How Axa drives digitisation forward

Digital transformation is a never-ending project, warned Olivier Vansteelandt, CIO at Axa Luxembourg and Axa Wealth, at a recent event.

Speaking at the MuleSoft Financial Services Summit, Vansteelandt described the steps his IT function needed to take to transition to an IT department for digital transformation. “I like to bridge the gap between IT and business,” he said. “These are two worlds that don’t understand each other very well.”

Axa’s Luxembourg business comprises just 300 people. Vansteelandt described it as a small company, running all types of insurance products, which means it has the same complexity as other parts of the Axa Group, but operates with a much smaller team. “Thanks to the engagement of the team, we were extremely flexible and we could react quickly as a small company, but we were not not agile by design,” he said.

Vansteelandt said that like many financial services companies, Axa Luxembourg is organised by business line, each with its own scope of activities, products and IT systems. These systems are connected together using point-to-point (p2p) integration. “With a p2p integration model, you spend time building interfaces on systems,” he said. “In the beginning, you think it is a transition, but [digital] transformation is a permanent state.”

In effect, from an IT management perspective, digital transformation means that the IT function must be run in such a way that projects are run iteratively. “For every change on an interface, you need to retest everything,” said Vansteelandt.

However, Axa Luxembourg’s existing architecture was based on p2p integration between systems. These can often stay in place for years, which, according to Vansteelandt, leads to a complex IT architecture that is very expensive to maintain. “You expend a lot of energy integrating systems,” he said. “You think it is a transition, but there is no end point.”

Vansteelandt said the company’s previous approach to IT integration was not agile enough to the support the business requirement to synchronise more platforms. This meant that any additional functionality required for a digital initiative brought significant costs.

“We decided to review the approach,” he said. Instead of using p2p integration, Axa Luxembourg has switched over to API (application programming interface)-led connectivity and transformed its focus to customer centricity, said Vansteelandt.

He created a team to centralise its API strategy and define a canonical data model that could then be used to align all parts of the business onto the same data dictionary. This led to a common data taxonomy across Axa’s product lines. Four years into this API approach, all integration is achieved through Mulesoft. Architecturally, the APIs are split into three layers, covering system, process and experience.

The benefit of having a central API strategy is that it promotes reuse in different projects. According to Vansteelandt, an API-based architecture transforms the way data is structured, which means the architecture at Axa Luxembourg is much more flexible than before. “You don’t need to reinvent the wheel doing point-to-point integration and you can reuse components,” he said.

The flexibility of the platform means that when a small part of the architecture is redeveloped, there is no need to redevelop and test everything else, said Vansteelandt.

For Vansteelandt, an API strategy offers Axa Luxembourg a third benefit, which reflects how the insurance sector is changing. Axa provides products for consumers and embedded insurance, such as the insurance that is offered for free when someone buys a new car. “Insurance products are becoming a commodity,” he said.

Vansteelandt said that with the ability to shop for insurance products via the internet, “there is no need for service and advice”. He added: “Then there is a third model, which is a niche market, where insurers are experts.” These cover very specific risks, such as insuring commercial aircraft, he said.

Axa Luxembourg needs an API ecosystem to manage these different models at the same time, said Vansteelandt. “Managing customer relationships is really key. We require capabilities ranging from very basic internet products to the APIs that we make available to partners and for new types of services. It is key to have connectivity and have integration across players in this ecosystem.”

For an API strategy to succeed, Vansteelandt believes the culture of IT needs to change from one focused on individual projects to having a top-down approach driven by a good architectural team. “It’s about aligning people to the same goals,” he said.

Another issue to consider is budgeting. “Who pays the bill?” said Vansteelandt, adding that it is very important to have clear rules defined.