Exclusive: ‘Time to shine’ – John Keppel, Zurich Insurance Group in “The Insurtech Magazine”

Zurich Insurance Group is reskilling thousands of staff as digitisation moves from the front to the back office. One impact will be to allow CFOs to play the more strategic, value-adding role they’re increasingly needed for, says John Keppel, Chief Operating Officer in the UK

When Mario Greco, the big boss of Swiss-based Zurich Insurance Group, declared at the end of 2020 that the old insurance business model was ‘dead, or at the very least dying’, it surely sent shockwaves through the industry.

But his reasoning was sound. New customer needs due to lifestyle changes and advancing technology have caused huge drop offs in traditional revenue streams. And historically-low interest rates, which many analysts forecast will remain for the foreseeable future, have seen insurers’ investment income plummet.

Greco was speaking from a position of strength; Zurich had repositioned its strategy some five years ago to be more service-minded so that it now derives more than half of its income from recurring fees – and although, of course, even global entities like Zurich can do little about interest rates, they can do something about technology to mitigate the impact of that decline.

John Keppel, Zurich’s chief operating officer in the UK, admits that the insurance industry – and Zurich itself – might have been slow to see the value of digitisation, but the company now considers itself a pace setter. And it’s determined that this won’t come with an associated human cost in what has been an intensely-manual industry.

For example, Zurich has started a company-wide upskilling programme for its staff as it introduces disruptive technologies. The company will spend £1million over the next five years in the UK alone, retraining, upskilling and augmenting 3,000 roles – about two-thirds of its UK workforce – and not just because it foresees an industry-wide shortage of robotics, data science and cybersecurity skills.

“There are many preconceived ideas about implementing automated processes into a business and how these roles must be carried out by tech specialists,” says Keppel. “In reality, the best people to do this effectively are those who have worked within the function you’re looking to automate. They are the ones who really  understand the process.”

Zurich has also made a strategic decision not to outsource any of that digitisation work to third parties on the grounds of costs alone. Instead, it has set up an Automation Academy that has already helped to create a 40-strong artificial intelligence (AI) team comprising of staff from across the business.

One external investment it has made is in insurtech Instanda’s low-code, Cloud-based insurance platform, precisely because it gives inhouse teams the autonomy to build, test and distribute products. But such transformation is not just about frontend products. It extends deep into Zurich, notably affecting the finance team.

“For modern finance functions it’s about embracing some of these technologies, and making sure that people have the capabilities to exploit them,” Keppel says. “The breadth of skills that now need to be inherent in a modern finance function and other functional teams across the business is something we’re addressing, so they contain people with skills in automation and product ownership.

Citing an example of how individual talents are being matched to specific roles, he says: “There are some new skills that are a little bit different and we’re working on programmes now to both build those skills and help people transfer from historical functions to new ones.”

Ultimately, that will future-proof the finance department.

“As other parts of the business have digitised and automated practices, we’ve benefitted by picking up people who know our business really well and moving them into an automation function, reskilling them, giving them modern technology capabilities. Then we will push them back out into the business, back into finance and other functions.

“This will be particularly important for finance as data is key. Finance people are, to some extent, data and, quite logically, number-obsessed. So data skills, data manipulation skills and data analytics skills, over and above what I think finance functions have historically had, will be needed, and embracing the technologies that support that kind of mass data management is something that finance functions now need to think about.

“It’s less about spreadsheet upon spreadsheet, reconciliation upon reconciliation, and more true data science that is needed in some of those areas.”

SLOWLY DOES IT

Zurich has made a conscious decision to steer away from what Keppel calls large, multi-year programmes of change, to an environment where he says it ‘does small and does more’.

“Smaller projects with faster, iterative execution, is something that is starting to work for us. Insurance has been slow to that,” he admits. “You’ve seen other industries embrace it much more rapidly. But I think it’s now certainly part of the fabric of our organisation. We’re starting to see that, not just within the project delivery functions, but also within finance and some other areas of the business, people are starting to embrace this ‘small is wonderful’ concept.”

With every part of the finance department’s role ‘critical to someone’, Keppel knows that while substantial programmes of change are what most CFOs would aspire to achieve, they nevertheless need to be accomplished with ‘a degree of caution and prudence’.

“It’s a matter of making sure that you’re moving at a pace that’s controllable, that the change is manageable, because of the importance of the activities that the finance function performs,” he says.

“You don’t want to do anything to destabilise it, and there’s no reason why you should, in a well-run programme. I think that comes back to the earlier point about looking for small, incremental changes that you can build on, rather than necessarily having busloads of people turn up and putting huge, significant programmes in place.

“I think, in many cases, tools like robotic process automation (RPA) are perfect for the finance environment. Multiple, consistent reconciliation activities can be automated really quite easily. It doesn’t get rid of the problem – it’s transformation with somewhat of a small ‘t’ – but it releases capacity to help teams think about and focus on more material changes, perhaps.

“’Just get going’ would be the best motto, I think, in finance functions, for those sorts of moves,” he adds. “Elsewhere in the business you see, perhaps, more material transformations with digital; changing channels and accessing markets in various ways, or interacting with customers in different ways through digital channels.

“I don’t think any of this is without opportunity for finance functions, for sure, and particularly in the areas of mass data management and data science, finance functions have a huge leap they can take, if they can get on board with that agenda.”

EXPANDING ROLES

And how is the role of the insurance CFO going to be shaped by increasing digitisation within the industry?

Research by Argyle Advisory and Research Services and FTI Consulting has found that by playing a leading strategic role in helping their organisations to overcome the COVID challenges, CFOs across industry are now well-positioned to lead the way as ‘value creators’ in their organisations.

Meanwhile, a separate study by the CFO Network into the abruptly changing landscape of 2020, has identified CFO priorities for 2021 as being: digital transformation; rebuilding organisational culture; creating a ‘new normal’ business model; empowering workforces through diversity, equity and inclusiveness, and growth.

Keppel fully agrees that CFOs will play an increasingly influential role as digitisation largely frees them of their traditional back-office responsibilities.

“You’re going to start to see finance functions, and therefore CFOs, spend far more of their time and energy engaging with the business rather than on what the business might consider to be back-end activities,” he says.

“Back-end activities, such as invoicing and debt collection, are not unimportant to any business but I think they can, in a big organisation in particular, become 85 to 90 per cent of what finance is doing, rather than the department supporting the business with planning, strategy development, market assessment and growth. So, digitisation will free up finance functions to add more value to the businesses they support and, to be perfectly honest, I think that’s what they’ve always aspired to do.

“Many high-energy people in finance functions who come through to take broader leadership positions within organisations are involved in the planning side, rather than the statutory accounting side of finance. With increasing digitisation of the department we’ll see more time for finance functions to deliver those sorts of things as we simplify the back-end activities for them. For me, that can only be a good thing.”

This article was published in The Insurtech Magazine #05, Page 38-39