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Seeing around the corner
AS MODERN services transform, entire business models may change. In law, for instance, technology allows some services to be provided on a subscription basis rather than with per-hour billing or a fixed fee.
Technology is not just a productivity tool, but "a way of enabling a fundamental change in how legal services are dispensed", says Rajesh Sreenivasan, head of technology, media and telecommunications at Rajah & Tann. The question is now: "How can I take this and ... save the clients money, not increase our revenue? Those are things that don't come naturally to lawyers and to firms."
But he adds: "The core work of a lawyer won't change. Tech won't replace lawyers. It will augment, it will amplify, it will speed us up."
Across industries, routine tasks have been automated, freeing staff up for high value-added work. This is no less true in modern services, says Minister in the Prime Minister's Office Indranee Rajah, co-chair of the Future Economy Council's modern services subcommittee which oversees professional services; ICT (Information and communications technology) and media; and financial services.
In the professions, content knowledge is sacred, says co-chair Teo Lay Lim, Accenture's Asean senior managing director and country MD of Accenture Singapore. But with wider access to information today, "the type of work that you do that truly adds value is going to be different".
What is technology's role in a sector that relies on human expertise? For a start, it can reduce tedious work.
In auditing, artificial intelligence (AI) is used to comb through reams of data to detect fraud. "The machine may not always be able to interpret it, but it can spot patterns," says Ms Indranee. When a pattern is flagged, an experienced human auditor takes a look and makes an assessment.
Checking contracts for unmarked changes once took many man-hours; now, these are flagged automatically. Similarly, "discovery" in civil actions involves going through documents for the information they contain. In the past, this could take two weeks; with AI, lawyers can be freed up for higher value-added work, says Ms Indranee. "Once you start going into the realm of judgment, strategy, then that's what you're really paying for."
As demands change, so must training, she adds. In the past, young accountants and auditors handled a lot of repetitive work. If they are to do higher value-added work today, then firms must help them make this transition and acquire the needed skills.
Apart from in-house training, firms can work with educational institutions to ensure that young professionals are equipped for working life. Rajah & Tann is in touch with local law schools about the legal tech tools that students will need to know.
What the market wants
Rajah & Tann set up its legal tech arm R&T Technologies in 2018. The law firm had seen technology's impact on its clients, explains Mr Sreenivasan: "So we knew it's just a matter of time before it's going to hit the legal practice as well."
Clients are a key driver of change, says Ms Teo. "They will say, 'Oh, you mean you don't have this technology? ... Why is it that you can't just automate the process?'" Over time, technology will be less of a differentiating factor, and more the "table stakes": required just to be in the game.
Successful firms are those that can "see round the corner", adds Ms Indranee. "You are servicing the client, you are trying to help them with specific problems. But you should not just be limiting yourself to thinking about the problems today. You must try to anticipate future problems."
In cybersecurity, R&T Technologies is helping clients stay ahead with services that are not just reactive but proactive: having cybersecurity protocols, analysing readiness, and advising on legal aspects. This is under an annual fee model for training, audits, and IT systems reviews.
Advising on legal liability can help clients save on insurance, adds Mr Sreenivasan. By taking steps to reduce liability and lower risk, clients enjoy lower premiums. "That's the real value that we bring to the table."
This is part of a larger mindset shift that R&T Technologies has made: "Our value add isn't just providing good legal service, but also helping these clients in terms of managing their cost centre perspective."
This idea extends to subscription-based offerings such as ContractArc, a contract lifecycle management solution. "We go beyond just thinking about the legal solution, to the business solution that the clients need," he says. "And I think that's the biggest change that this whole thinking has brought to us as lawyers. ... How can we help save you money?"
While this might seem counterintuitive for a firm's topline, the idea is to gain through volume over time. Furthermore, once a client is onboard a good platform, they are likely to stay: "The whole subscription model itself allows us to create tools and solutions that clients will use on a routine and repeated basis, and it leads then to an increase in our own revenue."
In customer-facing industries, too, technology is shaping expectations, says Allianz Asia Pacific regional chief executive officer Solmaz Altin. Take e-commerce: "As easy as it is to search for something that you are interested in, as easy as it is to get something delivered, the same expectation is there also with insurance."
The advantage of online insurance is that it cuts out transaction costs, which can be 30 to 40 per cent of the price, he notes. While customers are unlikely to do so for life insurance or long-term plans - for which personal advisers are still preferred - other products can be made easily available via partnerships with other firms.
When buying a mobile phone online, phone insurance can be offered as a tick-box option. Travel insurance can be offered with air tickets. Having invested in firms such as 99.co and Gojek, Allianz is exploring how to embed insurance in their offerings too.
Technology can also make policy administration more efficient. Using publicly available information about flight delays, an insurer's system can automatically trigger the relevant payout into a customer's bank account.
The Singapore market is ideal for online insurance, Mr Altin says: "When you look at the Singapore youth - highly educated, very online already, social media-aware, high digital savviness - there is no other way, actually."
Allianz is still exploring the Singapore market for its insurance business, but the city is already home to its regional office and an innovation lab. In 2016, supported by the Monetary Authority of Singapore, Allianz launched its Asia Lab. The lab's research and development work has been applied across the region, from detecting motor insurance fraud in Thailand to preventing underwriting fraud in medical insurance in Malaysia. (see amendment note)
Is all this a threat to human advisers? Amid the digital push, agents and financial advisers remain important, says Mr Altin. "I don't think good advisers are feeling threatened by this... They actually come to us and say, 'Help me to become more digital.'" Allianz has developed digital tools for agents to schedule appointments or gain client insights.
Not all modern services firms may want in-house solutions. Smaller firms in particular might want off-the-shelf solutions but lack the capability to assess the many available options. Trade associations and chambers can help in curation, says Ms Indranee.
For firms that do want their own solutions, partnership is an option. Rajah & Tann's ContractArc engine is developed by a third party, as the engine per se "is not where the value is", says Mr Sreenivasan. "The value is what we bring to the table, which is: Rajah & Tann-quality contracts." By partnering tech firms, R&T does not require its own development team.
Collaboration is possible within industries as well, as shown by the Singapore Accountancy Alliance (SAA) of eight independent accounting firms and business advisers.
The alliance "allows each member firm to retain its individuality but yet benefit from the synergies of collaboration", says chairman E H Luar. "We believe that, collectively, we can expand our pie of the business."
The alliance has let members share resources in joint staff training, enjoy economies of scale by hosting joint client seminars, and provide networking opportunities for staff.
"As an expanded group, we have greater bargaining power when negotiating with vendors for goods and services," adds Mr Luar. This includes collective negotiation for anti-money laundering screening software, and discounts on staff medical insurance.
Transformation is important for small firms too, he says. "As small accounting firms, we need to evolve beyond our traditional businesses in audit, tax compliance and corporate secretarial work."
With their traditional book-keeping role disrupted by technology, accounting firms must become "valued business advisers" and provide expanded services such as IT solutions, international tax advisory, debt and capital advisory, technology consulting, and valuation and data analytics.
There is scope for collaboration across the modern services cluster too. Say a firm wishes to set up in Singapore for access to the region. It will need a range of services, from financing and accounting to tax and legal. Firms in those respective sectors could collaborate to offer a full suite of solutions, says Ms Teo.
Such cross-selling can be done abroad too, says Ms Indranee. "So when you have a legal question that crops up in the course of your consultancy discussion, you can turn to the lawyer, and when the lawyer's talking and there's a tax issue which requires certain tax structuring, then you can talk to the consultancy side."
Larger firms heading overseas can bring smaller service providers along. For its part, the government creates platforms to help small and medium enterprises tap opportunities. These include Business san Borders by the MAS and the Infocomm Media Development Authority, a hybrid data and solutions hub connecting buyers, suppliers, and service providers.
"Organisations are starting to recognise that it's all about ecosystems," sums up Ms Teo. "So it's not about owning it all end to end. It's about how you connect with others who have adjacent capabilities."
Amendment note: An earlier version of the story referred to preventing underwriting fraud in medical insurance in China. Allianz has clarified that this is actually in Malaysia instead.
Brought to you by the Future Economy Council