McKinsey says bancassurance needs to be digital, omnichannel
BANKING professionals have long worked with insurance leaders to sell insurance. For the former, it’s an additional source of revenue; for the latter, bancassurance is a smart way to reach a new set of customers.
However, in the digital world, bancassurance professionals need to think smart. To stay on the growth path, they need to upgrade channels and digitize the products they offer.
Finalta, a McKinsey business, surveyed 118 banks around the world and found the digital bancassurance channels accounted for 19 percent of bancassurance non-life insurance sales but only 2 percent of life sales.
According to the think tank, this disparity exists because banks do not offer these products digitally. Banks have been slow to digitize because complex sales processes for insurance can make the move to digital channels more challenging.
Banks, McKinsey’s consultants argue, don’t think of bancassurance as a core part of their digital offering. Instead, they try to insert these products into other offerings online, making a tactical move instead of a strategic choice.
“Fewer customers visit physical bank locations, and banks have been slow to make up for lost branch sales by implementing a comprehensive digital model for bancassurance,” said a recent McKinsey whitepaper.
How to succeed in (digital) bancassurance
McKinsey studied a number of digital growth champions in Europe that bucked the trend of declining digital sales between 2016 and 2017. The think tank’s assessment of the success achieved by these firms uncovered three learnings for other insurers:
# 1 | Boosting personalization
“Bancassurers need to explore the potential of the rich banking data available to them as well as the sophisticated analytics for developing more relevant and timely offers for customers.”
Bankers have access to a lot of data about their customers. Not only does this allow bankers to engage in intelligent conversations with clients but helps discover timely and relevant bancassurance opportunities.
Starting a conversation about insurance needs when a client moves to a new home or welcomes a new child into the world can boost success rates by up to 40 percent, according to McKinsey.
To further increase the chance of success, bancassurance professionals can create tailored conversations. “Tailoring requires adjusting both the look and feel as well as the content of materials, which may include proposals pre-populated with the data already available to the bank.”
# 2 | Offering superior customer service
As discussed initially, one of the reasons bancassurance is seen as a challenge is because the channel requires a lot of hands-on management. For organizations going digital, this can be tough to keep up with.
“Bancassurers need simple, fully automated, and end-to-end processes that reduce barriers to sales in digital channels as well as barriers to relationship managers. In addition, they need to improve the customer experience and conversion along the sales funnel.”
While the transformations must come from within, Asian bancassurance leaders can look at some of the exciting standalone digital platforms that are selling insurance online via apps and websites for inspiration.
Ideally, cross-selling opportunities should open up as a result of providing a super customer experience and using data intelligently. Overall, this should lead to a massive uptick in bancassurance sales.
# 3 | Mastering the omnichannel game
“As the experiences of growth champions have shown, bancassurers can increase sales by leveraging all channels in a coordinated way. The first step is to make insurance sales available across channels—secure site, public site, and mobile app—often in a sequenced rollout.
For an omnichannel strategy to be successful, the process must be thoroughly refined.
Since insurance forms require a lot of details, not being able to continue with the application on other devices is quite a turn-off in the digital world. Bancassurance leaders need to understand this when integrating channels and platforms into their customer journey.
Building an omnichannel system typically requires creating a joint team of both bank and insurer employees empowered to bring together all the functions involved in the effort in an agile way.
Once this has been built, bancassurance revenues are sure to go through the roof. After all, customers do want insurance in the digital age, and being able to buy it online, comfortably, fills a gap in the market.
“The reward for pursuing digital bancassurance is significant—and across the globe, the spoils will go to those who get there before their competitors,” concluded McKinsey’s recent whitepaper.