Challenges in Pharmacy Benefits Management Payment Integrity Operations | Market Insights™
February 14, 2023
Pharmacy Benefits Management
Pharmacy Benefits Management
Pharmacy Benefits Management
What better way to find out how ChatGPT will impact the Business Process Services (BPS) market than to ask the trained chatbot itself this question? According to its answers, the future looks promising. But obstacles still need to be overcome. Learn about the latest ChatGPT trends in this second part of our series.
Since OpenAI released ChatGPT for public testing in November 2022, ChatGPT has generated a lot of buzz. Based on initial impressions, the technology holds great promise to enhance and revolutionize many industries, including customer experience, healthcare, logistics, banking, and education, among others.
With all the attention, it’s natural to wonder how ChatGPT will impact the BPS market. And how better than to hear it straight from the bot? So, our analyst logged in on a session with ChatGPT and had a very direct and long conversation. Here’s what we learned:
ChatGPT’s potential to enhance customer experience is fairly well known. It has shown the promise to improve current conversational Artificial Intelligence (AI) solutions and make them sound more human-like, which can significantly change how these services are delivered.
It is already capable of understanding natural language with high accuracy, and with enough training, it can start with taking on simple tasks at contact centers. ChatGPT also can track customer preferences and provide real-time insights that can unlock new opportunities for enterprises.
We were interested in understanding its impact beyond customer experience in other major areas such as back-office, content moderation, and finance and accounting, so we asked ChatGPT.
Below is a summarized finding of how ChatGPT can revolutionize six key areas, according to the conversation. (And we have no reason to believe it might have been exaggerating, unlike, say, an analyst writing something similar).
The answers show the technology can potentially have positive repercussions across major areas within BPS. With such huge potential, ChatGPT is expected to impact talent as well. While demand may decline for low-skill jobs such as data entry and transactional customer service, ChatGPT will require new skills such as AI and data analysis, creating new job opportunities in areas such as conversational AI design and deployment. As enterprises adopt ChatGPT and other AI technologies, developing new skills and staying up-to-date with industry trends and advancements will become increasingly important for employees.
While the technology is certainly promising, several factors must be considered for successful implementation, including ethical and legal considerations (such as data privacy and algorithmic bias), integration with existing systems, quality of training data, human oversight, and ongoing development and improvement.
ChatGPT has the potential to significantly impact various areas within BPS. While challenges exist, careful planning and considering factors such as data privacy and ethical implications can lead to successful implementation and ongoing improvement. With careful investments, planning, and further technological advancement, ChatGPT can reach its full potential before too long.
For the first part in our series, see ChatGPT – Can BFSI Benefit from an Intelligent Conversation Friend in the Long Term? To discuss ChatGPT trends, please reach out to Sharang Sharma.
Blockchain technology promises to transform banking, financial services, and FinTechs by enhancing the digital customer experience while lowering costs and reducing data risks in a secure environment. Service providers investing in blockchain capabilities will win in the long run. Read on to discover the future of blockchain in this blog.
Since its introduction in 2008, blockchain has established itself as a key to optimization. The banking industry is redefining itself through emerging technology that is improving products, customer services, and operational efficiencies.
In recent years, blockchain adoption has increased in banking and financial services and the emerging FinTech industry. Legacy banks and nations are now following the wave. Blockchain also is being used through Decentralized Finance (DeFi) and Decentralized Apps (DApps).
Let’s explore what blockchain is, why it’s important for this industry, and how the technology can further improve banking.
Blockchain is a distributed ledger that records transactions in an immutable, cryptographically secure way. It has been used to move money between parties without the need for third-party verification or intermediaries.
The technology works by creating a network of computers (or nodes) connected through the internet. Each node on this network stores copies of transaction data that cannot be changed or deleted. It also cannot be falsified, therefore serving as an invaluable tool for verifying authenticity and ensuring security when conducting financial transactions online.
The banking sector has been one of the first industries to realize the potential of distributed ledger technology (DLT), a protocol that enables the secure functioning of a decentralized digital database.
McKinsey estimates blockchain is expected to save around US$4 billion in cross-border payments and US$1 billion in retail bank operating costs and reduce regulatory fines by US$2-$3 billion and annual losses from fraud by US$7-$9 billion.
Blockchain technology has the potential to improve the banking industry in many important aspects as illustrated below:
| Key levers | Benefits |
| Cost reduction | Using blockchain reduces costs by allowing banks to process transactions faster while also eliminating the need for intermediaries that charge fees for their services. This can save money on transaction processing, leading to lower operating costs. |
| Energy conservation and ESG tracking | Due to the connected and transparent nature of the stored data, blockchain, in conjunction with the internet of things (IoT) technology, can accurately track carbon emissions and help firms track Environmental, Social, and Governance (ESG) mandates for clients and themselves. |
| Transparency and permissioned blockchain | Blockchain improves transparency by providing real-time records of all transactions occurring within an organization. It does this through a series of blocks chained together, with each block containing information about previous blocks and linking them together.
A permissioned blockchain is a distributed ledger whose contents are accessible only to authorized users. The user can only perform the functions they have permission for (granted by the ledger administrator) and are required to identify themselves to ratify such changes. |
| User experience | User experience is critical for any banking application. The interface needs to be intuitive and easy to use so customers can conduct transactions quickly and without hassle. Since some applications are based around peer-to-peer interaction, blockchain-based-apps such as DApps will deliver a smoother user experience. |
| Fraud prevention | The distributed ledger uses cryptography to ensure data’s authenticity and integrity. The ledger is transparent and immutable, meaning that it cannot be altered or deleted once it has been recorded on the network.
This prevents any single point of failure from being able to alter records or falsify them. When using traditional banking systems without blockchain technology behind them, these intermediaries often commit acts that can lead to the risk of material misstatements because they’ve been given authority over sensitive financial information and may lack proper knowledge about them. |
| Security benefits | In addition to fraud prevention, blockchain technology makes it easier for banks to keep track of who owns what assets when they move among different financial institutions (such as moving from one investment bank account to another). This enables them to better control access to those assets during transfer and helps prevent fraud by verifying that any changes made are legitimate before allowing them into the new account holder’s possession. |
Here are some examples of how blockchain is being used today:
Recording and verifying transactions are the most obvious use cases for blockchain in banking. Blockchain allows banks to automate their back-office operations and reduce manual errors, which can result in significant savings for businesses.
Blockchain can help streamline the various paperwork involved in international trade and reduce the risk of fraud. Banks are using blockchain to help manage the documents needed for completing a trade transaction, including contracts, letters of credit, bills of lading, import/export licenses, insurance certificates, and more. By digitizing this paperwork and making it available on a shared ledger, all parties can see what’s happening in real-time and know that the data is secure from tampering or fraud.
Blockchain technology has the potential to significantly simplify syndicated loans by creating standard contracts and automating all processes from loan origination to monitoring and repayment. This could be done with smart contracts – self-executing digital code that would automatically execute certain actions when conditions at met.
With blockchain technology, banks can store, access, and update data on a secure digital ledger. This makes it easier for multiple parties to view and share information, eliminating the need for manually matching data across multiple databases.
Blockchain-enabled payments across countries can be completed in minutes rather than days and at a fraction of the cost typically associated with international payments. Additionally, blockchain’s cryptography ensures an additional layer of security compared to traditional payment platforms.
Blockchain can also help automate certain processes within banks by allowing them to create smart contracts. Smart contracts are self-executing agreements between parties that use blockchains as their source code. This can eliminate the need for middlemen or third parties in business relationships, which can save money for both sides involved in the contract negotiation process.
Smart contracts can be used for multiple purposes, such as automated rebates, payments for services rendered or goods delivered, and licensing of intellectual property (IP) rights/non-fungible token (NFT) minting.
In addition to recording transactions, blockchain also can be used to track assets such as gold or real estate through an automated system that verifies ownership rights on a decentralized network of computers rather than through traditional means like paper documents or banks.
Blockchain can be used to provide authentication services on documents such as contracts, loans, etc., by checking their authenticity before considering them valid.
| Goldman Sachs | Goldman Sachs is backing the initiative of payment firm Circle to become a blockchain-enabled issuer of USDC (a form of stable digital currency) |
| JP Morgan | JP Morgan’s Liink enables institutions to exchange payment-related information quickly and securely |
| Al Rajhi Bank | Al Rajhi Bank facilitates its cross-border payments services on the foundation of Ripple’s blockchain capabilities |
| Swedish Central Bank (SCB) | SCB is experimenting with the possibility of launching e-krona in collaboration with R3 |
| HSBC | HSBC also utilizes R3’s blockchain capabilities to operate Digital Vault services |
| UBS | UBS launched the first digital bond to be publicly traded and settled on blockchain-based and traditional exchanges |
With support for blockchain adoption and investment from banks, more than 20 countries, including India, Australia, Brazil, etc., have taken further steps to pilot central bank digital currency (CBDC), which often utilizes blockchain. These investments have given rise to many groups and consortiums, as shown below:
Notable consortiums
| Hyperledger | Enterprise Ethereum Alliance (EEA) | BankChain | B3i | Marco Polo |
| ChinaLedger | Financial Blockchain Shenzhen Consortium (FISCO) | TradeLens | Contour | we.trade |
Lack of understanding and mistrust in blockchain technology and uncertainty about regulations, cost savings, and security are among the main barriers to adoption that will require time for banks to overcome before they can begin implementation.
Another obstacle is the impact blockchain may have on existing systems and processes. Integrating blockchain technology may not be seamless due to a lack of expertise and compatibility issues.
Scalability also is a concern. While the technology has the potential to handle many transactions, banks need to be certain it can scale up to meet their needs. A blockchain platform will not be useful if it cannot handle the traffic.
The need for standardization is another key challenge. Because blockchain technology is still in its early stages, no one-size-fits-all solution exists. Each bank will need to develop its own system, which can be time-consuming and expensive.
To stay competitive, banks need to implement process automation and deliver a superior digital experience to their customers. Blockchain offers potential as a transformative technology for banks to implement to improve services and customer experience.
Additionally, blockchain can help banks save money on transaction costs and reduce risk by keeping records updated across multiple systems. The technology also provides a secure environment that reduces the possibility of fraud or data loss due to cyberattacks.
We believe the future of blockchain offers promising opportunities for banks and service providers alike. Service providers will partner with banks and other financial institutions to bridge the gap by providing trust and knowledge, technology infrastructure support, and the right services to innovate and move forward together.
Making the right investment at the right time to take advantage of the growing adoption of blockchain will be the key to riding this growing tide.
To discuss the future of blockchain or banking and financial services trends, please reach out to [email protected], [email protected], and [email protected], and stay updated by accessing our latest research on banking business processes.
With the advent of chatbots reaching human-like sentience and mannerisms, and banks being at the forefront of adopting conversational Artificial Intelligence (AI), the question arises whether ChatGPT threatens the likes of Google, other AI platforms, and the non-critical workforce in the technology and services industries. While its promise remains high, will the banking, financial services, and insurance (BFSI) sector unearth ChatGPT’s full potential? Read on to find out.
ChatGPT has taken the internet by storm and has become a trending sensation overnight. This AI-powered innovative chatbot has taken the world for a spin and is generating a big buzz among millions of professional users experimenting with it. Microsoft has also invested billions in the tool.
But what is ChatGPT? Developed by OpenAI, it is a generative language model that has been trained over large volumes of text to generate human-like responses. Like a search engine, it curates answers for queries but is designed to answer in a more conversational flow that goes beyond chat and delivers a richer experience with an intelligent chatbot. The AI engine generates solutions for all sorts of queries, including R, Python, and VBA codes.
Let’s explore ChatGPT’s potential to impact the future of AI and its usage in the technology and services industry, particularly by financial institutions, banks, and insurers.
Banks can use ChatGPT in several ways to enhance their operations and customer experience. Here are a few examples:
Current use cases of ChatGPT in banking and financial services (BFS) and business process services (BPS) operations are limited. Building capabilities around conversational AI and incorporating ChatGPT into offering portfolios can help BFS and BPS firms unlock innovation. Enterprises such as Microsoft, AWS, and Meta are developing their capabilities internally or through partnerships with conversation AI specialists.
Industries leading in innovation investments are becoming early adopters of ChatGPT. Microsoft is reportedly investing US$10 billion in OpenAI and plans to introduce it along with its Azure OpenAI service bundle in the Bing search engine. This furthers Microsoft’s stake in the market, where it already has a working partnership with OneReach.ai, one of the market’s leading conversation AI providers, since 2019.
Although ChatGPT appears to have multiple uses and strengths, some limitations include:
While ChatGPT’s future looks promising, it is too early to say the product will revolutionize banking and financial services. Before it gets integrated into banking products, it needs to overcome several hurdles, including:
Though ChatGPT use cases are promising, it is still a machine learning model that needs modifications to be used in real-world applications. The model would have to consume specific industry data to build domain depth and be programmed to manage contextual nuances for various tasks. Its ultimate success would depend on end customers’ user experiences.
While the road is being paved for innovation, ChatGPT still has a long way to go before making strides into banking and financial services.
To further illustrate the nature of results and drill down on the capacity of ChatGPT, below are some screenshots for financial crime and compliance queries (platforms, codes, advisory):
If you have questions about banking and financial services trends or would like to discuss developments in this space, reach out to [email protected], [email protected], and [email protected].
Also, download our Navigating the Regulatory Tightrope via End-to-End Solutions – Financial Crime and Compliance (FCC) State of the Market 2022 report to explore key trends. Stay updated by following the latest research on Banking and Financial Business Process Services.
Join Everest Group’s Ronak Doshi and other industry experts on this webinar to understand how modernized, efficient, and future-proof core systems can be created at organizations.
Key takeaways for attendees include:
Banking and Financial Services
Since every past economic slowdown in this century has led to accelerated innovation and growth for FinTech firms, 2023 should be no different. We expect financial technology players to answer investors’ demands for increased profitability by tweaking business models and product innovation. To learn what FinTech trends will dominate in the coming year, read on.
FinTech firms have a history of responding to tough economic times by adapting and coming up with new business approaches. Looking back at the downturn in 2008, new FinTech trends emerged, including personal finance management (PFM), insurance aggregators and marketplace, robo-advisors, crowdfunding, challenger/neo/digital-only banks, and cryptocurrencies. Following the same pattern for innovation, the pandemic-led slowdown has resulted in buy now pay later (BNPL), metaverse payments, decentralized finance (DeFi), and Web 3.0.
Let’s explore the following FinTech trends on the horizon for 2023:
Rising interest rates and slow economic growth have pushed FinTech investors to demand profitability improvements. As a result, FinTech firms that were built to drive growth at the expense of profitability to scale and acquire customers are now forced to adapt their business models and investments. We expect FinTechs to find alternative monetization models. One such alternative that FinTechs are exploring is selling/licensing their technology, such as core systems and machine learning models (that they built and trained), to other financial services firms. Accessing already built and trained machine learning models will enable financial services to adopt AI at speed and scale without additional time and expense.
The last decade has seen FinTechs eat into the front-office surplus of incumbent financial services firms. Now, they are increasingly moving into mid-and-back-office processes to streamline these processes and data systems. We see FinTechs targeting the hard problems that incumbent financial services firms are slow to resolve because of legacy systems, data, and established processes. For example, eight of the top 10 retirement plan providers in the US are struggling with legacy mainframe-based technology and processes. Newer firms such as Retirable, Penelope, Smart, and Silvur have entered the market to provide better retirement experiences. Firms like Alto are bringing innovation from the Web 3.0 space to the retirement market by offering Individual Retirement Account (IRA) platforms. These IRA platforms simplify investing in alternative assets, such as start-ups and cryptocurrencies, by using tax-advantaged retirement funds. Beyond the retirement and pension segment, we see similar activity in the treasury, investment banking, group benefits, and specialty insurance markets
Wallets and super apps are becoming the foundational blocks for enabling ambient banking, which is focused on meeting the business and/or customer at the moment of their need, crossing other industries. Firms like Roostify and Ribbon want to orchestrate the end-to-end home-buying experience. Players such as Nomi Health and PayGround seek to simplify the end-to-end healthcare payments experience. We expect to see more vertically integrated FinTech firms at the intersection of financial services and industry experiences (e.g., car buying, small business invoicing and billing, supply chain, loyalty, and travel). Cloud and APIs are two technology components enabling the technical architecture necessary for embedded banking.
Environmental, social, and governance (ESG) is a major demand theme that represents a relatively untapped market by FinTechs. We expect areas such as carbon credit marketplaces, ESG data and analytics solutions, and ESG customer transparency solutions to dominate most FinTech activity in 2023. FinTechs that can offer support for ESG reporting and compliance for small- and mid-size financial services firms is a white space that should see significant growth in 2023.
We expect a slowdown in lending and BNPL and challenger banking because of profitability challenges, whereas segments such as cryptocurrency will see some slowdown due to the tightening of regulatory controls and the FTX collapse, which led to a crash in prices. Markets such as supply chain finance, crowdfunding, PFM, and robo-advisory are becoming saturated and remain highly competitive for new FinTech entrants. Wealth management is an attractive adjacent market for banks, lenders, Non-Banking Financial Companies (NBFCs), and insurance firms. These new entrants in the wealth management space are working with FinTech firms that are configurable and born in the cloud architecture to assemble their technology stack. Web 3.0 is an emerging space with a broad ambit across industries with possibilities to manage the entire asset lifecycle better. These assets could be physical assets, digital assets, media, identity, equity, bonds, or even virtual assets in the metaverse. Breaking down process complexity and reducing costs of operations across payments, treasury, and RegTech areas will drive the growth of FinTech activity.
In the upcoming year, we expect to see FinTech firms make deliberate moves to increase their profitability to meet investors’ demands. These actions will include firms selling/licensing their machine learning models, eliminating operational efficiencies through Web 3.0 innovations, focusing on the intersection of financial services and industry experiences, and making sustainability a priority.
If you have questions about FinTech trends or would like to discuss developments in this space, reach out to Ronak Doshi.
Also, watch our webinar, Key Issues for 2023: Rise Above Economic Uncertainty and Succeed, as we explore major concerns, expectations, and key trends expected to amplify in 2023.
The Property and Casualty (P&C) insurance industry has experienced numerous challenges in the last few years due to the pandemic, regional geopolitical conflicts, and strained macroeconomic conditions. To stay ahead of the competition and maintain business resilience and profitability, insurance carriers are partnering with providers to modernize their existing technology landscape and support evolving talent needs. Recognizing this opportunity, providers are investing in talent-skilling initiatives, efficient business solutions, improved delivery capabilities in geopolitically stable regions, and digital transformation strategies to address carriers’ evolving business needs.
In this report, we assess the capabilities of 21 Application and Digital Services (ADS) providers and feature them on Everest Group’s ADS in P&C Insurance PEAK Matrix®. The study will enable buyers to choose the best-fit provider based on their sourcing considerations, while providers will be able to benchmark their performance against each other.
In this report, we:
Industry: Insurance Information Technology
Geography: global
The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.
Global Business Services (GBS) organizations have a big opportunity to champion Environment, Social, and Governance (ESG) in banking and financial services (BFS) institutions. To learn about six ways GBS organizations can help enterprises reach their ESG goals and unlock greater value, read on.
ESG is creating new opportunities for BFS Global Business Services organizations. Fast-evolving consumer awareness about social, political, and environmental values, emerging regulations, and increased demand for sustainable financial products are pressuring BFS firms to prioritize ESG goals in operations and employment.
Let’s explore the significant role GBS units can play in enabling ESG for enterprises.
To meet new customer and investor expectations along with regulatory mandates, BFS organizations are building ESG products and services – such as green loans, sustainability-linked loans, and carbon-neutral banking – to make their operations sustainable.
Capital market firms are embracing green underwriting, while asset and wealth managers are steadily moving toward ESG investing. These organizations are also focusing on workplace diversity, pay equity, and good governance structure to meet their ESG aspirations.
This has created a big opportunity for GBS organizations to move from being measured for their labor arbitrage and cost efficiency to the value they can deliver to enterprises. These units can become vital to the enterprise’s ESG agenda by expanding their sustainable service offerings and conducting ESG-specific due diligence and risk assessment. GBS centers’ strong visibility across the enterprise’s functions, operations, and capabilities to support their ESG initiatives will drive this new focus.
As BFS organizations increasingly look for ways to support and grow their businesses with an impact-driven mindset, GBS organizations should be at the forefront of defining and internalizing ESG goals.
The new environment has opened up many avenues for GBS organizations to maximize the value they can deliver and become ESG enablers for their enterprises. For a deep dive into the opportunities summarized below, please read our newly released research.
See how GBS organizations can promote ESG initiatives within the enterprise in the image below.
GBS organizations can enable the following key opportunities for BFS firms:
As GBS organizations take on more strategic roles, it becomes imperative for them to step up and become ESG enablers for their enterprises. To do this, GBS leadership must champion the development of ESG-specific capabilities and prioritize initiatives to drive enterprises’ ESG agendas, while embedding ESG and sustainability practices into their service delivery and operations.
To discuss how we can assist your enterprise with achieving your ESG goals, reach out to Sakshi Garg [email protected], Piyush Dubey [email protected], and Mohini Jindal [email protected].
Discover more about how to integrate sustainability and ESG initiatives into your organization in our upcoming webinar, Driving Larger-scale Adoption of Impact Sourcing from the Inside Out.
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