Spotlight: Inclusive payment options are a must in a digital world

As insurers pursue the path to smoother digital journeys and payments, they risk losing customers who find themselves ‘digitally excluded’, says Luke Gall, product and engineering director, Access PaySuite 

In today’s digital age, the rapid rise of online payments has transformed the way the insurance industry manages transactions, offering both convenience and efficiency. However, as digital payments become more prevalent, it’s crucial for insurance providers to remember that not all customers are fully equipped to navigate this digital landscape.

In the UK alone, more than a quarter of the population is considered digitally excluded, meaning millions of potential policyholders struggle with online tasks due to a lack of skills, inclination, or essential tools like internet connectivity.

The challenge of digital exclusion

Digital exclusion presents a significant challenge for the insurance sector. For some customers, the barrier lies in unfamiliarity with digital tools, while others may lack reliable internet access or simply prefer more traditional methods of managing their policies.

This is where the value of a multi-channel payment system becomes evident. Such systems cater to the diverse needs of policyholders – providing advanced online payment options for tech-savvy customers while ensuring those who require or prefer assistance can still manage their payments effectively.

The role of digital innovations

One of the innovations helping to bridge this gap is Open Banking, also known as ‘pay by bank’. This method is increasingly popular because it offers an alternative for customers who don’t have or struggle to use a bank card.

Open Banking allows users to pay directly from their bank account securely, widening access to digital payments. This is particularly beneficial for those who are wary of using credit or debit cards online, or for anyone who prefers a more straightforward, bank-to-bank transaction.

Mobile wallets and other emerging payment technologies are also reshaping the insurance payment landscape. With the rise of digital wallets like Apple Pay and Google Pay, customers now have the option to make quick, secure payments using their smartphones. Incorporating these technologies into insurance payment systems can attract tech-savvy customers and streamline the payment process.

Maintaining inclusivity with traditional methods

Despite the rise of digital payments, more traditional methods such as direct debits remain the most popular choice for insurance payments, particularly for spreading premium costs over time. According to Access PaySuite research, more than half (57%) of consumers still prefer to pay premiums through direct debits, followed closely by online card payments (38%). However, the need for flexibility in payment options is clear. A significant number of policyholders continue to choose to pay over the phone (18%), via Open Banking (17%), or through mobile wallets (11%).

Navigating generational preferences

Generational differences play a crucial role in the choice of payment methods within the insurance industry. Younger consumers, particularly those aged 16 to 34, are more inclined to embrace Open Banking, with 23% of 16- to 24-year-olds and 25% of 25- to 34-year-olds opting for this method. In contrast, only 13% of those aged 55 and above prefer this option, highlighting the importance of offering diverse payment methods to cater to varying preferences across age groups.

Balancing innovation and inclusivity

To meet the diverse needs of today’s insurance customers, providers must adopt a balanced multi-channel approach. By integrating both cutting-edge digital solutions and traditional payment methods, insurers can offer a comprehensive range of options that cater to all customer preferences. This strategy not only enhances customer satisfaction but also helps insurers build a more inclusive and loyal customer base.

Embracing a multi-channel future

While the digital revolution in payments offers incredible opportunities for the insurance sector, it’s essential that no policyholder is left behind. By embracing a multi-channel approach that includes options like Open Banking and traditional methods, insurance providers can ensure that all customers, regardless of their digital capabilities, have access to secure and convenient payment options.

This inclusive approach not only supports those who are digitally excluded but also builds trust and satisfaction across a diverse customer base, ultimately enhancing customer loyalty and retention in the competitive insurance market.

The future of insurance payments lies in the ability to deliver a seamless and inclusive payment experience across various channels. By embracing multi-channel strategies, insurance providers can meet the evolving needs of their customers, ensuring that all policyholders have access to secure and convenient payment options.

As the industry continues to advance, focusing on both innovation and inclusivity will be key to maintaining customer trust and satisfaction.

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