Banks’ fee income faces threat from aggregators

Consider a turkey that is fed every day. Every single meal would firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race… Something has worked in the past, until …it unexpectedly no longer does, and what we have learnt from the past turns out to be at best irrelevant or false, at worst viciously misleading, Nassim Nicholas Taleb wrote in the bestseller Black Swan.

That unpredictability of action – and relevance of well-credentialed business models of the past – engulf the finance and insurance industry today. Online lenders, aggregators and digital platforms have the advantage of consumer database, power of analytics, low-cost model and faster processes.

You may not yet have a bank account or credit score, but Ola, Amazon, Flipkart, Jio and Swiggy have profiled you and finance services providers are using that information to sell insurance, mutual fund, personal loans and many more products.

When you are booking a cab, there is a pop-up saying if you are looking for a ₹1-lakh cover, you need to pay ₹149.

In many ways, cab aggregators have more hold on a customer than a bank, because a consumer is more likely to use the cab service and that has high recall value. If somebody bills a wallet with ₹999 instead of ₹99, they run analytics and know the DNA of the customers. Financial services providers piggyback on them and market their products.

“That conversion has started happening,” said Vibha Padalkar, MD and CEO, HDFC Life Insurance Company, which is daily selling 2,500 policies through Paytm. “It is a small number, but it can be very staggering.”

HDFC Life is running pilots where they have nudge engines and they track whether one is buying a BP machine or skipping rope or figuring out how to send one’s kids abroad. A pop-up will appear to share further information on it.

“The person thinks that the website is validating what he is trying to do and so after 5th or 6th nudge, we ask, have you thought of buying this policy,” says Padalkar.

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