Financial Transformations: Why They’re Taking the Industry by Storm

Posted by Richard Jacobson

Financial TransformationThe insurance industry is facing a number of critical disruptions across all dimensions. Growing technological advances, increasing regulations and burgeoning competitive pressures have made the ability to transform functions and critical operations essential for continued success. This is all the more true within the insurance industry’s financial segment.

But why the financial transformation and why now? Unprecedented challenges and changes have dramatically raised the stakes for financial sectors within the industry.

Externally, ongoing merger and acquisition activities, increasing regulatory pressures following the global financial crisis, rising demand for personalized products and services, and the growing focus on digital experiences are driving financial transformation to the top of the strategic agenda. Internally, organizations are facing increasing demand for performance data within finance, ongoing pressure to reduce finance costs, and inflexible and siloed legacy systems that are difficult to use and exceedingly time-intensive.

As a result of these megatrends and growing industry pressures, finance leaders are focused on making advancements across several fronts. Driving the transformation is a need for better decision making and more accurate, real-time reporting.

Insurance Financial ChangesIncreased controls are being implemented in order to promote strong governance, help reduce risk and streamline the regulatory compliance process. The adoption of common platforms, process automations and cross-organizational standardization are being implemented to increase organizational efficiency and reduce costs. In situations where outdated legacy systems are preventing or limiting the adoption of advanced analytics practices, new and updated technology is being implemented. Closer alignment and synchronization of functions and processes across organizational segments—including finance, risk and actuarial—is being authorized to provide clearer visibility into performance and allow for better decision making.

A shift is being felt within the finance segment of the insurance industry. Emphasis is moving away from transaction processing toward more strategic activities. In truth, the financial transformations of the past have primarily focused on savings—cutting costs, gaining efficiencies and establishing controls and risk-management procedures. Now, following the recent economic downturn and resulting great recession, insurance organizations must take a deeper look at their financial situations and rethink their practices and strategies. A new focus on enabling corporate strategy, capital agenda and competitive advantage in the marketplace must be adopted. Organizations must act quickly and decisively to improve the efficiency and effectiveness of their finance functions.