2022: the year of the customer

Next year will see financial services companies including insurers double down on their efforts to focus on customers, EY says.

As Australia emerges from the effects of the pandemic and economic recovery continues, insurers will increase efforts to improve value and personalisation, as well as develop “in-the-moment” services, EY Oceania Financial Services Managing Partner Grant Peters says.

“Adjacencies with other sectors will also be a focus, with financial services being increasingly embedded into broader ecosystems and customer platforms,” he said.

“Insurers will also be keeping their eyes on a few next horizon topics such as developments in and take up of electric and self-drive vehicles, and the use of AI to improve customer experience and business operations.”

Environmental, Social and Governance (ESG) will also be a significant strategic priority for the insurance sector next year and beyond, “particularly the impact of net zero commitments on their customers and the flow-on effects of this on their own business strategies”.

And after a year of mammoth change the regulatory agenda remains front of mind, with a particular focus around customer outcomes and operational risk management.

Reforms already made such as Product Design and Distribution Obligations and claims as a financial service “have yet to fully play out in the market”, Mr Peters says, and insurers will be working to embed these requirements into their businesses.

Business interruption is likely to remain “a major focus area” as the COVID-19 test case and other legal battles draw to a close.

“Insurers will be watching this space closely to determine the potential implications for their policies and claim commitments.”

Other common themes across the financial services sector include operational resilience and simplification, digitisation and efficiency across the value chain.

“The changing nature of work and skillsets of the future will remain a high priority, particularly in light of the increased move to remote and flexible working arrangements and the accelerated shift to digital spurred on by the pandemic.

“Australian financial institutions will be taking a good look at where future growth can come from in a highly competitive environment.

“Finally, M&A activity is likely to continue right across the sector throughout 2022, and we expect to see further consolidation over the next 12 months.”