Recently appointed chief executive officer of BankBazaar International, Vipin Kalra, shares his views on emerging trends, changing operating models in the financial services industry, and key challenges, as he drives the international expansion of the online marketplace company.
October 04, 2017 | Neeti Aggarwal
- Kalra believes less complex mass market financial products will get increasingly commoditised
- Banks need to focus and adapt on the "experience" aspect, not only in their own but also in someone else’s domain, to achieve a seamless end-to-end experience
- BankBazaar witnessed 44 million quarterly visitors and 40% repeat customers
BankBazaar, India’s leading financial marketplace company for loans, credit cards, insurance and other financial products, has witnessed a strong growth over the last few years. Riding on paperless processes and differentiated customer experience, it has grown from an average of 12 million quarterly visitors in 2015 to 44 million quarterly visitors in March this year.
The eight year-old financial technology (fintech) company is now connected to over 80 financial institutions and has the support of Amazon, Sequoia Capital, Walden International, and Eight Roads as its key investors. After a strong growth in India, BankBazaar has recently expanded its operations in the Southeast Asian region, hoping to replicate its model across countries.
To drive this growth, it recently appointed Vipin Kalra as CEO international operations, who was previously senior vice president of merchant sales for Asia Pacific at Visa. Having previously led the adoption of contactless payments in Australia, and later in Asia Pacific during his tenure in Visa, Kalra is an expert on payments.
Describing himself as a ‘realistic optimist’, with over 25 years of work experience in the payments and financial services field, Kalra aims to build and lead his BankBazaar business in the international markets outside of India starting with Singapore and Malaysia and intends to negotiate strategic partnerships with financial institutions.
Changing the financial service landscape with marketplaces
In the era of open banking and shared economy models, consumers now increasingly prefer marketplace models to compare products across different financial institutions and achieve real-time services. Learning from cross industry experiences, they now expect a more seamless and frictionless experience from their financial institutions. The institutions realise the urgent need to be where the customers are and strive to provide a consistent omni-channel offering, while exploring new operating models to acquire as well as retain customers.
“The traditional definition of loyalty is changing from purely ‘value driven’ to one that has ‘value plus experience’. That is the way to engage customers and banks need to embrace this change,” pointed Kalra.
Indeed, recent disruption and the entry of new fintech players have radically changed the financial service industry landscape, as more people move from search engines to marketplaces to begin their purchase journey.
Customer experience in retail and e-commerce has changed forced banks to rethink their operating models. As the marketplace proliferate, the competition to own the front-end customer relationship increases.
“Marketplaces are moving deeper into the value chain. They are evolving fast, understanding customer pain-points, and using state-of-the-art technology to offer better experience,” he noted.
Customers stay longer at marketplaces not just to compare products but to apply for services and get approval for credit products as well. These channels now provide a bridge between what customers want and what banks can offer, changing front-end customer relationship ownership and redefining how financial services are getting commoditised at the backend.
“There is no doubt that the mass market products that are less complex, such as credit cards, home and personal loans, will get more commoditised. However, banks still have to underwrite these, so they will continue to be the factory for production of these products, both in the long term and short term. At the same time, for more complex products where third party distributors are on the front-end, banks will play a larger role because of the complexities involved,” opined Kalra.
Nevertheless, integration does not come without challenges as more banks and marketplaces collaborate to widen their market reach.
“Banks have been good at bringing consumers to their door fronts, but they have to adapt and meet customers in someone else’s domain. There are implications they need to consider, such as the way they think of and design their product offering, the regulations and compliance requirements, how they transmit information, personal data privacy issues, and how they can integrate with third parties from a technology perspective. With all this, it is critical that banks focus on the ‘experience’ aspect, not only in their own but also in someone else’s domain, to achieve a seamless end-to-end experience,” he pointed out.
Increasingly, financial institutions now realise the need for a customer-centric service model and frictionless differentiated experience.
“Banks that have created a change management structure by empowering middle management; and have invested in their core technology systems to integrate with third party applications through application programming interface-driven platforms, keeping in mind end-to-end customer experience, will be the ones to move faster. The biggest barrier that banks need to overcome is a change in mindset,” Kalra explained.The growth for BankBazaar has been facilitated by the proactive government initiative in India to implement the biometric-enabled national ID initiative “Aadhar’ which was complemented by the regulator’s move to accept the ‘electronic know your customer’ (e-KYC) and digital signature, significantly easing the customer onboarding and authentication process.
To provide better customer experience and loyalty, BankBazaar created a credit tracker feature, which allows users to get easy-to-understand credit history through online and mobile platforms. It also introduced an app that allows customers to check all their finances across institutions using their mobile phones.Through these initiatives, customer visits expanded from less than 1% repeat customers between 2008 (when its operations first started) and 2010 to 40% today. The company has claimed that the ease of online applications resulted in three times more conversions and half the operating cost for banks.
After its success in India, BankBazaar is now looking to expand in key Asian markets with key focus on Singapore and Malaysia, where it has already established a presence. It now plans to widen its foothold in several English speaking countries, including Hong Kong, Australia, the United Arab Emirates, and the Philippines, where it can scale with the minimum investment.
“Technology is not a barrier as we have an easily scalable, low-cost platform. However, there is a difference in the readiness of banks and the financial services industry in general. The use of digital channels and ability to acquire customers through digital channels can vary from 20% to 80% across countries, for example Australian rates among the highest at 80%,” explained Kalra.
As the company builds its presence in a new region, it needs to manage the unique characteristics of each market as not all governments and regulators are opening up their marketplaces that allows for capturing and providing access to customer data.
"India’s Aadhar and e-KYC initiatives, and Singapore’s concession in its regulatory framework that allows banks to conduct or invest in complementary non-financial businesses are good examples of forward-looking initiatives but are few and far between,” Kalra said.
“We can expand and replicate our model across markets but there are two key prerequisites: one, regulators need to open up and set the scene for the market to become more digital, and two, banks have to open up the edges of their networks and be more willing to work with fintech companies,” summarised Kalra, whilst seeking greater support from regulators and institutions.
Categories: Financial Technology
, Retail Banking
, Technology & Operations
, online marketplace