21st Century Services - Empowering Innovation and Growth in the Global Economy
Mr. Gary G. Benanav
Chairman & CEO
New York Life International, Inc.
Thanks Paul, and good morning to everyone. It's an honor for me, and for New York Life, to be participating with all of you.
Today, I'd like to cover two issues. First, I'll focus on what my company regards as one of the biggest challenges confronting service providers in the 21st century. The challenge is this: how can we embrace new technological tools to sell and service our products while still maintaining a fundamentally personal relationship with our customers? Second, I'll talk about the importance of market liberalization and stability to foster growth of financial services in general, and insurance services in particular, in the Pacific Basin.
Technology has clearly enhanced our ability to reach new customers and has advanced the global portability of services like insurance. Simply stated, technology is making services infinitely more "trade-able." So geography and borders are no longer the great barriers to service they used to be. This is an exciting phenomenon for financial service providers like my company and it creates the potential of delivering world class services to people far removed from the geographical base of the service provider.
But this new capability presents us with the dilemma of how to manage the tension between technology, as a tool for succeeding at business, and personal relationships, as the ultimate foundation of that business?
We spend a lot of time thinking about this at New York Life. We know that each day more of our customers are joining the "anywhere, any time, any technology" crowd. At one extreme, some customers want only an electronic connection with our company. At the other extreme, some customers want only a face-to-face relationship. But a huge majority of our customers are in the middle and they want a mix of high tech and high touch relationships.
Our core product -- life insurance -- is complex, difficult to understand and above all, profoundly personal. We're very conscious of the fact that the word "life" is a part of our company's name. Our business has always been, and will remain, founded in very human interactions -- especially those between our agents and our policyholders.
So how do we fit this paradigm of our business into a world where commerce is increasingly driven by technology?
First of all, we recognize that being antiquarian won't work. At New York Life, we're actively embracing technology and its power to reach more people and provide them with better service. We have a clear-eyed awareness that the Internet is a powerful brand development and marketing tool.
It's clear that failure to employ technology as a communications, service, and sales tool would leave us in an ever shrinking segment of the insurance market. With more and more people in America, but also globally -- researching information about insurance policies on-line, and comparing that information, you can bet we're not going to be left behind.
So we're committed to building a world-class technology platform, focused on communication and education, service, and support for e-commerce. We're already using the Internet very actively to educate consumers about our products; to let them know how to contact one of our sales professionals; to self-service many of their needs and to provide a new channel for communicating directly with us.
At the same time, we're working very hard to ensure that technology doesn't lead to a "depersonalization" of our most important relationships -- those with our policyholders. We believe that the benefit of technology, in our business, is its power to link up actual, living human beings and to satisfy many service requirements. But, we're not interested in a technology strategy that entirely bypasses that linkage.
Our products are complex, and our customers have complicated and very individualized needs. We believe that most people will continue to want personal attention, education and guidance when they invest in something as important as life insurance.
We've discovered that all over the world, people need financial advice from a trusted and expert professional. This is particularly important in emerging markets where most people are unsophisticated about the multiple uses and complex features of insurance products. In these markets, trust and personal relationships have formed the basis of business transactions for centuries. And in most of these markets, there are no government guarantee funds to provide a protection net to people who give insurance companies their money for 10-20 or even 40 years in exchange for nothing more than a promise of future payment. So trust and customer knowledge about their insurance company are critical.
So we intend to stick with a professional, agent-based structure as the primary distribution system for selling our more complex products but fully supported by technology as a powerful tool to meet customer expectations and needs. And, while we will make simple products available for direct, electronic sales, we see these sales as establishing a first step in a multi-step, life-long relationship with our new customers. Our experience is that most young customers who want very simple term life insurance products, eventually become excellent prospects for the more complex products that are best delivered through a face-to-face relationship built on trust and expertise.
And once a customer purchases a product, whether simple or complex, we will give him/her the choice of electronic or personal service.
Turning to the issue of services trade in the Pacific Basin, it's clear that expansion of the service sector has advanced economic growth and development in the region. But that trade will continue to flourish only if a stable macro environment exists -- including economic, political and security stability, and only if we see continued movement to liberalize the policy frameworks that govern trade in our services.
And in order to bring all of the benefits of the insurance business, and most other financial services, to the economies and people of the Pacific Basin, we need:
Open markets in which licenses are granted based on merit and financial strength;
A level playing field between foreign companies and local players;
Pro-competitive regulations which allow us to design and price our own products rather than having to sell the same products at the same prices as all other companies;
Appropriate accounting standards and transparency so funds can be invested based on accurate credit analysis, not cronyism;
The ability to freely import technology and expertise;
The ability to provide components of our services from outside the country, for example, from regional service centers;
The ability to freely move information, particularly customer related data across international borders; and
The freedom to invest our accumulated insurance reserve funds in a wide range of investment instruments rather than requiring huge percentages of our assets to be in government bonds, bank paper or government directed lending.
The need for long term investments to match assets with insurance and pension liabilities creates the potential for developing capital markets in economies which desperately need long term, local currency debt and equity instruments to support their infrastructure and economic growth needs. But this can happen only if the insurance and pension industry are given the regulatory authority to do so.
So how are we doing in achieving these requirements for creating a strong insurance industry in the Pacific Basin? Governments in this region have clearly come to understand the role of services in generating growth, and are implementing policy changes that reflect that new attitude.
Certainly one of the most important "silver linings" of the Asian financial crisis has been the change the crisis provoked in prompting the liberalization of the financial services sectors of countries like Korea and Thailand.
But the pace of change varies greatly from country to country. For example, Hong Kong already provides all of these requirements and has enjoyed tremendous benefits by having such a vibrant and open insurance market. In the middle, Mexico has come a very long way in the last decade. At the other end of the spectrum, Vietnam has only recently begun to allow foreign access to its insurance market. But the question which nags at us now is whether the rapid recovery in Asia Pacific will cause governments to slow up or even stop the pace of liberalization.
The WTO Agreement on Financial Services, concluded in 1997, has provided my industry with important benefits in terms of a clear set of global guidelines and improvements in market access. We're anxious to build on that progress during the new services talks, and PBEC's support in that endeavor will be critical.
In China, of course, financial services have also figured prominently in negotiations for that country's accession to the WTO, and I'm confident that the final package will bring about expanded access to that important marketplace.
PBEC's Working Committee on Services has played an enormous role in supporting the financial services liberalization initiatives that have been sweeping the region, particularly in the wake of the Asian financial crisis. PBEC's role in creating business-driven guidance in the APEC and World Trade Organization forums is also critical -- particularly now, as the WTO moves ahead with further multilateral negotiations on services trade liberalization.
As a tie-back to our discussion of the role of technology, I should also note that we're very interested in the electronic commerce initiatives in APEC and elsewhere. E-commerce obviously cuts across a great many service sectors. With more of our business activities happening on-line, we'll want to stay very closely engaged in those developments and again, PBEC will play an important role in this issue.
New York Life is also very encouraged about APEC's role in promoting a stable business climate and progressive trade and investment liberalization in the region. We've recently stepped up our commitment to APEC, as New York Life's Chief Executive Officer, Sy Sternberg, has accepted President Clinton's invitation to serve as one of three U.S. member of the APEC Business Advisory Committee (ABAC). At the recent ABAC meeting in Bangkok, members worked on ways of promoting "best practices" in domestic financial systems and building capacity in the region's financial sectors. The goal is to assure the region's resilience in the event of future shocks. Mr. Sternberg's participation in this endeavor is another sign of our commitment to the region, and we're very much looking forward to making a constructive contribution to APEC's work in the coming years.
With that, I'll wrap up and look forward to a good dialogue with my fellow panelists and with all of you. Thank you very much.