The future of the insurance sector is not guaranteed. New technologies are transforming the sector as we know it, and as much as these new technologies may threaten what we already know, it will also present significant opportunities.
Companies are playing catch up as consumer expectations are increasing exponentially. Customers want a quicker response time, an efficient approach to problems and at the end of the day, more choice for their money. As new FinTech businesses diversify and continually grow, we are witnessing new tech innovations, such as blockchain, which is disrupting the market and creating a chance for reinvention and a greater opportunity to thrive.
Despite this new technology seeming like a small risk that is worth taking, recent research shows that many companies are not ready for technology disruption. What if it doesn’t improve your company’s efficiency? What if you spend hundreds of thousands on new tech and your employees are not fully trained in how to utilise it?
The edge of risk
Small and large FinTech companies adopting and developing solutions that use digital technology to evolve the customer service, new competitors may threaten legacy institutions of all shapes and sizes. With any new technology, that will eventually impact the company regardless, this new shift in the industry is the storm on the horizon.
Alongside the natural transformational changes every business will experience as time passes, there are developing technologies which include AI, blockchain and digital payments, just to name a few. Not only this, but cybersecurity is proving to be a greater challenge. KPMG reported in 2018 a 78% increase in business fraud, and FinTech companies in fact attract a higher risk of cybercrime.
Even the word itself; ‘disruptive’ does not evoke the most reassuring of steps for a business to make, and it is in agreement that the next five years are going to be rocky – are businesses prepared for this technological leap of faith?
A disruptive market for a disruptive way of thinking
We are at the present time in a state of economic and political disruption which is only going to encourage uncertainty in companies looking to invest in new technology. The decision to embrace new tech needs to be implemented efficiently, swiftly and effectively.
New start-ups are getting in on the act, naturally as they are founded on new technology. It is no surprise start-up hubs like Berlin are storming ahead especially when two of the world’s financial centres, the UK and USA, are reportedly not taking advantage of this technological age – 52% of businesses to be exact. The secret; start-ups are identifying opportunities amongst the chaos.
Those sprinting ahead and others staying behind
It is important to know what is considered ‘hype’ and what has proven its worth. AI is a form of technology that is sitting on the fence between becoming the next step for companies (30% of UK financial leaders have agreed with this) and being a piece of tech that won’t be ready for mass use for years to come.
We are already seeing the genuinely authentic impact automation is having on a company’s way of working, as it takes on, not only the considered mundane tasks that employees fill their time with, but is impacting the fundamental structure of the company and allows for focus on goals that assist with the company’s progress. Blockchain and crypto currencies overall have a smaller impact but operate on a shorter timeline of implementation and we are able to bear witness to the results faster.
For example; putting a name to one of those witnesses, HSBC are amongst the front runners to accomplish the world’s first commercially viable blockchain trade-finance transaction. This sounds like substantial progress, which it absolutely is, but any form of development especially in the technology space attracts an increased risk of cybercrime (we may have already touched on this, but cyber security is something worth mention two to three times over). With great new technology, comes great responsibility to handle it appropriately.
There is an argument to be had for whether or not ‘disruptive technology’ will disrupt the natural progression of legacy institutions or, if it will positively disrupt and encourage growth for a new level of success. It is all well and good talking about new technology and something that looks attractive, but most companies do end up falling into that awful trap of ‘its shiny and new, so let’s put it in there’ rather than actually taking a step back and looking at what they can already utilise within their business. The main qualifying question is; can this actually solve our business problem?