How Bancassurance Can Keep Pace with Retail Banking in Asia-Pacific


Bancassurance is an important distribution channel for insurance products throughout Asia-Pacific; in 2018 alone, around 31% of life insurance premiums in the region came from bancassurance.1 This is partly due to the transition of the retail banking industry to serve customers primarily through digital banking. Additionally, many “super apps” that deal with payments, e-commerce and digital wallets are moving into the financial services space, and banks that fail to keep up with changing customer demands are facing at the risk of disintermediation.

To successfully exploit the potential of this market in the years to come, banks and insurers must act on three emerging imperatives: digitize the bancassurance channel, reinvent the business model and highlight the raison d’être.

Digitize the channel

The traditional bancassurance model focuses on bundling protection products with existing banking products, typically sold in person at bank branches. This model then evolved to be less generic and more personalized. Thanks to major technological advancements, insurers and banks are integrating more digital and analytical tools into the end-to-end customer journey, enabling the bancassurance channel to better meet the specific needs of customers, both in person and digitally. .

The COVID-19 pandemic has dramatically accelerated the global digitalization of the insurance and banking industries, as lockdowns have prompted banks and insurers to quickly adapt to serve and advise customers remotely. Customer adoption of online and mobile banking has seen a net increase of 30% in the region, according to McKinsey Insurance estimates.

Digital marketing has also become more personalized.2 This is due not only to the modular nature of online sales, but also to regional regulators’ increased support for digital sales in recent years. For example, in October 2020, the Indonesian Financial Services Authority relaxed the rules for promoting insurance products online. Additionally, they have started to allow social media platforms to act as marketing channels for insurance companies and their distribution partners to promote their insurance products.3

The banking industry has embraced both regulatory and technological advancements to lead the way with sophisticated digital marketing and product offerings, but we have yet to see the same developments occur with bancassurance offerings.

Reinventing the business model

The continued popularity of short videos and social media content is an example of changing customer preferences and, in many cases, shortening attention spans. To capture attention, banks and insurers need to rethink the bancassurance business model by putting customer preferences and expectations at the heart. This could involve, for example, the emergence of contextual products integrated into the insurance journey and ongoing guidance to help customers change certain behaviors. Incumbents need to develop these capabilities quickly because customer behavior has evolved rapidly.

Building such innovative models will force banks and insurers to consider either investing in the right technology and building organically, or exploring strategic partnerships with insurtechs, technology providers and other partners who can provide the right capabilities.4 In addition, we are witnessing the emergence of direct distribution players in the banking sector. These players have significantly more experience in maneuvering digital channels than traditional players and are looking for insurance partners with similar capabilities.

So far, these challengers have only captured a small share of the insurance market, but they are poised for rapid growth. In many cases, going out before partnering with these players can mean a win for both parties.

Putting the goal first

As customer expectations evolve alongside societal values, banks have the opportunity to be at the forefront of these changes and clearly demonstrate how their purpose aligns with their customers’ goals. Indeed, the future of bancassurance will be through redesigning the channel as a way for customers to build and manage an integrated financial wellness plan. In addition to taking out appropriate life and non-life insurance, clients will be able to access comprehensive financial support, including loans to meet their life goals and savings and investment advice.

For banks to drive their purpose and develop an effective integrated financial wellness platform, they must have certain capabilities:

  • products in multiple asset classes, third-party services to cover broader financial needs, and simpler, more modular products
  • underwriting capabilities driven by advanced analytics,5 including a streamlined process for medical underwriting and access to in-depth proprietary research
  • sales platform capabilities, including an advanced analytics-based robo-advisory engine, online-to-offline journey assistance, educational media content, one-click sales journeys, and ongoing engagement throughout along the customer lifecycle through digital and in-person channels

As banks and insurers roll out these new features, they need to maintain a clear alignment between the purpose of these solutions and what customers are actually looking for.


As regional market evolution accelerates, insurers must prioritize initiatives that will help them leverage the benefits of existing models and move toward an integrated financial wellness model that creates more meaningful value. for themselves and for their customers.

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1 “2020 Global Insurance Pools statistics and trends: Distribution”, McKinsey, March 2021.

2 For more on the role of modern digital marketing in insurance, see “How Asian Insurers Can Use Digital Marketing to Fuel Growth”, McKinsey, April 11, 2022.

3 Baker McKenzie, “Indonesia: OJK Issued Implementing Regulations on Marketing of Insurance Products,” Lexology, October 26, 2020.

4 For more, see Digital & Analytics, “Insurtechs Growing Ripe for Insurer Investments and Partnerships,” blog post by Shitij Gupta, Varun John Jacob, and Shalija Raheja, McKinsey, July 16, 2021.

5 Ramnath Balasubramanian, Ari Chester, and Nick Milinkovich, “Rewriting the Rules: Digital and AI-Driven Underwriting in Life Insurance,” McKinsey, July 31, 2020.


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