Need of the Hour
customisation scoring a direct hit in the Asian personal financial
services market, things will never be the same again
recently had been the dominion of local players in the personal
financial services (PFS) market. The shift towards a global economyhas
prompted the Asian finance markets to respond to the call for
international quality products and services. Customers too now
seek a wide variety of products and services that are best in
now have to develop new strategies to market their tailor-made
products. Local players are slowly realising the need to pursue
strategies, which cater to the requirements of individuals, customer
segments, products and channels with a specific rather than generic
that signal opportunities
The PFS market
in Asia has been growing despite the financial crisis and the
general economic slowdown. The rate of financial products usage
has increased from 2.7 holdings per average income user in 1998
to 3.1 in 2001. Investors are now more aware of the various types
of risks and methods to diversify them. The need for high investment
returns has prompted consumers to switch over to more profitable
products like life insurance, equities and credit cards.
have started realising that savings account cannot provide adequate
returns to secure their future. In China, savings accounts representing
personal (household) assets dipped by 8%. An increasing number
of individuals are inclined towards other financial activities
thereby providing an opportunity for banks to develop new products
are showing a growing dissatisfaction with the available services
and are constantly searching for new and better products. This
lack of loyalty has become disturbingly common among the customers.
To drive business
expansion and volumes, local banks will require stronger marketing
skills. Segementation has been identified as
a fundamental tool to strategise in this market. The first step
in a customer driven system is to segment customers on the basis
of potential users, and find profitable groups. North American
and European financial institutions use segmentation, before investing
in sophisticated systems.
has divided the average income consumers into four categories,
based on the attitude of the customers.
averse: Old people and less educated ones fall
under this category. They avoid high-risk products. It is advisable
to direct such customers to local banks that offer low risk products.
Educated people, who like to use low-risk products but are not
averse to high-risk products, fall under this category. These
customers use varied products. International banks as well as
local banks that have been around for long would serve the needs
of these customers.
Well-educated customers with a high income regularly access reasonable
risk products. They do not seek advice, but instead analyse information
about products before they make a choice. Even though they are
happy with the present product, they are always in search of new
offerings. For example, Fidelity, a mutual fund company targets
such customers through both retail outlets , as well as, remote
These customers constantly keep changing products based on the
need for high interest, low risk products based on fund availability.
Familiar brands tend to gain the loyalty of fickle customers.
skills are required by the local banks to drive business expansion
and volumes. Also if the customer base of the bank were spread
across the segment, then it would be very difficult for the banks
to find a suitable strategy. We will talk about strategic options
available to banks in our next article.
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