Payments at the Speed of Light

August 19 2020 | Karen Furtado

What is the saying old saying? Moving faster than the speed of light? This would be the desired state for many policyholders and claimants, but it is not the current state of inbound and outbound payments processed in insurance today.

That said, there are significant advancements being made by both insurers and solution providers to deliver payments and payment options at a pace much closer to the speed of light.

Digital Payments Blog2If you try to picture a digital interaction, you might actually imagine movement at the speed of light – it is immediate, and being digitally based, it can be controlled precisely. For example, there are a number of payment options that consumers can use for inbound payments. Insurers offer some methods to facilitate inbound payments, but not all of them would necessarily be considered a digital experience. How can an insurer provide digital experiences in the payment process to really create a boost in capabilities? Insurers are now looking at sending invoices to their policyholders in the method of the policyholder’s choosing – email, SMS, or even through a digital wallet. The consumer can now start to change the method of payment in real time, providing a flexible and adaptive experience. And this real-time experience needs to occur very quickly.

Consumers also want their money delivered at the speed of light. But outbound payments are still significantly made by the issuance of a check, and the speed of light analogy would not often be used to portray that.

Recently, SMA held an Insights to Solutions Virtual Event that focused on the transformation underway in the Digital Payments space. Of the insurers registered for the event, a resounding 83% stated that improved customer experience is a key motivator as they are looking to adopt a digital payment experience.

A number of key themes emerged at the virtual event, but the main focus was on positioning digital payment capabilities in view of the insurer’s digital strategy. 67% of the registrants envisioned digital payments as a key element of their digital strategy and roadmap. Many of the changes needed to transform the outbound experience were also profiled at the event. The shift to digital payments requires an adaptation of people, processes, and technology to make the experience successful for both the sender of the funds as well as the receiver.

At the event, we explored the impact that COVID-19 has had on this space. No one wants to send someone into the office just to print a check. 64% of the registrants were looking to reduce their reliance on paper checks, and 53% were seeking to reduce internal processing expenses. This highlighted an operational inefficiency that triggered a new focus: offering the claimants options on an array of payment methods that are “best-fit” based on circumstances – the line of business, amount, etc. – whatever fits best in a given situation. And, in addition to improved customer experiences, there are operational savings to be gained from improved third-party payment methods. 

The entire claims process is transforming – providing tailored experiences that accelerate the claims process – which reflects digitally-supported processes rather than heavily people-based processes. Even for those who pride themselves in being high-touch, an interaction with a person does not always translate as being high-touch and customer-centric.  At times, the speed and efficiency of a process – including immediate payments – are better at hitting the mark. 

Many insurers recognize that a shift is needed. Creating a digital payment experience is on many insurers’ roadmaps over the next three years. COVID-19 has impacted these roadmaps – and pushed payments forward in the queue – because these advancements are needed now.

There is an urgency that was not here prior to March 2020. The past few months have forced us to realize that it is high time to rethink, reimagine, and respond so that your digital payments capabilities can react at the speed of light. These capabilities, combined with a comprehensive digital strategy, are critical for those who are serious about transitioning into digital insurers. SMA is uniquely positioned to help P&C insurers with this transition and to accelerate their digital transformation journeys. Please contact us to arrange a conversation about how we can support you on your journey.

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To learn more, please contact:
Karen Furtado
ReSource Pro