In this dynamic environment in which products have become a commodity, which business models are still effective for banks and insurance companies? We shed light on predictable disruption. 

This article is part of a series on the trends identified in Accenture's Technology Vision 2016 around a People First approach

Imagine getting into your new Tesla, whilst considering which insurance to switch to for your journey to Utrecht. Or, how about starting an online shop selling Dutch cheese in South Africa via the Amazon Store, and then Amazon offers you a 500,000 euro investment to help your business grow?

These kinds of scenarios weren’t common occurrences a few years back, but are highly likely in this day and age. Car manufacturers becoming insurers; publishers becoming investment banks: welcome to the age of predictable disruptions where new digital ecosystems dominate the world market. Question is: How can financial organizations and insurance companies deal with disruptions and stay ahead of the game?  

The Accenture Technology Vision 2016 investigates five trends, Predictable Disruption being one of them. Berend de Jong, former Managing Director at Accenture, sheds light on developments, trends and expectations for the future.

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Are Traditional Companies Doomed to Be Left in the Dust?

‘Fast-emerging digital ecosystems create foundations for the next big wave of enterprise disruption. Are traditional companies able to keep up with the rapid developments and make the necessary adjustments, or are they doomed to be left in the dust? How can companies – whether they employ 50 or 50,000 people – act and react to unexpected new competitors and processes and, ultimately, benefit from today’s changes, challenges and opportunities?

The biggest disruptions for the financial sector have been fourfold:

  1. Increasing transparency in information that has changed the nature of products to become commodities;
  2. The rise of digital ecosystems;
  3. The upsurge of fin-tech companies;
  4. Changes in laws and legislation.

There is Not Just One Way to Deal With Change

‘Companies have to keep up with developments, disruptions and trends no matter how rapid the pace is. “Let’s wait and see what happens” is not an option. Take BBVA, one of the biggest Spanish banks, for instance. It’s a great example of a company getting things right. What’s its approach? There isn't just a singular approach to keeping up with change; it is multifaceted.

BBVA adopted a very structured way to implement necessary changes. The bank invests directly in companies such as ‘Simple’; it participates in ventures; starts in-house labels; it has an open innovation platform and it offers open Application Programming Interfaces (APIs). I encourage Dutch banks and insurance companies to have the same diversified portfolio. It should be based on active participation, investment, making internal processes transparent and creating an entrepreneurial approach in the existing structures.

“I advise Dutch banks and insurance companies to have the same diversified portfolio of businesses”

Many Dutch companies have done remarkably well in growing and positioning making use of the disruptions. Adyen, Bunq and Intrasurance are primary examples of digital success.

Adyen is a swift growing global provider of online, mobile and point-of-sale payment solutions, situated in Amsterdam. One of its clients is Facebook, which is valued at over two billion dollars. Adyen’s biggest strength is its focus on efficient automated payment solutions.

Bunq, on the other hand, focuses on expanding its clientele in a quick and easy way. Becoming a Bunq client can be done in – literally – five minutes on a smartphone. The simplicity is incredible. The way new clients can come on board, how accounts can be divided, opening up different accounts: it’s fantastic. Bunq offers functionalities that other, ‘normal’ banks can’t.

Lastly, I think Intrasurance leads the way in the insurance industry. It is a back office insurance company that develops innovative solutions in the field of online insurance. Its services are hyper-efficient – needing only a fully automated system to fill out papers and documents or a team of employees makes a huge difference.

“Bunq offers functionalities ‘normal’ banks can’t”

The End of Financial Services as We Know It

In 2000, Accenture organized a conference for which I suggested the name should read ‘The end of Financial Services as we know it'. My timing was horribly off, but now we can see the financial impact of increased transparency on financial products offered by banks and insurance companies. The increased pressure on the price of insurances and banking solutions now forces the topic of the creation of new, much more efficient digital financial services.

My forecast has become reality, especially in our country. Yet there have been other factors causing even further disruptions, such as the internet hype around the millennium; the global financial crisis and the specific issues we had in The Netherlands with insurance policies with extremely high fees, for instance.

Nowadays, one only has to open a newspaper or watch the news to know what the next disruption will be - explaining why we refer to it as ‘predictable’ disruptions. Disruption is not a one-off thing; it is a continuous movement of changes and accompanying shifts in sectors, ecosystems and markets. Leading to the most important question: which possible business models are most effective and efficient for banks and insurers?

Image: Predictable disruption: The end of financial services as we know it

Traditional Companies Launching Start-Ups

Traditional financial companies are accustomed to updating and releasing new versions of software once, maybe twice a year. Many of them are somewhat stuck in routines and patterns. That might be the biggest difference with start-ups, which are more likely to think in weeks. Their upsurge is undeniable: they know how to deal with changes and commercial opportunities adequately. There’s a trend of traditional companies creating their own start-ups, such as Delta Lloyd fruitfully launching BeFrank pension schemes institution.

“Think of the company as if your own money is in it and look at it as if you are still a fledgling business”

Start-ups are able to think and act quicker, while using newly established ecosystems. This is why every organization should think of itself as a start-up, regardless whether it employs 3 or 300,000 people. The idea is to start with a clean slate; think of the company as if your own money is in it and look at it as if you are still a fledgling business.

Which services will you offer and how are you going to implement them?

In my experience, no one thinks about taking old stuff from the organization as it was. Starting with a blank canvas enables one to move fast and courageously. And, most importantly, benefit from growing digital ecosystems.

Making the most of emerging digital ecosystems is one of the things we do best at Accenture. We don’t witness transformations; we are the transformation. We guide our clients on the road to digitization, by altering their digital workforce, building open API platforms and designing client journeys. Moreover, we don’t only think of new services, we deliver them too. Not only in their own industry, but cross-sectoral as well.’

How is your organisation dealing with disruption and change? Get involved and leave a comment. If you would like to know how we can guide you in a world of disruption, please get in touch. Would you like to discover your career opportunities? Contact our recruiter.

Also have a look at the other articles published in the series on Accenture's Technology Vision 2016.