We see cognitive computing as a way to bring more humanity in the way we interact with our customers. We see cognitive computing as potentially having a very significant impact on MetLife as well as the industry.
– Martin Lippert, EVP and head of global technology and operations, MetLife
Creating sustainable differentiation
Leading financial services firms want to do more than improve productivity and tamp down risk, they want to create new markets. Cognitive technology allows firms to combine public and private content, such as benchmarks
and financial reports, with private knowledge, such as their own subject matter expertise, to generate breakthrough approaches to assess, manage and price risk.
“Consider a firm that specializes in transfer pricing,” said Marc Teerlink, Chief Business Strategist at IBM. “With cognitive, it’s not that you get 60 hours of transfer pricing down to five minutes. It’s that you
get many multiples of 60 hours down to single minutes.”
When that happens at scale, it opens enormous opportunities. Rather than having a junior staff member spend their days chasing down information, they can now use their professional training to model a range of scenarios
that creates new value and services for their clients. For the transfer pricing team, noted Teerlink, that means instead of three months’ throughput time, they can bring the client into a new market three months
faster. They can do so by anticipating all the variables needed to create a transfer pricing contract that protects the business and satisfies the needs of the local tax authorities.
With cognitive technology, the financial services industry has the opportunity to shift away from transactional engagements and take on more reflective and consultative work. Enabling that kind of innovation, however,
requires them to shake off some of their traditional conservatism and define business scenarios that are predicated on driving top-line results and not just bottom-line savings. One executive told us that their
goal was to have a transformational impact. They wanted to lead with a cognitive capability that was bold in ambition and that delivered significant and measurable returns in order to build interest and buy-in
across the company.
Take the life insurance industry for example, where the ability to price risk accurately has always been a cornerstone. Whereas current methods allow underwriters to gauge the relative risk for individual health
factors in the aggregate, such as smoking, it becomes challenging to price policies for customers who may have a combination of health issues. The customer may have great cholesterol and lifestyle habits, but
they’re also asthmatic and have a family history of heart disease. Cognitive technologies can absorb reams of health histories, medical data, actuarial data and other information to make underwriting precisely
tailored so customers aren’t being dinged unnecessarily, and life insurers aren’t being unwittingly exposed.
The ability to do this repeatedly and accurately at scale has the potential to revolutionize the life insurance sector, giving firms the ability to price competitively, sell directly to customers and deflect the
advances of hedge funds and other new entrants. Martin Lippert, EVP and head of global technology and operations at MetLife said, “We see cognitive computing as a way to bring more humanity in the way we interact
with our customers. As our ability improves with respect to being able to price to an individual based specifically on that individual’s profile, it begins to move us away from risk pools. So we see cognitive
computing as potentially having a very significant impact on MetLife as well as the industry.”