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Stephan Roth: "The goal should always be dedicated support of the customer lifecycle throughout the duration of the contract"

- Collection and Disbursement

Why the system conversion is necessary

And what it brings to customers, employees and sales partners in payment transactions

– Abstract

Customer individuality affects business models

The business model of insurance companies is based on data and its analysis. But the digital revolution is also presenting insurers with technical challenges, changing customer behavior and increasing competitive pressure. To remain ready for the future, business processes such as payment transactions must be analyzed and fundamentally adapted. The goal should always be dedicated support of the customer lifecycle throughout the duration of the contract.

How we work, shop, pay, take out insurance policies or cancel contracts today - the digital transformation is changing our lives. In the process, our expectations have also risen. The trend toward individualization not only affects insurers' business models, but also how customers expect to be treated.

Digitization changes everything

The collection and disbursement of insurance policies is a particular challenge here. Receivables management customers want to be treated in an individual, customer-oriented way. Currently, this dynamic is reinforced by the current Covid 19 pandemic, which acts as a customer service catalyst for insurers. Another challenge is the IT infrastructure with the underlying processes and the question of automation, modern payment options, digital communication channels and interactions.

Changing customer perspectives

Sales is always aimed at closing the deal, concluding a contract. But that alone is no longer enough in the age of digitization and individualization. Customer loyalty is paramount. One example: Just a few years ago, marketing experts only addressed digital natives when it came to modern product offerings and digital services as well as consulting. Digital natives are within the age demographic of people that have lived in a digital world since birth; Internet, WLAN, Smartphones, Amazon, Google, IOT.

This has changed. This has changed. What was considered a demographic change and technological knowledge gap is “no longer seen as a particularly big challenge” by most insurance companies, according to a study by Lünendonk entitled “Digital Outlook 2025: Financial Services” . Digitization even suits silver agers – the 50-plus generation. Digitization even suits silver agers - the 50-plus generation.

Mastering challenging customer behavior

The technology ramp of the past 50 years has changed customer behavior, giving them greater access to information and wider range of choices. It is now rare for customers to remain loyal to an insurer or even a bank for their entire life. Children and grandchildren no longer necessarily stay with their parents' insurance company. Customers have long had a desire for better services, offers, communication, interaction and connectivity. Expectations of speed and convenience are now very high. Customers now primarily obtain information via social media, apps, blogs and comparison portals. When they have a question, they look for an answer online first. Customers often prefer an e-mail or even a conversation with a chat bot to a phone call.

These new concepts of service also affect customer payment behavior and methods. Modern, automated collection and disbursement systems must adapt if their goal is to both manage payments and retain customers. In return, however, new payment methods also offer insurance companies greater security and more opportunities to retain customers in the long term.

40 percent of respondents in the Insurance industry see the loss of a direct customer interface "as a very great to great challenge," according to another finding of the Lünendonk Digital Outlook Study. This loss is accompanied by declining customer loyalty. In addition, large insurance companies see themselves increasingly in competition with new, emerging Insurers that focus on digitization in sales from the outset.

FinTechs in the insurance sector, for example, are in stiff competition with traditional insurance operators. FinTechs use data extremely intelligently, sell policies online, launch comparison portals and use chatbots in customer support. These "young savages" are open to new concepts and often faster at implementing them. FinTechs are not only leaner as organizations, their paths are also shorter. They avoid omnichannel strategy.


Identify weaknesses, recognize potential, act

"One of the central weaknesses of banks and insurance companies in the digital transformation and in competition with neobanks and online insurers are the historically grown and outdated individual software landscapes," complains the Lünendonk study.

"Many applications have become monoliths due to years of adding new systems," the report continues. The many new regulatory requirements represent an additional hurdle. These could not be adequately covered by standard software. This in turn has led to further development of individual software - and thus to heterogeneous systems that are now coming back at organizations like a boomerang.

Heterogeneous landscapes, created for historical reasons, often cause time delays for quotations, inventory and claims systems as well as commission and partner systems. In most cases, real-time processing is not available and integration levels are minimal. "Grown" IT systems do not provide a good basis for today's requirements: an open, flexible, process-oriented IT landscape. After all, IT organizations demand that even employees without programming skills can master the necessary tools.

SAP offers suitable modules for insurance processes with SAP FS-BP and SAP FS-CM. However, many other manufacturers such as Guidewire also offer solutions for the insurance market. For accounting, on the other hand, SAP solutions are often the software of choice across the board.

Set up processes with reliable partners and parameters

Modern IT technologies and architectures are characterized precisely by their advantages. They are flexible. In terms of collections and disbursements, they offer the option of replacing older quotation, inventory, and claims systems, as well as all other modules, as individual systems and thus modernizing them as decoupled IT systems.

These are ideal conditions for the SAP FS-CD module, which has established itself as the standard for large insurers. It is based on Mass Accounts Receivable and Payable (SAP FI-CA), which is used, among other things, in Bank Customer Accounts (SAP B-CA) or Public Services (SAP PS-CD). In the SAP system, SAP FS-CD is only one part of the whole - albeit an important one. Other modern and established non-SAP systems used include the core Guidewire system as well as on-premise systems.

The goal should always be dedicated support of the customer lifecycle throughout the duration of the contract. It goes without saying that the expectation is that processes such as direct debit, invoicing, and the incoming payments will function smoothly. Customers, even if they have received a reminder, should still feel they are in good hands. Ideally, they are uninterested in switching insurance companies. Especially if they have the option to switch between digital and physical customer support.

- Conclusion

Organizational transformation encompasses all stakeholders, processes and systems across all business units

In a comprehensive system transformation, the focus is not on software, artificial intelligence (AI) or the operating model, but on people: Customers and Employees. Process and system conversions are always accompanied by high demands on all project participants and employees. This system transformation can be company culture-changing.

Basically, large insurers should keep an eye on their complex process and organizational structure, because: A decided changeover involves more than the introduction of a powerful system such as SAP FS-CD, S/4Hana or other modules. The organizational transformation process involves all the people involved and permeates all the processes and systems of all business units in breadth and depth. This in turn gives insurers the opportunity to develop into agile organizations.

Every necessary and agreed upon system restructuring must be viewed holistically. Every system reorganization depends on intelligent integration that involves employees, sales partners and customers.

Stephan Roth ist Chief Product Owner im auf SAP-Lösungen ausgerichteten Dock Assurance bei IKOR

Contact Person

Stephan Roth

Chief Product Owner
Dock Assurance
+49 40 8199442-0

"Process and system conversions are culture-changing in terms of the company itself."

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