INSURTECH: PAYMENTS Stress test: Every failed payment costs the industry £50 in back-office processing
Got you r back Apply Financial’s straight-through processing tools have helped insurers in the West save millions in back-office costs while simultaneously burnishing their reputation with customers. Now CEO and Founder Mark Bradbury is looking East While big strides have been made in digitally revolutionising a sector notoriously slow at innovating, much of the emphasis so far has been on insurance product development and user experience. Telematics devices in vehicles to record and analyse data and reward less risky drivers with reduced ‘good behaviour’ premiums; embedding insurance in services offered by digital partners; providing users with more seamless and tailored experiences, not to mention faster claims resolution – no more sitting on the phone for hours waiting to get through to your insurance company – all dominate the insurtech agenda. But while such innovations undoubtedly enhance an insurance company’s value proposition for customers in an era of weak or even negative growth and intense profit pressures, they don’t address where the biggest cost drains are. Many of these www.fintech.finance
can be found in the middle or back office and one of the key issues is that of failed payments: the black hole of reconciliations where straight-through processing dreams go to die. Payments processor and validation software provider Apply Financial estimates that every payment that fails to validate can cost an organisation – be it a financial institution, corporate or otherwise – £50 in charges, resending costs, time spent rectifying the problem and exchange rate fluctuations (in the case of crossborder payments). For a large insurer this can add up to a lot of manual processing hours and a bruising impact on the bottom line. In fact, Apply Financial estimates that an insurer making eight failed payments a day will spend £100k a year fixing them. “The issue with a failed direct debit, in any company – not just insurance companies – is that you have to resubmit,”
says Apply Financial’s CEO and founder Mark Bradbury, “and that’s a very costly process; it takes up time.” Some of it’s down to fat-finger syndrome – wrongly keyed-in digits on the part of the insurer or the customer; a good proportion is due to oversight – the customer failing to update his/her information held on file by the insurer. Apply Financial’s key offering to clients is its Validate software that verifies bank payments through an application programme interface (API) plugged into a customer’s payment system at the front end. Interrogating world-class, virgin data sourced from the originating providers, the Cloud-based service uses algorithms to identify, analyse and validate payment data by crossreferencing account numbers, branch codes, payment purpose codes, holiday dates and many more data requirements, country by country and bank by bank. Issue 3 | TheInsurtechMagazine
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