Hence, an opening up of the markets eventually led the production houses to operate in an environment saturated with stringent competition. The companies worldwide have responded to this change by adapting themselves into newer strategies while designing their financial plans. Many firms have introduced added features in their operations so that they are able to meet more of the people’s demands and thus are able to capture a higher fraction of the market. Since it becomes easier for people to shop or transact under the same roof, this introduced feature is enough to lure them (Staikouras, 2009).
One such move that was simultaneously embraced by the insurance as well as the banking sector was that of indulging themselves in each other’s activities. Hence, two new strategies of ‘bancassurance’ and ‘assurancebank’ were introduced in some of the units in the banking and the insurance sectors respectively (Nurullah & Staikouras, 2008). For instance, in Europe, there is the HSBC Bank which has adopted the strategy of ‘bankassurance’ while there is the ING Group which has embraced the other strategy.
The strategy of bancassurance implies an embedding of the insurance sector in the activities of the banking sector (Ennew & Waite, 2007). The advantage to the customers in case such a strategy is introduced are, firstly, they are able to transact under a single roof which is time as well as cost-saving, and secondly, the moment that a customer takes some loan, he automatically is entitled to the insurance benefit that accompanies it. Thus, if the loan is meant for some investment and it fails to reap the returns it is expected to yield after a specified time period, then an insurance coverage will help him to forgo the loan and thus the person’s tremor is reduced by a great extent.
The HSBC Group adopted the