The World Goes Digital
The COVID-19 pandemic has caused social and economic disruption across the globe, sparing no country or industry from its effects. Pandemics and infectious disease are now considered the top perceived risk worldwide and it’s reported that COVID-19 has accelerated the impact of existing risks, such as geopolitical instability and cybersecurity. What would typically have unfolded across many years is now taking place over just a few months. Risks are not the only trend the pandemic has accelerated, however. The digital transformation that has been marching forward over the past two decades has turned into a sprint since the onslaught of the crisis.
As governments around the world have responded to the pandemic risk by enforcing strict social distancing measures, and in some cases full-blown lockdowns, citizens have been relying heavily on technology to continue essential tasks and stay connected with each other. A number of important in-person political and business events have been shifted to virtual mediums, such as the global G20 summit. Many corporations have transitioned to allow employees to work from with popular videoconferencing platform, Zoom, becoming a staple for corporates and households worldwide. Its revenue has tripled in 2020, proving that technology is being called upon to meet market needs more than ever before.
Supporting Businesses through Digital Means
For many businesses, one consequence of the COVID-19 crisis has been a dramatic uptick in their need to use digital technologies that help reduce face-to-face interactions and safeguard customer and employee health and well-being. It’s been reported that businesses in the retail sector are far more likely to survive the economic challenges posed by the pandemic if they welcome the technological advancements. These digital technologies include consumer-facing applications such as grocery and food delivery services, business-to-business e-commerce applications, and videoconferencing applications.
These technological advancements also allow businesses to expand their outreach to more remote markets and allows consumers in those markets increased access to goods without having to travel to the nearest city. Digital information systems can also help businesses to better organize data to track revenue and expenses, and to better understand their customers to make more informed predictions for trends in the market.
ICIEC understands the need to support Member Countries in developing the technical infrastructure to support these technologies and the need to support businesses looking to finance digital technologies in response to the crisis. So far this year, the corporation has provided nearly USD 419 million toward supporting infrastructure and USD 3.9 billion toward energy support, including EUR 50 million in cover for a telecommunications project in Indonesia that expanded access of 4G coverage from 40% of the population to 90%. The completion of this project ensures that more citizens living in rural areas have increased access to more reliable internet and data coverage, enabling them better access to online information, digital marketplaces and financial services with less latency, driving the country to shift to a more digital economy.
Advancements in Fintech
The benefits of rapid technology advancement also extend to the financial sector. Banks have traditionally had limited knowledge of their client transactions, with insurers such as ICIEC receiving a fraction of that knowledge. This led to an incomplete and outdated view of insurer’s performing assets, and ultimately an inability to predict when a transaction was likely to go awry.
For the past decade, advancements in financial digital technology (fintech) have been challenging the traditional boundaries of banking. Fintech is changing the way banks collect and store credit information, allowing insurers to be layered in when reporting significant data. In addition to increasing the efficiency of capturing and organizing data, many financial institutions, including insurers, are utilising artificial intelligence (AI) to make advanced predictions on client behaviour and transaction success. Fintech is also allowing clients to conduct their business remotely and track their accounts on-demand, providing more efficient and transparent customer service.
Though advancements in fintech have come a long way, many banks, particularly in low income and least developed countries, are still deficient in investing in and utilising these technologies – setting them back in comparison to the global trends. In addition to supporting Member Countries in implementing technological infrastructure, ICIEC recognizes that there is always room for improvement in our own information technology and has taken on a number of initiatives to mitigate this.
ICIEC’s Digital Progress
Most OIC countries suffer from insufficient credit information. Large and reliable volumes of credit data are instrumental for a holistic picture of business activity in any country. Inspired by the successful databases that ICIEC helped develop in cooperation with the Aman Union, ICIEC is in the process of setting up an OIC Business Intelligence Center (OBIC) to provide comprehensive credit information for OIC member countries.
The OBIC will provide meaningful benefits to Member Countries, including an increase in intra-OIC trade and investment volumes, along with greater financial inclusion for MSMEs and the unbanked citizens across the OIC. The OBIC is slated to boost private sector lending in the least developed OIC member states by an estimated USD 670 billion a year.
The OBIC will make use of advanced technology as it will employ AI solutions to deliver credit information and predictions, with integrated blockchain technology facilitating greater accuracy, convenience, and speed. The center will be a significant value-add to ICIEC’s mission of enhancing trade and investment across the OIC. The launch of the center is slated for late 2020.
In addition to the OBIC, ICIEC has begun the implementation process for a new Takaful System, aimed at improving the institutional performance, capacity and responsiveness of the Corporation through the digitization of many of ICIEC’s business processes. ICIEC expects that its new system will play a crucial role in fulfilling the goal to increase both the volume of intra-OIC trade and the volume of investment into Member Countries, in line with its 10- Year Strategic Plan. Additionally, the Takaful System will ensure that Takaful products are both easier to access and easier to use. The system is predicted to improve ICIEC’s efficiency and customer service experience by way of shorter processing times and improved information availability, making ICIEC’s products more attractive to prospective customers. The implementation of the Takaful system began in April of 2019 and is anticipated to be fully functional by late 2020.
Lastly, an often overlooked, but incredibly important aspect of advancement in fintech is the awareness, knowledge, and understanding of its impact. It’s important for insurance practitioners and finance professionals to be educated on the role fintech can play in their business. ICIEC plays a major role in the Aman Union Academy, a flagship professional development program for the Corporation. The Academy offers a course on the implications of digitalisation in terms of fintech, insurance technology (insuretech), and on how to best structure transactions using digital mediums.
