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 3: Launching in the technology sector

Our multi-part video series, Ready to Launch, is focused on unlocking the secrets of launching brands, products and services by exploring real-life examples from Australia’s marketing elite. The series is being produced as part of the Launch Marketing Council initiative by CMO in conjunction with independent agency, Five by Five Global.

More Videos

NetSuite started out as a cloud-based provider of Enterprise Resource Planning software or as NetSuite solution provider, which companies...

talalyousaf

NetSuite to acquire Bronto's digital marketing platform for US$200m

Read more

Thanks for sharing this post, its really good information I get through this blog.CDPO Online Exam Training

Infosectrain01

3 ways Booking.com is improving its B2B marketing game

Read more

Time is of the essence, especially for customer service teams. With chatbots, you can interact and assist customers at a larger scale, al...

Jai

Triple-digit customer database growth, personalised engagement become reality for Stone & Wood

Read more

Hey Emilie - great read, and I particularly liked the section on the pressure of having brand purpose/Gen Z spending habits. It's great t...

Chris Thomas

Have customers really changed? - Marketing edge - CMO Australia

Read more

Extremely informative. One should definitely go through the blog in order to know different aspects of the Retail Business and retail Tec...

Sheetal Kamble

SAP retail chief: Why more retailers need to harness data differently

Read more

Blog Posts

The ultimate battle: brand vs retailer

At the beginning every brand is pure. Every founder with a dream cherishes the brand like a newborn. But very soon that newborn goes out into the big wide world.

Simon Porter

Managing director, Havas Commerce

How the CMO can get the board on the customer’s side

For some CMOs, it’s easy to feel alone in the undying quest to better serve the customer. At times, it feels like the marketing department and the boards are speaking a different language, with one side trying to serve the customer, and the other side more focused on the shareholders and financials.

Jeff Cooper

CMO and board, Business Excellence Australia

The Secret Ingredients of a CX-Led Company Culture

When I talk to organisations around the world about their customer experience strategy, it is often the CMOs and their marketing teams who take the lead. They’re keen to improve the ways they attract and engage customers, and they want to understand the technologies that can help them make their customer experience truly outstanding.

Steven van Belleghem

Author, CX expert

Sign in