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Carpe Datum: Banks Must Seize Data Advantage To Cross-Sell Insurance Or Get Left Behind

Banks have a natural advantage when it comes to offering their customers insurance products. According to Cover Genius’ Vice President Strategic Partnerships, EMEA Daniel Poole, since consumers are already used to having their banks be the financial hub for all of their transactions, this relational reality puts insurance in a unique spot as a natural and intuitive extension.

At its core, this cross-selling opportunity is based on the swath of consumer data they already have, Poole said, and the degree to which it can be used to tailor and customize their insurance offerings to their clients, suggesting that banks are often the first to know when a customer is undergoing a major life change — such as having a baby.

“You’re buying a pregnancy test, then you’re on Amazon and you’re buying ‘What To Expect When You’re Expecting,’ and then you’re looking at nursery equipment and furniture,” Poole said as a hypothetical example. “All of these things indicate there is a new family member inbound. Banks are well positioned there to detect customer life changes and present convenient and tailored insurance offers to the customer when they need them.”

That transactional data trail will pop up with most major life events, such as a student going to college, a marriage and retirement. The key for banks, he said, is realizing that data has the potential to be the cornerstone of their unique, customized insurance offering for consumers. Provided, of course, they leverage it to build something truly convenient and friction-free for consumers.

The Challenger Bank Advantage 

According to a survey conducted by and published last month, almost half (45 percent) of bank customers are highly interested in receiving at least one insurance offer from their bank relevant to purchases and events. This willingness from consumers shows an opportunity for both mainstream and neobanks, also known as “challenger banks.”

But Poole said there is a gap in their inherent ability to provide those services, and legacy banks are left behind.

Challenger banks, he noted, unencumbered by legacy systems and processes, were built for convenience and ease of use, which data shows is the number one purchase trigger for customers. While neobanks do have an advantage, given their digital nature, there is still an opportunity for them to enhance and customize their offerings even further with embedded insurance and warranties.

“Convenience and ease is simply the right product at the right time and making it easy to purchase,” he said. Consumers don’t want one-size-fits-all offers that ultimately end up being a one-size-fits-none, he said — they are looking to the bank to tailor the protection insurance offers to the exacting requirements of that customer.

“And, it’s not enough to just have the data. You’ve got to be able to use the data,” he said. “While all banks have the data to be able to execute in this area, digital and challenger banks, again, have an advantage as they are often free from legacy systems which can limit both the ability to use data sets cohesively and the ability to benefit from deep integrations with partners, like Cover Genius.

Legacy banks, he said, are weakened in this regard by their tendency to silo their data. The transactional data, which could be helping them build better insurance offerings, sits totally isolated from what is actually being offered, failing to provide an advantage to the policies underwritten. If all data was optimized, banks would have visibility and make strategic use across all those data points.

With InsurTechs, there is an opportunity for both traditional and neobanks to better leverage their datasets to create tailored, embedded insurance offerings that protect their banking customers while creating strong engagement with them.

What Friction-Free Looks Like In Bank-Backed Insurance

The basic rule of thumb that financial institutions should look at when thinking about an expansion into insurance, he said, is that “it’s about making things as easy as possible for the customer at every stage within their insurance journey.”

For consumers, Poole said, the real test of convenience comes on the day they have to file a claim for something. That’s the real moment of truth, and it’s up to the financial institution (FI) to figure out how every touchpoint in that process can be optimized around consumer needs.

What that means is that it’s time to put an end to things like 30-page policy documents in a tiny typeface — as no one wants to read that. It means eliminating the 45-minute wait on the phone to talk to an insurance agent to get a question that could be answered just as easily, if not better, with a dynamically rendered website with a good FAQ set ready for perusal.

“When a customer comes to claim, do we need to be asking the standardized and generic question sets when actually we can dynamically render claims forms only to ask questions that are pertinent to that claim? And can we use that data that we’ve already used to quote and sell the insurance policy to pre-populate a lot of the answers to automate and streamline that process to the customer?”

Perhaps most critically, when it comes time to pay out on claims, he said, with all the options for paying a consumer digitally and instantly, it’s time to kill off the check and the tradition of someone waiting by the mailbox for their claim to be paid.

That ensures convenience, customer satisfaction is high and customers can go about their lives. Now is the time for financial institutions, including traditional and challenger banks, to embrace their data and use it to unlock new, tailored insurance opportunities that will drive revenue and customer satisfaction throughout the banking experience.

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