PayTM Karo has captured the imagination of Indians.
So while 200+ million Indians are already registered on their platform, selling them financial services is a big challenge.
Here are the challenges that I perceive for the Paytm Payments Bank.
Financial decisions is a deeply personal behavior thing. Improving financial behavior with technology is an interesting field (Called Captology) and BJ Fogg has done extensive studies on the same. Fogg says that any behavioral change will happen only when motivation, ability and trigger (MAT) combine together at the same time.
So while technology can improve the ability by making it easier to do financial transactions on mobile and provide triggers with the data mining techniques (birthdays, purchases for kids, etc), motivating a person to buy insurance or investments is a big challenge.
There are almost 2.5 million agents and advisors in the country selling insurance and investments. 90-95% of these agents are part timers and have little knowledge or professional expertise to dole out useful advice.
Plus there are several toxic and sub-optimal financial products that are on offer from the financial companies.
The above are two reasons why there is a huge trust deficit for financial services amongst the consumers.
It is important to note that while there is no motivation to buy for the layman consumer, there are big motivations for the untrained agent to sell!
Overcoming this trust deficit of the consumer and motivating consumers to buy financial services is a big challenge.
Technology in Financial Services
There are several (50+) robo advisory platforms in the country that promise commission free and professional & cost effective advice. While the premise of these platforms seem sound, the underlying assumption that the common investor is rational may not hold true.
Moreover, the traction for these platforms is disappointing.
To my understanding, the bet on technology itself being the solution is misplaced. I think that technology is an enabler, not the solution itself, especially in the financial services space.
Plus, there’s a difference between using technology for recharges and using technology for financial services.
Research suggests that five factors shape household engagement with financial markets. These are: Supply side barriers, Knowledge, Trust, Irrationality, and Mismatch between preferences and market offerings. (Source:)
So, understanding the strengths and power of technology in the financial services space is another challenge for Paytm Payments Bank
How to Sell to 500 Million Indians
While the trust deficit and sub-optimal products is a big challenge, the problem itself is an indicator of the solution.
In the financial services space, I think that the biggest factor for success is the distribution. Distribution has always been the single most important factor driving the financial services business worldwide. The complicated nature of financial services makes the effectiveness of distribution channels the key factor.
For the consumers, the distribution channel is the primary deciding factor in customer choice. Trust takes a long time to build up. But once it does, it helps in a big way. The distribution channels’ importance also puts them in a position to influence customer choice. Most people do not understand insurance; what they understand is what is conveyed by agents/advisors.
A New Distribution Channel: The Way Forward
Instead of building that efficient & effective sales team that everyone is building, how about building a Customer Service Champions (CSC) network.
A Customer Service Champion will focus on handling the service needs of the consumers instead of straight away asking for new business from consumers. A CSC may be responsible for the following:
- Learn about the customer’s needs and service requests.
- Conduct Financial Readiness Survey
- Provide answers on financial instruments.
- Communicate with customers via phone, email and chat
- Develop relationships with corporate, educational institutions and societies to conduct “Smart Money Manager” events.
- Ensure great customer experience on PayTM.
These CSCs need to be well trained and should clear this certificate course
The idea is to follow the right 8 step sales process instead of the one being followed right now. Right now, agents are expected to canvas business with as little training as possible. The 8 step sales process requires sales people to do prospecting, needs assessment before pitching a product.
The shortcuts of selling insurance has resulted into the trust deficit. It’s time the long, hard road is taken. I’m sure it’ll lead to success!!
All the best, PayTM!