For banks, their employees need to learn more about insurance products, which requires a higher workload and training. In the case of several bancassurance agreements, bank advisors may have incentives for conflict. You can recommend one product through another for personal interest. It is also difficult to determine who should assume legal responsibility in the event of a dispute with clients. Bancassurance as a term first appeared in France in the 1980s. At first, many countries thought that the practice of bancassurance would give banks too much control over financial products in the market. As a result, it has been limited. Bancassurance refers to an agreement between a bank and an insurance company. In bancassurance, the insurance company can use the bank`s distribution channels to sell products.
In return, the banks receive a certain fee from the insurance company. Customers` financial needs can be met through bancassurance. They can save time and energy because they have access to two different financial services at the same time. In addition, they are more familiar with their Bank financial advisors, smoothing the process of auditing and selecting products. As far as bancassurance is concerned, the bank`s customer relations play a decisive role. The internet narrows the gap between product developers and customers. In this sense, banks may lose their network advantages in the bancassurance agreement. In addition, insurance companies can collect customer behavior online in order to individually adapt products more suited to customers. Digitalization has a significant impact on the bancassurance model and banks are moving slowly online.
In bancassurance, insurance companies do not have direct control over the sale of their products. It may be more difficult to manage marketing strategiesMarketing StrategyA marketing strategy refers to a long-term plan formulated by a company to achieve certain organizational goals. The plan describes how business. For example, it can be difficult for insurance companies to reach out to the right customers. Digital technology invites both banks and insurance companies to refine their bancassurance agreement. They need to respond together to change and change the way they serve their customers. In bancassurance, banks provide the distribution channel and insurance companies remain product developers. It allows two sectors to use the existing network available to banks. Banks generally focus on selling life insurance products through bancassurance channels, as they generally have a higher price than life insurance products. Bancassurance requires banks and insurance companies to cooperate; However, integrating the activities of two sectors is not an easy task.
For insurance companies, they can generate more revenue through the bank distribution network. Insurance companies also have access to customers of partner banks. This helps to develop their products.
