Partnership and Purpose: Bancassurance in Asia

July 2024

There is great reason to take a close look at Asia Pacific as a key contributor to current trends and the direction of our industry. An EY outlook on the region described it as integral to the insurance sector, as it represents almost one-third of the global population (driven, in part, by growing middle classes) and includes some quickly expanding economies. EY notes that China, for instance, may become the largest national economy by 2030. Within this dynamic environment, insurers have seen strong results, but they also must navigate continued complexities and challenges.

It is difficult to address insurance distribution in Asia today without discussing bancassurance. It has been a significant sales channel in nations across this region for years, supported by relationships aiming to connect consumers with the coverage they need. A McKinsey article cites that, in 2018, bancassurance already accounted for approximately 31 percent of Asia Pacific’s life insurance premium. And it is growing: According to RGA, this evolving market is predicted to surpass $1.8 trillion globally by 2027.

After a trip last year across Asia — where I visited India, Singapore, Malaysia, Japan, Taiwan, Philippines and Hong Kong — I observed some consistent themes. One of these is the dramatic growth of bancassurance. Today, across the region, most banks have at least one insurance partner, and some partner with multiple insurers. The bancassurance channel represents a substantial share of life insurance sales in many markets — leveraging banks’ strong relationships with customers and ability to build trust via multiple touchpoints.  

However, the pace of change has accelerated exponentially. It would be unwise to assume growth will continue without intentional and meaningful action. To sustain a positive trajectory and position bancassurance for success, both banks and insurers must ensure their models and approaches are designed to achieve maximum engagement and effectiveness. Today, there is evidence of this shift — where concerted partnerships and a shared sense of purpose are being created between Asia’s insurers and banks to meet today’s customers where they are and provide relevant coverage they need.

Some trends that are likely to determine the focus of these partnerships and their efforts moving forward include:

Consumer Expectations

As with most people everywhere, the consumers in this region have new and evolving preferences when working with companies of all kinds. They simultaneously have more demanding perceptions of what they believe companies should offer them and shorter attention spans — due, in part, to growing reliance on social media for quick videos and versions of information.

However, Asia Pacific consumers stand out from others in that their expectations are intensely high, especially when it comes to seeking digital experiences that are smooth and individualized. Understanding the unique level and type of customer expectations in this region likely will drive innovative strategies and technologies designed to connect with consumers and serve their changing needs. Working together, banks and insurers can leverage and combine their unique strengths to deliver an outstanding bancassurance experience. 

A Digital World

In the Asian life insurance market, the rise in digital banking prompted a move toward bancassurance. As EY notes, “Consumer preference for interactions and relationships with insurers skews strongly toward digital.”

There has been a dramatic shift in how people interact with their banks to accomplish routine and more complicated tasks. Previously, this was likely to be a fully in-person process — a bank customer would come in to handle deposits, withdrawals, loans, etc. During this time, they would engage face-to-face with a bank agent who could also speak with them about insurance coverage. However, the growing prevalence of telephone banking and mobile banking means this is no longer the norm for consumers. An RGA article states, “While mobile banking was concentrated in younger people in the past, recent data suggests increased demand for digital transactions among all age groups.”

The shape a commitment to digital takes varies by organization — based on resources, priorities and other factors — but it may be evident in everything from customer marketing and product offerings to the underwriting process and policyowner service. In general, McKinsey emphasizes the necessity of digitalizing the bancassurance model to the same degree that banks and insurers are leveraging digital to personalize their other customer processes.

Reinventing the Model

It is critical that banks and insurers maintain an integrated effort, working together to build new distribution models that focus on connecting potential customers with the insurance they need. Those served digitally are just as likely — if not more so — as in-person banking customers to need information about obtaining coverage.

An important point in this discussion on connecting with customers today is that bancassurance partners must leverage a holistic approach grounded in omnichannel principles. While omnichannel is not a new concept in our industry, it is critical to use this lens in a fresh way while reimagining the bancassurance customer experience. At a basic level, it should mean that regardless of how a person is initially engaged and whatever the path he or she takes to possible purchase, each step in the journey should be consistent, and all transitions should be seamless.

While the concept may initially seem less personal, if a thoughtful approach is taken using the right technologies, the customer is likely to benefit. For example, using data about the customer that is available through the bank’s systems, a more personalized recommendation can be made that may guide product considerations. In addition, opportunities to obtain insurance coverage can be integrated into key banking processes, such as when a person applies for a mortgage loan. At a high level, RGA describes the partnership philosophy: “Operating models between bank and insurer are working to establish seamless coordination in the new omnichannel approach” to align with the current market environment and consumer climate.

People Remain Central

Within an omnichannel approach, smart players will recognize the ever-evolving — but fundamentally critical — role of people and the personal customer attention they can provide. At each touchpoint with a representative, a customer should feel confident and at ease. The representative must be well-trained to build strong and immediate trust with others, as well as to develop strong ongoing relationships, by presenting themselves as very knowledgeable and professional. Interpersonal interactions are the point in the bancassurance process where, if trust is established and advice is appropriate, a better customer outcome and more value are created.

Looking Ahead

Across Asia, organizations feel a consistent drive to evolve and to pursue new opportunities. In the context of bancassurance, this will likely result in a stronger industry for insurers and banks, as they pursue meaningful partnerships with the end customer in mind.

All efforts to implement a new model should maintain a rapid pace of change to match quickly evolving consumer preferences. Also, banks and insurers together can assume a role in which they provide a bancassurance experience that supports and informs customers’ comprehensive financial planning and well-being. It is exciting to consider how bancassurance presents an opportunity to broaden the customer value proposition. Those partnerships centered on a clear sense of purpose, a spirit of flexibility and a commitment to customer-centric design will lead the way.