Moving faster in a slower-moving industry

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How do you move faster in a mature, slow-growth industry that until recently ran on mainframe technology in a country that embraces continuity rather than change? Enterprisers Project caught up with Houston Ross, until recently CIO and COO of NN Life Insurance, to find out.

CIO_Q and A

The Enterprisers Project: What does the insurance market look like in Japan today?

Ross: Japan is the number two insurance market behind the U.S., and as a market, it’s very mature, with a low-interest rate environment. But that doesn’t mean we can’t move market share through being smarter and more efficient in what we do to serve customers.

The Enterprisers Project: Is insurance technology more or less a reflection of what we see in the U.S. and Western Europe?

Ross: Especially on the business side, most of the technology applications were developed in the U.S. or in Western Europe. As a reaction against that, in Japan everything’s been custom built in house. And all of that has a legacy cost we’re trying to manage now: a premium on development, on maintenance and on support. Not to mention that universities aren’t graduating COBOL developers anymore. The better you manage the legacy reality, the better your opportunity to compete in the next five years.

The Enterprisers Project: How do you overcome resistance to moving faster in such a mature market?

Ross: It’s been a challenge when the tendency in technology has been to say, “Okay, let’s change. Let’s make that platform exactly the way it’s run on my mainframe.” You end up with a new solution, but you’re just duplicating the legacy functionality. Maybe it doesn’t cost as much as it did on the mainframe, but you’re not getting the benefit of those newer solutions. So we’ve followed a two-part strategy: limiting functionality for core processes but opening up innovation investment for anything that touches the customer. After all, anything that doesn’t touch the customer is just a cost at the end of the day. Why not standardize it? And as we’ve started to deliver on this and people see the benefit, they say, “Now I understand why it made more sense to think more out of the box.”

The Enterprisers Project: What are a couple of examples of features and functionality that make the Japanese insurance experience more customized and faster? I’ve read that in Japan people still want to use businesses branches a great deal more than we do in the U.S.

Ross: It’s true, digital consumption is not as fast as it is in the West. However, it is a digital nation, and digital consumption is on the rise. The balance we have to strike is how do we maintain the personal interactions that our Japanese customers want, but at the same time provide the digital capabilities that will allow them to spend more of their time in those interactions on value-add discussions and not on administrative things? Look at quotes, for example. Historically people used Excel or pad and paper to provide a quote. Whereas if we provide digital solutions online, the customer can do their own simulations and have some ideas in mind for when the agent comes in again. The interaction is faster in terms of plugging in information they need to get the result, so they can have more value-add discussions face to face.

The Enterprisers Project: It’s an interesting contradiction that Japan has always been so far ahead in terms of consumer technology, especially handhelds, yet in terms of business technology, it’s not that way.

Ross: That’s the irony of Japan. When people come here they’re thinking of robotics, the semiconductor industry, the automotive industry. And all of these markets are very advanced and highly automated. But insurance, again because it has a specific domestic identity and is centered on the value of the human relationships, has hindered technology adoption.

The Enterprisers Project: So to move faster, IT really has to step it up.

Ross: Exactly. When I started in IT, in the banking industry, I was in the back room. But I believe as we become more customer-centric, and as digital consumption grows and people want the Amazon or the Apple experience across everything that they do, we are going to have to move the IT to the front office. That lets us interact with customers at the point of consumption. We have to be at a point where the customers are driving the requirements. If something is increasing value and strengthening the brand, we need to move the IT guys closer. Obviously, they need to be more business-centric as well, but at the same time they have to be able to adapt, modify, enhance, and deliver our user requirements much, much faster. That’s how we plan to grow in a stagnant market.

Houston Ross is Chief Operations Officer and Board Member for Czech Republic and Slovakia (formerly of Japan) at NN pojišťovna a penzijní společnost at NN Life Insurance, Ltd. Houston brings more than a decade of experience in the financial services industry with senior-level roles in insurance operations, investment banking and securities sectors.