Going ahead with its third phase of digital strengthening, HDFC Life is committing itself to adoption of emerging technologies. EC’s Abhishek Raval and Mohit Rathod speak with Subrat Mohanty, Senior Executive Vice President, HDFC Life
How do you look at the role of technology while strategizing for your business?
In my role of looking after corporate strategy, technology, digital and operations at HDFC Life, I have seen technology evolve from being a key enabler to business to firmly establishing itself at the front and center of our strategy for the foreseeable future. We see this across three horizons – first is to become a digital insurer, making sure that all the mid-office and back-office functions are automated, straight-through, frictionless, so that the customer journey is seamless. This requires us to make ourselves move to zero-paper, zero-branches – that’s what we have been working on for the last three years. This was enabled by a fundamental restructuring and re-architecturing of the technology stack, making sure the middleware is robust and separate from the core system, and the frontend is flexible and customer centric. As a digital insurer, we have taken the entire insurance service and product offerings and made it modular. It is provided as a standalone technology module to the customers – this is very important for our strategy in order to be relevant to our customers. All the aspects such as making APIs accessible, developing progressive web applications are part of this. This can’t be just the responsibility of the technology team, which is why the strategy team has been embedded into this – this is how we run some of our strategic initiatives on a multi-year horizon. For instance we are in our third year of the Mobility initiative while our STP and frictionless initiative is in its second year.
Also under the first horizon, we have an organization-wide automation platform that has over 50 bots operating with the help of a few vendor partners. We identified three different stacks of automation solutions based on our needs. One of which was simply around desktop automation; the second was RPA, and the third was cognitive. For all the three stacks, we started pilot projects by late 2015 with different vendors and partners. For example, earlier we used to have medical reports which would go through a long process. Now after scanning of the reports, we have placed a bot which reads the report and compares them with a reference range. This starts highlighting the cases that are higher or lower than the reference range. It significantly saves time of the underwriter. Similarly, we have multiple email and chat bots and an NLP based virtual assistant for all our sales and services staff that can answer every single query of theirs on any our current or past products instantly.
The second horizon is that of platforms and ecosystems that are emerging. We believe that in the next three-five years consumers will owe allegiance to certain ecosystems to meet most of their buying needs. For instance, an e-commerce ecosystem might provide shopping, food delivery, grocery and payments options in a single networked community. We have identified six other such ecosystems that might have relevance to life insurance products and our focus is to make ourselves the preferred partner for those ecosystems. This requires a very different way of thinking about technology that matches with the pace and demands of such ecosystems. Separately, we believe, similarly, there’s an ecosystem which could be orchestrated by an insurer – this could be around retirement, wellness, health, corporate services and more. We are betting on creating a couple of such ecosystems ourselves as we go forward.
The third horizon is slightly longer term and we are building optionality in trying them out at this stage. This includes adoption of blockchain, thinking of different ways to sell insurance using AI and machine learning tools and parameterized insurance. These won’t have resonance immediately (or might never), but we are keen on learning about them.
Across all of these initiatives, how are you using technology differently than a conventional life insurance company?
In all of these initiatives, the entire methodology is agile. Open source platforms are employed as much as possible, alongside using cloud in order to manage the infrastructure. The attempt is to keep ourselves in line with the wants of our B2B partners and consumers. For example, for a few years, we had to do a de-dupe with our customer at the frontend and ask for the details, which would be then processed at the backend before providing the results. Now with new age technologies, we can get this information in seconds – these are the things that we are already using, ensuring that we don’t repeat some of the past errors.
Additionally, we have already been using DevOps and microservices – this is the way forward. A lot of our current partners are completely different than our previous partners. For instance, these partners are building our new underwriting rule engine using some of these principles, rather than the classic monolithic approach.
Also, there’s a way we have seen we can calibrate our strategic initiatives with the fast changing technology options that are available. A good example is our Mobility journey. Our first aim was to ensure that the entire sales journey can be made available on mobile. We created a completely digitized point of sale (PoS) application, which can be used on a mobile or tablet device. We then created a host of specific solutions that we called the ‘InstaSuite’ which enabled the zero paper, zero branch presence for our Sales staff. This was how Mobility 1.0 got done. Mobility 2.0 was around making these tools as platforms upon which we can create new ways of doing business – like integrating with our Bank/NBFC partners, creating an entire training and certification module on the go or a mobile hiring module among others. Under Mobility 3.0, which is almost getting completed, we have extended these further to include geo based services, hyper personalization and to our services platform. For instance, we have InstaServe, wherein any of our colleagues can serve our customers on the most frequently transacted services anywhere, anytime on the mobile.
From a bottom line perspective, there are various metrics involving ratios such as combined expense ratio or the settlement ratio. How does the use of advanced technologies affect these ratios?
We are a fairly self-critical management team that’s constantly asking if we are getting the RoI for these investments. It isn’t an easy task to justify the investment otherwise. This is an ongoing exercise where the technology and digital teams are learning and getting better at identifying what metrics are they impacting.
I will cite our performance on a few metrics that we have gotten better at based on some of the examples I have mentioned earlier. One of our strengths is the number of corporate partners that we have (over 150) that has allowed us to scale our group business significantly. Among other reasons, our technology platform that allows us to on-board, integrate and provide added value to our partners has been quite instrumental in this journey.
The other metric is the improvement in efficiency of the sales funnel. Using the mobility platform, intelligent analysis of data and persoanlization tools, you can streamline the process, thereby increasing productivity. Our growth is largely led by volume increase; we are selling good protection plans at smaller ticket price – this is again possible due to technology.
We have been able to do predictive analysis at the stage of business login itself to prevent frauds. This will help quality of business and over a period of time the experience on claims, persistency and quality parameters (vis-a-vis the assumptions we have made) will start getting in line or lower. This is an important was to improve the embedded value of our business and this is further enabled through good use of data and analytics.
In the company’s opinion, how is technology becoming central?
In our board meetings, we have at least one-two topics on technology, mulling on how to get better at partner acquisition, how do we ensure better ability to deliver on our assumptions, and how technology is helping our customers get better advice, a seamless onboarding experience and services on the go. We spend a lot of time talking about reimagning insurance through technology and data and on platforms and ecosystems during our annual strategy discussions with the Board. We share our experiences, bring in international practitioners and we seek the guidance on our plans. Technology, its likely impact and our plans in the digital space are part of our everyday discussion among the leadership team.
Cyber security is critical for the BFSI sector. Does HDFC Life have an independent director on cyber security?
From a regulatory perspective, we need to have a cyber security policy which is ratified by the board, and a cyber security roadmap. We started this two years ago, proactively. We presented a three-year plan of the cyber security roadmap which gets discussed in every board meeting. The plan is running to its schedule. Every month, we have a review with our cyber security head, wherein big global incidents are discussed and we plan steps to protect the organisation from such incidents. We also did an independent audit and assessment of our cyber security infrastructure, wherein we were scored the best in the insurance space – almost comparable with banks.
What are the company’s plans for the third horizon this year?
Blockchain is definitely one interesting area. Voice technology is another, especially in India. We continue to remain paranoid about being disrupted so we stay humble and we keep our eyes and ears wide open.