The insurance industry and the world at large have changed dramatically over the last 24 months. Understanding the current digital landscape is key to developing an optimal transformation strategy.
Consider:
• COVID-19 accelerated digital transformation of all organizations. Driven by increasing customer expectations and the necessity of providing remote work capabilities, companies sped up their transformation journeys anywhere from six months to several years.
• Pending regulation changes require new digital capabilities. The arrival of Long Duration Targeted Improvements (LDTI) in the United States and the International Financial Reporting Standard (IFRS) 17, both due to hit in 2023, impose extensive reporting requirements that will require digital system upgrades for most firms. Companies can choose to make short-term improvements to meet the requirements or use this as motivation to perform a more extensive overhaul.
• The race to market. Business and consumer customers demand products be introduced and updated more quickly than ever before. Top-tier insurance players use digital analytics to predict profitability of new offerings, innovate and collaborate on designs quickly, and iterate once the product or service is in hands of customers giving feedback.
FUTURE STATE: WHAT IS DIGITAL FINANCE TRANSFORMATION?
The future finance ecosystem, combined with advanced ways of working, such as design thinking for product development and Agile software development, will empower finance to become experimenters and innovators, spending most of their time on valueenhancing activities, such as: • Proactively identify and mitigate emerging risks across the organization. These can include everything from the ramifications of new international tax law to the consequences of social and economic disruptions. The speed and depth of cloud-based tools allows finance leaders to see threats on the horizon much more quickly and launch proactive programs to mitigate harm.
• Recognizing opportunities to grow revenue and lower cost through data-inspired insights. These could include identifying lines of business to spinoff as well as analyzing the financial strength of acquisition candidates. Increasingly, insurers are looking to develop new lines of business outside their traditional offerings, and finance will play a critical analytical and financing role here.
• Delivering strategic business insight by leveraging tools, such as scenario modeling and predictive analytics, to inform business strategy.
