Digital refinement: New opportunities for growth in the bancassurance channel

Global bancassurance sales grew across all regions in the past decade, outpacing other channels in both life and nonlife products. Due in large part to low starting penetration, Asia–Pacific posted the largest contribution to bancassurance growth in absolute terms, while Europe and Latin America experienced among the highest growth rates in sales. Life products are the focus of bancassurance growth in Asia–Pacific and Latin America, as banks are increasingly motivated to increase revenues in the face of shrinking net interest margins. As banks continue to hunt for new sources of noninterest income, European bancassurers are experiencing more growth in nonlife product sales.

A survey conducted during McKinsey’s annual Global Bancassurance Forum in Rome last month confirms that bancassurance leaders are seeing this growth firsthand: 72 percent of respondents said that bancassurance channels experience more growth relative to other channels.

The next frontier in bancassurance: A sophisticated digital presence

Despite marked progress, obstacles to further growth remain. For one, sales processes for insurance products remain complex and clash with changing customer expectations for more simplicity and a seamless customer journey. Plus, insurers and banks must navigate new regulations around product bundles, sales processes, customer accessibility, and customer retention.

While industry players might have previously debated whether to go digital, the opportunity is now undeniable, and leaders could shift the conversation toward how to mature their digital presence. There are many use cases for digitization, from streamlining processes for “ROPO” (research online, purchase offline) customers to enhancing customer journeys for stand-alone sales to optimizing sales funnel, to name just a few.

In Europe, most of today’s digitized bancassurance use cases are attributable to a small network of “digital growth champions” that are pulling far ahead of the pack. From 2016 to 2017, these champions have demonstrated new business sales growth of 17 percent, significantly outpacing sales growth of all other players we examined.

Three steps toward sophisticated digitization

Despite high interest in digitization as an enabler of growth, most banks have been slow to digitize their bancassurance products and customer journeys. Those that are early in the journey would do well to follow the lead of digital champions in three specific ways.

1. Lay the foundation for digital and analytics capabilities: Our research finds that digital sales do not cannibalize traditional growth but rather increase sales growth overall. For example, stronger personalization based on event triggers or interaction data can boost sales outcomes by 20 to 40 percent. In addition, real-time quoting and prepopulated applications via advanced analytics can improve the customer experience by fostering simplicity and transparency. Installing an upgraded IT system and updating the operating model accordingly to enable such processes is crucial.

2. Building partnerships across ecosystems: As ecosystems reshape traditional sectors, bancassurers must better define their role to ensure their channel remains relevant. As such, leading banks and insurers are actively seeking new types of partnerships across a broader product scope and wider geographical footprint. By following suit and partnering with additional services and product offerings via digital platforms and ecosystems, bancassurers can sharpen their value proposition for customers and capture cross-selling opportunities.

3. Putting the customer at the center of all decisions: Customers should lie at the heart of any bancassurance strategy. Therefore, a customer-centric mind-set should influence every decision, from paring down to a simplified product portfolio to building a seamless customer journey across multiple channels and points of contact. Furthermore, bancassurers should be obsessive about offering best-in-class services and support across both digital and physical channels. To do so, banks and insurers will need to work together closely to empower all the functions involved with agility.

The bancassurance channel offers substantial growth opportunities for players that are ready to refine their approach through digitization. By laying the foundation for digital and analytics capabilities, building partnerships across ecosystems, and continuously putting the customer at the center of all decisions, bancassurers can achieve significant growth and help make their organizations more resilient in the years to come.

The author would like to thank all those who attended the annual Bancassurance Forum in Rome on May 23–24, 2019, to discuss the state of the industry and how new trends and innovations can shape the way forward. See you next year!

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