FIT FOR GROWTH HOW INSURERS CAN PROFIT FROM ECOSYSTEMS, PLATFORMS AND CONNECTED SERVICES - PWC
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www.pwc.de Fit for growth How insurers can profit from ecosystems, platforms and connected services.
Contents
Contents
Table of figures......................................................................................................... 2
A Introduction....................................................................................................... 3
B The market – ecosystems, platforms and connected services
are setting the scene......................................................................................... 4
C Market positioning – models for playing in ecosystems................................... 7
D Create your ecosystem strategy – write your own rules and learn
how PwC can support you.............................................................................. 12
E Summary and outlook..................................................................................... 14
Our experts............................................................................................................ 15
Table of figures
Fig. 1 Top five companies across the globe by market capitalisation................ 4
Fig. 2 Benefits of ecosystems.............................................................................. 6
Fig. 3 Different ecosystem typologies................................................................. 7
Fig. 4 Building the ecosystem is a strategically important
and complex task..................................................................................... 13
Fit for growth 2Introduction
A Introduction
This paper discusses the developments, challenges and opportunities for the insurance industry brought by
new business models that are having a tremendous impact on existing insurance products and services. When
viewing traditional insurance products in light of changing customer expectations and behaviour, innovative
technologies and competitors, opportunities emerge for insurers that are enabled and driven by ecosystems,
platforms and connected services. These opportunities and the relevant market positioning techniques will be
explained and underpinned by use cases.
Non-financial players are increasingly relevant to their customers. In doing Finally, a company must evaluate
rewriting the rules of the market, so, they must provide customers which model best fits their digital
driving higher customer expectations with an even more holistic service. agenda, business strategy and
across all industries, including This means transforming insurance corporate vision. Moreover, building
financial services. Companies that products and services for customers and/or contributing to ecosystems
have pursued a platform business into solutions by making them even is a strategically important and
model, such as Amazon, AirBnB and more true to life. The role of insurers complex task. This paper introduces
Uber, have created ecosystems in will continue to change as the focus a proven PwC four-step approach
the mobility, travel, health, shopping shifts from compensating damage for establishing an ecosystem. This
and lifestyle sectors. At the same claims to preventing these events. approach delivers customer-centric
time, they are among the most Within this framework, traditional solutions for driving ecosystem
valuable companies worldwide insurers have to decide how they sustainability through efficiency
based on market capitalisation. The will deal with other market players boosts and a short time-to-market
success of these business models like InsurTechs or non-insurers, ie, to period. Accordingly, as a first step, the
puts the insurance sector and its cooperate or compete with them or concept must be developed, which
long-established incumbents under simply to ignore them. implies defining and upholding the
pressure as platform players blur the digital agenda, including reflecting the
lines between traditional industry This paper outlines three different targeted offering; secondly, a detailed
sectors. Established insurers need to ecosystem typologies: contributor, market screening must be carried out
reimagine their business beyond their orchestrator and a hybrid model. For in order to determine how other market
industry borders. each participation model, success players should be dealt with; thirdly,
factors and barriers will be considered partnerships must be established;
Insurers who are able to distinguish and an insurer’s potential suitability for and lastly, companies must determine
themselves from their direct putting such a strategy into practice how to maintain these strategic
competitors and provide seamless given a desired digital agenda will partnerships once created.
access to their products and services also be evaluated. Furthermore,
will thrive in the “ecosystem world”. this paper highlights selected best
Establishing, maintaining or integrating practice methods that follow the
into existing ecosystems is crucial for ecosystem models presented and
insurers in order to adapt to changing the corresponding market positioning
customer expectations and to remain behind it.
Fit for growth 3The market – ecosystems, platforms and connected services are setting the scene
B The market – ecosystems, platforms and
connected services are setting the scene
As with other financial service sectors, for financial service providers.
the accelerated pace of digitisation is Disruptors from outside the insurance
posing a challenge for the insurance business are encroaching on their
industry. Customer expectations are home turf, mostly pushing financial
continuously evolving and adoption services towards a support product for
of and reliance on mobile technology their ecosystem.
solutions is driving the transition
from close relationships and nearby Non-financial service players are
branches to individualised and rewriting the rules of the market
easy-to-access digital services. In The most cited examples of
essence, consumers want products ecosystems that are expected to
and services that meet their personal usher in this borderless world are
needs at a competitive price. At the mobility, health, travel and (shopping)
same time, customers are unaware marketplaces. Unsurprisingly, digital
of which company is providing these forerunners are now spearheading
products and services. Society is global value creation. In the last
moving towards a digital world in decade alone, platform and ecosystem
which consumers are engaging with players have taken the fast lane to the
cross-sector ecosystems more than top-five leader board of worldwide
ever before. Despite the potential companies as measured by market
opportunities, this is also problematic capitalisation:
Fig. 1 Top five companies across the globe by market capitalisation
∑=0 ∑ = 679 ∑ = 3,470
Platform players
Market cap. in $ bn
Non-platform players
Market cap. in $ bn
∑ = 1,846 ∑ = 916 ∑=0
2008 2013 2018
1: Exxon Mobil 1: Apple 1: Apple
2: Petrochina 2: Exxon Mobil 2: Alphabet
3: General 3: Google 3: Microsoft
Electrics 4: Berkshire 4: Amazon
4: Gazprom Hathaway 5: Tencent
5: China Mobile 5: Petrochina
Source: PwC Top 20 Companies Report 2008, 2013 and 2018.
Fit for growth 4The market – ecosystems, platforms and connected services are setting the scene
However, you do not have to look Today, insurers have to acknowledge Point-of-sale insurance, for example,
far to find successful ecosystem that the increasing reliance on has become common practice for
players. Smaller yet highly successful technology is not only reshaping airlines and car and electronic goods
companies like the German CHECK24 the client’s expectations, but is also retailers. It is a promising and lean
are leading the way in bringing blurring the lines between industries. sales channel for insurers who have
ecosystems to life. Their retail platform The rise of ecosystems has not gone mostly limited themselves to inflexible
directly offers their clients financing unnoticed and insurers cannot ignore products despite the popularity of
solutions for bigger purchases or the role they play for their target integrated client experiences. This
suggests adding travel insurance clients. Formerly defined borders blind spot has been readily exploited
tailored to the travel dates and between industries and services are by other non-insurance competitors.
destination when booking a hotel vanishing and insurers find themselves Aspiring platform companies, such as
online. However, CHECK24 does not in a position where differentiating booking.com or billiger-mietwagen.de,
manufacture, ship or issue any of the themselves in the eyes of their clients have managed to eliminate insurers
aforementioned products themselves. has never been more challenging. in the context of travel cancellation
From the client’s perspective, Incumbents need to find a new way of policies. They simply started offering
CHECK24 acts as an ecosystem thinking about their business model two product categories – one that is
orchestrator for multiple related or and framework conditions in order to fully refundable usually up to 24 hours
complementary products and services. remain relevant to their clients. before travel without any justification
This produces a holistic customer needed at a premium price, and a
experience. From an ecosystem For insurers to excel in this cheaper option without fully refundable
contributor’s perspective, CHECK24 environment and effectively leverage cancellation.
acts as a facilitator and assists the interconnected networks, they need
contributor in connecting with clients. to rethink their business model. This Despite the popularity of point-
means that incumbents have to move of-sale distribution, insurers have
Insurers need to reimagine their away from a product-focused strategy seldom been able to scale sales in
business beyond the borders of towards a client-centric perspective this channel. Although point-of-sale
their industry that looks beyond existing product and insurance can be seen as a precedent
The fact that client expectations are revenue categories. In order to grow for modern ecosystem players, it has
evolving cross-industry is by no means in an ecosystem-driven marketplace, mostly been considered a support
breaking news. However, insurers have insurers have to evaluate partnership rather than a core business and
not been able to keep up with the pace opportunities, assess network risks therefore received little to no attention
of change. For decades, the traditional and identify value drivers. in strategy development. Technological
insurance business model has been advances have fostered ecosystem
considered a trouble-free sweet spot. New business models encourage thinking, and the business potential
The sale of an insurance contract new competitors of platform and ecosystem play is
resulted in a long-term relationship Whenever an industry is undergoing growing at an unstoppable pace.
with little client interaction and need significant change or where existing Insurers need a clear digital strategy,
for maintenance, with opaque pricing players have not leveraged market vision and commitment to establish
structures, terms and conditions often opportunities to their full potential, themselves in this environment and to
deterring clients from actually filing new competitors are waiting in the unlock their full potential.
claims for minor incidents. In this way, wings. Large corporations in many
insurance companies managed to industries are either building new
establish themselves as risk and data ecosystems or enhancing or joining
aggregators. Nevertheless, insurance existing ecosystems. The clock
companies – just like banks – tend is ticking for traditional insurers,
to stick to their traditional business InsurTechs and industry incumbents
models and concepts, offering isolated to build, establish and maintain the
products to their prospects and clients. ecosystems of the future.
Fit for growth 5The market – ecosystems, platforms and connected services are setting the scene
Platforms and ecosystems are An ecosystem, on the other hand, is consumer at the heart of their thinking
shaping the future of business an integrated network with a set of and operations, which, simultaneously,
As has become evident from interconnected services that allows encourages collaborative product and
examining the most successful participants to address a broad service development. Ecosystems
companies in the world today, variety of client needs in the context offer a wide range of opportunities to
producing a top-notch standalone of a single user experience. In this insurance companies, and these need
product no longer appears to be the sense, an ecosystem approach goes to be assessed and considered in the
cure-all solution. The Googles and beyond pure platform play – mostly digital strategy process.
Amazons of today are not working as cross-industry or cross-sector – selling
isolated microorganisms, but rather in results and customer experience rather Depending on the positioning insurers
digital, client-centric ecosystems. This than isolated products or services. adopt within a connected ecosystem,
new way of doing business builds on Taking a result-focused point of they can reap multiple benefits:
platforms and networks, mostly cross- view requires incumbents to put the
industry or cross-sector, thus enabling
operations beyond previously defined Fig. 2 Benefits of ecosystems
borders.
Reduce attrition
A platform, on the one hand, is the Single interface purchases reduce client attrition from prospect to
technical infrastructure necessary for closure by eliminating borders between the point of sale and the insurer’s
participants (clients or producers, B2B website, office or the like.
or B2C) to connect with each other.
The various participants interact via
Leverage network effects
the platform to create and share value.
Enter new client segments, establish new products and jointly benefit
Platforms offer open infrastructures,
from increasing sales with your partners from associated industries.
eg, APIs (application programming
interfaces), that enable prompt on-
and off-boarding of participants and
Become relevant
encourage data sharing. The most Help your clients transform from reactive to proactive – integrate
common examples of such platforms third-party products and become a part of their daily lives.
are probably Uber, AirBnB and Spotify,
who work to bundle supply from a
large number of producers (here: Avoid future claims and costs
Uber drivers, flats and musicians) Help clients to monitor, predict and jointly mitigate risks through
into one single point of access for the individual preventive actions against damages or physical harm, thus
consumer. Although a platform can precluding the need for future claims.
facilitate an ecosystem by itself, an
Increase loyalty
ecosystem may also build on a set of
Increase contract flexibility using individual risk calculations and pricings
platforms.
based on evaluation of continuously gathered data (e.g. bonuses for
careful driving).
Fit for growth 6Market positioning – models for playing in ecosystems
C Market positioning – models for playing
in ecosystems
How can insurers excel in this Depending on the position their overall business strategy in order
challenging environment and incumbents target, competition in to define a clear digital roadmap
reinvent client acquisition and an ecosystem world is not limited and ecosystem vision. However, the
relationship models? to their own industry. Aside from fuel for a low-cost player might not
innovative and agile insurance drive the engine of a differentiated
technology companies (InsurTechs), insurer. It is therefore important for
players from outside the insurance incumbents to decide which path
market are entering the field when it they want to take – contributing to an
comes to building and orchestrating existing ecosystem or building and
an ecosystem. Insurers need to revisit orchestrating their own.
Fig. 3 Different ecosystem typologies
Owner of ecosystem
(orchestrator)
• Flight delays/cancellations
• Flight ticket changes
• Flight accidents
Contributor
Clients
(plug-and-play)
• Employee health • Sharing case studies, exam
• Nutrition plan/programmes questions, course material
• Clinic visits
• E-commerce insurance and • Reward programmes for careful
guarantees (monetary refund) driving
• Pay-as-you-drive (premiums acc.
to driving style and/or distance)
• Tyre damage
• Payment protection insurance • Smartphone insurance
• Consumer finance platforms
• Credit guarantees (consumers
and funders)
• Rent insurance (landlords and tenants)
• Bike (accidents)
• Smart home/connected property
Fit for growth 7Market positioning – models for playing in ecosystems
Plug-and-play: Contribute to others’ capabilities, insurers can quickly scale The effectiveness of pure plug-and-
platform ecosystems their business – even with small-ticket play strategies strongly depends on
Similar to but more refined than point-of- policies – and, in some cases, even the ecosystem partner or partners,
sale distribution in other sectors, a plug- increase their own and their partners’ because the insurer is decoupled
and-play strategy relies on leveraging sales by jointly eliminating product from the client. As a result, a clear
existing ecosystems. Insurers can ambiguity and risk on the client downside of this strategy is the
use API technology to embed their side. In addition, the plug-and-play loss of direct customer interfaces.
products and services into other strategy avoids expensive branch and Furthermore, when the platform the
platforms and customer experiences. marketing costs while maintaining insurer connects with is acting as
In this way, the insurer assumes a full flexibility and control over sales an aggregator, client focus is at risk
contributor role, supplementing an channels. Low on- and off-boarding from overbalancing of price instead
existing ecosystem with their products. costs allow incumbents to quickly of the focus being on brand or actual
leverage and expand into other features. However, insurers can take
Plug-and-play strategies offer cost- ecosystems or withdraw from existing preventive and mitigating actions by
efficient and high-speed access to areas of business. Finally, insurers can means of thorough partner analysis
new and large volumes of clients and leverage this flexibility to access non- and selection methods.
revenue pools. With the necessary home markets in order to test and offer
back-office and claims processing different product features or pricings.
Zhong An: a model contributor
Company profile Business model market segments and it partners with
Zhong An is a fully digitalised Chinese Zhong An’s business model is based important brands in each segment.
insurance company with 3,000 on a supply chain that is highly Among the most famous partners are
employees worldwide. More than half focused within the insurance industry. Air China and Ctrip (travel industry),
of its employees are IT developers According to Zhong An, they are XiaoMi and DJI (consumer electronics),
or engineers who build customer- running five ecosystems: Lifestyle Citic Bank and WeBank (banking) as
centric and automated digital services. Consumption, Consumer Finance, well as Taobao, WeChat, Baidu and
Originally founded as a joint venture Health, Auto and Travel. Zhong An’s Changan.
by Alibaba, Tencent and Ping An insurance products are sold online
Insurance Group, Zhong An defines through these ecosystems. Although Competitive advantage
itself as a technology company rather their business model is online-only, a Zhong An’s ecosystem strategy
than an insurance company and has large volume of policies are sold every is based on placing its insurance
grown to become one of China’s major year (more than 10 billion policies products within the digital product
online companies. Initially, Zhong from 2015 to 2017) and they are able platforms or retail websites of its
An offered services only to Alibaba to handle large numbers of requests partner companies. This model yields
customers for covering the delivery simultaneously. This is due to the two significant advantages: first,
costs of faulty products, which is an fact that the majority of automated Zhong An leverages the customer base
essential issue for Chinese online operations use modern technologies of its partner company. Second, the
shoppers who are afraid of buying like cloud, AI or blockchain. As online- process of consuming a product of
faulty products. This produces a only business models generate plenty one of Zhong An’s partner companies
win-win situation, as the reluctance to of user data, Zhong An uses its D&A and of Zhong An itself is seamless,
buy Chinese products due to inferior technologies and applies sophisticated fully digital, quick and easy. Zhong
quality is eliminated, leading to an data analysis. In doing so, Zhong An is able to put such a process in
increase in retail sales as well as sales An improves the customer centricity place for its customers thanks to its
of Zhong An’s insurance products. At of its products. In light of this, unique employee structure. It consists
that time, around 80% of Zhong An’s defining Zhong An as a technology mainly of IT developers, while only a
customers came from e-commerce company rather than an insurance minor proportion of staff are insurance
and online service providers like company seems appropriate. Zhong brokers.
Alibaba, Tencent and Baidu. An’s ecosystems cover almost all
Fit for growth 8Market positioning – models for playing in ecosystems
Financials
2014 2015 2016 2017
Revenue $122.2m $367.6m $492.2m $800.7m
Change in revenue compared
– ~ 200.6% ~ 34% ~ 62.7%
to previous year
Change in profits before tax
– ~ 59.7% ~ –79.3% ~ –7.7%
compared to previous year
# of employees 184 665 1,574 2,541
By implementing its services in which is Chinese Singles’ Day, one
numerous different industries and of the biggest shopping occasions
thanks to its simple and efficient in China, Zhong An sold 240,000
purchasing processes, Zhong An insurance policies in one second.
improved its gross written premiums This number is tremendous and only
(GWP) by more than 80% within one achievable due to Zhong An’s resilient
year (accounting for $370 million). In the IT infrastructure, making it a role model
same year, specifically on 11 November, within the insurance industry.
Build-and-run: orchestrate your Build-and-run strategies put the the complete package allows insurers
own platform ecosystem insurer at the heart of an ecosystem, to move from competition in terms of
When it comes to building ecosystems, allowing them to function as a hub for price towards competition in terms of
insurers find themselves in competition a certain aspect of their customers’ value creation.
with players from outside their lives. In this way, incumbents are
industry. The market is riddled with in command of the client interface, However, ecosystem builders have to
players striving to command the improving retention and loyalty – bear in mind that the establishment
customer interface space and to be assuming that an orchestrator role of an ecosystem comes with initial
in direct control of client interaction. allows insurers to establish themselves set-up and maintenance costs that
In contrast to plug-and-play, as a connected hub and to embrace are higher than in a purely plug-and-
orchestrators write the rules of their data collection far beyond the borders play model. Existing structures and
ecosystem and user experience. The of traditional insurance business. legacy IT systems can complicate
orchestrator is the owner of the client New data analysis tools and artificial platform play and actually hinder
interaction and value proposition intelligence solutions, in combination the successful establishment of an
and is in control of the platform. with the data customers willingly ecosystem. In this respect, insurers
In an orchestrator role, insurers are share, opens new horizons for product can learn from agile and innovative
in charge of incentivising clients to development, underwriting, claims InsurTech companies who operate
enter into their ecosystem and, more management and personalisation. In using modern systems while following
importantly, to stay engaged. They doing so, insurers can become truly the test-and-feedback culture
have to assess and update the set of client-centric and relevant. In addition, required to excel in a customer-centric
aggregated services and products in the orchestrator has full control over environment. However, incumbents
order to be attractive to the client and partner selection and can focus on can overcome this challenge by setting
ecosystem contributors. engaging the partners that are best up their ecosystem infrastructure
suited to their integrated service away from their existing business and
offering. These integrated offerings by connecting, exchanging or re-
are a unique selling point, and offering engineering in a selective manner.
Fit for growth 9Market positioning – models for playing in ecosystems
Ping An: a model orchestrator
Company profile Business model All the services offered are delivered
Founded in 1988 as an insurance Ping An was able to achieve this level by Ping An’s ecosystem partners while
company, Ping An started to market of customer relevance by orchestrating delivery is supported by Ping An’s AI
financial service products in the mid- and maintaining platforms in and big-data technology solutions.
1990s and developed into a significant various industries that are relevant
internet financing company. Thanks to customers. These platforms – Competitive advantage
to heavy investments in technologies accessible via apps and websites – Besides delivering holistic customer
like biometrics, cloud, big data and contain a variety of complementary services, Ping An also delivers value
artificial intelligence, Ping An today services. These complementary by simplifying processes. Ping An’s
is a remarkable key player when it services offer a holistic customer customer accounts combine several
comes to ecosystems and is one of product portfolio, boosting the sales topics of customers’ daily life into
China’s most remarkable companies. of all companies involved. Besides a single app. Besides investment,
Ping An has grown into a company its initial core product insurance, expenses, deposits and loans as
that is relevant to its customer on a today Ping An generates high revenue well as insurance management, the
day-to-day basis by offering numerous with products from other industries customer can also manage care
financial services like asset or wealth such as health care, automobiles, trading activities, fine payment, real
management and investments, and real estate and banking. Ping An’s estate valuations, and health records.
health care. By doing so, Ping An has key ecosystems – covering financial, By orchestrating ecosystems in several
evolved into a personal finance service health care and auto services as well sectors and simplifying processes
provider. as real estate financing – are designed that touch upon various fields, Ping An
to deliver a holistic customer service rapidly expanded its customer base
and cover all phases of the customer’s and drastically increased customer
life cycle. The overall aim is to provide relevance thanks to its “all from one
services for every possible situation. source” approach.
Financials
2014 2015 2016 2017
Revenue $72,272.5m $97,694.1m $106,299.3m $129,393.7m
Change in revenue compared
~ 27.5% ~ 31.5% ~ 8.8% ~ 21.7%
to previous year
Change in profits before tax
~ 34% ~ 47.1% ~ –3.1% ~ 31.5%
compared to previous year
# of employees 235,999 275,011 318,588 342,550
Ping An was listed among the Fortune users of the auto ecosystem that
Global 500 in 2018, with reported connects customers with around
revenues of around $145 billion 30,000 care stores, 100,000 garages
globally. Ping An has 180 million users and around 35,000 used-car dealers,
of health-care services provided and 21 million users of the real estate
through Ping An’s health ecosystem ecosystem.
in around 260 cities, 32 million daily
Fit for growth 10Market positioning – models for playing in ecosystems
Hybrid – the way of transformation at the same time, follow a plug-and- valid option for incumbents for testing
Of course, there are also ecosystem play strategy for small ticket products which way to go or for driving their
players who do not identify with one like travel insurance. Nevertheless, transformation process. Temporary
or the other typology of ecosystem they maintain traditional operations hybrid strategies allow incumbents
player or who are currently in the for complex products or areas to stretch development costs, search
midst of their transformation process. where clients typically value human for partners and organise change
Incumbents transforming with the goal interaction, such as life insurance. processes over a longer period of time
of a build-and-run strategy may start or even follow a phased approach to
orchestrating ecosystems for some of Although the hybrid approach is lift operations into the new ecosystem.
their products like car insurance and, neither fish nor fowl, it might be a
Allianz – a hybrid on the verge of transformation
Company profile Business model ecosystems outside the Allianz Group.
Allianz SE is one of the world’s Last December, Handelsblatt cited Combining these two typologies,
leading insurance and financial Amazon, Google and the Chinese Allianz applies the hybrid strategy.
service providers. The Group offers insurance company Ping An as Allianz’s
comprehensive services in property largest future competitors. Against Competitive advantage
and casualty insurance as well as life this background, Allianz has initiated a As the customer interface has
and health insurance. The portfolio paradigm shift. With Allianz X – Allianz’s evolved, Allianz offers its products
ranges from general life liability and digital business unit – the insurer not only via brokers and agencies,
car insurance to travel and credit is investing in evolving the digital but also increasingly via digital
insurance to assistance services. business model. On the one hand, platforms. Although customers inform
The company is also the world’s Allianz takes the role of orchestrator by themselves about the products using
fourth-largest asset manager and establishing and maintaining several online comparison portals, they still
provides clients with numerous asset ecosystems (Data Intelligence and want interpersonal contact. Allianz
management products and services. Cybersecurity, Wealth Management is therefore pursuing a two-pronged
As of 2017, Allianz ranked 22nd in the and Retirement, Connected Health, approach. With its solid financial
Forbes Global 2000 of the world’s Connected Property and Mobility) and situation, strong customer base and
largest companies. As it stands, Allianz by providing interfaces for portfolio international brand recognition, Allianz
market capitalisation amounts to companies. On the other hand, Allianz has several competitive advantages
approx. $100 billion. assumes the role of contributor by over its newly established competitors
connecting its own digital products to from outside the industry.
Financials
2014 2015 2016 2017
Revenue €96,802m €104,231m €104,615m €108,649m
Change in revenue compared
–2.20% 7.70% 0.40% 3.90%
to previous year
Change in profits before tax
~ –8.9% ~ 14.6% ~ 4.0% ~ –1.4%
compared to previous year
# of employees 147,400 142,500 140,300 140,600
Getting involved in ecosystems external environment and customer While establishing or engaging
with convenient services for clients expectations. The ecosystem models in ecosystems, insurers have to
and partners is an intelligent described above have differing, but thoroughly assess different criteria
and indispensable approach for equally convincing, advantages. alongside their digital agenda and
keeping pace with the changing There is no one-size-fits-all approach. follow a multi-step approach.
Fit for growth 11Create your ecosystem strategy – write your own rules and learn how PwC can support you
D Create your ecosystem strategy –
write your own rules and learn how
PwC can support you
1. D efining and enhancing the 2. Screening partners Based on the chosen cooperation
digital agenda Being aware of potential client model, other aspects need to be
In order to establish, maintain and solutions means screening the market examined and agreed upon, such as
enhance a sustainable ecosystem, to identify potential partners who are business and contractual matters,
following a customer-centric approach already offering these solutions or eg, revenue models, the need for due
is key. This enables offerings that who could be a great match. In doing diligence or a risk analysis, and the
add value for the client, therefore so, the market should be scanned interface management between the
making an impact on them as a firm. and evaluated based on previous partners by ensuring compliance.
The first step is to develop a digital defined criteria that reflect the digital
agenda based on the strategy behind agenda and the strategy behind it. If an 4. Fostering existing relationships
it, followed by market screening of appropriate partner cannot be found Once the business relationship
potential partners, the establishment for the desired offering, alternatives has been established, it must be
of preferred partnerships and lastly, such as in-house development can maintained and enhanced. Some
the continuous enhancement of the be considered. If a potential partner aspects are mandatory as they are
business relationship. that is contributing to the strategy regulatory requirements. However,
and satisfying a concrete demand there are some aspects that are more
In order to move forward with the and client need is identified, a letter commercial and should be further
digital agenda in the first place, of intent will be signed by both parties developed to ensure that the offering is
gaining insights into client behaviour to set the legal ground for building the still up-to-date and enables excellent
and expectations is paramount. This relationship. market positioning of the company. For
enables the ecosystem company to commercial reasons, innovative power
start thinking about client-relevant 3. Establishing partnerships and flexibility should be maintained
products, thus producing initial During the early stages of partnership and strengthened continuously by
ideas for offerings that add value for establishment, the key pillars for the steadily working on the reputation of
clients and corresponding use cases. business relationship are defined. the company. Of course, the regulatory
These digital agendas differ from one The entire customer journey will be must-haves such as the definition of
ecosystem player to another, as they conceived and structured into phases roles and responsibilities, data security
have to be elaborated on an individual for digging deeper and conceptualising and privacy compliance as well as
basis. It is critical that the company the future offering. Furthermore, risk management have to be put into
puts itself in the shoes of their clients different cooperation models – such practice and interfaces have to be
and ascertains their needs and as outsourcing, sales cooperation and managed accordingly.
expectations with them. joint ventures – have to be considered.
Fit for growth 12Create your ecosystem strategy – write your own rules and learn how PwC can support you
Fig. 4 Building the ecosystem is a strategically important and complex task
Customer-centric,
simple and secure
offerings
Fostering existing
4
relationships
1. C
ommercial aspects
Flexibility
Innovation enablement
Reputational risk
Client journey
and phases …
a ct
ti mp
en 2. R
egulatory/mandatory
Cli Establishing aspects
3
partnerships
Client demand Roles/responsibilities
and need Cooperation model Processes/interfaces
Client behaviour Due diligence/risk analysis IT change, release, …
and expectation Screening partners Price/revenue model IT run (incident, BCM, …)
2
Screening and
IT integration or interface Reg. compliance
evaluation: strategic fit,
Defining and business opportunity, Client journey Service level agreements
1
enhancing the company’s
Regulatory requirements …
digital agenda sustainability, …
Ideas and use cases Letter of intent Contract Fulfilment
FinTechs, InsurTechs, start-ups and other (potential) cooperation partners
The bottom line is to focus on the During this process, each ecosystem
client right from the start and allow player has to define its customised
room for flexibility in the business strategy, build corresponding
relationship in order to be able to react platforms and offerings around it and
to unexpected (market) changes, thus ensure that each offering is embedded
creating a sustainable ecosystem. in existing ecosystem offerings.
Fit for growth 13Summary and outlook
E Summary and outlook
While some decades ago, establishing Which insurer will be leading the digital
an ecosystem of services would change in the industry? Which insurer
have been a Herculean task, today’s will transform its traditional business
world is actually encouraging model into a mainly platform-based
interconnection and collaboration. business model? Which typology of
Insurers are fortunate to have a ecosystem do incumbents mostly
unique selling proposition: with a large follow? These are just some of the
customer base, insights into data and many questions that need to be
established brand recognition, insurers answered in the near future.
have enormous success factors at
their disposal when establishing and Moreover, it remains to be seen how
maintaining ecosystems. Moreover, established insurance companies will
insurance companies have built up initiate this change. In this respect,
holistic regulatory expertise, giving InsurTechs play an important role.
them a competitive advantage over Cooperation between established
their latest tech-related competitors insurers and new market entrants
from outside the industry. Their solid from outside the industry is only one
financial situation enables them of several unrecognised synergies.
to invest large sums in evolving This is mainly but not solely due to
their digital agenda by engaging in the fact that customers increasingly
ecosystems. Inevitably, their services demand single-source products.
and products are relevant and related Also, in light of increasing competition
to a majority of basic customer needs, between established insurers and
eg, financing and insurance services companies from outside the insurance
for cars, construction financing and industry, it is inevitable that the two will
household insurance for real estate. come to cooperate with one another.
Besides these competitive advantages Collaborating with InsurTechs enables
and success factors, the right mindset incumbents to develop new products
and vision are also key to developing and distribution channels more quickly
or engaging in an ecosystem. Focusing while at the same time entering new
on your strengths while implementing markets and discovering new business
the overall strategic agenda is opportunities.
essential.
One way or another, insurers must
It remains unclear which incumbent initiate change now and seriously
will win the “digital race” and, thus, reconsider their business model. Only
maintain or improve on its current those who manage to digitise their
position in the market. The upcoming business model will remain successful
years will mark a turning point. in the future.
Fit for growth 14Our experts
Our experts
Nina Bartholmes Carina Specht Marie-Christine Lehmann
Director Manager Manager
Management Consulting Management Consulting Management Consulting
Financial Services Financial Services Financial Services
Mobile: +49 171 8675116 Mobile: +49 170 5599329 Mobile: +49 151 57445878
nina.bartholmes@pwc.com c.specht@pwc.com marie-christine.lehmann@pwc.com
At PwC, we continuously strive to analyse and engage in innovation in order to be able to deliver the best possible service
and value to our clients. Our European Customer & Operations practice, in particular, regularly cooperates with InsurTech
and FinTech partners to investigate current trends in the financial service market (see, for example, our whitepaper
“Outsourcing 3.0: Licensed FinTechs Driving Growth and Efficiency for Banks” in collaboration with FinLeap) and conducts
market surveys on outsourcing, cooperation and banking ecosystems (see, for example, our 2018 PwC outsourcing
survey – only available in German). In addition, we are driving the development of platform banking in cooperation with
Mambu and Backbase in order to lead financial services into the digital future.
About PwC
Our clients face diverse challenges, strive to put new ideas into practice and seek expert advice. They turn to us for
comprehensive support and practical solutions that deliver maximum value. Whether for a global player, a family
business or a public institution, we leverage all of our assets: experience, industry knowledge, high standards of quality,
commitment to innovation and the resources of our expert network in 158 countries. Building a trusting and cooperative
relationship with our clients is particularly important to us – the better we know and understand our clients’ needs, the
more effectively we can support them.
PwC. More than 11,000 dedicated people at 21 locations. €2.2 billion in turnover. The leading auditing and consulting
firm in Germany.
© May 2019 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft. All rights reserved.
In this document, “PwC” refers to PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft,
which is a member firm of PricewaterhouseCoopers International Limited (PwCIL). Each member firm
of PwCIL is a separate and independent legal entity.
Fit for growth 15www.pwc.de
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