Chapter 3 – Delivery Models

The three important human’ interventions in physical channels are

1. Internal Customer – Staff of the Branch
2. Specialised Marketing Personnel
3. Direct Selling Associates (DSAs).

In many of the public sector banks, retail banking is carried on only as a separate departmental activity and not as a Strategic Business Unit (SBU) whereas in foreign banks and new generation private banks, retail Internal customer, is more focused in service delivery in new private sector banks. In public sector banks, even without a strategic focus to retail banking, the service delivery is generally more personalised and caring because of the loyalty factor of public sector bank customers and better personal understanding of the customers’ profile by the staff in PSBs. This is more pronounced in semi urban and rural branches where retail customers are more loyal and value their relationships with the banks.

Efficient service delivery

• The following needs to be given emphasis for efficient delivery:
• Understanding the customer, his income level, his financial profile, his needs, his requirements of financial products and his life stage.
• Cross selling the right products to match their requirements.
• Post sales service follow up for customer satisfaction.
• Customer Empathy – Putting yourself in the shoes of the customer and looking the service level from customer perspective.
• Understanding the product features and service prescriptions and conviction about the bank’s products services for right selling and better product and service delivery.
• Attitude for customer service and the concept of team in customer delivery.

DEDICATED MARKETING MANAGERS

In foreign and private banks, since there was mismatch with their retail banking objectives and the human resources available to achieve the objectives, private banks engaged external agencies to carry out marketing and customer acquisitions. Public sector banks have appointed specialist officers for marketing and retail banking initiatives. Separate Marketing Managers were appointed in addition to existing internal human resources. These specialist Marketing Managers (MBAs in Marketing) were young and energetic and recruited from the campuses of management schools. The expectations from these officers are —

• Market Intelligence.
• Potential Sourcing.
• Product and Service Delivery Presentations to the identified customer segments.
• Right selling to the targeted customer group.
• Sales Conversions
• Closing the leads with sales.
• Compliance of promises made and conforming to the service delivery standards.
• Following up with the operations department for effective process and delivery of products sold.
• Customer Relationship Management on a continuous basis for improving the loyalty factor as well as additional sales. The effectiveness of delivery to retail customers has improved very well in this dedicated model.

DIRECT SELLING AGENTS (DSAS)

• The concept of Direct Selling Agents (DSAs) was pioneered foreign banks.
• DSAs are agencies appointed by banks to source business for them on a fee basis.
• Banks which do not have a branch penetration and geography, to service a large section of customers, seek the help of DSAs for sourcing business on behalf of the bank and also complete the preliminary formalities for acquiring customers.
• DSAs are primarily engaged in sourcing Credit Cards and Retail Loans. The appointed DSA appoints field personnel and supplemented by tele callers, start the marketing process, and follow up to meet the customers and convert them into sales.
• But the scrutiny and KYC formalities for the above are basically done by the banks.
• Misselling by DSAs have been rampant especially in the credit card space which make the customers fall into a debt trap by—misusing the cards. Similarly, the pricing for the loans are not explained clearly. Ultimately this will result in dissatisfaction for the customers and reputation risk for the bank.
• With limited branch networks, private sector banks are increasingly depending on outside agencies to sell their retail products. Despite the lack of loyalty and accountability associated with direct selling agencies, new generation private sector banks see this as the only way in which they can grow their scale of operations in the country.
• By appointing DSAs, the cost of delivery of service would be considerably reduced as DSAs are not in their pay rolls. The compensation for the DSAs will basically depend on the volumes of business sourced.
• However, there is Reputation Risk in the DSA model as the field personnel deployed by the DSAs for sourcing business try to make some false promises in the Turn Around Time (TAT) in retail asset processing and issue of credit cards.
• DSAs focus on pure selling by pushing the products than effective marketing after verifying the needs of the customers and their actual requirements.

SALES THROUGH TIE UPS

• Bulk sale through tie up is another option to expand retail assets. Banks enter into tie ups with the following agencies for extending different types of loans.
• Tie up with Builders as a preferred financier for extending Home Loans to prospective buyers. Special concessions like waiver of processing charges, documentation charges, mortgage charges etc., will be offered as additional attractions for these borrowers. In this type of tie ups, bank will approve the specific projects of builders and express their interest to finance the individual or group buyers of the project. Builders in turn will refer their buyer customers to the Bank for considering home loans. In another type of tie up, banks will finance the builders for their housing projects and enter into arrangement with the builders for repaying the loan from the proceeds of sale of flats to different buyers.
• Tie ups with auto dealers is another method adopted by banks for expanding retail credit. This model is more prevalent among private sector and foreign banks. Banks tie up with auto dealers as a preferred financier and set up a counter/desk in the showroom of the auto dealer for soliciting/ capturing customers for extending loans. When a person visits a tied up car dealer’s showroom, on completion of his choice, the customer is referred to the bank’s staff at the showroom and the bank staff immediately get the details and requirements and start processing the loan based on merits. There is another type of tie up where the manufacturer, dealer and banker coming together for offering loans with- maximum concession through sharing of the concessions by all the three. But this model is under strain as manufacturers through their financing arms (NBFCs) extend the credit facility to the ultimate buyers thus making additional profits from the sale of cars.
• Sanctioning of Personal Loans under tie up with different institutions: Banks tie up with institutions for extending Personal Loan to group of employees of the institutions and the repayment of loan will be undertaken by the company. The institutions will recover from the salary of the employees on a monthly basis and remit to the bank directly. Thus repayment is assured for the bank.
• Educational loans are disbursed on a tie up basis. Banks set up special counters during the admission season in reputed educational institutions and offer education loans based on merit.