By Zainab Iwayemi
While it is true that COVID-19 has severely disrupted the financial services industry, the pandemic has also presented productivity opportunities. Firms are getting to realize the need for new capabilities with digitization becoming ever more critical and technology solutions increasingly involving collaboration with third parties.
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Lots of organisations who have already applied digitization in one way or the other are already reaping the result, though there are still widely untapped opportunities in other areas like the technical skills that workers need, and more importantly, in new soft skills, such as agile methods and advanced collaboration techniques.
A survey by PwC, a global network of firms, shows that firms, and especially insurance firms, are taking concerted action to implement this sort of training by putting in place the resources and technological infrastructure necessary for making productivity gains through the unlocking of five pillars, namely, better understanding the workforce; rethinking the change function; embracing the platform economy; bringing agile mindset to the mainstream; and mastering digital labour
Understanding the workforce
Notably, the COVID-19 pandemic and its aftermath have underlined the importance of analyzing workforce productivity as recent studies have shown that remote workers are just as productive or more productive than office workers. To a manager, dealing with a more dispersed workforce adds layers of complexity to their job in terms of evaluating employees, hence, improving their performance and developing teams, while employees believe the lack of visibility often means that training needs are overlooked, extra work is not appreciated, and it is even more difficult to separate top performers from the middle of the pack.
Insurers need to develop a baseline understanding of the activities their people engage in each day. However, it’s best to start by applying this approach to a small segment of the workforce where the potential gains are most obvious. For instance, a detailed time study will generate data needed to identify top performers and laggards as well as improve the organisation of work, and critically make it clear which specific actions would increase productivity and engagement.
Rethinking the change function
According to recent findings by PWC, the average change budget at a financial services institution represents about 14 per cent of annual operating costs. Another survey conducted in 2020 shows that in terms of ranking by importance, the top three organisational change priorities are client and customer satisfaction (90%), regulatory compliance (85%) and operational resilience (82%).
In a post-COVID-19 world, characterized by a growing need to accelerate digitization efforts, right-size businesses, as well as cut costs in a negative credit and economic environment, digital skills are a key means of improving an institution’s performance and generate maximum impact from ever-larger change budgets. In this regard, better use of data and analytics can help insurance firms reduce the budget for a change portfolio by up to 20 per cent without losing material benefits.
Embracing the platform economy
Many of the most valuable companies in the world have embraced the platform economy as a business model. This means that they operate with relatively few full-time employees and an increasing percentage of gig economy talent that they can access on-demand, making their organizations extremely innovative, nimble and cost-efficient. Fifty per cent of organisations surveyed by PWC say they now use crowdsourcing. Beyond cost efficiencies, these platforms make it possible to access multiple talents, from workers with undifferentiated skills to professionals with highly specialized expertise.
Just like it is done in many mutual fund marketplaces and multi-provider lending and insurance sites, the global network of firms reports that many financial institutions will become platform companies themselves that will facilitate transactions across a wider suite of products and services – including those from other participants on the platform. Leaders in the industry are looking at their workforces to evaluate which roles need to be performed by specifically permanent employees and which can be performed by gig economy workers, contractors or even crowdsourcing.
Bringing agile mindset to the mainstream
The PwC survey also shows that the use of agile ways of working declined over the past two years, though the most common applications are still in information technology, finance and business development. This is caused by management teams not being fully committed to the journey while other management teams don’t always understand how the new approach will create value or improve performance, and they might be uncomfortable working in unconventional ways with greater transparency.
Insurance providers need to build their capabilities in stages over time. This is because agile is best implemented in financial institutions when viewed from the enterprise lens, rather than being isolated within a single business or support area. though doing this will result in a profound change in the way an institution is organised and operated.
Mastering digital labour
Artificial intelligence (AI), the most widely used type of automation solution, has passed robotic process automation (RPA). AI solutions can now enable the underwriting of large mortgage loans in minutes, as it allows home buyers to walk through a property and make a fully backed offer on the spot. AI is also increasingly being used in conjunction with Internet of Things devices to track data as diverse as health factors, driving habits and investor sentiments.
As these new digital labour solutions become mainstream, insurance firms will need to apply the same type of rigorous management and control processes to AI and RPA to enhance traditional automation efforts carried out by the information technology department. This means that end-user upskilling efforts need to go far beyond simply teaching people to use a tool. Workforce will need to better understand control, change management and other elements of the systems development lifecycle.