There exists a correlation between tech adoption strategy and business outcomes, according to research from Harvard Business Review (HBR) Analytic Services. Its recent study, entitled “The Digital Dividend -- First Mover Advantage” demonstrates how organizations that believe in the benefits of implementing new technologies also lead in revenue growth and market position.
The study, sponsored by Verizon Enterprise Solutions, is composed of responses from 672 business and technology leaders from around the globe. Executives were asked about the growing influence of what HBR Analytic Services calls the “Big Five” tech tools -- cloud computing, social, mobile, advanced analytics, and machine-to-machine communications. Its goal was to determine how these technologies are transforming businesses.
Respondents were organized into three groups: IT Pioneers (34%), who strongly believe in the benefits of new technologies; Followers (35%), who invest after the benefits of new tools have been proven; and Cautious (30%), organizations that wait until tools are well-established before they invest. Pioneers saw the most positive business results, with 20% experiencing more than 30% growth as a result of early tech adoption.
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In financial services, three-quarters of respondents claimed that their offerings had at least moderately changed as a result of new technologies. Some 66% said that changing consumer expectations make up the primary driver behind tech transformation, and 78% noted higher customer satisfaction after adopting new tools. The industry is primarily composed of risk-averse Followers that are challenged with strict regulations and management of sensitive financial data.
The trend of pursuing early tech adoption has extended to insurance. “We’re finding that competitive advantage is something being explored more,” says Stephen Busateri, managing principal of insurance for Verizon Enterprise Solutions. Businesses are heavily investing in the modernization of back-office policy administration systems, greater front-end efficiency, and automation. Big data is another key area of investment, specifically to improve pricing and customer engagement.
P&C insurers are farther along than those in L&A, he explains, which is largely due to the rise in UBI. “They’re really looking to take aspects of vehicular telematics as a jumping point to enhance their pricing discipline.” Investments will help P&C and multiline insurers to determine more competitive pricing policies.
Demographic changes pose a challenge to L&A insurers, which need to improve their communication strategies. This sector is struggling to educate a generation of individuals that doesn’t see the value of investing in something that is intangible to them.
Many have begun to look at telematics data in order to develop an omnichannel perspective on their consumers and engage in digital conversations. “How they reach out from a mobile perspective has been pretty important,” says Busateri. “They have started to collect data on all of their interactions.” He notes that this is not something L&A has done well, or easily, in the past.
A more aggressive tech investment strategy demands cultural change, which today’s leaders anticipated about four to five years ago, he explains. At that time, many insurers took note of the demographical, business, and technology changes affecting the industry and adjusted their structures accordingly by creating teams that could act on new ideas. Over the years, these development teams could determine which ideas were fruitful and create pathways for them to evolve.
Insurers that didn’t plan for the technological shift are now attempting to make up for lost time by trying to attract new customers or pursuing M&A, which has increased throughout the industry this year. “One thing they’re universally realizing is they’re out of time.”
Kelly Sheridan is Associate Editor at Dark Reading. She started her career in business tech journalism at Insurance & Technology and most recently reported for InformationWeek, where she covered Microsoft and business IT. Sheridan earned her BA at Villanova University. View Full Bio