You must have heard about pre-approved loans, but have you heard of instant loans ready for disbursal through ATMs? Banks are queuing up such products for you. It seems they are relying more on retail credit nowadays, at a time when they are facing many problems with their corporate clients. Factors such as rising Non-Performing Assets (NPAs) and lower demand for wholesale loans are making banks a lot more dependent on retail customers and High-Net-Worth Individuals (HNIs). If you think banks are getting just too aggressive and taking a high risk by offering instant-ready-to-disburse loans; be rest assured that banks are doing their business intelligently. Probably, it's the time for their customers to stay clear of such loans.

Banks are using their resources well…
Your bank knows a lot about you. The personal information you divulge while completing Know Your Customer (KYC) formalities is very rudimentary considering the level of information it collects passively when you start banking with it. If you predominantly use one account to collect money, pay money, and perform other transactions; your bank automatically knows a lot about you, your profile, income generation, spending habits, and purchasing power among other things. Banks are the power stations of personal information but thanks to stringent norms and code of ethics, they can't disclose anything about you to the third party. Not only that, a few banks observe such strict internal policies that, very few of the staffers actually have access to such sensitive information.

However, if you believe that banks are not making any use of this for the purpose of improving a banking relationship with their customers, then you are probably missing the bigger picture. With the advent of technology, banks are well-equipped these days like never before. They use modern data analytics software and other tools to make such a vast data workable for their product teams. Use of technology makes it easier for the bank to strengthen their risk management processes as well. Moreover, the precise analysis also helps them customise products. For example, it will not sell you instant-ready-to-disburse loan products, if it sees a bigger prospect in you to sell the even more profitable product.

So far, the most significant trouble for banks, in marketing any product, was the human resource constraints. It was a bit difficult for them to customise products, reach potential clients personally and garner the business. Therefore, location and the staff strength of bank branches mattered a lot. 'Footfalls' was the key to driving business. Contrary to that, today banks encourage the use of ATMs rather than visiting branches personally. This helps them rationalise their staff strength. Moreover, you walk into an ATM yourself, banks have to exert no effort in getting you there. They just have to make sure that ATM is located in a busy locality and is well-maintained. If they manage to do this, ATMs become touch points for satisfying customers' requirements and selling products.

 

So, why you need to be aware?
You may probably get carried away by the convenience of securing loans without any action on your part. However, don't forget that if you take up any loan, you will have to pay it back on time. The bank won't give you any concession there. So, before you fall for such "easy credit" don't forget to make an assessment whether you actually require a loan? Many a time, people take personal loans for two purposes. One, because they don't have any provision for contingencies, and two, they are spendthrifts. Both the situations are equally dangerous.

PersonalFN believes that saving money equivalent to 6 months of your monthly expenses, for contingencies. Moreover, you should budget your expenses and focus on saving more money and investing it intelligently. To satisfy your financial goals, it works to adopt the prudent and disciplined approach. PersonalFN helps people in managing their finances better by offering honest advice and a range of services.

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