The Internet of Everything (IoE) and its impact on insurance and other financial services is at its infancy. As IoE proliferates within the insurance industry, there becomes an increasing need to connect data sources and virtualize that data. With more connected “things” than ever, data points can be utilized in different ways to provide better customer service, prevent fraud and develop new products. Because these new data points can change everything from a business model to product design, insurers need sophisticated software to manage them. All of these additional data points are on top of the explosion of data already in the industry – referred to as “big data”.
Insurers are now looking into software solutions that virtualize data and connect disparate sources around the firm to business intelligence applications that decision makers are using to look for specific insights. Data virtualization allows insurers and financial professionals the ability to manage big data and get updates in real-time without moving the data from its original location. By leaving the data in its original location, it reduces the duplication of data when data marts and data warehouses are created for specific analytics applications (e.g. Customer Information File) and allows for other applications to easily access the data as well.
Recently, a large global insurer was in need of a solution that could provide a flexible, but efficient data strategy; allowing everyone within the enterprise to create virtual data stores for everything from enterprise risk management to a single view of their customers. The insurer decided to implement a centralized platform for faster, more efficient access to data across the enterprise. An agreement for access across the enterprise enabled their business to use it as an “all you can eat” solution. Data virtualization is an approach that can deliver on the promises of the data warehouses of the past – enabling insights from the data stored in the transactional systems without the downsides of data duplication and expense of building and maintaining the data warehouse. But it goes two further: it can both deliver the vision in a short time frame and provide real-time updates in real-time.
Historically, to create a single view of the customer, companies would need to identify all of the specific data sources around the company that hold policy, interaction data, and sometimes third party data to create an Extraction, Translation and Load (ETL) process (typically overnight) to move the data into the data warehouse on the customer. Creating a data warehouse, finding the data, determining a new data structure and consolidating the data would take more than a year in several situations, but with a data virtualization software solution, this is able to be completed in a matter of weeks.
Companies are now able to put together a single view of the customer, real-time portfolio views in the wealth management space and risk analytics in the insurance space in short periods of time and get updates to the data in real-time. Analytics applications benefit the most from the use of data virtualization because it grants companies the ability to add another data point, or data source easily as well as the ability to normalize the data.
Data virtualization is crucial for business decision makers, because it creates an easier path to expose big data to analytics applications to provide meaningful, real-time insights they are looking for to help manage their business. For example, when a customer called to report a recent change of address, the data would not be updated to some data warehouses for a period of time, often waiting for overnight batch processes to update. Data virtualization allows for these data points to be updated and accessed in real-time by creating a pointer to where the data is, usually via last name or social security number. When the update occurs in the transactional system, it simultaneously updates in the virtual data warehouse.
With the expanding amount of “big data”, insurance and financial companies are in need of a software solution that allows their business leaders to make decisions in real-time. And with the coming wave of ever building data resulting from the Internet of Everything (IoE), data virtualization will be playing an ever increasingly important role. The opportunity won or lost will be determined by how well business leaders leverage their data to affect business value and obtain a significant advantage over competition.
About the author: Jeff Tumpowsky is a senior advisor in Cisco’s Financial Services vertical focused on the North American financial services and insurance market.