Nikolaus: Hi everyone, welcome back to another episode of Reinventing Finance. Today I have the great pleasure of having Martin with me on my virtual abode. Martin, welcome, how are you today?

Martin: I'm very good today, thank you, and thank you for having me.

Nikolaus: Of course. Martin, would you mind introducing yourself and your company to those of our viewers and listeners who don't know you yet?

Martin: Yes, with pleasure. So my name is Martin Schachinger, I'm co-founder and managing director of Finnoconsult, which is a consulting company to support banks and insurance companies to become more digital, to serve their customers in a better way. If you would have asked me a month ago, I would also say that I'm the owner of the company, but now I'm part of AOE Group, which is a German mostly development group, and we believe it's a very good fit because we in Finnoconsult do most of the consulting part, and now we have a very strong partner for development.

Nikolaus: Awesome. So banks, insurance companies, digital, digital transformation, it's a wide field. Do you have specific elements that you focus on most, and what type of problems do you tend to solve for your customers?

Martin: We mostly focus on the front end part and on retail customers. So the main question is how do banks and insurance companies serve their retail clients? How is the digital experience, and can we improve it? Can we offer better digital services as banks and insurance companies to our customers? That's the main idea and our main focus. We are not so much focused on back office process management. We are not business process analysts, something like that. We really focus on the front end of the experience of regular retail customers.

Nikolaus: And how do you go on about this? I appreciated that every client is somewhat different, but is there, if you had to kind of walk us through an exemplary kind of process or project so we get a little bit more flesh on the bone here?

Martin: Yeah. So that's actually a good point to introduce Finnoscore because for the last 10 years for banks and the last four years for insurance companies, we have the Finnoscore. The Finnoscore is our evaluation method to see from an outside perspective how digital and insurance company or bank appears to the customer. What we cannot do there is really go and become customers because we do it for 150 insurances and 250 banks. So we already spend lots of effort in creating the Finnoscore, but we really look at it from a pure outside perspective of the non-customer, what the non-customer can see online and how digital the experience is for the non-customer. So that's it, and yes - you have a question.

Nikolaus: And that's super helpful. So for example, you know, we wouldn't know exactly how the purchase workflow works. We wouldn't really know how a customer portal works.

So it's, and I think that's a clear, you know, how does a non-customer can interact with the insurer or bank? What are the kinds of key dimensions that you look at when calculating your score?

Martin: The Finnoscore is a little bit built alongside the AIDA model. So attention, interest, desire, and action, which is basically the buying process of the customer. So we look at, the customer will first need to get attention for this. We look a little bit at the online marketing performance of the company that we analyse. But then we move on to how the bank or the insurance company introduces itself. Can I see a clear, unique selling proposition? Is it obvious why I, as a new customer or a new potential customer should become customer of this institution? Then see how easy it is to onboard. How the digital on boarding is process or is it not digital? Do I have to go to a person, do I have to leave my house, which in our view is not good because as I said, we are talking all about the digital experience. So if you have to leave your house to become a customer, we would give this company negative marks on this topic. And then also looking when you are a customer, the little bit, the retention part, what services do I receive when I'm a customer, how I'm rewarded for staying a loyal customer. This whole chain from first contact to remaining a loyal customer in the digital world, that's what we're looking at.

Nikolaus: And how do you do the weighting to kind of get to a score? As I would imagine that it's probably easier to agree on aspects to look at, but how relevant each aspect is might garner a little bit more discussion potentially with your customers as potentially as well. But is there like are there some true heavyweights, you know, in the weighting or is it more distributed? And if so, why?

Martin: There are heavyweights in the evaluation. So what I didn't mention yet is we have 12 dimensions in the Finnoscore for banks, 11 for insurance companies. And obviously not all 12 or 11 have the same weight. To us, the whole online experience, so if the website has a very high weight, the presentation of why should I become a customer have a very high weight. And what we don't give such a high weight is things like how you present your environmental or social responsibility. That's not it's not the reason is not that we think that's not important, but we can only view from outside. So in the Finnoscore, if you put lots of lies about your environmental responsibility on your website, you will get a good mark because we are not there. There are special companies to evaluate how environmentally friendly you really are. We cannot evaluate that. We can only evaluate how you present yourself on the website. And because of this, we give, for instance, this category a lower weight than really how easy it is to become a customer online. And that's the main focus of what we are looking at.

Nikolaus: Out of just a kind of random thought, potentially, I would imagine that we're kind of looking at traditional web, mobile fast funnels on websites, et cetera. How do you perceive the advent of potentially generative AI in the customer engagement and how that might change these things? Is that something you've you must have discussed it, but just kind of getting your feeling, you know, appreciative that it's massively developing, you know, whatever we think today might change in two weeks’ time absolutely. So just a snapshot view about someone who looks at the front end of insurance and banks for a living.

Martin: So if you would have asked me some years ago, I would have said more complex products. It doesn't matter if it's in the bank, the house loan or something like this, or if it's in the insurance, a long lasting product like your health insurance. You probably need an advisor to help you, because in the past without AI, you could just present basic products, ask some simple questions and then try to find the correct product for the customer. Now, with the insurance distribution directive, you are always in this mix. Do I give it to really give advice online or do I just suggest three options to the customer and the customer has to choose themselves because I don't want to completely fulfil the IDD? That's the main issue. And with AI, what you can do now is completely replace the physical advisor with a real advisory experience online. Something that was not possible without AI, because if I talk to you and you are my insurance advisor, I will have lots of questions. You will answer them in some kind of online, static online process, which is still 99 percent of online sales of insurance companies. You will just ask predefined questions and there might be a question mark below where I can start a chat with someone to help me. If you now introduce AI, it's a completely different bargain because then you can really ask, like your physical advisor, you ask the digital AI advisor like in a real advisory talk. And that's the big difference. And that's where you can also better fulfil the IDD. There might be still some legal problems. Are you liable for the advice the AI gave to your customers? Probably yes. But in general, it's a big step forward. And that's something we don't really see happening at the moment. But we know that some insurance companies are starting to think about this real online advisory experience.

Nikolaus: You pre-empted a next question where you've said, is there anyone, worth checking out that you're aware of to say, this is something that's live. So but from your, if I'm not over-interpreting it, you're not aware of a live AI sales agent that one can log on and just kind of play around with.

Martin: I am not aware of any live experience that's really like you say, there's no more difference to the contact with my physical advisor. It's really that I don't know. I know that there's at least one insurance which I cannot name because we are doing a project with them exactly to discuss how they can achieve this online advisory experience. But that's obviously under an NDA. So I cannot say with whom we are talking there.

Nikolaus: Awesome and understood. And so I guess just a big shout out here, anyone listening to this, if there's anything that and I think that I like what Martin said, that a non-customer can check out against and play around with. That is not just a static chatbot, which we've all used with some level of frustration, I guess, just waiting to get towards the actual customer service agent, at least in my view. Please let us know. It's a fast developing field and I think we all agree on in principle about what could and what shouldn't work. But I think it would be interesting to see in practice.

Martin: And maybe if I can add something. So it's also really a legal question. I'm definitely not a lawyer, so I cannot say anything definite about legal issues. But all the insurance companies that we talk to, they are really afraid of the IDD. And I believe the main question at least the legal department will have is really when the digital AI gives me advice, is am I liable or not for what the AI advised me? That's, I believe, will be a huge issue because how can you, there are hallucinations still in the AI, if you come to topics which are actually not so common and ask the ChatGPT some questions, you cannot be sure that it's correct what's answered. And then how can you at the moment be sure that the advice given to customers by an unchecked AI is the correct advice? So to me, it will take at least two or three more years till we are there that also legal departments can feel safe with what AI advises you.

Nikolaus: And it's a big and very relevant question. Some part of me always kind of thinks, the standard of proof to the new is always higher than the standard of proof to the existing, because let's face it, I mean, we won't call it hallucinations, but there's miss selling in your tied agents and broker within IDD. It might just be less obvious. It might not be as easily found out. And it might not go to such a scale because there's kind of limit to how much miss selling an individual can kind of do. But sometimes feel that, the new just has to be better than the existing one, not perfect, is sometimes what I'm thinking. But no, certainly legal questions, very, very big topic. And again, that is why it would be interesting to how the first movers try to grapple with it, because the truth is also unless it's done and then tested in the courts, no one, you know, I've heard a saying at high seal in the courts, you know, you're in God's hand. So, you know, whatever professor of law or some big law firm is going to write down, you know, at the end of the day, you know, who knows? But anyway, understood. If we're kind of moving, you must have seen so many, so many customer journeys, et cetera. And again, we appreciate that, you know, everything is contextual. But are there some kind of top levers or measures or even if it's easier kind of mistakes that you've seen as you kind of to, you know, maybe improve your Finnoscore, but ultimately to improve, you know, your sales performance? That's ultimately what, you know, quite frankly, I don't think anyone specifically cares about the Finnoscore itself. It's about improving sales. Right. And it's a good tool to kind of aggregate and hold a conversation. So what top levers or top mistakes kind of come to mind if you were to aggregate and simplify your experience in this area?

Martin: The main mistake is that you mostly think about your internal things and not about the customer. That's that might be a penalty to say it, but that's actually what's still happening.

Nikolaus: You have an example.

Martin: Yeah, it starts with it's also a high level example, but to start with the initial point that especially insurance companies that on their physical sales force is still very powerful and very strong. So we meet a lot of insurance companies that actually don't dare to sell too much online because they are extremely afraid of their physical sales force. I met the digital leader of an insurance company who told me that one of her main jobs was to be shouted at from physical sales people. So that's number one. They are really afraid. Then what we already mentioned, the legal things, the legal department are also very strong. And then you come up with experiences that probably put you on the safe side on legal topics, but probably are not the best experience for the customer. To give you a simple example, the IDD allows to basically get out of the whole advisory thing if the customer says, I don't want to be to have real advisory. So what you can do and what some insurance companies are doing, you start the whole process, funnelling the customer for some questions, then suggesting this product bundle or this product would be the best insurance solution for you. And then you end up with a sentence, I acknowledge that this was not advice and I can contact an advisor if I want to have additional advice. And I click on this, I can actually not close, not buy the insurance online. And everyone who reads this sentence will basically get afraid. What does this mean? Does this mean that's not the best solution for me? Then we probably stop the online sales process and then still go to the physical advisor. And those are the things where more brave decisions and more customer oriented decisions for a customer who really wants a digital experience would be necessary.

Nikolaus: Do you have experience on A-B testing that? Have you ever done a project where one said, because I think we all agree, it's less customers, it'll prevent some customers, but we don't really know how many customers until you kind of A-B test it with a control group. Have you ever done a project on that to determine how big of a business lever that would be?

Martin: What we did, we did not do A-B testing for this specific topic. We do A-B testing for frontends, but it's actually quite difficult to do A-B testing with real customers, with banks or insurance companies, especially for those topics where you're not sure if it's fully legal to do it or not. If you're in online sales, you just put the red button and the blue button and you see which is clicked more often and you do it with live customers, that's much more difficult with banks and insurance companies, also because most of the IT systems are actually so complicated that they couldn't even manage a real life A-B test with real customers in the production environment. So that gets difficult. But what I can say with a bank where we did the online sales process for a bank, we always analyse the funnel at what step, how many people leave the process without going to buy the product in the end. And there for banks, you have this famous US relations question where you are asked, are you a US citizen or a resident in the US and it's always formulated in a way that no one understands it because some lawyers write the text and there we lost 30% of the customer who reached this point did not go on because they were confused. That's not an A test but it was really a massive loss of customers just because of this one very legal sounding and not very intelligible question.

Nikolaus: And it's unlikely that they were all US citizens.

Martin: Yes, definitely.

Nikolaus: I really like the second point. I think the first point is a result for not investing appropriately in digital channels as they could because you have channel conflict. I actually understand the rationale as anyone who has, it's always the question if you don't have anything to lose, and you go for risk. If you have something to lose, you need to evaluate. And it's at least in most developed economies; insurance is still very strongly intermediated. And so there I fully understand the situation that they need to balance those power struggles. Are there any kind of more specific... within the customer journey where you say, guys, here's three things, here's some quick wins that you've seen where you just are flabbergasted why these aren't implemented literally everywhere. And I can also give you some examples if that's helpful. So I don't know. For example, when I spoke to my UK colleagues, every customer journey has a safe for later. Of course, you can start a customer journey and re-enter at any point in time. This is not the case on... I don't have the data for it, right? But there's still customers who do not have a safe for later or exit pop-ups or... I'm just kind of going through some e-commerce hacks, right? Or abandoned cars or bandwagon effect, just kind of not even restructuring the product. Because you're right, the digital, the channel, the person responsible for the channel might not have an impact on the type of product that they're getting, right? If they're not strong enough for political reasons, but they can kind of rework the engagement. For example, we believe that we've looked at some things about putting the email address really early on so you can retarget because it's not the same getting through insurance funnel is not the same as getting an e-book. And we found on the sales side, it actually had very little impact to none. We just got more emails to retarget. Kind of those tactics. Do you have things like that?

Martin: A few examples, just again following the customer, the process of becoming a customer. Actually, the first thing that you very rarely really find on webpages, it doesn't matter if it's bank or insurance companies, it's actually the USP. Why should I become customer of insurance A and not insurance B?

Nikolaus: Because there isn’t one. Maybe that's the reason. But I get it. What's the selling proposition?

Martin: Why go there and not somewhere else? If you look at new insurances, sure, take like Lemonade. I mean, I know that Lemonade is not doing so well from a commercial perspective because also customers are very conservative, but how they present themselves, we have this AI to evaluate most of the damage reports and we can give you money quite fast. That's a clear USP that they show. For the others, it's really in many cases, in most cases, not really clear why I should go to A and not to B. And if I cannot get this across, then you actually end up with a pure price decision and don't present what other advantages you have. So number one to me would really present the unique selling proposition. And then the second thing, but also lots of insurances don't have this classic call to action. There should be a call to action that's always visible. I like this insurance. I want to become a customer. And some put the call to action somewhere hidden below and fill most of the webpage with some useless information about what they do, what their board members did last weekend or whatever. It's not really useful. And it hides actually the main focus of, in my mind, of the webpage should be number one, get new customers and number two, service your customers, especially if they want to report damages. That's the main focus of this website and that's not there. And the main point is if you want to sell something, this call to action, yes, I like it. I want to become a customer, should be always present and not be hidden somewhere on page five or something like that.Then next point, because I already mentioned the price, when we discussed it's easier for banks. The general account costs this much per month for nothing, easy to present. Most insurances that we talk to tell us we cannot tell the customer price. It's impossible because it depends on so many factors. So I can maybe only put a firm price there, but not specific. The problem that's true, but the problem with this is many people now go to comparison platforms and there they will find the price. And if this price is completely stupid and not usable, it's still a price that the customer will take into consideration for their buying decision. So you cannot shy away from giving the customer some way of growth. Yes.

Nikolaus: So I think that's fair, but I think the comparison also on a price comparison website, you need to, you only get the price after you've provided lots of information. And are you saying that the problem is that insurers are not making their offline products online or is it that it takes a bunch of questions to show an online price?

Martin: It takes a bunch of questions to show an online price. That's the argument they have. But then you just have to make assumptions. I mean, it can end up with some stupid examples. There are two German car insurance companies that both have a statistic with the price comparison of their insurance against the other insurers. And if you look at them, I will not name the names now, but if you look at them, you'll see an almost identical graphic. The only thing is they are always the cheapest and the other one is always also on the graphic and is much more expensive because it obviously depends on how you configure the product to come up with the real price. But just then using this as an argument of not telling customers anything about prices without forcing them to answer five to 10 questions about exactly what they want is in my mind, not a solution because in the comparison platforms, they also don't do it. You will see a price after answering the questions. No, no. In some of the comparison platforms, you don't even answer questions. You just say, I want a home insurance and it immediately tells you for 20 different insurance companies, the price based on some basic assumptions they make.

Nikolaus: Okay. So they have some kind of like pre-calculators, etc. that you can then configure and that would be a solution, right? That you try with kind of pre-populating certain data based on best educated guesses to kind of get the customer faster to the price. And if price comparison websites who ultimately use the same configuration can do it, then that is a good place to get inspired.

Martin: And then to the last point, once you are a customer, then you should have some advantages of being a customer, especially, I mean, for life insurance doesn't matter too much because you cannot change anyway after you did it. But for things like car, household, whatever, there should be clear why should I stay loyal to this insurance company and not go somewhere else that's maybe cheaper. And if there are no other advantages from being a loyal customer, maybe having more products with one company, that's things that should be really considered and clearly presented to customers. It's worth staying.

Nikolaus: Do you have some examples that you think work?

Martin: Yeah, I mean, I try not to give too many examples, but for instance, with Allianz, they have really a very, very nice loyalty program with tiers and everything where you can really see it's a good thing that I'm a customer and I'm rewarded for it.

Nikolaus: OK, so I was also, you know, and I appreciate you don't want to call up one insurer for another, but, you know, there's things like no claims bonuses or there's things like I'm on a telematics tariff with a hook and I'm pretty sure that if I leave, I'm a really boring driver, I have 25 or 30 percent rebate that I would lose that. I think there's bundling discounts sometimes, but I think the point is it needs to be kind of potentially clearer because I also am with other insurers where I don't really know what the benefit would be of adding more products. I don't think that's. Yeah, I think there is obviously some. And again, this is where there are obviously some legal aspects around cross subsidizing different products. Right. But I think where there is a will, there's a way. And, you know, you can potentially cross fund things from marketing, et cetera. So I think that's just there's always a reason not to do something. And insurance, it's plentiful. But, you know, I don't think you need to be a genius to figure some of these things out and the beautiful thing is what we're talking about, the front end elements is you can just get inspired because it's in the open. Right. We're not even you know, you just need to have a look.

Martin: And it's really that it's also the power of the physical sales force because we, for instance, we talk to one insurance companies, they have actually lots of benefits like entry tickets for a concert, something like this, but they just give it to the advisors and the advisors decide whom to give it to. But if you come from the digital channel, you actually have no idea that this exists. It would be nice to know or at least tell them we have free tickets. And if you're a very good customer, you can get one. That's something that you don't learn from this insurance company. If you go online, they just don't tell it and for customers who are really coming from a digital side, it would be really important to know about it because that's part of their buying or not buying decision.

Nikolaus: Understood. And if we were to kind of zoom out a little bit and say, a good friend of yours was a CEO of an insurance company. What advice would you give him or her and also provide? Because, you've seen more things than what you offer as a project or as a consultant, you know, you've so just as a friend. So if it's not, you know, if the first advice is hire us or do on the customer journey, et cetera, if there's if there's more meta recommendations that you see, feel free to just kind of give your what does Martin Schachinger think? You know, what would your personal advice be to an insurance CEO? And if you need to contextualize it to make it relevant, that's not your bank, is the same. Please do so.

Martin: I really think I covered this and it's very high level, but it's forget all your internal shit to forget what the legal people say. Forget the fight between physical advisors and digital sales. Just do what the customers want. Just try to block all those internal power struggles and really focus on how to achieve the best digital experience for customers. And I give lots of examples how to from a funded perspective, how to do it. But that's the important thing. They are so and that's basically typically for any company above maybe a hundred employees, they are more concerned about their own infighting than they are really concerned about serving customers. Might be too cynical, but I unfortunately I still see it with a lots with lots of customers that internal politics comes first and customer often comes second.

Nikolaus: I think that's a very clear statement. And I, you know, where can I sign? You know, I wholeheartedly agree.

Martin: I actually didn't answer your first question because you asked what's the our process in our projects? Yep. And I did with the Finnoscore, but actually I didn't present the full process.

Nikolaus: So please do. Yes.

Martin: So basically, as I introduced, we have the Finnoscore there we evaluate an institution and that's also our sales tool, how to get in contact with banks and insurance companies. We do lots of press work also. So sometimes they even come to us and not read to them and ask us, can you tell us more? And then the next step is actually that we do a workshop together with them where we show them how they are doing, what we would criticize about what they are doing and also show them best practice examples. As you just mentioned, it's all online. You can see it. But obviously no one will look at 150 insurance companies besides us and really see how they are doing. So we show it with best practice examples. That's the first step. The second step is then to identify together with them what are the things they could do better, especially quick wins. If you're extremely bad in one category, there might be a quick win where you can immediately make a huge jump forward. And then ideally we support the companies also in implementing those measures that we identify together that could be improved. That's the main thing. And then since we are now also part of development, also the software development and implementation of this solution would be also something we really love to do with our customers.

Nikolaus: Perfect. Martin, before we wrap up, is there anything we didn't discuss but should?

Martin: I believe we were very comprehensive. I wanted to mention because it's also for people who look at the video, there's also besides Finnoconsult actually Enno Studio on my background. So Finnoconsult, what we do in Finnoconsult is the advisory part. But several years ago, together with a German partner, we founded Enno Studio, who takes care of all the online design user experience, customer experience, and also customer testing and marketing aspects of the whole topic. In Finnoconsult, we concentrate more on the technical and business side. And in Enno Studio, we concentrate on all the customer experience design, customer wishes. That I should mention that we are not only Finnoconsult; we are a group of companies that work together for a long time.

Nikolaus: Perfect. Martin, thank you very much for your time and for your insights. Anyone kind of looking to get a sense of where they stand with their digital front-end journey, reach out to Martin's team. I would guess happy to walk you through their process and their experience. And I think to anyone, I think this is one of the key messages; even though it's an old message, but the best messages usually are, focus on your customer.

Martin: Thank you very much. And just to mention that Finnoscore is actually also live on our website. So you can, if you want to see where you stand and also compare against your country or other countries, you can actually go on our website and you'll see all the numbers there.

Nikolaus: Perfect. We'll make sure to add that into the show notes. And Martin, thank you so much for your time. Have a lovely day.

Martin: Thank you. Bye.