With rise in digital bancassurance, OCBC aims to insure one in two customers

Singapore

OCBC is seeing a sharp rise in digital insurance transactions, with seniors above 50 - the fastest growing segment - making up more than half of this group, said a top OCBC executive.

Tan Siew Lee, head of wealth management Singapore, OCBC, told The Business Times in an interview that the bank is aiming for one in two of its customers to be insured in the near future, compared with one in five at the moment.

This comes as the pandemic has resulted in accelerated digital adoption, altering customer behaviour and mindsets - in many cases, for good.

But its push to digital bancassurance preceded Covid-19, driven by a need to keep up its edge as a dominant player in the space.

While the bank was among the first in Singapore to offer health insurance on digital channels back in 2017, it was in 2019 that it started to ramp up its digital bancassurance product suite to include travel and home contents insurance, in part to appeal to younger, more digitally savvy customers.

In the past year, OCBC started offering more life insurance and single premium products. Through its digital platforms, sales of OCBC's single premium plans have amounted to more than S$1 billion since they started last year.

Together with insurer Great Eastern, which OCBC has a 87 per cent stake in, it was also the first in Singapore to launch a life insurance plan focused on sustainability in July this year.

As the bank is now fully integrated with Great Eastern through application programming interfaces (APIs), it greatly accelerates the speed to market and offers straight-through processing.

Today, most of OCBC's bancassurance products are curated on its digital platforms, where in most cases, customers are able to purchase with several clicks of a button without a need for medical underwriting.

Digital bancassurance transactions' contribution rate has grown by three times, and now make up 40 per cent of all bancassurance transactions. Bancassurance as a segment has grown in importance to OCBC, with its contribution to consumer banking revenue up almost 15 per cent year on year.

With Covid-19, the bank has seen some changes in its customer profile when it comes to bancassurance.

Three years ago, seniors above 50 years old made up more than 50 per cent of all bancassurance customers, with sales typically done face to face at branches.

Fast forward to 2021, this same group is now leaning towards digital sales, and is the fastest growing segment for digital bancassurance with growth of three times compared to a year ago. Seniors above 50 years old now make up 60 per cent of the digital bancassurance customer base.

The pandemic likely played a key role in this acceleration, said Samuel Wang, head of bancassurance, OCBC.

Firstly, with the pandemic highlighting the fragility of life, customers begin to feel that insurance is something that they need more compared with previously, he said.

Secondly, with digital adoption accelerating, customers are getting used to digital interactions, which includes how they interact with banks. As such, customers are increasingly turning to online platforms to purchase insurance instead.

"Customers who are more self-directed may not want to feel like they are being pressured to talk to someone," he noted. "One of the impetuses for us to embark on this digital journey is to serve customers the way they prefer."

With the bank's ambitions of insuring one out of two customers, OCBC is seeking to capitalise on several trends in the bancassurance space.

Among them is the move towards more openness in the financial industry, with the launch of the Singapore Financial Data Exchange (SGFinDex), a digital infrastructure riding on the national digital identity system SingPass.

Currently, customers can decide to collate their financial data from various banks and view them on a platform of their choice.

In the next phase, insurance will be a part of this - a move that Ms Tan believes the bank will benefit from.

"Right now, this is something that insurance agents do very well as they form that relationship with clients and ask to see all your insurance policies and finances to help them plan," Ms Tan notes. "With the next phase of SGFinDex, it will give the banks an edge over insurance agents because now we can consolidate everything digitally."

That way, OCBC will be able to get a complete financial picture of clients and see what gaps are missing for its clients in order to recommend suitable products.

The bank is also counting on creating a personalised experience for users to get them to come onboard.

In January, OCBC will be launching data-driven underwriting, or predictive underwriting, that can offer customers preferential rates based on their data.

"We will look at certain data of the client, and see how we can offer products that are guaranteed issuance, or even if some questions need to be asked, they will be simple," said Ms Tan. "We can then offer you the product directly at a much reduced premium compared with someone we do not have data on."

This level of personalisation, she believes, in the future of insurance.

Ms Tan highlighted that the "end game" for her is for one in two customers to fulfil the bancassurance journey digitally.

"Customers are getting younger and they are not coming into the branches," she said. "Of course there will be some insurance products that are a lot more complicated that require medical underwriting, so the human channel will not go away anytime soon for insurance, but digital will definitely play a role."