Sector Remarks

Sectors have specific digital impacts and challenges. We will share with you some insights from the field.

1. Energy Awakes

Energy companies need to adopt their business model and develop a digital strategy to remain relevant during the energy transition.

For generators, the transition is happening towards a fossil-free future. This is shown by the increasing investments in renewable production and distributed energy resources on smaller scale. Energy companies must adjust their internal organization to accommodate the changing asset mix.  A digital approach to operate, optimize and steer the asset portfolio is required.

For grid operators, the adverse of smart grids imposes both a threat as well an opportunity. The flow on distribution networks is becoming bi-directional making classical investment planning and asset operations more complicated. Having a clear forecast of flows in the network and a real-time view of loads is a must to ensure grid stability.

For suppliers, the energy customer is evolving into a “prosumer” and has nowadays more options to determine how to fulfill the consumption demand: solar panels on rooftop, clever sourcing via various platforms, heat pumps, etc. This implies that energy supplier can not depend purely on the commodity as revenue stream but need to adapt to a more customer-centric approach. Furthermore, we see that the customers assume – as a minimum – a seamless digital experience in terms of product offering, customer service and other online interactions.

All these developments require a clear digital strategy and digital execution plan to maintain relevance in the market.

2. Financial Disruption

Disruption, as defined by Harvard Business School’s Clayton Christensen, is the creation of products for underserved or unserved markets — typically overlooked by existing enterprises that are too busy chasing the high-margin businesses.

Today, disruption is hitting the financial services sector. One example is crowdfunding, in which startups can bypass banks and venture capitalists to get startup capital. In addition, there is a new wave of startups offering products for financially underserved customers, offerings loans and other new financial services.

The same technologies that are driving the growth of startups from Silicon Valley are reinventing the marketplace of financial services for underserved consumers. Emerging companies are capitalizing on increasingly robust and inexpensive computing power, ubiquitous consumer Internet and mobile access, and the growing demand for comprehensive digital networks. These companies are improving access to effective, high-quality products for underserved consumers while developing technology with broad applications beyond the underbanked market. The underbanked market in the United States is currently estimated at $78 billion in annual revenue, serving 68 million consumers across 22 different financial product types.

 

3. Digital FMCG

The pace in which society and its consumers become fully digital, and the speed at which technology gets innovated, gives opportunities for companies to change the way they run their business in the most fundamental way. Business models change and as a consequence, the operating models need to change at a higher speed than ever before in order to remain relevant and competitive in the markets of today.

Increasing and more sophisticated customer demands, driven by digitization, apps and the cloud, are forcing companies to adopt new business models and deploy advanced technologies to help improve productivity. Today, consumers are used to buying products with their smart phone enabled barcode reader when they are walking on the street, reading a magazine or wherever they are; or learning and discovering new products and services on their second or third screen while they are simultaneously doing something else.

4. The Future of insurance

Sia Partners regularly express their thoughts on the future outlook of the insurance market and how disruptive technologies will change this market forever. Their predictions are mostly trueandthe impact of some technologies might be even more significantthan currently foreseen.  

In recent years, we’ve seen the number of devices that are connected to the internet (often embraced as the ‘Internet-of-Things’) grow tremendously. Rapid developments are made simultaneously in the field of wearables (e.g. smartphones, smart watches, smart glasses), smart homes (e.g. thermostats, motion sensors, outlet controls) or smart machines (e.g. self-driving cars, drones, autonomous robots). Expectations are that the number of smart objects will likely tripleby the year 2025.

The capturing and collection of data from these smart devices lead to almost infinite pools of data. The development of gathering data goes hand-in-hand with the ability to analyze, interpret and visualize this data, due to major advancements in Artificial Intelligence, Machine Learning and Predictive Analysis.

For an insurance company, this entails a significant impact on the core of its business and its competitive edge. Outstanding risk can be monitored continuously and presented to the consumer in a simple and understandable fashion. The consumer can in turn choose to accept this risk or mitigate the risk by taking either preventive measures or by taking out an insurance for this specific risk. Peer-to-peer comparisons are instantly available and essential in guiding the consumer in making these kind of choices.

This sets the foundation of the upcoming Usage Based Insurance (UBI), often dubbed in the auto insurance as Pay as you drive (PAYD) initiatives. In other words, the customer only pays for the actual outstanding risk that he’s willing to cover with an insurance. This requires an insurance policy with flexible terms and conditions. Furthermore, there are still some valid concerns in the area of privacy and the solidarity principle (the principle whereby a group of insured persons bears the covered damage within the group). The nearby future will tell us how these concerns will be addressed…

5. Data-driven Journeys

Most insurance companies in the Netherlands are familiar with some type of customer journey management. What are the results?

Customer journey thinking often translates to the visualization of the customer journey in total or the journey around specific touchpoints. In addition, different kind of analyses are performed on the data that is collected from various customer communication channels. The willingness to fully understand and execute customer journeys in a highly data-driven fashionis made widely popular since the article of Coolblue CEO Pieter Zwart, who stated that his hugely successful company is a “customer journey agency” operating “extremely data-driven”.

Analyzing the current customer journey is a good first step to offer a structurally better customer experience, although it’s important to understand the context of these proverbialjourneys. When focusing on customer interactions, we identify and differentiate between three perspectives; process, data, and emotion. In short; the process that architects have designed on paper, the factual journeys made insightful through process mining and the perceived value of this journey by the customer.

In our article, we state that innovations are needed to provide lasting value and not to lose the customer. By relying on the emotion curve, one can establish where the uplift in customer experience is required most. Techniques like Design Thinking can help to translate ideas on paper to prototypes that can be tested with customers. In the end, a continuous (live) monitoring of the customer journey is crucial for a complete conceptualization. This clarifies the actual impact of digital investments on the customer experience.

For more information on this topic, please read our recent blog article here:

http://en.finance.sia-partners.com/20181023/exploring-context-data-driven-customer-journeys/

 

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