…the first step towards a winning digital strategy for insurers and financial advisors
The first thing we need to do in a discussion about Digitalization is to truly understand what it means and why we should care about it. There are at least three good reasons why we should care about it, the first reason which easily comes to mind is the fact that Everyone seems to care about it.
Digital transformation is now a key element, and if you want to be a relevant part of those discussions, you need to understand what it means. The second reason is that, behind the hype of digital, there is substance, Digitalization is beginning to re-write the rules of competition, right now it might be a bit hard to see what’s the hype and what’s the substance but when the dust settles, the rules of competition would have changed. Capabilities required to succeed will not be the same as they used to be, and the firms that used to be market leaders may not come up on top in the digital area. There is no doubt that if you want to part of the firms that come up on top, you need to ensure that your firm embraces Digitalization.
This brings us to the question, What is Digitalization? You might think that you know this and probably have a broad general view on it, but to cut through the corporate bust and the hype. We need a more clear and careful definition of Digitalization. But before we define Digitalization, we need to make two important distinctions and also clear out common misconceptions when people talk about Digital transformation in Finance.
Digitalization Vs. IT Support Business. The first distinction we need to make is Digitalization and the use of Traditional IT to support the business. In Insurance, Finance and other sectors, firms around the world started using computers to support business already in the 70s, 80s, and 90s, many firms begun been dependent on those systems from top to bottom in conducting business. At the beginning of the 21st Century, technology development picked up in pace, we saw what was known as the Dotcom boom, and the term web 2.0 gained popularity. Today, however, the Tech wave in finance has not only continued to accelerate, but it changed in its very nature. Trends such as the Internet of Things, Cloud and Virtualization, Big data Analytics, Social Media, Advance Machine Learning, 3D Printing, etc. This means that Digital technologies are no longer support for how companies do business, Digital Is becoming the way to do business, and that’s the critical difference.
But there is a second important distinction, we need to distinguish between Digitization and Digitalization. Digitization is the conversion of analog, physical objects into digital goods. An example is cash that becomes mobile payments or physical forms that become a web form. Digitization means products and services offered no longer involves any physical components, they become what is known as Digital Goods.
Digitalization is the wider effect digitization of products has on the industry because when the products of an industry become digital, means that the dynamics of the industry will change. Very broadly, Digitalization shifts the focus from the creation of a fortified market position that can be defended to an innovation arms race where the only constant changes. The more digital an industry is, the faster the speed of change.
Now, with this distinction in mind, let us look at some common misconceptions about digital transformation. One common misconception is that digital transformation is something that is coming towards us, something that is likely to hit the financial industry very soon, but, as a matter of fact in many parts of the industry, finance is already a digital industry. Digital competition is not the future, it’s what is going on right now, and the only sustainable way for firms to compete, thrive and stay on top is to re-invent themselves for constant transformation.
Now, having defined the basic meaning of Digital and Digitalization, let’s explore how it impacts finance and Insurance by starting at where all businesses should start, The Customer.
In the current hype about digital, we need to remind ourselves that we aren’t interested in technology for their right, we’re interested in Digital because it helps us to acquire and retain customers that are interested in what you can offer them. It is said that the traditional customer in the financial and other industries is a slow-moving one, with a potential of extreme loyalty to brands.
However, what is becoming a challenge to the norm are the new and young customers entering the market, and these new and young customers are very different from the Traditional known customers. Now, the question remains, what are these customers looking like? How do you win them over? And how do we get them to stay around for more business? The new customers entering the market today belong to what is called Generation Z.
Generation Z is currently the largest demographic in Ghana and the world, they are typically highly educated, they are tech-savvy, and more importantly, they have grown up in a world with social media, and mobile technologies always present, they can’t imagine a different world, this generation is the True Digital Natives. According to the National Communications Authority of Ghana in their recent Telecom subscription report. Ghana with an estimated population of 30,922,666, the total subscriptions of data in the country at the end of December 2020 were 26,589,177. The penetration rate for internet data for the period stood at 85.99%. These statistics further goes to prove that Ghana’s demography is largely made up of Generation Z.
It’s proven that as customers, Generation Z is focused on innovation, insisting on convenience, always connected, and lacking brand loyalty. Now the question is, how do we get to this generation Z? We get to them through smartphones, this group of consumers are not just mobile-first consumers, they are mobile ONLY, they are always connected to their mobile devices and expect to use them efficiently and securely to interact with you. According to the same report of the National Communication Authority of Ghana, of the 26,589,177 internet users in Ghana, 92.7% of the users access the internet through their mobile phones.
The Generation Z also want all their interaction with you to be personalized, contextualized and as fast as possible. It is also important to remember that this group is very tech-savvy, they know what the latest technology can do, and are likely to be aware of innovative features through social channels. This generation z is more likely to slide towards companies whose activities align with their characteristics. As a company, by providing and implementing a digital strategy that ticks all these services (Personalization, Contextualization, Speed, and Convenience) you earn the right to do more and more business with generation Z.
To be successful in your digital strategy as an Insurer or financial advisor, a critical question you should ask is; How does my Digital strategy align with this new generation of consumers. Does my strategy support Personalization? Contextualization? Speed? Convenience and mobile?
National Communications Authority: Industry Report – Telecom Subscriptions for December 2020.
The writer is a Digital Strategist, can be reached on 0263139899/0501149133