I was really impressed with how spot on Brian Ascher is in this article about what it takes to create a disruptive financial service company. It really resonated with me and got me thinking about a few things I hadn’t before, mostly around the relationship between big data and network effects, or as Brian calls it “big data learning loops”. It almost feels like we need a new term for this concept as it pertains to financial services specifically.
Since I’m working on a new company in the life insurance space, I’ve been thinking about how this concept might apply. Obviously underwriting is a process entirely driven by data and it will likely change dramatically as insurers get better at analyzing the data and quickly feeding it back in to their underwriting practices, in as close to real time as possible. But the systems challenge is far less interesting than the question of how new kinds of data such as social media, the social graph, identity authentication, and more might be used in underwriting. And of course, there could be plenty of legal and privacy questions brought up by such practices. For the insurer that figures this out, a huge competitive edge is sure to exist. But then again, I’m not holding my breath.