Beating the Clock in Enterprise Software Development in Insurance
Driven by emerging technologies and a new customer-centric approach, the insurance industry is changing. In a series of articles, Koble’s team is looking at the current state of digital insurance, as well as factors for insurance leaders to consider when deciding on software for their enterprise. In part one, Anna Vogel, Chief Platform Officer at InsurTech wefox Group, and Managing Director of Koble, examines how software can help carriers and distributors to keep pace with the rapid rate of change in the digital economy.
In 1965, when Intel co-founder Gordon Moore predicted that processing speeds would double every two years, he set the tone for things to come. More than 50 years later, the debate has moved on to AI, quantum computing, and the idea of the Singularity — that ever-faster improvement cycles will eventually lead to the development of super-intelligent machines that outsmart people and take on a life of their own. Speed, in other words, is a force to be reckoned with. A cursory glance at the adoption rates of this century’s technologies among consumers is a meaningful indicator of this development.
In the wake of digital transformation, the business world has shifted gear too. Arguably, digital disruption will reach every corner of the economy, forcing even those companies initially resistant to digitising their products and services to reinvent themselves as technology companies. “Like it or not,” software business Majesco wrote in their recent Future Trends report, “the ‘Amazon experience’ is now the benchmark for all businesses, including insurance.” How fast a business adapts to this new reality may determine if it survives.
Even big tech itself is trying to figure out how to beat the clock. Google, Apple and co. are using their vast financial reserves to bolster their respective points of differentiation in a competitive marketplace. Each year, they buy numerous tech companies to stay on top of progress. As opportunities for growth are shifting online and born-digital businesses gain vital market share, many incumbents are trying to figure out how to keep up with the rapid rate of change.
A window of opportunity
In this climate of digitally enabled, accelerated change, hesitation can set companies on a path towards failure, turning them into burning platforms. Yet, being a bit late does not mean that all is lost. In fact, it can be turned into an opportunity.
Modern enterprise software can help businesses leapfrog ahead.
While change is often seen as linear and incremental, new technologies can help businesses and industries bypass certain stages. It can even help stragglers rush to the top to become digital leaders. China’s fintech sector is one such example of an industry that has leapfrogged ahead. After showing a low level of credit card adoption, Chinese consumers now surpass the USA in their use of online payment solutions.
APIs as a game changer
Software has undergone a profound evolution over the last few decades, driving major change and benefits. It has moved to the cloud, been repackaged as a service, and reinvented for mobile. As the graph below shows, when it comes to scaling, cloud businesses are some of the speediest companies around.
And, after several stages of disaggregation and abstraction, software has been broken down into its constituent parts, paving the way for the development of granular, single-function application programming interfaces (APIs).
Although designed to enable a frictionless customer experience when tapping into the digital infrastructure of say a bank or insurance carrier, APIs are consumed by computers, not human beings. Using independently deployable microservices, APIs speed up the development of new applications while working seamlessly in combination with legacy systems.
However, APIs aren’t new. Nor are they an insurtech invention. They have a proven track record of helping businesses and industries rapidly digitise their value chains and have transformed mere brick-and-mortar companies into digital frontrunners.
Micheal Endler, part of the editorial team at Google, illustrates how APIs can rejig a complex industry such as the banking sector and turn disruption into innovation: “APIs enable enterprises to make their core capabilities — such as a bank’s transaction functionality — easier for developers to leverage and reuse, which can, in turn, make it easier for those enterprises to launch new services, forge new partnerships, and develop software faster and more efficiently. To compete in today’s digital economy,” Endler concludes, “is in part to skillfully create, manage, and leverage APIs.”
For many incumbents in the insurance industry, it has become increasingly clear that the heyday of monolithic architectures housing many tightly coded functions is long gone. Contemporary enterprise solutions use microservices to allow for a more modular architecture that is flexible and easily scalable, enabling traditional businesses to leapfrog a few rounds in the race for digital transformation and growth.
The acquisition shortcut
The big question is how to get there, and fast.
Maintaining the status quo and adding a digital overlay won’t do. All-time highs in investment in insurtech and digital infrastructure suggest carriers and distributors are waking up to this.
However, building applications from scratch that empower you to move fast and meet changing business needs and increased customer expectations can take months, even years. This challenge is amplified by the short supply of programming talent.
Except for a few core applications bolstering major differentiators, building the quality digital solutions in-house needed to stay afloat in today’s fast-paced market is near impossible.
As mentioned, even the fastest moving companies out there buy other tech businesses to enhance their technology stack and talent pool. Arguably, this is the quickest way to access the tech and workforce needed to keep ahead of the curve.
But these companies are more or less born digital. They understand how the tech companies they acquire operate. Traditional businesses may wish to consider different avenues to jump ahead. Partnering with a tech company or licensing software for a specific solution from a high-end provider can give you instant access to the technology in question too.
Whatever route you take, speed is essential when choosing your tech strategy. For traditional insurance carriers and distributors looking to expand and grow, it has become a differentiator in its own right. And with the power of software reaching new heights, late adopters still have time to leapfrog ahead and become digital leaders.
Resources and additional readings:
- Techcrunch — Every Company is a Technology Company
- Majesco — Future Trends looking back and leaping forward
- The Startup — GAFA-What we can learn from their acquisition strategies
- Dasym — Looking at digital leapfrogging
- PIIE — How China leapfrogged ahead United States fintech race
- Bessemer Venture Partners — State of the Cloud
- Andreessen Horowitz — The World through an API
- Apigee — Demystifying Microservices
- Apigee — When Banks turn Disruption to Innovation
- Apigee — Microservices from Hype to Practice
- Venturescanner — Insurtech 2019 Funding
