BackCups of tea, banks and insurers
The need for creative regression by banks and insurance companies is not just a storm in a tea cup
PremiumBanking folklore has it that when a foreign bank’s branch in Kolkata’s Dhakuria area moved to core banking solution in the early 1990s, it replaced passbooks with monthly account statements. There was promptly a huge furore among customers. The branch stuck to its policy, but after serious heartburn.
The reason was far more pedestrian than mistakes in statements. The very activity of coming to the bank to update passbooks provided an opportunity (especially for retired customers) to interact with the branch manager, chat with her over cups of tea, share daily joys and sorrows, and some intellectual discussion as well, this being Kolkata. All that had to disappear abruptly.
Unknown to us, it has come back. No, not the account statements per se, but the branch, in a broader sense. It had begun to fade from the mind space, but is now firmly back.
With the insurance agent, the bonhomie was a little chequered. He would typically belong to the same locality, so the cups of tea and chit-chat was kosher. Bit of a lovable nuisance, he had only one product to sell and sold it by scaring you. God forbid (this was a mandatory expression), but what if you are no more? Just think - won’t you be happy to get so many lakhs after you die? Surely you don’t want to see your family out on the streets? Morbid though these were, you nevertheless needed the bloke at the moment of truth—claims settlement—of course, when you can’t monitor it.
In this case, too, the personal touch faded because the agent would now come with hard cold arithmetic in hand (more likely in a laptop)—more products, examples, riders, incentives, et al. The old-style agent has made a comeback, or the newer age ones have had to creatively regress, since late 2010, as unit-linked products moved to the ICU.
We first got a glimpse of this change when in 2010 ICICI Bank articulated their 5C strategy-credit growth, CASA (low-cost deposits), cost reduction, credit quality, and—surprise, surprise—customer service. An executive had explained, “In our quest for technological improvement, we had forgotten that we are serving real human beings." Axis Bank, which has consistently highlighted the shift to non-branch modes, emphasises less of that now. Perhaps the greatest challenge has been for insurance agents who have had to retrain in the forgotten art of selling plain vanilla term insurance products.
In none of these cases did the initial change lead to 80% of the business moving to an impersonal platform (the internet is only one example); it was at most low double digits. So the retracement should have been easy, right? The problem is that banks and insurers have not fully grasped how difficult it is, operationally.
It is tough because there are indeed very few precedents; we are mentally not attuned to ‘creatively regress’. The car industry hasn’t got back into labour intensive production after automating. Telecommunication hasn’t reverted to writing letters—we ended the telegram too recently. Even in the financial sector, exchanges haven’t had to regress to open outcry, or the ‘T+indefinite’ settlements. Progress seldom needs looking backward.
It is also difficult because the process is people-intensive, in sheer numbers as well as the change in behavioural pattern that this necessitates. For one, getting good people has now been formally recognised as India’s Achilles heel. The job is harder for the crop of new recruits, especially since the first thing that they ‘heard’ after they were born was a text message on a mobile phone.
Sure, some of this regression has been inspired by a mandated thrust on financial inclusion. You need the brick and mortar (and of course human beings) to interact with the farmer. But one look at the overflowing crowds at even the urban branches and the steeple chase for customers, and it becomes clear that the change is largely self-inflicted.
The irony is that the public sector, which is perfectly positioned to take advantage of this situation, has barely noticed the subtle change. They should instead have seized upon it. Their ambivalence is understandable—it is normal for diffidence to arise when much of the 2000s was spent by them in catching up with the private sector, computerising, introducing new products and dealing with employees rendered redundant. Once you have invested so much energies in combating what was perceived as past inadequacies, why ‘go back’?
But creative regression does not mean yanking out the air conditioner or inducting rude employees. It is a constructive reversal of the mindset towards a greater personal touch. If nothing else, it will prevent more Cobrapost-like revelations! It is a practical necessity, and not nostalgia.
The author has been a senior research analyst on financial services as well as other sectors at various investment banks, and is currently an independent consultant focusing on banks and financial services.
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