Banks have a pressing need to increase their product offerings. Couple of decades back, they relied primarily on cost reduction and price increase to boost profitability. Since the past decade, Banks have relied heavily on third party revenue, and should take series of strategic steps to capitalise on the Bancassurance opportunity. 

Today Banks’ sell only what Insurers give them; Insurers call the shots in designing products and underwriting. Banks should seek Insurance partners who are committed to designing specific products and underwriting processes tailored for Banks customers and distribution channels.

Partnership deals are reliant on a structured deal and commercials, maintaining high level of transparency. Commercials need to worked upon protecting interest of both the Bank and the Insurer, and hence needs expert guidance.

Most consumers’ first financial relationship is with a Bank. To take advantage of this fact, Banks should strive to establish a broad financial relationship with their young new customer. They should introduce these customers not only to core banking products, but to full range of bank’s service including Insurance.

Broadening the initial contact into a first insurance relationship can help increase revenue and strengthen bond with customers. This relationship will increase in value as the customer ages and becomes wealthier.

Banks have strong brand and close financial relationship with customers, and have an advantage of selling ability. In order to build Insurance business, Banks will need products and services that will address specific customer needs.

Investment products are fast becoming an essential part of the repertoire of successful Banks. Bundled investment and insurance products are an integral part and Banks will need products in order to sell Wealth management services to the affluent customers.

Traditionally Insurers suffer because of dissatisfied customers primarily serviced by Agents. Banks can exploit this weakness by offering mass-market customers a more satisfying experience at a lower cost. By improving distribution, Banks can increase profitability of standard policies.

Underserved segments include first-time investors, small business and self employed. These segments are large and can be lucrative if served in a cost effective manner. While serving them, Banks should keep in mind the long term potential and total life time value of this segment while designing service and pricing strategies.