(Posted by David Schapiro)
I am on a flight to visit with customers and analysts, something I do every month. With the recent pace of events in the financial sector, the few weeks between one trip and the next seem to last an eternity.
As I mentioned in previous posts, I have done my assessment on how the credit crisis has and will affect our customers in the financial services industry. In the course of this analysis I spoke in depth with our customers and market analysts in order to understand what is going on so we could build a model and take the appropriate action if and when required.
Now, I am going back on the road and telling the world – customers, analysts, the media – what we are doing to address the concerns of our customers given the situation.
I am confident in our understanding of the market dynamics as well as the value of our proposition to help our customers adapt to this brave new world. It is in line with our vision of helping banks and Insurance companies increase customer value and profitability by better knowing their customers. But it takes more than just a vision to make things happen in these challenging times, especially with such a high level of uncertainty in the air.
We are getting great feedback from the market about the direction we are taking. At the same time, adapting to the new realities requires some new thinking on the part of insurance companies or banks. It is always easier to just do what we have always been doing and continue to use the same systems without any real change. In times like these, however, change is what we need. Many of our clients, which have already taken similar steps over the past few years, have achieved quantum leaps in profitability.
There is a great amount of research predicting how IT budgets of insurance companies will shape in 2009. The recurring theme is that insurers will continue and maybe even accelerate investment in IT. My own observations reinforce this view, as we are seeing insurance companies continue to invest in IT solutions. I believe this is a good sign for the industry’s future.
The other recurring theme in the media predictions and analysts’ research is “better underwriting and improved risk management”. These, in my mind, offer good and necessary improvements, but only on the tactical level, i.e. doing what we do today just more efficiently. Our focus, conversely, is on changing the way insurers operate strategically and placing greater emphasis on customer lifetime value. It requires some creativity and a change of mindset. More challenging, but also far more rewarding.
As the old Chinese saying (or curse…) goes, we are living in interesting times. In the same breath, we view these as exciting times, offering us and our customers a way to improve the way we do business. As FDR said during a previous crisis, “the only thing we have to fear is fear itself.”
