Get set for hypertech: Why it’s time for life and pensions businesses to think bigger on technology
05 February 2019
The life and pensions industry is being transformed by data and technology innovations. As PwC explores in UK Life & Pensions: A roadmap to succeed in a fast-changing sector, a combination of data analytics, artificial intelligence and increasing computational capacity are paving the way for simpler products, reduced costs and sharper risk pricing. These developments can also boost innovation by making it possible to tailor customer solutions with greater precision and build and deploy new offerings with increased agility and speed.
More than just data processing
The possibilities of new technology go far beyond just data processing. Developments in areas ranging from medical science to transport open up once in a generation opportunities for life and pensions businesses, while putting some prevailing business models at risk of obsolescence.
If we look at gene editing as an example of emerging ‘hypertech’, recent advances now make it possible to delete or correct disease-generating DNA. While ethical debates continue, it may only be a matter of time before this kind of gene screening and therapy become as routine as conventional embryo scanning, which would open the way for a massive increase in life expectancy. The first person to live to 150 may already be alive today. Taking this into consideration the importance of broadening horizons and rethinking strategies becomes clear.
At the very least, actuarial assumptions would need to be rethought as a result. With more years spent in retirement than at work, there will also be opportunities to create a whole new model for savings, long-term care and through-life financial planning. As a life and pensions business, it’s important to think about what this model might look like and what capabilities you would need to realise the potential.
Competing in a new consumer market
Looking more broadly, we could soon see the bulk of power coming from low or no cost renewable energy. With research in the US suggesting that if you drive less than 20,000 miles a year there are cheaper options than owning a car, we could also soon see shared mobility becoming the norm. And that’s even before there is an eventual mass move to driverless vehicles.
With lower fuel bills and less of people’s day spent at the wheel, they will have more time and money at their disposal. The consumer market could also open up as people look for one-stop packaged services covering everything from electricity and mobility to broadband and mobile phones. As a life and pensions business, there is a risk of being cut out of the loop as your products are wrapped up in broader service offerings. At the same time, your long-term customer relationships could put you in a strong position to be the trusted provider of choice for these packaged services. How can your business tackle the risks and capitalise on the opportunities?
Risk of inaction
So, far from viewing technology through the narrow prism of data processing, it’s time to think bigger. And in thinking about how to ensure your strategic plans are forward-looking and ambitious enough to deal with the rise of hypertech, it’s worth remembering the advice of Bill Gates in his book The Road Ahead: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.”