Third party product services by banks
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Third party products refer to non-bank products that are sold by banks, such as insurance, mutual funds, and gold coins. These products are not part of the bank's balance sheet and allow banks to earn fee-based income without providing capital. Selling third party products is a growing business opportunity for banks and allows them to leverage their existing customer base through cross-selling. However, some argue that aggressive marketing of these products can encourage dead investments and overwork bank staff who may lack understanding of product risks.
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Third party product services by banks
- 2. Third party product refer to those products that are sold by a bank for some other institutions. The third party product distribution involves selling products that are not created from the bank. It is not come under the balance sheet of bank. These are not deposits or loans. The bank does not have to provide capital to earn income from selling these products. The third party products is fee based income for the bank.
- 3. Insurance products Gold coins Mobile recharge Mutual funds Government bonds Demat account Collection of taxes & utility bills Advisory services
- 4. the bank receives revenue on the sale of different kind of product in the form of commission, professional fees etc. Third party distribution of financial products is turning into big business opportunity for banks. Insurance industry sources, around 15 - 20 % of fresh life insurance business ( in terms of premium income) is getting generated through banking channels.
- 5. low cost and no capital requirement make it viable for banks to consider third party product even if the fee is low. Bank gets fat commission by leveraging existing customer base by cross selling multiple products to same customer. Third party product can build new sales orientation in the banks.
- 6. Bank by aggressive marketing of sale of gold coins are actually are converting the savings of the economy into dead investments. Thus it is against the national income interest. No body realizes that how much energy is wasted at branch level to meet even the smallest targets for these products.
- 7. Bank staff who does not understand the risk associated with these products are asked to market these products. Front line staff at banks may be more interest in pushing insurance and Para banking products instead of promoting core banking products.
- 8. FACILITIES SBI ICICI CITI BANK DHANLAXMI BANK Gold coin Gold coin rates in public sector bank are low as compare to private sector & cooperative banks There is gold coin rates are high there is no gold coin facilities There is gold coin rates are generally high as compare to public sector Demat a/c Opening fee with 850 For non Indian 1000 No opening fee No opening fee Opening fee with 285 For non Indian 1140
- 9. FACILITIES SBI ICICI CITI BANK DHANLAXMI BANK Mutual fund SBI offers its own mutual funds like SBI mutual fund ICICI is also offers only its own mutual fund like ICICI Prudential fund Citi bank also offers mutual fund but its do not have its own mutual fund, it sells the mutual fund of other banks & companies like HDFC, axis They also offer mutual funds of other banks & company, they don’t have there own mutual funds Advisory services There is availability of advisory services like suggestion for better investment etc., they charge fee for the same There is also availability of advisory services for which they charge fee There is also availability of advisory services for which they charge fee There is no advisory services
- 10. FACILITIES SBI ICICI CITI BANK DHANLAXMI BANK insurance SBI focus more on its own insurance policies as compare to third party insurance policies like SBI life insurance, general insurance etc. ICICI also provides its own insurance policy like ICICI Prudential Life Insurance Company Limited, ICICI Lombard Citi bank don’t have there own insurance policy but they provide insurance policy of third party companies. Like health insurance, medical insurance, life insurance Dhanlakshmi bank don’t have there own insurance policy but they provide insurance policy of third party companies. Like health insurance, medical insurance, life insurance
- 11. FACILITIES SBI ICICI CITI BANK DHANLAXMI BANK Insurance SBI focus more on its own insurance policies as compare to third party insurance policies like SBI life insurance, general insurance etc. ICICI also provides its own insurance policy like ICICI Prudential Life Insurance Company Limited, ICICI Lombard Citi bank don’t have there own insurance policy but they provide insurance policy of third party companies. Like health insurance, medical insurance, life insurance Dhanlakshmi bank don’t have there own insurance policy but they provide insurance policy of third party companies. Like health insurance, medical insurance, life insurance