Designing the Future State Solution
Robyn Kurtz Levy & Pinchas Leybov
March 16, 2023
In case you missed part 1 of the series where we introduced the change management journey, here’s a recap.
Now, with documentation of the “as is” conditions complete in our previous blog, we have identified the symptoms and causes, and gained internal consensus with our client in validating those conditions and the priorities for problem-solving.
Now it’s time to move to the design of the future state solution.
First, we need to acknowledge that every financial services firm is approaching the future from a unique point of view, based on where they are in their journey. There is no “magic wand” or “silver bullet” that applies across the board.
Every organization is at a different point of maturity. Its technology architecture and software implementations form a unique combination, including the length of time they’ve been in place, and how ingrained they are in daily work and processes.
That said, just as we see some common patterns in the “as is” state, there are several design principles that guide our thinking as we lay out the roadmap from today’s Point A to tomorrow’s Point B. Let’s start at the “30,000-foot level”, within the organization.
Break Down Organizational Silos – Strive for the Composable Enterprise
In Step 1, we identified the existence of organizational silos as a key reason insurers and banks miss major market opportunities, fall behind competitors, risk unnecessary regulatory exposure, and deliver a less-than-optimal customer experience (CX).
To address these issues, we begin the design phase with a discussion of how we can move the organization toward becoming more composable.
The composable enterprise is built around a way of thinking and working that looks at the full range of corporate resources as a set of configurable building blocks – building blocks that can be assembled, disassembled, and reassembled readily to meet rapidly-evolving business needs.
The composable financial services organization takes an “outside-in” view of the world, putting customer-centricity at the center of its strategic planning, decision-making, and day-to-day operations. The composable enterprise places emphasis on working across functional boundaries, breaking down organizational silos, and reacting quickly to market changes.
(For a more detailed discussion of the composable organization and its benefits, please refer to one of our earlier posts on this topic.)
The discussion with client leaders here centers around readiness and adaptability. We want to avoid the “big consulting firm” approach that requires months of organizational redesign and further demands that organizational change be completed as a “gate” to addressing technology improvements, adding unnecessary delays to problem-solving and value realization.
We at Earnix pride ourselves on being flexible, practical and agile in this regard. There is no “one size fits all” solution. An interim task force approach may be the best way to test and iterate on how the various functions can work more effectively together, prior to actually implementing an organizational redesign. The goal is to move the organization toward composability at a pace that makes sense.
Build a Composable Technology Infrastructure
Composability, in the form of cloud computing, software-as-a-service (SaaS) architectures, widely-available application programming interfaces (APIs) and interchangeable software building blocks, is now a proven reality for updating the infrastructure of modern financial services enterprises.
This opens a wide world of choice that can serve the needs of agility, flexibility and speed, without compromising security or causing undue risk. It allows mixing and matching of in-house and external resources for the optimum combination of technologies.
Applying composable infrastructure can result in significant cost reductions, allow for a wide range of technology choices, and provide a level of interoperability not possible with yesterday’s monolithic, in-house/on-premises technology stacks.
Beginning with the cataloging of “current state” infrastructure and the ideal “to be” technology stack, we work with our clients to determine what underlying infrastructure should be leveraged as is, and what must be migrated to a more composable stack, where and how it should be deployed, and a timeline for the necessary transitions.
Update Software to Deliver Best-of-Breed Functionality
The software portion of the technology stack is the next to be addressed. This means looking at all software assets – data, processing, and applications – and either ensuring that they are already reusable building blocks, or supplementing those that are best left untouched with more modern capabilities.
A design principle we apply here is that not all existing technology is inherently bad, or needs the “rip and replace” treatment. Legacy systems may have a perfectly valid place in a revised technology architecture, though their roles may change.
For example, many non-customer-facing back-office operational software components may have been functioning well for decades – think accounting, billing, financial reporting, claims processing, call center management, etc. Precious resources may be better employed in areas in which customer engagement is important, and these back-office applications left as-is, minimally-maintained, or encapsulated for access by new or updated customer-facing applications.
Application Software for Uniquely Satisfying Customer Engagements
This is the place where we seldom, if ever, see insurers and banks having the software needed to provide the customer experience that today’s consumers demand. The requisite functionality may simply not be in place, or the software that is attempting to serve these needs is totally inadequate, inflexible, or no longer maintainable, and adding this functionality or replacing the offending applications is required.
At Earnix, we have a complete toolbox of software to leverage to make these vast improvements:
Earnix Underwrite-It connects underwriting software to pricing, and rating in a seamless, collaborative process. Shared components with Earnix Price-It enable underwriting and pricing teams to work together to achieve shared goals and drive maximum business impact.
The Earnix Enterprise Rating Engine provides dynamic pricing and robust product personalization. Our AI-driven enterprise rating engine operationalizes advanced analytics and builds robust control and governance standards across the organization.
Earnix Price-It delivers dynamic pricing software backed by robust data-science, analytical modeling, and AI capabilities, allowing you to instantly deploy rates to online channels, serve up millions of quotes per day, and optimize digital channels in real-time.
Earnix Personalize-It allows for the AI-powered personalization of product offers and bundles, so that insurance companies and banks can for the first time define, personalize, and deploy offers across the enterprise effortlessly.
Drive-It is a unique telematics app for auto insurers that collects robust data around braking, acceleration, distraction, speed, cornering, and other real driving events and uses ML to generate predictive scoring algorithms. With Drive-It, insurers can assess the precise risk of individual consumers to maximize profitability and align product offers to lifestyle and behavioral factors, not just financial or demographic data.
Don’t Forget Data!
No matter what infrastructure and application strategies we pursue, data is key. All financial services organizations suffer from issues with data that “lives” in silos throughout the organization, is not well-maintained, and has no clear ownership – the corollary to our observations about the organization and the technology stack.
To take full advantage of composability and maximize other technology investments, these hurdles must be overcome.
In the next and final installment in this series on change management in financial services, we’ll look at how we at Earnix guide the implementation of changes to infrastructure and applications, and how we support the long-term success of our clients.