The Nordics’ Fourth Wave of Digitization
Our world is in the midst of a fourth wave of digitization, where advances in the internet and its related technologies are becoming inseparable from daily life. And unlike the three previous waves (computer systems, internet-enabled computers, and mobile internet) this one is being led by the Nordics through their rich ecosystem of startups and leading educational institutions. In our latest podcast, Sapiens’ own Finn Oskarson, Regional Director for the Nordics & Baltics, joins Amanda Ingram, Sapiens’ P&C Product Strategy & Marketing Manager, to discuss the Nordics’ fourth wave of digitization and how it is setting a global benchmark in digital adoption and innovation.
Amanda Ingram|Finn Oskarsson
Amanda Ingram: Hello and welcome to the Sapiens Insurance 360 podcast. I’m your host, Amanda Ingram and I’m a P&C Product Strategy & Marketing Manager at Sapiens, and I’m very, very pleased that you’re out there listening; this is where we discuss the latest news, trends, and issues from across the insurance solutions and the technology spectrum.
So just in case you weren’t aware, the world is in the midst of a fourth wave of digitization. What does that mean? Well, simply put, the age when new advances in information technology, notably the Internet and its related technologies, are rapidly merging and becoming inseparable from daily life. After three previous digitization waves, i.e. computer systems and products, internet-enabled computers, and mobile internet, the internet and many of its surrounding objects, i.e. smart mobile phones, home appliances, vehicles, everything’s connected these days, and different types of sensors and actuators are connected, and their data can be collected and exchanged among devices through modern communications and network technologies.
What you may also have been unaware of was that the Nordics, i.e. Denmark, Finland, Iceland, Norway, and Sweden, are leading the charge in this fourth wave by pioneering digital technologies through their rich ecosystem of startups and leading educational establishments. They are also advancing research in deep technology such as AI and quantum computing. But what is it about the Nordics that puts them at the forefront of this wave, enabling them to set a global benchmark in digital adoption and innovation?
To answer these questions and more is today’s guest, Finn Oskarsson, Sapiens’ Regional Director for the Nordics & Baltics. Finn, thanks so much for joining us on today’s program, which is titled, “The Nordics’ Fourth Wave of Digitization.”
Finn Oskarsson: Thank you, Amanda.
Amanda Ingram: So Finn, let’s begin. A simple question to start with: Why are the Nordic countries such early adopters of innovation?
Finn Oskarsson: Well, that’s a great question, Amanda, and to answer that, I need to look back a bit. I mean, if you look at the Nordic countries, we have around five million people in Norway, Finland, and Denmark. Sweden has 10 million. And Iceland, well, I’m not really going to count them because they have 365,000 or something. So they’re kind of out of the equation at the moment. But we’re not many. And the labor costs that we have are also quite high. So we’ve been, always been very cost focusing and cost conscious and being kind of aware that the customers need to be serviced. So therefore also that you see that in the early nineties, we had kind of the initial responses around customer centricity that we created our own customer databases, having a mutual captive customer database, serving the different policy admin systems for motor, home, homeowners, households, etc. So given these small populations, there’s always been the need to kind of get this customer overview and to sell more to each customer. And therefore they’ve been kind of bundling products and giving incentives to kind of combine all your policies within an insurance company. So the customer-centric thing has been going on for a very long time, and they’ve also, at the same time, been investing significantly into business intelligence solutions, which again gave more information, gives more history, gives more ability, a better ability to understand more about the customer, but also allowing for being proactive in terms of customers who had maybe three policies and they didn’t have the travel insurance policy. They could proactively start sending direct mails and getting that business, too. So, we also see that this amount of data that they have is now the gold mine for the future of AI implementations that we see, that they’re able to use all this data, historical data, and be proactive toward the customer. But coming back to kind of your initial question is the fourth wave of digitalization. I think also we can see that that during the early nineties, we had the first web pages providing general information. You might be able to kind of look through and see some some specific information about car insurance, but there wasn’t really any data up there. And the second wave, which we saw coming toward [the] year 2000, you could actually go in and look at your policies and see, see what you had and you would maybe get a quote as well. The third wave was when you got “why” pages where you could actually get a full overview of all your insurances that you had, but you could also then start asking for quotes and do amendments to your existing policies. Now, the fourth one is, is when you start combining all this data and all this information that we have into a dialogue, a dialogue-based solution with the customer, where the computer can actually propose and initiate a journey with the customer proposing the best next steps, and you should be looking into this or that. So we kept kind of this two-way dialogue between the customer and the insurance core system, if you like.
Amanda Ingram: So thank you for that. It’s fascinating. From a Nordics perspective, what do you think their success in the digital adoption has been? Is it about providing insights on lessons for the rest of the world? What do you think those lessons and insights might be?
Finn Oskarsson: Well, I think the Nordics, the success that the Nordics has within digitalization, I mean, is quite significant. When I’m meeting customers outside the Nordics, Southern Europe, the U.S., or other places, I see that they’re a very old school. I mean, they’re still taking payments with checks or credit cards, while in the Nordics, that’s that is very, very old. So I often say that the Nordics is the Silicon Valley of insurance. And there are many reasons for why we are there. And coming back to the initial question around customer-first, customer-centric, we also have a very strong infrastructure in terms of Internet access, mobile networks, and we also have very standard official and trusted electronic IDs, so that you can log onto various sites and they are trusted and they are secure. So it’s very easy to identify yourself as an individual when you’re doing your insurance or banking, or whatever it was on the net. It’s also, I think the Nordics has been so proactive and so innovative, because we have a high cost of labor. We’re very technology prepared, ready to test new things, and we’ve been early adopters. So I think the Nordics has been kind of getting used to technology and a new, way of utilizing it in the most optimal ways. And I think thirdly, the thing that also impresses me is the insurance industry in the Nordics have been able to look from the kind of the outside in, looking into the needs of the customer, looking in to adjust the customer journeys and to simplify the products and not asking too many questions that are in reality unnecessary, so that the you’re not kind of replicating the old back office screens in your policy admins systems, but you’re actually redoing them and putting them in a different, more natural order when you’re communicating with customers, which allows for a better customer experience, which then allows for customers to come back.
Amanda Ingram: Thank you, Finn, that’s fantastic context. So the Nordics has been well known for their efforts in innovation and sustainability. And, you know, the current hot topic of ESG. Have these efforts helped ease in any way the terms of greater acceptance of digitization and any other next-gen technologies? What’s your take on that?
Finn Oskarsson: I think the Nordics has been very preoccupied with the climate and being sustainable, and kind of doing the right things. We see a severe impact on climate changes in several places and the Nordics with flooding, rain, etc. So I think the Nordics has understood that we need to change, we need to change our behavior, but also how we do things and if you look at how we are moving into the claims area, where we’re starting to repair it and not kind of throw away and provide a new one. I think that’s really one of the areas where we see the biggest impacts of our sustainability thinking. Also, the fact I would say that the number of electric cars in Norway is significantly higher than any country in the Nordics, and that’s mainly driven by tax issues, but also [the] low cost of road tolls, etc., allowing the customer to kind of be incented to move in that direction.
Amanda Ingram: Thank you, Finn. Just on our next topic, among the Nordic countries, Finland, Norway, Sweden, Denmark and Iceland, is there one that stands out in terms of digitization? Is there a particular market that sets a real example for the world in terms of digitization initiatives?
Finn Oskarsson: I’d say that they’re quite similar, all of them. The level of optimization, digitalization is quite the same. Again, the infrastructure is quite advanced and mature, so that you will see that, I mean the way that the insurers interact between them is, is highly automated. We don’t see that anywhere else on the planet. For instance, if you go to your insurance company and you buy a new policy, then the existing company will take care of the cancellation, make sure that all these kinds of transactions are done automatically. You don’t need to do anything else. The same thing we see around claims regress handling, that’s also been automated between the companies through this advanced network. So I think, it’s quite similar, the whole, kind of the way the Nordic insurers think and that’s because, again, coming back to becoming a customer-centric organization, thinking about how we can simplify things for the customer.
Amanda Ingram: Thank you, Finn, those insights are fantastic. So we have time for just one last question. Are there additional factors that the Nordics will require or need to consider or even adopt to continue their competitive advantage in digitalization?
Finn Oskarsson: That’s an interesting question. Well, if you look back, I mean, the Nordics, they have been leading this, so that it’s kind of what the Nordics do, you will see many others will follow. And I think we will, we probably haven’t even thought of what’s coming up next. But one movement that we see is the moving to the cloud, not mainly for cost reasons, but more for regulatory compliance and security. We see the number of cyberattacks increasing also in our region. So security is becoming a very, very important part of their daily operations. Furthermore, I think, if anybody is preoccupied with GDPR data protection and access to data, I think the Nordics take those rules a lot more seriously than other parts of Southern Europe, for example. So the cloud is enabling a lot of that, those requirements need to be solved. I think also the fact that you see the car insurers are moving more and more into the insurance space. The large Nordic insurers typically have around 30% to 40% of their premium income coming from car motor insurance. And you see that those, that market changing and that dynamics are changing, so that the insurers will need to kind of move away from traditional 12-months policies into a, kind of a, pay as you use, pay as you rent, pay as things go wrong type of things and they are very actively, getting into the whole value chain of either owning a car or using a car, or either it’s on a monthly basis or an hourly basis, and that is a big challenge to these larger insurers to kind of adopt to these changes that are happening very, very fast.
Amanda Ingram: Thank you, Finn! This has been a fascinating conversation on the Nordics and how they’ve really caught the “fourth wave” of digitization due to strong governmental support, a highly educated population, and a culture of innovation, which has positioned these countries as leaders in the digital arena. So 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. Don’t forget to subscribe to the podcast. Thank you once again for listening. We’ve got more coming up, so stay tuned for our next episode on Sapiens Insurance 360.
