Consider the following statistics about the financial services industry:
- Seven out of 10 consumers express an interest in life insurance that changes over time.2
- The number of records lost or stolen because of data breaches went from 1.1 million in 2015 to 13.3 million in 2016.3
As the financial services industry continues to focus on protecting the client experience, the statistics demonstrate that distinct opportunities to improve that client experience exist. In the Financial Services Evolution: 2017 Industry Predictions report from LIMRA, two themes, innovation and technology, reveal questions – and some answers – about where the financial services industry is going.
Why should you care?
These issues will force you to change the way you do business in the retirement market. Canadians are demanding more retirement solutions and other financial investments. This new “emphasis on longer-term savings products has propelled the demand for financial planning and wealth management.”4 And while the companies you work with create new solutions, they also need to protect clients’ privacy and personal information.
The LIRMA report makes these bold assertions:
- Innovation and disruption are two terms used almost interchangeably in the financial services industry. More companies are creating innovation centres and searching for new sources of inspiration.5
- Cybersecurity threats will expose companies to further risk.6
To help you understand the implications of issues in the LIMRA Industry Predictions report that affect you, Sun Life Financial interviewed experts about the future of innovation and technology in financial services:
Innovation – Léo Grépin, Senior Vice-President, Individual Insurance and Wealth, Sun Life Financial.
“Innovation could be a new financial services product, but I think more importantly, it’s actually innovating the way we deliver the solutions.”
Technology – Eric Monteiro, Chief Analytics & Engineering Officer, Individual Insurance and Wealth, Sun Life Financial.
“We need to put the client first, relentlessly. If we don’t, someone else will. They’ll probably be working out of a garage, but they’ll do it.”
5 key trends in innovation
- Globalization and improved access to information – can help us simplify solutions and enhance the advisor and client experience. For example, we’re receiving value from being part of the Waterloo, Montreal, and Toronto start-up eco-system. But we’re also plugged in to the technology scene in California and we get ideas and partnerships from as far away as India.
- New solutions – A lot of financial security is about peace of mind for our clients. We’re innovating by working to decrease their risk level through better solutions.
- Failure – Is absolutely an option and even a necessity, but not just any kind of failure. It’s about failing fast and failing often by taking smaller and quicker bites at the problem and rapidly applying what we’ve learned to our processes. Failing on its own is worthless. Failing with the right post-mortem and insights drawn from the failure is learning gold and the engine of innovation.
- New markets – We know many Canadians aren’t well served when it comes to financial security. They are under-insured and don’t have enough savings for retirement. Also, our advisor population is nearing retirement, and we need to help the next generation take over. Many of these millennials have different expectations for their career and the technology they need to build a business.
- Adapting – Our business today looks nothing like what it did 20 years ago — solutions are different, the client experience is different, our internal processes are very different. Forging connections with external partners will be as important as identifying internal innovators. The companies that win will be those that can best form an eco-system of partners and integrate external solutions and internal solutions.
“There are ways to overcome our challenges; for example, we work with start-ups rather than compete with them – at Plug and Play in California, MaRS in Toronto, Communitech in Waterloo, or the start-up community in Delhi, India,” says Grépin. “I’m bullish on the industry’s ability to face these challenges. It has been around for a couple hundred of years and has been able to adapt and innovate over the years.”
Grépin outlines important success measures for the financial services industry to get better at innovation, which:
- Starts with people, and it can come from any employee. We’re working hard to build a culture of innovation and continuous improvement in all our employees.
- Requires an ability to understand and listen to your clients. Throughout the organization, we dedicate time to hear what our clients and advisors have to say. We dedicate teams and build technology to better understand what our clients and advisors want. It’s also about innovating the experience and simplifying the access to information and service.
- Also requires a culture of failing fast, failing often, and learning even faster. We celebrate problems and how we can learn from them.
- Requires diversity of thought – people diversity – and creating collisions between these different ideas. We’re purposeful about creating these moments – about breaking down the silos in our large organization and bringing people together who wouldn’t normally connect across business lines and functions. That’s often when the best ideas emerge.
“What excites me about innovation in financial services are the possibilities. There’s such a gap in financial security and financial literacy among Canadians,” says Grépin. “To close that gap, we need to create better access to solutions – through our advisors, our websites, our mobile app, our online tools. We do that by making it easier to do business, through the elimination of a number of medical test requirements on our life and health solutions, and with the coverage of people with HIV up to $3 million. Better problem resolution for our clients makes it easier and more efficient when they need answers to more complex questions.”
5 key technology trends
Monteiro identifies trends that will affect our industry:
- Data analytics – coming of age in financial services; in fact, I would argue in business more generally. For our industry specifically, it will create a much more dynamic, responsive, and productive business.
- A magnetic experience – across all channels is a must – clients’ expectations have been redefined by the digital-native companies, and firms in our industry need to match or surpass that, not just catch up.
- Legacy systems – often viewed as synonymous to bad systems. That’s a simplistic view of the world; these systems are reliable and functional, but they often present a barrier to speed. What we need to do is figure out how to evolve much faster where it matters, while improving our legacy systems to continuously modernize them.
- Cybersecurity – a big deal for everyone, but especially for financial services, for obvious reasons. We need to embed cybersecurity in every process, system, and activity – not think of it as an independent, separate discipline. It needs to be part of everything we do.
- The impact of technology – will be very positive for clients and advisors. It can also be very positive for us as an industry, but we do need to adapt quickly and seize the opportunity for the impact to be positive.
According to Monteiro, we need to do 3 things to adapt and prepare for technological change:
- Relentlessly put the client first. If we don’t, someone working out of a garage will.
- Master a two-pronged approach, where on one hand we participate in the fast-moving tech eco-system forming around us. On the other hand, quickly testing and learning things and partnering with start-ups, we need to rebuild and modernize our foundations, our systems, our data, and our processes.
- Recognize that some of the talent necessary to win in this new marketplace will come from other industries.
“What excites me the most about technology in financial services is that now more than ever, we need to strive to provide clients with the right solutions, at the right time, through the right channel,” says Monteiro. “By embracing these opportunities, it will lead to a much better client and advisor experience, and both you and I will be doing business based on clients’ terms.”
In future articles on the Retirement Resource Centre, look for the videos based on the LIMRA Industry Predictions that discuss The Changing Consumer, Regulation, and Talent Management.
You might also like…
- How life, health and wealth solutions can help create a powerful plan
- When estate settlement costs your clients more than money
- Clients with foreign property? What you need to know
1 Financial Services Evolution: 2017 Industry Predictions, LIMRA, 2017, page 9.
2 Could Product Design Be a Driver of Growth? LIMRA, 2016. The 70% statistic refers to U.S. consumers.
3 Breach Level Index (www.breachlevelindex.com).
4 “Shifts in consumer spending,” Statistics Canada, May 14, 2014.
5 2017 Industry Predictions, LIMRA, 2017, page 11.
6 2017 Industry Predictions, LIMRA, 2017, page 14.