BFSI Exchange Summit 2017ET Edge
Awareness, simplicity in product design and efficient service delivery using technology will facilitate inclusion of hitherto uninsured and underinsured Indian population. It is for the companies to build stronger customer relationships and create more trust and ease in the claims process. The area of financial security for both living too long and dying too early can be given further impetus through appropriate behaviour changing incentives to customers as well as providers.
Technology while providing a disruptive edge is also about enabling the current workforce and nurturing a culture of change. It’s important to create a business climate that allows one to try new things, fail fast, learn fast and keep improving.
Technology is the key to Digital Transformation, which is the need of the hour. A robust security architecture, a deep rooted and reliable network architecture, robotics and Artificial Intelligence are the key requirements for such transformation, which will completely change the BFSI landscape in the years to come.
Digital is democratic for empowering people and enabling services to deliver enhanced customer experience. Hence enterprises must include the digital dimension in their growth plans. Increasingly customers are opting for digital mode to address every need. And services in digital mode reach out to more number of people. So businesses too should be reaching out to them, using digital.
With the many new innovations and directions that the BFSI Industry is taking, whether in terms of new ways of working, financial inclusion moving to digital ways of transaction, the space is a dynamic and fascinating one. This movement has spawned synergies that at some point will bring together everybody onto a platform of both inclusion and access.
The Motor Vehicles Act makes it mandatory for all vehicles to have a TP insurance to protect against accidents and damage to Third Party. PMJJBY was launched with a premium of 330 for 2 lacs cover, which is a negative margin product that has absolutely no scope for misselling to the customer. There has been limited new enrollments beyond the year of launch. In order to enhance awareness of risk management and promote life insurance as a personal risk mitigation tool, the Government may consider a built in cover with every Jan Dhan Yojana account, with an opt-out option to the customer.
Even though the mutual fund industry is booming, it still largely remains underpenetrated in India. There is still a large mass of savers who haven’t yet got into the investing habit. We believe that the long term outlook for Indian economy remains positive. Equities thus have a good potential to give healthy returns given this outlook over the long term.
Insurance is a critical element in bringing about financial inclusion across the country. It is evident that Indians see value in insurance products, but most often life and motor insurance take more precedence than health insurance. In order to encourage more people to purchase health insurance for themselves and their loved ones, insurers along with the government and regulatory bodies should spread awareness about the importance of including health insurance in their personal finance portfolio.
Banks will need to leverage technology to offer contextual banking and reduce number of steps required to be performed by the customer to avail a service. This also includes reducing number of key strokes. Banks need to quickly adopt an Omni-channel approach to engage with customers with common process & content orchestration. In addition to this, over a period of time banks will need to use Machine Learning, Artificial Intelligence and Natural Language Generation to significantly improvise the engagement with customers such as intuitive and personalized responses based on customer profiles or classification of common queries.
Technology has put customer at the core and companies which have customer centricity built in their DNA will emerge as clear winners. In today’s digital age, and a mobile-first world, companies that offer truly seamless platform agnostic experience and offerings based on behavioural analytics, will emerge most profitable and be able to drive recommendation and referrals. Especially in healthcare, customers demand (and rightly so) instant resolution and urgent care. It is therefore important for health insurers to modify their approach to build strong customer relationships.
Banks will need to be increasingly sensitive in their lending to industries that might create a bigger carbon footprint, to the extent of bearing further exposure and reducing current exposure to these companies. Indeed, The Indian Accounting Standard could raise provisioning requirement by banks to cover bad loans by as much as 30%.
Banks are saddled with over Rs. 8 lakh crore of bad loans, and the migration to ‘expected loss’ from current ‘incurred loss’ will most likely raise the provisioning requirements for loan losses in the medium term. This move is aimed at eliminating credit shocks like those seen during the global financial crisis in 2008.
The country needs to create jobs for its growing youth population and the small and micro sector is well poised to meet that demand. The MSME sector, which is the cradle for the large entities, must be nurtured as they not only provide avenues for fulfilling entrepreneurship ambitions but also support the larger objective of providing jobs. Besides job creation, banks will also get opportunities to lend their support to the country’s infrastructure growth, making them a part of the next wave of growth.