Finance loves paper. Typically finance functions insist on reams of documentation and especially the storing of original papers. However, digitalisation in the Finance function is powering a paradigm shift – enabling an unparalleled level of efficiency and generating data-driven insights as a strategic input.
Customers want touchless transactions today and vendors, too, are seeking direct payment transfers. At the same time, the need to meet stringent internal control, compliance and audit guidelines is prompting life insurance companies to hasten the digital transformation of the finance function. The upgradation is helping revolutionise several processes, thus making redundant the traditional way of operating with manual and paper-heavy processes. Digitalised and automated workflows are boosting efficiencies and reshaping the way we work – and the company-wide implementation of technology in digital-native companies that embarked on digitalisation pre-pandemic, is helping insurers become leaner, smarter, and faster.
Let us take a look at how digitalisation is transforming the Finance function:
Digital processing and automated workflows
In the old days, customers had to physically submit all documents, be it for KYC or medical and death certificates in the case of claims. Stakeholders such as employees and vendors also submitted physical invoices. The manual process of verifying documents, going from desk to desk to secure approvals from multiple authorities, sanctioning and processing payments was lengthy, laborious, and prone to errors. All this is changing as life insurers adopt digital transformation and go paperless to put the customer first. Life insurance companies are automating requirements like KYC mandates so that customers can apply for insurance plans online. The eventual aim is to only store physical documents for regulatory purposes and make the organisation virtually paper-free.
Contemporary insurance firms have shifted to digital document submission, with the Finance departments digitalising most of their operations. The aim is to enable a policyholder to upload all documents, and for the Finance team to process it digitally end to end. This can simplify processes, reduce processing time, and boost efficiency. Also, since the documents are uploaded digitally, the stakeholder can track every stage of the processing, establishing trust and transparency.
Similarly, insurers are adopting electronic payment transfers for customers, vendors and even employees. Earlier, vendors would submit invoices physically. Today, they can not only submit them digitally, but the entire workflow from approvals to payments is also being automated.
Employee first centric life insurers are also adopting software solutions for their sales teams so that employees no longer have to keep manual track of the kilometres travelled to claim conveyance. Once this GPS-based software is installed on their mobile phone, it automatically clocks the distance traversed and calculates the reimbursement. This can help reduce the Finance and sales teams’ workload, enabling the latter to focus on serving customers better.
Innovations in customer service
Digitalisation is also enabling insurers to enhance customer delight by automating claims and maturity payments. As a step in this direction, some customer-focused life insurance companies in India have already introduced immediate payouts on certain types of claims. For instance, the payment hits the customer’s account as soon as the claim is approved, even if it is late at night. For non-death claims, if the policy’s maturity date falls on a holiday or weekend, the customer may receive the payment on the preceding working day itself, even if it is T-3.
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Sharper internal controls
Finance teams are also improving fraud detection by adopting digitalisation. When documents are submitted digitally, manual intervention is eliminated and there is a lesser risk of tampering of confidential information. Bank account and policy numbers cannot be manipulated either as the digital audit trail will identify the source of the change. Plus, the automated maker-check approval process will ask for the document on the basis of which any details were changed. These controls help reduce fraud.
The impact
Digitalisation is helping the Finance function at life insurance companies enhance operational efficiencies, improve transparency, and achieve leaner growth. Finance functions are tackling higher volumes with the same team strength. Stakeholders are beginning to enjoy greater transparency as they can view their uploaded documents and track their claims status online. And with lower processing time, insurers are becoming more agile too. In short, it has enabled the function – and the larger insurance sector — to graduate from a reactive or ‘detect and mend’ to a proactive ‘predict and avert’ strategy. And that transformation will only deepen as insurers adopt newer technological innovations and seek new ways to take digitalisation and automation to higher levels.
Views expressed by Nalin Bhandari, SVP & Head – Finance Controller, IndiaFirst Life Insurance
