One word that catches the eye of almost every customer or business is “simplification” – in terms of processes, transactions, ease of use and comfort.
Digital solutions are indeed useful tools for simplifying customer journeys. As a result, the high frequency of digitalization occurring in today’s society is causing new trends to emerge in customer behaviour and business decision making patterns in financial services.
Digital is reshaping stakeholder dynamics
The digital medium is shaking up many stakeholder relationships. For instance, the buyer-seller relationship is being completely digitalized in the fintech and insurtechs industries. Digital solutions are allowing customers to directly transact with insurtechs and as a result are eliminating the need for middlemen, brokers and such, in the business.
Even though Covid-19 has forced companies to shave down a significant amount of their task forces, the brighter side of the pandemic and the digital transformation acceleration it has provided is the impressive uplift seen for the Gig economy – where organizations hire independent parties for temporary positions. Earlier, the Gig economy was restricted to freelancers but now the scenario has flipped; the use of freelancers, independent contractors, consultants, temporary contract workers and professionals and is on the rise. Once perceived as a hustle, “the Gigs” are now a part of a trillion-dollar industry. This new trend has influenced the pricing of products and services and transformed customer perceptions with reduced price points paired with heightened service efficiencies. Masses of consumers are becoming more focused on the quality of the service or the product rather than being preoccupied with the brand that is providing the service, which is a massive change in customer behaviour and decision making due to digitalization.
Mobile-first customer experience strategies
Many of the emerging new age insurtechs are driving exclusively towards mobile and shutting down their “web apps and voice-based customer care centres” that are operationally intensive. Budget is shifting from operations to enabling digital technologies and clubbing all the services on mobile.
Industry statistics clearly suggest this trend is already in progress and companies need to design solutions accordingly. According to “Business of apps”, consumers will spend triple the time on Twitter via the smartphone app in comparison to a desktop computer. Social media apps have created an ecosystem of customers which are profiled based on their behavior. This kind of customer profiling has enabled the ecosystem partners to find new ways of selling based on the behavioral patterns.
Digital payments: code is replacing cash and cards
For in-store retailers, foot traffic has been a huge disappointment due to Covid-19. Social distancing mandates attached to the pandemic have instead benefitted digital payment companies, as contactless payments are preferred, and physical cash is avoided in order to restrict the spread of the disease. It is estimated that by 2023, $2.73 trillion mobile payments will take place.
Digital wallet companies are offering visually great and intuitive services within their payment apps. The plethora of services available at customer’s fingertips are ones that insurtechs and fintechs simply cannot offer due to various regulations. With this dynamic, traditional banks and insurers are at risk of becoming merely a backend for digital wallet companies.
Health insurance has moved from push to pull
The need for better and preventive healthcare was not a strong priority for many customers pre-Covid-19. This perception has been transformed by the pandemic as people are more aware of various health risks. Currently, there is a splurge in purchasing health insurance policies, and customers are actively involved in finding the best fit for themselves.
Undoubtedly, there is a wave of new behaviors that involve digital mediums of: engagement, payments, transactions and support. These mediums are driving change and drastically influencing decisions made by both customers and businesses alike.