Banking on partnerships: Insurance is the next frontier for customer retention in banking

South African retail banks occupy a powerful position at the centre of their customers’ financial lives. They hold deposits, facilitate transactions, finance homes and vehicles and provide access to credit.

Yet that privileged position can no longer be taken for granted.

As digital-first banks, fintechs, and retailer-backed financial services intensify competition, the strategic contest is shifting from acquiring the primary account to earning a greater share of each customer’s financial life.

Future growth will increasingly depend on how effectively banks use their distribution, data and trust to deepen relationships, increase customer lifetime value and become more relevant across the broader financial ecosystem.

A key part of this ecosystem is insurance, which is increasingly becoming an important part of that opportunity and growth story.

Bancassurance has already demonstrated the value of bringing banking and insurance together, but the opportunity extends far beyond the traditional model.

By partnering with insurers that bring specialist capabilities banks cannot efficiently build or operate themselves, banks can broaden their propositions, respond to more customer needs, and participate more meaningfully across the financial lives of their customers.

The value of embedded insurance and white-labelled offerings lies in their ability to create new revenue streams, strengthen customer retention and improve financial resilience. However, the real differentiator is execution.

Modern financial ecosystems demand relevance, simplicity and integration: vehicle finance creates an immediate need to protect the asset; a home loan naturally creates a need for property and bond-related cover; and unsecured lending creates an opportunity to protect customers against events that may affect their ability to meet repayments.

Enabling this kind of value across sectors, including banking, has been at the heart of Hollard’s partnership proposition for decades.

The benefits of embedded insurance for banks

Embedded insurance enables banks to play a broader role in helping customers protect their financial position and navigate unexpected events with greater confidence.

It can make the banking relationship more relevant and useful by helping customers understand their risks, make informed financial decisions and ultimately be more certain in the choices they make.

Done well, embedded insurance also reduces friction by removing unnecessary secondary sales journeys and creating a more seamless customer experience.

However, it also raises the stakes because customers do not necessarily distinguish between the bank and the insurer behind the proposition.

Choosing the right insurance partner

In looking to partner, banks should therefore consider a variety of aspects, such as an insurer’s claims experience, customer value proposition, underwriting capability, regulatory expertise and governance, as well as its ability to deliver servicing without creating unnecessary friction.

The bank should experience simplicity, even where the underlying insurance environment is complex.

This requires strong operational capability, reliable claims processes, sound governance and flexibility to integrate into existing customer journeys.

How the partnership works

Different institutions require different models. For some, a straightforward distribution arrangement may be appropriate. Others may want to participate more deeply in product design, customer servicing and the economics of insurance.

Structured arrangements, including cell captive models, can enable larger institutions to participate more directly in underwriting performance while operating within the framework of a licensed insurer.

Hollard designs insurance solutions around each bank’s customer base, commercial objectives, risk appetite and operating environment.

The bank contributes its customer knowledge, data and distribution capability, while Hollard provides underwriting, product, pricing, claims and regulatory expertise.

Digital integration, API-enabled journeys and responsive product development also allow solutions to be brought to market and refined more efficiently.

For Hollard, being partner-first means understanding the partner’s business, integrating into its environment and evolving the proposition together.

The bottom line

Embedded insurance can support diversified revenue, stronger customer retention and greater customer financial resilience. However, these outcomes are not created by distribution alone. They depend on partnerships built around shared ambition, customer understanding, operational execution, trust and the ability to adapt over time.

For more information on how Hollard can partner with your bank and fintech, visit https://www.hollard.co.za/our-world/partners.

Obakeng Moloisane is the head of partnerships at Hollard Life Solutions

About Hollard

The Hollard Insurance Group (“Hollard”) is South Africa’s largest privately owned insurance group. Hollard provides short-term insurance, life insurance and investment products to a diverse customer base.

Through Hollard International, the group has access to 10 markets across the continent: South Africa, Botswana, Ghana, Lesotho, Mozambique, Namibia, Zambia, Kenya, Tanzania and Uganda.

Brought to you by Hollard.

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