digital sales how digital sales concepts in p&c and l&h ...58b2432c-3ebc-417a...reduce...

Swiss Re Reception Russia 2019, Moscow, 17 July 2019Dr. Evangelos Avramakis, Head Digital Ecosystems R&D, Swiss Re Institute, Zurich

How digital sales concepts in P&C and L&H make the difference in future

Digital Sales

remember 1999

2Source: IBM RFID Commercial - The Future MarketVideo Source: https://www.youtube.com/watch?v=k3Fdox5_rg4

3

Source: Emmanuel Eric JOLICOEUR (26,04.2017) Brief History On Mobile Phones. Supinfo

https://www.supinfo.com/articles/single/4322-brief-history-on-mobile-phones

2000

1999

2002 2003 2004 2006 2011

4

Source: Jordan Teicher (29.01.2018) Checkout lines are so 2017. IBM blog

https://www.ibm.com/blogs/industries/checkout-lines-2017/

RFID

RFID

RFIDRFID

RFID

RFID

RFID

RFID

RFID

RFID

RFID

RFID

RFID

RFID

RFID

RFID

RFID

RFID

5

remember 2018

Image Source: https://www.kron4.com/wp-content/uploads/sites/11/2018/10/vlcsnap-2018-10-23-19h19m38s906_1540347593535_59976476_ver1.0.png?w=1280&h=720&crop=1

6Source: Daily News Media (05.03.2019) Japanese startup unveils Minority Report-style AI that can spot shoplifters BEFORE they stealdaily-news-media.com/japanese-startup-unveils-minority-report-style-ai-that-can-spot-shoplifters-before-they-steal/https://vaak.co/

Sources: Wikipedia.org (accessed 25.05.2019) The Minority Report

https://en.wikipedia.org/wiki/The_Minority_Report

Video Source: https://www.google.ch/search?q=minority+report+advertising&safe=strict&source=lnms&sa=X&ved=0ahUKEwjA9ojp3b7iAhUlNOwKHZpuBOkQ_AUICSgA&biw=1200&bih=534&dpr=1.6

Minority Report advertisingBiometric Personalized Ads - Advertisements that speak directly to the consumer in public settings.

7

8

Source: OfferMoments Digital Platform (accessed: 20.05.2019)

http://www.offermoments.co.uk/offermoments-digital-platform/

9

Source: Typology Eyewear (Company Website) accessed 05.02.2019

www.topologyeyewear.com

https://itunes.apple.com/US/app/id1110119242

AR supported personalized eyewearStyle and preview your custom-tailored glasses

10

Source: Genevieve Scarano (02.03.2019) You Can Virtually Try On Sneakers With This Cool App – Geek.com

https://www.geek.com/tech/you-can-virtually-try-on-sneakers-with-this-cool-app-1772785/

https://wanna.by/

https://itunes.apple.com/us/app/wanna-kicks/id1444049305?mt=8

11

Sources: Nike.Company Website (14.11.2018) Nike's New NYC Flagship is the Face of Living Retail. Nike.com

https://news.nike.com/news/nike-nyc-house-of-innovation-000

12Source: Andreea Conway (22.07.2012) Audi with its new digital car showroom. auto-types.com

https://www.auto-types.com/autonews/audi-with-its-new-digital-car-showroom-8986.html

13

Insurance crash experience (Australia)

Source: Lui Gough (24.03.2014) Visited: NRMA Crashed Car Showroom. Goughlui.comhttps://goughlui.com/2014/03/24/visited-nrma-crashed-car-showroom/

14

…so it’s not all about TECHNOLOGY?

Image Source: https://i.ytimg.com/vi/pbzCTMHFlxg/maxresdefault.jpg

reducing customer

effortreducing customer

timereducing customer

costs

Source: Teixeira, T. S., & Piechota, G. (2019). Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption. Broadway Business

Video source: Pexels.

…it’s all about the customer experience !

16

What needs to get fixed in the insu-rance industry

1Customer journey & experience as key driver in digital sales

2New competition and (digital) touch-points impacting business model

3

Agenda

17

45

0

40

35

30

25

20

15

10

5

Source: Hakim A et al. (1998) - Effects of walking on mortality among nonsmoking retired men. New England Journal of Medicine, 338(2), 94-99.

Onlineretailers

Local retailstores

National retailstores

Streaming TV /video/

music service

Mobile phone

providers

Credit card rewards/

frequent flyer programs

Banks Cable TV providers

InsuranceAuto or Home/Renter

InsuranceLife or

Annuity

Insurance as an industry might just be too complex for consumers!The Challenge: Complexity

Percentage of consumers who say these businesses’ products are easy to understand

Reduce complexity – simplify products and processes – for all channels!

18

2x

Source: Simplicityindex (2017) Omni Channel Customer Care, simplicityindex.comDixon M et al. (2010) Stop trying to delight your customers. Harvard Business Review, 88(7/8), 116-122

The Customer Effort Score (CES) outperforms the Net Pro-motor Score (NPS) and Customer Satisfaction (CSAT) in predicting behavior

Predictive powerfor repurchasing

Predictive power for increased spending

NPS

CSAT

CES

In complex industries customer tend to use twice as much the telephone to receive more information about a product or service

If complex then switchchannel

The Challenge: Mobile as a channel experience issue in Europe

Customer Effort – Reducing customer effort pays off Complexity = Channel Switch - Complexity costs*

19

Source: Bain & Company (2017) Customer Behavior and Loyalty in Insurance: Global Edition 2017https://www.bain.com/insights/customer-behavior-loyalty-in-insurance-global-2017/

Note: Channel experience score is defined as share of delighted customers minus share of annoyed customers

The Challenge: Mobile as a channel experience issue in Europe

Channel experience for P&C relative to leading channel 2017 (indexed to zero)

Mobile interactions delight P&C customers – not in Europe

~400~120~110~70~50~15~4~3~2 ~400~120~110~70~50~15~4~3~2

20

The engagement gap in the Financial Services industry

Average interactions per year

>7'500

2'300-2'5002'100-2'300

1'400-1'600

800-1'000

LifeInsurance

Technology companies

Social media

Non-lifeInsurance

MotorInsurance

HealthInsurance

Retail Telco Banking

1 Adapted from: Berger-de Leon M. et all. (2016) McKinsey - Transforming life insurance with design thinking

30-50270-300

70-9060-70

The Challenge: The engagement

Estimated average number of customer contacts over 20 years1

Omnichannel customers: higher NPS, higher penetration… …. and digital interactions matter!

21

Digital interactions are driving NPS and product penetration

Source: Bain & Company (2014) Customer Loyalty in Retail Banking – Global Edition 2014

2.4 2.6 3.0 3.2 3.2Productpenetration*

# digital interactions

0%

10%

20%

30%

22

1011

27

31

Single-Channel

Digitalonly highmediumlow

Omnichannel

NPS Score traditional US banks2014, NPS score in percent

Branch Phone ATM Online Mobile

ᴓ Number of interactionsAverage number of interactions in last quarter, traditional bank respondents, in US, 2014

0

20

40

60

9

24

68

26

13

Branchonly

Digitalonly highmediumlow

Omnichannel

# digital interactions

digital

* average number of products owned NPS = Net Promotor Score

The Challenge: Digital Relationship

22

New competition arriving – this time from outside!…and a significant number considering introducing AI services

Aggregators Start-Ups“Challengers”

Intermediaries

Banks / Insurers

TechPlayers

Established market players New entrants

customers

The Challenge: New competition arriving

23

B2CTRŌV DIRECT TRŌV EMBEDDEDTrōv’s flagship on-demand insurance application

B2B2CTRŌV PRIVATE LABEL Private labeled apps and web front ends for insurers (B2B2C)

B2BTRŌV PRODUCT LINEAPI accessed services offered from the platform, embedding Trōv capabilities

Source: Dowds M, Chief Strategy Officer Trov, Instech London, BT Center 20 June 2017http://www.instech.club/

NPS

70Renewal rate

97%

Source: Lemonade Blog (20.06.2018) We suck, sometimesttps://stories.lemonade.com/lemonade-transparency-review-blog-eced69282ac8

the original the copy

24

25

APIs als the new golden standard:i.e. Lemonade API

Commerce Real Estate Marketplaces

Financial Service

Smart Home Security

Insurance As as Service (IaaS)

Everything Else

Adapted from: Lemonade.com (28.05.2018) https://www.lemonade.com/api

26

Healthcare and Health Insurance shakeup - big tech is preparing

Company

Strengths • Google Cloud Platform

• Al - Cloud infrastructure

• Oscar Health investment

• Verily Life Sciences

• AWS• Alexa• Supply delivery

• iPhone consumer base

• Apple Watch • App Store

frameworks

• Azure• Healthcare NExT• Microsoft

Genomics

Opportu-nities

• Personalized, low cost health insurance2

• Population health• Precision medicine• Clinical decision

support

• Personalized, low cost digital health insurance1

• Medical supply services

• Personalized health benefits

• Personalized health insurance

• Remote patient monitoring

• mHealth

• Population health• Precision medicine• Clinical decision

support

Source: Laurie Beaver (19.07.2018) BIG TECH IN HEALTHCARE: How Alphabet, Amazon, Apple, and Microsoft are shaking up healthcare — and what it means for the future of the industry. Business Insider

https://www.businessinsider.com/alphabet-amazon-apple-and-microsofts-influence-in-healthcare-2018-7?r=US&IR=T

1 Susan Morse (08.02.2018) What the Amazon, Berkshire Hathaway, JPMorgan deal means for payers. Healthcare Finance News

2 Lydia Ramsey & Zachary Tracer (26.03.2019) $3.2 billion startup Oscar Health is plotting its expansion into new states as it moves into a competitive insurance plan market. Business Insider

Source: Mike Peterson (04.05.2018) 7 Times an Apple Watch Helped Save Someone’s Life. Idropnewshttps://www.idropnews.com/news/apple-watch-news/7-times-apple-watch-helped-save-someones-life/70824/10/ 27

28

Apple’s Watch can detect an abnormal

− heart rhythm with 97%1

− sleep apnea with 90%1

− diabetes with 85%1

− hypertension with 82%2

− AFib with 98%3

accuracy!

Source: 1 Tison, GH et al. (2017). Cardiovascular Risk Stratification Using Off-the-Shelf Wearables and a Multi-Task Deep Learning Algorithm, 2 Ballinger B et al. (2018) DeepHeart: Semi-Supervised Sequence Learning for Cardiovascular Risk Prediction, 3 Stanford (2018) Apple heart study

Afib = atrial fibrillation

30Source: Lilla Laczo (05.11.2019) Top 5 HIIT Apps You Should Download For 2019. Shapescale.comhttps://shapescale.com/blog/fitness/top-3-hiit-apps-download/https://healthsolutions.fitbit.com/

31Source: Lilla Laczo (05.11.2019) Top 5 HIIT Apps You Should Download For 2019. Shapescale.comhttps://shapescale.com/blog/fitness/top-3-hiit-apps-download/https://healthsolutions.fitbit.com/

32




3

Agenda

34

Source: creativebrief.com (accessed: 06.04.2018)http://www.creativebrief.com/agency/work/24886/12640/nespresso-brand-strategy-branding---design-innovation-npd-service-design-the-future-of-coffee-experiences-by-futurebrand

35

Source: protospain.com (accessed: 06.04.2018)https://protospain.com/producto-experiencia/Source: protospain.com (accessed: 06.04.2018)

https://protospain.com/producto-experiencia/

36Source: Fletcher Y (accessed:10.06.2018) - How to buy the best Nespresso machine, which.co.ukhttps://www.which.co.uk/reviews/coffee-machines/article/how-to-buy-the-best-nespresso-machine

~x 4

37

Japan Tsunami 2011

Understanding the underlying causality why consumers are buying products.…What has caused the consumer to “hire a product” in order to get the job done?

Prof Clayton ChristensenHarvard Business School

Image Source: TOPMBA (03.10.2013( Harvard’s Clay Christensen: The Wrong Kind of Innovation http://www.topmba.com.br/harvards-clay-christensen-the-wrong-kind-of-innovation/

The new value proposition – from transactions to experiences

38

Commodities ServicesGoods

Price

Source: adapted from: Pine BJ & Gilmore JH (1998). Welcome to the experience economy. Harvard business review, 76, 97-105.https://hbr.org/1998/07/welcome-to-the-experience-economy

Experiences

39

“Eight weeks in, Starbucks Shanghai Roastery is raking in insane sales”In one day Shanghai Roastery makes more than double what a traditional U.S. store makes in an average week.Image Sources: CNN Travel (05.12.2017) - Shanghai's Reserve Roastery: What's it like in world's biggest Starbucks? Shanghai's Reserve Roastery: Inside the world's biggest StarbucksSource: Whitten S (25.01.2018) Eight weeks in, Starbucks Shanghai Roastery is raking in insane sales, CNBC

https://edition.cnn.com/travel/article/worlds-biggest-starbucks-shanghai/index.html?gallery=9

40

Sources: Modiface.com

41

Source: Amanda Cosco (19.03.2018) L’Oreal acquires Toronto-based Modiface. Electricrunway.com

https://electricrunway.com/loreal-acquires-toronto-based-modiface/

42

in % of total)

Source: AT Kearney (2017) Beauty and the E-Commerce Beasthttps://www.atkearney.com/retail/article?/a/beauty-and-the-e-commerce-beast

43

Source: Kyle Wiggers (04.06.2019) Amazon and L’Oréal let you digitally try on makeup. VentureBeat.comhttps://venturebeat.com/2019/06/04/amazon-and-loreal-let-you-digitally-try-on-makeup/

44

Do you know these brands?

45

Mobile E-Commerce shopping apps – most active users (combined iPhone and Android, Q1 2019)

Source: App Annie (20.05.2019) What You Need to Know About Southeast Asia’s Growing M-Commerce Landscapehttps://www.appannie.com/en/insights/market-data/southeastasia-mcommerce/

46

Russia, Google Play Store (Top apps, 09 July 2019)

Sources: Similarweb (09.07.2019)https://www.similarweb.com/apps/top/google/app-index/ru/all/top-free

Konstantin Petrenko (19.11.2018) Which social networks are used in Russia? Quorahttps://www.quora.com/Which-social-networks-are-used-in-Russia

28%

14%

19%

n/a

(new)

Rank Dailyuse*

4%

47

Source: Marina Yalanska M. et al. (2018) Case Study: Tasty Burger. UI Design for Food Ordering Apphttps://tubikstudio.com/case-study-tasty-burger-ui-design-for-food-ordering-app/(accessed 20.04.2019)

48

Fluid and smart interfaces

Source: Ramotion (2016) Car Control - App Interface: in User Interface Design on Jan 28, 2016https://dribbble.com/shots/2487806-Car-Control-App-Interface

50

on demandexperiences

51

Global InsurerSwitzerland (09.04.2018)

[ins.]

Global InsurerUK (09.04.2018)

[insurance]

Global InsurerItaly (09.04.2018)

[ins.]

Global InsurerGermany (09.04.2018)

52

Snapsuresnapsure.de

Wealthfront.comblog.wealthfront.com

Tubikhttps://dribbble.com/Tubik

Oscar Healthmedium.com/oscar-tech

A variety of IoT and AI start-ups are developing solutions for the generation contextual and behavioural insights

53

context360.com theneura.comsentience.com

A variety of IoT and AI start-ups are developing solutions for the generation contextual and behavioural insights

54

context360.com theneura.comsentience.com

55GPS

Motion/Acceleration

Gyroscope

Sentiance delivers insights into consumer behaviorhttps://itunes.apple.com/be/app/journeys-2/id984087229?mt=8 56

Cuvvacuvva.com

Carrotwww.carrotinsurance.com

59

Rootwww.joinroot.com

InsureAppinsureapp.com

Ping An Lifepingan.com

CommunityLifewww.communitylife.de

Ladderwww.ladderlife.com

Folksamwww.folksam.se

60

61Source: WEF (26.11.2018) How the powerful science of behaviour change can make us healthierhttps://www.weforum.org/agenda/2018/11/science-incentivize-behaviour-change-vitality-physical-exercise/Accenture (2019) Life insurance is a dying business

62

600customer

interaction per year

+34%higher activity

days

-30%lower

hospitalisation costs

Higher customer loyalty and satisfaction with lower costs

Source: WEF (26.11.2018) How the powerful science of behaviour change can make us healthierhttps://www.weforum.org/agenda/2018/11/science-incentivize-behaviour-change-vitality-physical-exercise/Accenture (2019) Life insurance is a dying business

Contact Center

Understanding customer journeys is key for key insight generation.How to get insights into non owned touchpoints?

63

Online (incl. mobile)

Agent / “Broker”

Contact Center(i.e. phone, chat)

Paper / E-Mail

Awareness Consideration Purchase

Owned Touch-Points Paid Touch-PointsEarned Touch-Points

Sources: adapted from: Swiss Re (2014) Sigma – Digitaler Vertrieb von Versicherungen, Helsana Marktforschung (Projekt Formutainment, 2013)

Friends & Family

Online Reviews(i.e Expert reviews)

Paid Touchpoint(i.e. Google, Facebook, …)

Customer 1

Customer 2

64




3

Agenda

65

Do you intend to keep your

customer interactions?

Do you assume to loose full

control but stay relevant?

How did you consume MOBILITY lately?

66Video Source: Pexels

….and in the near future?

Source: Cooper Hewitt (2018) Photorealistic rendering based off of concepts in the NACTO Blueprint for Autonomous Urbanism. Copyright © 2017 Bloomberg Philanthropies. Source: Cooper Hewitt Explores The Future of Mobility in New Exhibitionhttps://www.si.edu/newsdesk/releases/cooper-hewitt-explores-future-mobility-new-exhibition 67

….and what about micromobility?

68Image Source: https://www.li.me/hubfs/scooter_revised%202-1.png

….and how many apps do you want to use for all these

mobility services?

69Video Source: Pexels

70

Variety of business setups and data insights

“Connected”Product / Service

DigitalEcosystem

Digital Platform

72

connectedproducts / services

74

digitalplatforms

79

digitalecosystems

80

Digital ecosystems allowing producers to seamlessly integrate

Source: Tan B. et al. (2915) The role of IS capabilities in the development of multi-sided platforms: the digital ecosystem strategy of Alibaba. com, Journal of the Association for Information Systems

Producer /Supplier

Intermediary

Customer

Intermediary

Intermediary

“Traditional Economy” Digital Ecosystems

Further Stakeholderi.e. Service Provider, Advertiser, etc.

Digital Platforms

Outside box - platform providerInner box - platform owner/sponsor

81




3

Summary

82

Rate of change is about to dramatically increase – we might underestimate the technological impact on the long run

Source: Deloitte (2017) Rewriting the rules for the digital age; Deloitte Global Human Capital Trends

Rate of Change

Time

Rate of change catalysed by technology

Technology

Individuals

Businesses

Public Policy

1970s 1980s 1990s 2000s 2010s Today

Businesses are lacking behind technology developments

Rate of Change

Human Adaptability

“the pace is only accelerating”

Source: Friedman, T. L. (2016). Thank you for being late: An optimist's guide to thriving in the age of accelerations (First edition.). New York: Farrar, Straus and Giroux

We are heretoday

Technology

83

Shift from vertical to consumer-centric horizontal markets

Source:: Swiss Re Institute

Vertical markets

…

…

Ve

rtic

al

valu

e c

ha

in c

en

tric

ma

rke

ts

Mobility Housing Health & well-being

Lifestyle

Vertical 1 Vertical 2 Vertical 3 Vertical n

………Functional customer centric markets

Mobility

Housing

Health & well-being

Lifestyle

…

Horizontal customer-centric markets

Health

Education /Working

Living

Free time

Mobility

Customer Journey

84

Competing against (digital) customer relationship

Cash Inflow

Cash Outflow

owned

Consumer Lifestyle

Asset, Liability and Risk Management

Consumer Trust

not owned

consumers touchpoints

Ecosystems

context & relevance

customerempowerment

85

Key factors catalyzing digital transformation DNA –Altogether to be managed simultaneously!

Customer CentricOrg. Design

Digital KPI Design Promoting Behaviors

Foster Collaboration and Culture Change

Digital Talent Hiring and Management

TechnologyPartnerships

High-End Customer Experience

AI & Mobile First Paradigm & Mindset

Customer FocusedMethods & Design

Highly Agile and Flexible Organization

Customer Organization People Technology

Sources – adapted from:Capgemini (13 July 2017) Culturally willing is more important than technically ableCapgemini )2017) The Digital Culture Challenge: Closing the Employee-Leadership GapMcKinsey (2015) The Making of a Digital InsurerBoston Consulting Group (2017) Boosting Performance Through Organization Design

Thank you

86

Dr. Evangelos AvramakisHead Digital Ecosystems R&DSwiss Re Management LtdMythenquai 50/608022 ZURICH, SWITZERLANDDirect +41 43 285 49 73 E-mail: [email protected]

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