Digital Transformation of Bank Assurance

Bancassurance - the distribution of insurance services/products by banks - is not a new phenomenon, but many banks and insurers are still far from offering their customers a seamless financial services experience. 

However, to ensure this seamless/simple experience, banks and insurers need to cope with new challenges. Particular attention must be paid to the following areas: 

Consistent Customer Experience (CX) 

Customers expect a consistent customer experience. Media disruptions, multiple data entries, and process waiting times are no longer acceptable. The simple CX familiar from online retail business is the benchmark here. 

A consistent CX also has advantages for the insurer. As soon as an insurance policy is integrated into online banking, the customer and insurer have much more frequent touchpoints. Which leads to the potential for cross-selling and upselling.  

Integration of Data (Personalized Advice)  

Both banks and insurance companies have a large amount of transaction data about customers. Linking and analyzing the available data allows the creation of personalized offerings, tailored to individual customer needs and risk profiles.  

For example, the financing of a house with a bank can be used as a trigger for a personalized offer, e.g. for term life insurance, which can already derive key parameters such as the sum insured from the amount to be financed.   

To avoid isolated solutions, the focus here is particularly on the use of overarching standards. While an established standard has been in place for several years in the banking sector with the Payment Services Directive (PSD2), considerations for the insurance sector at the European level are still in their infancy under the heading of "Open Insurance".  

Open cooperation is initially tedious for banks and insurance companies but creates great added value for the customer. In the long term, the customer will always stay with those companies that act fairly and transparently.

Compliance with Legal Regulations  

As both banks and insurers are highly regulated industries, attention must be paid to the interaction of the respective regulatory requirements when integrating the processes. 

Depending on the level of organizational integration and compliance with GDPR, the bank may benefit further by adjusting its risk rating to align with that of the insurer. In this case, the bank and the insurer have a joint social responsibility of which they must be aware. 

While there are EU-wide requirements for the processing of personal data, such as the EU General Data Protection Regulation (EU-GDPR), there are also many specific regulations that differ from country to country.  For Germany, the "Banking Supervisory Requirements for IT" (BAIT) for banks and the "Insurance Supervisory Requirements for IT" (VAIT) for insurance companies should be mentioned in particular. 

Cyber Security  

Ensuring a seamless customer experience requires in-depth integration of various systems of banks and insurers. This means that not only each system must be hardened and protected against attacks, but the integrated overall process must also be secured. To further increase Cyber Security, the EU has adopted the DORA requirements, which will come into force as of 2025.  

The Digital Operational Resilience Act (DORA for short) focuses on digital operational resilience from a regulatory perspective. Among other things, DORA focuses very strongly on technical and organizational measures that must be implemented in the area of Cyber Security. The requirements are very wide-ranging, from risk and emergency management to mandatory source code analyses. 

Interested in digital Transformation for Bancassurance? Get in touch with us!

SOURCES

-PSD2

-Open Insurance

-Bafin (German insurance supervisor) on DORA