Financial Institutions Headway for Consumer-centric Business Models in the U.K.

Published Date : Mar 28, 2016

In the U.K., the financial sector is heading towards a customer centric approach. This is a radical change in the working of the financial sector that U.K. that operated with the sole aim of profitability and business growth. 

As cited by the Association of British Insurers, in the U.K., the relationship between insurance companies and their clients has undergone a paradigm change. For example, in the sector for General Insurance, with the emergence for direct sales provisions and with the emergence of comparison website facilities, customer relationship has reached new heights and also demonstrates greater commoditization. 

In the life and long term savings arena, the insurance sector in the U.K. demonstrates a sea of change on account of several favorable parameters. These are related to the development of personal pension instruments in the U.K. in the 1980s, the development of the IFA (insurance for independent financial advisers) market, progression of platforms, emergence of pension reform, and the recent removal of commission-based sales and service practices.

In the recent past, top trends that have over-arched consumer insurer relationship in the insurance sector are summarized as follows:

  • Increased demands for customer services and for resolution of complaints
  • Expectation of greater protection by policy holder to receive from regulators
  • Elevated consultation for data use and pricing risks
  • Ultra-fine segmentation of consumers by insurance provider. This is based on the attributes of education, ethnicity, economic background, etc.
  • Multi-channel relationship between consumers and insurers steered by the digital revolution.

In the financial sector in the U.K., segmentation of clients is gaining prominence in the bid to understand clients better. For instance, a financial institution may have only 20 clients or may have a huge database of clients consisting of thousands of individuals or company contacts on record. By means of segmentation, financial institutions can find hidden opportunities within the client base – to understand and identify factors that group clients or prospective clients together.