VIEWPOINT

2023

T H E F U T U R E O F D I G I TA L
BANCASSURANCE SALES

Identifying trending digital

sales models in bancassurance

AUTHORS

Banks are evolving by leaps and bounds, using digital José González
channels to facilitate interactions and meet the
Cristina Vila
demands of their customer base. In this context,
the bancassurance model — which has been an Borja de la Cuesta
example of success in past decades — must adapt Pau Fuentes
to changing customer requirements and seek ways
Alexandra Jausas
to continue growing. In this Viewpoint, we explore
some options bancassurance businesses can initiate Eduardo Munguía

to help them thrive and capture the digital sales

opportunity.
VIEWPOINT ARTHUR D. LITTLE

SE T TING THE S TAGE: - The use of data analytics and artificial

THE NEED FOR A DIGITAL intelligence (AI) to provide personalized

SALES S TR ATEGY product recommendations, promotions,

and offers across all digital channels.
The evolution of the banking industry is ongoing.
Banks have moved from implementing digital
- The application of AI as a game-changer
for automation and simplification, which
channels toward developing a fully omnichannel
improves support and interaction and
experience for their customers. This technology-
upgrades underwriting tasks, making
centered landscape is more important than
them more efficient and accurate.
ever; the vast majority of today’s customers
demand a digital presence from companies they If they do not want to be left behind,

support. A smaller yet significant proportion of bancassurance businesses must reinvent

clients are transitioning from brick-and-mortar themselves to capture digital opportunities,

to online. There has been an undeniable shift using current interactions with their customers

by banks toward improving and adapting their to realize the potential that flourishes around

digital channels to make them both user-friendly their existing relationships.

for customers and a highly intuitive tool to drive This Viewpoint focuses on an end-to-end digital
sales. path strategy to improve bancassurance sales. We
start by defining the types of digital customers
to target and their main characteristics. Then we
BANCASSURANCE identify the optimal tactics for reaching them via

BUSINESSES MUST a fully multichannel approach.

R E I N V E N T T H E M S E LV E S
T O C A P T U R E D I G I TA L DIGITAL BANCAS SUR ANCE
MODEL S
OPPORTUNITIES
Although all companies have their own unique
attributes, Arthur D. Little (ADL) has identified
Nevertheless, expanding a bancassurance three types of digital customers and developed
business goes beyond building digital assets; generic but experience-based descriptions for
implementing an omnichannel strategy can them. ADL’s previous work informed the decisions
create a seamless, integrated experience for about which models best suited each type of
customers, regardless of which channel or device customer in order to maximize conversion rates
they use to interact with their bank. This strategy while ensuring positive customer experiences.
is based on:
All three types of digital customer have specific

- A consistent, real-time user experience traits:

(across all channels, including web, mobile,
1. Engaged customers — identified based on
and in-person) which is cohesive, easy to
their recurring interactions with their bank,
navigate, and ensures that customer data
which is typically their main one.
is shared across channels and accessible
for any interaction, giving the customer the 2. Dormant customers — have limited

opportunity to switch between channels/ interactions or none at all with their bank,

devices. which is typically their secondary bank.

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VIEWPOINT ARTHUR D. LITTLE

3. Non-customers — are not part of a bank’s Embedded insurance sales

customer base but might be interested in
Embedded insurance is the real-time bundling
buying insurance.
of insurance products during the commercial
Widely differing needs and interests among transaction of another product or service.
customers call for various methods of gaining Bancassurers use this type of sales model
their attention and suggesting the right by taking advantage of the range of banking
insurance to them. The details below describe customer purposes to offer targeted insurance
the most suitable alternatives for meeting products. For example, when a client is soliciting
insurance-related customer needs. a loan, insurance companies can offer payment-
protection insurance.
APPROACHING If applied well, this approach results in very high
ENGAGED CUS TOMERS conversion rates since the offer is made in a
moment when the customer is more receptive
Engaged customers are characterized by a
and the coverage is related to the ecosystem
substantial number of interactions with their
of the product or service they are pursuing.
bank; using these moments to offer insurance
products is a potentially strong strategy. Several requirements must be considered for
Leveraging events allows the offer to be made this sales model to be effective (see Figure 1).
at the right time, maximizing both the conversion First, it is of utmost importance that the different
rates and the customer experience. insurance models and actions are aligned with
the overall bank strategy, to avoid friction
We identified two relevant strategies to
and make the most from combined synergies.
convert engaged customers:
Effectively managing leads is necessary. Both
1. Embedded insurance sales businesses need to agree on the rules to define

2. Contextual insurance sales eligible leads, based on the customers’ interests

Figure 1. Considerations for an effective embedded sales
and behaviors.
model
Figure 1. Considerations for an effective embedded sales model

Alignment with overall strategy

Different insurance models & actions must align
with overall bank strategy to avoid frictions
& make the most out of possible synergies

Leads management Data sharing

Business needs to reach alignment on Personal data integration & use is subject to
rules to define eligible leads based on GDPR compliance; thus, it requires managing
customers’ interests & behavior customer consents & privacy policies

Historic data FL/anonymization techniques

Creation of segmentation, In the case where a legal framework is under
propensity to buy & price development, federated learning or anonymization
sensitivity models are needed techniques can be useful to kick-start data projects

Customer journey phase fully digitalized

Data use cases require high level of digitalization to
provide necessary inputs (high-quality historic data)
& allow for effective deployment

Source: Arthur D. Little

Source: Arthur D. Little

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VIEWPOINT ARTHUR D. LITTLE

In addition, the entire customer journey should It is important to note that developing and
be digitized for optimal results; data use cases executing contextual action models requires
require a high level of digitalization to provide handling personal data and using customer
the necessary inputs (i.e., high-quality historic consents to comply with GDPR. A legitimate
data) and allow for effective deployment. Historic business interest is not enough for contextual
data modeling is consequently employed to actions. To be effective, bancassurance
build models to identify specific products businesses require effective platform integration,
for targeted customers. Examples of models which allows the development of analytic models,
include segmentation, propensity-to-buy, or combines bank and insurance data, and supports
price-sensitivity models. the execution and monitoring of campaigns.

Finally, managing customer consents and

privacy policies is an imperative for effective
embedded insurance sales. In the EU, personal BUSINESSES NEED
data integration and its use must comply with TO ALIGN THEIR RULES
General Data Protection Regulations (GDPR). TO DEFINE ELIGIBLE
If legal framework is under development,
LEADS BASED ON
federated learning can prevent data exposure
CUSTOMERS PROFILES
and anonymization techniques can be help
kick-start data projects.

Contextual insurance sales Carrying out near-real-time actions requires

direct connections with customer touchpoints
This sales strategy is based on specific triggers
(ingest inputs) and the platform (analytic
and matching them to a set of designated
models). Actions triggered by events should be
insurance products in near real time. Firms must
accompanied by other activities from the same
undergo full data integration to identify the best
phase of the customer journey, such as sales
opportunity windows and recommended actions
or claims, which should also be digitalized to
for each client (see Figure 2). For example, a
enhance the customer’s overall experience. This
bancassurance firm could offer a pet insurance
strategy achieves its best results with companies
policy to a customer with a history of multiple
who offer a wide range of products, as this makes
dog-related purchases.
the most of the detection and actionability of
the different triggers. Finally, businesses need to
Figure 2. Specific triggers and translating them into
Figure 2. Specific triggers and translating them align their rules to define eligible leads based on
commercial offers
into commercial offers customers profiles.

Trigger Corresponding action

• Card transaction for plane tickets Offer a travel insurance policy

• Card transaction for dog-related

Offer a pet insurance policy
products or vet services

Provide efficient management

• Multiple transactions at pharmacies
of health insurance when renewing

• Increased average expenditure Offer additional coverage for

at gas stations in recent months client’s current car insurance

• Recent expenditures in home Offer additional coverages for client’s

automation & electronics current homeowner’s insurance

Source: Arthur D. Little

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VIEWPOINT ARTHUR D. LITTLE

APPROACHING Thoughtful use of customer bank and insurance

DORMANT CUS TOMERS data forms the foundation of a digital campaign

strategy. Data analytics can enrich customer
Dormant customers are characterized by low segmentation models, propensity models, and
levels of engagement with their bank, which pricing models, which can be used to create
means their interactions range from none to media that are tailored to each client. There is
very limited. a direct trade-off between quality leads and
conversion costs, as the sales effectiveness is
In this situation, we cannot benefit from the
tied to the quality of leads. An insurance company
interactions we have with engaged customers
must collaborate with a bank to prioritize and
to make offers at the opportune moment. Instead,
contact the customers with highest conversion
it is vital to find alternative ways that will still
potential.
convert customers, albeit at lower conversion
rates than those of engaged customers because
of lower customization.
D ATA A N A LY T I C S C A N
Two approaches can reach dormant customers:
ENRICH CUSTOMER
1. Digital campaigns
S E G M E N TAT I O N M O D E L S ,
2. Standalone marketplaces PROPENSIT Y MODELS,
AND PRICING MODELS
Digital campaigns

Greater integration with banking operations can

facilitate the use of digital campaigns to connect Extracting the value of this opportunity requires
with existing bank customers. These campaigns obtaining customer consent. As with contextual
use different methods for customer outreach insurance sales, legitimate interest is not
— email, short message services (SMS), app and sufficient for a bank to use customer data to
Web banners, push notifications, and so on (see develop models and make customized offers.
Figure 3).

This approach is based on offering products on

digital channels based on propensity-to-buy
models, which use past purchasing behavior
to predict the likelihood of future purchases.
Upselling and cross-selling strategies can

Figure 3. Digital
also be campaigns strategy
integrated into digital campaigns.

Figure 3. Digital campaigns strategy

Use customer bank Develop enriched models Customize digital

& insurance data (e.g., customer segmentation, campaigns for each client
propensity, pricing, upsell,
cross-sell)

• Requires customer consent to handle • Sales effectiveness of digital

bank personal data (GDRP compliance) campaigns is tied to quality of leads

• Legitimate interest is not enough • Trade-off exists between quality

of leads & cost of conversion
Source: Arthur D. Little

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VIEWPOINT ARTHUR D. LITTLE

Standalone marketplace THE INVESTMENT

Creating a digital insurance store is another OF EFFORT AND TIME
alternative with a low level of data integration M AY M A K E A D I G I TA L
with banking activity (see Figure 4). The only data MARKE TPL ACE LESS
shared fulfills the purpose of easing customer
APPEALING THAN
navigation online or in the app and pre-filling
necessary data to provide a quote or facilitate
OTHER OPTIONS
a subscription.

The standalone marketplace model is an option

Moreover, the low conversion rates of
for bancassurance businesses that are not
e-commerce marketplaces result in the need for
interested in complex data-integration solutions.
a high number of leads to achieve a reasonable
However, it is less effective compared to other
impact. Unconverted leads must be continuously
sales strategies, as it requires the customer to be
monitored so bancassurance businesses can
proactive. The investment of effort and time may
perform additional actions to build their
make a digital marketplace less appealing than
customer base.
other options, and clients may look elsewhere for
insurance products. Companies opting for this
marketplace model have to be willing to direct
greater efforts toward advertising and push their
marketing departments to execute aggressive
campaigns to promote their products.

Figure 4. Considerations for an effective marketplace

strategy
Figure 4. Considerations for an effective marketplace strategy

Pressure on campaigns
Fierce competition of marketplaces push
marketing departments to execute aggressive
campaigns where margins tend to be reduced

High number of leads Data integration

Due to low conversion rates of an Integration of customer data is
e-commerce marketplace, high mandatory to ease navigation
number of leads is needed to achieve & enhance customer
reasonable impact experience

Digital sales Leads monitoring

Offering products in an e-commerce Monitoring unconverted leads
marketplace requires enabling digital & performing additional actions
sales, which can be extremely challenging is crucial to deal with low
for some products (e.g., underwriting, conversion rates of
client willingness) marketplaces

Advertising efforts
Leads that visit the e-commerce marketplace
have a reduced interest; advertising efforts are
crucial to promote the customer proactiveness

Source: Arthur D. Little

Source: Arthur D. Little

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VIEWPOINT ARTHUR D. LITTLE

Figure 5. Assessment axes to enter the open market

Figure 5. Assessment axes to enter the open market

1 2 3 4

Product portfolio Commercial model Brand Economic model

Source: Arthur D. Little

APPROACHING The products chosen will also depend on the

NON - CUS TOMERS business model selected. For example, when the
decision is made to sell on aggregator websites,
Entering the open market is a recurring challenge the offer should be limited to the mass products
for bancassurance businesses since it involves a included in them (e.g., auto, home), while if the
huge opportunity to broaden the database and bancassurer opts for direct distribution, the range
multiply the potential market with non-customers can be wider.
(i.e., customers outside of banking leads).
Furthermore, it is important to differentiate
Source: Arthur D. Little
How should bancassurers approach non- the open market value proposal from the
customers? This is not a trivial question and bancassurance one to avoid channel friction.
calls for profound assessment in order to define This will lead to different products and pricing
the most suitable way to do it. Based on our adapted to each of the channels (open vs.
experience, this assessment should take place captive).
around the four axes shown in Figure 5.

Product portfolio IT IS ESSENTIAL ,

Outside the bancassurance environment, FOR BANCASSURERS
competition is fierce and the need for TO ASSESS AND
differentiation and the pressure on price O B J E C T I V E LY R E F L E C T
are voracious. It is essential, therefore, for
ON THE PRODUCTS
bancassurers to assess and objectively reflect
on the products with which they can compete
WITH WHICH THEY
in the context of a competitive market where CAN COMPETE
bancassurance levers such as customer
information and the use of relevant touchpoints
cannot be used. In a market with such limitations, Finally, even if the value proposition is different, it
bancassurers should develop an objective is important that bancassurers leverage learnings
analysis based on market benchmarking about and capabilities developed in the bancassurance
products’ value offer and the key drivers for their business and apply them to products developed
success. for the open market. Bancassurers thus are able to
generate competitive advantages by leveraging
current pricing models based on clients’ banking
data in the traditional bancassurance business and
taking advantage of open banking and differential
pricing proposals in the open market context.

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VIEWPOINT ARTHUR D. LITTLE

Commercial model Bancassurers must choose between creating

a new brand versus using the bancassurance
There are two commercial model options to
brand. Brand development is costly; therefore,
consider: aggregator websites and direct
leveraging the bancassurance brand would enable
distribution. Exploiting aggregator websites
levels of awareness and trust to be achieved in
requires a segmented acquisition strategy
less time and at lower costs.
(i.e., targeting profitable customers) and cost-
effective products. Bancassurers must meet An alternative that balances the reduction of

these two objectives to be competitive as well frictions and flexibility with the minimization of

as profitable. At the same time, the range of awareness costs is launching the products in the

products to be offered is limited by aggregator open market under a co-branding scheme with

websites’ focus (e.g., auto, home, health). both the new brand and the bancassurance brand.

On the other hand, in direct distribution there is

Economic model
greater flexibility in terms of the value proposition
to be offered. However, the success of this To minimize frictions with the bancassurance
alternative will depend on generous marketing business as well as cannibalization concerns, it is
expenditures in order to develop search engine essential to design a competitive commissioning
optimization and management capabilities to model for the bancassurance business regarding
acquire customer leads. Direct distribution also sales in the open market.
requires an optimized sales funnel with a simple
Although the captive context is far less relevant
and intuitive process that is, if possible, boosted
in the open market sales process than it is in
via telephone actions (e.g., contacting customers
the bancassurance environment, this economic
who have not completed their purchase and are
model can be justified by using bancassurers’
stuck at a particular sales funnel stage).
back office capabilities for reaching operational
scale efficiencies, the bancassurance business
Brand
brand, and the need for joint financing of costs

Competing outside the bancassurance and investments to develop the opportunity. This

environment requires a minimum level of brand point is key to maintaining a good relationship

awareness and trust (this is particularly relevant between partners and guaranteeing alignment to

for products in the health segment). The branding further develop the business, both in the captive

strategy can also make it possible to avoid and open markets.

friction with the bancassurance channel and to In summary, to be successful in the open market
offer additional flexibility to compete in the open bancassurers must carefully select products
market. For example, creating an ad-hoc brand that can compete in this context, devote
for this environment may allow for a different generous marketing expenditure, and develop the
value offer than for the one offered in the captive opportunity in a way that keeps partners aligned
context, adapted instead to an environment in developing the business as a whole.
characterized by competition, price pressure,
and low availability of customer information.

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CONCLUSION

D I G I TA L R E I N V E N T I O N

THE BANCASSURANCE BUSINESS

MUST REINVENT ITSELF

It is essential that bancassurance businesses develop plans

to manage the ongoing digitalization in the banking sector.
In this Viewpoint, we explored points to consider for a
successful sales strategy:

1 Taking advantage of current customer interactions to

heighten customer experience and sales performance
levels.

2 Creating an omnichannel presence for an integrated

customer experience.

3 Using data analytics, AI, automation, and subscription

simplification to build a consistent, real-time user
experience personalized to meet customer needs.

4 Understanding the three types of digital customers:

engaged, dormant, and non-customers. Each group
is unique; the strategy for approaching each customer
type and making insurance offers will vary.

The bancassurance business must reinvent itself to stay

relevant, capture digital opportunities, and expand to
create success for the future.

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NOTES

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Arthur D. Little has been at the forefront of innovation since
1886. We are an acknowledged thought leader in linking
strategy, innovation and transformation in technology-
intensive and converging industries. We navigate our clients
through changing business ecosystems to uncover new growth
opportunities. We enable our clients to build innovation
capabilities and transform their organizations.

Our consultants have strong practical industry experience

combined with excellent knowledge of key trends and dynamics.
ADL is present in the most important business centers around the
world. We are proud to serve most of the Fortune 1000 companies, in
addition to other leading firms and public sector organizations.

For further information, please visit www.adlittle.com.

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