Why financial services companies should be in fear of the tech disruptors

Latest Capgemini report paints a disrupted picture of the financial services sector

Financial services companies have long feared the world’s technology giants would start coming after their customers, and it appears those fears are not without foundation.

A new report from Capgemini has found that despite the millions of dollars insurers spend on building their brands, many younger customers would be quite happy to shift their business into the hands of the world’s tech giants in exchange for a better experience.

It is a finding that should be concerning for brand owners across the financial services sector.

According to Capgemini’s annual World Insurance Report 2018, almost 30 per cent of customers globally are willing to buy insurance products from big tech firms such as Amazon and Google. That has grown significantly from the 17.5 per cent who reported they would do so in 2015.

Vice-president for Capgemini Australia, Mohit Jain, says that rate of change will only go up.

“The market is not fully tested, and they have not launched,” he says. “But very subtly - and in some geographies not so subtly - they have been marketing themselves and promoting in social media what they are doing.

“These results really help reconfirm for these big tech firms that there is a market getting ready for it.”

The report points to numerous examples of big tech firms investing in financial services products, such as the Amazon Protect service, which launched in the UK in 2016 offering protection against accidental damage, breakdown and theft of Amazon purchases. Amazon is also collaborating with Berkshire Hathaway and JPMorgan to create a healthcare company to serve its employees in the US.

Similarly, Apple has been making inroads into health insurance, while Google’s owner Alphabet has invested in numerous insur-tech firms. Jain says the attraction for big tech firms to move into financial insurance comes from their common origins as data-driven industries.

“There in lines the threat to the incumbent firms, is that the big tech firms have been natively built as data organisations, able to harness real time insights,” Jain says. “Once the big tech firms sort out the trust factor with the underwriting process, and they sort out their distribution channels, this will go quite explosive, very quickly.”

That big tech firms have any chance of winning customers away from traditional insurance providers is based in the experience consumers believe they will provide. Jain says the report reconfirms Gen Y and the tech savvy groups are far more likely to churn for better user experience with the big tech firms.

“They have simplified customer experience for their own native flagship products,” he says. “With the financial institutions, typically they have not been as simple.”

Hence Jain says there has been a concerted effort among incumbent insurance firms to change the user experiences that they offer, along with the operating models that sit behind them, to create simpler and more flexible products. And in many cases, they are doing so in conjunction with fin-tech firms.

But it seems they still have plenty of work to do. The report found that Ausrtalian insurance firms had the greatest lag in customer experience when compared to their counterparts in banking. While 42.3 per cent of respondents had a positive experience with their bank, only 29.2 per cent could say the same about their insurer.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu

 

 

 

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

Launch marketing council Episode 5: Retailer and supplier

In our fifth and final episode, we delve into the relationship between retailer and supplier and how it drives and influences launch marketing strategies and success. To do that, we’re joined by Campbell Davies, group general manager of Associated Retailers Limited, and Kristin Viccars, marketing director A/NZ, Apex Tool Group. Also featured are Five by Five Global managing director, Matt Lawton, and CMO’s Nadia Cameron.

More Videos

Great read. I agree that it should be a perfect balance between interacting with your customers and knowing your brand. As a business, yo...

Caroline Scott

7 ways CMOs can improve their customer engagement game

Read more

Very true. Team development helps improve collaboration among the team members. I was able to improve my team's collaboration skills by t...

Quent Sinder

Why empowering others can help make you a great leader

Read more

CRM is a very good software that can help you succeed in your business. In my company, this system has allowed me to improve customer rel...

Anna Janicka

Sensis rebrands to Thryv and brings business software to Australian SMBs

Read more

AI Leasing Assistants have finally arrived for the multifamily industry. With so many to choose from it can be hard to figure out which i...

Alice Labs Pte. Ltd.

CMO's top 8 martech stories for the week - 6 May 2021

Read more

Nowadays, when everything is being done online, it is good to know that someone is trying to make an improvement. As a company, you are o...

Marcus

10 lessons Telstra has learnt through its T22 transformation

Read more

Blog Posts

Why if marketing is all you do, you’ll never be very good at it

OK, so you’re probably thinking: “Here comes another article to badger me about living in my bubble.” And also, “I bet this bubble-bashing piece will go on to explain how I can achieve better results through some heady dose of new life experiences, new routines and annoyingly different opinions on social media.”

Dane Smith and Toby Harrison

Ogilvy Australia

A leader’s role in rebuilding a culture of confidence

Every day, there are new predictions and studies on the future of work, the state of the economy and the unfolding global pandemic. All of which creates uncertainty and heightens the imperative of effective leadership.

Michelle Gibbings

Workplace expert, author

Confused About Your Customers?​

​I've worked in brand and marketing for more than 20 years. But there’s one area where I’ve found myself going around in circles and I must admit I'm becoming increasingly confused.

Rich Curtis

CEO, FutureBrand A/NZ

Sign in