Big data offers an opportunity for many industries, and those like banking and insurance are under increased pressure to exploit it to improve customer service, reduce risks, and bring new efficiencies to how they do business. Last June, AGCOM, Italy’s regulatory authority for the communication sector, released the results of a study on the use of Big Data in the banking and insurance sectors, two industries known for their intense use of data. In this post, we’ll look at some of the main findings of this report.
Regardless of the industry, big data offers a range of opportunities if managed properly. These include:
AGCOM also highlighted the following challenges of using big data in the banking and insurance sector:
Users know that their data has a crucial role in the insurance sector. So, how to use Big Data?
The competitive nature of the insurance industry requires companies to in turn be competitive on both pricing and customer service. Access to geolocation information and other personal data allow customers to easily submit insurance claims electronically, and access to the same data allows the insurance company to offer quotes and discounts that are tailored to a customer’s habits and activities.
In addition, like many industries, insurance customers expect ever more customer-centric service. This includes 24/7 access to support across multiple channels (telephone, chat, email, social networks) and in all phases of the relationship, from the initial conversion to the purchase, throughout the policy term, and through to the renewal cycle.
While the advent of big data offers insurers a wealth of information that on the one hand may enable algorithm discrimination in assessing risk, on the other, this makes it easier for an increasingly knowledgeable customer to choose between competitors.
On the cybersecurity front, AGCOM’s research has highlighted the concerns of a number of respondents regarding the improper use of personal data. Those companies who are able to demonstrate the care and protection of customer data will have an additional competitive lever that will be appreciated by a wide audience.
With regard to the dominant position of some players who have more sources from which to extract and organize data: this should be addressed through targeted partnerships and alliances to increase the value of their data through integration with external platforms.
Changes as a result of the digital revolution, including new data protection regulations such as the European Union’s General Data Protection Regulation, known as GDPR, have also brought forth new frontiers for protection.
Consumer habits and classic ways of interacting with their target audience are changing, and the traditional areas of protection are evolving as well. Consider, for example, the two branches into which the sector is usually divided: life and non-life.
The recent enforcement of GDPR, which regulates the privacy and processing of personal data, provides among other things that companies are responsible for the protection and possible loss of customer data, even when that data is entrusted to a supplier or an external partner. This opens the door to a new type of cyber risk policy. The policy, of course, does not relieve the insured from the obligation to protect servers, databases and IT infrastructure from potential cyber attacks by any appropriate technological means, but it does cover damages in the event that the measures have failed to prevent fraudulent action. The coverage will thus ensure against disputes and possible production stops and protect it against brand reputation risks.
It is a new frontier in which companies can be protagonists, facilitating digitalization processes and minimizing the related dangers.
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