Technology will act as a huge enabler to reach out to a new segment of customers and explore untapped markets in the financial services market. The banking industry has already taken to the mobile opportunity and now it is time for the insurance and asset management industries to follow suit. These sectors need to develop innovative applications to assist in the sales process for agents and brokers, rather than restricting the scope of applications to vanilla activities such as quote generation or providing product information.
Given the large volumes with lesser margins involved, technology needs to be extensively used for maximising benefits as well as Return on Investment (RoI). Mobile and tablet based selling and customer service need to become focus areas, apart from continuing to leverage on the established channels in the sector.
The findings are part of a CII-PwC report Bridging the gap with digital, which also states India’s six largest cities account for 10 percent of the country’s bank branches, while at the other end there are eight districts in the north east with just two or less branches each. With steady growth in branches over the last three years, there is a clear opportunity to expand reach through either branch expansion or by focussing on alternate distribution channels.
Additionally firms need to balance supply-side challenges, such as regulatory requirements and optimal incentive structures, with demand-side stumbling blocks through well thought-out systems, structures and controls, so as to truly extract the potential that technologies such as mobile and digital provide to any distribution strategy, the report added.
The reach of social media is expanding every day, from major cities to Tier 2 and Tier 3 cities in India. Many internet penetration initiatives that try to leverage on innovative, lower-cost methodologies are further adding to this expansion. Social media as a channel provides companies with the ability to create highly tailored propositions. Using social media mining tools, companies can assess customer sentiment regarding product propositions and brands and appropriately create highly specific solutions.
The report suggests that a collaborative effort from the government, regulator, industry players and technology innovators is required to penetrate the rural and semi-urban areas. New guidelines issued by different financial services regulators will necessitate changes in processes, product mix as well as the technology components adopted by market players.
Mr V Ganesh, Chairman – CII Financial Distribution Summit 2014 and Chief Executive Officer, Karvy Computershare Pvt. Ltd., said, “Our industry has already witnessed the use of a number of interesting methodologies to address the challenges of distributing to these markets, be it bundling new products with existing ones through established financial channels, enhancing the productivity of channels with technology or directly reaching customers through social media and other digital avenues. There are significant learnings to note from other countries as well as other industries, including the FMCG, telecom and e-commerce sectors.”
Vivek Belgavi, Partner, PwC India, said, “The allocation of resources across the different channels is crucial when considering the right distribution mix for Tier 2 and Tier 3 cities. Given the more geographically dispersed demand and traditionally lower average ticket size, these cities entail a higher cost. So the use of traditional distribution services needs to be assessed. The key is to balance this constraint with effective incentive structures to encourage agent productivity and thus make up for the lower ticket size through higher volumes.”