The ongoing technology revolution is reshaping the insurance industry. Recognizing the opportunities and the threats from this change, Aegon has a three-pronged approach to adapt and prosper in the changing digital universe.
"We are responding to this rapidly changing environment by embracing innovation in our core operations, through satellites and by reaching out to a broader innovation universe," according to Marc van Weede, Head of Corporate Development at Aegon Asset Management.
Van Weede spoke about Aegon's approach to innovation during a keynote entitled, 'The sharp end of corporate innovation', at the Innovate Finance Global Summit in London on April 29.
Longevity and low interest rates
Aegon's purpose is to help people achieve financial security through all stages of their lives. As people are on average living longer lives, there has never been a greater need for the type of insurance and pension products and services Aegon offers.
There are a numerous challenges. Persistently low interest rates, longevity and rising capital requirements have led to a shift away from guaranteed life products to more asset management type of products, increasing the uncertainty for our customers. Social benefits by governments are being reduced, resulting in greater individual responsibility. But many people are not well-equipped to bear that responsibility.
At the same time, digital channels and platforms are becoming increasingly important to service customers more efficiently. This opens the insurance industry to disruption by Big Tech and start-ups who increasingly also employ the latest artificial intelligence (AI) technologies across all parts of the industry value chain.
For example, AI has the potential to revolutionize the sources and data analysis to drive investment decisions. Secondly, AI is already increasingly applied to improve claims management and in fraud-detection algorithms.
Aegon is responding to this rapidly changing environment by innovation in its core operations, through satellites and by reaching out to a broader innovation universe.
This means applying new technologies and skills to upgrade legacy or core businesses. Aegon is working with companies such as Automation Anywhere and Blue Prism to robotize manual processes. The company is also applying process analytics to identify the bottlenecks in customer journeys."
Satellites - innovations at a distance
The second approach is to have satellite operations at a sufficient distance from its legacy businesses to develop and quickly implement new business models. A key example is Go Bear, a joint venture launched in 2014 that now provides meta-aggregation services for a range of financial products across seven South East Asian markets. Another example is the first Dutch full-service online bank, Knab.
We also have to be able to switch in and out of different fintechs as technologies and companies evolve.Marc van Weede
The third innovation instrument is Transamerica Ventures, Aegon's corporate venture fund. The Group created the USD 140 mln fund four years ago to make profitable investments in relevant fintech technologies, and to interact with portfolio companies and other fintechs to accelerate the transformation processes at Aegon.
The fund currently has 18 portfolio investments and there are commercial agreements between a majority of these companies and Aegon businesses. A selection of the investments include:
An Everplan allows users to store wills, passwords, funeral wishes and more in a secure and shareable digital vault that can be accessed by loved ones. Transamerica's brokers use Everplans to build stronger relationships with their customers.
Next Capital provides tailored investment advice to Aegon's individual retirement customers, supplementing but not replacing human advisors in our Advice Centers.
H20.ai has created an open source machine learning and artificial intelligence platform trusted by hundreds of thousands of data scientists in over 18,000 enterprises globally.
Georg Schwegler, head of corporate venturing at Aegon, recently elaborated on the fund's investment strategy in an interview with Dutch financial newspaper, Het Financieele Dagblad. The fund doesn't just exist to aim for a high return of investment, but also encourages learning and cooperation within Aegon's businesses. "Investing through the backyard," is how Schwegler described this approach.
Indeed, Aegon is seeking to institutionalize the ability to identify relevant technologies, screen start-ups and make it easy for fintechs to do business with the Group. "We also have to be able to switch in and out of different fintechs as technologies and companies evolve. Van Weede: "The Venture Fund plays an important role in building our capabilities."
About Marc van Weede
Marc van Weede is the Head of Corporate Development at Aegon Asset Management. He was an initiator of the Transamerica Venture Fund, Aegon Group's corporate venture fund and chaired the fund's Investment Committee during the past four years. He is also a director of Aegon Industrial Fund Management Company, Aegon's asset management joint venture in Shanghai.
What others say about our digital strategy
Peter Littlejohns writes in Compelo.com:
"Customer expectations are at the forefront of insurers' minds as they become more about speed, but an Aegon exec believes the claims process is the most important step to get right."