|V Vaidyanathan, Executive Director, ICICI Bank|
For a while the “new economy” was considered to be IT, ITes and the sort. To me, now everything is the new economy because everyone is now swimming in new waters. So there will be an adjustment to the new world economic order among all service providers, and this will have deep impact on what and how the consumer is served. On businesses, this will have long term impact on how they are positioned to take off, when the wind blows. What the new paradigm means for the consumer, we will explore in this article.
Like all services, banking too has gone online, but the touch and feel is still missing. The real power of the internet will be unleashed for the consumer only when the internet becomes a live branch, not a passive information tool or an inert transaction channel as it is today. The customer can, in theory, get access to Tellers, Relationship Managers, and the Branch Manager, exactly what you could get in a real branch. In the first of its kind in the world, we’re soon launching a new model called “i -Zone” where we’ve simulated a live branch on the net. This branch will interact live with the customer; negotiate loan contracts, and help customers take investment decisions online. They can even do real transactions like accepting and dispensing cash through the courier model, traditionally the domain of the physical branches.
For long, banks encouraged customers to transact through alternative channels - customers did exactly that. Going forward, banks may sing a different tune, requesting customers in. I mean, here are millions of customers walking in into branches everyday, and we are going around soliciting them. This has to change. Routine transactions will still happen remotely, but now, more than before, the customer is seeking advice, is not in a hurry to close, and will be happier doing direct deals- without intermediaries. For banks, there is a renewed appreciation of these footfalls; every foot is worth its weight in gold. This month, we launched a campaign “Just Step In”; requesting customers to walk in to our branches. Indeed, but within a week of its launch, we see a rise in direct enquiries at our stores.
For a while, the focus will now shift from wealth creation to wealth preservation. Last year this time, if banks told customers to make a Fixed Deposit, to many it sounded a joke- the joke doesn’t sound so funny anymore. Customers somehow believed in a false sense of immunity against any wealth erosion; and the occult financial knowledge did not help. This leads us to the subject of financial planning.
I feel one area where tools are missing in the banking system the world over, are quality financial planning tools. There hardly is a bank where the internet banking sites provides for comprehensive and quality financial planning. Usually a need and a service plug together, somehow this area is a vacuum. More than ever before, the customer has a need to simulate her cash flows, her personal balance sheet, and mark to market all financial investments including non banking assets like property. We’ve got to work on this and provide our consumers a quality tool.
At first blush, the thought of the planner may sound neat. But the more important requirement is the realization of the need for financial planning among consumers. In good times; the term “balancing the portfolio” was heard by us consumers but went unabsorbed as a routine drone. Now its sinking in. We did a consumer education series on financial planning a year ago, our research showed the message didn’t stick on consumers. We restarted our “ICICI bank Financial Education series” in leading newspapers and television; now there is a surprisingly high attention and recall.
The last bit, the need for trust services and will creations will spurt. This may have been a latent need, but I suspect this will soon jump the queue in importance. And when the bubbly economy resurfaces, the popping sounds will be happier than before for consumers and businesses alike.