The pandemic has revolutionized the insurance sector with tech companies partnering with insurance companies to bring innovations in products and the way they are distributed to customers. Leveraging AI, machine learning, deep learning, artificial neural networks, blockchain and IoT, the insurance industry has shifted from detecting and repairing work to predicting and preventing mode. Using data from every source, including geo-location and activity tracker wearables, the companies are fine-tuning the premiums to make them more competitive. Embedded insurance, the digital real-time bundling, and selling of insurance during purchase and sachet covers, or bite-sized insurance that serves specific needs of customers for a shorter duration, are helping insurers reach out to a wider audience.
InsurTech startup platforms also digitize claim processes through solutions such as video and mobile options, using intelligent bots, Robot Process Automation and Natural Language Processing. For instance, a general insurance company has partnered with a technology start-up and rolled out automated car inspections and claims assessments using AI. Customers can capture photos or videos of a car for policy renewals and claim assessments, allowing insurance and automotive players to reduce more than 90% of the cost of inspection and the time required for inspections. With metaverse opportunities emerging, lnsurTech players are now enabling cyber and digital asset protection coverage. There are a few insurers that offer cyber insurance coverage that protects firms against online risks such as malware, phishing, identity theft, cyberbullying, and IT theft and the customers can customize their plans according to their needs.
Alternative investment platforms
With easier digital onboarding of customers and cost-effective access to investment platforms, new-age customers and HNIs are using alternative investment platforms for wealth creation. The alternative investment solution ecosystem, which includes data analytics providers, insights providers, B2B software solution providers and online platforms, supports customers in taking informed decisions, especially in non-traditional areas such as tokenized real estate, digital gold, startups and non-fungible tokens (NFTs).
Banks and financial institutions are currently exploring partnership potential with alternative platforms. However, such tie-ups are still in the early stages in India, with most customers in the HNI category. That said, with SEBI updating and reviewing regulations for WealthTech platforms, India will become a matured alternative investment market, which is expected to touch US$230 billion by 2030 from the current US$20 billion in assets under management (AUM).
By employing tools including robotics, ML, and automated data analysis for better credit assessments, the digital lending ecosystem that is filling India’s credit gap among the low-income group and small businesses is now at a crossroads. Digital lenders have upgraded their technologies with unified dashboards and analytics, and are using various ML-based models for fine-tuning their products. Customer acquisition and onboarding processes, including application processing, applicant assessment, screening, servicing, collection, and analysis, are getting end-to-end automated.
With the launch of government-backed digital public goods like the Account Aggregator(AA), an RBI-regulated entity having an NBFC-AA license that helps individuals in accessing and sharing information digitally from one financial institution to another, and Open Credit Enablement Network(OCEN) that connects loan service providers and lenders, the digital lending space will now further help India move toward financial inclusion. AA and OCEN will not only enable disburse loans in smaller amounts but also help build innovative financial credit products on scale. In the next couple of years, by interlinking with existing platforms like Aadhaar and UPI, these platforms will revolutionize the future of digital lending.
With digitalization and FinTech paving the paths of financial inclusion of the underserved population, financial education will be the next step in the FinTech revolution. This will not only lead to the development of hyper-personalized products but also help customers choose appropriate financial services, which will improve the overall financial health of the population.