Fintech: More than just banking
This is a call to entrepreneurs especially those who are focused on developing B2B products in the “Fintech space”.
Fintech is in vogue these days. BlockChain is cool. Cool startups are disrupting banking business models. In India there is talk about the “India Stack”, Universal Payment Interface and how these frameworks could upend major players. Most people associate FinTech with Banking, and just commercial banking offerings such as Alternative Lending; most traction has been in the payments domain.
Insurance does not come to mind when most people talk about FinTech. Why is this so? The Insurance industry has been traditionally laggards in the adoption of technology, highly conservative and averse to risk, especially startup technologies.
But several forces and technologies are coming together that could transform the industry and open up exciting opportunities for fast movers and new entrants. Premiums tailored to lifestyle (thanks to Fitbit type devices) or driving style (thanks to sensors in cars) will become a reality soon; it is easy to imagine the car rental industry getting fully disrupted. Predictive analytics in domains such as Crop Insurance & Hurricane Insurance should soon offer significant value to insures due to improve speed, reduce cost and offer great user experiences to customers. AI-based algorithms could potentially replace (expensive) mathematicians who help deliver actuarial services. This is just the tip of the iceberg, there are so many technologies and applications of high importance and relevance to the industry.
The full life cycle of an insurer’s business — product development, marketing, sales and distribution, risk management, underwriting, policy management, claims processing — is ripe for disruption with a group of technologies — AI, Telematics, Genomics, IoT, Big Data/Analytics — that are fast maturing and coming together. It is easy to picture faster/cheaper rollout of new insurance products that are highly personalized with great customer experience, a true win-win for both insurers and customers.
For this scenario to become reality, there has to be sufficient number of industry-specific applications built on these promising technologies. And they can only be provided by startups. The insurance companies are (forced to) ready to adopt . Will there be enough such startups…to reap the rewards?