The insurance industry is undergoing tremendous transformation as we enter the digital age; providing consumers with more choices (and with that, more power) than ever before. As organizations review processes and map out key areas where they can improve customer experience and meet their expectations, one key point is top of mind…
With 40% of the workforce expected to be millennials in near future, purchase of insurance is rapidly moving towards “social” experience, where access to information and ability to connect with a knowledgeable advisor happens in real-time. New and even old consumers are now placing greater value on the experience of dealing with insurance companies even over lower rates.
For all insurance products, relationships between the provider and customer starts with a payment. With most millennials not owning a check book and existing customers gaining trust with online payments, electronic options are a must for any provider today. The COVID-19 pandemic has further accelerated the utilization of electronic payments across all industries.
Providers have quickly adopted to online payment channel options; however, technology being deployed is very traditional and older than most millennials. Let’s outline some of the common electronic payment options, impact on customers and organization, as well as how they can be digitized to deliver better experience and greater value.
Pre-Authorized Agreement (ACH / EFT)
This technology was going to replace the need for a check in 1980’s, so we can guess how old the process is and how successful it really was. Pre-authorized agreements (PAD) have a place in the payment channel. However, they are not without friction, especially for online purchases. PADs require quite a bit of information that most folks will not know instantly, such as routing, transit and bank account numbers, which are found at the bottom of your check, which again many consumers might not even have any more.
Once a PAD has been set up and executed, the process becomes straight forward, but since there is no visibility into the bank account or notification to consumer of the withdrawal, the possibility of NSF (insufficient funds) fees happening is real, which is costly for the consumer and provider. Also, posting and reconciling these types of payments is generally very manual and laborious.
Applying digital technology to this traditional process can significantly improve the experience, while retaining the benefits PAD was intended to deliver. The experience of connecting via online banking (i.e. securely signing in with your banking login info), which we all use nearly every day can not only eliminate friction with instant verification, but also provide visibility to consumers when they are about to make a payment so they can know if they have sufficient funds available to pay the bill. Connecting the customer payments to policies / invoices digitally will also streamline acceptance, posting and reconciling steps.
Credit Cards can be a great option
Credit card utilization is gaining traction in all facets of consumer purchases as well as B2B and for a very good reasons; convenience, security and points. Contactless payments utilization has grown 30% in the last year, simply by removing the friction of needing to enter a four-digit pin.
Removing even a few seconds of friction delivers a major uptake in utilization and therefor spend with organizations who are easy to deal with, proving the importance of convenience in today’s market.
For the most part, providers are offering credit card payment options, but it’s far from seamless for customers and internal operations. On top of that, the cost of accepting credit cards is taking a major chunk out of bottom-line profits.
Traditional credit card acceptance is very similar to requiring the four-digit pin (creating friction during the checkout). It usually surfaces as a hosted checkout page for clients, who then need to enter identifying information such as policy number, name, customer id, or invoice number prior to adding their card information and making a payment.
Digitizing this check-out process with an integrated experience will eliminate this friction by presenting the customer with a data rich, auto-filled invoice, and if they already entered their card information previously, allows them to single click approve and pay.
Removing friction during the check-out process will deliver convenience and security customers are looking for, but what about the fees?
Ability to pass on the fees to customers for this service in the form of convenience fees is gaining traction and customer acceptance. Digital platforms that enable pushing acceptance fees to customers need to be flexible around the structure of charges, allowing providers to decide if they would like to surcharge 100% of the fees or share in the expense.
Offering other less expensive digital payments is a great way to meet customer expectation of convenience, while providing a wide breadth of payment options and choice when it comes to paying with credit card and passing on the fees.
Remember, your staff is also your customer
Often in a race to deliver new products and services for the end customer, the staff experience is overlooked. Customers are the lifeblood of any organization and servicing their requests is a priority, which it should be.
However, without understanding the impact new services can have on internal operations, many projects will fall short in their objectives because they create complexities for internal staff. When looking at the customer journey to identify friction points, it is very important to map the correlation between the needs of customers and the impact on internal operations.
Looking at the electronic payment flow, digitizing the customer experience can alleviate many friction points for both end customers and internal staff. Today’s disjointed processes not only add friction points to customers during the payment checkout process, as detailed above, but create unnecessary complexities for finance and accounting groups handling, matching, posting and reconciling payments.
Make sure your digital payment experience is integrated in order to eliminate most, if not all, frictional touch points within the chain to deliver a seamless checkout experience for customers (think Amazon), while internally creating a touchless transaction flow to eliminate tedious and manual steps for your finance team.
Digital payments can go a long way to improve your customer and staff experience, drive operational efficiencies and increase your bottom-line. However, it’s important to understand that electronic payments are a vehicle and a digital platform is the experience of the drive. If you would like to learn more about digitizing your payment experience check out our other resources or schedule a demo with one of our team specialists.