In the past two years, the pandemic-induced digital shift has forced payment providers and other organizations to improve their payout processes, especially as consumers seek increasingly faster payouts and streamlined digital experiences.
One sector working quickly to modernize operations is the insurance sector, as firms overhaul their legacy operations to satisfy digital-first customers.
According to a recent survey of European insurance firms featured in a recent PYMNTS report, close to 90% have undertaken some sort of digitization initiative to enhance the customer experience and make it easier for digital-first consumers to process claims and manage documents.
Read the report: Disbursements January Tracker
The January report on disbursements and overcoming the hurdles to instant payments, published in collaboration with US money mobility company Ingo Money, further revealed that 42% of the region’s insurance firms said they were interested in using technology to develop their mobile app experiences. Additionally, 34% of survey respondents expressed interested in boosting their digital payments capabilities.
However, these efforts to meet consumers’ needs for instant payments could fail if payors don’t take the necessary step to overhaul their digital infrastructure to support these transactions, such as investing in automation and advanced tools that will enable digital instant payments and ensure transactions are smooth and secure.
These tools include artificial intelligence (AI) and machine learning (ML), which can be particularly useful in helping payors get up to speed by enabling real-time notifications, decision-making and data processing, the report noted.
Read more: Why Automation and Other Technologies Are Critical to Instant Payments’ Continued Growth
In a recent interview with PYMNTS, Drew Edwards, CEO of Ingo Money, said payors who fail to do this risk losing two-thirds of consumers who will turn to competitors to satisfy their payment needs if they don’t get access to instant or same-day payment methods.
However, upgrading existing real-time payments systems with newer technologies often comes at a heavy cost — which explains why not all the 5,000-plus financial institutions (FIs) in Europe have adopted real-time payments, according to Bernd Richter, SVP of global real-time payments for Europe and U.K. at FIS.
Read Richter’s interview: More Central Banks Will Build New Clearing Houses for Real-Time Payments
Richter added that for smaller banks, sometimes “the business case is just not there,” which is an indication that it will take a while before the region becomes “fully real-time payments enabled.”
The rising digitization is also exposing more firms to security vulnerabilities, another area that must be tackled as more insurance companies move their operations online. Forty-two percent of survey respondents shared that their increasing reliance on technology left them more vulnerable to security risks.
See also: Valley Bank on Overcoming the Hurdles to Instant Payments
Yet still, those firms remain undeterred. Rather than scale back on their digitization plans, firms said they will tackle the issues head on by investing in more robust security measures. More than 40% aim to increase investments in their security technology, while another 40% also plan to hire staff dedicated to cybersecurity.
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