Insurers are presented with a golden opportunity to transform their finance organization to align with their company’s digital initiatives. Across all lines of insurance, companies are investing heavily in developing pioneering new products, acquiring and divesting business lines at a rate never seen in the industry, responding to increasing regulatory oversight, and answering calls for environmental, social, and governance (ESG) initiatives.
Insurers not only need digital tools and capabilities to meet those imperatives, but an agile organizational structure that speeds up decision making, moves closer to the customer, and, most of all, supports innovation at speed.
Companies can choose to do short-term improvements to meet the requirements, or use this as a motivation to perform a more extensive overhaul. The most challenging work is not related to technology implementation, however. It’s redesigning the finance organization to support all other departments in the digital journey. This requires a change in management focus, incentives, and an enthusiasm for collaborating across departmental lines.
To start, finance can use six levers to begin moving on their digital journey while still realizing quantifiable benefits in the short to medium term:
This blog provides details on the necessary first step on the finance transformation journey – a self-assessment of your company’s finance maturity. For the details on each of these six steps, plus case studies and a self-assessment questionnaire, download our paper, “Using Digital to Transform Finance in Insurance: Six Steps to Drive the Digital Transformation of Finance.”
To get started, perform a self-assessment that looks at specific measures of maturity in finance along four key dimensions: automation, data, cloud, and ways of working.
Understand your current state of automation. What functions are done manually versus performed by bots? How effective is your automation at driving cost improvements? How much time and money is spent maintaining and updating those technologies? Do you retrain humans who lose their positions to automation for higher-value work?
Insurance companies and finance are full of data; the question is whether it is in digital form, usable for forecasting trends, real-time analysis, and modeling tax effects? Controls must be in place so data is captured at the source and its integrity maintained. Also required is an understanding of how much finance resources are committed to performing manual reconciliation or going back to operations to request data. Understand how your data is obtained, cleaned, formatted, and stored. In other words, is it consistent and instantly accessible by everyone from the CEO to a salesperson on the road? Is there a common data dictionary? Is the data secure from attack?
To what extent is your finance operation in the cloud and benefitting? Many firms still split operations between on-premises and cloud components. This hybrid approach keeps outdated systems functioning on the on-prem side, sort of, but eventually can create more problems by holding back deep transformation. Finance executives must also assess the effectiveness of their backup and recovery strategy and the ability of their cybersecurity program to defend against threats like ransomware and denial of service. Are you up-to-date in upgrading your tools and security patches?
Suddenly many of your employees work remotely, empowered by communications software and remote access to corporate networks. This requires new ways of thinking about change management, collaboration, and even HR functions, such as onboarding new hires. But “ways of working” has another connotation in the digital environment. The digital organization promotes dismantling silos, working across functions, and making organizational hierarchies flat, with decision-making authority pushed closer to whoever is serving the customer.
A few years ago, we talked about digital transformation in traditional financial services as a nice-to-have benefit driven by automation for reducing cost and improving accuracy. Now, that transformation must go much deeper than plugging in a few robotic process automation bots.
Finance transformation is now understood as the tip of the spear that will help insurance organizations drive product and process innovation, meet complex regulatory reform, and create value not just for a broad portfolio of stakeholders but for society in general.
Now is the time to create the finance transformation within your organization.