Big data is a big topic of discussion and debate in the insurance industry, as insurance companies try to figure out ways to cost-effectively tap into the huge volumes of internal and external information available to them, and the vendor community scrambles to develop systems, tools and platforms to support these efforts. But while these sophisticated analytics and data management solutions are critical to a productive approach to big data, technology is just one aspect of a successful strategy.
In fact, it may be the least important part of an insurer's efforts, according to Allen L. Weinberg, a New York-based director in the business technology office of McKinsey & Co. and co-lead of the consultancy's banking and securities operations and technology practice. I spoke recently with Weinberg about what it takes to compete on big data, which he described as "being predictive, being real time, and tying that back into a way to execute and serve the customer in a new way."
Weinberg offered some provocative observations about the challenges financial institutions face in creating a big data-focused culture at their organizations. "In our experience, technology is the least important issue to overcome," he told me, pointing to talent, culture and governance as the inter-related keys to a strong big data program. For example, to attract professionals with the kinds of analytic skills they need to be competitive, insurers can't just hang out a "For Hire" shingle. There has to be a cultural commitment to making data insight part of all kinds of business decisions, Weinberg suggests. "If you don't have a clear value proposition and career path," he says, companies will not be able to retain talented people with these in-demand capabilities.
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And having the right talent to support big data-related initiatives is essential, as future growth, profitability and compliance will depend on insurers' ability to leverage customer, risk and financial information. Or, as Weinberg puts it, "Big data will be an element of who does well going forward."
Insurance & Technology has examined the ways insurance companies are merging big data capabilities with core processes such as underwriting, and we have reported on the results they are getting and the best practices they are identifying. But in reviewing what carriers are doing today with big data, it's important to keep in mind that in reality, these are the early days of this movement. "It's the beginning," Weinberg points out. "This is the early innings of what we think will be a revolution." Insurers have a great opportunity to be the leaders of this revolution, if they mobilize forces on all fronts -- technology, skills, culture and governance.
For more on what it takes to compete successfully on the strength of big data, check out Kathy Burger's exclusive video interview with McKinsey & Co.'s Allen Weinberg.