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Neobanks, also called challenger banks or digital banks, are fintech companies that are branchless and paperless, instead using digital channels including apps to service their customers’ banking needs. They draw on the latest software and artificial intelligence to engineer tailor-made services, while minimising operating costs.

Given the convenience and low (or no) fees neobanks offer, differentiating from traditional banks is easy – who doesn’t want their bank in their pocket 24/7, rather than having to drive to an ATM or branch and queue? Yet what about setting themselves apart from other neobanks? 

The global digital banking market is set to exceed $30.1 billion in value by 2026 and, in Africa, digital banks see a huge opportunity in the unbanked but mobile-connected. While the neobank space in South Africa is still relatively small, the rapid rise of TymeBank shows that it’s going to grow – and fast. As more digital banks start competing for customers, yours will want to stand out from the pack. A great way to do that is by launching embedded digital insurance through our insurtech SaaS. 

Why keep your customers waiting for digital insurance?

A research survey has revealed that 70% of digital bank customers want embedded insurance offers based on their transactional data, as do 44% of traditional bank customers (PYMNTS.com/Cover Genius). Transaction-based insurance means giving customers hyper-relevant offers in real-time: a customer booking flights via their digital bank account is offered travel insurance; someone buying a motorbike has a theft/damage cover offer pop up; a loan applicant is invited to take out income protection, and so on. 

The survey demonstrated that banking customers would respond positively to insurance offerings that met their cover needs intuitively. By assessing their transactions, AI software can automate relevant, personalised insurance offerings to customers, increasing the likelihood of take-up – and the impression that yours is a customer-focused bank. 

Like digital banking, digital insurance is also set to grow –  at its highest rate until 2026 – making it a promising, low-risk business venture.

How digital insurance can support your banking services

Offering embedded insurance to customers could grow trust in your brand and prompt bigger purchases through your transactional services because customers will know they have the means to instantly protect the value of large purchases. 

The safer customers feel with you, the more often they are likely to buy through you, too – and the more they buy through you, the more likely they are to make you their primary financial services provider in most or all respects, turning them into loyal customers for the long-term.

Strategic “mini”-insurance offerings can be engineered to prompt your existing banking customers to upgrade to premium banking accounts –  often a challenge for digital banks. Monese now offers protection on all UK transactions made on its card by premium customers, at no extra cost (it also offers an income protection policy for less than two pounds per month – low premium; high perceived value). 

Your new insurance line could bring on board new banking customers. Consider a customer who doesn’t bank with you, who is buying pricey tech equipment online. They spot your purchase insurance offer on a web banner and, by activating the banner’s QR code on their phone, they are able to take up your insurance offer to cover their purchases. Later on, satisfied with your customer service there, they decide to migrate to your banking services as well.

Sidebar: “The African banks of the future will most likely transform into becoming universal banks; the banks that will move towards the upper end of the scale where they provide a comprehensive set of services to their clients whether it be individuals or enterprise with the likes of insurance and vehicle financing, almost all of it done digitally.” – Frost & Sullivan Africa CEO, Hendrik Malan.

What kinds of digital insurance will you offer your banking customers?

Within a month, Click2Sure’s team can embed an insurance line MVP into your banking platform, for products that will prove relevant and attractive to your customers. The insurance would be “white label” in nature – even if it is underwritten by a Hollard or Guardrisk, it would be presented to consumers under your brand.  We also design insurance to be omnichannel in nature – meaning it can be distributed via website, mobisite, app, chatbot, eCommerce, WhatsApp, SMS, and, as in the example above, QR codes. The result is widely visible insurance, with a consistent take-up rate and almost no distribution costs. You might offer customers:

Travel insurance: Think how much travel is going to take off once the pandemic is well and truly over? Travel insurance can range from covering flight delays or cancellations to lost luggage.

Ticket cover:
In the wake of COVID-19, everyone is more aware of the risk of a long-awaited concert or sports event being suddenly canceled. With this insurance product, ticket purchasers will know they’ll be reimbursed should the unexpected happen.

Purchase protection: Insurance related to customer spending attracts more, and bigger, transactions.  Purchase protection can cover both online and card purchases made by your customers, in case of theft or accidental damage. 

 Delivery protection: Delivery protection covers online purchases in cases where the goods aren’t delivered, are defective, or don’t match their description online.

 Refund protection: Sometimes, you can buy something on a whim – and then just not really want it. With refund protection, you can file a claim to get your money back, even if the retailer won’t accept the unused item back, within 90 days of purchase.

 Extended warranties: There is no greater disappointment than when an expensive appliance or device malfunctions just after its warranty ends. With extended warranty protection, customers can have their tech or appliances covered for an additional two years. Click2Sure implements extended warranties for OEMs – but we can do it for you, too. It’s a fast-growing insurance segment. 

Income protection: Providing financial protection for customers in the event of temporary work incapacity due to an accident, sickness or retrenchment.

The insurance opportunity is intriguing, but what about the challenges?

Traditional banks also see the great opportunity that lies in digital insurance, yet they sometimes hit
a number of hurdles when they decide to implement it; from difficulties integrating or upgrading complex legacy systems, to not yet being structured to distribute their insurance products easily and cost-effectively. As such, many of the traditional banks are now playing catch-up to the fintechs, which can hit the ground running already “digitally-transformed”.

Your digital bank is very likely operating off cloud-based software already, which would make the implementation of our SaaS insurance solution relatively simple – and your banking services are probably omnichannel in nature, which would make adding insurance distribution easy and virtually cost-free.

What about cost Vs revenue? You would pay only for the implementation of the insurance solution, and then an ongoing subscription to Click2Sure’s underlying cloud-hosted SaaS. The revenue from policies would of course need to be shared with your insurance products’ underwriter, but you should still realise time-to-value much sooner than you’d expect.

You wouldn’t need to hire distribution staff, since that would be handled digitally, and nor would you need to hire more administration staff – with insuretech SaaS administration is easy and as automated as possible. The back end of your insurance solution would include dynamic product configuration; easy policy adjustment; claims management access; financial management (which can be reported via Bordereau); standard reports; easy to read dashboards and business intelligence. You would be able to:

  • Have a real-time overview of claims lodged
  • See a timestamp of all events
  • Track real-time claims status and updates
  • Leverage automated claims approval mechanisms
  • Rely on AI fraud detection mechanisms
  • Rely on auto and manual flagging of potentially fraudulent claims
  • Alert customers about policies purchased or activated
  • Send premium payment reminders
  • Provide claims-related updates and policy renewal notifications
  • Cross-sell and up-sell to policy holders based on their transactional data

It would be just as easy for your customers, who can take up insurance policies in quick and easy self-service steps, after which they would be able to access their dedicated Customer Dashboard at any time to:

  • View their T&C’s and policy schedule
  • Submit claims
  • Manage, extend or cancel their policies
  • View your product or promotional messaging 
  • Take out additional types of insurance cover as you add them 

The data advantage

When it comes to digital insurance, big data is an important supporting component for compliance and governance reasons, as well as being a valuable tool for monitoring and reacting to customers’ transactions and interactions with your insurance offering. Here is more information about the powerful data capability Click2Sure would incorporate within your insurance product line. You can expect:

  • Live dashboards (claims, sales, churn, loss ratio, business mix, and more)
  • Data analytics (data warehousing, APIs to Tableau and more)
  • Bordereau reports (file download, FTP or API with underwriting insurer)

Standard management reports (sales, age analysis, un/successful collections, and more)

Why make Click2Sure your technology partner in this venture?

Click2Sure started in 2015 with the “Problem to Solve” of buying insurance as an embedded experience. We sought to transform insurance from an administration-heavy afterthought to a real-time offering at the point of purchase; to digitise the entire insurance chain from start to finish for traditional insurers; to make insurance easier and faster for consumers to find and activate, and to democratise insurance through configurable SaaS, opening it up as a revenue-generating opportunity any non-insurer could launch.

Our team is led by Daniel Guasco, founder and guiding force behind Click2Sure. Dan is a successful serial e-commerce entrepreneur who has been instrumental in growing the e-commerce industry in South Africa. He has won numerous awards, including the U-Start Africa Top e-Commerce Website Award (2011 and 2012), and in 2015 was recognised as having made the biggest impact on e-commerce in Africa. Many industry stakeholders know of Dan from his time as Founding Director/Joint CEO of Groupon South Africa (2010 – 2016).

In closing: our elevator pitch

Research has shown that digital banking customers would be receptive to transaction-based insurance offers. Digital insurance is set to grow at its highest rate until 2026. Launching insurance can increase trust in your brand, and encourage more and bigger purchases through your banking channel. Strategic insurance offerings may prompt basic banking customers to upgrade to premium, insurance-inclusive accounts. Implementing and running insurance SaaS is relatively simple and cost-effective. Both you and your customers will find the insurance easy to manage – and you will benefit from powerful supporting data, for compliance and cross/upselling purposes. Click2Sure has a history of fintech innovation and ties with a host of licensed underwriters/insurers.

Most importantly, launching insurance would help your digital bank to stand out against competitors – including the many new digital banks that are about to click to launch. 

Innovation-centric digital bank? Call us on +27 (10) 045 4019 or mail hello@click2sure.co.za to set up a no-obligation introductory meeting.