There is no doubt that technology and digitization have been a primary and important ingredient in the growth of any company, however banks have been slow to mobilize their bancassurance products on the digital path and it could be partly the fault of the complex insurance product sales processes and competition with other banking products.
The Insurance Banking Today
Those in Asia-Pacific and Latin America have focused on a large scale in the bancassurance channel to sell life insurance products, which choose to have higher average sales prices and profit margins than most non-life products.
When banks have access to their clients’ personal financial assets, they often work to promote embedded cash value life policies as an investment alternative, citing tax benefits.
Also, many banks have gone to great lengths to market non-life insurance products, which have lower selling prices and commissions.
Global sales of bancassurance grew in all regions from 2011 to 2017, which were led by Latin America, whose premiums expanded 12%. In Asia-Pacific sales increased 9.2%, where China accounted for two-thirds of the growth.
The slowdown of digital insurance banking
A survey of 118 banks around the world found that digital bancassurance channels accounted for 19% of non-life insurance sales, while 2% of life sales, where advisers and branches next being dominant (85% of sales in 2017).
This difference exists because in rare exceptions, banks do not offer products digitally and have been slow to digitize because complex insurance sales processes can make the shift to purely digital channels more challenging.
Some banks may also not view life insurance as a priority investment solution due to increased regulatory contracts and dissolution of tax benefits in some markets.
Each bank continues its path in search of the creation of a multichannel model that adapts as the best option, dominating the field and standing out digitally.
It is common to see banks continually evolve their digital strategies and offering. In this process, however, banks often treat bancassurance products in a tactical rather than a strategic way. As a result, banks tend to embed these products into other offerings rather than making them a low-key part of their digital channel strategy.
Unfortunately, fewer customers visit the banks’ physical locations and they have been slow to make up for lost sales at branches by implementing a comprehensive digital model for bancassurance.
There is no doubt about the great growth opportunities for bancassurance, however, one of the keys to capturing them is in the digital and analytical capabilities that give way to personalization: a better customer experience and an omnichannel offering.