Aviva embracing artificial intelligence in quest to become fintech firm
Aviva is eyeing acquisitions in artificial intelligence and big data as it looks to overhaul the insurance industry and transform itself into a fintech firm.
Chief executive Mark Wilson said the 321-year-old insurance giant had built a good balance sheet and was primed to use it to ensure the business remains a step ahead of its rivals.
Speaking at Aviva's "digital garage" in Hoxton, East London, Mr Wilson said the insurer's innovation projects had attracted calls from "big names in Silicon Valley" and helped seal a lucrative deal with Tencent, a 300 billion US dollar Chinese technology firm.
He said: "I don't mean billions, but we will do acquisitions if we find the right things, maybe in big data, maybe in platforms.
"There is nothing imminent, but we can do this because we have built a pretty good balance sheet, which we can now use."
Aviva launched the "digital garage", a technology hub for product development, in 2015 after ploughing millions of pounds into an innovation strategy that failed.
It led to the creation of Ask It Never, a feature which allows customers to buy insurance without filling in endless forms, and the MyAviva app, which puts customer policies in one place online.
Such has been the interest in the "digital garage" that Tencent, one of China's biggest technology companies, has bought into Aviva's Hong Kong business in a joint venture with Hillhouse Capital.
The move is part of a plan to digitally disrupt the Hong Kong insurance market by targeting customers through their smartphones.
"We do want to change Aviva into being a fintech," Mr Wilson added.
"It's quite weird because we have been getting all these inbound calls from the big names in Silicon Valley.
"I had a call from the chairman and CEO of one of the big ones last week, he called me up and I said 'why?' and he said because 'no one else is doing it."
The aim of the "digital garage" is to create an operation to "compete and cannibalise" Aviva's current business, but the move has been met with resistance, with Mr Wilson having to fire "two senior people" who tried to block the project at inception.
Since then, Aviva has bought the majority of Hoxton Square, an area inside London's Silicon Roundabout tech hub, and populated it with 250 data scientists and designers, with the aim of bolstering the workforce by the end of the year.
It has helped Aviva find a digital solution to the problem of making its vast customer systems "talk to each other", a task Mr Wilson was initially told was "impossible" and was likely to cost him £300 to £500 million over five years.
He said: "We went to one of our digital guys and said how can we do it and he said '£16.5 million to do 80% of it in six months'.
"I wouldn't want to give the impression that it is simple and it is still ongoing to get it in the form we want, but now we have connected them all, it is what MyAviva is based on."
Aviva is spending £100 million a year on digital development, while its venture capital arm Aviva Ventures is investing £20 million each year until 2020 in tech firms that could disrupt the insurance industry.
The venture capital fund recently invested £4 million into Owlstone Medical, which has developed a breathalyser to identify certain cancers and illnesses at an early stage.
It has also taken a £5 million stake in Neos, an insurance start-up which uses smart home technology to protect homes from fire, water damage and theft.
Mr Wilson is focused on buying start-up firms to plug skills gaps within the business and said his need for technology specialists was now outstripping demand for traditional insurance workers.
He added: "The skills set we need has changed (...) I certainly don't need as many actuaries any more and I can't hire enough data scientists."