Redefining distribution

Indian Financial Services players/service providers have until now, not been able to adequately leverage opportunities in the financial distribution architecture, despite having a captive audience to capitalize on. Having said that, we have in us the ability to build a global standard for financial distribution in India. Our analysis in the report suggests the following key takeaways to consider.

A bad experience is bound to create dis-trust at the end of the financial services beneficiary. To do away with dis-trust in the establishment, it is important that regulators put in place measures that will prevent mis-selling of financial services products. Global best practices if adapted to India, can offer a lot in addressing the pressing challenges that call for better supervision in distribution.

Appropriate, unbiased advice, will go a long way in establishing the much needed trust among beneficiaries of our products and services. While it is a matter of minutes we can earn the apathy of our clients, establishing trust by demonstrating competence in advice, is a matter of time. Technology has a lot to offer, by way of putting in place checks and balances to ensure our advice is measured, and must be a part of the equation.

Fulfilling unmet needs of the BoP population is one example of the captive audience that was mentioned earlier. Another type of trust issue we can face when reaching the unbanked or the BoP segment is the: “We don’t know you” syndrome. This segment is unaware and therefore untrusting. Creating financial awareness takes precedence here, as providing access alone, will not tackle the problem. Those on economic edge are a lucrative segment for service providers. Not only is there an evolving workforce in the Base of Pyramid (BoP) population, but also, by use of digital channels are they more likely to fall in the financially included net, and with further engagement with a diverse community of stakeholders, their engagement levels are likely to deepen. Technology is without doubt a part of the equation. Governments, communities, and organizations, all have to converge in pulling this unbanked and BoP segment into the financial inclusion net, and in turn reap the benefits of scale presented by this segment.

As the trend toward digitization continues, the digital channel has the power to solve many challenges in distribution for service providers. For consumers, digital offerings offer convenience (such as tailored services) and resonate with them, even if physical accessibility is not an issue.

Each of the takeaways discussed in our report, will depend on a range of factors and conditions, often subject to changes beyond our control. But, business ventures must go beyond business as usual. We will also need a diverse set of resources and capabilities to successfully deliver the distribution program: funding, staff, knowledge, processes, and systems to name a few. Companies championing new ways of thinking and resolving these uncertainties, while building key capabilities, will emerge as the more engaging go-to platforms.