Growing India's financial services market

The great thing about being a marketer in India is that there are many half-filled glasses (that need filling), many bare feet (which need shoes). Market penetration rates are typically single digits for most emerging categories (telecom at 25% penetration and growing at nearly 1% a month is an honourable exception).

The marketer's story - being recanted in this blog - is essentially about tracking this market penetration rates story and about the lessons / actions marketers need to draw/employ to move the needle faster.

The panel discussion

Thus, there was this interesting panel discussion by The Ad Club, Mumbai at the Taj Lands End Hotel on Fri, Jan 4th that I attended. The theme was the "latest trends in global consumer banking" though it was all in context of India's financial services market.The speakers were Sanjeeb Chaudhuri of Citibank and Ajay Kakar of Reliance Capital with Anuradha Sengupta, Features Editor of CNBC serving as moderator. The audience was small (~50) but keen. The Club & the hotel did themselves proud with great refreshments prior to the show. Well-known ad honchos from the Mumbai scene viz. Pranesh Misra of Lintas & Palekar of Eureka Forbes played host.

Sanjeeb Chaudhari of Citibank EMEA (Europe, Mid East & Africa) and ex-RHL, Unilever & Colgate, who began his Citibank career with Diners cards in India in 1989, spoke about the retail banking consumer in Europe. His main themes :

1. Consumers are today overwhelmed with an overpumping up of advertising volume. Citibank U.K. itself sends out 100 million pieces of direct mail - in a country of about 30 million people.Do Not Call lists, spam blocker for mail, ad blockers and fast forwarding of TV commercials (TiVo)are all symptoms of an overwhelmed consumer.

2. Meeting the needs of this overwhelmed consumer are key. Sanjeeb predicted that there is going to be a regulatory push on protecting consumer interests i.e. privacy.

3. In this environment, brand building has to be more bottom-up and P2P.Brands need to find a way to be invited to the conversation. "Tribes" and blogging are in.

4. Be obsessed with the consumer. In banking, one tries to build the brand around life events e.g. marriage, birth, anniversary. Reinforce the brand with every interaction. And for this, use technology. Also,develop a topdown competence within the organization. For example : Contact optimization. Citi Europe can today create an unstructured product for a single customer (customer of 1) in 24 hours.

5. Another example of using technology for becoming customer-centric is "Lights out automation" or, automation that minimizes human interaction. Scotia Bank used a mix of simple and complex triggers to achieve this. A third technology : interaction marketing, which is what supports inbound marketing. A fourth requirement : site optimization. Lloyds TSB has optimized their site for visitors.

6. At each touchpoint, we have : Touchpoint <=> Decision engine <=> Database

Ajay Kakar of Reliance Capital (and ex-O & M) presented the story of the Indian financial services industry from a marketer's perspective.

1. Over 40 plus years after the industry started out with UTI's ULIP (in 1964),there are today 32+ mutual funds with assets totalling Rs. 550, 000 crore.But,this translates to a mere 4% market penetration after all these years. And there is a similar low penetration in other financial services : 2% for general insurance (despite 14 players here) and 17% for life insurance.The key issues impacting this penetration rate are as under.

2. While - overall across product categories - the Indian consumer is getting sophisticated per se, aspiring to be a global citizen et al, when it comes to personal finance he remains a simpleton. He is confused between financial categories, cannot distinguish one from the other. He also sees many similar products with similar claims.He does not and cannot evaluate between all these.

3. People delay their decision to invest. In addition to finding it confusing to decide, they don't seem to find it exciting to do so.

4. The financial services companies/banks have brought this upon themselves.These players tend to have identical products, offers and marketing.It is difficult to differentiate between products within a brand or across the value propositions of different brands.

5. Separately, all that Indian companies seem to be doing is customer acquisition.Companies are not looking to create value.Listening to customers is not happening.

6. The solution for such early stage markets is education i.e. educating cosnumers and would-be consumers. That is what Prudential did in the U.K. (Sanjeeb). Unfortunately, the cost of such education is too high to be borne by a single player alone. Thus,it's necessary for the indutry to get together and talk,abandon their individual positions and look at a mutuality scenario.The sentiment of the panel and the audience though was that this today looks like a distant proposition.

7. We need training academies for our people who sell financial services.

8. Direct Selling Agents (DSAs)wield a disproportionate influence today on the business ("have led the financial companies to a near abdication of control over the business").

9. In this business, trust is paramount. The customer is more interested in whom is he buying from rather than what he is buying. Who is saying that the product is "safe" to buy,is what the consumer seems to be asking. Is this product being referred by a known person ?

In fact,said Sanjeeb,trust is so important that a trusted non-financial services company can well enter the field and "disintermediate" financial servies companies.

Lessons from the panel discussion for marketers & Internet folk

• Ajay's observations are good food for thought, nay a brief, for marketers and advertisers looking to create a mass financial services brand
• Since upmarket & early adopter users in India would behave similar to consumers in evolved markets like Europe, Sanjeeb's thoughts are pointers to what needs to be done for these important segments.
• Since lack of trust is the # 1 issue preventing mass growth of investing, online social networks - where non-investors are in online contact with friends & acquaintances who invest - will help. See also here my presentation on Social Networking : Learnings & Opportunities.