Leading by insight should deliver insurance solutions aligned with what customers actually want. Today’s explosion of data gives us unprecedented knowledge of both our customers and the insurance market. This data focus can lead to new insights around how to save costs and drive efficiency through improved business processes. Importantly, these insights can also be used to improve customer engagement.
Everyone in Financial Services has an equal responsibility to make customers feel safe when they buy financial products. But trust has to be earned, it is not a right. Given recent damning headlines, one of the biggest challenges for the financial service industry must be winning back customer confidence. In ‘cutting the wrong corners’ I touched on the woes of TSB last month. Their story was followed by problems at Visa when the payment system crashed, leaving people unable to transact.
The Insurance industry is not immune. Earlier this year, research by Protection Review’s The Syndicate stated that almost half of Britons cite a lack of trust as a reason for not taking out protection policies. The report, which surveyed 1000 protection policyholders and 1003 non-holders revealed that just one in four respondents said they trusted insurers.
Decades of distrust
This lack of trust has built up over decades and for a variety of reasons. The recent TSB and Visa headlines are simply the latest in a long line. These high profile cases may hit the headlines, but everyone in the financial service industry bears a responsibility to get things right for the customer, every time.
Unfortunately there is no quick fix, although too many organisations are looking for a short cut. Shareholders exert pressure to increase revenue and cut costs immediately. They rarely think long term. However, respect and confidence can be lost in a heartbeat. Winning it back takes a genuine desire to put the customer first and will take time and real effort.
So what should we change?
There is more business information available than ever before. With the right company culture, this information will be used to put the needs of the customer at the forefront of every business decision. Cutting staff numbers? How will that affect the service we deliver to the customer? Changing product terms? How can it be managed so the customer really understands why and how it affects them? Business Transformation? How will it transform the customer experience in a positive way?
Every change, however big or small, needs to be quantified from a customer perspective. ‘Treating Customers Fairly’ isn’t just a phrase, it is a formal requirement set down by the FCA to ensure financial services are delivered in a way that is never detrimental to the customer. When you really analyse the FCA objectives, ‘treating customers fairly’ simply means customers should be treated in the same way as the people you care about most, your friends and family. So what actions could be most effective?
The right decisions need to be made at the Executive level. Most organisations value data that will help them understand the needs of their customers. Much has been written about big-data analytics that will help shape company strategy. With the technology available, we have a huge opportunity to radically improve customer engagement. But, and it is a big but, all the insight must lead to positive action driven by decisions at board level that are always based on what is best for customers.
We have a collective responsibility
Everyone involved in the Financial Service market has a responsibility to regain customer trust. Product providers, distributors and technology companies have to work together to focus on the customer.
There is a huge cost for companies to distribute their products though volume players such as supermarkets, banks or aggregators, consequently they often focus on the needs of the distributor rather than of the customer.
Likewise, the distributors themselves have ever increasing costs for attracting the customer. They spend millions on marketing through channels such as Google or television advertising, so they press for margin. This has the effect of pushing up prices or reducing product value, all at the expense of the end customer.
Technology has a huge part to play too, by providing safe and effective solutions for product fulfilment.
Where do we go from here?
So, where do we go from here? A good place to start would be to instil a culture across the Financial Industry of putting the customer first. The Financial Service Industry has a huge amount of data available. ‘Leading by insight’ can translate this information into solutions that actively engage our customers and give them products and services that they value. Only then will we see the trust and loyalty of customers returning.