First steps towards a connected future.
The exciting potential of the Internet of Things has been talked about a lot. With billions of new connections predicted in the next few years it is widely accepted that IoT and connected technologies will revolutionize the way businesses operate, not to mention the way we live our lives. The hype is justified. Massive amounts of data, generated by connected devices, can now be turned into accessible information and used to power intelligent decision making. This changes the way businesses and organisations operate.
In some places more than others, change has started to gather pace. Industrial and manufacturing sectors, for example, have begun to employ IoT with success, changing the way that data is used and decisions are made. With machinery and infrastructure becoming more and more connected, we have greater visibility over our factories and assets, including both their behaviour and their fault diagnostics. Our work with critical infrastructure at Heathrow Airport uses predictive analytics to help diagnose mechanical faults and schedule engineers in anticipation of potential malfunctions. This avoids downtime and enables the engineers to radically change the way they offer their services to the airport.
But in other industries, particularly those that involve customer-facing services, change has been slower. Insurance and finance are good examples of this. From our experience working with several major insurers in the UK, we can offer the following advice to large organisations looking to take advantage of connected technologies.
Firstly, you just have to start. Taking those first steps may seem like a big risk to your business, but procrastination is a guarantee of failure. Successful entrepreneurs have one thing in common; they do the things that others are telling them not to. Insurers are, by their very nature, some of the most risk averse organisations on the planet, but there is a growing awareness that connected challenger brands are on the move. With a customer-focussed, digitally enabled approach, these challengers are eyeing their slice of the pie and time is running out for the big players.
Secondly, big businesses have huge advantages that they should leverage; their existing customer data and their balance sheets. Balance sheets should be used to fund innovative projects within the business, and customer data provides the bedrock and the insight upon which new products are built. With connected assets generating huge amounts of information, insurers need to learn from this data. It gives them the power to assess risk in new ways and to establish closer relationships with their customers. But more on this later.
Thirdly, an iterative approach is likely to be best. Big organisations will need to achieve buy-in from the wider business. Start with one or two business units and a few streams of data and go from there. Once a demonstrably favourable outcome has been achieved, invite other business units to participate, or feed in more sources of data. As the ROI needle starts to move, greater investment will be made available.
Lastly, develop an end goal. A vision. Many large financial organisations are using mergers and acquisitions to collect every cutting edge technology under the sun. But what does that mid/long-term relationship with the customer actually look like? Within insurance there is a clear opportunity to move from merely insuring customers’ assets, to actively helping to protect them. With the ability to remotely detect dangerous faults, such as water leaks, valuable customer assets can be saved, and large pay-outs avoided – a win-win situation. In short, the insurer can become an ‘assurer’, and there is every indication that customers would welcome this as something of genuine value within their lives.
But insurers and other organisations need to be able to collect this data first – a significant challenge; given the number of different device manufacturers emerging across home, motor, health and other spheres of daily life. Once they have managed this, they need to analyse it and translate it into a natural human language (e.g. “a car is cornering at 50pmh in the rain on a 30mph road” or “a vessel has entered a danger zone”). Partnership with third party experts will be key, as this involves complex algorithmic technology and the adoption of new software at an enterprise level.
Once this process has started, however, new opportunities start to emerge. Risk can be calculated in new, more accurate ways. Connected customer products and policies can be offered, taking into account far more contextual information than was possible before and resulting in a fairer, more transparent relationship. Greater value can be given to customers, helping them to protect their assets as well as covering them in an emergency. Safer behaviour can even be encouraged. All in all, connected insurance (as well as other connected industries) will evolve in ways we cannot foresee. There will be challenges ahead, such as those of data protection and security, but these will continue to be addressed and are likely to be outweighed by the benefits. When considering how your business can take advantage of connected technologies, only one thing remains certain; you just have to start.
CEO & Co-founder,