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Bancassurance : Future Trends
BANCASSURANCE / CROSS SELLING IS GOING TO BE A MAJOR TREND IN BANKS, NOT BY CHOICE, BUT BY COMPULSION, BECAUSE : • Pressure for increasing profits & productivity • Limited lendable resources • Limited capital availability
• Meeting customer needs of other financial products • Business that does not use scarce lendable resource or capital or create NPAs. • Customer retention – it is general knowledge that larger the number of connections or relations that a customer has with his banker, the higher is his probability of continuing his relationship with the Bank
• There is a huge untapped market for para-banking products and the banks would definitely like to benefit from the available business potential • There is huge distribution network / infrastructure already existing. • It enhances the brand equity of the bank, from being a mere bank to a financial supermarket, selling all financial products. • SO BANKS ARE GETTING INTO THE BUSINESS OF CROSS – SELLIING.
Insurance Penetration : World Scenario • Huge Scope for Growth in Industry
Insurance Density : India Scenario Insurance Industry, particularly Life Insurance is growing in India RERASONABLY FAST
Insurance Penetration : India Scenario Life Insurance penetration is improving better than General Insurance
Insurance Sector in India over the years In Crs Source: IRDA Annual Report
Insurance Distribution Structure Bancassurance Tied Agents Web Marketin g Direct Marketing Brokers/ Corp Agents Insurance Busines s Partner
World Scenario of Bancassurance Share
Banking & Insurance : The Perfect Mix Synergy Insurance products to the captive banking customer base. Capital Zero capital Investment Resources Leverage on existing infrastructure & optimal utilization of Bank’s staff Enhanced fee income Good first year commission and long term, stable continuing renewal commission. “ One Time sales – Life Time Earnings “ Customer Acquisition & Retention A customer acquired stays with the bank for a Life time – 10 yrs. To 30 yrs. “Larger share of Customer’s Wallet” Additional Income without fund requirement and risk of NPAs.
Need of the hour - Training of Bank Staff Ø Wider Basket : Staff need to be sensitized of the wider market available for tapping. In addition to selling bank’s own products, bancassurance offers opportunity to sell other related financial products too, and thus expand the product range. Ø Increased need to Cross Sell and up sell - Requires data mining and use of sophisticated tools like CRM / Lead Management software for which the employee needs to be equipped. ØThe staff need to be trained, both in soft skills and in product features so that they are able to offer the right products to the right customers. Needs analysis to be done so as to ensure that NO MIS-SELLING IS DONE. ØCustomer centricity must be the core of all considerations.
Need of the hour - Technological Support & Integration Ø Seamless integration of technology ØDirect Debit for Renewals (Banks need to automate collection of renewal premium) ØMIS @ Click §Special Intranet based Portal where : Each Branch can see the details Print Premium Receipts / statements View Customer details View Product details , etc Seamless Integration of insurance and Banking to increase the ease of Sales and reduce cost, so that consumer gets the benefit.
Strategic Challenges…………. ØInsurance companies need to innovate and offer products suitable for distribution thru banks and relevant to the needs of bank customers. ØInsurers to work with banks and offer bundled products ØInsurers should offer special pricing for distribution thru banca channel, since their cost is lower, benefit must be passed to consumers. Ø Sales commission should be adequate to incentivize banks. Ø Insurers must ensure impeccable track of claim servicing so that banks do not lose his basic business / client , of ancillary business
Banks will be required to re-align staff incentive for sale of their own roducts vis-a-vis of the tie-up Partners, as they shift from a manufacturing to a pure distribution of products.