Banking and insurance have both undergone an astonishing transformation during the lifetimes of many Australians. From being the almost Dickensian institutions of yesteryear – dark, hushed, secretive and wood-panelled – banks have evolved into the upbeat retail financial shopfronts and online multi-service megastores we know today. Meanwhile, the insurance industry is undergoing its own technology-led disruption. But one bastion of 19th century banking and insurance has remained: the secrecy. Until now.
In 2019 the government passed a law giving banking customers greater access to, and control of, the data associated with the products and services they use. The accepted term for this raft of changes is ‘Open Banking’.
It means that financial institutions – starting with the Big Four banks but extending to others later – must make credit card, deposit, transaction and mortgage data available if customers request it.
What that translates into is portability. It’s a bit like the competitive transformation of telco services once consumers were given ownership of their phone numbers. Owning your own transaction and spending habits data and being able to easily share it with a third party – via Application Programming Interfaces (APIs) – means that your bank’s competitors can analyse the information and offer a better deal to suit your particular circumstances. It’s being heralded as a game-changer, and the end of consumer inertia and ‘rusted-on’ customers in the entire finance industry.
It can only be a matter of time before the open data scenario is extended across other types of financial transactions. But as far as the insurance industry is concerned, the data mining future has already arrived. Digital transactions and the volume of available client data have grown exponentially, and will continue to expand at a vigorous rate. Data analytics and AI are already being applied to client information in larger firms, to assist with risk analysis and underwriting, premium setting, claims processing and new product development. This will one day become the norm for the entire insurance arena.
And although Open Insurance and access to external data has not yet arrived, it will. What can we expect it to look like?
Here are just some of the sweeping changes that data sharing will bring to the insurance industry.
Broader value propositionInsurers will have an improved insight into their clients’ range of insurance needs and will be able to offer suitable products, rather than consumers having to shop around with different providers in order to cover all their risks.
Is your organisation prepared for Open Insurance?
Find out by asking yourself these questions:
If you would like to learn more about hiring IT & Digital professionals for Open Insurance & Open Banking please feel free to contact our specialist recruitment team.
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