Millenials -- defined as those born after 1980 -- are digital natives who use mobile devices and social media very heavily. The mobile channel is replacing the web as the primary method for reaching this generation. In some ways, this means that developers of mobile apps are the new insurance agents. If you are a CMO, you will need to start putting together an agency contract with the developers of popular apps that are likely to reach your audience. This business model is already being leveraged by retailers and telecom companies. The app developer gets a lead or marketing fee for driving traffic to a retail store. Banks and insurers could potentially sell their products to mobile app users.
What does this mean to the executives who are planning their digital IT strategies? They will have to embrace Open IT architectures, as they will need to expose their enterprise applications and data to the developer communities via application programming interface (APIs). It sounds like service-oriented architecture and web services all over again -- but the difference now is that you are dealing with a new fast-moving digital channel which potentially has 50 times more user volume than the web, and the primary access is from a mobile device.
In the insurance industry, APIs would be needed for shopping, quotes and sales, payments and claims. The ACORD capability and messaging model will serve as a good foundation to start with as its origins are in allowing for easier interaction between agents and insurers. However good API design requires product managers, marketing and business managers to be involved and it is not just a technical activity. Insurers need to have a good understanding of the target developer community that they would like to enlist as channel partners and then design the APIs based on products and services to be offered through these channels. The limitation is not technology but the ability for insurers to adopt and change their business models.
[Previously from Koka: Customer experience starts with a vision]
This is not a new concept, as Salesforce.com and Netflix started with CRM and video rentals respectively and then converted their platforms with open APIs to outside developers and partners. This transformed their business models and allowed them to grow dramatically at the expense of their competitors. REST APIs are web services APIs but do not use SOAP. They are designed to simplify development of applications by developers. API management software allows companies to publish their APIs and manage access to their data in a secure way. This requires enrolling partners, authenticating them and then enforcing what they are entitled to as per the agreement you reach with the different types of developers.
According to a study conducted by MIT Sloan Management review and Capgemini Consulting on digital transformation in 2013, a mere 7% of respondents said that their company's digital initiatives were helping to launch new businesses, and only 15% said new business models were emerging thanks to digital technology. One respondent noted that in his company, "the belief is that digital technologies are not that effective yet in our marketplace." Another said customers weren't ready for new models yet, because they are "highly conservative and resistant to change." It could be that these technologies are so new that they simply haven't had time to be turned into new business opportunities.
Ravi Koka is CTO, Insurance Products, at Polaris Financial Technology Ltd.
[The mobile employee -- as well as the mobile customer -- are here to stay. Is your insurance company prepared? Learn how to set up and maintain a mobile infrastructure that can support today's needs and tomorrow's expected mobile demands. Attend the From BYOD to 802.11ac: How to Build A Next-Generation Mobile Infrastructure session at Interop 2014 in Las Vegas, March 31-April 4.
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