Former SEBI Chairman M Damodaran said that mis-selling is not just about selling products that should not be sold to customers but it is about not selling a good product to them. He was speaking at the seventh Financial Distribution Summit held today in Mumbai.
Urging distributors to establish trust among their clients, Damodaran said if distribution community does not sell good product to people, they will lose trust and trust is central to all relationships.
Damodaran said that distributors should rely on 3Ts – Trust, Transparency and Technology to grow business. “You need transparency and technology along with trust. However, if trust is missing, technology and transparency is of no use. While distributors should welcome technology applications that have made life better, building trust is the key to grow,” he said.
Damodaran urged the industry to develop simple products, which are easy to understand. He said that the industry should recognise that there has been a huge knowledge asymmetry between manufacturers, distributors and consumers. Also, complexity has been increasing because manufacturers want to challenge their own ability to come out with something complex. Hopefully manufacturers and distributors understand this but after that chain, no one understands the product, he said.
Meanwhile, Sundeep Sikka, Chairman, CII Financial Distribution Summit and ED & CEO, Reliance Nippon Life Mutual Fund said, “With the advent of disruptive innovation model by new ecommerce and fintech players, new-age technologies such as cloud computing, customer-facing artificial intelligence, and big data will continue to evolve and not only drive more competition to the financial sector but also improve the way financial businesses provide customer satisfaction.”
Talking about the opportunities for the industry, Sikka further said that it is projected that national savings in India will reach US$ 1,272 billion by 2019. Over 95 per cent of household savings in India goes to bank deposits and only 5 per cent in other financial asset classes. But the landscape is changing rapidly at present, he added.