We all know that tech is disrupting every single industry and financial services is not the exception!
"The use of data and being able to offer a truly digital customer experience are both critical for the insurer of the future, something Big Tech firms like Amazon and Google excel at. The threat from such entrants is more real than the insurance industry might want to admit"
Anirban Bose, CEO Capgemini Financial Services SBU
Welcome to your blog post. Since the early 2000, the world's major digital players have been developing their own financial services and products. The year 2014 marked a turning point in the interest given by big techs which increased their developments within the industry.
Amazon lead the incursion in 1999, with accept.com payments platform. In 2008, in addition to Amazon, only ANT Financial Services, Tencent and Alphabet had launched a financial service proposition. Today, more than 350 services have being launched since 2000 and Alphabet is leading the way! From payments, insurance and trading to Blockchain and cybersecurity!
IIn the news last week:
Alphabet’s move into the insurance business. Verily Life Sciences, the health care company owned by Alphabet, is launching a new subsidiary for the effort called Coefficient Insurance Company, which will be backed by the commercial insurance unit of Swiss Re Group. This follows Googles interest in acquiring Fitbit, the maker of wearable health devices. While insurance companies have been struggling to deliver a superior customer experience, Google already has deep knowledge of our lives and data on health adds another dimension! The intimate knowledge of our daily patterns and interest that Google has had for years provided it with a far better picture of risk than any other insurer business. Coefficient Insurance, would initially focus on stop-loss insurance to protect employers from staff health cost volatility; this is certainly not individualized health insurance based on big data just yet. But it is going to get personal very soon as it will start monitoring at-risk employees via their smartphones and even couching them towards healthier lifestyles.
This is not the first time a big technology company try to disrupt the health industry. Amazon Alexa and Alphabet own DeepMind made headlines with their contracts with the NHS in the UK. Apple collaboration with Aetna on an app that uses Apple Watch data to reward users with healthier lifestyle and Facebook last year, launched Preventive Health, a tool that recommends users to have checkups based on their age and gender. All this was before covid-19. Which made the operating systems run by Google and Apple central to digital contract tracing.
New insurance firms that use technology innovations to focus efficiencies and attract specific customer segments, are leading the way with digital agility; however with massive scale, rich personal and commercial data and advance technology big techs are tapping deeper into financial services revenue pools. Big corporations may not feel the sting of this new entrants early on, due to their vast customer bases and their expertise navigating regulation. FinTech startups, however, might struggle if they find themselves in direct competition with big techs.