Tag Archives: customer experience

Biometrics and Fraud Prevention: Seeing Eye to Eye

As more consumers opt for the flexibility of serving themselves, it has become essential for businesses to deploy strong systems to authenticate identity. The challenge is how to reduce fraud without frustrating consumers or compromising the customer experience.

Biometric technology has been seen increasingly as a solution in industries such as financial services, but is there a useful place in insurance? As technology becomes more convenient –and more secure — many are saying yes.

What’s What in Biometrics

By identifying individuals through their unique physiological or behavioral patterns, biometrics offers a higher level of security, ensuring that only authorized persons have access to sensitive data. Physiological biometrics include fingerprint, face, iris and hand geometry recognition. Behavioral biometrics identify signature and voice verification, including keystroke kinetics that identify a person’s typing habits.

As consumer-centric channels such as mobile and online applications continue to expand, so will the risk of fraud. And while many industries, including insurance, continue to deploy new technologies to stave off attacks, the reality is that the tools and methods by which professional fraudsters operate are becoming increasingly sophisticated.

“While insurers have applied some preventive measures against fraud, the industry as a whole needs to catch up,” says Steve Cook, director of business development, Facebanx. “They must be forward-thinking and recognize the benefits of biometric technology and how it can help in preventing fraudulent activities.”

Reducing Claim Fraud and Protecting Data

One area where biometrics has begun to take hold is healthcare insurance. A study by the Ponemon Institute found nearly 1.5 million Americans to be victims of medical identity theft. Healthcare fraud is estimated to cost between $70 billion and $255 billion a year, accounting for as much as 10% of total U.S. healthcare costs.

Many insurers are using biometrics to help reduce billing fraud by eliminating the sharing of medical insurance cards between patients, or by making it more difficult for a person to assume another’s identity. For example, as an alternative to paper insurance cards, a biometric iris scan can immediately transport proof of a patient’s physical presence at a healthcare facility.

Biometric technology is also assisting healthcare insurers with compliance and data integrity standards — in particular with those set by the Health Insurance Portability and Accountability Act (HIPAA). For example, in addition to adhering to requirements for automatic logoff and user identification, insurers must implement additional safeguards that include PINs, passwords and some method of biometrics.

Fraud Capabilities in Property and Casualty

According to a report by Aite Group, the war against fraud in property and casualty insurance is also escalating. The group estimates that claim fraud in the U.S. P&C industry alone cost carriers $64 billion in 2012 and will reach $80 billion by 2015. Customer contact centers have been hit particularly hard. While the focus on protecting consumer data has primarily centered on online channels, fraudsters are now targeting the phone channel, as well. Leveraging information obtained through social media networks, thieves are manipulating call center representatives and gathering customer information. 

For this reason, biometrics are being deployed. Representatives can cross-reference incoming calls against a watch list of known fraudsters, identifying unique voice prints. Advanced biometric techniques can also identify fraud patterns based on speech analytics, talk patterns and various “red flag” interactions.

Summary

The insurance industry is just beginning to scratch the surface when it comes to identifying areas of fraud management to which biometric science can be applied. 

“Insurance companies [that] are first to adopt this kind of technology will push the fraudsters over to the competition, because fraudsters don’t want their face or voice on a database that they can’t control,” Cook says.

Making the switch to biometric security measures can mean a substantial investment if done on a large scale. Even so, with the proliferation of online channels, consumer conveniences and ever-shifting tactics of fraudsters, deploying some degree of biometric technology will become a competitive necessity. And, as long as the insurance industry continues to expand consumer services because of e-commerce and m-commerce, no doubt new applications of biometrics will come about.

Lots of Energy Going Into Improving the Customer Experience

Over the last two years, we have witnessed executive appointments and many strategy projects related to improving the customer and agent experience. It seems like we’ve all been bombarded by banner ads, e-mail promotions, webinars and conference speeches on this topic (and I speak from personal experience, having participated in a number of these). All of this energy and activity will translate into more major initiatives and spending in 2014. The question is, “What will these initiatives look like, and who will be in the driver’s seat?”

There will still be many individual projects that will contribute to enhancing the customer experience. Insurers will roll out new mobile apps, customize customer documents, upgrade portals and provide new customer self-service options. All of these types of capabilities are important elements of the customer experience. 

But for insurers that are thinking ahead, there will be two overarching initiatives that set the stage for a differentiating customer experience.

One of these initiatives will be driven by business leaders – planning for customer interactions through the whole customer journey. In 2014, more insurers will map out their communications with customers and agents across the enterprise. This type of initiative is increasingly being driven by the CMO with the intent of improving brand consistency and customer satisfaction.

The second initiative is often driven by the CIO, and it is aimed at establishing a unified digital platform that integrates all types of digital communications with customers and agents – mobile, portals, the public web site, social media and collaboration technologies.

I expect to observe many different variations of these initiatives in 2014. Insurers that are able to combine these efforts will make the most progress in improving the customer experience and having an important impact on company results. The ideal scenario will be to establish a unified digital platform to support all digital customer interactions in a common, efficient manner and then optimize each interaction with an understanding of the overall customer journey. Individual projects for mobile, collaboration, portals or other technologies will be able to leverage the platform and produce consistent, personalized communications.

Dare to Be Different: It's the Only Approach That Works

In today’s dog-eat-dog business environment, it is essential that you develop a strategy to stand out in a crowded marketplace… to separate yourself from your competition.  Simply put, to be different! 

Theodore Levitt, the renowned economist, professor at Harvard Business School and editor of The Harvard Business Review, had the following to say in his 1991 book, Thinking About Management:

“Differentiation is one of the most important strategic and tactical activities in which individuals and companies must constantly engage.  It is not discretionary.  And, everything can be differentiated, even so-called commodities such as cement, copper, wheat, money, air cargo and insurance.” 

Price is the enemy of differentiation.  By definition, being different is worth something.  Consumers are willing to pay a premium, redefine the buyer/seller relationship, erect barriers to the seller’s competitors and establish the seller as a trusted adviser when a differentiated platform offers perceived value in the marketplace.

Research on Brand Differentiation

Even with all of the attention paid to branding these days, more and more companies are being commoditized.  In other words, fewer and fewer are able to differentiate themselves through the eyes of the customer.  Commoditization occurs when the focus of the consumer’s decision is on the offering rather than the quantifiable difference that you bring to the business.  You cannot see commoditization.  However, it can be felt with a negative impact on your confidence, reputation, time, money and relationships.  Brand Keys, a loyalty and engagement research consultancy, analyzed 1,847 products and services in 75 categories via its Customer Loyalty Engagement Index.  It found that only 21% of all the products and services examined had any points of differentiation that were meaningful to consumers.    

So what is missing?  A differentiated value proposition supported by a unique consumer experience.

Differentiated Value Proposition

Value proposition is the reason for your professional existence.  It describes how you create value for others.  It makes you stand out in a crowded marketplace.  Without a compelling value proposition, you are ordinary and disposable – a commodity.  With a distinguished value proposition, you are unique and indispensable. 

Your unique value proposition must summarize the reason why a potential customer should buy your particular product or service, how it exceeds that of your competition and why it is worthy of the price they must pay.  The ideal value proposition is concise and appeals to the customer’s strongest decision-making drivers.  It is an irresistible offer, an invitation that is so compelling and attractive that the customer would be out of his or her mind to refuse your offer. 

Customer Experience Journey

What is the Customer Experience Journey?  It is the sum of all experiences that the customer has with you and your organization … the actions and results that make the customer feel important, understood, heard and respected.  Each and every customer interaction molds and shapes the journey.  While you may take great pride in the “features and benefits” of your offerings, it is important that you assess the degree to which you are stimulating the emotions of those whom you serve.  To accomplish this, you must deeply engage your customer’s emotions in addition to, and even above, their intellect.  You will hit roadblocks unless you are able to form an emotional connection that transcends price and product. 

Emotional connections are essential components of the journey.  Research indicates that more than 50% of the customer experience is subconscious, or how a customer feels.  The self-conscious brain is a fertile garden in which to sow positive seeds.  The mind is highly selective, processing millions of pieces of information each second.  Whether you realize it or not, you are touching the subconscious in each step of the Customer Experience Journey. 

In designing and delivering a Customer Experience Journey, it is important that you have a plan to engage the consumer.  Emotional engagement is the foundation of the customer experience.  People rationalize personal decisions first but make decisions based on feelings.  A great experience transcends the rational attributes of a product or service (i.e., price). 

Cecil Beaton, the English Academy Award-winning costume designer, said: “Be daring, be different, be impractical, be anything that will assert integrity of purpose, emotion and imaginative vision against play-it-safers, the creatures of the commonplace, the slaves of ordinary.”

Dare to be different?  You bet!