At Finnoviti 2023, CEOs become thought leaders about not leveraging digital as a copycat tool, but rather as a driver of customer education that is aligned with fast paced innovation and a differentiator that creates value:
- Mehernosh Tata, ED & CEO, ECL Finance
- Satyajit Tripathy, MD & CEO, United India Insurance
- Kamayani Aniruddh Nagar, CEO-Wealth, Bajaj Capital
- Himanish Chaudhuri, Partner & Financial Services Leader, Deloitte India
- Manoj Agrawal, Group Editor, Banking Frontiers (Moderator)
Manoj: Today, using technology, copying anything has become very easy and product differentiation barriers are literally becoming close to zero, especially for digital products. But what does remain is service differentiation. What is your learning about applying digital to extend service differentiation and pricing differentiation? And from pricing differentiation to value differentiation?
Mehernosh: You’re right…a lot of this is now very standardized and commoditized. The way to look at this is how do you bring about value creation for your own customer? If you get the right value creation, if you ensure that there is a certain richness in the product or service that you’re offering, then pricing will play a role. But it is not binary. Value creation and the value journey are important. From a service point of view, what’s important is that organizations have to start thinking more from a design thinking point of view. Most of us have grown up in very siloed environments, and I think design thinking is a much-needed concept which brings about focus on the customer journey and therefore, when you’re focused on your end customer, whether it is internal customer or an external customer, you start designing processes which are seamless, frictionless and thereby enhance the service. This becomes a big differentiator. What are you bringing new today will get replicated in 3 to 6 months, but the way you are able to be with your customer service journey, will be moments of truth.
When you have to accept an insurance claim or disburse a loan that has been committed, to be done within a particular period of time, those moments of truth are very important and differentiate the good from the great.
Manoj: So, what has been your experience with design thinking?
Mehernosh: The concept really is to look at having cross-functional units be very agile and therefore the amount of iteration that you do is a lot. You do not go for a perfect product right now. So it’s all about thinking and seeing what is best for the customer, talking to those customers, showing what has been built, getting them to play around with it and give feedback. We should take that feedback and re-iterate and that’s the loop with to keep working on. We have seen in our own experience when we’ve done some of this testing with our own customers, a lot of thinking that we have done in boardrooms really is not what is reality when exposed to customer.
Satyajit: Product differentiation in non-life is both easy and difficult. When you have commoditized products like motor insurance and health insurance, price can be a differentiator for people who are buying it like a commodity. But for an insurance policy on a factory or marine or aviation, what comes in the picture is not the pricing but your expertise and your ability to service that claim. Digital is a layer on top of the product and the expertise – you cannot buy or sell an insurance for a chemical factory digitally. Of course, servicing the claim for smaller products like motor and health is also very important and you have a low turnaround time.
Himanish: I would like to absolutely and wholeheartedly agree with Mehernosh. I think it’s the moment of truth for the business that we are in, and in real life that matters. When you’re watching TV and you want to buy something and you click that buy button, the timer comes on and makes you think whether the transaction will go through or not. The moment of truth is when you you’re going for a holiday and you want to buy that last minute travel insurance. The moment of truth is where everything converges – your brand risk, your reputation risk and your product risk. That’s the start of the service journey, because after that you will have payments, re-payments, claims and so on. In this very low customer loyalty world, you will have to retain the customer and get him/her to the next product.
So the question on loyalty and customer service being the differentiation, starts at the point of sale, but this is a business where you have to every day, every transaction, prove that you’re up there. It’s no longer an assisted relationship driven business, except for complex products. At any point in time, if your scoring engine or credit engine or some other engine doesn’t work, it straight away impacts your brand and reputation. So the key is how to build a platform, which is obviously tech and data enabled, which lives with you. You really have to ensure it to be rugged, reliable and scalable. And there is no set way for it.
Kamayani: Tech for the sake of tech is not the way forward. Today, product differentiation has narrowed down. It is very difficult to be it to make a differentiation for the customer unless and until you’re able to have that moment of truth of when the customer gets what he wants to get. Tech can be built but are you solving a problem for the customer. You throw money and you’ll get innovation, you’ll get AI, you’ll get everything. But, are you actually bringing to the table something which the customer needs or are you being able to discover for the customer something that he has not discovered himself? I think solving that latent need or solving that problem, which the customer has at that moment, will be the differentiator as it goes forward.
Manoj: Gen Z are all exposed to in their social world and in the social world, you have all kinds of very powerful campaigns and influencers. You also have positive things like green movement, ESG, DEI, and more. How do you see yourself engaging with the Gen Z on these kind of parameters? How do you build up a relationship on a brand that is less dependent on the product attributes?
Satyajit: It is not that the whole business is driven by Gen Z. Gen Z has a mindset. They have a particular approach. They are influenced by certain things. But to devise a product exactly for this section of the population is not that easy from insurance point of view. What you can do to differentiate is that how quickly you are able to settle the claims for the products they buy, such as motor insurance and health insurance. For products which are basically sold of the shelf requires a much different approach. In such cases, what is necessary is that to create a kind of risk awareness. It is not price only which determines the sale, it is what is the cover that the person wants. For example, flood cover for motor insurance may be meaningful Mumbai, but not in areas where rainfall is low.
I think I think the level of penetration of insurance in India in non-life, which is around 1%, is pathetic considering the population plus the literacy plus the education that we have. Unless we have education and awareness on this line, the selling of the product will become wrong. And if I give an example, the health insurance sector has seen manifold increase in policies selling because of covid, which decades of advertising could not do for health insurance. You don’t have to push all health policy now. Now Gen Z and Gen X and all others are falling over each other to buy health policy.
Kamayani: I think it is always good to catch them. Secondly, I think Gen Z is just a mindset because you will have generations after Gen Z. So it’s about how humans are evolving and how mindsets are changing, So it’s not about a particular generation. I think it’s about how people are now thinking of the way forward for everybody. You spoke about things like ESG or DEI being not being the core product, but I believe anything that benefits overall – consumers and planet – is something which can be made core or can be tied into a product. Diversity and inclusion doesn’t hurt anybody, it helps.
When it comes to connecting with Gen Z, specifically in areas like wealth management, it’s not about products being sold, it’s about products being bought. Can I have good content which interacts with people? Can I have ease of understanding like Satyajit clearly put it that it is important for people to understand what they’re buying. So it’s not about a herd mentality that everybody is wanting to do one thing – for example, everybody at one point of time wanted to purchase tech stocks.
Manoj: I take two points from what you said. One is that the key is not social media, rather it is content. Second, I’m reminded in one of the articles of some banks that would, based on your spend or your relationship, give a certain percentage to green. I think that’s a very simple way of integrating something that is non-core to the core product.
Himanish: We have to accept that this generation is far more aware than what any other generation before that was. They care for the planet, they care for the sensitivities that are there, and therefore their value axis is slightly different and we have to address that. And if we do not address those sensibilities, I think we’ll be missing the bus.
Mehernosh: When you look at large organizations, you’ve got companies like Google, Microsoft, Starbucks, etc. Most Gen Zs would associate themselves with these institutions. These brands have been able to create an open culture. This is the first thing that one needs to really look at when you want to connect. They are also very clear about having work-life balance. For these large companies that I mentioned, their vision and mission statements don’t change every 2-3 years or even decade just because a different generation is coming in. It doesn’t work that way. I think they are very well framed and there is more meaning to it. I think most youngsters today seek meaning in their work, and that is very important for many of them. They don’t want to do mundane jobs just because they’re going to get a 15% increment at the end of the year. They want to know more in terms of how their work is being more meaningful in some way or the other.
Manoj: To summarize based on what all of you have said, today’s customers and today’s younger generation is moving up that Maslow’s hierarchy and organizations have to be cognizant of that and then engage with them at a higher level on the hierarchy and move up from the product or the functional level. Thank you panelists for a deeply insightful conversation.