I t is no secret the insurance industry has struggled with digital adoption. Traditional insurance CEOs are accustomed to traditional models, working with brokers and agents knowing that when you invest a certain amount, you are going to get that back, plus a certain percentage. There is a formula to that return on investment and it is a low-risk approach to generating revenue. In contrast, digital is an unknown space with unknown risks and unknown returns. It is understandable why CEOs are reluctant to commit.
Changes in customer behaviour and technology are impossible to ignore in today’s market with online sales growing from zero to 9% of market total in China in two years alone and with Asia being the leading internet growth engine worldwide. While risks may be high, it is imperative for company boards to invest in digital if they want to remain relevant. Our recent Group results demonstrate that digital transformation can lead to new revenue streams fuelling growth.
To change mindsets and execute a successful digital transformation demands a radical approach. Our experience at Aviva has shown us there are five core elements to a successful transformation.
1. Separate digital from traditional
After examining our structure at Aviva, we realised tacking digital onto traditional business units and trying to merge the two simply would not work. The only solution was to carve off digital all the way down to separate entities and organisations.
Aviva Digital was set up as a separate legal entity, which also means it is separately regulated, and detached from the traditional core of the business. This allows for specialisation and focus on different skillsets, mindsets, and ambitions, which are the key ingredients required to succeed in a disruptive landscape.
Aviva Digital may be separate from the rest of the businesses, but they work closely together. Separation does not mean isolation.
2. Upgrade product and customer engagement
Products also need to be revamped for digital distribution. Simply moving existing products for traditional channels onto digital platforms does not make them digitally viable offerings, but we need to rethink how to make these products more transparent so it is easier for customers to understand and purchase them.
Learning from experience in more mature markets helps us formulate better distribution strategies. Anticipating and adopting a proactive approach when shifts occur in the industry is vital in order to stay ahead of the curve. Besides ensuring that our advisers are equipped with digital solutions to improve efficiency and provide a seamless experience for our customers, we have also developed digital platforms such as ClaimConnect in Singapore, making it easy for people to do business with us.
3. Hire the best talent, but make sure it’s diverse
Hiring external talent from fundamentally different backgrounds improves diversity and expands the pool of resources available. For example, the Aviva Digital Chief Designer has a background in gaming and has experience launching games into the Chinese market. There’s a huge amount of behavioural research that is poured into the creation of successful games, and analysing customer behaviours is critical when digitalising insurance.
Hiring talent with an entrepreneurial mindset is also highly beneficial because they understand what it takes to drive change and can be deployed into multiple markets. This is why we brought in our Managing Director for Asia Digital in Singapore. Talent with a customer-focused, entrepreneurial or technological background is the secret sauce to a winning digital team.
4. Create an open environment to collaborate
Once you hire the right talent and have a team of developers, designers and marketers with diverse backgrounds, innovation does not magically happen. You need to create an open environment for the team to test, fail, and refine ideas.
This is why Aviva set up “Digital Garages” in the UK and Singapore, which are open offices that allow teams to closely collaborate. This agile methodology is not unique to Aviva. However, the setup works because the teams work with a single minded focus around solving problems and creating innovative solutions.
5. Simplify structures
Organisations grow incredibly complicated over time and a few years ago, we realised that solving our customers’ problems was not a straightforward process. Teams were incredibly vertically structured and we had a multitude of phone numbers for customers to dial. Employees that were literate in car insurance were illiterate at life and critical illness, and this was an issue for customers looking to speak to a service representative quickly.
The beauty of transformation is that we get to evaluate and optimise, right down to the organisational structure. Aviva is not only transforming from a digital perspective, but fundamentally changing how it operates by simplifying internal structures. Killing complexity is indeed one of our core values. This means we are always solving problems with the customer in mind.
Executing digital transformation on a global level requires strategic thinking. You need to build a foundation architecture that is applicable in any market globally, so you can deploy it into each market at a fraction of the cost. Digital allows you to build assets in one location and drop them into another, which is what Aviva has done, starting with the UK and replicated in Singapore.
We have to learn from market leaders in sectors beyond financial services, such as Amazon and Google, when navigating the unchartered waters of transformation. It is important to form partnerships or collaborate with the disruptors who have the most experience with technology and innovation to pilot models and embrace a test, fail and refine approach. Being comfortable with failure, acknowledging it and persevering regardless is crucial to keeping up with the speed of change.
In this era, CEOs have no choice but to invest in digital and while the space is unknown. It is clear that this is the direction of our future. Aviva is certainly steps ahead on that journey of true digital transformation.