The future of bancassurance in Asia

The bancassurance channel is an increasingly important distribution channel and represents a significant growth opportunity for insurers across Asia. Globally, the bancassurance market reached a value of USD$1,191 Billion in 2020 and is expected to grow to USD$1,696 Billion by 2026, according to a new report by IMARC Group¹. The importance of the channel is equally prominent in Asia. For instance, in Hong Kong, bancassurance accounts for over 50% of premiums and about 33% in Singapore².

There are a few reasons behind this trend. For one, the integration of banking, wealth and insurance services makes it easier for customers to have a holistic view of their investment, protection and financial management needs. An ageing population has also led to a greater need for health, life insurance and retirement plans, which has also been a key driver of growth.

However, Covid-19 has changed the way we live and work, and industries have had to adapt quickly to this change. The pandemic has also exposed the vulnerabilities of bancassurance models that have not invested in digital enablement. With the need for social distancing, financial advisory conversations had to be conducted remotely. Agile bancassurers were able to meet their clients’ needs by leveraging digital technologies to enable remote client engagement, financial advisory and digital fulfillment journeys. This was especially essential in tech-savvy Asia, where internet penetration in several markets is higher than the global average.

The slowdown of footfall may continue in the new post-pandemic world, as most people and processes have moved towards a simplified virtual model of working. Even as countries start to open up, companies must pivot to a remote end-to-end advisory model through digitally interactive customer journeys.

Customisation through data is key

Availability of increased data and emerging technologies is allowing insurers to offer tailor-made products to their customers. Banks have a data advantage and integrated bancassurers are able to customise insurance propositions to meet the individual needs of their customers through targeted use of data and analytics tools.

With a better understanding of our customers’ overall financial needs and preference, bancassurers can provide hyper-personalised services, recommending the right products and services to the right customers at the right time, through the right channel. The use of data can also help to identify pain points in customer experience and by applying AI, we can also streamline customer journeys and simplify processes such as underwriting and claims. This will significantly improve customer experience.

However, preferences and processes are not the only areas that can benefit from data analytics. Insurance is intrinsically linked to one’s health and wealth, and the insurer of the future needs to offer an integrated health and well-being proposition that takes into account our customer’s financial, mental and physical wellness. This is one of the fastest growing insurance segments in Asia and indeed globally. The conversation is rapidly shifting from products to platforms and integrated bancassurers are at the forefront of this, building digital ecosystems that embrace customers, both in sickness and in health and incentivize them to cultivate sustainable, healthy habits.

As we are in the business of protection, it’s also essential that we protect our customers against financial crime. Cybersecurity is one area that no business can neglect. By applying sophisticated data-driven algorithms, integrated bancassurers can better detect and prevent fraud.

The whole is greater than the sum of its parts

To meet the needs of a fast-changing industry, banks and insurers will need to capitalise on their respective strengths and integrate seamlessly to create a omni-channel experience for customers.

In today’s competitive marketplace, a successful strategy involves the marriage of innovative products and efficient processes with segmented and targeted needs-based advice. When you integrate channels, technology, operations and data between a bank and insurer, you create a synergy that opens up unique opportunities and new business segments. Integrated bancassurers are able to drive value for their customers in every part of the value chain.

Additional synergy opportunities can also be derived through strong collaboration with a bank’s retail and commercial banking units, allowing bancassurers to meet the needs of retail customers across segments (mass, mass affluent and High Net Worth customers) as well as business owners and employees of large corporates.

Using HSBC Life as an example, our integrated wealth and insurance model provides us with distinct advantages. We are able to build holistic customer solutions across our Banking, Insurance, and Asset Management businesses and are able to connect strategic corridors through our global presence. This enables our customers to access the best solutions across the region and benefit from our global presence and best practices.

Looking ahead

In today’s environment, the question all insurers should be asking themselves is: how do you pivot in the short-term to be less reliant on face-to-face, in-branch interactions, while still planning for the long-term? For bancassurers, we will need to be both a microscope and telescope. The pandemic has led to an acceleration in customer adoption of digital channels which will continue into the future. In the near term, the industry has to pivot to ensure that digital deliveries are closely aligned with current societal and customer needs.

In the longer term, technology is only going to be part of what good banking service looks like to customers. While many day-to-day activities – such as payments, lending and account opening – will be efficiently managed through digital platforms, truly understanding individual customers’ needs, helping support them as they manage their health and wealth, take out a mortgage or buy protection for the future, remains a distant goal for technology. This is why human interaction will still be necessary, particularly when it comes to important life decisions or complex situations that require empathy and reassurance.

To succeed in the new normal, bancassurers around the globe, but especially in Asia, will need a digitally-enabled financial planning and insurance services proposition that offers needs-based wealth planning and insurance services, delivered by a team of experienced financial planners. Essentially, one has to blend the power of technology with the expertise of people. As an industry, we need to be cognizant that the world is becoming more interconnected and the affluent in Asia are well-banked across geographies. Business models that have invested in digital touchpoints have proven to be more resilient and will continue to thrive in the new world.