By leveraging on digital innovation, DITO can improve its operational efficiency by automating processes, streamlining operations, and incorporating AI and ML technologies into its key processes from onboarding, underwriting to product distribution, claims processing and payments. This can result in faster turnaround times, lower operational costs, and a more seamless experience for customers.

For example, insurance is often viewed as something that is sold rather than something people actively seek to purchase. One solution to this challenge is the implementation of AI chatbot technology to help answer simple insurance terminology questions and provide basic education about insurance to better prepare the consumer for more meaningful conversations before purchasing a policy.

Digitalisation can also provide greater visibility into business operations and data, allowing DITO to respond promptly to shifting market conditions and evolving customer demands. DITO can adopt an instant gratification approach in its reward program and proactively anticipate or predict consumer preferences and demands, giving them a competitive edge in the market, ultimately leading to increased customer satisfaction and loyalty.

The path to profitability is important for DITO to ensure that it has a clear plan to generate sustainable revenue and remain financially viable in the long run.

To develop a robust path, it is essential for DITO to be backed by the right consortium partners who can offer valuable capabilities to enhance its overall business strategy. By leveraging on the consortium’s well-established ecosystem such as existing infrastructures and distribution channels, DITO can efficiently deploy a range of digital products and services while maintaining active engagements with its customer base. This approach can significantly lower the cost of customer acquisition and cost to serve, allowing DITO to break even faster.

Incorporating robust prudential standards into the development of DITO's path to profitability can play a crucial role in securing long-term sustainability and success of the business. By prioritising effective risk management and compliance with financial crime measures, DITO can create a secure foundation for its operations and build trust with customers and investors. Additionally, implementing prudential standards can help DITO navigate potential regulatory challenges and maintain compliance with industry regulations, which is essential for sustained profitability and growth.

The introduction of DITO to the Insurance and Takaful sector presents an opportunity to make a meaningful difference in achieving the aspiration of "Finance for All," as outlined in BNM’s Financial Sector Blueprint.

Following the success of the Digital Banking Licence issuance in 2022, in line with the third key strategic thrusts of the BNM Financial Sector Blueprint 2022–2026 to advance digitalisation of the financial sector, BNM issued the Exposure Draft for the Licensing and Regulatory Framework for DITO, with an aim to issue up to five DITO licences.

The DITO licences represent a significant opportunity for market players to bring innovative Insurance and Takaful products to the unserved and underserved. In this regard, the applicant must demonstrate how it plans to fulfil the mandated value propositions, namely Inclusion, Competition and Efficiency, while complying to regulatory requirements applicable to existing licensed Insurers and Takaful Operators. The 5-year business plan must include a clear plan on the DITO’s path to profitability and a roadmap for developing technology solutions, including front to back-office operations, especially on how products and services will be rolled out to the target consumers. In addition, shareholding structure should reflect a cohesive approach to bring together various strengths of consortium partners to work together towards achieving a common goal. Lastly, as exiting the financial system is a complex and intricate process, the exit plan may also consider the principles laid out in the BNM Recovery and Resolution Planning Policy Document to ensure a well-managed and efficient exit strategy.