Current Situational Analysis of Bancassurance at

Urban Banks
Effective integration with banking services still lacking.
Insurance products not fully compatible with banking products.
Resource planning needs to be more efficient.
Current customer penetration is less than 1%. It indicates poor execution
so far and a huge untapped potential.
Even within this meager client base, there are increasing customer
complaints related to mis-selling and policy servicing.
Less than 12% of repeat or referred business indicates very low customer
satisfaction index. This should be treated as a wake- up call as if strong
customer dissatisfaction is not attended to, will affect banks goodwill as
well as core banking business.
The haphazard and inept execution is likely to lead this huge opportunity
to a challenge rather than a success story.
Bank staff is overtly engrossed in being a submissive service provider as a
banker rather than enhancing customer engagement by being a financial
service provider.
Modern day banking is not about Banking OR Non Banking services but is
about Banking AND Non banking services.
Lack of role clarity in the execution cycle of Bancassurance.
Skill and knowledge levels need definitive improvements.
Importance and Commitment to Training is lacking at all the levels. It is
still considered optional and interfering. Understand that price of
ignorance is much more than cost of training. On the other hand, training
so far has been mostly generic and hence unresponsive.
Traditional insurance sales skills are perceived to be too hard by bankers,
while banking culture is too passive for insurers.
Shift from purely a service culture to a more balanced sales and service
mode is mandated.
Customers still do not see any value in the insurance services being
provided by their banks.
Increasing importance of non-banking, fee based income is still not felt at
the branch levels.

 Banks do not know how to secure their interests. They not geared up for
multi vendor operations as well.
Awareness about legal and compliance related to Bancassurance is almost
non- existent.
No focus on Rural and Micro insurance.

Challenges Ahead in Managing

Bancassurance
Irrespective of the finer details in the upcoming
Bancassurance Regulations, some of the basic undisputed
challenges are Managing Multiple vendors With Multi vendor operations permitted,
Banks need to be equipped to manage them
Distributing Multiple products Understanding and Skill levels will have to
be much higher
Customer Relationship Management Most critical for UCBs
Legal and Compliance Issues shall need immediate attention as the onus
is now solely on the banks. Complaints related to banca are to fall under
banking ombudsman.
Data Security as a fall out of open economy, is an indirect threat in case of
multi-vendor operations
Increased man-hour deployment for the task would be needed and hence
higher levels of productivity is a must
Restricted earnings on percentage terms. Need to increase volumes to
increase the revenue.
Direct Exposure to risk of Grievance Redressal and Arbitration on
insurance matters. Remember 90%+ cases are related to sales
inappropriation.
Increase in cost of execution and servicing
Immediate focus needed on in-depth Training
Need to understand insurance beyond relationship (request) selling or
product selling
Attention to details like documentation, solicitation, solution
recommendation and commitments during sales process in now
mandatory.

 Bancassurance is no more a joint exercise predominantly executed by the

insurance companies; it is now a fully owned distribution responsibility of
the Banks.
Most importantly it shall mandate a cultural transition at banks from only
service to sales & service in relation to bancassurance.
It is expected that from FY 2012-13, UCBs would be given targets related
to Microfinance.
Apart from Microcredit, Microinsurance is one of the most key areas of
Microfinance.