Bancassurance…the new opportunity; Growth, Differentiation and Disruption
| date: July 27th, 2017
Bancassurance is quickly gaining popularity in Africa as both banks and insurers recognize the need for partnerships in an increasingly competitive market. New business models, technology and customer dynamics are reshaping the ecosystem forcing players in the industry to reinvent themselves in order to thrive in the long-term. A combination of external and internal forces are creating more pressure to improve financial performance by boosting productivity, reducing costs and increasing revenue. The bancassurance model is seen as the key to generating dynamic growth and exploring new opportunities as well as addressing the low insurance penetration in the market.
In keeping with the trends and as part of our push towards supporting the growth and development of the banking and insurance sectors across Africa, Turnkey Africa recently partnered with Lloyds Africa in hosting the 3rd Annual Africa Bancassurance Conference 2017. The two-day event themed ‘Innovation, Customer Experience and Digital Disruption,” featured over 20 international and local speakers and attracted over 125 bancassurance practitioners from Africa, US, UK, Australia and Switzerland. The event had a well curated selection of content around bancassurance including the effects of legal and regulatory framework, special risks insurance, strategic partnerships, market trends and future prospects for the African bancassurance sector.
Delivering the keynote address at the event, James Norman KPMG East Africa’s Head of Insurance remarked that, “Globally the insurance sector is under more pressure than ever before.” He attributes this to the speed at which transformation is happening and impacting all markets including all aspects of insurance. He sees this transformation as driven by several factors key of which are innovation, disruption, technology, convergence of sectors and new ecosystems.
According to Mr. Norman, emerging markets whose average growth of 7% is faster than the global average growth of 3% are favorably positioned to drive the future growth of the global insurance market. However, there is need for a concerted effort by industry players within this region to develop clear strategies for the advancement of the Insurtech ecosystem.
Building upon Mr. Norman presentation was Turnkey Africa’s CTO Shikoli Makatiani’s who illustrated how insurance and banking can achieve strong competitive differentiation through the use of data analytics. Mr Shikoli feels that, “The insurance industry is ripe for disruption and chances are high that whoever disrupts it will do so using data…maybe even using the same data insurers already have sitting in there databases.” He believes that the use of analytics will enable insurance and banks be able to continuously improve their business practices and models and remain competitive in a cutthroat market.
“Like Uber, the taxi industry disruptor powering an entire business model through data and technology, insurers need to re-imagine their business models and processes and incorporate digital and data at every level of their insurance value chain,” he added.
Other speakers at the event see Africa and in particular Kenya as a great place to be in terms of the future development of the bancassurance industry. Their reasons for optimism including the rapid economic growth, rising consumer class, technological development and the presence of sophisticated participants currently in the market.
They believe that a bancassurance partnership is in the long run only successful if it’s a very strategic partnership and fully integrated model. And the lack of many such bancassurance partnerships and models within the region is the reason why we are lagging behind other regions like Asia and Europe.
Turnkey Africa sees great potential for the growth and success of bancassurance not only in Kenya but across Africa. Bancassurance is uniquely placed to address not just the insurance penetration shortfalls but the trust and awareness deficits that plague the industry. And while we can see some growth, there still exists a gap in product innovation and diversification, customer-centricity, fully integrated partnerships, leveraging of technology and alignment of the local industry with global best practices. Through our bancassurance solution, TurnQuest Bancassurance Suite, we seek to plug this gaps by providing our clients with a comprehensive solution catering to all functions of the business for sustainable growth and profitability.