How insurance and retail could work together for the future of IoT
When it comes to perception of the finance industry, there’s sometimes an unspoken divide in opinion: People see retail as one of the more forward-thinking areas whereas, say, insurance is generally regarded as a part of finance that’s behind the curve. The truth is that all aspects of finance are now touched by the Internet of Things to different degrees, with many companies a way along their journey, products already rolled out to their customers.
For large financial entities such as Direct Line that have significant R&D budgets, specifically for the Internet of Things even, you could imagine a wearable that would allow for retail payments, personal activity tracking, as well as behavioural analysis on the road for example. The reality of a company developing and providing this kind of hardware as well as successfully operating across finance with no external consultation is unlikely, so this is where we will see further link-up with the big players in tech, fitness and wearables.
Vital too in these developments are fintech startups, earning their place in the financial supply chain thanks to deep technological know-how and existing relationships with stakeholders at many points in the value chain. Propensity modelling and purchase data analysis have been in play for years (Amazon’s business model is the obvious one that springs to mind), but what we could see between retail and insurance is a symbiotic relationship that would allow one to compliment the other. Example: Say you buy a car from a retailer and you get sent an offer of a preferential insurance rate from a finance partner of the showroom’s credit supplier. Perhaps even beacon-triggered retail discounts as part of an insurance provider bundle too.
Such is the nature of finance in the 21st century that many older, less agile companies have an interest in several areas of the industry, both directly and through partnerships. Also – the importance of new entrants into the fintech market can’t be understated, companies run by risk-takers built for tech innovation from the ground up.
Although it is difficult to evolve there is disruption in the financial sector for sure, and like every other industry whoever adapts will survive. But many more businesses are on that journey than you think.
Author: Jon Kennard
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