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Sep, 15 2009

Financial services franchise

Under the broad framework that makes up a successful franchise business in financial services, there are two objectives that need to be managed in a cost effective way. Almost all financial services businesses have a strong regulatory angle to it. It incl

Under the broad framework that makes up a successful franchise business in financial services, there are two objectives that need to be managed in a cost effective way. Almost all financial services businesses have a strong regulatory angle to it. It includes client servicing and process orientation. It is not surprising considering that most investments are for future and not for immediate consumption, and the product and service offering in most cases are therefore bundled to provide for a stretched service over a period of time. And this involves, at least four steps. The first two steps are understanding the client need followed by mapping the need with the right product offering. The last two entail reaching an agreement on the sale process and executing the same followed by periodic review of  investment against the original objective.

Thus in the chain there are a set of things that are best done centrally. There is a benefit of centralized knowledge and skill. With increasing regulatory and compliance costs it is becoming difficult for a small size business to discharge full responsibilities. In addition, the increasing complexity of products and service requires constant upgradation of skills for selling. Having said this, the clients legitimately demand more and more responsiveness to their needs and want someone to understand them better in a skilled way. Most life goals have a large social context and thus it is best understood locally.

Thus, if we marry the twin needs it becomes clear that financial services will move more and more towards the franchising mode and will open up greater opportunities for entrepreneurs. It is well known that as any country progresses the opportunities in  financial services multiply. It is not surprising, since the savings and investments move from more physical assets (gold, house etc) towards more financial assets (mutual funds, equities etc.).

In the financial markets, franchising has been there for more than a century. They are called by different names though. In the equities market they are known as sub-brokers. In the Indian context the ratio of brokers to sub-brokers is 1:25, i.e for every main broker we have 25 sub-brokers. It is a win-win situation. It creates reach at a lower cost and makes the cost variable for the main broker. For the sub-broker, it creates an opportunity to do business. In ICICI Securities, we have more than 1200 partners who help us reach out to our clients. We offer them support on business development towards acquiring more clients, enhance their business building and brand building skills to help them perform better. In addition, we conduct product level trainings for the sub-brokers as well as their clients to keep them updated on the latest.

On a day-to-day basis, we ensure that all settlements are central and seamless through extensive use of technology. In our business, risk management is very critical due to fluctuating markets. We take care of risk management centrally to offer our partners  risk-free business opportunity. Our partners have more than 75% face time with their clients since we take care of all operational issues centrally. We help them in decision making through centrally managed online chats. Our endeavour has been to strengthen our sub-brokers  to make them more successful and compete with the best in the market.

Concluding, we would suggest  that the financial services are ideally suited to a franchise  based model, and they have been there for many years since. As the country grows, the opportunities will multiply. There is no ceiling on what a person can grow and earn. We see a growing trend in the new generation coming towards financial services industry due to its high yielding returns and a professional stature attached to it.. We would welcome anyone who would want to partner with us to help meet life goals of our clients through financial goal settings and implementing the same.

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