More importantly, the statement that “digitization will help insurance firms” is no longer a matter of conjecture but a verifiable fact. Profit statements from around the world show that firms that took to digitization have cornered the lion’s share of the sector’s profits, while those who are just now getting on board are struggling.

All this aside, there are glitches in digital implementation. For example, many customers still feel they need help processing insurance claims digitally—complaining that interfaces are slow and difficult to navigate.

How the Pandemic Impacted Digitization of Insurance Operations?

A survey of Insurance CEOs conducted by KPMG International found that 46% felt the pace at which their organizations were digitizing operations had increased dramatically after the pandemic—putting them years ahead. Moreover, 75% of the CEOs surveyed said that creating new digital business models and revenue streams have accelerated by a matter of months. About 46% said they had seen an exponential increase in the rate at which companies were creating a seamless digital customer experience.

See chart 1 for the results of KPMG’s CEO outlook survey conducted in 2020, a special edition during the pandemic. Interestingly, only on very few occasions had they said that progress towards achieving any digitization goal might have lapsed. 

Chart 1 

What Are the Obstacles in an Insurance Company’s Digitisation Journey?

Although the CEOs surveyed by KPMG were optimistic about their companies’ digital transformations, they listed several challenges that stood in the way of these efforts.

The chief obstacle behind the digitization of processes seems to be a lack of vision about future operational scenarios. An operation scenario is “an imagined sequence of events that includes the interaction between, for example, a company’s product or service and its users.”

CEOs of insurance companies have admitted that their biggest fear when embracing digital transformation is uncertainty over how customers will react. This growing technology poses a big question for insurance companies: how can they implement it while ensuring that customers continue to trust them?

Chart 2

Will Digitisation Help Reduce an Insurance Company’s Expenses?

Not only does digitization lead to better customer service, but it also reduces costs for insurance companies. A recent survey conducted by management consulting firm Kearney shows that insurance claim managers at leading companies say they were able to reduce the amount of money spent on processing claims due to digitization. About 83% of participants said that a slow and inefficient insurance claim process leads to high associated costs.

Are the Tech-Based Insurance Companies Getting Funds?

In 2015, venture capitalists invested nearly $2.6 billion in insuretechs— see chart 3A for the year-wise funding details. Also, interestingly, these new firms are concentrating more on property and casualty insurance than on life and health products.

Chart 3B shows the share of all innovations recorded in the insuretech database. It is evident from this study that these companies are concentrating on the distribution part of their product and spending little time on marketing or claims divisions.

Chart 3A

Chart 3B

Kearney, a leading global management consulting firm, reports that investments into insuretech (the convergence of information technology and insurance) have increased dramatically. Notably, such deals are on the rise not only in the Americas but also in Europe—to an extent even in Middle East & Africa. The Chart 3C shows the number of insuretech deals in select regions.

Chart 3C

Does Innovation and Digitalization Work for Insurance Firms?

Insurance companies should get into the game as quickly as possible in an increasingly digital world. There is enough evidence to show that getting digitized sooner helps to create an edge over competitors. For instance, in direct auto insurance in Spain, Germany, and the United States, a single player has cornered a very high share of the profits.  

Charts 4A, 4B, and 4C demonstrate how three players — Huk24 in Germany, Direct Line in Spain, and Progressive in the United States — took home a large share of the profits. And these three players were the first movers to digitalize their insurance products. 

As seen from the charts, the industry rewards those who innovate, particularly those who do so early. Getting stuck in a business routine and refusing to experiment digitally will lead to heavy losses. 

Chart 4A

Chart 4B

Chart 4C

Is Digital Insurance Claiming Process Glitch-Free?

Yes and No. Most customers have had a smooth transition to digital insurance, but some—especially those trying to file claims—have reported glitches in the system. 

In a survey sponsored by Bain & Company and conducted by Dynata across 17 countries covering 135,000 consumers, 28% of customers who tried to claim their insurance said that their initial transactions started digitally and failed in the first attempt. About 18% of respondents also said their initial attempts failed when researching insurance products.  

Chart 5A

About 20% of customers said they needed personal help while accessing digital insurance products, and a similar share complained that the systems were slower than manual transactions.

Chart 5B gives a detailed split of the various issues faced by insurance customers during digital claim interactions. 

Chart 5B

Conclusion

The results are precise: Insurance firms must warm up to the digital challenge. The sooner they do so, the better for them—and their customers. Data shows that those companies which reacted quicker and digitized their products earlier reaped the rewards—while others who did not failed due to lacking innovations. However, while companies transform their products, they should keep an eye on customer satisfaction and lend an ear to subscriber needs. Increasingly insurance subscribers are complaining a lot about the claims interface of firms— especially about the complexity of their websites.

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Interestingly, the increase in teleconsultations has continued even after two years, despite relaxations in Covid-related movement restrictions. This shows that while the Pandemic was the catalyst needed for boosting online consults, people did not stop using it when the pandemic subsided.  However, concerns remain with most consumers worried about data security and, more importantly, the privacy of their health data. While health apps continue to increase their customer base, U.S. patients are particular in their doctors approving the usage of such apps. 

Digital Technologies Used 

In 2016, when U.S. residents were asked about their preferred digital technology for monitoring their health, about 33% of them said they used mobile apps. In contrast, virtual consultation with the doctor was cited by only 12%. 

In just over four years, things took a wild turn. In 2021, when the same set of residents was asked the question, only 18% said they relied on mobile apps, while 32% were interested in a virtual consultation. 

The change is directly related to the Covid-19 pandemic, which led to a unique situation of an increasing number of patients and high restrictions on movements, and fear of getting the disease while in close contact. 

The growing disease burden and reluctance to have physical contact meant that doctors and patients increasingly preferred digital consultation. This led to the surge in such consults, as seen in the graph below. 

The sudden demand for digital health-based tools also led to innovations such as digital therapeutics and health chatbots. 

Reasons for Digital Adoption

While U.S. consumers quickly adapted to digital health, 33% said their medical provider should validate such technology. The proliferation of health apps and wearables has made U.S. consumers cautious about their choice. 

This is also reflected in 30% of them insisting that confidence in data security and privacy will help them use digital technology more. It is important to note that consumers are least bothered about the software quality or cost of the device. When it comes to health, their primary aim was to ensure that the apps had no security issues and that their physician recommended them. 

Digital Technologies Used 

Concerns about digital security and privacy were chief issues for digital health enthusiasts in the U.S. About 44% of U.S. consumers strongly agreed in 2021 that they should have the right to approve collecting and using personal health information for purposes beyond their treatment. 

About 35% strongly agreed that the increase in virtual care due to the Covid-19 pandemic has made them consider their data privacy and security needs. 

Telehealth Claims

An analysis of telehealth claim volumes in the U.S. showed that such claims had spiked to 78 times the pre-Covid levels in April 2020 after the cases started to spread like wildfire. The severe movement restrictions on the initial days and the sudden surge in ailments meant that tele-consults were the only way out. The safety of the patients and the doctors also played a vital part in this surge. 

Though the restrictions eased and fear of catching the virus subsided a bit in the following months, telehealth claims continue to be 38 times more than what it was before the pandemic. 

Specialization-wise Penetration

While telehealth consultations have drastically improved across the U.S. after the pandemic, the increase was not recorded across all specializations. The psychiatry specialization, which requires negligible physical contact, recorded the biggest surge in telehealth penetration. In February 2021, at least 50% of psychiatry outpatient claims were made online. 

The telehealth penetration was higher among patients getting treated for substance use disorder. However, the share decreased to less than 5% when it came to specialties such as general surgery, orthopedic surgery, and ophthalmology, as physical examination of the patient is a must in such cases. 

Modality of Appointments

When the U.S. customers were asked about their most recent type of appointment on June 14, 2021, only 31% of psychiatric/psychological patients said they met their consultant in person. This further shows how the penetration of telehealth has been disproportionately higher in the psychiatry specialization. 

Digital Health Adoption Rates

When the U.S. residents were asked about the adoption of telemedicine, only 4.7% of patients said they attempted it before Covid-19. The share increased to 18.7% after the pandemic. Before the pandemic, only 10.7% of patients consulted doctors over the telephone, while 23.7% made phone consults after the advent of the pandemic. 

When a similar question was posed to doctors in the U.S., stark differences were observed before and after the pandemic. Only 20% of doctors consulted patients over the telephone before the pandemic, and the share increased to 85% after Covid-19. A similar sharp spike in doctor consults was also observed in video consults. 

Top Reasons for Digital Adoption

When asked to list the top three factors which helped U.S. customers consider digital health technology, 48% said they were drawn towards it as it helped reduce wait times. Convenience and cost savings were also quoted as the main reasons. 

When the same question was posted to U.S. doctors, 73% cited workflow efficiency as the reason. Patient safety and insurance coverage were also among the top three reasons. 

Conclusion
It is evident from the survey results that U.S. patients are overwhelmingly happy to switch to digital consultations and virtual disease management. However, their data privacy and security concerns should be adequately addressed in the coming days. Policies and regulations which assure U.S. citizens that their personal health information will not be leaked without their permission and won’t be sold without their knowledge will help boost this trend further.

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Especially, the pandemic seems to have accelerated the need for online banking needs. People are willing to change banks if the alternative offers better apps and websites to operate their accounts. Data shows that the working-age population, especially the younger workers, prefer banks that offer better tools to access their money online. 

However, the banks are not able to build digital adoption solutions themselves. Most rely on third parties to fulfill their digital needs. This has a serious impact on their ability to keep customers’ data secure. For most financial institutions, ensuring cyber security has become a major headache. As the number of online bank frauds continues to increase across the globe, the dark underbelly of digital payments is rearing its ugly head. 

Ten charts that show the digital penetration and its side-effects in the banking industry:

Number of active online banking users worldwide in 2020 & 2024 forecasts

Chart 1 shows the number of active online banking users worldwide and forecasts. Across all regions, the number of online banking users has multiplied by varying degrees. The sharpest growth was recorded in China and the Far East. Europe too witnessed a significant surge in such users. 

Online banking penetration in selected European markets in 2021

Chart 2 shows the share of people who use online banking in select European nations. In at least 27 countries, more than half the population uses online banking. And in eleven of them more than 75% use the digital adoption solution. Put together close to 60% users in the Euro area are familiar with online banking. 

Number of people who are using mobile banking as primary method in the US

Chart 3 shows the share of the U.S. population across age groups which uses their mobile phone primarily to access their bank accounts. As can be observed from the chart, more than 60% of youngsters aged between 15 and 34 now access their accounts using mobiles. The share is nearly 50% even in the 35-44 age group. These numbers show that about half the working-age population are now into mobile banking. 

Main reasons people are switching financial institutions according to mobile banking users in the US 2021 

Chart 4 shows the main reasons for customers in the United States to switch banks as of September 2021. More than 40% of customers said that mobile banking was the reason for the switch, followed by 35% who changed their banks for online banking. So the top two reasons for changing financial institutions were related to digital banking solutions. 

New banking functions implemented due to the outbreak of Covid-19 worldwide

Chart 5 shows the new banking functions implemented worldwide due to the pandemic. Due to the movement restrictions during the pandemic, neither the banks nor the customers were able to do physical transactions. This prompted the banks to go digital. About 40% of them increased their limit of contactless payments and 34% implemented a fully digital process. 

Share of online banking customers who enrolled because of Covid-19

Chart 6 shows that a fresh wave of customers enrolled for online banking due to the movement restrictions during the pandemic. Especially in China, where a zero-covid policy was enforced by the government with severe and sudden lockdowns in urban clusters, 33% of the bank customers enrolled for digital banking due to the pandemic. A similar increase in online customers was also observed in South Korea, Spain, and the United States. 

Delivery of different digital banking capabilities among financial service providers worldwide in 2021

Chart 7 shows the delivery of different digital banking capabilities among banks in 2021. Banks rely on third parties to build their digital solutions but do not rely solely on them. As can be observed from the graph, for most digital solutions, banks augment their services with a third party, and only a smaller share of banks either builds the solutions themselves or source them from a third party exclusively. 

Six main challenges with digital banking according to providers worldwide 2021

Chart 8 shows the main challenges in digital banking. Of course, with the advent of digital banking, the biggest drawback is ensuring the security of their customers. About 40% of banks felt that ensuring data security and ensuring cybersecurity across their network were the top two challenges they face.

Charts 9 and 10 show the value and the number of banking frauds in the U.K. and India, respectively. The numbers have been on an increasing trend in both countries. A trend that underlines the dark underbelly of the online banking system with cyber frauds managing to swindle hard-earned money using various online tools. 

Value of annual online banking fraud losses in the UK (GBP)

Number of cyber crimes related to online banking across India

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With the explosion of digital book reading devices such as the Kindle, online publishing has become the norm. However, physical books have not died yet, with millions of printed books sold daily. 

So, to what degree has the book publishing business turned digital in the United States? 

Chart 1 shows that, in 2020, around 756 million units of printed books were sold in the United States. In comparison, the number of e-books sold in the same period stood at 191 million. Four printed books were sold for every e-book sold in the U.S. It’s also important to note that the number of printed books sold in 2021 stood at 825 million, the highest in more than two decades. 

This means that while e-book sales have picked up, print sales are four times higher and are growing steadily in the U.S market.

Chart 2 shows the share of adults who have read a book in the United States in different formats. The data shows that the percentage of e-books and audiobook readers increases over time. The share of adults who have read an e-book grew from 17% to 30% between 2011 and 2021. In the same period, the figures for audiobooks increased from 11% to 23%. However, the share of adults who have read a printed book has fallen from 72% to 65% and is holding steady around that mark.

Chart 3 shows the preferred book format among adults in the U.S. Interestingly, even during the pandemic, when movement restrictions were in place, printed books were preferred by a majority. In a survey conducted across the United States between March and April 2020, 70% said they preferred either new or used print books, whereas about 25% said they preferred e-books. 

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Most of these companies started as small-sized firms trying to make their mark in the 2010-2015 period. Initially, their products were poorly understood and only a handful of clients engaged their services. But in the last seven years, the firms have gained the trust of many established brands such as Microsoft, Symantec, HCL, and Verizon. Given the potential, lately investors have pledged millions to be part of their growth story. In fact, since 2020, the funding has improved leaps and bounds. The number of employees willing to work for these firms has improved too as the funding increased gradually over the years. 

The following graphs depict the revenue earned, an estimated count of employees, a sample of the clientele, total funding received, rounds of funding, growth of funds across years and total valuation in select companies. 

Chart 1 shows the revenue earned by select companies in 2022. Walkme leads the pack with $178 million earned as revenue, this year, so far. Followed by Pendo with a $100 million revenue.

Chart 2 shows the number of employees working for these organizations as per the latest information available. Walkme has employed the most number followed by Pendo and Whatfix, while Applearn has the least.

Chart 3 lists the list of reputable firms served by select companies. Walkme boasts a considerably higher number of customers with many reputable names while Whatfix has an understanding with Microsoft. 

Source: Company websites

Chart 4 shows the total fund received by select companies since their inception. While some established firms such as Pendo and Walkme have crossed the $300 million mark in funding, others such as Apty and Applearn are still starting and have miles to go. 

Chart 5 shows the number of funding rounds completed by these DAPs since their inception. Both Pendo and Walkme have completed at least 10 rounds of funding. Insideboard and Applearn have completed two rounds of funding. 

Chart 6 shows the growth story of these companies in terms of funding. Each line graph represents funding received by a DAP over the years since the start. Across all the companies, the story was similar. Understandably, they struggled to raise funds during the initial period, however, the recent years have attracted many investors. For instance, in the case of Walkme, the funding amounts took a sharp turn upwards in 2019 and the firm has not looked back since. It is worth noting that the funds have increased despite the impact of the pandemic on the world economy. 

Source: Getlatka

Chart 7 shows the total valuation of select companies for which the figure was available. Both Walkme and Pendo are worth more than two billion dollars while the rest are still in the up-and-coming phase. 

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