Bancassurance — an opportunity to create wealth for the masses

Observer writer

Sunday, September 02, 2018

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In the past, you walk into the bank, the credit union, the investment banking house and ask how much interest rate they would pay you. Then you could take your $10,000 or more and put it down for 30 days, 180 days and the like and then collect your interest cheque at the end of the period.

Those days are over.

Now, to get a repurchase agreement you need at least $1 million. And for investors who are comfortable with risk, there is the Jamaica Stock Exchange (JSE). So where does that leave people with less than $1 million to invest or who are afraid of risk?

Enter the bancassurance sector characterised by products such as ScotiaMint and OMNI. This is where commercial bank customers have the opportunity to get investment plus insurance. These type of products not only carry an insurance product, but a guaranteed return which is comforting to clients who are uncomfortable with taking risk.

According to PriceWaterHouseCoopers, if this sector is to provide value to the mass market of the financial sector, a few things must happen:

1. Products need to be simple and clear as to the benefit.

2. Providers need to avoid a product-centric sales approach and serve their customer's financial needs.

3. Invest in training to uncover customers' financial needs.

4. Invest in digital analytics to understand customer preferences to design campaign and provide information in real time during the sales conversation.

The question is how best can the commercial banking sector serve a market that has small sums, low-risk tolerance and a high need for financial literacy education.

According to co-founder of THINK. GROW. LEAD, Duane Lue-Fung, consultative selling is the answer. And while it takes time to set up properly, once in place, companies then reap the dividends.

“In this space called bancassurance, the kind of conversation you need to have is with a demographic that does not like risk and yet wants their money to grow. So the sales team has to be extremely good at listening, which allows them to ask deeper questions. That takes time and you have to have mass to make money in this marketing.”

There are a number of financial institutions competing for the share of wallet in the space and Lue-Fung says, “Selling insurance is a different kind of conversation. There is no quick way to help people to understand the product. It is one of the most time-consuming products I know. You have to ask good questions, listen, extract, and be clear as to what you are looking for and what you want.”

In explaining the sales strategy from the company perspective, Lue-Fung explains: “Once you spend the time to get it set up properly, the process is not slow. Understand that in sales there are two things that are time-bound, including the sales cycle; and insurance carries a particular sales cycle which is the time you meet the client and you get the cheque. You can have the conservation in one hour and I have a pipeline of people through my prospecting rituals which includes making 50 calls per day — my pipeline is full.”

Lue Fung continues, “Even though the companies are making record profits, it may be at a time when skill sets and competencies are at the lowest, and the leadership competencies are weak and cannot tap the untapped opportunites. However, if the companies upskill, they could see 30 to 40 per cent growth. The frightening thing is that what if they upskilled? What if leaders were holding people more accountable? What if leaders were able to coach more effectively?”

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