The cloud – which refers to storing, managing, and processing data via a network of remote servers instead of locally on a server or personal computer – is quickly becoming a critical source for innovation.
Without a robust cloud strategy, an organization’s pace and breadth of innovation is likely to be hampered. Here are five common reasons organizations are turning to cloud computing services:
- Cost: Reduces the capital expense of buying hardware and software and setting up on-site data centers.
- Speed: Vast amounts of computing resources are only ever a click away so they can be provisioned in minutes.
- Scale: The right amount of IT resources can be delivered right when they are needed, and where they are needed around the world, meaning it can scale seamlessly with the size of the organization.
- Productivity: IT teams can allocate their time to more important business tasks, rather than time-consuming IT management chores essential for on-site data centers.
- Security: Many cloud providers offer a broad set of policies, technologies, and controls that strengthen security, helping to protect data from potential threats.
The cloud makes it possible for organizations to access and analyze the kind of big data required for them to compete, and makes it possible to access AI-based services. Furthermore, many believe the cloud will make it easy for businesses to build blockchain applications. Cloud vendors, such as Microsoft Azure, are investing in building open tooling for enterprise blockchain networks, which will see widespread adoption of blockchain in the enterprise.
The cloud has opened doors to deep data analytics while significantly increasing the speed at which transactions can occur. For this reason, any reticence the insurance industry showed early on has been replaced with a holistic embrace of trusted cloud platforms.
Cloud in the Insurance Sector
Implementing cloud technology into the insurance industry is a positive step towards building a digital insurance landscape. However, more widespread reliance on the cloud should proceed with caution. Insurers manage vast amounts of highly private and personal data, and transacting through the cloud can be risky if not working with a reputable vendor knowledgeable about data security and data privacy. While any new technology brings inherent risk, cloud computing is safe and efficient when acquired through large, reliable providers.
For the insurance industry, the cloud has proven itself in three distinct areas: access to data, scalability, and trust and reliability.
- Greater access to data: Whether it be to support machine learning, predictive analytics, or another form of AI, having greater access to analytics isn’t just about improving the bottom line; it also helps the industry to better understand customers, and to design and deliver the right products at the right time to the right audience.
- Scalability: Insurance companies are powered by actuarial analysis, something that requires vast amounts of data, understanding, and computational power. To keep up with a modern on-demand economy, it becomes impossible to conduct the required analysis on-premise, making the cloud the ideal environment for speed and scalability.
- Trust and reliability: Over time, cloud technology is also proving itself to skeptics, using one of the most stringent units of measurement in the insurance industry – trust and reliability. The more cloud technology transitions from “emerging tech” to “known entity,” the more readily insurers can rely on cloud capabilities to bring other technical innovations to fruition.
Final Note
Emerging technologies – particularly AI, blockchain, and the cloud – have provided a vehicle of change for the insurance industry, and new innovations will help spur vital disruption that will infuse new life and opportunities into the insurance landscape.
So how do we transition from talk to action? With all of this inevitable change, who will step forward as clear industry leaders and who might get left behind? The good news is that innovation is not built on the principles of scarcity. For one to succeed another does not have to fail. The rise of insurtech has introduced a host of startups to the market, small companies built on digital agility that bring new perspectives to the business of insurance.
Tech giants offer another intriguing opportunity for insurance companies to disrupt or face being disrupted themselves. The recent watershed announcement by Amazon, Berkshire Hathaway, and JPMorgan Chase to partner on reducing the cost of providing healthcare to U.S. employees demonstrates how leading firms in other fields can make real change, even in complex regulatory environments such as insurance. Partnerships will be critical to innovation. Change does not happen in a silo, and as insurance companies engage in mutually beneficial partnerships with incumbents or startups in the field they will help to drive faster, smarter, and more successful disruption.
The insurance industry is a valuable and necessary institution, and if insurance companies are able to take a holistic approach to the challenges faced then this will likely yield the best outcome. Firms must individually and collectively shift their focus and recognize the need to become technology-minded companies, using their strengths and skills in insurance, coupled with key partnerships and a newfound understanding of emerging technology, to provide lasting value to customers.
Jason Oh is a management consulting professional at Novantas, specialized in financial services strategy consulting. He holds experience helping Fortune 500 financial institutions with commercial due diligence, go-to-market strategy, and distribution channel strategy. He’s also an avid traveller with passion for FinTech, marathon, and blogging.
Image: Pexels
🔴 Interested in consulting?