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We’ve Yet To See The Full Benefit Of Digitalisation In The Insurance Sector

The Foreign Investors Council of Serbia has a multitude of ideas on how to continue the wave of digitalisation and render numerous financial sector services even more accessible to citizens

Digitalisation, which the FIC has spent years advocating for, has brought advances in many fields, from e-government to the financial sector. Now, according to FIC Executive Director Aleksandar Ljubić, it is very important for further reforms in this field to continue.

The pandemic brought us hitherto unseen acceleration in all fields, and particularly when it comes to the digitalisation of financial services. How has Serbia’s financial system responded to these challenges?

– We’ve seen a sharp increase in electronic transactions since the outbreak of the pandemic, but also in the wider application of contactless payment options using digital “wallets”, which have been made available to a large number of financial institutions. In addition to this, significant progress in the area of the legal framework that enables the further digitalisation of financial services in Serbia has also led to the acceleration of digitalisation. The exceptional advances that Serbia has made during the time of the pandemic, and which will have a lasting positive impact on the competitiveness of the Serbian economy, are represented by the introducing of the service of issuing qualified funds for the creation of a remote electronic signature, a so-called cloud qualified signature, then the real-time electronic recording of transactions via the internet, or online fiscalization and electronic invoicing, and the introduction of the first registered electronic identification scheme, as well as the enabling of payments of monthly bills, shopping at retail outlets and online in an exceptionally simple way, via the national IPS (Instant Payment System) using QR codes.

Simultaneously, Serbia’s e-government system has reached a critical juncture at which there is sufficient infrastructure and the technical and personnel capacity required to quickly develop new services (such as the “My Data for Bank” service) and place them in the function of resolving urgent social issues. The greatest progress has been achieved in the field of electronic payments on the eGovernment portal, where citizens are now able to make direct electronic payments without the need to submit paper evidence confirming payment.

The banking system has experienced a significant transition to e and m services over the previous period. As advocates of digitalisation and the development of e-services, what does the FIC today see as the main avenue for further changes in this sector?

– Although the greatest strides on digitalisation have been made in the financial services sector, many challenges remain ahead of us. Our members particularly emphasise the importance of easing the use of digital identity/signatures in such a way that they become accessible to the widest circle of citizens, in a simple way and without high costs, as well as enabling the application of the institute “digital bills of exchange”, which should be registered as such in a unified register of bills of exchange, i.e., signed electronically.

Alongside the public administration’s further digitalisation, it is also extremely important to conduct continuous educational campaigns to ensure citizens are informed about the possibilities and advantages of digitalisation, but also to empower them to utilise the digital tools of public administration that are available.

When talk turns to the financial sector, we most commonly discuss banking. However, there is also ample room in the insurance sector for the changes that you’ve long advocated for. Do you see progress in that area?

– A large number of insurance companies, as well as other participants in the insurance market, are striving to adapt their services to suit the digital world. However, alongside technical, cultural and other obstacles, regulation also represents an important limiting factor. Despite recent years having seen huge steps taken towards the creation of regulatory conditions for digital operations, room still exists to make further improvements, especially in the insurance domain.

The greatest progress has been achieved in the field of electronic payments on the eGovernment portal, where citizens are now able to make direct electronic payments without the need to submit paper evidence confirming payment

Apart from this, FIC members are of the opinion that it would be extremely important for the Serbian economy and citizens to improve solutions when it comes to group insurance contracts that would enable direct communication with all insured parties prior to the concluding of insurance contracts, access to information on the way a claim is submitted and the prescribed deadline for filing a damages claim, i.e. the exercising rights on the basis of insurance, as well as the way the rights and interests of insured parties are protected with insurance companies etc. It is vital to determine a strategy for catastrophe and natural disaster insurance, and to create conditions for tax breaks to apply when paying premiums for all types of life insurance, which would both stimulate the development of the insurance sector and create conditions to improve the social function of these types of insurance. V

The last FIC White Book included several recommendations related to simplifying and easing international financial transactions. Has progress been made on this front in the meantime?

– Improvements were achieved in the period between the last two editions of the White Book when it comes to the solutions of individual bylaws, but even more significant improvement was achieved in terms of transparency and the availability of the views of the National Bank of Serbia regarding the interpreting of provisions, primarily of the Law on Foreign Exchange Operations. It is extremely important for this process to continue and speed up in the period ahead.

Our members gave a series of constructive proposals that, when implemented, would bring essential improvement to the business climate in Serbia. Our members expect, among other things, the further easing of administrative requirements, a switch to ex-post reporting on cross-border financial loans, simplification of the so-called “settlement” of claims for all types of current and capital transactions, but also relaxation in terms of providing residents with warranties for international credit transactions and the like.

We’re already halfway through 2022 and nearing the completion of the implementation of the Government’s programme to develop e-government services, which have had a strong impact on the development of financial sector services. How would you today summarise the successes achieved and challenges that remain in fulfilling that plan?

– In the process of overcoming the challenges posed by the pandemic to the Serbian economy, but also the society as a whole, the fact that the Government of the Republic of Serbia placed digitalisation high on its agenda of priorities was critical. Great efforts have been made and progress achieved, especially when it comes to regulations aimed at enabling the further digitalisation of the economy and the public sector. The readiness of all state institutions to continue in this spirit in the period ahead is extremely encouraging, because digitalisation is an endless process that permanently demands innovative and swift solutions, provided we want to find ourselves in the company of developed countries.

From the perspective of the FIC, and under today’s conditions, what are the most important next steps when it comes to guaranteeing financial stability and the further development of financial services?

– Financial stability is largely conditioned by essential economic growth, fiscal consolidation and the implementing of structural reforms. Furthermore, the privatisation and corporatisation of public enterprises and the reform of public administration will impact total macroeconomic indicators significantly, thereby also impacting the further development of the financial services sector.