Says HSBC's manager (retail assets) Rajeev Jamkhedkar: "Banks employ DSAsmainly to increase the amount of proactive selling instead of waiting forcustomers to come to the branch. In a city like Mumbai, customers usuallydon't have the time nor the inclination to go to a bank. And that's whereDSAs come in... a substantial portion of business is generated from loanproducts through DSAs".

Notes HDFC Bank's country-head for marketing & retail assets Neeraj Swaroop:"DSAs are an important channel for sourcing new business... they contributeabout 50 per cent of new retail businesses. And we keep the DSAs motivatedthrough a combination of promotional programmes, timely training and activesupport".

And the move to employ DSAs has paid off handsomely. Despite the limitedreach of many a foreign and private-sector bank, the fact remains that theycome tops when it comes to retail banking. The hardsell - over and abovegood service and branding - has seen Citibank topping credit-card issuancesat over 1.5 million; StanChart-Grindlays at over a million and even arelatively late entrant like HSBC at close to 300,000. And between them,these three foreign banks have no more than 100 branches!

Notes Capital Services' - a DSA for HDFC Bank - senior business developmentexecutive Rahul Rathod: "Banks usually look after existing customers and notafter opening of accounts. The job-profile of a DSA is limited only foraccount opening and selling of products, which could be savings and currentaccounts, fixed deposits, NRIs services, demat, credit cards et al".

Employing DSAs is not a new trend, Citibank started it off; rivals StanChartand BankAm followed suit. But of late, DSAs have come to the fore with theretail banking turf heating up. And DSAs hawk just about every other retailbanking offering - credit-cards, personal loans etc. and also act ascollection or delivery agents for cheques, and sundry other schemes. Allthis is in line with the emerging trend of banks using newer and relativelyunorthodox distribution channels to outsource services. Or in simple words,if somebody can do it better than you, give it to them.

DSAs are small-scale entrepreneurs who have sales experience. Most are smallset-ups - private limited or partnership companies - who compliment theretail marketing of banks depending on their size. As far as the banks areconcerned, setting up a sales network involves huge cost. Banks prefer tokeep lean and mean and out-source through DSAs. No bank would naturally wantto have a bloated pay-roll on this account.

Says IndusMarkfin Pvt Ltd's Thomas Chandy - a DSA for ICICI Bank: "One ofthe reason why banks opt for DSAs is because of their cost structure... itis unaffordable for banks to recruit high-flying MBAs and have a separatemarketing set-up".

Very often DSAs have specialists who are sought out by banks, who eventuallyland up cross-selling multiple products and services. They have atele-marketing set-up to generate leads, and a field-force which would thendo the follow-up of the same. DSAs also make house-calls to get theapplication form filled up properly and also take a passport-size photo.

And what about the bank-DSA relationship?
Says Mr Swaroop at HDFC Bank: "DSAs are provided product-training... theyare paid on their success in generating valid application forms. Pricingmodels vary, but are generally linked to volumes as well as incentives forachieving higher volume slabs".

Observes Mr Jamkhedkar at HSBC: "The way HSBC sees DSAs, it is not as aprincipal agency... we see them more as partners. So, it ultimately dependson the treatment of the relationship with DSAs".

And what about loyalty? Can a DSA hawk a rival's products?
"No", says Mr Swaroop categorically. "We do insist on exclusivity... mostDSAs of the bank are exclusive in that they do not sell financial serviceswhich compete with the bank's products. Loyalty is a key factor".

And loyalty is a tricky area. "The question of loyalty does not arise.Although an agreement is signed, DSAs are free to terminate it if they arenot happy with our bank, our products or services offered. After all, itshould be a win-win situation for both the DSAs and the bank", notes MrJamkhedkar. Explains Shelar Senjit, business manager of Ford BrothersCapital Services, a DSA for ABN Amro Bank and American Express: "There is amutual agreement between the bank and DSAs that we do not infringe onselling other banks' products as it is unethical". But then allowing a DSAto sell rivals' services has its benefits even though this may not bepalatable from a bank's point of view: if a bank were to reject a particularclient, he or she can be pushed to another bank. There are new equationsthat are emerging. Many such as HDFC Bank are looking at the option ofsetting up a separate marketing company. Why? "You can ensure loyalty andcontrol... unlike in the case of a DSA who may shift over to a rival if thedeal is better,'' says Mr Swaroop.That may well happen in the future. Butfor now, banks and DSAs are having a honeymoon.