Banking, finance, and insurance sector can gain a lot from the digital boom that is creating waves globally
Digital is the way that the world is rapidly adapting to, following the havoc wreaked by COVID-19. Digitisation cannot be ignored, and people are adapting to the virtual arena in all forms of life, be it entertainment, luxury, or finance. Starting from the simplest forms of payment, cash is slowly disappearing, and even small-ticket expenditures are now being done digitally. Not only is it pushing people to newer horizons, but also opening up new career opportunities.
The digital boom has beautifully modified finance and insurance. While finance is a sector that has absorbed many engineers and IT graduates into it, the one area that we cannot ignore is Insurtech, which is the use of technology in the insurance sector.
Insurtech is any technology that is moulded in a way to enhance the way the insurance sector works. It involves data, consumer wearables, artificial intelligence, and apps to bring in a transformative effect on business.
How does insurtech help?
Like the banking sector, the insurance industry also provides services that generally involves a cumbersome process while buying policies or claiming existing ones. For one, there is always the fear of having to deal with pushy agents, so the process becomes more of a dreaded nightmare than an investment option. Then comes the immense amount of paperwork that makes it difficult for the finest of perfectionists. There is, again, the fear of having claims denied despite the amount of research and organization that goes into it.
This is where technology is needed to serve a customer with what they need. With insurtech, one can buy a policy in one click on their smartphone, thus bypassing the costs you would incur if there was a middleman. The coverage becomes more accessible because there is not much paperwork involved, and the claim process is more straightforward. Both the insurer and the policyholder stand to benefit from this.
Why do we need insurtech?
Insurtech is the answer to a lot of problems that the traditional insurance sector faces. There is a reason why more of the workforce needs to be upskilled in the use of technology to help provide solutions. Here are the areas where the use of technology benefits the sector:
Know your customer process
All companies that provide financial and insurance services need data on their consumers because it helps them establish authenticity and policy framing. Done traditionally, the process is cumbersome and requires a lot of legwork. Technology can save both the customer and the company some pain where the details can be filled and submitted digitally and stored in a cloud for ready access.
Managing claims
While buying a policy, the claim documents seem to pile up to no end. The perfect solution to managing this is blockchain technology, which can create one version of documents. This can be monitored and evaluated in real-time very easily.
Detecting fraud
Insurance fraud is widespread. There is a lot of investigation that goes into payouts. Any chance of an error is virtually eliminated with the use of technology. The depository becomes digitised and can provide an authentic record of a client and their claims. There is the prevention of duplication, and all third-party interference can be done away with. Personal data can be stored on the cloud instead of a ledger, ensuring privacy, always a winning point for the consumer. Such information also helps insurance companies from preventing any sort of fraud. Insurtech can help push more people towards buying policies.
Making contracts smarter
The future is paperless. Contracts in the insurance sector can be digitized using insurtech, which will allow blockchain technology to frame and store contracts. It also helps in tracking and negotiations, thus ensuring authenticity. This works the best for life insurance policies, where the technology helps go through online death certificates to process a claim. It does not require a third-party assessor. Computer protocols take over the process, thus minimizing the risk of fraud.
Making payments easier
A digital pathway is the easiest way to pay today. In the insurance sector, payments are the cornerstones, be it premiums or policy payouts. With a large amount of money being circulated in it every day, the chances of human errors increase. With the right kind of technology, payment can become hassle-free. Buying insurance also becomes a breeze when a smartphone can help with one touch.
Why do insurtech need engineers and IT graduates?
As the ever-evolving insurance sector adopts more technology, people’s demand to create it will jump up exponentially.According to a CB Insights report, the second quarter of 2020 saw insurtech firms making $1.56 billion across 74 deals. This represents a 71 per cent quarter-over-quarter jump in their total funding. This directly affects job opportunities, which also increase as companies look for new talent to take over the technological front.
The opportunities will evolve to find new solutions. This is also an industry that will always have a future. Fast-paced companies are always on the lookout for experts who can innovate and think very quickly. These firms invest a lot in different technologies. If one has the required expertise in artificial intelligence, cryptocurrency, or blockchain, they will always be relevant in the sector and demand. Individuals who know how to stay ahead of their clients and their needs, who can anticipate and react quickly will make it big in the industry, and that is where a good software engineer will shine.
This is the age of big data, so all companies that build technological solutions will collect a lot of data to boost their operations. Data helps in creating forecasts so that insurance companies can formulate better products. Smartphone apps will be a two-pronged solution that will benefit both investors and companies. While the latter can use this to collect data on the customer, the former will see life become more manageable with better payment gateways for premiums.
Data scientists, analysts, AI specialists, and cloud managers are the industry’s future and one that engineers and IT graduates cannot ignore anymore.
A career beckons
The future of the BFSI sector is digital and cloud-based. At a time like this, having a ready workbox with the right technological tools will bring out a bright workforce who will be equipped to tackle every kind of problem that the industry springs at us daily. Upskilling is the need of the hour, and a steady pool of IT graduates and engineers can work wonders for the industry.
The author is CBO of Manipal Global Academy of BFSI