Innovations in payments tech are eating the traditional payments industry.
A wave of innovation is driving a dramatic shift in the way we make payments. The presentation highlights the most important trends fueling the changes: the rise of payment apps, mobile registers, e-commerce, and the decline of cash and checks. The deck also shows where the author believes the payments industry is headed. Looks like I won't be needing to buy a new wallet after all.
To increase market share and increase relevancy, Accenture says insurers must plan for the blurring between the digital and physical world, the rise of crowdsourcing, the advent of the data supply chain and three other trends.
Accenture research indicates that 55 percent of customers would be interested in insurance products and services offered on social media. To unlock the value of their data, insurers must treat data more as a supply chain, Accenture said, enabling access to the data and allowing it to flow easily and usefully through the organization and eventually to partners as well. That’s why insurers are implementing big-data tools, investing in advanced analytics applications and purchasing data visualization software.
“The supply chain begins when data is created, harvested, imported or combined with other data,” Accenture said. “The data then moves, flows and transforms through the supply chain, incrementally acquiring value. The supply chain ends with a valuable insight as its output.
“Now, companies can take advantage of the opportunities for data monetization—to sell data insights directly, share them through partnerships, or develop entire ecosystems around them,” Accenture said. “Insurers have the opportunity to think outside of the box for new ways to appreciate and take advantage of the true value in their data—provided they do so in a way that is sensitive to the thorny issue of data privacy.
Both are viewed as representing a moment in time that has passed, and while respected for what they did, relevance has waned.
Interesting metaphor and reminder that the IBM System/360 celebrated its 50th birthday recently. We like to think of technology as a zero-sum game, but when put into the context of contributing to the top and bottom lines of organizations, that's just not the case. If such were the case, then automobiles would have eliminated trains, and planes would have eliminated automobiles. All those technologies are still with us, and likely will be for many years to come.
The two-year delay in the implementing new regulatory requirements has helped European insurers confidence, Ernst & Young says, but almost 76 percent do not yet meet reporting requirements.
Most European insurers said they had made little progress in terms of disclosure and transparency requirements, EY said. Almost 76 percent said they do not currently meet most or all Solvency II reporting requirements.
"The level of implementation readiness has made little progress since 2012,” said Martin Bradley, EY's global insurance risk and regulation leader. “Uncertainty in implementation and timing delays may explain the lack of progress but it is now critical to accelerate these projects in 2014. Given the current status, the reality for many is that the 2015 transitional reporting will need to be done largely on a manual basis."
What exactly is the difference between omni- and multi-channel?
More insurers (and businesses in general) are adopting the outside-in approach and creating a customer-centric focus so they can anticipate and cater to their needs. “Omnichannel" describes the seamless integration customers' expect and companies seek to deliver across access points & channels. It’s absolutely more than a buzzword in the insurance industry, it's the target carriers must aim for and constantly evolve to... It's a journey not a destination or off the shelf solution.
Customers’ needs vary based on the type of interaction. They want to know their business partner will "know me and assist me" on any device, at any time, through any access point.
P&C insurers face profitability pressures that rate hikes alone likely will not relieve.
Property/casualty insurers face profitability pressures that rate hikes alone likely will not relieve, so insurance executives plan to improve margins through more rigorous underwriting. To meet that top underwriting objective — and several others — company leaders are relying more on analytics, investing in new policy management systems and improving staff expertise. In addition, larger insurers are implementing social media programs and UBI pricing. Some are consolidating or restructuring their underwriting functions to gain operational efficiencies.
Going after the right kinds of customers is how marketing analytics lends a laser-sharp focus to insurers’ marketing spend.
Data, whether generated from internal or external sources is playing an increasingly important role in helping companies more effectively target their marketing. Companies don't need to house all of this customer information in their internal databases, but they should be able to access it and use it for predictive analysis.
By usisng marketing analytics advertising placements of insurers will be better targeted to the bull's eye. They will reach the people they want to reach -- the right customers. Possibly, their media mix will change -- right now they blast everywhere, but the percentages of TV, online and print advertising may need adjusting for a more positive result. Best of all, word-of-mouth advertising begins to take effect. They will now spend less on advertising because they will let the right customers do the marketing for them.
Over the last few years, senior executives, legal teams and IT departments have been have been heavily tasked with protecting their companies from a multitude of evolving legal and compliance liabilities.
Most financial institutions save too much data. While some of this data is important business documents required for day-to-day operations or is mortgage documentation required to be held by law, much of what has been saved has no business value and some could become a liability over time. Saving everything is not a sound corporate policy.
The “save everything policy” exposes a company to breaches and litigation. Information governance allows banks to control Big Data by determining the location and disposition of sensitive data, which protects both the consumer and the company. Once policy is defined, it can be overseen, audited and enforced.
Information governance strategies include such initiatives as eDiscovery, and also provides a platform for defensible deletion and compliance. Today’s information governance strategies include determining the disposition of the content, what records have value, what has no value and taking action on it.
In more than 71 pages, banking and securities regulators detailed precisely how they planned to strike a balance between banning proprietary trading while providing banks with the flexibility to continue to engage in certain market-making activities.
Five federal agencies unveiled a highly anticipated final rule on Tuesday after taking three years to craft a ban that would prohibit banks from 'gambling with U.S. taxpayer dollars'.
The controversial ban on propietary trading, enacted in the Dodd-Frank Act, has proved to be one of the financial reform law's most challenging provisions to implement, forcing the five agencies to work together in a lengthy process that has frustrated everyone involved.
The only way the new information demands of the Volker rule i.e. not exceeding customer near term demands, or explaining trades that heighten compliance risk, can be implemented effectively is through current technology. The volume is too huge and the speed of trading to fast to expect any of this to be done manually or with legacy systems..
Bank of America s tech team is bringing compliance employees closer to the app-creation process in order to hedge against bumps down the road.
Dave Godsman, Digital Banking Solutions along with several other B of A executives, including Hari Gopalkrishnan, B of A's eCommerce, architecture and segments technology executive, took part in a breakfast for analysts and reporters this week in Manhattan. The purpose was to pull the curtain back a bit, and disclose the bank's software strategy. Though fairly cryptic, a few details emerged.
The ubiquity of smartphones, along with banks' need to iterate responsibly (read: regulation) necessitates a high level of collaboration between innovation and legal needs whereas in the past there would have been none. The process, and the growing partnership between departments, has ramped up gradually over the past several years as the bank has perfected its technology. "The business has changed," said Godsman. "We deliver software."
Most midsize commercial insurers rank regulatory compliance as a top-three strategic priority for their companies, according to a new survey.
While carriers already spend significant IT resources on regulatory compliance, the majority of Novarica Research Partners Program survey respondents expect the cost of compliance to increase in 2014. The survey also found that while insurers expect business as usual when it comes to market conduct examinations and financial audits, they expect a great deal more scrutiny around their data and reporting.
Products and processes were cited along with complexity as the top challenges for remaining compliant. “When senior insurance executives talk about their strategic goals for their company, they often refer to speed-to-market, agility, and the ability to rapidly respond to market changes. But regulatory compliance, a critical capability for an insurer, is also increasingly seen as a key strategic priority, not just a tactical process required to keep the lights on. An insurer that is able to rapidly and accurately respond to regulatory demands is also typically an insurer that is nimble at reacting to market demands as well,” said Karlyn Carnahan, co-author of the survey report.
Nearly half of all M&A activity since 2011 has been divestitures, according to a new report from Deloitte. The data reflects banks trying to streamline their business in the new operating and regulatory environments.
Many banks are sharpening their focus in the postcrisis operating environment by doubling down on niche services or shedding what no longer works. the Deloitte study focused on the largest banks, which are simplifying their organizations as part of the lessons learned from the 2008 financial meltdown, as well as in reaction to the onslaught of regulations that followed it.
Still, other experts note that banks' quest for specialization through divestitures or acquisitions has been a major driver of M&A. Essentially, in the current low-rate and low-growth environment, banking has become a lot like a swap meet. "For a while, we saw things like divestitures because banks were trying to survive. Now they are doing it as they look to figure out how they are going to prosper and to differentiate and overhaul their operations so that they can have a few business lines that they are really good at," says Terry Keating, a managing director at Amherst Partners, a financial advisory firm.
While it sounds like a marketing buzzword, data lakes offer an alternative to enterprise data warehouses.
What's the advantage of data lakes to insurance companies? Much of the data that is valuable to the policyholder application and claims administration processes is based on a lot of unstructured data: notes from agents, call center notes, photos of properties before and after damage, sensor data from telematics, geospatial data and social media data, just to name a few. The ability to put all this information together can enable faster access, at lower costs.
The connection between European banks and UK financial services is a lot stronger than you think, Freddie McMahon says.
In the era of Big Data, the level of transparency will be unprecedented. What’s certain is that, over time, even smaller firms that are involved in fraudulent or illegal transactions, if only unknowingly, will have the torch shone on them, too.
Moving forward, real-time, or ‘living’ KYC, will have to become the modus operandi. Living KYC is a Know Your Customer process powered by Big Data platforms that is embedded and ongoing, not one-off.
To stay relevant, insurers must upgrade systems to support multichannel sales, marketing and service requests, direct sales and make use of big data, according to Swiss Re.
The experience of UK personal motor insurance markets, where e-commerce sales now dominate, shows how quickly consumer buying patterns can change. “A 2014 survey indicated that by 2018, insurers anticipate nearly one fifth of their business will come from online sales through personal computers” according to Swiss Re.
The availability of big data also can be used to increase customer retention, Swiss Re said, and through predictive analytics, insurers can try to identify those most likely to defect, when and why, and take measures to boost customer satisfaction and encourage loyalty.
Definition of the "business case" is firmly on the agenda as technology investment decisions are increasingly talked about in many more offices than that of the CIO.
According to IDG's Enterprise Role & Influence of the Technology Decision-Maker Study, no less than seventeen people are now involved in influencing major enterprise technology purchases, compared to just ten in 2011. That's a huge shift in the dynamics of how business needs are determined and tech investment decisions are made.
Change is triggered by its ability to drive business agility and not just efficiencies and lower costs. Definition of the "business case" is firmly on the agenda as technology investment decisions are increasingly talked about in many more offices than that of the CIO.
As organizational departments (e.g. claims, underwriting, accounting, internal audit, etc.) become increasingly dependent on technology, the heads of these departments have become more aware of the importance and role of technology in everything they do. They have naturally become more involved in the technology investment decision making process. The widening IT audience is not a hindrance – it's a clear advantage that will serve insurers well for those that foster an environment of collaboration and mutual understanding. By breaking down the walls between IT and departmental heads, business change is possible in unison and with agility, leveraging technology as a core enabler for growth.
9 out of 10 financial institutions believe big data will separate the winners from the losers in banking, but hurdles hinder progress.
More than 70% of banking executives worldwide say customer centricity is important to them1. However, achieving greater customer centricity requires a deeper understanding of customer needs. Research from Capgemini indicates that only 37% of customers believe that banks understand their needs and preferences adequately.
And what are the biggest impediments to big data success - no surprise here. Too many silos, data is not pooled for the benefit of the organization ranked first with 57% of the respondents noting this was a challenge. Further, many banks have inflexible legacy systems that impede data integration and prevent them from generating a single view of the customer.
It’s one thing to talk about creating a marketing analytics foundation and turning data into insights, another to use those insights to make business decisions. But doing so is potentially a game changer.
The authors' hypotheses: currently, P&C personal lines carriers are not getting reasonable returns on their huge marketing expenditures because they don't understand the role big data can play. Marketing analytics provides the opportunity to make changes and redirect marketing spend in a way that’s supported by what the data suggests.This will reduce ineffective marketing spend and redirect that budget to more productive places.
Aggressive sales and performance goals could be a case of Big Data Gone Wild.
Using the example of a recent article in the LA Times about Wells Fargo which reportedly pushed employees to sell eight products and services to each customer household, the author raises an interesting question. Does rigid adherence to quotas, analytics, and data-driven decisions have a down side, such as motivating employees to be overly aggressive and go against their customer's best interests?
Analytics don't provide the full picture. Combining data with experience and judgment will always produce a better decision than the data by itself. Rather than being fullydata-driven, organizations need to understand which decisions could benefit from more data, and what that better data is. More data is not the panacea. Figuring out which data will help you make better decisions or understand the situation clearly is what creates competitive advantage.
P&C Insurers Look to Data and Analytics for Growth in 2014
According to Ernst & Young's recently released “2014 US Property-Casualty Insurance Outlook best performing companies are taking steps beyond pricing and underwriting discipline, leveraging data and enhanced analytics to refine their market segmentation strategies across all lines. They are also leveraging technology to improve distribution and operating efficiencies.
Regulators are closing in on a final Volcker Rule to restrict proprietary trading, dialing up certain requirements related to documentation while providing some flexibility on market making activities.
After more than three years and 18,000 comments regulators are closing in on a final Volcker Rule that is expected to be tougher than its first draft. The specifics of a final rule are a closely guarded secret, but regulators are expected to strengthen the provision in an effort to ensure it would help avoid multibillion dollar trading losses like JPMorgan Chase & Co.'s "London Whale" episode, while also offering greater flexibility to allow banks to engage in market making activities.
Among other changes, the agencies are likely to increase the amount of information firms must keep track of for capital markets transactions, according to several former regulators with knowledge of the process.
Regulators are nearing completion of a landmark proposal that would institute a liquidity requirement for financial institutions designed to help buffer against a prolonged market crisis.
The three banking agencies have spent roughly 10 months drafting a U.S. plan to adopt the Basel III requirement, which global regulators amended in January to expand the types of "highly liquid" assets and allow banks to build up their buffer over time instead of immediately.
The proposal, which had been expected as early as this summer, will now be up for discussion and released at an open Federal Reserve Board meeting on Oct. 24, according to a notice posted on the agency's web site yesterday.
The article is a must read for anyone interested in getting a better understanding of what the US agencies are considering adopting and the aspects of the rule that may need to be adjusted to fit the domestic environment. Under Dodd-Frank, bank holding companies with assets greater than $50 billion face a liquidity stress test and requirements to strengthen liquidity risk management standards.
System and database administrators accounts are being compromised at an increasing rate, according to a survey conducted by Enterprise Strategy Group.
Asked about their security budgets for fighting insider fraud, 53% of the survey respondents said it would be increasing. However, much of this will be perimeter security rather than techniques such as encryption. "It's keeping the rats out rather than protecting the cheese," says Sol Cates, Chief Security officer for a software security company.
Yet, banks are far more susceptible to insider security threats than in the past. The problem is not that banks are hiring bad actors - it's that insiders have become prime targets for cybercriminals. Much of the fraud is now perpetrated in the name of insiders whose identity and access to networks and sensitive documents have been compromised.
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