Changing Trends in Online Financial Transactions
The changing trends and rapid growth of online financial transactions are easy to understand. With their speed, security, and ease of processing, online financial transactions empower all parties within the insurance ecosystem, resulting in enhanced service and greater customer satisfaction. Special guest Kevin Moon, Regional Sales Director of Financial Services at InvoiceCloud, joins host Jiffy Thomas, Sapiens’ Vice President of Professional Services, to discuss the changing trends and increasing demand for online financial transactions, and why they are here to stay in today’s insurance industry.
Jiffy Thomas|Kevin Moon
Jiffy Thomas: Hello and welcome to the Sapiens Insurance 360 podcast. I’m your host, Jiffy Thomas, Vice President of Professional Services here at Sapiens. And I’m so glad you out there listening. This is where we discuss the latest news, trends and issues from across the insurance solutions and technology spectrum. In the insurance ecosystem. Everyone’s familiar with the claim lifecycle and the claim itself that’s at its heart. But what really empowers a lifecycle engine are payments. And on today’s program, “Changing Trends in Online Financial Transactions,” we’ll examine some of the latest trends in claim payments driven by customer demand and the critical importance of digitalization for carriers. With us today to discuss this topic is Kevin Moon, Regional Sales Director of Financial Services at InvoiceCloud. Sapiens’ partner InvoiceCloud’s mission is to simplify payments by removing friction from the most frequent and sensitive policyholder interactions. Kevin’s been with InvoiceCloud for over 10 years, where his various roles have included Regional Sales Director, Account Executive, Business Development Executive, and Sales & Finance Coordinator roles. He has extensive work experience in the financial services industry and Kevin, thanks so much for joining us today!
Kevin Moon: Jiffy, great to see you and thanks for having me. It’s an honor.
Jiffy Thomas: So, Kevin, to start off, talk to us about the current trends for claim payments and our customers driving the need for them.
Kevin Moon: Yeah, this is an exciting topic, something that I think about every day. But I think the most obvious trend from my perspective is the trend toward digital claim payments. So we hear every day that carriers are looking to remove the physical and manual checks that they’re printing and mailing, sometimes even in-house and looking to pay those out electronically. And to your point, I think the customer demand is driving that trend and carriers are also driving that trend. I mean, from the carrier side, I think this came out of COVID. It became top of everyone’s mind. And a theme that I heard over and over again is that carriers were sending employees back into the office just to print and mail claim checks. And so it got them thinking like, hey, and there must be a better way to do this more efficiently without putting our employees at risk. And then customers are also driving this trend. And I think it’s just the trend toward everything becoming digital and customers really want to be paid electronically. We actually did a study at InvoiceCloud with over 2,000 policyholders and how they would prefer to receive insurance claim payments and over 73% said they would prefer to receive a claim payment directly into their bank account and not have to wait through the mail. That makes sense. And so I think it’s safe to assume that customers are demanding this. Carriers are hearing this from their customers and they’re listening to their customers, which is a great thing.
Jiffy Thomas: And you’re right about COVID, which has impacted many of our lives and in a positive way. And it’s pushed people to digitalize more and more, with work [working] from home and not going into the office. So totally valid points. Thank you for that, Kevin. Now, on another note, why is it important for carriers to digitalize their claim payments?
Kevin Moon: Yeah. I love it. Why is it important? This could be a full, two-hour podcast. But I think there’s a few key things that I think come to mind and why it’s important for carriers to digitize these claim payments. I think one, the biggest one, is creating internal efficiencies and reducing costs. When you have a digital claim payment, there’s just far less need for administrative overhead, manual intervention, and paperwork. Also, carriers are looking to reduce the time it takes to settle claims. I think we all know this, but the longer a claim sits out there, the more costly it becomes for the carrier. So they’re really looking to settle those claims more quickly. There was a U.S. property claims report that showed that carriers who implemented outbound digital payment solutions reduced the average time to payment by up to five and a half days. So they can settle those claims almost six days more quickly than with a physical check. And with physical checks in the mail, it can really make matters worse for the carriers in terms of cost. Typically, we hear if a check is lost in the mail, the carrier has to stop the payment with the bank. They’re dealing with a frustrated customer on the phone. And then to remediate that issue with the insurer, they’re commonly having to overnight a check and that’s an additional expense.
Jiffy Thomas: Yeah, that’s on the front end. And then there’s still on the back end, there’s additional workflows as well, right? They come into the system, cancel the check, and then they’ve got to reissue the check. And the very interface has got to repeal the request out there. So it’s just compounding it there.
Kevin Moon: Right. And then the second piece. We had internal efficiencies and reducing costs, but also reducing fraud. Digital payments are simply more secure compared to sending a physical check in the mail. And, you know, there’s no audit trail. So you once you send a check in the mail, it’s out there. And there was a number of studies. But commonly these studies say that paper checks are subject to nearly twice as much fraud risk than any other payment method. And in 2022 alone, there was 1.3 billion lost in check fraud. And I was actually chatting with the carrier last week. It’s pretty topical, but they had an issue with a washed check — a bad actor had intercepted the check, manipulated it, and deposited $100,000, and a year later, this carrier is still disputing that fraud with the bank and still trying to reconcile that issue so that disappears with a digital payment. And then the third reason why it’s important for carriers to digitize these claim payments is going back to the customers driving this trend. I think consumers really expect this. It’s really important for carriers to meet their policyholders where they are and how they want to do business. So as an insurer, think about your personal life. The vast majority of carriers, I’d say 99%, have a way for you as a consumer to pay your premium. But that’s not the same percentage that have an easy way to send you money when you’ve had a catastrophic event. And so I think that’s frustrating for policyholders and they really want to do business electronically.
Jiffy Thomas: Yeah, totally. Kevin and [I can] just personally relate to this. I had a recent home insurance claim. And I was talking to the adjuster in the morning and the claim was settled and 20 minutes later I get an email with a online link to go collect my payment and literally in hours I saw the funds in my bank account. Compare that to the traditional model where you get a check in the mail two to three days later you endorse it, bring it to the bank. Then the bank takes another two to three days. So easily five to six days between the claim being settled in using the funds in your bank versus hours.
Kevin Moon: Right. And that was a good experience for you, Jiffy.
Jiffy Thomas: Absolutely.
Kevin Moon: I’m sure you’re not considering exploring other insurance carriers.
Jiffy Thomas: Yeah, I totally can relate with that. Thanks for that context, Kevin. So, when selecting a digital outbound payment solution, what should carriers be looking for, in your opinion?
Kevin Moon: In my opinion, when a carrier is evaluating, you know, selecting a vendor for digital outbound payments, I think it’s really critical to get into the weeds and see the product as quickly as possible. A lot of the top vendors, they’re going to look very similar on the surface and very similar in a PowerPoint. So they’re going to have or they should have robust payment options, multiple ways of sending out these claims communications and notification channels. And they’re going to have the ability to integrate with that core claim system. And so I think once you get into the weeds, and actually can see the product. There’s a few things in my opinion that they should be looking for. So one is, is the vendor we’re evaluating true SaaS, a true software as a service platform. Why is that important? Because a SaaS platform will release new features, new updates, and upgrades automatically. So there’s no effort for the carrier. And this is critical, especially in digital payments of any kind. They’re changing so quickly, that if you don’t have a true software as a service platform, you’re going to have the constant headache of upgrades and updates, having to wait for new technology while it’s changing so quickly in the background.
Jiffy Thomas: Totally agree in that sense, especially in this kind of a model, where the finance industry is changing literally every day, every month, and adding in more options. So to go with someone then as a SaaS offering, like you said, zero disruptions or upgrades, quick to get the feature installed. Totally understand the value.
Kevin Moon: Yeah, 100%. And then I think, two in the weeds, when selecting an outbound digital payment vendor, you should look for someone that has an open banking model or connected banking model. Okay. What is that? Why is it important? So in an open banking model, these funds aren’t pulled from the carrier’s account until the claimant actually receives the money or they select how they want to be paid and the money is deposited into the bank account. So in your example, Jiffy, in an open banking model, you got that that claim, that claim money, that money would not be removed from the carrier’s bank account until that very moment. Without that, and we see this very frequently, is that the money is pulled when you, the claimant, actually just get the notification. So the money is removed. But that doesn’t mean that you’ve actually received the funds. So in your example, you could have sat on that email for a couple of weeks, right? But that money has been removed from the carrier’s bank account. So they could have been they could have invested that money. They could have been earning interest on that money. And it really impacts their bottom line.
Jiffy Thomas: And it works both ways too, Kevin, to your earlier comment about shortening the window of closing your claim, you’ve already made the decision to make the payment. If the claimant are the party that is being paid comes in and picks up the payment, you close the claim, you move on. [The] company can adjust the books and so [it] works both ways.
Kevin Moon: Yeah, absolutely. And then and then lastly, I think carriers should be looking for a vendor, an outbound digital payment vendor, that can disburse multiple types of outbound payments. Not just claims; that’s vital and critical, but, you know, as they see the internal efficiencies and the reduced cost from digital outbound payment solutions, I think it’s important that they can scale that into other areas of their business. Agent commissions sending out digital return premiums, vendor payments, bulk vendor payments. I think these are, you should look for a solution that has a vast array of types of payments that they can send out electronically. So you can really see the full value and all the efficiency that that can drive.
Jiffy Thomas: Brilliant. Kevin. There are many, many things to look out for the right vendor, thank you for that. So moving on, explain how InvoiceCloud specifically is overcoming the challenges of digital multiparty claim disbursements. If there’s more than one party involved, like the lienholder in your previous example, how do you go through those steps electronically?
Kevin Moon: Yeah, in summary, we’ve tackled that, Jiffy, and I think it’s surprising to a lot of carriers. I think they assume that digital disbursements, a digital claim payment can only be handled in a 1 to 1 scenario. So the insured is paying I mean, the carrier is paying one person, right? So I think they’re they’re pleasantly surprised that we’re tackling this multiparty scenario. So our solution has built-in order and built-in logic that will support multiple parties. And so we have some parties who are tasked as an endorser. So just to endorse that this payment is accurate, and then other parties who are labeled as recipients of the money. So kind of, we could really dive into the details, but in a high level, a endorser would receive an email or a text notification. They would be able to review the documents. They would sign off and electronically say, yes, I have endorsed this payment is correct. I’ve reviewed the documentation. And once that’s complete, then the party to actually receives the money would then get an email or text notification to review and decide how to actually remove the funds or collect the funds. And this can include lenders or lienholders, who have to endorse a payment as well. On the other side of the coin, Jiffy, I actually just had one of my coworkers who went through this, who went through this process, but with a manual check. So he had to, and this was a home claim, right? So he had to wait for the check in the mail. He had to endorse it. His wife had to endorse the check, and he had to physically take the check to the bank, the brick-and-mortar location, to have the lienholder endorse it. And then he had to take the check and deposit it and wait a couple of days for it to clear. With a digital solution, you can take that manual process from days or even weeks to just hours.
Jiffy Thomas: Totally can understand that and relate it to my experience as well, Kevin. So thank you so much for that. One final question. Tell us why InvoiceCloud solutions are relevant and helpful to insureds, brokers, and customers alike?
Kevin Moon: Yeah, one of my favorite topics. So I think as an organization, it’s important to understand kind of their background and what their key focus is. InvoiceCloud is laser-focused on digital payments. This is all that we do. And we’re a large organization. So we have the engineering and development resources and to put money into R&D to continue to invest in the product. We’ve been talking about how quickly the landscape of digital payments has moved. It’s critical that you have a vendor that is investing in R&D and really refining the user experience and the user interface. And we’ve been doing that for over 15 years and that’s our sole product, our sole focus. And I think also why our solutions are relevant, especially for these listeners, is our partnership with Sapiens. We have a very tight partnership together. We have 23 mutual customers. We’ve proven these integrations over 23 times with unique carriers. And I think specifically, Jiffy, and you could talk to this, is we have a pre-integrated solution. So we have out-of-the-box, robust APIs that are proven and you don’t have to do it yourself.
Jiffy Thomas: Exactly. And having a product that has a standalone, has its own portal, just makes that integration so much easier and tighter. Like you said.
Kevin Moon: Yeah. And then lastly, [and] I know this is a podcast on claims trends, but I think I’d be remiss, and it’s important and helpful for insurers to mention our inbound premium collection solution. I think consumers expect a seamless solution for both when they want to pay a premium and when they want to collect money from a claim. So we’re really focused on a seamless solution for both sides of the coin and trying to make the process as simple and as easy as possible for them. And look, every carrier’s unique, has their own unique business goals and needs. And so for anyone listening that’s interested, we welcome the opportunity to learn more about your business and see if InvoiceCloud might be a good fit.
Jiffy Thomas: Thanks a lot, Kevin! Digitized payments are really empowering all parties within the insurance ecosystem, leading to streamlined payment systems and ultimately, enhanced service quality and greater customer satisfaction by the enhanced experience that we just talked about. Thanks so much for joining us and walking us through the latest in claims payment technology and its importance.
To our listeners, as always, thank you so much for spending your time with us today. We love hearing from you, so if you have comments or would like to follow us on social media, please reach out to us on our channels. And don’t forget to subscribe to the podcast, and thank you once again for listening! We’ve got more coming, so stay tuned to Sapiens Insurance 360. Bye for now!
