The IDD Directive: an opportunity, only if you can seize it
2018 was a big year for insurance industry and will probably be remembered as the big turning point when it comes to sales models in consulting. The IDD Directive and its succeeding regulations have been introducing major changes to the industry, posing numerous challenges that are – not even so slowly – eroding the ability of brokers and advisors to sell their products.
From politics to finance, the focus is switching to what people need and want. This is why the European Union is moving towards this direction, aiming to increase the level of consumer confidence in the financial world, with transparency and customer satisfaction as key objectives.
But how can we really improve transparency and increase customer trust in finance?
Simple, using the new IDD directive as a lever and as a starting point for switching from a traditional to an innovative business model. In one word: personalization.
Data: an untapped potential
Personalization = effective use of data.
The impositions of the IDD from threat thus become an opportunity: knowing the needs of the people and offering them the best possible product means having the possibility of expanding the information on the customer, or the database on it, which, using special technological enablers, will allow the development of tailor-made Customer Recommendation models.
The clear benefits are:
- greater understanding of the customer and his financial needs;
- new range of products and “tailor-made” services (e.g. IoT Health, Pay as You Drive, Blockchain policies);
- new tools to support commercial storytelling.
From IDD questions to customer fidelization
People nowadays demand a commercial path specifically designed for them, a path that is engaging, effective and truly omnichannel.
How is it possible to do that? First, if carefully designed, the IDD questionnaire represents a very effective tool to profile customers and infer their financial needs. Thanks to the questionnaire, in fact, it is possible to obtain precious personal information with a very high semantic value, which can be used, in a perfectly legal way, to better understand people’s needs: from risk tolerance, both objective and subjective (i.e. linked to psychological and behavioural aspects), to wealth and income. Not to mention the level of economic-financial and digital education that are fundamental to set up an effective communication strategy.
This is a process that allows banks and insurance companies to effectively meet the needs of today’s consumers; old paradigms only make clients escape to innovative realities.
How to provide a customer service that everyone dreams about?
Today, there are new fully digital financial players that offer people ad hoc services and that make the financial/insurance sector a life companion you can actually rely on. Think of crowdlending platforms that allow you to obtain a loan directly from private and institutional investors in a simple and transparent way, without relying on the banking channel, that looks slow and old.
Let’s just compare a totally modern digital banking platform, built on the needs of customers with the rather “stupid” one of traditional bank accounts that, despite having decades of data on spending habits, movements and holiday choices of people, have always been offering the same services.
Thanks to artificial intelligence, it is instead possible to identify the real needs of its customers, avoiding the dissatisfaction that people feel today in interacting with their own credit institution.
Why not anticipate customer needs?
What artificial intelligence can do here is help traditional banking and insurance actors in switching form a rather “old” model to a model that anticipates people’s needs.
Thanks to the availability of so-called Big Data, the financial sector can, for example:
- improve the process of credit rating, granting the right loan to the right person (user X buys a flight ticket every year in December for a holiday trip, so why his bank doesn’t anticipate his need offering him a special loan for that trip?);
- help in managing everyday expenses (there is a significant gap in the gas bill, why the bank doesn’t report it to the user immediately?);
- offer a precise and fast resolution to problems.
In this way, the customer is smartly engaged and not only mortified by long waits and poor and standardized services.
Data analysis? Sure, but clever analysis.
Of course, the ambitions of financial institutions always have to deal with the reality of often limited budgets that privilege investments in back-end systems. Plus, commonly there is a reduced availability of innovation skills within the organization.
All this can be surpassed through the use of the right software of artificial intelligence and machine learning that improve the database of companies and that instead of increasing costs reduce them, thus bringing banks and insurance companies to the same level of the most disruptive technology players currently on the market.
This is done by technologies such as our SideKYC®, which allows each person to be fully profiled. An in-depth analysis integrated with other information (open data) that are not related to the individual himself, but that are used to construct, for example, the environment that affects his behaviour.
The result? The customer experience is thus enhanced and made more effective and, thanks to the interaction with other marketing tools, reached all touch-points and all channels of the costumer journey.
Virtual B Fintech solutions
Virtual B has been working for years in the financial sector, with a close focus on data and data analysis. Our experience has led to numerous solutions that generate value and solve issues for financial and insurance intermediaries.
SideKYC® is an advanced data analytics software created by Virtual B for banks and insurance companies. SideKYC® can profile customers, identify individual needs and map them with the best product.
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