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How ZA Bank and Generali do digital bancassurance

“Drop-offs can’t be fudged”: what partners behind a novel digital bancassurance deal are learning.



The idea of digital bancassurance has been kicking around for several years, but in Asia it appears only one complete example exists. Last April, ZA Bank, a virtual bank in Hong Kong, teamed up with Generali to offer wholly digital insurance products.

A year on, the two partners are proclaiming this a tentative success, although without revealing the value of premiums sold. Yet they both acknowledge the model remains a work in progress.

Consultants were banging the drum for digital bancassurance before the Covid pandemic. A 2019 McKinsey report noted that worldwide, digital bancassurance channels accounted for only 2 percent of life sales, because bank branches and physical advisors remained dominant.

Both banks and insurance companies have been slow to digitize.

Digital doldrums

Insurers have given up on trying to digitize any product with complexity. Because they rely on intermediaries, they don’t have the means to gather enough data about policyholders to serve them with personalized offers. For that, they must rely on banks, which have a broader relationship with customers.

Within banks, however, insurance tends to be the poor cousin to other wealth-management products within banks. They usually insert insurance on top of an existing investment or wealth offering, rather than regarding it as a strategic vertical. The decline of branch banking – hastened during the pandemic – and cost-cutting at banks means they are selling less insurance and gathering less information about their customers.

Many retail banks have revamped their digital capabilities but feel those insurance products that sell online are not very lucrative – so they do not invest more in this space.

Insurance companies pay banks handsomely for bancassurance relationships. This leaves them dependent on banks, even if they’re not getting the value they expected. Their alternative is to go digital themselves, but insurers face even steeper legacy problems than banks.

Can insurers DIY digital?

The obvious response is to engage in more data-sharing activities, perhaps with an insurtech or an insurance broker in the middle. But open insurance models are still in their infancy, as both banks and insurers struggle with data governance and the idea that customers need to be the ones who decide how, when and where their data may be shared or used.

A number of banks have been digitizing parts of their bancassurance process. DBS, for example, has digitized some of the paperwork on Manulife policies, with the help of CoverGo, an insurtech.

Such examples go only so far. They pre-populate forms for bank staff, generate profiles, recommend suitable products, and then hand these over to an insurance company’s agent. These are big improvements that remove a lot of headaches, but they are not end-to-end digital.

Parts of the process

That’s what makes the ZA Bank relationship with Generali stand out. ZA Bank, now three years old, is one of Hong Kong’s virtual banks. It has no relationship managers. It has no branches. Some competitors have launched digital wealth initiatives, but not yet a bancassurance model.

That said, while the bancassurance part of the policy sale is fully digital, the customer’s experience is not. At the end of the day, ZA Bank funnels a lot of customer information to a Generali sales agent. But by having the bank side of the deal fully digital, this creates more efficiencies and a different customer journey.

Boston Consulting Group helped ZA Bank and Generali build their bancassurance process. Penny Law, managing director and partner, speaking at a conference organized by InsureTech Connect, says the new model is based on three trends.

First is personalization, a catch-all theme across financial services. Firms are using artificial intelligence and big-data analytics to figure out how to target individual customers with the right product at the right moment. Digital bancassurance is a natural arena.

Second is a new emphasis among banks on health and wellness. These are not traditional insurance policies that banks sell (banks usually focus on complex investment-linked products, which command a high commission). But wellness provides banks with many potential customer touchpoints; it’s a theme that gives them an excuse to engage with customers regularly, which in turn lets them collect a lot more user data. Digital bancassurance becomes a useful tool to embed a bank more deeply with its customers.

The third trend is omni-channel, using all kinds of ways to convert business leads into sales. “It’s about nurturing,” Law said, “matching the right salesperson with the customer.” In effect it’s about proving digital models can mean sales, and if bank reps start to generate business, they’ll embrace digital tools.

The role of consent

ZA Bank took these principles and made them work in the real world.

“Normally the bank provides the customers, identifies their need, and refers them to a specialist team that sells insurance,” said Calvin Ng, alternative chief executive at ZA Bank. But a virtual bank doesn’t have an RM or specialist team. It still generates a referral to the insurance company, but at a different stage of the process.

“We don’t want to just make a form and pass it over,” Ng said. “We create a seamless experience in which the customers feels empowered, and we create a better sales journey, not just lead generation.”

What’s the difference? First, there’s what goes on behind the scenes. ZA Bank’s tech identifies a customer browsing its app looking at insurance-related products. Its tech is designed around microservices, an architecture that structures an application as a loosely aligned group of very specific services, which can be plugged in or bypassed like building blocks. This is the technological layering that allows for speed and flexible product development.

These microservices are connected to ZA Bank’s insurance partner (which also includes affiliate Zhong An International as well as Generali). The insurer passes a lot of product information to the bank. When a bank customer browses on this information in the bank’s app, the system immediately assigns them an insurance agent or financial advisor. The customer will see the advisor and their relevant details, including their licensing, and a proposed meeting – kind of like ordering an Uber car, with the driver, car and pickup formulated in seconds.

Speed is one part of this process. So is transparency. Before the information is sent to Generali to line up an advisor, the customer must approve their data being shared. “You see your information has passed on after you push the button,” Ng said. “That’s control.”

He reframes the idea of personalization – offering the right product to the right person at the right moment – as being about a consent-driven process. It’s about ensuring the customer is connected to the right service provider after they’ve agreed to let the bank pass on their information. Perhaps it’s more performance than a radically new business model, but it’s meant to engender trust – which is important for new, digital-only businesses.

Changing agents behavior

From the insurer’s perspective, trust isn’t just about customers. It’s also about their intermediaries.

“How do we sell this to agents?” said Lai Windian, chief business officer at Generali Hong Kong. “We need them to first have the digital tools. They need to see the advantage of gathering more customer data.”

This addresses one of the challenges of selling insurance online. In a bank branch, a customer has to fill out a lot of paperwork that describes themselves – their job, salary, health habits, and so on. There isn’t the same kind of time or space in a digital interaction to amass such details.

When a Generali agent is matched to a customer on ZA Bank’s app, they face a new situation. A traditional agent will woo customers they know. Now they’re being fed meetings with people they do not know. Therefore they need database management skills. First, to develop a profile of the customer. Second, to keep them organized, such as getting reminders to call customers on time or manage their meeting calendar.

These tools also help banks monitor and measure how agents perform. The system will track a sales rep’s time, interactions with customers, and product knowledge. It’s designed to improve conversions or steer reps away from leads that turn out to be duds. 

But getting sales agents to do this isn’t easy. They are now getting used to using social media or messaging channels like WhatsApp to connect with prospective customers. “It’s hard to ask them to track their activities,” Lai said. “But we can use this data to know which part of the sales process is working, and we feed that information back to the agents. Now the entire sales team is showing better results, and this make the offer from digital bancassurance more sustainable.”

Iterate and improve

The process is likely to get better. Insurance agents will gradually realize the benefits of a more data-driven process. The bank will accumulate more data that it will crunch to optimize the process and sharpen its marketing, while also finding additional partners that provide a pipeline of users.

Plenty of challenges remain. For Ng, it’s whittling products down to become as simple as possible. Currently, ZA Bank offers several insurance products, including pure protection plans, retirement annuities, and several investment-linked plans.

For Lai, the challenge for Generali is working with a data-driven distributor because insurers are slow. But she is learning that, in the digital world, products are commodities. The value-add is in the packaging, even little things like adjusting colors or how someone sees it on a screen. Such things are easy for an insurer to adjust, compared to product structure such as premiums or product features.

Digital sales campaigns are also easy to analyze, with ZA Bank able to give near-instant updates of what works and what doesn’t. The partners can look at ratings on the app, user comments, and most of all, real-time impact on sales whenever they roll out a different feature. Sometimes the reality is harsh, but at least the insurer’s agents can’t obfuscate. “Drop-offs can’t be fudged,” Lai said.

But when it comes to disclosing what works and what doesn’t, the partners remain quiet. Ng and Lai declined DigFin‘s request to detail the premiums sold through their tie-up. Perhaps the biggest difference between digital bancassurance and the traditional kind is that it changes the power dynamic between distributor and manufacturer. For a young virtual bank such as ZA Bank, success is existential, whereas for the insurer, it’s an experiment.

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