Spotlight: Is insurance ready to go multichannel on payments?

Customer expectations around payment processes have changed significantly in recent years, with digital payments and online options gaining in popularity. However, a sizeable portion of the UK population still struggles to complete online tasks, so insurers must be careful to remain inclusive.

Multichannel payment systems make online payment tools and open banking available to those who are comfortable using the technology, while enabling contact centre staff to be deployed strategically to support customers who would rather pay by phone.

Evolving at pace

Access PaySuite’s research on payments in the insurance sector showed that the ability to spread payments through direct debits remains the most popular method. However, a significant proportion of consumers are now choosing to pay over the phone, via open banking or a mobile wallet.

 

In addition, well over half of consumers say being offered a wider choice of payment methods would positively impact their choice of insurance provider. And it now appears that the insurance industry is moving to meet this demand.

Rob Denny, head of service delivery, Hiscox UK, says: “Like technology, customer expectations evolve at pace and customers expect a range of options when making a payment. We are definitely seeing more investment in this space. The insurance industry recognises the need to provide omnichannel accessibility, but there is a way to go before this is the norm.”  

Flexibility is key

Multichannel payments are an effective way to engage customers – but they may swap out their preferred channel depending on the type of insurance policy they need. A straightforward and/or low-cost policy can be bought online with no human interaction. However, cover for something more complex or unusual might require a detailed discussion with a member of the contact centre team.

Inflexible nature

There is little doubt that legacy systems are proving a significant obstacle in providing customers with a seamless multichannel experience. These systems are often incapable of offering customers a smooth journey across these different options.

We predict insurers will have no choice in the long run to update their payment systems.

Phil Evans, GoShorty

Phil Evans, commercial director at GoShorty, says: “Unfortunately, older technologies could not have anticipated the huge advancements in technology, with their inflexible nature proving troublesome to businesses reluctant to update their systems.

“However, it’s inevitable that payment methods will continue to change, meaning it is essential for all insurers to modernise their approach.

“This doesn’t have to happen overnight, with the potential to slowly phase out older systems. But we predict insurers will have no choice in the long run to update their payment systems as consumers demand quicker, easier processes, making it essential to begin the transition now.”

A few simple clicks

This is becoming more pressing as a growing number of insurance customers now prefer to use open banking to pay their insurance premiums. This growth is being led by those in the 16-34 age brackets, highlighting not just generational differences but where future demand will lie.

Once set up with open banking, customers can pay for purchases straight from their bank with a few simple clicks. In the background, insurance companies can use details harvested from banking data to offer tailored products and services to help those in need.

Denny says: “Removing effort and making it as easy as possible to transact is key for any business. Younger customers have only transacted in a world where processes are generally fast and seamless, and will not accept complex processes when purchases made through one click or face recognition are so widely available.

“Open banking gives users a clearer view of their financial situation by combining data from multiple organisations. This is common now for customers of challenger banks, which typically attract a younger demographic.”

Rock solid option

Digital wallets are a convenient payment method, which enable customers to pay straight from the wallet. Wallets can have two-factor authentication (2FA) and pin codes to make them a rock-solid option against fraud, theft and digitally malevolent players.

“The use of payment wallets is becoming more popular across all demographics and is the expected norm among the younger population,” Denny adds. “This could undoubtedly improve the onboarding experience of new customers when wishing to take out a policy online, particularly when using phones and tablets.”  

Hinder progress

According to Evans, more traditional businesses with less tech-savvy individuals are likely to be more reluctant to embrace open banking and other, more innovative payment types.

This is despite the fact open banking is generally cheaper for businesses to process than traditional card payments, with insurers able to pick the best day to extract direct debits – but it can require a greater amount of time to integrate.

He says: “Unfortunately, this could hold back their progress, especially when it comes to retaining a competitive edge in the modern insurance markets. With more regulatory changes for open banking expected in the future, this means customer concerns – such as those over data privacy and security – are likely to reduce, meaning businesses really need to undertake modern digital transformation as soon as possible or they might fail to future-proof their business.”

Safe and secure

Unsurprisingly, secure data handling is a priority for many of the customers who are increasingly opting for online payment options. Payment systems must have the highest levels of security to lessen the chance of customers’ card payment details being breached, hacked or stolen.

Being safe and secure and free from fraud is [the minimum requirement] these days.

Neil Dodd, Cuvva

There are other payment options that do not require people to read out their card details where they could be overheard. They receive a secure payment link, either through SMS, live chat or email, while continuing to speak to an agent over the phone. This can help to reassure those who may be nervous to take their first steps towards online payments.

Neil Dodd, chief product officer at temporary car insurance provider Cuvva, says: “Being safe and secure and free from fraud is [the minimum requirement] these days. As a high volume insurance player, offering an instant car insurance solution for customers to get on the road in any car instantaneously and effortlessly, is vital. Which means we need to be able to offer customers payment options they’re used to and prefer, such as Google Pay and Apple Pay.

“But we take it a step further. By being app-only, our customers have everything they need at their fingertips. All security and fraud checks are done within the app, allowing customers to shop freely and at lightning speed. Seamless payment systems and processes form an integral part of the overall customer experience.”

A multichannel future

With benefits including more choice of payment methods, improved security and the opportunity to attract more customers, are insurers poised to embrace a multichannel approach?

Evans says: “The combination of an increase in payment options with improved security is an attractive prospect for many customers. A multichannel approach is therefore an excellent way to ensure you’re not alienating any customers, who may have a payment channel preference, such as Apple Pay.

“With some customers also abandoning their carts due to issues such as user experience or potentially not having their physical bank card to hand, services such as Apple Pay enable seamless, easy and trustworthy payments that customers are comfortable making.”

By embracing multichannel 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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