Open Banking - added value for insurance companies and their customers

The dovetailing in the financial industry between banks and insurers is becoming ever closer. New business models and digital services such as open banking illustrate this trend. How can insurers benefit from the fact that customers can securely share their financial data? What added value is created for their customers?

It is true that in the age of Covid-19, an intermediary rarely sits at the dining room table, in the living room or in the office of a self-employed person. However, one thing remains the same, even in this situation: for comprehensive advice on financial and insurance matters, a dedicated inventory of the asset and insurance situation is necessary. Even in the digital age, this is often done by poring through folders and bank statements. But there is already a much simpler solution: many customers already have access to a log-in to their online bank account and are willing to share their financial data with insurers.

The use of online banking is common practice - three-quarters of German bank customers already do their banking online (source: Bitkom, 11/2020). There is a rapidly growing demand for mobile banking, and more and more mobile services are being offered at the same time. Digital payment options and also contactless payments are becoming increasingly popular. Digital account access can be used to consolidate a lot of customer data. In addition, the potential policyholder has the possibility to retrieve and view this data at any time

Data-supported financial and asset analysis

In the consultation with an intermediary and in the application process, the bank account can serve as a data source and accelerate the process. Online banking makes it possible to record data more quickly by releasing the account data in compliance with data protection regulations. The data-supported financial and asset analysis can thus quickly and comprehensively record the customer's situation and offer suitable solutions including risk and creditworthiness checks. Of course, other factors can also be added, which are available as additional information alongside the account data.

Account holders always have full control over one-time or recurring account access and data usage. This allows the frequency and recurrence of account data usage to be redefined individually for each use case.

Different use scenarios according to area and purpose of use and insurance product are:

  • A one-time release of the account data as part of an insurance consultation (for example, recording the risk and financial situation).
  • An insurance contract (e.g. household contents, term life or private health insurance, etc.)
  • A multiple or permanent use as part of a customer relationship (for example, when using an insurance app)

Opportunities for insurers

This digital service improves conversion in the consultation and application process and supports a positive customer experience. Furthermore, multiple categorization mechanisms can map individual customer characteristics, which are used for cross- and up-selling. For insurers, it will be possible to use marketing intelligence - based on advanced data analytics - to identify life-changing situations of their customers and thus suggest new, complementary or extended insurance products in a timely and needs-based manner. The provision and use of current account information in ongoing contract support is also relevant for existing customers. Here, new information or relevant changes in the financial situation can always be transmitted automatically. As a result, customers experience tailored advice as well as individual adaptation to their respective changed circumstances and risk requirements.

The service can be used proactively and reactively to support customer loyalty. The active use of the service enables insurance companies to use data analyses to identify potential cancellations on the part of the insurance customer, for example, and to set up appropriate customer retention measures. Alternatively, insurance customers themselves initiate an individual consultation in order to find tailored offers and receive optimal support. Open Banking helps to enhance customer value and increase customer loyalty by expanding data sources - on the one hand through a sales-driven approach, but rather through the proactive identification of customer needs and their fulfillment. This digital service supports future-proof service and consulting performance.

Benefits for customers

Interested parties and applicants benefit from a simple, fast and comprehensive inventory. Based on this, they can additionally rely on holistic financial and asset analyses and tailored solution advice. The necessary information is transmitted at the time of consultation or for the preparation of an application. The customers themselves decide on the release and use of their data through declarations of consent and possible revocations. The released use of data is of crucial importance for prospective customers and policyholders. More accurate risk forecasts using the account data provided enable improved terms and conditions. In addition, aggregated data collection saves time. This means that risk-adequate hedges can be identified at an early stage.

In an ongoing contractual relationship, customers can proactively receive individual suggestions from the insurer for optimizing pension benefits through continuous analysis based on the account data. In this way, the customer receives needs-oriented advice. By making situational adjustments to life circumstances, this ensures that insurance coverage is always optimally designed.

About CRIFBÜRGEL

On the one hand, CRIFBÜRGEL is an Account Information Service Provider (AISP) - i.e. it offers a transnational "as a service" solution with a single interface for accessing current accounts in several countries. Furthermore, CRIFBÜRGEL provides insurance companies with the technical platform for a white label APP, which already combines a multitude of added values. This gives the policyholder ad hoc access to various services, such as bank account aggregation, income and expense categorization, cash flow forecasting, budget planning, creation of personal goals and much more. Both solutions provide the basis to use account information in various processes. These digital services are data privacy audited and DSGVO compliant.

We thank Christian Rubey from CRIFBÜRGEL for his co-authorship

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