First published in Mint Nov 6, 2013

We are making an attempt here to share some best practices from the Mobile Telephony Industry for the Financial Services Industry in India. Having worked in both the Industries for a good amount of time each, I have often wondered on how much each has to learn from the other. Learnings apply to the Industry players, to the Regulators and even to the Customers themselves! Let’s see how.

After about a decade of existence, Mobile companies had reached a stage when the top management there had started talking about “What is good for the Customer is good for us, in the long run”. Such companies systematically pared down Tariff Plans which were not in the interest of the Clients, and even launched the Best Value Plan concept – which is your most optimal plan as per YOUR usage. I remember the joint MDs of a leading telco clearing the proposal in one day for launching the Best Value Plan, which would cause revenues to be hit by Rs 1200 Cr pa in the short-term! The long-term impact, of course was highly satisfied customers, lower churn and hence higher net revenues.

On similar lines, the Full Talk-time Prepaid Card was another winner when customers used to feel cheated while paying 20-40% of the price of the Card as processing fee. This product brought millions of customers into the fold by taking away the thought of “mobiles not being value-for-money”.

Around the same time, the leading telcos started with keeping things simple. They came out with the Re 1/min tariff throughout the day, junking time-of-the-day and day-of-the-week pricing. The number of pricing points itself was brought down. The monthly bill for post-paid plans was cleaned out and made easy-to-understand.

Communicating to the customers was refined over the years and some of the best advertisements have come from this Industry. When calling between Chennai Circle and Rest of Tamilnadu was converted into a local call, the “Ura State, Ura Rate” (One State, One Rate) campaign was a superbly simple way to communicate that. The importance of the network was communicated through the pug ad of Vodafone, one of the most loved ads of all times. And who can forget the Zuzus explaining away in a simple and funny way complicated products like Dating line, Stock Ticker, Celebrity Gossip.

Coming to Regulation, there were two regulatory master-strokes which propelled the Industry into the stratosphere. One was when incoming calls were made free – this increased the number of customers by a hundred million. The other was allowing companies to share their passive infrastructure – an amazing way to make competitors share their fixed costs, and hence increase profitability of the entire Industry.

And what can Customers of Financial Services learn from their own customer-behaviour for mobile telephony? Well, understanding accurately your own needs and then understanding different products well. Even the most semi-literate customer knows his talk-time, his ring tone and his tariff for calling within the village or the State or the country. Of course, we are comparing apples and oranges here – financial services products are of many different types, and way more seriously impact our lives and the lives of our families. But that only increases the onus of understanding them better.

So, to summarise, what can the Financial Services Industry learn from the Mobile Telephony Industry?

• Align business interests with customer interests. Financial services is a fragmented Industry and players who will understand the “Good of the Client” maxim will stand apart in the long run.
• Add more value to the products, take out niggling charges. More clients will come. Some banks have already stopped charging for low balances, for multiple ATM withdrawals. But there has to be a concerted & consistent philosophy around all such moves.
• Keep things simple. The colour coding on Mutual Fund is a start. Unbundling of multiple objectives from products is another step that should be taken.
• Communicating in simple language about the features of products and YOUR need for the products, is one of the biggest challenges for our Industry. Of course, some Insurance companies have made a sincere attempt and the recent 6%/7%pa savings rate by the younger banks also comes to mind.
• While Regulation has been active in protecting the customers, worrying about the business models of the Players should also form the basis of some of the thinking. All links in the chain need to be protected. Only then will regulation be truly comprehensive.
• Customers need to ask themselves on what can I do to understand my own Financial Needs, what is Financial Planning, what is Asset Allocation, and finally which products really meet my needs.

Having said all of the above, we in our Financial Services Industry in India have our own shares of best practices. But there are huge challenges that still need to be solved, and looking outside could clear our minds on some of these challenges. Also, I am aware that these learnings are easy to suggest but tough to implement. But then, there are no short cuts to any place worth going.