“We’ve seen two years’ worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security—we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything.” — Satya Nadella, CEO Microsoft
This statement was on April 30 – just two months into COVID – and reflects the pace of change and acceleration of digital transformation across all industries, including insurance. The pace of change in insurance continues to gather speed and dominate C-level discussions and planning.
Today’s changes require insurers to gain clarity on how to succeed in the future of insurance. Future market leadership will be defined by a new digital foundation and business model that embraces customer, technology and market boundary changes with vision and energy. This year’s Strategic Priorities report found that forward-thinking leaders are digitally transforming their current business, while also disrupting it by building their business model for the future. The gap between Leaders, Followers and Laggards over the last year and the next three years is staggering:
- In the past year, Laggards had a 41% gap to Leaders; and Followers, had a 15% gap to Leaders.
- Over the next three years, the gap widens, with Laggards falling 62% behind Leaders and Followers trailing Leaders by 21%.
The era of succeeding as a “fast-follower” is long gone. Today’s Leaders are reallocating their investments into digital transformation that gives them a compelling, engaging, customer-centric approach that differentiates them.
How do your strategies align to what Leaders are doing? What specific plans can you take to improve your odds of success? How can you accelerate your digital transformation? These questions and more are what the just-announced strategic alliance between Majesco and KPMG are focused on: to provide a sustainable, risk-optimized route from strategy through execution.
Digital Maturity
Gartner’s Emerging Risks Monitor Report from earlier this year noted that “organizations are concerned about their ability to keep up with a rapidly changing business landscape, driven in part by concerns about their own organizations’ lagging and misconceived digitalization strategies.” This is a profound statement. Insurance still embraces decades of legacy business assumptions and technologies that are roadblocks on the path to digital maturity.
Why is this important? Because KPMG’s research, compiled from various studies, found that digitally mature organizations outperform less mature organizations. How? Digitally mature organizations had 25% higher revenue growth and 31% higher EBIDTA over the last three years, 11% higher Net Promoter Score and higher speed to market by 17 months! Digitally mature organizations not only operate more effectively, they are obsessed with their customers and with defining, unlocking and preserving value for both the customer and their business.
For too many insurers who lack digital maturity, this difference and the growing gap between Leaders and Followers and Laggards should be a strong motivator to move forward on the journey and get ahead of the curve … now.
See also: The Rules of Digital Transformation
The Path to Digital Maturity
Visionary leaders see the market, customer and technological trends as a many-fold opportunity for insurance — and are preparing to use new sources of data, reach new market segments, offer innovative products needed by customers, create exceptional customer experiences, leverage new channels and more. KPMG’s recent report, 2020 CEO Outlook, found that the top priorities were focused on: digitization of operations (74%); new digital business models (70%); the creation of a seamless experience (73%); and a new workforce model augmenting people with AI (66%).
Majesco’s research echoed a similar sentiment and indicated that leaders are moving forward with a cloud-based no-code/low-code platform using microservices and open APIs (64%); are envisioning and experimenting with new digital experiences (68%); and are focused on digital ecosystems and partnerships (45%) that will allow them to stay out ahead of the trend and the marketplace.
This is why Leaders are accelerating their digital journey across three key areas as depicted in Majesco’s Digital Maturity Model (below):
- Digitize - Create Portals for Traditional Products & Channels for Digitization & Automation of Existing Processes
- Optimize - Expand Customer Engagement Beyond Transactional Interactions to Broader Customer Experiences
- Innovate - Launch Innovative Products & Services to Transform to Digital Operating and Business Models
Insurers can start at any point on this maturity curve – from focusing on today’s business or by creating the business for the future. Regardless, having a single digital no-code/low-code platform with rich insurance content and a robust digital ecosystem of partners to enable this journey across a wide array of business scenarios is crucial for success.
But acceleration means traditional methods have to be adapted to meet the time pressures.
Digital Maturity — From Good to Great
The book by Jim Collins, "Good to Great," published nearly 20 years ago, is still so relevant in today’s digital age. While many different concepts were discussed in the book, the key to success was leadership. A key to that leadership is having the right people in the right positions to create an environment for success. They have a vision and goals for success and constantly review and act on data or results to “make it better.”
In today’s digital world that is about creating an environment that enables “test and learn” and innovation. And the theme is speed to market.
See also: Optimizing Insurance’s Role in the Pandemic
Companies that procrastinate are risking irrelevance, because, as the pace of change accelerates, their ability to adapt diminishes. This is why taking action now is crucial.
