It’s all about the data. (But a few other things matter, too.)

How the right data strategy, approach and people fundamentally transform the finance function in insurance.

When it comes to the finance function and indeed broader business transformation in the insurance industry, conventional wisdom holds that it’s all about the data. Certainly, those of us who are accountants and actuaries believe that data is both the biggest challenge and biggest opportunity to genuine transformation.

After all, we’ve been pushing it around spreadsheets, systems and reports for years or, for some of us, decades. I’ve spent nearly 20 years trying to provide solutions to address operational challenges, improve reporting accuracy, and deliver more insightful analysis. Most times we encounter efficiency, technology and regulatory challenges that – let’s be honest – have just added to the problem on data. Even as technology has matured, large data programmes have struggled to deliver tangible benefits. But I believe a bigger issue is often the strategy and approach.

So, when we say, “finance transformation is all about the data,” we actually mean that the right data strategy, the right approach to adoption, and the right people (with the right skills) are also required. Yes, sourcing your data into “one place” is important. But if that’s all you do, you are unlikely to see much benefit. The real value comes from a combination of things –?probably the most important of which is the orchestration of that data (i.e., the provision and automation of data through your processes and teams).

The technology has moved on significantly even in the last couple of years. The hyperscalers’ data platforms and the associated ecosystems and tools provide new opportunities to build robust solutions and gain access to scarce data engineering talent (which most insurers don’t have enough of).

Consultants are often guilty of over-using the term transformation. With that caveat in mind, I believe the investment in data platforms and the enabling orchestration will be the most important operational investment you make because it enables –?yes – transformative outcomes. In just the last few years, I’ve seen clients realize genuine and significant benefits in terms of stronger controls, process acceleration and richer performance insights.

The really interesting aspect to these transformations is the degree to which it can fundamentally change the role of finance and the shape and skills required to support the new operating models and capabilities. Access to high quality data means finance teams can shift away from sourcing, processing, reconciliation, and production activities to higher value tasks that involve review, interpretation, engagement and collaboration. It also means an operational support capability trained with the new data and technology capabilities that can deliver more value to the business.

Data platform concept

In simple terms, your data platform should become the spine of your finance function. It can provide the infrastructure, tools and capabilities to provision information to the right processes and teams and act as the glue which binds business and technology capabilities. The real benefit, however, is the ability to ‘fuse’ the business and finance data together, enabling reconciliation from data sources and thus avoiding an ‘unreconcilable branch’ of finance data.?

Successful implementations leverage your organisation’s data capabilities and components with technology platforms that give you the ability to deploy tools to support interface management, security, data quality, analytics, modelling capabilities and the like. By combining these tools and applying them to core processes and applications, our clients have been able to realize significant benefits.

Data platforms also underpin the application landscape, which does mean a rethink in this space. Part of the historical challenge has been that we have over-complicated core applications (e.g., models, general ledgers) or built up a myriad of end-user computing solutions around them, in large part because we’ve lacked core data capabilities. ?

The huge benefit of the right data platform is that it simplifies the application landscape. The heavy lifting, data processing and provisioning is done on the data platform, so applications do only what they are designed to do (e.g. ?apply logic, run calculations). Therefore, applications become easier and cheaper to migrate and maintain. This is also how data platforms enable insurers to apply innovative automation and AI tooling to drive further operational improvement and performance insight.

Thanks to these modern data platforms and a proven approach, we’ve been able to deliver benefits in collaboration with clients and partners:

• Acceleration of core processes (e.g., financial close, reporting, FP&A) and improved (systemised) controls
• Ability to review financial data daily, thus improving visibility into financial performance, providing early insight and enabling finance teams to be more proactive in engaging with the business
• Systemised data flows reducing reconciliation issues and the need for manual intervention / data validation freeing up finance capability and capacity to re-focus
• Elimination of the majority of processing and reporting end-user computing solutions
• Simplified application architecture, de-risking the implementation of core applications (e.g., sub-ledgers, general ledgers, reserving tools and reporting)
• Increased ability to leverage automation tooling and AI in reporting and analytics ?

What have we learned?

I believe the lessons we’ve learned can help other insurers advance on their data journey:

Establish the right data strategy, based on enterprise views: It is all about the data. In reality, that means it’s all about ensuring the data technology and tooling do the work for us. Orchestration is fundamentally important. How you systemise and automate the flow of data through processes and technology from source to information determines how effectively you can generate and provision insights for internal and external stakeholders.

Data strategies demand an enterprise-wide perspective. Why? Because there is no such thing as just finance data. All of that data comes from other sources (e.g., external inputs, transactional systems). It’s vitally important to establish end-to-end views of all the data as data strategies are being formed and before determining the highest-priority solutions.

Create a strong data culture, with new thinking, behaviours and skills: Data quality is foundational. That value should be reflected in the culture through appropriate and visible C-level sponsorship emphasising its importance. Culture is an important factor because the transformation requires a change in behaviour and mindset.

As accountants and actuaries, we’ve long mistrusted our data (in some cases for good reason). Access to high quality data means a significant shift in our roles, from a position of being sceptical of data and process to having confidence. Often in these situations, people are tempted to revert to old ways of doing things, such as manually checking data flows and controls that are now systemised and automated. A combination of continued sponsorship and communication around the new capabilities can help counter those habits. A technical solution that provides full transparency on data movements, progress and validation will build further trust in the new solution and support new ways of working.

In some cases, insurers will need new people with new skills. Nearly all carriers will need to upskill and/or retrain existing resources to make the most of better tools and better data. Creative sourcing strategies can help bridge the talent gap, particularly for the most in-demand skills.

Build a very different (and patient) delivery approach: Successful migrations take time. Don’t try and put every piece of data in one place first. Establish the end-to-end platform and capabilities, then begin to migrate and adopt the platform for key data sets and processes. Accepting that you can’t solve your data overnight or move everything at once, you can use low-code tools to help plug the gap (e.g., as a pre-migration step to help clean up and restructure your data).

Development teams also need to recognize that finance data can be both regulatory and temporal in nature and thus requires the appropriate governance and controls around solution deployment and the running of these processes in a business-as-usual context.

The agile ethos and approach to implementation of data solutions helps drive rapid progress and helps promote collaboration between data, technology, business, operational, finance, risk and actuarial teams, all of which must be involved to produce optimal results and outcomes.

However, agile can present challenges for areas like finance given these requirements. It is vital therefore to build-in communication, discipline and control to development plans and the business-as-usual data approach to maintain control and reduce close process issues (for example).

Conclusion

The technology to really transform finance is now readily available and continues to improve and develop at pace. It’s now easier to deploy and it is delivering genuinely transformational outcomes. But the right approach is critically important, as are the right people and organisational mindset. These factors can be the difference between impactful results and expensive non-delivery.

So, yes, transformation is all about the data, provided you have the right strategy, approach and people to put the data to work for the organisation and not the other way round.

This post is a the first in a series of blogs that will deep dive into different areas of the organisation and the opportunities we and our clients are seeing to create the finance function of the future.?

I would love to hear your views on the perspectives I have shared. Please share your thoughts, insights and experiences in the comments section.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms.