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4 posts from September 2015

29 September 2015

Aces high: know your hand to avoid chancing your arm in a deal

by Matthew Linehan Manager

I recently attended a data and analytics networking evening at our Embankment Place office. Throughout the evening I found myself describing the deals environment to colleagues and guests from different areas of business. The link between the deal process and business change was a consistent theme. A transaction is a period of substantial, rapid change from business as usual. Depending on whether it is embraced or rejected, change can be either a benefit or a challenge. For those who meet it unprepared, change can represent uncertainty, risk and disruption.

Effective planning is the key to success. The expression, ‘put your own house in order’, resonates here. We see the value of preparation when working with organisations’ data. In the so-called ‘era of big data’ we might assume that data would be consistent, embedded throughout organisations, and complete. But this is often not the case. In many organisations the business is disconnected from the IT function, and access to trusted, insightful data can be limited.

Sellers with access to high-quality data can better understand the story of their business. This will provide a degree of comfort through the deal process. Investors increasingly employ advisors to conduct detailed analysis of a seller’s transactional data. Modern data and analytics technologies can make short work of large volumes of data under tight timeframes. Leveraging the data to understand strengths and potential pitfalls before entering the deal process can reduce the element of surprise. This puts management on a stronger footing in negotiations. Articulating the strengths of a business accurately will help the seller command a better price.

Transactions rooted in trust are smoother and more robust. Investors who uncover inconsistent narratives about a business are more likely to lose faith in the deal. In contrast, sellers who maximise consistency and minimise uncertainty will inspire confidence in their business. A straightforward data preparation exercise helps the seller lay solid foundations prior to the deal. This increases the chances of attracting the most suitable investor for the business.

I opened by considering what change can mean for those who are unprepared. Management teams which fail to prepare their data risk uncertainty during the deal. But businesses which plan effectively, and understand which aces they hold, can stack the deck in their favour. For those who are ready to embrace it, change represents an opportunity for growth and development. This can still be disruptive but challenging ourselves is no bad thing. In a rapidly evolving market which demands agility, preparation is key to staying ahead of the game.

If you would like to discuss these issues, or the impact of emerging technology or data and analytics on your industry, then contact our Data & Analytics team.

by Matthew Linehan Manager

25 September 2015

Win-win: How claims are next in line for digital transformation

by Jeremy Lefebure Director

Claims are not just an insurers’ biggest expense - they’re also the crucial moment that matters for customers. If handled badly, they’ll switch to a competitor, and potentially tell others about their experience. That’s why the latest data and digital advances in claims management could prove to be a critical differentiator, combining the win-win of lower claims costs and a more compelling claims offering for the customer.

So how can digital transform claims? The immediate wins are convenience, personalisation and speed. For example, a new generation of sensors and connected devices can initiate the claims process instantaneously. In a car accident, the in-car sensor could record the impact speed and location, while a smartphone App would help capture third party details and damage on the scene, enabling the right settlement to be organised straight away.

We’re also seeing a big leap forward in options for customer segmentation, as behavioural analytics, pattern recognition and other fast-developing techniques enable insurers to quickly screen for fraud risks as well as identify situations, such as vulnerable customers, who are likely to require special attention. Further helpful developments include predictive models that can set benchmarks for likely outcomes based on a batch of similar claims. It’s then possible to better manage expectations, as well as compare the results against actual experience to detect signs of leakage.

Changing the business model

Yet, in many ways this is only the beginning. The real shift in the insurance business model is going to come from the role digital plays in understanding and mitigating risks, thus avoiding a good number of claims altogether. For example, vehicle and property sensors not only enable insurers to determine real-time risk exposure, but can also encourage safer driving and help identify accidents waiting to happen. Similarly, wearable health sensors used in the new generation of life and health cover can help to promote healthier lifestyles and alert policyholders to the need for prompt medical attention. Crucially, these developments are moving insurance from a transactional relationship to a continuous and valued engagement with policyholders.

Setting the pace

Realising this potential is challenging - demonstrated by the huge lag between the market leaders and followers.

Many of the front-runners are new start-ups or ‘greenfield’ operations, who have the advantage of being able to build a digital claims process from scratch. For routine claims, customers benefit from a fast and straightforward process, while the insurer is able to run the operation with fewer people and at lower costs than their conventional counterparts. Greater process automation for routine claims allows claims professionals to focus on the difficult cases, while next generation artificial intelligence (AI) can help them to make smarter choices and serve customers better than ever before.

At the other end of the spectrum, many insurers are coming up against slow and unwieldy legacy systems and ingrained ways of working. But they can catch up fast, and we’re seeing innovative transformation approaches that seek to play the digital start-ups and disruptors at their own game. For example, cloud technology allows firms to scale up without high fixed costs, and an agile delivery culture helps them get up and running, gain feedback and quickly respond.

So what can you do?

Quick wins

1) Get to market quickly

Rather than waiting for the whole organisation to change, the latest digital technology allows new claims management capabilities to be quickly and cheaply set up from scratch.

2) Start small, learn fast and, if needs be, fail fast

Pilots or ‘greenfield’ operations could be launched, tested, adapted and rolled out more widely in line with customer outcomes and savings generated. If it doesn’t work, the business can discard, learn from what went wrong and aim to get it right next time.

3) Greater flexibility and reduced execution risk

The test and learn approach would allow much greater flexibility and room for innovation on the one side, while reducing the costs, design and execution risks of big investment projects on the other.

Taking engagement and value to a new level

Achieving claims excellence is one of the most visible and impactful things an insurer can do. More responsive claims management, tailored to meet the needs and expectations of different market segments, would certainly help to foster new ways of working and engaging with customers. Helping families and businesses to reduce the risks they face, and supporting them more effectively if they do run into trouble, would vastly increase how customers view the value of what insurers offer. If the insurance industry fails to rise to the challenge, someone else will.

If you would like to discuss these issues, or the impact of emerging technology on your industry, then please get in touch with Euan Cameron.

by Jeremy Lefebure Director

21 September 2015

Can we afford to lose serendipity?

Every second of every day, vast amounts of data are being generated. Organisations, both public and commercial, are finding new ways to use it – whether it’s to improve the way they run themselves, to tailor their offers to individual customers, or to reduce their operational risk. The benefits that access to data brings, we all agree, are huge. 

The technology that allows us to make better use of data is improving constantly. But in the race to monetise data, I worry sometimes that we’re inadvertently sleepwalking into behavioural changes which might have long term impact we may not want. 

Take, for example, superficiality. I’m guilty of that right now, as I’m boiling down an extremely complex argument into 500 words for this blog. Somewhere along the development of the internet it was decided that readers can only absorb short content – which means that a lot of information is now in bite-sized pieces.  As a side effect, there is an increasing number of “echo-chambers” of low-information content.  It can’t be a coincidence that a study by Microsoft found that the average attention span dropped from 12 seconds in 2000 to 8 seconds in 2013.

This academic study of the impact of the internet on reading found that more information being available and accessible to us has resulted in an increase in reading speed, but also an increase in skim reading and scanning. We’re less inclined to question information we read online – how many of us are guilty of ‘learning’ through Wikipedia without checking any of the references? In other research, psychologists at Yale University found that search engines tends to give people an inaccurate view of their own intelligence and that may lead to over-confidence in decision-making.

And then there’s the uniquely human joy of serendipity. Algorithms create recommendations for us based on what we read, listen to or watch, or what our social media friends like. This, as this excellent article points out, is engineered serendipity, not actual serendipity. Providence, kismet, lucky happenstance, whatever you want to call it, is progressively disappearing from our lives. Of course it is replaced by other interactions – often with communities of people just like us.  It seems the system of cross fertilisation of ideas through frequent serendipitous contacts has slowed down.  Will that lead to more ostracism?  Can this be reverted? 

And finally, algorithms encourage us to abdicate a greater proportion of everyday decision-making. They take over simple tasks, tasks that required us to think just a little.  Often, the immediate benefit is that algorithms complete tasks faster and better than us.  However, we’re losing the long term benefit of exercising our mind and memory daily vs consuming and accepting content, even if it’s just reading a map vs receiving direction instructions. While we’re learning new skills no doubt, are our minds getting flabby without the proverbial daily walk in the park? 

Clearly the short terms benefits of the myriad applications of data analytics have great immediate benefits – to individuals, governments and commercial organisations. But perhaps we all need to keep in mind what it is that makes us human, even as we attempt to replicate human thoughts and emotions in a technological form.

If you would like to discuss these issues, or the impact of emerging technology or data and analytics on your industry, then contact our Data & Analytics team.

02 September 2015

Do Androids Dream Of Electric Sheets?

You just got out of your cab at Huis Ten Bosch theme park, about an hour north of Nagasaki, Japan. You enter the lobby door of your hotel, and a velociraptor in a porter's cap greets you at the front desk. You're not dreaming; you've just entered the world's first hotel staffed almost entirely by robots.

The Henn-na hotel, which translates to English as "strange hotel", is a 72-room temporary habitation which opened on the grounds of Huis Ten Bosch on July 17. This hi-tech hotel aims to reduce costs for guests by boosting efficiency through robotics. The concept seems to be working, as the rates at this hotel are around 9,000 Yen per night, which is around three times as inexpensive as similar hotels staffed by living, breathing humans.

English-speaking guests are treated at the front desk to the aforementioned dinosaur, while Japanese guests can converse with a humanoid female robot. Luggage is brought to rooms by cart-shaped bots that the user programs to steer their belongings to their specified room. To minimize the use of keys, which could be harder to manage with the electronic staff, all rooms are equipped to open with advanced facial-recognition technology.

The rooms also include human alternatives to typical hotel amenities. Room service can be ordered via a tablet within the room, or by asking a flower-shaped bedside robot named Tuly to place an order for you. The items are then delivered by an automated cart straight to your door. To reduce energy costs, high-efficiency radiant panels use electromagnetic technology to detect body heat, and transfer heat to and from objects in the room. This method is more cost-efficient than traditional air conditioning as it can recognise exactly when the room needs to be heated or cooled. All rooms are equipped with motion sensors that detect when lights should be turned off.

While robots are the customer-facing workers, there are certain areas behind the scenes that still use humans. Security, for example, is still monitored by people who view the footage from hotel cameras. There is also no mention of robots performing services like cooking, or cleaning towels and sheets.

The president of the company, Hideo Sawada, says that he hopes to make the most efficient hotel in the world. He stated that he wants to bring fun to the hotel experience, while utilising the technology to make the hotel comfortable while also easier on patrons' wallets.

Henna-na is driving innovation in the hotel industry while creating memories for anyone who stays with them. Sawada said that his company is hoping to build 1,000 of these automated hotels all around the world. The robot revolution marches on.

If you would like to discuss these issues, or the impact of emerging technology on your industry, then please get in touch with Euan Cameron.