Bancassurance expansion and digital transformation

Bancassurance is a key strategy for banks to offer integrated financial solutions to their customers. To succeed in this competitive market, insurance providers will need to work hand-in-hand with their banking partners to leverage digital technologies to enhance their value proposition and customer experience. Data analytics is a crucial component of digital transformation, as it enables banks to understand their customers' needs, preferences, and behaviours. By using AI tools, both insurers and banks can analyse the data from various customer touchpoints and generate insights that can optimise the bancassurance process.

For example, AI can help banks segment their customers based on their risk profiles, life stages, and financial goals, and offer them personalised and relevant insurance products and services. AI can also help automate and streamline insurance processes, such as claims management, underwriting, and policy administration, and provide faster and more convenient service delivery.

One of our award-winning innovations in Hong Kong is the Easy Claims online platform, which provides a simple and secure online claims journey for our customers. Data privacy and security are essential factors when applying AI in enhancing the customer experience. As a bancassurance provider, we are committed to both innovation and data protection.

Another example is for FNOL (first notice of loss) to be made available online, which allows customers to easily and conveniently submit a claim 24/7 with uploading of required documents digitally. Across the region today, we have already implemented online FNOL in most of our markets. It has enabled us to evaluate the damage, allocate adjusters if needed, and resolve claims more quickly and precisely, creating confidence with today’s customers who have limited time.

In Singapore, we have deployed significant resources on digital enablement, from the digitalising of our front-end customer portal to the automation of claims management, fraud detection, scam prevention and provision of straight-through payment options. 

Our API strategy with our bank partners has also been instrumental in scaling our business offerings online. Through APIs, we can onboard our retail products and services quickly to the banks’ multiple platforms and increase accessibility to customers on 24/7 basis.  Importantly, the technology allows for secured data exchange for functions such as policy application and payment processing. There are many opportunities with APIs as the building blocks for digital connectivity and helping us to generate further insights into our customers’ needs and user behaviour.

In the realm of AI, we have also tapped on human-like talkbot to support customer service. And with Generative AI set to be the next big wave, such technological innovations can unlock further value - whether it is to facilitate more personalised coverage, accelerate underwriting or the claims management process. To this end, our goal remains to work together with our bank partners so that we can pivot towards a fully digital customer journey that creates value for our policyholders. 

The digital landscape has also changed the expectations of customers, who now demand immediate access to information that can help them make purchasing decisions. To meet their needs, we have to offer personalised and relevant bancassurance solutions that fit their life stage and lifestyle, and that are easy to obtain and comprehend, with flexible coverage options. This requires strong data management capabilities to deliver the right solutions at the right time. Moreover, we have to ensure digital trust and security in all our bancassurance transactions and processes.

In Singapore, we will be implementing an anti-scam digital solution to facilitate the verification and reporting of malicious communication and a streamlined access to cyber insurance for local businesses.

Adding to that, COVID-19 has increased people’s risk awareness and this interest continues to manifest in their spending on health insurance and other pandemic-related coverages. Singapore, like any other developed countries in Asia, is facing a rapidly aging population that would require insurance policies to focus more on preventive care. With consumers’ needs becoming more complex, it pays for bancassurers to strengthen their data management capabilities in order for them to better anticipate and support the holistic needs of their customers.

Different jurisdictions have different rules and standards for bancassurance, such as banking, insurance, and consumer protection authorities, each with their own objectives and requirements. These may change frequently and unpredictably which increases operational costs and risks for bancassurance providers. The complexity also makes it more challenging for bancassurance providers to keep up with the changes and to plan their strategies across different markets.

When it comes to product innovation and digital distribution, some markets are advancing better than the others, often because bancassurance has more regulatory hurdles and constraints than other business models such as e-commerce platforms. This means that bancassurance faces more difficulties in competing and reaching customers in these markets.

Singapore has always positioned itself as a financial hub and has a favourable regulatory environment for financial institutions to do businesses here. Banks and insurance companies are regulated financial institutions and at the end of day, both parties need to hold high standards in compliance around personal data protection, and preventions of money laundering and terrorist financing.

Insurance distribution has changed in recent years, as consumers have more choices than just banks when they want to buy insurance. They can access insurance products at the point of relevance, when they need them most, rather than relying on bancassurance. This is the trend of embedded insurance, which is growing in popularity.

Banks still have a lot of advantages and opportunities in the insurance market, because they have a long-term and trusted relationship with their customers, as well as rich data and analytics on their personal lifestyle and life stage. They can use the rich data to customise and offer insurance products that are relevant and suitable for their customers' needs. For example, they can embed and bundle general insurance solutions, such as travel insurance, home content insurance, personal accident insurance and more in relation to these needs along their customers’ journeys with the bank.

Bancassurance remains a prominent growth channel in Singapore. Whilst distribution through agencies and financial advisors is still prevalent in Singapore, insurers are increasingly turning to digital distribution channels to service their retail customers. Bank partners are also pivoting to digital channels as more customers shift to online transactions as opposed to physical visits to the branches, and this has enabled insurance distribution to become more cost efficient, leading to better bottom lines for insurers.

Within the commercial insurance side, insurers are also developing digital portals for SMEs to purchase and access their policies directly. For large corporates and regional insurance programmes, these are still typically intermediated by brokers for their risk advisory expertise.

Bancassurance is growing due to the rising need for insurance protection, the digital transformation of banking and insurance industries, and the regulatory support for cooperation. These factors have different impacts in different markets but generally for the region, traditional banking ecosystems are changing to include partnerships with e-commerce players that are not limited by conventional banking practices, and players are looking for ways to innovate and diversify their business models. As a result, the scope of bancassurance is expanded.

Technology is enabling banks to use data more effectively, and to align with customers’ journey and their needs and preferences. With that, digital bancassurance platforms will increasingly offer a better customer experience, personalised recommendations, and data-driven insights. This will make it easier for agents to provide information, for customers to self-help, and for more insurance solutions to be available, making them more accessible and efficient. At the same time, we can also be more creative in our offerings.

While digital banks are emerging in the region, traditional banking players are also enhancing their digital banking capabilities rapidly. This leads to the expansion of partnerships to include ecosystem partners such as fintechs, e-commerce platforms, and super apps.

Bancassurance penetration still has a lot of growth potential in this region. With technology and data enabling players to level up their game, the traditional model is evolving to suit customers’ preferences. As banks find ways to optimise their business profitability while also delivering value to customers, insurance providers will need to keep up and also innovate on all fronts, evolving with the banks.

Bancassurance will continue to thrive given the banks’ extensive customer base and multiple touchpoints, they do serve as crucial distribution channels for insurers.

Besides some of the established bancassurance partnerships in Singapore, digital banks have also emerged in recent years, fuelling the growth of the bancassurance market.

Operating purely online, these digital banks are also partnering insurers to offer protection coverages for their customers. The bancassurance landscape will continue to evolve with more players and availability of digital distribution channels to reach out to more customer segments, spurring further innovation and expanding the accessibility of insurance in Singapore and in the region.