Opening Up the Future of Financial Business with Digitalization

* Article originally appeared in Nikkei Japan and has been translated into English.

MS&AD Insurance Group, one of Japan’s leading insurance and finance groups, established the promotion of digitalization as an important strategy in its “Vision 2021” medium-term management plan that was launched in 2018, and since then the whole group has been engaged in digital transformation. Mitsui Sumitomo Insurance Group (hereinafter “Mitsui Sumitomo”), which is the core company of the group, is implementing a new structure to improve customer experience value by leveraging data. Shinichiro Funabiki, who until last year was spearheading digital transformation as the group’s CDO (Chief Digital Officer) and in April of this year was appointed at Mitsui Sumitomo’s new company president, together with Tomoji Takahashi, President & CEO of Teradata Japan, a leading cloud data warehouse company that has supported this initiative, sat down to exchange their views on the reality of digital transformation and leveraging data.

Teradata Japan, Ltd.                 Mitsui Sumitomo Insurance Group Holdings, Inc.
President & CEO                        Representative Director
Tomoji Takahashi                        President & CEO
                                                                

What digital transformation has Mitsui Sumitomo implemented? And which Teradata solutions have supported this?

- Enhancing sales skills by combining people with technology

- You were appointed as President of Mitsui Sumitomo in April, and before that you were spearheading the promotion of digital transformation as CDO of MS&AD Insurance Group. Could you give an overview of digital transformation in the MS&AD Group?

Mitsui Sumitomo Insurance Group Holdings, Inc.
Representative Director
President & CEO
Shinichiro Funabiki

Shinichiro Funabiki (hereinafter "Funabiki") There were three main cornerstones of digital transformation. One of these is to enhance the sales skills of agencies. I have been at this company for 38 years, and for 25 of those years I was involved with sales. That experience has given me a certain belief: that the major structure of the insurance industry is constant. You have insurance companies, agencies, and customers. In other words, value reaches customers in a BtoBtoC pattern. That's the basic state of the insurance business.

Teradata Japan, Ltd.
President & CEO
Tomoji Takahashi

Insurance is different from general consumer goods, which can be purchased online or in-store without there being a considerable difference between the two in terms of the choices available. Consumers ask questions such as "Is this product really what I need? Is it going to be wasted? Will the amount of compensation be adequate in case of an accident?" And they need to make purchasing decisions only after giving consideration to such matters. But that decision-making process is not really something a customer can go through alone. So appropriate advice from insurance agency staff is essential.

Therefore, if agency staff have strong sales skills and the ability to give good advice, the value that can be provided to customers will increase. "We are making investments into digital to enhance the abilities of agencies to improve customer experience value. This is one of the cornerstones of digital transformation."

Tomoji Takahashi (hereinafter "Takahashi")  I think you've described the very essence of sales there. Customers need to think not only about product specs, but also about whether or not that product is really suited to their life and way of living. That's key with insurance products, isn't it. If customers feel that a product is being recommended by someone who really understands this, they will be able to sign a contract with peace of mind. Sales is all about people. Having personally been involved in sales for 20-plus years, I too firmly believe that to be the case.

Funabiki  MS1 Brain came about as a result of digital investment for the enhancement of such sales skills. This is a solution where AI recommends optimal contracts and timeframes to customers by centralizing and analyzing data held by Mitsui Sumitomo, such as customer information, contract information and past accident history, etc. This was introduced across the board at all 36,000 of Mitsui Sumitomo's agencies in Japan. Using this solution, agency staff can estimate customer needs and provide sales expertise that we refer to as “NBA” (Next Best Action).

Teradata has demonstrated great ability with initiatives to unify data. We used the cloud data warehouse software Teradata Vantage on AWS and combined our own data, as well as group company data, agency data and business partner data, to create a base for MS1 Brain. That was a vital element when it came to digital transformation in terms of the sales activities of our agents,"

Takahashi　It really is a solution that enhances sales skills by combining people with technology. Being able to participate in the development of MS1 Brain was a hugely valuable experience for us.

The main characteristic of Teradata Vantage is that it can integrate various types of data which allows many users to then freely leverage the data. But what kind of data is required in order to further enhance customer understanding and the customer experience? That's what we want to focus on as we continue supporting digital transformation.

- Centralizing data means enhancing corporate integration potential

- Please tell us about the second and third cornerstones of digital transformation.

Funabiki　The second cornerstone involves building a sales system for products that don't feature on the agency sales network, which includes products where contracts need to be completed very quickly, such as short-term travel insurance or CtoC online transaction insurance, which has really taken off in recent years. We built a structure whereby contracts for products such as these can easily be completed on a smartphone.

Next, the third cornerstone: RisTech, which is a field that we intend to focus on going forward. We coined this term by combining the word “risk” and “technology”, and it refers to a structure in which data analysis is used to visualize corporate or personal risk, predict accidents or minimize damage when accidents occur.

There are many areas of risk that are becoming more pronounced year on year but which insurance is not covering, such as natural disasters, damage from cyberattacks, collapse of deteriorated infrastructure, or the unexpected spread of infectious diseases in advanced primary industries adopting biotechnology, etc. I believe that visualizing such risk areas is one of the important societal roles insurance companies have to play. RisTech is what makes this possible, thanks to the power of technology.


Takahashi　I think what you’re saying - that data application should not stop at the proof-of-concept level, but should rather be turned into a tangible structure and connected to business activities and new business potential - is really wonderful. There are quite a few companies out there that talk about digital transformation being an objective but don't take action.

I think a particularly important point is that you focused on the need to centralize data and implemented that. Many companies adopt a silo mentality about their data, you know, keeping data decentralized at group companies or individual departments, which means they face issues in terms of being unable to leverage the data effectively. The only way to resolve that issue and centralize data is to enhance the company’s potential for integration. I’m very happy that we’ve been able to help in this regard.

Funabiki　Financial institutions hold vast amounts of information. Much of that information, however, existed in paper format and lay dormant in storage rooms without having been digitized. Or, even if the information had been digitized, it was scattered around numerous locations. As you say, that was a huge problem. By developing a system that can centralize and analyze such information, the value that we can offer our customers greatly increases. For me, whether or not a business has such data infrastructure in place will make a major difference in the future.


Takahashi　I think another very distinctive aspect is that you are engaging with digital transformation by setting and aiming for a clear goal. That of exploring the ideal way of leveraging data and creating solutions that enhance sales capabilities through "people x technology" with the aim of enabling agency staff to interact more deeply with customers. In other words, rather than thinking of how to use the data you have at hand, everything starts from the perspective of how to grow the business by enhancing customer experience value. I think that’s one of the reasons for Mitsui Sumitomo’s success with digital transformation.

- New initiatives aimed at democratizing data application

- Please tell us about the next step in digital transformation.

Funabiki　Data analysis tools must be freely and fully accessible to all employees and agency staff, not only for data scientists or experts in the field. Each individual will use the power of data to resolve issues encountered in their particular situation. I believe that digital transformation of the company as a whole will be achieved based on these building blocks.

I also think that responding to the diverse needs of local customers by using digital solutions in such situations should be the mission of a company that has a nationwide service network. And in order to achieve that, one of the next steps is to upgrade MS1 Brain to a more versatile tool.
Takahashi　Ensuring that anyone can use data analysis tools is what we call the “democratization of data application”. I think it’s fair to say that this is a very high level of digital transformation.

Funabiki　As far as financial institutions are concerned, human resources are extremely important assets. When individuals become able to perform data analysis, their value as a talented resource increases. Providing opportunities for such value increase is an important role for the company to play. And then there’s the matter of connecting the power of digital to the growth of working people. That's another important form of digital transformation.

Takahashi　We really want to support such initiatives that increase the value of human resources. In August of last year, Teradata opened the world’s third Executive Briefing Center (EBC) in Tokyo. This is a place to introduce successful examples of data utilization from around the world and discuss data analysis methods. Discussion programs are put together in line with requests, and the facility has been evaluated highly since its opening. We’d love to see information analysts and people who want to learn more about data analysis taking part, and we hope people using it as a venue for sharing advanced examples and discussing business issues.
Funabiki　That sounds great. We'll definitely look for an opportunity to use it. In our medium-term management plan from 2018, we have invested in building a foundation for data centralization and analysis. Starting from the current fiscal year, we will enter the phase of tangibly connecting that foundation to business growth. We would love to have Teradata’s continued support.

Takahashi　It would be our pleasure. I’m sure that as company president you will continue promoting digital transformation in the financial sector, and we’ll continue doing all that we can to support you.