The term fintech has been in common usage for quite some time now; it stands for technological innovation applied to the financial sector: a paradigm shift made possible by Digital Transformation.
What does it translate into? To put it briefly: new business models, new processes, products and services, disintermediation, simplification, new market players, and therefore many new opportunities to be seized.
The discourse is similar when we talk about insurtech: a label under which we include everything related to digital technological innovation applied to the Insurance industry.
Fintech and insurtech, it almost goes without saying, are two driving forces following the same direction, and they are proceeding by reinforcing each other.
To get a general idea of the size of the market we’re talking about, consider that in the first half of 2022 alone, global investment in fintech was $107.8 billion. In the previous six months (the second half of 2021) this figure was $111.2 billion.
Let’s move to the more specific field of insurtech. At the end of 2021, the market value stood at $3.85 billion. And the growth estimates? They are impressive: the compound annual growth rate is estimated at around 51.7% for the period up to 2030.
The Italian insurtech market has also begun to move at a good pace. In the first half of 2022, investments exceeded €200 million. The previous year, in the same period, this figure stood at around €60 million. As we can see, this was a marked increase, but Italy still lags behind compared to other European countries such as Germany and France. Seen from another point of view, we could say that there is very wide room for growth in the Italian fintech and insurtech ecosystem.
The insurance sector was initially held back on its path to digitization by the slow and bureaucratic procedures that have always characterized it, all the more so in Italy. But now, things have completely changed.
The path drawn by this shift has a very clear direction: it goes from digital identification and authentication systems to the collection and exploitation of data—the most valuable asset for any company today—to the creation of a new relationship with customers.
In this post, we will focus on three decisive areas: the issues of digital identity and electronic signature; legally compliant digital preservation; and finally, from CRM systems to CCM that are digital and personalized.
Digital Identity and Electronic Signature
Let’s start with the concept of “electronic identification,” as it is defined on the official AGID (Agency for Digital Italy) website.
“Electronic identification is a process in which personal authentication data is used in electronic form to uniquely identify a natural person and a legal entity”.
In short, it’s a set of information that uniquely identifies a specific person, within a given computer system.
Not only that: digital identity makes it possible to establish that an individual person, at a specific time, is performing certain actions online.
Without getting lost in excessive technicalities, let’s get to the point: through digital identity systems, all on-boarding procedures in insurance can take place directly online, without analog steps, and still in compliance with all legislative regulations and with the maximum security.
The electronic identification system with which we are all most familiar is certainly SPID. According to data from the Digital Italy Agency, the total number of SPID digital identities in Italy exceeded 35 million as of January 2023.
Of these, more than 6 million have been activated in the past year, with the trend accelerating steadily and decisively, triggered especially since the emergency phases of the Covid-19 pandemic. During 2022, there were more than one billion logins with SPID.
Then there is the issue of the CIE, the Electronic Identity Card: by the end of 2022, more than 32 million Italians possessed the CIE.
And, of course, the electronic signature tool fits into this groove. Signing documents and contracts remotely and from any type of device, precisely through electronic signature solutions, is now what users expect. Integrating these tools into your processes is therefore a key step for improving efficiency, but also for providing a better customer experience.
Very briefly: public adoption of these tools is at an all-time high. And insurance companies must keep this fact in mind and use it to their advantage.
Compliant digital preservation
To address the topic of digital preservation we must establish a preliminary awareness: that of the difference between dematerialization and digitization. Dematerialization processes refer to the simple replacement of paper documents with their electronic counterparts. Digitization goes further.
Only through digitization can paper documents and analog processes be completely eliminated, as digital counterparts take on full legal and evidentiary value. There are many benefits of digitization for fintech and insurtech companies. First of all, it saves money: these are the direct and indirect costs that come from paper, space to store it in, postage, etc. And, when it comes to the Insurance industry, the amount of paperwork can be (and almost always is) very important. Of course, it also saves a great deal of time.
Then there is the efficiency in terms of search time: unearthing a packet amidst a mountain of papers may not be easy. And think about how complicated it can be to search for only a few specific elements within a single document.
With digitization, these problems cease to exist: you can search effectively, in a targeted way, with near instant results.
With standardized digital storage, moreover, the risks of loss, wear and tear, and compilation errors are drastically reduced.
Then think about the aspect of sharing entire documents or parts of them: in a digital environment everything is simple and immediate. In analog, the same process is slow, cumbersome, and full of risks.
Also let’s not forget the aspect of transparency, and, above all, the possibility of exploiting your document repository on different levels that were previously unthinkable. Think of all that can be triggered through shrewd analyses of big data, or – more so – of the “smart data” or “deep data,” that enterprise documents are full of.
But that is still not all. Digitization produces a number of opportunities that go beyond simple fulfillment: opportunities that start with electronic filing and then impact CRM (Customer Relationship Management) and CCM (Customer Communication Management) processes in a positive way.
We will focus on these opportunities below, in the final section of this post.
From CRM to CCM
The trajectory in this post has centered on the areas of fintech and insurtech concerns, in particular, the delicate stages of on-boarding. We started with digital identification and authentication tools. And we moved on to the topic of digital archiving and regulatory storage.
We are left to outline one last step, which in many ways is the most decisive one.
The most important fruit of digital archiving, in fact, is a CRM (customer relationship management) system that is extremely efficient, smart, and can be used at a great level of depth. To put it another way: an invaluable mine of data on all of your customers.
What does all of this translate into? Into an unprecedented amount of knowledge of your target audience.
Knowledge that, in turn, is a breakthrough in communication and in the relationship between the insurance company and the individual insured. In short, revolutionizing CRM systems in a digital sense has an extremely positive impact on CCM (Customer Communication Management) systems as well. And what is the keyword of the CCMs of the future? Personalization.
Starting with data analysis, companies can build a one-to-one digital communication with their customers. A real tailored dialogue, based on individual risk profiles, of course, but also on the characteristics, needs, and desires of individuals. Pay attention to this data! The Insurance Industry is the third largest manufacturing sector with the highest “planned churn” rate: this has grown from 19.5% in 2018 to 22.5% today.
In short, everything revolves and will increasingly revolve around the issue of Customer Retention: it is the first concern and goal for companies in the industry. And the path to achieving this goal passes through the ability of companies to create a new relationship with individual policyholders. With the tools offered by specialized companies such as Doxee, you can integrate certification and authentication tools with electronic signature tools, all the way to digital preservation. Finally, to personalized marketing and communication tools. Not surprisingly, an industry giant AXA has relied on the services offered by Doxee with the goal of reducing the cancellation rate by customers at the sensitive time of policy renewal.