The “Digital Shift’s” Impact on Banking and Insurance

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behavior analytics

Behavioral Analytics and the “Digital Shift’s” Impact on Banking and Insurance

In the past 15 years, with the rise of the Internet and the drastic “Digital Shift”, we’ve seen business transform like never before.

Traditional retail took a huge hit as consumers shift their behavior to custom online experiences.

Direct-to-consumer business models displaced wholesalers.

And customer expectations around transparency and ease-of-use change dramatically.

Why go to a Mall when you can order on Amazon?

Why go to a Mattress King when you can order directly through Casper?

Why go to a car dealership if you can order a Tesla or connect with someone locally through TrueCar?

E-commerce is the easiest and most commonly thought of and mentioned ‘disrupter’, but the Internet has not stopped there.

The customer-driven shift from face-to-face business models to ‘faceless’ business models has forced companies to adapt to new customer preferences.

Like everyone else, Banking and Insurance organizations have been forced to play catch-up and adapt to the changing landscape.

With new internet-based entrants in the space, industries like these are faced with three critical challenges when it comes to transforming their businesses into digital powerhouses:

  1. The Digital Shift has led to the “Faceless” applicant
  2. Traditional brick-and-mortar customer experiences have gone online
  3. Risky behavior is easier to accomplish and harder to catch

Let’s take these one-by-one…

The “Faceless” Applicant

If you think about the process for applying for, say, a Life Insurance policy in 2005, an applicant would sit down with an insurance agent to begin their application.

These agents were trained to welcome the potential customer with open arms, create a warm and inviting atmosphere, but most importantly, keep an eye out for any ‘red flag’ behavior that may arise from the customer during the application process.

Now that 55% of applicants are looking for solutions online and face-to-face interactions continue to fall off a cliff, so much of the crucial behavioral analysis, the “behavioral analytics”, captured by the agent has been lost.

If the applicant was nervous, fidgety, or obviously uncomfortable, they could simply be just that, or they could be a bad actor worried about getting caught.

The agent, trained to spot these behaviors, could simply ask some additional qualifying questions to mitigate the risk that this is fraudulent behavior.

On the flip side, if the applicant seems ripe for an up-sell or cross-sells of an additional product, the agent could act on that in real-time.

Today, that entire interaction is lost.

As businesses attempt to make accurate and cost-effective underwriting solutions, they are doing so with very limited data— the ‘final answer data’ provided by the submission of the application alone and third-party datasets once the user presses submit.

This leaves institutions extremely vulnerable to risky and fraudulent behavior and they only realize they’ve been duped once the claims hit months or years later.

Hackers and scammers are the obvious culprits, but internal agents ‘gaming’ the system to ensure applications are approved and commissions and quotas are nothing new.

Everyone remembers the well-publicized Wells Fargo example, but companies all across the globe are having the same problem of agents manipulating information in an act of self-servitude.

This is very bad for the customer and the company and could have a lasting impact from a brand and monetary perspective.

Brick-and-Mortar Experiences Have Shifted Online

The days of a smiley welcome, warm cookies, and an offer of ‘coffee or water’ are gone.

Today, customers and agents interact almost exclusively over the phone or online.

With that, digital experiences are becoming more and more tailored to the individual user when they are interacting with a website, mobile app, or application.

Seeing products and services unrelated to what you’re looking for, questions that aren’t specific to you, and requiring users to jump through multiple hoops creates an immediate turn-off and will likely deter customers from choosing your company.

In the age of price shopping and information hunting, having a seamless user experience can make the difference between a happy new customer or an annoyed public detractor.

And the best way to accomplish this is having a robust behavioral analytics tool that tells you exactly what to do. 

Businesses today are getting smarter and tailoring experiences for each individual user, interacting in real-time with a customer through the rise of chatbots, and providing helpful information and resources within the experience so that user doesn’t need to go searching for the information and never come back.

Risky Behavior is Easier to Accomplish and Harder to Catch

The answer to seamless user experience isn’t necessarily opening up the castle gates and letting simply anyone come inside.

If it were, risk and fraud departments likely wouldn’t exist as they’d be extinct from a heart-attack epidemic.

If Risk/Fraud departments had their way, there would be endless screens, background checks, fingerprint scans, airport security-like x-ray machines, and Minority Report-like facial analysis that stand in the way of a fraudster and their desired goal.

Even with the invent of technologies like e-signatures, which are relatively secure, businesses still struggle with identity verification and risk mitigation. 

The key to ensuring a safe and effective screening process while maintaining a seamless user experience is in balance and dynamic interaction.

“So what should I do to survive the digital transformation?”

The most human element of all, reading and reacting to someone’s body language, has been technology’s Holy Grail since the inception of A.I. back in the 1950s.

It’s impossible to read, understand, and react to someone’s body language using a computer, right?

Not so fast…

The advances in A.I. have been rising at an unprecedented level, especially in the last decade.

And predictive behavioral analytics and biometrics may be the map to the elusive Holy Grail once and for all…

Even a few years ago the answer to “How can I operate in a digital world the same way I did in a physical one? would have been…“You can’t.”

But today, with the rise of predictive and prescriptive behavior analytics companies like ForMotiv, solutions to these problems are finally possible.

ForMotiv combines AI, machine learning and predictive behavioral analytics, and behavioral psychology into an engine that transforms data insights into actions in order to deliver real business value and help companies with personalization, predictions, and risk modeling.

We call this, “The Digital Polygraph”. 

Businesses using digital behavioral analytics are better positioned to not only survive but thrive in the new digital age.

Want to monitor your internal or external agents? No problem, behavioral analytics to the rescue. 

ForMotiv will give you insight into every interaction anyone has on any particular application or interaction.

Analyze applicants behavioral analytics, or “Digital Body Language”, by measuring every interaction, down to the keystroke, correction, and time on a question, of every individual application.

ForMotiv uses this information to baseline ‘good’ behavior and alert, in real-time, deviant behavior.

Want to create a seamless online experience? 

ForMotiv will put a finger on the pulse of your application’s “Health Score”, providing insights such as “chokepoints” and “high drop-off questions”.

Not only that, ForMotiv provides recommendations into “Optimal Application Flows” by analyzing the optimal flow from good users and measuring any UX changes in real-time.

Want to strike a balance between friction and user experience? 

ForMotiv will give your team real-time actionable insights into users completing applications and dynamically interact with them.

For instance, ForMotiv can predict with roughly 95% accuracy if a user is likely to abandon the application.

If that user hits an ‘abandonment threshold’, ForMotiv will dynamically engage the user with tooltips and FAQ’s, a “click to call a representative” button, or prompt your chatbot to interact with the user.

ForMotiv has proven its ability to predict fraudulent behavior by analyzing behavioral analytics with roughly 85% accuracy.

When a user hits a “fraud threshold”, dynamically add friction questions such as uploading a Drivers License.

Using behavioral analytics, ForMotiv has predicted thousands of potentially fraudulent accounts, leading to millions of dollars of savings for insurance and banking institutions.

What’s even more astounding is what a simple 1% increase in ‘good’ conversion rates can do to your top-line.

Forrester studies show that a 1% increase in conversion can lead to over $200mm in additional revenue. 

With the ever-increasing adoption of digital applications and experiences, make sure you’re staying ahead of the curve.


Want to learn more about ForMotiv and how we can help you transform your business into a digital powerhouse with behavioral analytics? Email us at info@formotiv.com


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