Alittle experimentation is always a good idea. Like merging different sources to create innovative products. Chefs, artists, scientists... everybody has long discovered the benefits of this line of thought. So why would bankers be left behind?
They are fast learning that the only way to stay afloat is to forge strategic alliances to develop new products and services that would meet the emerging needs of Indian customers. Enter the new age bank, a one-stop-shop for all your financial needs, both the acknowledged ones and those you don’t know about yet.
Simply put, from being a mere custodian of your resources, a bank now actually chaperones your financial future. Says Harpreet Singh, business director, wealth management, Centurion Bank of Punjab; “Customers trust banks with their money and seek advice from time to time on what to do with their surplus that cannot build wealth sitting idle in the savings bank account.”
This is an opportunity that banks have seized and most banks these days offer some form of advice or products that are not under the purview of traditional banking—from insurance to mutual funds to portfolio management services. While many of them are available on the electronic banking platform, these are all services that need more human intervention. That’s why banks developed the last delivery channel enabling home banking—doorstep banking. Whether you are a high net worth individual or a salaried employee, the bank will dispatch agents to your home or office to help you manage your money.
Says Sandeep Das, head, wealth management, Standard Chartered Bank: “We provide services to our customers to manage their surplus money. It covers several products including savings accounts, deposits, investment products and bancassurance.” It all started with housing and personal loans got extended to mutual fund sales and now insurance tie-ups and even the gateway to buy and sell securities. The reason banks are expanding beyond plain banking services is similar to why post offices got into setting up mini-banking operations— it’s driven purely by customer needs.
Based on existing banking accounts, banks initially limited themselves to extending easy loans to account holders to help them realise their financial goals and build assets (homes). Banks are also ready to provide you overdraft facilities against your deposits, shares and other financial securities, to meet short-term fund requirements. All this is possible with relationship managers of banks who have the access and ability to achieve the best-fit money management system that works for you.
“These are activities that help us retain bank customers from looking out for money management and periods of tight cash flows,” adds Singh. Banks offer existing accountholders better interest rates and deals on loans to retain them from switching loyalties. After all, the money lent is from the pooled deposits and a system to earn the bank an additional income source. Clearly, as Indians earn more, save more and accumulate more, banks will play a crucial role in helping their customers protect, create and manage wealth.
While wealth creation and management tools are for your good that the bank offers free of cost or for a nominal fee depending on the product that is sold, it does come with its own set of caveats that you should be aware of. In the exuberance of selling non-core banking products, relationship managers in banks can get aggressive and sometimes even trick you into buying products that you may not need. There are numerous instances of people having been thrust with insurance policies or mutual funds that they don’t need and don’t understand much about.
Banks too on their part understand this lacuna that exists and have started to put systems in place to check misuse that such selling opportunities relationship managers can thrive on. “Our advisers undergo stringent training and certification before they sell investment products to accountholders,” says Das. Banks have realised the need for qualified and trained personnel who these days help accountholders manage their finances better and build wealth.
“There are widespread apprehensions amongst accountholders on relationship managers not selling the right product. As a bank we stand to lose if accountholders are sold something wrongly,” says Singh. Insurance companies on their end see the benefits of tie-ups with banks to customise policies especially for banks, extend free advisory services to bank accountholders to protect their wealth (see graphic). This gives them the ease to spread their network and reach.
On the service front, relationship managers visit accountholders at their home and take them through elaborate financial planning exercises and suggest products to fit into their overall financial life. While traditional banking operations are now getting out of the bank, there are value-add services that are now being delivered at the doorstep to accountholders that makes banking an experience they enjoy and find helpful. Use services that banks offer to handle your investments, take care of things like applying for public issues, new fund offers and more.
Though in matured markets tax planning is also done by bank’s relationship managers, it may just be the next feature that you can expect from your bank. The day is not far when banks will take care of all your financial needs, literally from the cradle to the grave.