Demystify FinTech, RegTech, and InsurTech
2017 Jul 7 / By Nilo R. Reyes
FinTech is driving innovation in financial services globally and changing the nature of commerce and end-user expectations while shaping the next generation of banking, financial services and insurance. We are pleased to have the industry leaders gathered at PCCW Solutions’ BSFI industry forum to share different forward thinking perspectives.
Our guest speaker from PricewaterhouseCoopers (PwC) and executives from PCCW Solutions shared insights on the new technologies and trends that the financial services industry in the region is experiencing, including how enterprises can tackle the challenges and opportunities brought by regulatory compliance requirements.
"Forget the unicorns, watch out for the Chinese dragons instead, as China is about 18-24 months ahead of the world when it comes to FinTech," said Henri Arslanian, who is PwC's FinTech & RegTech Lead, China/HK and U.S. Liaison. Ramez Younan, Managing Director of PCCW Solutions, echoed the market potential of banking and financial services industry in Asia Pacific, "45% of profit derived from banking and financial services industry is generated in the Asia Pacific region. However, we live in the most fragmented region with a lot of regulations and diversified views of governance of the industry."
"Your competitors of the future are not going to be other banks with a digital channel, but are going to be data and tech firms that just happen to be in the insurance and banking space as well," said Henri. Banks and financial services firms have to be customer-centric and transform digitally in order to drive growth. Digitalization is the new norm and having a trusted partner in the digital ecosystem helps organizations to be agile, reacting and responding timely to the keen competition.
"PCCW Solutions is at the forefront to drive FinTech innovation and is committed to be the trusted digital transformation partner in the region," Andy Mak, Senior Vice President of PCCW Solutions said. "We master the blockchain technology to develop different use cases, enabling our clients to deliver innovative services balanced with higher transparency, better customer experience and effective risk management," Andy added. According to the onsite polling, over 50% of the delegates responded that they are already using FinTech to provide new services, and also over 50% voted that "streaming business process" is the main driver to accelerate blockchain adoption.
Balancing customer experience with risk management
Financial institutions, whether domestic or international, are feeling the competitive pressure to increase revenues, lower operating costs, and delight customers. As such, business models are being redesigned and the use of innovative solutions is getting higher attention to address customer pain points. Although only 37% of all organizations have seriously adopted digitalization in 2016 according to the survey by the World Bank Group, many banks - both retail and non-retail sectors - have commenced their transformation journeys to provide anytime, anywhere banking services, ensuring their processes are aligned to customer expectations and their products and services are insight-based to provide added value.
FinTech players have been introducing technologies such as biometrics to help speed up Know-Your-Customer (KYC) checks to verify customer identity during on-boarding, blockchain to validate required information that are across multiple entities, and AI-powered chatbots that can takeover agents to handle routinary and simple queries instead of human interventions.
While financial institutions need to make sure their customers’ information is protected in the era of high cybercrime, they don’t have to compromise service. With the right strategy and technology partner, a growing number of banks are finding a balance where security and customer experience intersect.
Simplified sign-on makes it easier for customers to use services if multifactor authentication and integrating single sign-on (SSO) are provided. This convenient process lessens customer frustration and speeds up their ability to perform banking tasks. Also, it is vital to keep sensitive company information secured and create an ongoing fraud awareness program for both employees and customers. Engaging a technology provider with proven data-security expertise could prevent data breaches and other forms of cybercrime, thus minimizing not just financial loss but also maintaining customer trust and mitigating reputational risks.
Smart contract for insurance industry
Insurance organizations can consider using blockchain technology to streamline payments of premiums and claims. In addition, blockchain technologies can support significant digital transformation upcoming in the industry since much of the transformation relies on data. For example, actuaries and underwriters are using the ever expanding universe of data to build models to estimate risk and determine pricing more accurately.
During the industry forum, the handling of customer claims was used to highlight typical bottlenecks or issues that customers and insurance organizations face and how blockchain could help. For customers, insurance contracts are typically complex and difficult to understand because of the legal language used. In addition, when accidents happen, customers can often be faced with a complex and drawn-out claims process. From the insurer’s perspective, the industry is facing ever tighter regulation and growing threats from fraud.
Smart contracts driven by blockchain could provide customers and insurers with the means to manage claims in a transparent, responsive, and irrefutable manner. Contracts and claims could be recorded onto blockchain and validated by the network, ensuring only valid claims are paid. For example, the blockchain would reject multiple claims for one accident because the network would know that a claim had already been made. Smart contracts would also enforce the claims triggering payments automatically when certain conditions are validated.
Adopting a common blockchain across the sector could create a step change in value for the insurance industry and claims handling could become more efficient and streamlined, resulting in an improved customer experience. Such an approach could also help to reduce further fraud if identity management was also enforced on the blockchain.
The case implied that a common claims handling platform would still make it possible for individual insurers to compete for customers, offering a range of products and prices by virtue of the smart contracts they set up. Moreover, a blockchain would allow the industry as a whole to streamline its processing and offer a better user experience for customers who have to make a claim. Simultaneously, storing claims and customer information on blockchain would cut down fraudulent activities.
| Nilo R. Reyes|
Client Partner, Banking, Financial Services and Insurance Industry
Nilo focuses on building and enhancing client relationships, providing value-added sales and service support and proactively working with partners in new business and product development initiatives. Nilo has over 25 years of experience in international banking with Bank of America, DBS and ANZ Bank and continues to highlight that the customer should always be at the center of any business inter-action in his current role.