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DIGITAL BANKING Tips - 32: Bancassurance

Bancassurance is one of the most profitable partnerships banks have, as the name implies, with insurance companies. This means insurance companies sell their products via bank’s online and offline channels to bank clients. In return, banks get fees or commissions so there is a win – win relationship has been set up between the two parties. Selling an insurance product is not an easy job, selling an insurance product to Millennials could be even more challenging unless there are some gimmicks in place. This article is about “Selling Insurance to Millennials via Banking channels”, if you find this interesting – please keep on reading.

Bancassurance business model first emerged in Europe, in Spain then expanded through the world. Some banks integrated insurance sales into their processes; some others focused on limited number of insurance products and sell them as a value adding product. One way to another, as long as this partnership would be profitable – Bancassurance would be an attractive area both for the banks and insurance companies. However, Millennials have a potential to change this picture and there would be some fine tunings required in order to adapt the changing needs of this new breed of customers. Digital Banking Channels is the way serving them, so selling through these channels is a good way to catch their attention.

Selling an insurance product is not an easy job, selling an insurance product via Digital Banking could be even more challenging. The very first thing that comes to mind is selling the insurance product as a part of banking package or bundle. For example, selling a life insurance together with a mortgage product or car insurance with car loan. The creativity is a critical asset every insurance business professional should have. Considering the types and variety of insurance coverage needs of clients (some examples are hair, legs, breast, death by falling coconut or an aliens attack) – creativity accompanied with innovation may create many miracles in Bancassurance Landscape.

However, this is easier to say than do. Why? Mostly because of changing customer behaviours and expectations. Yes, I have been talking about the Millennials – the new and the most predominant generation today. It is not a secret that they do not like banks and they do not want to spend any money for insurance (together with Pay TV, Weddings, Children, Homes and Cars). It has been some time since Insurance Industry learnt that treating them in the same way their parents – caused very low rate of engagement and loss of business. So it is obvious that “winning hearts of Millennials” (and turning them into profitable clients) take some effort and require some changes.

What kind of changes are we talking about for Insurance business? Let’s do this in Scottish style and answer with another question: What kind of generation is it? Well it is a kind of generation who has overly protected parents and they stay or live at family home till very late age. They believe in SHARING (car, couch, house), not OWNING. In other words, they want accessibility not ownership. Plus, most of them are quite slow to launch anything – like living on their own, start family, buy a house etc. We should also consider that there is a huge sum of Student Loan debts on the table too. As a result, they have fewer assets and nothing to protect. Whether we like it or now, this is the segment who needs to be targeted. So what was the original question, oh yes - What kind of changes are we talking about for Insurance Business?

First of all, we can forget all other channels and focus on only Digital Channels in order to serve Millennials. There hundreds of reports that state their preferred channel of business is Digital, ideally Mobile. Just for a moment close your eyes (can you see what I wrote here now, under normal conditions you shouldn’t! OK then please open your eyes – this was not a good idea!) and think about the five stages of Insurance Selling: Pre-Purchase, Purchase, Pro-Purchase, Claims and Feedback. If you can successfully take each and every of them to DIGITAL, then you are done.

Second, there is a need for a good friend that is called INNOVATION. Insurance industry needs Innovation today more than ever in its history. Think about some new technology products like Wearables, Internet of things (or connected devices), Self-Driving Cars, Sharing Economy – these are the game changers. Depending on the approach, they could be the best friend or worst enemy of insurance companies. What is your reaction to these game changers: fight, ignore or work with them? (at this moment, you should say “work with” them – I put the others just to provide some options for the question. As in reality there are no such options!!)

There are millions of opportunities available thanks to digitalization, sky is the limit for any of combination of creativity and innovation. Let’s think about Location Based Services, Mobile Payments, Home Automation systems or Mobile Scanning. How about augmented reality or object recognition for instant quotation? The opportunities are endless…

Millennials need to trust you in order to make business with you. I mean an earned trust, not a paid one. This requires understanding them and respecting their choices. If they like sharing, rather than selling car insurance – usage base insurance is product that should be offered them. If they find your way of doing business boring – then gamification is the thing you need. Look at the trends at P2P payments, then you will see that there is a need for P2P Insurance too. This new generation of clients love personal and authentic offers; we can only provide such offers by knowing them well. As they are on Digital area, Digital insight coming from social media plays a very critical role for success. So let’s open some space for such data in our databases and place some software to turn this data into meaningful information.

Both banking and insurance business are subject to huge disruption unless the right moves done.  Millennials are fast and agile, much more than the banks and insurance companies are. Do not expect them slow down, speed up to catch them…



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