January 31, 2017

7 Symbiotic Ties With Insurtechs

Summary:

Here are seven examples of banks and insurers

that created very different ways of working with
fintechs and insurtechs.
By: Reggy De Feniks, Roger Peverelli

Our previous blogpost introduced the Top 10 insurtech trends for 2017. We received a lot of
requests to share more of our view with regard to the last trend we mentioned: symbiotic
relationships with insurtechs. Banks and insurers are looking for ways to learn much more from
the fintechs and insurtechs they are investing in and partnering with. This is indeed a critical
issue to accelerate innovation in banking and insurance. In our new book "Reinventing
Customer Engagement: The next level of digital transformation for banks and insurers," we
actually included seven best practices -- seven examples of banks and insurers that created
very different ways of working with fintechs and insurtechs. (The book will be available Feb.
23, but you can already pre-order at Amazon). Corporate Venturing Virtually every bank and
insurer is organizing competitions and hackathons or supports one or more accelerator
programs. Some have started their own corporate venture arm. Obviously, corporate venturing
should not be the main way for financial institutions to reinvent themselves. It is a means but
not an end in itself. The challenge of the digital transformation is essentially a cultural one that
involves the whole company, not just the technology. Working with fintechs and insurtechs
offers the opportunity to rethink and accelerate innovation. Innovation is not about asking
customers in focus groups what they want. It is about understanding new technologies and
how they will interact with consumer behavior. And that is one of the things fintechs and
insurtechs are much better at than incumbents. Therefore, financial institutions need to really
immerse in the fintech community to stay on pace or maybe even a step ahead in a rapidly
changing technology environment, or, better still, to shake up the status quo and accelerate
change in the stagnant financial industry. [caption id="attachment_23815" align="alignnone"
Strategic Ventures). Key note address at DIA Barcelona in 2016[/caption] Banks and insurers
are looking for ways to learn much more from the fintechs and insurtechs they are investing in
and partnering with -- whether it is about specific capabilities or concrete instruments they can
use in the incumbent organization, or whether it is about the culture and the way of working.
(At last year’s edition of our Digital Insurance Agenda, Minh Q. Tran, general partner at AXA
Strategic Partners, and Moshe Tamir, global head of digital transformation at Generali, shared
their view. Check here for the interview with Tamir. Obviously, expect more such keynotes
addressing this critical issue at DIA Amsterdam, which will take place May 10-11, 2017.)

We have come across quite a few

different models in which relationships between financial institutions and fintechs/insurtechs

seem to flourish. In this blogpost, we included seven examples. This is not meant to be
exhaustive. New kinds of symbiotic relationships evolve every day, and of course they can be
combined. 1. DBS Bank: Fintech Injections Neal Cross, chief innovation officer at DBS Bank,
involves fintechs in his own distinctive way: “I don’t do innovation, I do sales. I sell programs
that solve business problems inside the bank. We always start with their problems, around
business model innovation or around KPIs. The start-up community plays a key role in our
programs. I often tell our business units: 'Give us 20 of your staff, we will split them into teams
and pair them with startups.' By embedding our staff in this agile, lean mean way of working,
everyone benefits. We make sure our teams work within structured processes that include
research, experimentation and prototyping, followed by implementation. Everything we do is
focused, and we get senior sponsorship before embarking on a project, so we don’t have
problems with innovations that end up not being implemented.” [caption
id="attachment_23817" align="alignnone" width="372"]

Neal Cross[/caption] 2. Aviva: Icons

This is the best practice that we included in our previous blogpost. Andrew Brem, chief digital
officer at Aviva: 'In our view, ‘icons’ are needed to spearhead the digital transformation
process. Our digital garages in London and Singapore are such icons. They are a very
concrete and visual manifestation of our digital journey - for everyone across Aviva. The
garages are not just idea labs to house ‘skunk works’ teams. They are real places, where we
make and break things. We run digital businesses from the Garages, and we design and build
our digital ecosystems such as MyAviva. Anyone from Aviva is welcome to come and hold
workshops and meetings there, to see and feel our digital capabilities at first hand. The
garages also help us engage with insurtechs and inject their culture into our organization; by
launching startups ourselves, but also by partnering, mentoring and investing. Aviva Ventures,
with a fund of £100 million, is also housed in the garage, and so are some of the startups they
invest in, such as the IoT home security startup Cocoon.” [caption id="attachment_23818"

align="alignnone" width="418"]

Aviva Garage, Shoreditch, London[/caption] 3. Deutsche Bank: Digital Factory In the

summer of 2016, Deutsche Bank started its “digital factory.” More than 400 IT specialists and
banking experts from the private, wealth and commercial clients division are working on a
specific site in Frankfurt to develop new digital products and services for the bank's customers.
In addition, there are 50 places for external partners from the fintech community. The digital
factory is obviously also connected with the Deutsche Bank’s innovation labs in Berlin, London

and Palo Alto CA. 4. Munich Re:

Interfaces Andrew Rear, CEO of Munich Re Digital Partners: “To avoid a culture clash, we
have set up a separate Digital Partners unit in 2016. To make the interface between the two
worlds work, two things are vital: The first is speed. Startups move fast and don't accept the
limitations of a corporate diary: 'Time is money' is literally true for them. We therefore need to
move with the same sense of pace. The second is decision-making: Start-ups make decisions;
they don’t arrange committees. Therefore, we don’t do that, either. All the key decisions from
Munich Re’s side are in our hands. In our model we do the things startups don’t need to
control, to make their proposition live. That can include policy administration, compliance,
reporting and product pricing; the ‘boring insurance’ stuff. We have stakes in our start-up
partners but we don’t interfere in the way they engage their customers. The positive effects on
our ‘regular’ organization are noticeable. For example, people in compliance and risk
management were not used to these new speeds but are already adapting and finding new
ways to fulfill their responsibilities in a way that is manageable for the start-up." Example of an
interface between Munich Re and startups at regional level is Mundi Lab. Mundi Lab is an
accelerator partnership between Munich Re Iberia & Latin America and Alma Mundi Ventures.
Augusto Diaz-Leante, senior vice president of Munich Re Life, Spain, Portugal and Latin
America, explains how the cross-fertilization with startups works: “We select startups from all
over the world, such as RiskApp from Italy and Netbee from Brazil. Twenty Munich Re
executives mentor these startups one-on-one. The best-performing companies with the highest
potential to disrupt the insurance industry have the opportunity to work on a pilot program in
one of the Munich Re Iberia or Latin America markets. In this way, the sharing of knowledge,
experience and expertise is made very concrete.” [caption id="attachment_23820"

align="alignnone" width="406"] The

Munich Re Mundi Lab team[/caption] 5. Zurich: Open Innovation Zurich created a platform to
bring together the innovation initiatives and projects in the group. Xavier Tuduri, CEO of
ServiZurich Technology Delivery Center: “In the Zurich Innovation Lab, we generate disruptive
ideas and strategic R&D projects for the global Zurich group. We believe in open innovation, a
collaborative model that means combining the internal knowledge, for example regarding
markets with external talent and disruptive technologies. In this way we are always at the
forefront of the latest disruptive fintech and insurtech developments, while being able to quickly
develop tangible prototypes that fit and inspire our businesses. These are prototypes, without
risky high investments, for example regarding using drones for risk assessment. Each
prototype project is led by an employee of ServiZurich who works together in a team with
several start-ups, universities and institutions. In this way, our people and organization get
injected with new ways of working and thinking.” 6. Chebanica!: Co-Opetition If a financial
institution wants to behave like a fintech, it needs to open up, think of what the ecosystem
could look like, be at the forefront to see what is happening and partner with fintechs to
accelerate innovation, to learn or to advance the sector as a whole. Roberto Ferrari
(CheBanca!) is a protagonist of this mindset: “We believe in a ‘co-opetition’ model. There will
be things in which we will be competing with fintechs and other banks, and areas where we will
be cooperating with the same parties. Therefore, we try to make the Italian fintech community
grow. Building a larger cake will be for the good of the whole financial ecosystem, innovation is
key and startups will always be the lifeblood of any sector. We among others launched the
Italian fintech awards and the Smartmoney blog, which is now the most important vertical
innovation in banking blogs in Italy. We now have a very strong presence in the Italian fintech
community, and we are close to all developments and connections. I and other C-level
executives at our bank speak to at least five to six fintechs each week, and we have already
launched two new services – award-winning Mobile Wallet and Robo Adviser -- thanks to our
partnership with some specialized Italian fintech startups. We help them by partnering, but also
we want to help them to go abroad as scale is key to succeed.” [caption
id="attachment_23821" align="alignnone" width="376"]

Roberto Ferrari (right) with Matteo Rizzi

(left, one of the most influential fintech experts)[/caption] 7. Metlife: Capability Building Lee
Ng, vice president and COO of LumenLab, MetLife's innovation center in Singapore:
“LumenLab and our new businesses are distinct from MetLife’s core business. Our mission is
to create a growth engine that launches disruptive new revenue-generating businesses for
MetLife, targeting the needs of Asian consumers across health, aging and wealth. But we do
work with in-country experts to develop plans for testing the new business ideas and assess
market potential. In our first year we, for instance, launched BerryQ, a quiz app that rewards
users for their health knowledge; Rememory Stories, a platform to capture intergenerational
stories; and developed CONVRSE, virtual reality experiences around service and sales for
financial services. We notice a real mindset shift within MetLife because of this cooperation.
The people we work with develop skills about new ways of testing new ideas, new toolkits and
new ways of thinking. Our core insurance business thus improves their performance, through
adopting new behaviors like curiosity, velocity, experimentalism and bravery. In others words,
we are lighting a path for innovation at MetLife.” [caption id="attachment_23822"
align="alignnone" width="560"]
LumenLab, Singapore[/caption] We believe that it will be increasingly important to adopt a
culture of constant innovation, to stay in sync with all that is going on out there. Rather than
trying to change their DNA, which is quite impossible, banks and insurers should think that
constant innovation is the only way to adapt the DNA to the change that is taking place. You
can, for example, buy great algorithms, but if you are not able to transform your culture, the
implementation of these algorithms will fail. A banker shared with us: “I see working with
fintechs like vaccinations in biology: these injections in our cytoplasm help us prepare
ourselves for new attacks and adapt to changing environments. If you acquire new fintech
companies, you could destroy them if you don't adapt to them as an organization. You have to
adapt the mindset of your own people. It is like playing a piano. Some people sit down on their
piano chair and move their chair to the piano. Other people don't want to change their position
and try to pull the piano to their chair. We should therefore teach people to move their chair
after sitting down. How to move the chair will depend upon the situation, but should always
deliver value to our customers.” Working With Fintechs and Insurtechs at DIA Amsterdam
Maximizing the results from working with insurtechs is an essential subject on the Digital
Insurance Agenda. So definitely expect us to pay ample attention to this at DIA Amsterdam:
our two-day conference connecting insurance executives with insurtech leaders. Check out
www.digitalinsuranceagenda.com for more information.

Reggy De Feniks

reggy@digitalinsuranceagenda.com

Reggy de Feniks is an expert on digital customer engagement strategies

and renowned consultant, speaker and author. Feniks co-wrote the
worldwide bestseller “Reinventing Financial Services: What Consumers
Expect From Future Banks and Insurers.”

Roger Peverelli

rpeverelli@vodw.com

Roger Peverelli is an author, speaker and consultant in digital customer

engagement strategies and innovation, and how to work with fintechs
and insurtechs for that purpose. He is a partner at consultancy firm
VODW.