Thomas Jerolitsch | VP, Product Management, FIS
September 01, 2020
Companies of every size are increasingly feeling the pressure to digitalize their payments infrastructure. This is particularly true for insurance companies, where the competitive landscape has increased thanks to purely digital insurance firms that appeal to millennials through their technology footprint and simplicity of doing business.
These digital insurance companies are trying to win over new clients as they enter the insurance market and lock them in as long-term customers. For traditional insurance companies, there is significant competitive value in investing in digital technologies to improve the user experience and remain competitive.
The payments space is a key component of an enhanced digital user experience for insurance companies’ customers who are asking for the real-time experience they are increasingly getting used to from the retail world. By digitalizing their payments infrastructure, insurance companies can offer a simpler and more rewarding experience to their customers while automating and centralizing internal payments processes to drive efficiencies for the business. Digitalizing also gives companies the opportunity to differentiate themselves in the market or respond to market pressure already created by their competitors.
The use of old legacy technology in the insurance sector has long been an unfortunate trend. The legacy systems that insurance companies use for payments are sometimes self-developed and are often up to 30 years old. This kind of legacy technology is often inflexible and requires a large team to run, is costly to maintain and notoriously difficult to keep secure. They are often supported by outdated processes as well that can lead to payment fraud and errors. Legacy systems are particularly a challenge when the insurance company wants to leverage new payment technologies and trends like real-time payments.
Proactive insurance companies have been looking for ways to move away from cutting checks in the US and to provide customers with faster payments and better service when it comes to processing and paying out claims across the globe. This is where digitalization comes in, and where companies have been deploying their own digitalization initiatives.
Now is the time for insurance companies to leverage the latest and greatest digital payments technology – like a payment hub. A payment hub can help insurance companies centralize and standardize their payments processes across their disparate payments systems, help them gain cash visibility, increase controls, reduce payment fraud and leverage the latest advanced technologies like real-time payments. With a payment hub connected to a banking API, for example, insurance companies can pay claims in real time. This is a huge competitive advantage.
Insurance companies have a great opportunity to enhance their customers’ user experience by embarking on digital payments technology initiatives.