At a time the whole world is talking about the end of capitalism following the financial crisis that started in the US, the ‘good old public sector institutions’ certainly seem to be back in the reckoning. – partly because the global meltdown has made private institutions appear very risky, and maybe also because government institutions are proving better than their private counterparts in delivering service. This may not be a universal truth, but in Himachal it certainly appears very much true.
Himachal has recently seen several financial institutions like ICICI and HDFC opening there branches across major towns. Similarly, offices of brokerage and share trading firms like Reliance Money and India Infoline too have come up at a rapid pace, while roadside hoardings can be seen advertising insurance companies such as Bajaj Allianz, HDFC Standard Life, Reliance Insurance and Max New York Life among many others. Certainly, people who earlier had no option but to deal with public sector behemoths, now have newer options and opportunities to seek better financial services. But the question here is, “Are these private sector firms offering any better services?’’
The picture is not as rosy when it comes to the service delivery aspect of it. In the last three months the HimVani team has been hearing stories of private institutions giving a raw deal to many of its readers and citizen journalists. Boudhayan, a marketing executive working with a major co-operative, who had recently moved to Shimla from Delhi, wanted to renew his motorcycle’s insurance policy. The last one was issued by Reliance General Insurance in Noida. But he was shocked to find that in spite of having centralised systems, the company’s branch in Shimla was unable to process the renewal of the policy – the reason given was that the branch did not fall in the same zone as Delhi. The option available to him was to go back to Delhi with his vehicle, and get it inspected there to get the new policy issued.
Service delivery in private sector banks is no better. On a visit to ICICI Bank in Shimla, one is bound to find bored-to-death faces of front desk staff, who are just doing their job rather then creating a customer experience. The latest PR campaign of the bank says that it is well capitalised and has high net worth. Well Mr. Kamath, certainly your bank is doing well in financial terms but customers expect good service. The “Hum Hein Na” factor is missing in this part of your operations.
Close by on the mall road, the HDFC Bank branch is no better. Recently, Shilpa, a friend, wanted to open an institutional savings account for their society in the bank. She was surprised to find that the staff did not have proper knowledge of the product as well as the documentation required for it. An account which normally takes an hour to open in a public sector banks is yet to be opened after chasing bank officials for more then 20 days. At the time of submitting the application, the bank executives found that the board resolution was not in the format which is acceptable to the bank. However, they accepted the application with a promise that they will be able to take approvals from their Cluster Head for the same. Surprisingly, the approvals are yet to be taken in spite of chasing the bank executives almost every day.
Surprisingly, in both the cases the ray of hope came form of the much-criticised public sector institutions. Boudhayan, who finally went to United General Insurance in Shimla, had a new policy issued in one hour. All his paper work, vehicle inspection and processing of papers was done by an agent of the company who did not even charge any money from him. Shilpa got her societies’ account opened with the State Bank, again in one hour, and could put in her first cheque the same day. In both the situations the paperwork was completed and the service delivered at the branch itself. The same would have taken 15 – 20 days in a private sector institution as service delivery comes from centralised offices in Mumbai or Gurgaon. It is due to this that the HDFC bank executives are still figuring out whether they will get approvals from their bosses or not.
An analysis of the situation shows that in public sector institutions the branch managers have lot more decision making authority. Moreover, for them the business is totally dependent of relationships and not on the process. A branch executive in a private sector institution is not confident while committing a service delivery to their clients unlike their counterparts in public sector institutions. Now that most of the public sector institutions are heavily using IT to deliver services through ATMs and online banking, the staff is lot freer to offer personal services to customers, thus increasing the whole customer experience as well as competition for the private banking and financial institutions.
The signals are ominous. Now that financial institution in the red in US stand nearly nationalized after government supported bailout, has the wheel turned full circle in India too? The answer may not be far off.