How can a cashless economy help Insurance?- Business News

How can a cashless economy help Insurance?

"We as a country are promoting a "cashless" environment and it is inevitable that during the coming years, our economy will move towards this reality"

  • January 6, 2017  
  • |  
  • UPDATED   20:20 IST

"Cash is King". We have grown up on this adage. Unfortunately (or fortunately) the recent developments in the country have turned this concept on its head. We as a country are promoting a "cashless" environment and it is inevitable that during the coming years, our economy will move towards this reality.

Take a look at how the macros stack up? A nation of 1.2 billion, GDP growing at 7% and a country which is embracing technology across domains. India is at the cusp of a digital revolution and it is important that we accelerate the pace towards a non physical mode of transaction. With penetration of Life Insurance at 3 % & General Insurance (including Health) 1%, there is a clear opportunity waiting to be tapped. And this is where the drive towards promoting cashless payment system is a "silver lining".

In every purchase cycle, payment is the "moment of truth". In a selling process, this is where the rubber hits the road and hence a critical part. In this context, for Insurance a cashless environment works very well. Digital locker, Unified Payment Interface, Mobile wallets are increasingly being adopted. These give a seamless experience for the customer and helps the Insurer crunch the time lag. "Convincing" and "Payment" are areas where maximum time is invested and if you take one out of the equation (time spent perspective), it adds a lot to the productivity of the sales channel. Having said so, the biggest benefit that one has to appreciate in this transitioning eco system is people getting used to a non physical payment world. This is a paradigm and once settled, it would be a great lever of growth for the Industry. It also inches people to a digital world thus opening the doors to a global market where distance is just a number. This is the biggest plus that one can draw from the initiatives that are being undertaken to promote a cashless India.

While the financial system is being geared up, it is time that the Insurance Industry also starts working in areas which would enable a conducive environment for growth. The primary areas that need to be focused are -

  1. Simple products
  2. Standardized sales processes which ride on technology
  3. Customized products to cater to individual needs
  4. Communicating the security associated with cashless payments
  5. Increase awareness & value of the solutions offered
  6. Payments (credit & debit) through the e route
  7. Service cycle on the digital platform
  8. Increase engagement with the customer digitally

The gist: A very big process imperative "payment" will go the digital way. Very soon, we will have a connected country where transfer of money will be seamless. From an Insurance perspective this will be a big boost since it will enable a process without any breaks. It is hence important for the Industry to work on the product proposition and increase awareness of the product value while at the same time coming up with solutions which are customized to the consumers' needs & requirements. The more one is able to adapt to the customer needs, the faster will be the insurance adoption and consequent penetration in the country.

Each of the verticals in the Insurance space ie Life, General & Health are products which offer great value to the consumer. What is needed is to reach out to them and communicate. With a mobile penetration of ~1 billion & smart phone penetration of ~700 million (next 2-3 years) reaching out to the customer directly will no more be a barrier. The objective of the Insurers should be to integrate the large populace into the financial mainstream. The country is at an inflection point. With the power of "e" slated to increase manifolds, we should see a tectonic shift soon.

By, Shalabh Saxena, Director - marketing & customer retention, Canara HSBC Oriental Bank of Commerce