Adoption of Virtual Banks and Insurers

Adoption of Virtual Banks and Insurers 13 Executive Summary Trust and security concerns The public is very concerned about data privacy. Unless this concern is alleviated, the potential for delivering novel financial products and services that use data from different sources enabled by OpenAPI cannot be realized. It is also crucial that virtual banks and insurers instigate and maintain a high level of cybersecurity and data security to improve public confidence. Moreover, the public must receive assurance of these efforts, based on recommendations from and assistance of relevant regulators, authorities, and independent consultants. Society-wide infrastructure for identity authentication By leveraging the new digital identification infrastructure (iAM Smart Account), incumbent and virtual entries could raise the level of convenience and efficiency of their service delivery. For this to be successful, the public must be educated on the purpose, use scenarios, and security measures accompanying any society-wide authentication infrastructure. Challenges facing virtual banks and insurers A lack of trust is a major factor that inhibits customer adoption of virtual banks and insurers. It will take time for these new entries to build a reputable brand in the market. Participating in social and charitable events would be one way to show their support for the community. Success factors of virtual banks and insurers Virtual banks may gain a larger customer base if they launch investment products that compete with those of traditional banks. For example, technology can be leveraged to offer wealth-management products equivalent to those that have been accessible only to financially affluent individuals who could afford the typically high minimum-investment requirements. Specifically, the use of technology should allow virtual banks to dissect these products into more affordable units, and pair these with investor advice or education. Virtual banks could also stand out by offering cryptocurrency as an investment asset, as this is not available from traditional banks. Customers indicated that they would prefer to use virtual insurers more efficiently for purchasing simple insurance products, such as travel and home insurance. The thin margin of these products could be offset by the large volume of sales achieved by automation.