How curating ecosystems enables self-disruption

Everyone knows that staying afloat in today’s fast-moving, transformative business environment means using technology to enable increased agility. It’s not enough to adapt to what’s happening now; the key is to be prepared to adapt to what comes next – and beyond.

Designing for digital-first consumers

Nationwide was founded in 1926 to provide automobile insurance to farmers. While the company’s offerings have evolved over the years, by early 2019 Nationwide was looking to launch an entirely new kind of product; one that would connect with a new generation of drivers with a digital-first mindset.

Roughly 50% of the US population is now comprised of millennials and Gen Z (defined collectively as those born between 1981 and 2012). Failure to keep up with the expectations of these increasingly influential, digitally-minded generations is not an option that companies can afford to take.

But rather than make assumptions, the team knew they first had to define what a good insurance product looked like in the eyes of these target customers. Taking a Design Thinking approach, a consumer persona called Tonika soon became central to the project’s development.

“Tonika was a woman we interviewed who so embodied everything we were hearing from the cohort that we just used her as our persona to capture what we were hearing from everybody else,” says Liles.

Tonika is in the 25- 37 adulting range, she’s coming off her parents’ cell phone plan, and she’s starting to seek value. She wants to engage via a mobile experience. She doesn’t think things are quick enough, she doesn’t think things are fair and transparent, and she doesn't see the value.

Pursuing speed and simplicity

“These younger consumers don’t understand why insurers need so much information,” explains Kunal Kochhar, a member of EY Digital Innovation team. “Why does it matter if I am married? It really should just be based on what I drive, how I drive, and when I drive.”

Thanks to their customer research, Nationwide realized not only that they needed to create a digital-first platform, but one that radically simplified the insurance-buying experience for customers like Tonika.

“This customer wants transparency. They want to be able to trust,” Kochhar continues. “They want to understand what they’re paying for and why – and they want to be rewarded.”

In the end, Nationwide decided that what Tonika wanted was a radically different insurance product. “She wanted an insurance experience that was delightful for the customer via every interaction,” says Connolly. “A quick quote and policy issuance, and a claims experience where the status details are shared proactively.”

With just a scan of the drivers’ license and the response to four questions, customers are able to get an auto policy issued, within 60 seconds.

Aiming for hard targets

Not only did Nationwide want a radical, disruptive product, they wanted to get it to market fast. Really fast. Within seven months – in time for a December 2019 launch.

However, insurance companies in general, and incumbents in particular, can be seen as slow to adapt. To avoid being slowed down by legacy systems and cultural constraints, Nationwide decided to set up Spire as an entirely new, separate company, and run it on an outsourced technology platform.

This presented its own challenges – not least in building the right digital infrastructure and operating models to support ambitious plans without excessive risk and expense.

What the Spire team needed was a way to adopt plug-and-play approaches to innovation. Via its EY Nexus for Insurance platform, EY teams were able to solve that problem for Spire – and help create a brand-new insurance company in the process.

Ask most insurance companies, and they will agree that it typically takes between 18-24 months to get a new product to market – already a longer period than Nationwide could normally afford. But the company was also in the middle of a core operations transformation process. Getting a new product to market could have taken as much five years.

When we were brought in on the Spire project, we had seven months to hit the target launch date. But with EY Nexus for Insurance, between three-nine months is the usual range to delivery. 

A combination of talent, technology and trust led Nationwide to turn to EY teams and our EY Nexus platform.

“We knew the technical stuff was going to be really hard, and we knew EY had a massive jumpstart on everybody else with Nexus being in production to support other carriers for over five years,” says Liles. “They have also been a long-term partner of Nationwide, so they knew how to operate with us. That combination of a market lead and a prior relationship, and operational talent, was a good starting point.”

Taking a modular, ecosystem approach through Nexus

The foundational technology behind Spire’s speed and success is housed in EY Nexus – a powerful platform that enables the rapid, modular construction of sophisticated insurance products, whether these are to replace existing core operations, or to introduce brand new products. 

EY Nexus for Insurance utilizes many established and emerging technologies, all sitting on Microsoft Azure – but the key to its adaptability is that it does not limit EY teams or clients to specific technology providers. The EY Nexus platform has been developed to be fully compatible with commercial technologies built for other cloud providers, off-the-peg, or custom-made bespoke solutions. “Azure is cloud infrastructure – essentially the table on which we put our dinner,” says Kochhar. “Every dish on that table is a modular element you can bring in. We build or buy exactly those elements that the client needs.”

Central to the success of Nexus is EY teams seeking to understand individual clients’ needs, and then identifying the right modular elements to help deliver the desired results. It allows us to quickly create an ecosystem of software, whether this means partnering with a third-party software provider, or developing in-house, bespoke applications.

“The brilliant thing about Nexus is that it's a platform, not a single solution. It’s not a piece of software with specific business functionality”, says Greg Sarafin, EY Global Alliance and Ecosystem Leader. “Nexus helps us identify capabilities from an ecosystem that we curate, and then cultivate them into new products and services for our clients. Crucially, it's also been designed to handle change on the back-end systems without disrupting the front-end engagement systems for our clients and their customers. It can continually adapt and evolve over time, as needs change and new capabilities become available.” 

Making insurance more agile

This flexibility became increasingly important as Spire moved closer to completion, and the EY teams and Nationwide teams moved into a period of continuous testing, with Nexus allowing the product to be refined on the go.

“Few companies have enough capital or enough in-house capability to create enough innovation to self-disrupt,” says Sarafin. “That means you need to be able to find disruptors to work with.”

“After finding potential partners, you need to be able to determine which ones you can work with and which ones you can't – especially as some could be competitors. Then you need a way of dealing with the operational risk of working with these disruptors – some of whom may be small and short-lived.”

“What firms need is an intermediary platform like EY Nexus that enables these connections to take place without any risk to their own front-end operations, and seamlessly swapping in and out different innovative technology and software providers. I call it ecosystems integration.”

“This is the thing that makes EY Nexus different – EY doesn’t just find potential partners and make introductions; we cover the operational risk of setting up and integrating those partners, along with their tools and technologies. We don’t just make introductions. Instead, Nexus gives EY clients new ways to collaborate and innovate.”