An Article published on "The Financial Express"
Monday, 09 September 2013
The concept of family bankingAjoy Paul
Banking business has become more complex these days. The unhealthy competition, incremental percentage of nonperforming loans (NPLs), hijacking products and clients by competitor banks, liquidity crisis and the unstable growth of the banking industry makes one to think whether it is on the right track or not. It's time for the banks to go out of the box and reshape their business strategy by putting collaborative marketing efforts to get the first-mover advantage.
More or less, every bank is offering the same kind of services and the same kind of products. Policies and regulations are also similar. Then why are there dissimilarities in collecting deposits and in providing loans? Most importantly, why are there dissimilarities in NPLs? Is that because some banks are very well-managed and some are not, some are having talented personnel and some have not, some are very accurate in forecasting and some are not, some are credit gurus and some are not?
The bank that best addresses and anticipates customers' needs renders consistently higher quality services and connects to the customers via their horizontal channels and wins in the long run. For banks, sustainability is one of the main focuses. But these days, banks are losing their sheen because of unhealthy competition and sustainability is now the key question.
We believe all banks are the same. Every bank should participate in the economy equally. For this reason, every bank gets the equal right to make profit and create wealth and by participating in the economy equally, they should ensure their sustainability.
Firstly, banks should turn to the 'full-fledged family service' from the individualistic service. The banks should serve the family of a client, not only individuals. Today the concept of banking is to serve the individual person. We are providing a loan to an individual who has an income source, taking deposit from an individual who has surplus money. We should drift away from the individualistic service approach and provide package/ bundle services to 'families'.
How is it possible?: Just think about a family which keeps its savings like pension or provident fund (PF) money with the banks in the form of FDR/DDS for the house master himself and other members of the family by holding a monthly deposit scheme in the name of wife/children or an education scheme for higher study of children, a marriage scheme for daughter, brother or any other relative who resides abroad and also can maintain an FC account.
Foreign remittances come through banks to their family members back at home. That same family needs auto loan, education loan, consumer loan, house renovation loan etc. If we can make them believe that we are their 'family friends' and we are with them all the time, come rain or shine, the family banking will have a greater and stable effect.
At the same time, the target of zero NPL will be achieved. The words like 'defaulter', 'NPL' etc will no more be there in the dictionary of the banking sector. Because, we are banking with our own family and we know the ins and outs of the family.
Similarly, the person will consider it disgraceful to be a defaulter. The bank also can provide insurance coverage to its product, from which the client will get benefit in future. For that purpose, a bank can team up with an insurance company for providing that service.
If an insurance company teams up with a bank, it will lead to merger of the bank and the insurance company in future. If insurance companies merge with banks, the latter will be able to take care of the children of a family, their education and their habitat and secure their life. Thus all the banks will have some families to serve and they will be rendering a full-fledged service to the families and as a whole the nation. If banking is a service industry, then obviously we serve the nation but the sample (family) should come first.
The writer is a management trainee of AB Bank Limited.
ajoydu@gmail.com
Banking business has become more complex these days. The unhealthy competition, incremental percentage of nonperforming loans (NPLs), hijacking products and clients by competitor banks, liquidity crisis and the unstable growth of the banking industry makes one to think whether it is on the right track or not. It's time for the banks to go out of the box and reshape their business strategy by putting collaborative marketing efforts to get the first-mover advantage.
More or less, every bank is offering the same kind of services and the same kind of products. Policies and regulations are also similar. Then why are there dissimilarities in collecting deposits and in providing loans? Most importantly, why are there dissimilarities in NPLs? Is that because some banks are very well-managed and some are not, some are having talented personnel and some have not, some are very accurate in forecasting and some are not, some are credit gurus and some are not?
The bank that best addresses and anticipates customers' needs renders consistently higher quality services and connects to the customers via their horizontal channels and wins in the long run. For banks, sustainability is one of the main focuses. But these days, banks are losing their sheen because of unhealthy competition and sustainability is now the key question.
We believe all banks are the same. Every bank should participate in the economy equally. For this reason, every bank gets the equal right to make profit and create wealth and by participating in the economy equally, they should ensure their sustainability.
Firstly, banks should turn to the 'full-fledged family service' from the individualistic service. The banks should serve the family of a client, not only individuals. Today the concept of banking is to serve the individual person. We are providing a loan to an individual who has an income source, taking deposit from an individual who has surplus money. We should drift away from the individualistic service approach and provide package/ bundle services to 'families'.
How is it possible?: Just think about a family which keeps its savings like pension or provident fund (PF) money with the banks in the form of FDR/DDS for the house master himself and other members of the family by holding a monthly deposit scheme in the name of wife/children or an education scheme for higher study of children, a marriage scheme for daughter, brother or any other relative who resides abroad and also can maintain an FC account.
Foreign remittances come through banks to their family members back at home. That same family needs auto loan, education loan, consumer loan, house renovation loan etc. If we can make them believe that we are their 'family friends' and we are with them all the time, come rain or shine, the family banking will have a greater and stable effect.
At the same time, the target of zero NPL will be achieved. The words like 'defaulter', 'NPL' etc will no more be there in the dictionary of the banking sector. Because, we are banking with our own family and we know the ins and outs of the family.
Similarly, the person will consider it disgraceful to be a defaulter. The bank also can provide insurance coverage to its product, from which the client will get benefit in future. For that purpose, a bank can team up with an insurance company for providing that service.
If an insurance company teams up with a bank, it will lead to merger of the bank and the insurance company in future. If insurance companies merge with banks, the latter will be able to take care of the children of a family, their education and their habitat and secure their life. Thus all the banks will have some families to serve and they will be rendering a full-fledged service to the families and as a whole the nation. If banking is a service industry, then obviously we serve the nation but the sample (family) should come first.
The writer is a management trainee of AB Bank Limited.
ajoydu@gmail.com
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