The Amazon Thesis: Digital Payments for Traditional Processes

Amazon is constantly touted as the gold standard when it comes to experience, ease of use and constantly exceeding customer expectation and service standards.  

The reason why is obvious. 

Amazon has successfully displaced traditional incumbents to become the biggest retailer in a highly competitive space by delivering what customers want, how they want it, and removing frictions throughout their buyers’ journey.   
Amazon recently commissioned a new research study from the Baymard Institute to examine the ways customers interact with a mobile checkout experience (i.e. how to create the best experience for customers and optimize the mobile checkout).  For an organization that is lauded for their existing process to continuously look at ways to improve customer experience is incredibly impressive. 

However, the report findings are even more impressive. 

Baymard reports that ecommerce sites can increase their conversion rate by 35% solely through a better checkout design.

This increase in conversion rate translates to $260 billion in lost orders.  If the gold standard in customer and payment experience can still make major improvements to their process and drive significant value to their bottom line, it really begs the question, what value the rest of the market, especially insurance providers could drive to their respective organizations?

But the insurance industry is different with much more complex transactions and so many providers offering different products. It’s a traditional relationship business, you might be thinking. 

Well, if we compare the traditional retail model, the transactions were equally if not more complex, with possibly more vendors offering unlimited possibilities of products that the only way we thought it could possibly be sold was in person.  Amazon has taught us otherwise and, in the process, displaced and even put some industry giants out of business.
When looking to purchase insurance, most consumers will turn to the internet today to look up providers for the coverage we are looking to purchase.  Consumers like to educate themselves while being able to compare providers and product offers to fully understand what the best fit and price is for the coverage they require.  

The more information that can be gathered, the better a consumer will feel about the service provider and the policy that is eventually purchased, which will help reduce buyers remorse. This also reduces the amount of time the providers need to invest in educating and selling to prospective clients. 
For the most part, this is a similar experience any consumer will go through when looking to purchase other products and inevitably land on Amazon product page, review different offerings from a wide variety of suppliers, compare features, pricing and finally select the product, add it to the shopping cart, click pay and excitingly wait for delivery of the new purchase. 

Simple. Secure. Convenient. This removes all the friction from the decision to buy.  

However, when looking at the process to purchase insurance, consumers are presented with a checkout page that requires identification (policy or customer number) and usually a bunch of other fields before they can even submit payment information.  

If a user is paying by bank, the process becomes significantly more arduous; having to look for the check book to find our banking information (transit / institution /account), possibly micro debit/credit verification, before being set up to make a payment, which generally takes a day or two to go through.
Certainly not an Amazon like experience. 

It seems unimaginable purchasing any other product online with a checkout experience like this. 
What is often not discussed about Amazon’s experience is their internal operations that are so efficient, streamlined, and integrated. There is no human interaction handling the volumes of incoming orders and payments. It’s completely automated, posted to correct systems, and sent for fulfilment.  

This is why Amazon can handle incredible volumes of orders and payments at lightning speeds. 
Definitely not the same experience for most insurance providers. 

The staff at a majority of providers, brokers, and agencies is physically handling and posting incoming customer payments from different statements and forms, matching payments to the right accounts, manually handling exceptions, and finally, reconciling these accounts against the GL.  

This causes a significant impact on labor and any growth in business comes with a great increase in operational costs. 
We are now living in the convenience economy; time is an incredibly valuable commodity and customers are placing greater value on ease of access.  In order to survive and thrive, providers need to change and take advantage of this paradigm shift.  

Payments are the first and often the last mile of your customer journey and for forward thinking providers it's an incredible opportunity to capture a bigger share of the market (think what an increase of 35% to your conversion rates would do for your business), while reducing operational costs by implementing an integrated digital payment platform. 
Not often are we presented with a fundamental shift in the market that opens up a significant opportunity for providers who are willing to change and adapt to the new realities.  Companies that are passionate about enhancing their payment experience, will see a big payoff (and rather quickly), both from revenue increase and decrease in operational costs. 

Amazon has proven this thesis. So, what are you waiting for?

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