Indian banking customers are now willing to shop around for products and services, says a survey on personal financial services by McKinsey.
There has been a decline in loyalty across income segments from 79 per cent in 2007 to 40 per cent in 2011. Therefore, there is need for greater focus on quality of customer interactions, the McKinsey survey states.
Another observation made by the survey is that although insurance continued to be the most penetrated product, there has been a 20 per cent decline in actual use of insurance products between 2007 and 2011. In the same period payment products — debit-cards — and investment products — equities, retirement products — have doubled.
Financial planning
The survey also states that the percentage of customers willing to take advice for financial planning has increased from 58 in 2007 to 70 in 2011. But there is also a declining satisfaction with financial planners.
Therefore, the financial planning industry in India looks like a very promising industry, said Mr Renny Thomas, Partner, McKinsey India. “There is a big perceived need for financial planning. It is probably one of the most high-growth segments in India,” he said.
The share of banks in financial planning has increased from 7 per cent in 2007 to 16 per cent in 2011, but is still lower than in markets such as Korea and Taiwan, where banks' share is over 50 per cent.
In India, the share of insurance agents is still the highest, at 34 per cent, despite declining from 49 per cent in 2007.
“There is a long way for the banking channel to go in terms of penetrating the financial planning space,” Mr Thomas said.