According to a report carried out by Embedded Finance & Super App Strategies and InsureMO, the European embedded insurance market is set to reach 30% of P&C and 10% of Total Life Markets over the next decade.

The commercial potential for embedded insurance products for larger and more diverse non-insurance organisations across Europe has certainly risen and provides exciting opportunities for companies and customers alike.

Now, more than ever companies must adjust to keep up with rising demand from customers for flexible and affordable financial products and services.

Companies, regardless of the sector, are embracing technology to transform their ideas and generate new revenue streams. Insurtech is, to some degree still, the new kid on the block in this regard, and has emerged as an attractive proposition for companies looking to diversify their product offerings. Finance companies in particular can benefit from integrating embedded insurance options in their business. This article will explore why financial companies should embrace embedded insurance solutions to not only mitigate risk but also drive revenue growth, boost customer loyalty, and foster a competitive edge in the market.

Strengthens customer trust and loyalty

One of the most compelling reasons why financial businesses should adopt embedded insurance solutions is that it provides unparalleled value and a dynamic experience. Customer trust and loyalty are core values of insurance, and they tend to stay with their insurer for years and build a relationship in that time with their agent. Insurance can be very personal, particularly in medical cases, so fostering that relationship is key to providing a superior service. By integrating embedded insurance solutions, businesses can offer a personalised shopping experience that meets the customer’s needs and saves them the time and worry of going through multiple insurers.

The rise in demand for more personalised services and products, lends itself to embedded insurance, which can provide tailored coverage options that align closely with customers’ needs and preferences. Through data analytics and insights derived from customer behaviour, companies can customise insurance offerings to address specific risks or enhance the perceived value of their products or services, this tailored approach can retain existing customers and attract new ones.

Neobanks like Revolut have already embraced some forms of embedded insurance. For example, they offer travel, pet and purchase cover insurance products to their customers, starting at £3.99 each month. However, there are vaster opportunities that non-financial companies can access and pull measurable results. Life insurance in particular presents a key opportunity for travel companies to capitalise on this growing trend and foster the trust of their customers. Accidents occur all the time on trips and people can fall ill and, in some cases, die when abroad. Covid-19 demonstrated just how valuable life and travel insurance is we don’t consider all the risks when travelling. However, businesses can encourage people to buy life insurance products when they are booking a flight or a lounge. Offering products at check-out prioritises convenience and simplifies options for busy travellers who can’t decide what to go with, and companies can tailor products based on data information provided by the customer. Making shopping and life, in general, easier and more personable has never been simpler to do when adopting embedded insurance.

Beyond CX: Channels Revenue Growth and Diversification

Beyond improving the customer experience (CX), embedded insurance presents significant opportunities for revenue growth and diversification. By leveraging their existing customer base and distribution channels, finance companies can capture additional revenue streams through insurance premiums. For borrowers, for example, life insurance is more than just a “nice to have”: if the main earner dies or falls ill during the term of the loan, families can find themselves in serious financial turmoil. Life insurance can mitigate this risk. Also, by bundling insurance with their core offerings, finance companies increase customer lifetime value, therefore enhancing their profit margins.

Another core reason why it should be integrated is that embedded insurance allows companies to tap into new markets and customer segments that may have been previously underserved or overlooked. For example, Mercedes-Benz offers an embedded insurance solution for its vehicles that includes theft protection and collision damage coverage. The policy is built into the monthly finance or lease payment for the vehicle and is automatically renewed each year. In addition, insurance from banks for example has a long successful history offline where it is known as bancassurance. Now, financial companies have the opportunity to make it available online and provide customers with a valuable asset at the point they need it.

Life insurance in particular can be a lucrative asset for companies wanting to expand and can open doors to new markets by appealing to digital nomads for example, who rely on neobanks to keep their money safe as they move from one destination to another. All of these examples demonstrate the versatility of embedded insurance and how any industry can re-capture its customer-base and grow exponentially.

Risk Mitigation and Financial Stability

From a strategic standpoint, embedded insurance offers finance companies a powerful tool for mitigating risk and enhancing financial stability. By transferring certain risks to insurance partners, companies can protect themselves against customer default accidents, sickness and other unforeseen events. This risk mitigation not only safeguards the company’s bottom line but also enhances investor confidence and resilience in the face of market uncertainties.

At its core, embedded insurance can provide companies with a competitive advantage by offering comprehensive coverage that goes beyond traditional warranties or guarantees. By providing customers with peace of mind and financial protection, companies can differentiate themselves from competitors and strengthen their brand reputation. In industries where trust and reliability are paramount, such as healthcare or financial services, embedded insurance can serve as a powerful differentiator that attracts and retains customers.

Game-Changing Data is King

Data is now the backbone of a company’s customer service efforts and helps a business keep track of their preferences, habits, and behaviour. This secret weapon can be used to offer the right type of insurance and insurance amount to their customer at the appropriate time. Customers who have been with a company for a long time will have built up their profile and this can be translated into a curated experience that meets their needs before they even know they need it.

In conclusion, Insurtech is an exciting prospect for financial companies. It will continue to evolve as new-age technology comes in and give customers more reasons to stay loyal to their favourite brands. It is a challenging time for businesses, but by implementing embedded insurance solutions, more problems can be solved, and companies can continue to be creative and innovative. The advantage of such platforms is you can try before you buy, so take the opportunity to test the waters, and see what Insurtech can do for your business.

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When a bank that is solely in the virtual world takes care of global payments, P2P fund transfers, contactless Mastercard with no transaction fees added, and a change to purchase and exchange cryptocurrencies like Bitcoin, Ethereum, and others, the financial society blazes in response to it.

The COVID-19 pandemic has had a sudden influence on the digitalization of business activities for all types of businesses. Banking is no exception. During the last few years, the number of consumers who visit the bank branch and do their banking transactions has dropped sharply. This article aims to illustrate the enhanced impact of digital banking on the finance world.

When one thinks about the digitalization of global banking systems, the first term that comes to mind is “Internet banking.” How is offline banking different from online banking? Sometimes people do not use the word strictly, as they often mean other things that are different from the definition of the word. This is why, for most people, the terms digital banking and online banking are often used interchangeably.

In reality, they are two separate concepts, each with its own legal and ethical issues. As for online banking, the core activity of a bank involves being online. These consist of deposits, withdrawals, money transfers, and bill payments. However, it is not possible for more advanced transactions to be performed without actually going to a branch. Consequently, online banking belongs to the category of tools that work hand-in-hand with its branch-based peers.

In the case of digital banking, the entire banking service is made available through the internet. You can access the digital bank through an app or its website. All operations that a consumer avails of through a traditional bank branch can be availed of through the app. It embraces automated processing of requests from consumers and removes the hassle of paperwork completely. Digital banking  involves a high degree of process automation that involves programming interfaces (APIs) for cross-institutional services. This financial data can be accessed via desktops, mobile phones, and ATMs. 

“Technology is having a huge impact in driving the banking sector forward to provide a better service to more users.”

• Schuyler Weiss 

Digital banking has grown rapidly, but customer behavior hasn’t shifted much. Only a small fraction of customers rely on their main bank for various financial products. Additionally, a significant portion of British adults have opened accounts with online-only banks.

Financial institutions such as N26, Starling, Monzo, and Allica Bank have completely disrupted the norm of banking the traditional way. With no legacy systems to contend with, this space has been more nimble in responding to changing consumer behavior, shifting the focus to digital banking instead. Despite challenges in funding and valuation, fintech investment remains robust, with traditional financial institutions increasingly acknowledging the competitive threat posed by digital challengers.

To compete effectively, traditional banks are exploring innovative strategies. One approach involves leveraging low-code tools to rapidly develop new services, reducing reliance on legacy systems. Collaboration with external partners is also critical, enabling traditional banks to reach new demographics and reshape their brand image.

However, trust remains a cornerstone for traditional banks. While their long-standing reputation for financial stability offers a competitive advantage, they must also cultivate trust in digital channels, where modern consumers interact most frequently. Despite this, conventional banks remain strong with their diverse range of service offerings, although new contenders are progressively diversifying their offerings through collaboration deals.

The evolving banking landscape presents both challenges and opportunities for traditional institutions. While competition intensifies, it also drives innovation and forces traditional banks to modernize and adapt. Success in this dynamic environment hinges on embracing change and investing in strategies to remain relevant in an increasingly digital world.

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Financial services organizations are at a crossroads, faced not only with the imperative to adapt, but also to revolutionize their approaches. The advent of Fintech 3.0 presents an unprecedented opportunity to transcend legacy paradigms and usher in a new era of innovation. Embracing the evolution, here are the fintech waves unveiled:

The First Wave: Fintech 1.0 – The genesis of consumer-oriented fintech, marked by pioneers such as Intuit Quicken and PayPal, laid the foundation for managing personal finances and streamlining transactions. This era heralded a departure from traditional brick-and-mortar transactions, introducing the world to online banking and the convenience of digital financial management.

The Second Wave: Fintech 2.0 – Building upon its predecessor, Fintech 2.0 saw the emergence of B2B and B2B2C fintech companies, offering specialized solutions to businesses. Categories such as Payments, Banking, Alternate Lending, Wealth Management, Insurance, Payroll/Benefits, Capital Markets, and Real Estate showcased a diverse landscape. Financial institutions focused on digital marketing, digital account opening and digital loan applications as ways to engage prospective customers. As leaders solidified their positions, the industry matured, setting the stage for the next evolution.

The Third Wave: Fintech 3.0 – In the third wave, the spotlight shifts to ‘Decision Intelligence’, enhancing personalization and efficiency through cutting-edge technologies like artificial intelligence, machine learning, and intelligent integrations. This approach delivers an ’Apple Like’ experience not only to customers but also enriches the working environment for financial institution staff and developers. Unlike the previous wave’s sole focus on customer experience, this new era equally prioritizes the well-being and productivity of employees (employee experience) and developers (developer experience) at large financial organizations. By automating mundane tasks related to compliance, fraud, and decision-making, the third wave fosters a more efficient operational framework, allowing all parties to concentrate on driving superior outcomes.

Moving away from the compartmentalized approach of the past, Fintech 3.0 revolutionizes the industry with a modular architectural framework. This innovation empowers financial organizations to swiftly launch and integrate a diverse range of financial products like memberships, deposits, loans, investments, and insurance. It’s designed for agility and efficiency, enabling rapid market entry for new offerings. Moreover, this framework incorporates seamless integrations with essential services including Customer Identification, KYC, AML, Customer Due Diligence, ID verification, fraud detection, document collection, eSignatures, and various enterprise and core system integrations. This comprehensive setup not only fosters automation across these services but also supports rules-based decision-making, ensuring that every action is predictive, understandable, and auditable.
To pave the way for a future-ready stance, several critical priorities emerge. At the core is the ’customer experience’, focusing on engaging customers within their existing digital realms. Just as Buy Now, Pay Later (BNPL) options are conveniently presented during online checkouts, financial products like deposits, loans, investments, and insurance must be seamlessly embeddable. They should not only integrate effortlessly into standard digital marketing landscapes but thrive within the unique digital ecosystem of the financial institution, which might encompass various partners as well.

In the realm of digital decision intelligence, Fintech 3.0 platforms serve as foundational elements, enabling financial firms to transform outdated systems into captivating digital solutions. Utilizing secure APIs and microservices, these institutions can weave together unique user experiences, paving the way for innovative business and revenue strategies. This strategy mirrors the groundbreaking influence of Amazon Web Services (AWS), promising to reduce expenses and simultaneously boost customer interaction.

As the financial services industry stands on the precipice of Fintech 3.0, organizations must not merely adapt but seize the opportunities it presents. This paradigm shift promises not only a competitive edge but a commitment to innovation that transcends the boundaries of conventional finance.

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