Q: What is the concept of Web 2.0, and how does it apply to insurance and financial services?
A: John Anthony, The Hartford: Web 2.0 is a misnomer that describes an ongoing shift, rather than a short-term transition, in how services are enabled over the Internet. For insurers, this shift is primarily driven by the desire to leverage the Internet as a true computing platform. For example, carriers can expose to customers data-driven services traditionally locked away in policy administration, billing, claims, CRM and other systems, resulting in a network-enabled value chain that empowers customers and expands the carrier's market in a scalable, cost-effective manner. Future market pressure will encourage insurers to differentiate themselves by building radically new services with Web 2.0 characteristics.
A: Matt Nelson, TowerGroup: Web 2.0 is the use of lightweight, intuitive, Web-based services that rely on user participation and user-contributed data, and generally involve some level of social interaction and networking. For financial services firms, this isn't going to mean MySpace [a social networking site]. But it might mean taking some of the philosophies that have made similar sites so popular in the consumer realm and applying them to business software and client portals.
The most obvious opportunity for Web 2.0 in financial services firms is in client portal design. Most financial services firms still have fairly basic, HTML-style client portals. Technologies like AJAX, Adobe (San Jose, Calif.) Flash and Microsoft (Redmond, Wash.) Windows Presentation Foundation (WPF) allow developers to build sites that engage the client more effectively. The slightly less-obvious application is in business software, where Web 2.0 concepts might allow firms to better collaborate internally and externally [with business partners] on knowledge management and problem resolution. Also, there are some interesting possibilities for augmenting the traditional support channels (call center, etc.) with self-service tools like wikis.
A: David David McFarlane, Nexaweb: Web 2.0 allows financial services companies to deliver complex, strategic services such as insurance premium calculation and claims processing through the ubiquitous and economic reach of the Web. The competitive advantages are clear: global collaboration through visual metaphors using unstructured data and multimedia; informed decision support through real-time events and data feeds from multiple sources; and regulatory compliance through centrally managed applications with a consistent look and feel.
Q: Are insurers implementing Web 2.0 technologies?
A: Anthony, The Hartford: Insurers are starting to realize the value of social software to enhance open communications. For example, we recently experimented with podcasting to distribute best practices and industry information within our sales organization, and are exploring the use of wikis as platforms to document IT standards and reference architectures.
We have seen initial insurer investments in Web 2.0 technologies as part of ongoing efforts to enhance IT portfolios by combining redundant and closed technology functions into meaningful business services. When designed correctly, these services are exposed directly to partners, distributors and customers over the Web, resulting in more-flexible and cost-effective interactions.
A: Robin Bloor, Hurwitz & Associates: I see very little pioneering of Web 2.0 from insurance companies. Insurance companies in general have used collaborative technologies — such as those from IBM (Armonk, N.Y.), Lotus (an IBM subsidiary) and Microsoft — for quite a while, and they can be deployed in a Web 2.0 manner. But I've seen very little evidence of it. I haven't seen any activity in the area of customer relations, where the potential rewards should be the greatest.
Q: What are the reasons for a lack of interest in Web 2.0 in certain parts of the industry?
A: Anthony, The Hartford: The insurance industry has been particularly slow to leverage collaborative technologies such as blogs, wikis and podcasts in the public domain. While these communication tools offer an opportunity to engage our customers, partners and shareholders in a direct and often more-personalized conversation, they can be perceived as a challenge to existing corporate communication controls and processes. The jury remains out on how significant of a role social software will play in the transition to Web 2.0.
A: Nelson, TowerGroup: This is new technology that people currently equate to the consumer realm. When you think of Web 2.0 business opportunity, you probably think of ad and search revenues, not better user interface design, improved site usability, collaboration, etc. But these are the more relevant business impacts.
The biggest downside is that it's new, and some people fear change. IT departments are eager to use these tools and develop and deploy new software, but business isn't yet driving the projects. With regards to internal Web 2.0 tools — blogs, wikis, etc. — there are major adoption challenges. A good portion of the intellectual property of a firm resides in the older, more-senior staff that is often hesitant to pick up and use new technology.
A: Bloor, Hurwitz & Associates: It's simply a matter of where to invest. A Web 2.0 project is very difficult to define in terms of specific business objectives. You are, in effect, opening a communications channel, and that may or may not pay big dividends. There are no obvious corporate successes to imitate and no easy way to calculate payback. There is no surefire way to activate a community. So any foray into a Web 2.0 project is going to be speculative.
A: David McFarlane, Nexaweb: The industry has been slow to adopt the social networking elements of Web 2.0 — wikis, blogs, tagged metadata, user-based data. These capabilities offer less-obvious immediate returns and present potential problems of privacy, confidentiality, governance and digital rights. These concerns are mainly culturally driven by a reluctance of IT to cede control to its users, and management to forgo stringent controls in support of regulatory compliance. But the convergence of SOA and Web 2.0 is creating a governed environment that promotes the core tenet of Web 2.0 — user empowerment.
Q: What are the security, privacy and legal issues, if any, of Web 2.0?
A: Anthony, The Hartford: As insurers leverage Web 2.0 technologies to deliver new data-driven services, the industry must consider questions around data ownership and entitlements. Consider, as an example, our industry's growing interest in emerging technologies such as vehicle telematics and other sensor technologies. While these technologies produce new data sets that can be used to create original and innovative services, they may contain sensitive and personal information that will require robust data security solutions. In addition, the use of collaborative technologies outside the walls of enterprises will require information protection and legal experts to ensure the security of intellectual property and other private information.
A: Nelson, TowerGroup: The fact that Web 2.0 relies on users contributing all of the data certainly does raise some issues. ... If any firm, in any industry, decides to let its employees blog publicly, they need to first consider the risks and create careful policies.
A: Bloor, Hurwitz & Associates: I don't see the legal or security issues as any worse than those associated with any other Web activity. Where a company sets up a wiki, it is best practice to declare a usage policy of all postings to the wiki, otherwise you are open to copyright disputes. But that has always been best practice for accepting postings. There is one particular issue, though, associated with Second Life or any other virtual world, and that is the fact that there is a very blurred line between fantasy and reality in such environments. Thus doing business in such places may leave a company open to accusations of deception.
Peggy Bresnick Kendler has been a writer for 30 years. She has worked as an editor, publicist and school district technology coordinator. During the past decade, Bresnick Kendler has worked for UBM TechWeb on special financialservices technology-centered ... View Full Bio