How do other tech and fintech innovations drive the digital transformation of insurers?
To meet the demands of today’s consumers, companies must constantly innovate. Fintech and other tech, for example, have transformed the financial services and insurance industry, from the democratization of finance and insurance to the creation of digital currencies that have changed the way we think about money, IBM research says.
As other tech and fintech companies strive to meet the needs of their customers and partner with large financial institutions and insurers, they can use artificial intelligence and hybrid cloud solutions to drive true digital transformation and meet these growing demands.
According to a study by the US Government Accountability Office, approximately 45 million people do not have credit scores because they do not have certain data on which credit scores are based, limiting their credit history. Traditional credit reporting models use parameters such as active loan status or credit card payment records to provide a person with a credit score.
If someone doesn’t fit into these parameters, it can be difficult to get a loan, get a mortgage or even buy a car. However, with a more accurate model, such as an AI-based model, financial institutions can better identify loan applicants. This can lead to higher levels of approval for these populations that would otherwise be typically overlooked.
That’s why fintech digital lending platforms are being created, focused on helping people with no credit history or low scores get credit. Using artificial intelligence, the models use a large amount of bank transaction data, behavioral data and economic variables related to the loan applicant’s source of income.
Data security is central to almost everything we do, especially in the insurance and financial services industry, as banks, insurers and other institutions securely protect consumers’ most sensitive data. With data now living everywhere, in multiple clouds, on-premises and at the edge, it’s more important than ever for banks to centrally manage their security.
“It is important that banks, financial institutions and insurers consider how they can best reduce their exposure. With the help of fintech AI platforms, organizations can be given control and visibility of their data everywhere. The cloud’s focus on compliance and security helps make this possible and gives customers the confidence that their data is protected, which is critical in the financial services and insurance sectors,” IBM said.
The use of fintech and other tech innovations has had a tremendous impact on the financial services and insurance industry. As the experience of many fintech and other tech players shows, having an innovation ecosystem that supports the mission of a large financial or insurance institution is critical to success, and accelerating the adoption of artificial intelligence and hybrid cloud technologies can drive innovation across the industry.
Thus, the funding of other tech companies that use AI technologies increased by 18% to almost 2 billion dollars. The most significant implementations of artificial intelligence in the insurance sector include AI technology for underwriting, user behavior analytics and automatic discounting of premiums.
The increase in the amount of financing indicates a change in the interaction of the insurance sector with AI. While insurance companies are already using AI for claims settlement and risk assessment, GlobalData has identified a new wave of AI innovation focused on more specialized insurance needs.
Technology is being deployed across the sector to deliver faster and more accurate services, from product development, underwriting and claims to customer service chatbots, risk assessment and quoting. However, what is interesting is that while some large insurance companies are actively investing in AI, many are moving slowly, unsure of how best to deploy these technologies.
Analysts recommend that insurance industry leaders and stakeholders be proactive in establishing partnerships with AI technology companies and taking action when considering potential AI-related acquisitions. AI is particularly transforming the personal and health insurance sectors.
The global AI market is expected to reach $909 billion by 2030, highlighting the growing importance of artificial intelligence in various industries, including and in property and health insurance. In the field of property insurance, a noticeable surge in innovative activity is also visible both in recognized industry leaders and in young startups.
The evolving landscape of the insurance industry sees more than a hundred startups actively developing AI-based solutions, analysts say. Thanks to a proactive approach, leaders in the insurance sectori can effectively navigate dynamic market conditions and stay ahead of competitors.
Through cloud technologies and artificial intelligence, fintechs and fnsurtechs are helping traditional market participants to ensure that their bancassurance products and services meet the requirements and the same strict regulations that banks and insurers must meet. With security and controls built into the cloud platform and developed by the industry, it is possible to significantly reduce risk, accommodate new regulations and accelerate the adoption of cloud technologies, machine learning and AI technologies.
The lack of awareness of the importance of Artificial Intelligence is a concern as new market entrants begin to make an impact. Insurtechs use the capabilities of artificial intelligence to present a new range of innovative products. These include instantly configurable life insurance and on-demand property insurance coverage. Consequently, traditional insurance companies now face unexpected competition. It is imperative that they pick up the pace when it comes to investment and technology adoption, or they will be left behind.