A financial services consultant has branded current bank strategies for broker market segmentation like the insurance channel of the 1980s.
Following Westpac flagging the insertion of a new 'Platinum' service above its Advantage + segment yesterday, MGF Consulting's Max Franchitto said such segmentation strategies raise client interest questions.
"This is good news for brokers writing lots of business and I am sure the benefits will be appreciated, but how do these benefits translate into “end customer” benefits?," Franchitto asked.
"Once again the banking channel is doing what the life insurance channel was doing in the 1980’s , working at winning the channel not the end customer."
Franchitto, who is a consultant with experience across the financial services industry, said the a string of benefits provided to top tier brokers could lead to conflict of interest.
"Worse still, could it prejudice the 'meeting the client's needs' sense of priority? After all, how does a mortgage applicant benefit [in the case of Westpac] from a David Institute course, given that the broker they deal with should already be of a considerable level of professionalism?," he asked.
Both Westpac and CBA have strongly defended their segmentation strategies in recent days, with Westpac relaunching its new 'Platinum' offering, and CBA claiming banks who do not segment are "ignorant and apathetic" when it comes to the needs of their broker cusomters' clients.
Both banks have iterated the need to more closely understand and work with their higher volume introducers, to ensure benefits both for these brokers, and the end client.
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