    This article first appeared in the Spring 2021 edition of the Sync NI magazine. You can download your FREE copy and sign up to recieve future digital editions here.

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