At Adacta, we've spent years helping insurers establish successful ecosystem partnerships, enabling them to launch new digital distribution channels and products with the help of our technology. One channel that's become increasingly important is bancassurance.
In this blog, we’ll share some key insights about the current landscape of bancassurance, why it matters, the opportunities it creates, and how you can position your company to benefit.
Table of contents:
Bancassurance is a partnership between a bank and an insurance company, where a bank that already has a trusted relationship with its customers offers insurance products directly to them. The bank earns fees from selling policies, while insurers gain immediate access to the bank's extensive customer base.
People appreciate a simpler customer journey and implicitly buy insurance through their bank, where they already manage their finances.
The history of bancassurance dates back to France in the late 1970s. Initially, it faced pushback due to concerns about banks gaining too much market control. Over the decades, however, these barriers eased, allowing bancassurance to flourish, particularly across Western Europe. Today, these integrated financial services are not just commonplace but essential for sustained growth in many European countries.
The bancassurance market in EMEA is growing. The bancassurance market value is expected to rise from about USD 651.6 billion in 2024 to approximately USD 857 billion by 2030. But why is this growth happening? Let us break down the key drivers:
Customers love simplicity. Managing banking and insurance at one familiar place saves them time and makes their financial lives easier. If a customer trusts their bank for financial advice, why not insurance too?
The digital acceleration has transformed banking. Banks now embed insurance products directly into mobile apps and online portals, allowing customers to buy coverage and even file claims through familiar channels and apps.
Europe's ageing population requires more life, retirement, and health products, perfectly aligned with bancassurance capabilities. At the same time, younger generations welcome the convenience and user experience of buying smaller-ticket policies online through digital banking channels.
While selling insurance products offers a valuable alternative revenue stream to banks, for insurers, bancassurance lowers costs to reach customers more efficiently.
Not all regions are the same. Here’s a quick snapshot of how bancassurance looks across EMEA:
There are several bank channels used to distribute insurance products.
Digital Channels. Digital cross-selling is slowly becoming the primary channel for bancassurance. Embedding insurance directly into digital banking apps makes insurance products instantly accessible and easy to use. Customers now expect the ability to research, buy, and manage insurance policies directly through digital portals and mobile apps that streamline customer experiences and provide fast quotes and instant coverage. An example is Revolut offering travel and car insurance within their app.
Physical Branches. Despite digital dominance, branches remain essential, especially for complex products that require personal interaction. Bank employees, although not traditionally insurance experts, can become effective with proper training and technology-driven sales tools. An example is insurance products that are related to bank products and offered when customers need them, such as during mortgage or loan approvals.
Having helped implement IT systems for bancassurance, we see firsthand that technology has significantly transformed it, and that successful bancassurance relies heavily on robust technology integration.
Embedded insurance involves weaving insurance products directly into banking and financial platforms, creating a unified customer experience. This integration improves convenience, strengthens customer loyalty, and enables banks to proactively manage financial risks, such as protecting against borrower defaults on loans due to unforeseen circumstances like illness or unemployment. Additionally, it provides valuable insights into customer behaviour. Technologically, embedded insurance depends on flexible architectures like APIs, microservices, and cloud-based systems, ensuring smooth and scalable integration.
Effective integration of banking and insurance IT systems is essential for bancassurance. A middle-layer architecture utilizing APIs and microservices ensures smooth data flow between platforms, enhances operational agility, and provides a secure foundation for integrated customer servicing and analytics.
Banks typically use their digital platforms, such as online banking portals and mobile applications, to integrate insurance products directly into the banking experience. This integration allows customers to conveniently access, compare, purchase, and manage insurance policies alongside traditional banking services. Customers benefit from an intuitive, unified experience that simplifies financial management and is available anytime, anywhere.
Banks can leverage client data and data analytics to identify customer needs and offer and deliver personalised insurance coverages. Using different forms of AI further enhances these capabilities by refining the underwriting processes, improving risk assessment accuracy, and strengthening fraud detection, ultimately boosting sales conversions.
AI-driven chatbots and virtual assistants effectively handle routine inquiries, assist in policy selection, and guide customers through insurance processes. This technology streamlines interactions, boosts efficiency, and frees human agents to address more complex customer needs.
Bancassurance offers strong growth potential, but it also faces significant hurdles. In Europe, strict regulations such as GDPR and the Insurance Distribution Directive (IDD) set high standards for data privacy, disclosure, and sales conduct. Operationally, banks and insurers must navigate complex system integrations, manage cybersecurity threats, and ensure thorough staff training to prevent mis-selling and maintain service quality.
Cultural differences can also pose challenges, as banks typically focus on transactions while insurers prioritize risk management, which may affect customer experience and efficiency. These issues can be mitigated through clear partnership agreements and technology-driven process alignment, a strategy we have successfully applied in our own projects.
The future of bancassurance is exciting, shaped by continuous innovation and changing market demands:
At Adacta, we've built our AdInsure platform with modern ecosystems, such as bancassurance, in mind. AdInsure can be easily leveraged as a Bancassurance solution sitting on top of existing core legacy systems. AdInsure for Bancassurance provides the following:
We've seen firsthand how the right technology can transform bancassurance from a side business into a core revenue driver.
As insurers consider their bancassurance strategies, they should remember that it’s about creating simplicity for their customers and growth for their business. Leveraging the right technology partner can be your critical advantage in a rapidly evolving market.