Lessons from Uber and Ola
Intermediaries in the financial services would be in a position to understand what the app cabbies are facing today
By Narayan Krishnamurthy
Three years ago, I tried an app based taxi-hailing service for the first time. I was a sceptic and new to Smartphone use. But, within minutes I had an alert about the car’s driver details and a time by which it would arrive where I was waiting for it. I still recollect vividly the hospital gate where I was waiting for this cab to arrive to pick me up. The cab driver was polite and the insides of the car clean. It was so not true feeling that I had by the time I reached my house and got off without paying the driver as the money was adjusted off through the preloaded money on the app.
Since then, I have been frequently using the services of app-based taxi services, Ola and Uber. Over time I have got into conversation with the drivers, a pastime of mine to understand why they left their jobs to take the risk and start driving. I encountered many interesting people, but mostly drivers who were either working in a household or taxi drivers working for bigger cab companies. I also encountered a few enterprising youngsters who part time drove these cabs to make some additional money. They owned the cars they drove, and felt the additional 2-4 hours on week days and weekends was worth driving the cab to significantly increase their incomes.
Agents and distributors
Most agents and distributors of financial services are no different – they start part time, before learning the tricks of the trade to go fulltime. In the past two decades I must have met some 100 odd agents or distributors, whom I still continue to stay in touch with. They have all grown successfully from the time I first met them. Many have added qualifications which they did not have or undergone training to do better in what they do and so on. Over this time frame, though they have faced challenges that have hit the very basis on which they entered the financial distribution industry – income flows.
Those who started as insurance agents soon started to add financial products that post offices sold under their umbrella. Many undertook the AMFI certification to start selling mutual funds, some became sub brokers to offer share trading and kept adding the services as it emerged. Not all succeeded at the same pace. The reason being, not all of them wanted to add to their services, some of them just did not have the drive to dive more into the profession, because they found it very difficult to understand that real dynamics of the workings of the trade.
Let me share the example of this person who also doubled as a post office savings distributor. The year when the government ended their commissions, he stopped servicing those who had post office instruments that he had sold to. I had tried reasoning with him that those people had put money into NSCs because he had advised them and had helped them put their monies into it. Now when they wanted his services to get their monies out, he was being unfair acting high handed with them. He quipped – no money in servicing and hence no service on such transactions.
He adopted a similar approach when the insurance company he was representing started to offer a much cheaper term plan and heavily advertised about it. Instead of showing value in the changed scenario to his existing clients, he not only started bad mouthing the insurer, but also discouraged his clients from taking these policies, because it did not pay him anything in return. At the same time, I remember a lady, who had got into the financial services distribution because of economic hardship she faced with a husband who had left her to fend on her own do wonderfully good.
She adapted to the changes so well, that recently when exchanging new year greetings she stressed that her business had grown ten times in the past ten years, even though she was finding it difficult to cope with rising costs, compliance costs and paying a staff of 8-10 in an office that was no more functioning from her house. She put the customer before everything else and has been an avid learner of new sales and finance techniques. She actively participates in several industry forums and ensures her learning never stops.
No point protesting
The protesting Ola and Uber drivers need to accept the new rules of the game and get going with their work than lose money by keeping their cabs off the roads. Most of those who are protesting are the ones who bought two or more cars based on the commissions they earned in the early days of these services. They forget that the radio cabs that protested the entry of app-based cabs protested at that time, which did not do anything good to them. The Uber and Ola drivers forget that the higher incentives they were initially offered was to get them to adopt to the new ways of taxi services than assuming themselves to be the owners of business.
Intermediaries in the financial services could draw a leaf from the protesting cabs – changes will occur around them, in their business and the regulations under which they function. It is for them to pre-empt some, face some and adjust to them and focus on what they do best. For a successful financial services intermediary business to thrive the need is to focus on client service and the rest will fall in place. Ultimately, it will be relationships and the services you offer that will count on how much a client lets you service him, not the fee that you can earn by selling products or services to them which will drive your business.