Guaranteeing a customer-led approach through innovation
Digitising insurance for the future WRITTEN BY
CATHERINE STURMAN PRODUCED BY
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Placed on Fortune magazine’s list of The World’s Most Admired Companies over 10 times, we find out how Aflac strives to soar above the competition
nternationally recognised by its famous icon, ‘the Aflac duck’, insurance giant Aflac has become a leader within US and Japanese markets. Delivering exceptional services and solutions with a ‘customer first’ approach, its growing Japanese customer base has presented a number of challenges, but unlocked new opportunities through digitisation. Although technology continues to disrupt the way in which customers access products and services, spanning both policyholders and agents, John Moorefield, Executive Vice President and Chief Transformation Officer, explains that the Japanese insurance industry has previously been less aggressive in the adoption of new technology. However, the country is undergoing a significant sea change. The changes in Japan are driven by evolving customer behaviours, but are consistent with changes that organisa-
tions such as The Boston Consulting Group (BCG) and Accenture have monitored and analysed worldwide. Customers expect expanded and enhanced services to be included with the products they purchase, and the quality of these services is becoming as important as the products themselves. “The interest in fintech and in implementing new ways of delivering services to customers in the insurance industry is picking up in Japan at an accelerated
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rate. It’s not only creating a situation in which we’re catching up with the kind of services delivered in other regions, but we’re also, in some ways, getting ahead, because we’re just making a generational jump,” says Moorefield. Responsible for Aflac Japan’s information technology, policy services and security, as well as the company’s transformation at Aflac Japan, Moorefield, along with other leaders, ensures that the company’s customer first approach will remain the key driver as it broadens its product line. “We are ensuring that our priorities are driven by what the customer wants. From that perspective, we are working extremely hard to not only be the most innovative in terms of insurance products for our customers, but to also be the leader in technology deployment to accelerate customer service,” he says. “This encompasses the turnaround time for requests and the usability of our applications. This ensures customers are satisfied
John Moorefield Executive Vice President and Chief Transformation Officer Â â€” John A. Moorefield, executive vice president and chief transformation officer is responsible Information Technology, Policy Services, Information Security and Transformation for Aflac Japan. Mr. Moorefield joined Aflac in 2005 and has held several key positions, including chief information officer of Aflac Japan. Prior to joining Aflac, he served as a principal in ApproxiCom, LLC and held leadership positions at Cap Gemini Ernst & Young LLP, Fidelity Investments and NationsBank. He was promoted to his current position in January 2017.
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The Digital Future Is Now The Boston Consulting Group (BCG) is a global management consulting firm and the worldâ€™s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highestvalue opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with offices in more than 90 cities in 50 countries.
For more information, please visit the website: HTTPS://WWW.BCG.COM/DIGITAL-BCG/OVERVIEW.ASPX
BCG’S PERSPECTIVE ON DIGITAL TRANSFORMATION When it comes to the digital transformation of business, the future is now. Companies worldwide are using digital technologies and advanced analytics to unlock new sources of economic value and achieve step-function improvements in productivity, flexibility, and speed in business and in IT.
WHERE DO WE START? BCG’s “Digital Acceleration Index (DAI)” measures the degree of digital maturity and a global study based on DAI shows that digital maturity drives superior performance. The Digital Acceleration Index helps organizations assess their digital maturity—that is, uncover their digital strengths and weaknesses, determine whether their digital capabilities are lacking or imbalanced, and evaluate how well they perform against peers in digital efforts. Our global study shows that increased levels of digital maturity significantly improved competitive advantage in multiple areas, such as time-to-market, cost efficiency, product quality, and customer satisfaction.
(technology in the industrial production processes of physical goods), and enterprise (infrastructure, platforms and standard software packages). Companies will increasingly build internal capabilities and focus resources on product and service technologies and production technologies for competitive advantage. For example, autonomous cars use a variety of product and service technologies—including, radar, lasers, GPS, odometry, and computer vision—to detect and interpret their surroundings. They also include apps that link the customer to the OEM. Meanwhile, companies will devote fewer internal resources to enterprise infrastructure, opting instead for cloud-based utilities. Not only does getting the digital transformation right improve a company’s operations, but it can also boost valuations. According to our research, traditional assetheavy companies often trade at low multiples, even below annual revenues, while pure digital companies typically trade at multiples that are several times that of revenues.
INITIATIVES CREATING THE TECH FUNCTION OF THE FUTURE
Digital strategy and digital transformation are top priorities for CEOs around the world, but a fundamental question remains: How do we make these happen? BCG has found that the most successful companies excel at Speed, Scale, and Value—in parallel. That is, they determine: How can we move at digital speed? How can we change the way we work across the entire enterprise? How can we create tangible value for the business—and for customers?
1. Develop product and service technologies close to the business. With fewer internal resources devoted to enterprise technologies and technologies that are more integrated into the business units, leaders can turbocharge product and service technologies. Small teams can focus on working closely with product managers and customers on new products and services, speeding up iterations and time to market.
TRANSFORMING IT TO TECH TO ENSURE DELIVERY
2. Integrate technology and the business. Today’s silo-like IT function needs to be transformed into an embedded and integrated business technology structure. In practice, this means that leaders need to create collocated, cross-functional teams for agile development and effective collaboration of business and technology resources.
There is a strange dynamic at play at many traditional companies: technology is increasingly important, yet in many cases, the IT function is not involved in the development of the new, differentiating products and services aimed at ever more discerning and empowered customers. IT transformation is part of a larger need to digitize businesses: the vast majority of companies are, or are becoming, technology companies—at least to a certain degree. Soon, technology will be embedded in nearly every product, service, and process, all of which will be integrated into a broader digital ecosystem. Powerful software will be the backbone of products, services, and customer engagement. Data is already a highly valuable asset for every company, and the ability to analyze and act on that data is at the core of a company’s competitive advantage. To handle the digital shift, companies must bring business and technology together. More specifically, they must rethink how they manage three categories of technology: product and service (technology embedded in end products and technology that embeds end products into digital ecosystems and customer interfaces), production
3. Build software engineering capabilities as a critical differentiator. We have seen large incumbent companies staffing more than 75% of IT roles with generalists. Leaders need to make significant changes to this skill mix, moving the organization toward specialized engineering and analytical skills to develop products and services. 4. Ensure powerful governance and steering capabilities. In the future, business units will all have their own capabilities for developing products and services, so strict rules and regulations will be necessary. Leaders will need to ensure a strong governance and steering function to coordinate certain areas such as vendor management; ensure that standards are met in various areas including cybersecurity, data, and application architecture; and avoid unexpected side effects such as heavy loads affecting specific parts of the infrastructure.
“We are working extremely hard to not only be the most innovative in terms of insurance products for our customers, but to also be the leader in technology deployment to accelerate customer service” — with our service without having
to go through multiple steps of
Executive Vice President and
Chief Transformation Officer
In order to support these applications and provide new services, Aflac and other organisations in Japan rely on
and adapt accordingly using both top local
companies providing and
talent and off-shore delivery centres.
enhancing core IT functions such
Across its entire portfolio, Aflac has also
as infrastructure operations, sys-
invested in a number of cloud platforms,
tem development and
including those provided by IBM, SalesForce
communications. Some of the
and ServiceNow, to support its distribution
market leaders in these areas are
system, and introduced several payment
NTT Communications, Pactera
methodologies which will take advantage of
and NTT Data, which are demon-
new services in the Japanese market.
strating their ability to understand new expectations
“This allows us to pay claims and reimburse our customers for certain transactions w w w. c o m p a n y w e b s i t e . c o m
via ATMs. ATMs in Japan are not just cash machines, but provide many services. Being able to take advantage of that provides convenience for our customers,” explains Moorefield. “Leveraging new payment strategies that banks are developing allows us to provide instant payments to customers, without waiting for a night-time batch routine from a bank. We’ll be able to pay customer claims almost immediately in certain cases. These are the kinds of things we are able to take advantage of because the ecosystem in Japan is developing quickly across the financial services industry.”
CUSTOMER-FIRST From its innovative product offerings, to being awarded the Computerworld Smithsonian Award for Excellence in Technology, Aflac has always sought to look at customer data and related pain points to prioritise and transform the customer experience through an Agile methodology. w w w. a f l a c . c o m
“We use customer feedback based
on what we have developed to constantly iterate and update applications, and to develop new products for what customers want to see from an insurance product perspective,” notes Moorefield. “We determine the gaps which are not met in the marketplace, particularly for the younger generation of customers. Two years ago, we launched a new product line for income protection in the case of short-
Aflac was one of the first companies to contribute more than $1mn to the Red Cross for Tsunami relief in Japan in 2011
term illnesses, driven mainly by the needs of the 20-30-year-old customer group which has not been our base
a policyholder can complete online ver-
sus using the call centre. Our
With a need to appeal to all demo-
mobile-first push is fairly aggressive in
graphics, Aflac has sought to overhaul
terms of ensuring that as many ser-
the way in which customers interact
vices as possible are pushed to the
with the organisation – from visiting an
smartphone or to a mobile tablet to
agent, to choosing a web or mobile
deliver services to customers.
application, Moorefield has worked to
“The reality is that we’re going to
completely enhance and expand the
have to figure out how to deliver all ser-
vices to all age groups.”
“We were the first in Japan, in our
As Aflac works to meet this chal-
part of the industry, to allow online
lenge, partners are a vital source of
claim submissions, and we’re expand-
knowledge and experience for the pro-
ing that to cover as many claim types
motion and enhancement of
as feasible on that platform,” he says.
digitalisation initiatives. Accenture and
“We are expanding the services that
BCG, for example, do this by proactively w w w. c o m p a n y w e b s i t e . c o m
“The ecosystem in Japan is developing quickly across the financial services industry” — John Moorefield, Executive Vice President and Chief Transformation Officer
proposing new services as part of regular interactions and information sessions.
tion of Japan. Since 2012, it has built on its commitment to supporting the Aflac Cancer Center, and invites young
patients to design the Aflac Holiday
Whilst Aflac remains committed to
Duck, which is then sold in Macy’s
its core values, it also places signifi-
stores across the US. All profits go
cant investment in a number of
toward new treatment programmes.
Additionally, Aflac was one of the
In the 1990s, the company
first companies to contribute more
pledged $3mn to establish Chil-
than $1mn to the Red Cross for Tsu-
dren’s Healthcare of Atlanta and
nami relief in Japan in 2011.
built the first Aflac Parents House,
“Tsunami relief is just one exam-
which is now owned and operated
ple,” reflects Moorefield. “We’re very
by the Children’s Cancer Associa-
committed to children’s cancer and w w w. c o m p a n y w e b s i t e . c o m
cancer research, that’s just a core value to us. With a long-term goal to support the policyholder with great insurance products and technology, Aflac will continue to make advancements to remain a technology leader. “Aflac has a spirit, and I’m very proud to be part of an organisation whose core philosophy is to be there at the time of need for the policyholder,” states Moorefield. “Our focus is on how to quickly and efficiently pay claims, to get money in the hands of the policyholder at their time of need, and we really have a commitment and the spirit to do that. It removes stress, helps the policyholder recover, and that’s a meaningful thing to me.” Although change can be particularly difficult to undertake in Japan, especially with a focus on quality and perfection, Moorefield is eager to take on the challenge. “At the end of the day, when we do something, we do it right,” he concludes. “It has a significant impact due to the large size of the company and that’s very gratifying, I truly love what I’m doing.”
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