Financial strategies encompassing credit and insurance options specifically tailored for Small and Medium Enterprises (SMEs)
In a recent study titled "Bancassurance: Solutions and Opportunities for Protecting SMEs," conducted by SDA Bocconi School of Management and Aon, the strategic benefits of bancassurance in supporting Small and Medium-sized Enterprises (SMEs) in Italy have been highlighted.
The report underscores the potential for Italian banks to leverage the country's well-integrated banking and insurance ecosystem. By offering bundled insurance products like property, liability, and key-person covers alongside credit services, banks can add value to existing SME banking relationships and improve overall profitability per client.
Italian SMEs, a fast-growing segment in the bancassurance market, are projected to grow at a Compound Annual Growth Rate (CAGR) of 7.11% in Europe. This growth is driven by regulatory requirements such as professional indemnity and increasing awareness of operational risk protection.
However, the Italian bancassurance market faces challenges. Complex regulatory requirements in Italy and Europe affect product design and compliance. The need for personalized advisory services to handle intricate SME insurance needs is another hurdle. Digital innovation, such as AI automation in contact centers and voice bots, is expected to handle 50% of inbound insurance inquiries by 2027, balancing efficiency with high-quality human advice for complex cases.
Managing credit and operational risk prudently is also crucial. Italian banks focus on sectorial risk assessment and proactive credit management tailored to SMEs’ sectoral profiles and the macroeconomic environment. Regulatory hurdles affecting bank operations and consolidations, such as bureaucratic procedures and the "Golden Power" regulations, could limit bancassurance’s expansion or product offerings compared to more flexible international environments.
Despite these challenges, Italian banks, with their extensive territorial presence and trust among entrepreneurs, can serve as a vehicle for providing insurance products specifically designed for SMEs. Bancassurance, thus, presents a strategic opportunity for banks to strengthen their role as a reliable financial partner for SMEs in Italy.
The study provides concrete data, innovative analyses, and strategic recommendations for institutions interested in bancassurance. Institutions experiencing a significant increase in revenue with bancassurance tend to emphasize its ability to respond to market opportunities, tackle competition, and expand the offer. Institutions with a moderate increase in revenue place greater emphasis on reducing operational costs.
Italian SMEs, on average, invest 14,013 euros annually on insurance coverage, significantly less than the global average of 22,600 euros. This gap in insurance expenditure between Italy and other industrialized countries presents a strategic opportunity for banks to increase their revenue and support SMEs in Italy.
In comparison, annual investment in insurance for SMEs in countries like Ireland, China, and Australia exceeds 26,000 euros. The need to diversify revenue streams and improve customer engagement drives this integration. The multi-brand strategy is effective in improving profit margins and reducing operational costs but less useful for increasing customer loyalty and the customer base. Commercial partnerships are perceived as the most advantageous model for implementing a bancassurance strategy, particularly in terms of increasing the customer base, customer loyalty, and improving profit margins.
Andrea Parisi, CEO of Aon's Italy and Eastern Mediterranean region, emphasizes the importance of providing a range of safeguards for Italian SMEs to ensure their survival and prosperity. Giampaolo Gabbi, Director of the Finance Knowledge Area at SDA Bocconi School of Management, comments on the report's objective, stating that it aims to contribute to public and professional debate on the strategic importance of bancassurance in supporting SMEs in Italy.
[1] Source: Bancassurance: Solutions and Opportunities for Protecting SMEs, SDA Bocconi School of Management and Aon, 2021. [2] Source: The Economist Intelligence Unit, "Bancassurance in Europe: Opportunities and Challenges," 2018. [3] Source: UniCredit, "UniCredit's Strategy for SMEs in Italy," 2020. [4] Source: Italian Banking Association, "Regulatory Framework for Bancassurance in Italy," 2019.
The financial business sector can utilize bancassurance as a strategic solution to protect and support Small and Medium-sized Enterprises (SMEs) in Italy. By offering bundled insurance products alongside credit services, banks can improve their overall profitability per client and add value to their SME banking relationships. Italian SMEs invest less annually on insurance coverage than their counterparts in countries like Ireland, China, and Australia, presenting a strategic opportunity for banks to increase their revenue and support SMEs in Italy.
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