Harnessing machine learning and cloud technologies to outpace the competition
By Stephen O’Hearn, Global Insurance Leader at PwC
Core systems transformation and shifting operations to the cloud are already helping to drive down costs and speed up data processing. What if you could go further by harnessing technology to gain insights that haven’t been available before and untap whole new revenue streams?
In the data field, the biggest opportunity lies in machine learning, which is a form of artificial intelligence (AI) that involves pattern recognition. We at PwC explore the unfolding potential in Machine learning in the cloud: A sound policy for P&C insurers.
Machine learning in the cloud would enable your business to find new (and sometimes unexpected) patterns or trends that could help you to sharpen risk prediction and prevention. You can bring together and analyse data from a variety of sources, such as email, social media and browsing patterns on websites, to generate a comprehensive risk profile of individual customers.
Faster, cheaper and more accurate
These capabilities are paving the way for the development of new products in areas such as usage-based auto insurance, which requires rapid, low-cost analysis of a wealth of changing sensor data and other factors to determine pricing. They can also enhance customer service. In a call centre, for example, you can use the technology to analyse a customer’s data (including information from past calls to tone of voice) and automatically route the person to the appropriate staff member. This can eliminate the customer’s frustration at repeatedly pressing buttons to find a person who can help. It can help pick out customers who are at risk of leaving, enabling targeted interventions.
The big advantage of machine learning in the cloud over conventional generalised linear modelling (GLM) techniques is that it’s faster, more accurate and able to deal with a greater variety of data sets. Working on the cloud also means that you only pay for the analytics you need, which means your cost efficiently scale up or down as demand dictates.
Cost benefits
The necessary investments may seem expensive now, but we anticipate that AI costs will continue to decline. The investment can also be offset by efficiency savings and a potential boost in revenue.
Some of you may be wary of moving business over the cloud because of concerns about cybersecurity or overreliance on a single provider. These are complex issues and I can’t do full justice to them here. However, the major fault lines in security tend to lie in gaps in access controls and governance rather than where data sits. To avoid reliance risks, you can deploy multiple vendors. Technical solutions are also making it easier to shift work quickly across platforms.
Five keys to success
How then can your business make the most of these opportunities. Our report highlights five keys to success:
1/ Understand what you are working with
Assess the status of your core systems transformation project to identify your IT infrastructure and data needs. Your current technology may not be enough to handle the processing load.
2/ Consider a data audit
A data audit can help you work out whether you need to augment your existing data in order to leverage machine learning effectively. Machine learning can provide such thorough and comprehensive analysis, it’s possible the technology may need access to additional data sets to provide robust results.
3/ Think about what you want
Consider what areas you want the machine learning technology to focus on. It’s tempting to use it in every area, but you may gain better results through selective piloting.
4/ Go to the cloud
With the results of the assessment in hand, you can develop a strategy for implementing machine learning in the cloud. If you haven’t yet embarked on a core transformation project, consider embracing machine learning and cloud computing from the start.
5/ Find your competitive edge
The differentiating potential of these capabilities stretches from product flexibility to the quality of service. The trick is to find those areas in your market that machine learning would help you stand out as a leader.
Business boost
So, leveraging machine learning and cloud computing could help you to make more accurate predictions and more informed data-driven decisions. They could also open up market opportunities that you might otherwise have missed. And all this at less cost and greater speed than conventional analytics.
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