J. Service Science & Management, 2010, 3, 520-528
doi:10.4236/jssm.2010.34059 Published Online December 2010 (http://www.SciRP.org/journal/jssm)
Key Factors Influencing Bancassurance Success
-Mainland China Evidence
Chiang Ku Fan1, Yu Hsuang Lee2
1Department of Risk Management and Insurance, Shih Chien University, Taipei,Taiwan, China; 2Department and Graduate Institu-
tion of Business Administration, Shih Chien University, Taipei, Taiwan, China.
Received August 14th, 2010; revised October 5th, 2010; accepted November 10th, 2010.
ABSTRACT
The aims of this paper are 1) search for the key factors of bancassurance operation in mainland China; 2) explore the
weight of each key success factor; 3) identify performance gaps typically measured as performance min us key success
factors. This study besides reviewin g literatures and interviewing with exp erts, also adopts the modified Delphi Method
and the Analytical Network Process (ANP) to construct a framework of key success factors of bancassurance. Then, the
Importance Performance Analysis (IPA) is applied to identify the performance of each key success factor for bancas-
surance. The finding offers the decision-maker fo r the revision of the bancassurance strategy that had been inappropri-
ate. In other words, the strateg y maker can identify the weakness and strength o f their bancassurance strategy, and al-
locate their resource accordingly as well.
Keywords: Bancassurance, Analytical Network Process, Delphi Study, Key Factor, Importance Performance Analysis
1. Introduction
Bancassurance becomes the most popular insurance sell-
ing channel in mainland China. According to the statisti-
cal reported by China Insurance Regulatory Commission,
the premium income from bancassurance increased from
RMB 127.8 billion to 339.9 billion during 2006 to 2008.
Bancassurance has accounted for 45.6% of total first year
life insurance premium income in 2008 compare to
31.0% in 2006.
In this context, competition in the bancassurance in-
dustry is at an all-time high, challenging providers to
attract new customers while retain existing ones. Thus,
identifying key success factors for insurers and banks
improving their bancassurance strategy accordingly is
not only a critical competitive differentiator but a neces-
sity. Unfortunately, several theories or research lay be-
hind the expansion of bancassurance. However, identify-
ing and qualifying the key success factors for bancassur-
ance is a complex issue and often depend on the subjec-
tive assessments of managers. The strategic planners in
banks or insurers, however, often lack objective deci-
sion-making procedures and clear-defined evaluations
criteria while identify the key success factors for ban-
cassurance, not to mention to assess the weight and prac-
tical performance of each key factor.
To fill this gap, the purposes of this paper, first of all,
is to search for the key success factors for bancassurance
in the mainland China area. The second is to explore the
weight of each key success factor. Finally, is to identify
performance gaps typically measured as performance
minus key success factors.
The finding offers the decision-maker for the revision
of the bancassurance strategy that had been inappropriate.
In other words, the strategy maker can identify the
weakness and strength of their bancassurance strategy,
and allocate their resource accordingly as well.
Summary of th e literature review with reg ard to the key
factors for success with bancassurance are as followings:
1) What methods employed to identify the key factors
of success were not described in the prior papers related
to key factors for success with bancassurance.
2) The weight or ranking of each key factor were not
defined in prior studies related to key factors for success
with bancassur a nce.
3) No prior research focused on evaluating the per-
formance of the key success factors for bancassurance.
4) According to the prior studies, some key success
factors for bancassurance and a hierarchical evaluation

Key Factors Influencing Bancassurance Success-Mainland China Evidence521
structure can be concluded, including: A. service quality
of the bank; B. short time of product innovation; C. short
time to establish a substantial market share by providing
lower premium insurances to bank distributions; D. small
subsidiary set-up cost for insurance distribution; E. large
sale promotion from banks; F. lower administration costs
per insurance contract; G. marketing partnership; H. joint
ventures; I. creation of integrated groups; J. internal de-
velopment (see Table 1).
2. Methodology
The methodology in this study consists of three phrases
(see Figure 1). The major theoretical approaches are
described as follows.
2.1. Analytic Network Process
This paper adapts ANP methodology for identifying the
weights of the key factors is due to its suitability in of-
fering solutions in a complex multi-criteria decision en-
vironment since ANP uses a network without a need to
specify levels in hierarchy [7,8]. For ANP’s technique
retails, one can refer to the study of Saaty [9].
The pair-wise comparison in ANP is made in the
framework of a matrix, and a local priority vector is de-
rived by solving the following equation
,
max
A
ww

 (1)
where A is the matrix of pair-wise comparison, ij de-
notes the importance of the ith element compared to the
jth element, and, w is the eigenvector, and
max
a
1/
ij ji
aa

is the largest eigenvalue of A. Saaty [9] proposes
several algorithms for approximating w: In this paper, a
three-step procedure is used to synthesize priorities [9].
We derive the super matrix W [7], as in (2), by sur-
veying data to have W21 and W32 established, via model
described in Figure 2.
1
11
11 11 1
1
1
1
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k
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k
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k
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n
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nm
e
WWW
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1
1
11 111
1
kn
mkkmnn
kn
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C
eeee ee
W
WWW
m
nn

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






















 
  

kn
CC
(2)
Following the arguments in Saaty’s study [7], the
converged limit super-matrix has the same form as the
weighted super-matrix. And by normalizing each block
of this limit super-matrix, the final priorities of all the
elements in the matrix can be obtained.
2.2. Importance-Performance Analysis
In 1977 Martilla and James introduced Importance-per-
formance analysis (IPA) as a framework for understand-
ing customer satisfaction as a function of both expecta-
tions related to salient attributes (“importance”) and
judgments about their performance (“performance”). The
traditional approach for IPA developed by Martilla and
James [10] has been improved into various forms in ap-
plications [11,12]. By being applied in hotel sector, the
IPA produced a graphical display on separate measure-
ment of performance versus importance on each factor or
Table 1. The key factors for bancassurance success.
Organizations Key Factors References
Short time of product innovation [1-3]
Lower administration cost per insurance contract [1,4] Insurer
Provide lower premium insurance to bank distribution [4]
Small subsidiary set-up cost [4]
Service quality [1] Bank
Sales promotion [4]
Marketing partnership [1]
Joint ventures [1,5,6]
Creation of integrated groups [1]
Strategy of Bank and
Insurers Consolida-
tion
Internal development [1,2]

Key Factors Influencing Bancassurance Success-Mainland China Evidence 522
Figure 1. The structure of methodology.
Figure 2. Network form for this paper.
attribute. Based on the picture from the IPA, the strategy
makers can identify the marketing or operational needs
for an organization [13].
Typically, the IPA begins with identifying the critical
factors to be evaluated. The factor s are based on a litera-
ture review or qualitative research [10,14]. Martilla and
James [10] suggested the use of means to separate each
of the two measurements. Importance scores were either
above or below the importance mean, and performance
scores were either ab ove or below the performance mean
[15]. This combination resulted in four “classification
possibilities” [10,16] (see Figure 3).
3. Decision Model Application and Result
After conducting the research methods, the findings of
this study were described as fo llows.
3.1. The Result of the Delphi Study
In order to identify the key factors and develop the eval-
uation structure for bancassurance success, this study
applies a purposive sampling technique and select 10
experts who are employed by different model banks or
insurance companies in mainland China with a known
involvement or expertise in bancassurance.
3.1.1 The Result of the First Delphi Study
The aim of the first Delphi study is to identify the key
success factor for bancassurance. Delphi panelists were
asked to justify their answers to interview questions and
to rate their level of agreement toward key factors, rang-
ing from strongly agree 5 to strongly disagree 1. Descrip-
tive statistics of attitude toward each key factor at inter-
view were showed as Table 2.
Based on the result of a Wilcoxon Signed Rank test,
no significant attitude difference toward each key success
factor was found betw een round 2 and ro und 3. Thu s, th e
10 items proposed by this study can be identified as key
success factors for bancassurance.
3.1.2 The Result of the Second Delphi Study
Delphi panelists were asked to justify their answers to
interview questions and to rate their level of agreement
toward hierarchical evaluation structure developed by
this research (see Figure 4, 5, and 6).
Based on the result of a Wilcoxon Signed Rank test,
no significant attitude difference toward the hierarchical
evaluation structure was found between round 1 and
round 2. Th erefore, no mor e round of interv iew was nec-
essary. This means the hierarchical evaluation structure
provided by this study could be identified as the suitable
mode to evaluate bancassurance success (see Figure 5
and 6).
3.2. The Results of the Analytic Network Process
3.2.1. Establish the Pair-Wise Comparison Matrix
and Determine Eigenvectors
The respective weights of the three evaluative criteria
are insurer (0.297), bank (0.383) and strategy of bank
and insurers consolidation (0.320). Assume there is no
interdependence among sub-criteria, which sub-criteria
should be, emphasized more in determining their re-
spective upper level criterion. The eigenvectors for in-
surer (W32 (C1)), bank (W32 (C2)) and strategy of bank and
insurers consolidation (W32 (C3)) are organized into a
matrix, W32; that represents the relative importance of
sub-criteria with respect to their upper level criteria (see
Table 3).
3.2.2. Establish Pair-Wise Comparison Matrices of
Interdependencies
The inner dependency among the criteria and the sub-
criteria is W22 and W33 respectively (see Table 4, 5)
3.2.3. Evaluate the Limit Matrix
As shown by the dotted bracket in Figure 4, the super-
matrix in this paper comprises all the elements in the
network. The generalized form of the super-matrix is
shown in Figure 7. The report of the synthesized results
rom the super-matrix is in Table 6. f

Key Factors Influencing Bancassurance Success-Mainland China Evidence523
Table 2. Descriptive statistics of attitude toward each key factor at interview round 2 and round 3.
Attitude toward Key factors
SA A UD D SD
Key factors
R2R3R2 R3R2 R3 R2 R3 R2R3
Short time of product innovation 8 9 2 1 0 0 0 0 0 0
Lower administration cost per insurance contract 7 8 2 2 1 0 0 0 0 0
Provide lower premium insurance to b a n k d i s t ribution6 7 3 3 1 0 0 0 0 0
Small subsidiary set-up cost 7 8 2 2 1 0 0 0 0 0
Service quality 7 9 3 1 0 0 0 0 0 0
Sales promotion 8 9 2 1 0 0 0 0 0 0
Marketing partnership 8 8 2 2 0 0 0 0 0 0
Joint ventures 6 7 3 3 1 0 0 0 0 0
Creation of integrated groups 7 8 2 2 1 0 0 0 0 0
Internal development 8 9 2 1 0 0 0 0 0 0
*Five Attitudes toward Key Success Factors: Strongly Agree (SA), Agree (A) Undecided (UD), Disagree (D), and Strongly Disagree (SD).
Figure 3. IPA concept map.
Figure 4. Evaluation structure of key factors.
Figure 5. Inner dependence among criteria.

Key Factors Influencing Bancassurance Success-Mainland China Evidence 524
Figure 6. Inner dependence among sub-criteria.
Table 3. Weights of the criteria and sub-criteria in mainland China.
Criteria Weights of Criteria (W21) Sub-Criteria Weights of Sub-Criteria (W32)
Short time of product innovation 0.818
Lower administration cost per insurance contract 0.093
Insurer 0.297
Provide lower pr emium insuranc e to bank distribution0.089
Small subsidiary set-up cost 0.051
Service quality 0.353
Bank 0.383
Sales promotion 0.596
Marketing partnership 0.028
Joint ventures 0.325
Creation of intergrated group 0.555
Strategy of Bank and
Insurers C onsolidation 0.320
Internal development 0.092
Table 4. Inner dependenc e matrix of criteria, W22.
Goal Insurer Bank Strategy of Bank and Insurers Cons o lidation
Insurer 0.000 0.000 0.572
Bank 0.345 0.000 0.428
Strategy of Bank and Insurers Cons o lidation 0.665 0.000 0.000
Table 5. Inner dependenc e matrix of criteria, W33.
Short time of product
innovation
Lower ad-
ministration
cost per
insurance
contract
Provide
lower pre-
mium in-
surance to
bank distri-
bution
Small
subsidiary
set-up cost
Service
quality Sales promotion Marketing partnership Joint ventures
Creation of
integrated
group
Internal
develop-
ment
Short time of product
innovation 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Lower administration cost
per insurance contract 0.000 0.000 0.000 0.000 0.000 0.000 0.112 0.112 0.000 0.000
Provide lower premium
insurance to bank distribution 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Small subsidiary set- u p cos t 0.000 0.00 0 0.000 0.000 0. 000 0.000 0.888 0.888 0.000 0.000
Service quality 0.000 0.900 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Sales promotion 0.000 0.000 0.900 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Marketing partnership 0.000 0.100 0.100 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Joint ventures 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Creation of integrated group 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Internal development 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Key Factors Influencing Bancassurance Success-Mainland China Evidence 525
21 22
32 33
Goal Criteria Sub-Criteria
Goal
Criteria
Sub-Criteria
I
WW
WW

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Figure 7. Generalized super-matrix.
Table 6. The synthesized results from the super -matr ix.
Node name Limiting values from the
Supermatrix Priorities (limi ting values normalized by cluster)
Insurer 0.297 0.065
Bank 0.383 0.084
Strategy of Bank and Insurers Consolidation 0.320 0.070
Short time of product innovation 0.110 0.086
Lower administration cost per in surance contract 0.037 0.029
Provide lower premium insurance to bank distribution 0.012 0.009
Small su bsidiary set- up cost 0.210 0.165
Service quality 0.229 0.179
Sales prom otion 0.241 0.189
Marketing partnership 0.020 0.016
Joint venture s 0.047 0.037
Creation of i ntegrated group 0.080 0.063
Internal development 0.013 0.010
3.3. The Results in the Importance-Performance
Analysis
The purpose of attitude survey was to collect data with
regard to the performance of each key success factor
identified through Delphi Study in this research. The
respondents were asked to answer the level of perform-
ance for each key success factors for bancassurance.
Through snowball sampling technique, the question-
naires were distributed to the qualified managers who
were introduced or recommended by other managers
with job experience in bancassurance. This study suc-
cessfully surveyed 35 qualified managers employed by
different banks and insurance companies. As stated in
methodology section, the range of rating level in per-
formance survey was from one to five. However, the
range of weights estimated through ANP was from zero
to one. In order to conduct comparison, this study trans-
fers the key factor’s weight to 1 to 5 scale.
Table 7 shows the mean of performance ratings of the
10 key factors and linear transformation of key factors’
weights in mainland China. The mean of overall linear
transformation of key factors’ weights was 2.87 and the
mean of their performance rating was 2.77.
In the grid, there were 10 success key factors for ban-
cassurance in mainland China that fell in terms of the
four quadrants (See Figure 8). According to the grid, a
total of one success key factor fell into the “concentra-
tion” area (quadrant I,), these included creation of inte-

Key Factors Influencing Bancassurance Success-Mainland China Evidence 526
grated groups (1 .50, 3.14). Fur ther more, four success key
factors located in quadrant II, they were short time of
product innovation (3.25, 3.39), small subsidiary set-up
cost (3.75, 4.24), service quality (4.00, 4.40) and sales
promotion (3.50, 4.50). The management scheme action
“keep up the good work”. In addition, three success key
factors that had plotted in the “low priority” area (quad-
rant III) were lower administration cost per insurance
contract (2.50, 2.15), joint venture (1.25, 2.48) and in-
ternal development (2.75, 1.42). Finally, two success key
factors fell within the “possible overkill” area (quadrant
IV), included provide lower premium insurance to bank
distribution ( 3.50, 1.38) and mark eting partnership ( 4.50,
1.62).
4. Conclusions
The purpose of this study was to identify key factors in-
fluencing bancassurance success in mainland China. The
above analysis supports the argument that, while it is
necessary to identify areas of importance and low per-
formance, neither by itself is sufficient. Just because a
key factor is important does not mean that resources
should be expended in that key factor; performance may
be adequate, in which case the benefits of the resources
Table 7. Gap analysis of key factor and performance in mainland China.
item Key Factors
Linear Transformation of
Key Factors’ Weights (A)Mean of Performance (B) Gap Analysis (B-A)
1 Short time of product innovation 3.39 3.25 –0.14
2 Lower administration cos t pe r
insurance contract 2.15 2.50 0.35
3 Provide lower premium insurance
to bank distribution 1.38 3.50 2.12
4 Small subsidiary set-up cost 4.24 3.75 –0.49
5 Service quality 4.40 4.00 –0.40
6 Sales promotion 4.50 3.50 –1.00
7 Marketing partnership 1.62 4.50 2.88
8 Joint ventures 2.48 1.25 –1.23
9 Creation of integrated gro ups 3.14 1.50 –1.64
10 Internal development 1.42 2.75 1.33
Overall 2.87 2.77 –0.10
Figure 8. Importance-performance grid in mainland China.

Key Factors Influencing Bancassurance Success-Mainland China Evidence527
Figure 9. Resources allocation in mainland China.
expended will be limited.
In context of mainland China, factors such as creation
of integrated groups falling into quadrant (I) are per-
ceived as more important, but performed poorly in ban-
cassurance. The managerial implication is that manage-
ment has to put greater efforts into improving perform-
ance in these factors.
Factors such as short time of product innovation, small
subsidiary set-up cost, service quality, and sales promo-
tion in quadrant (II) are rated as important with high lev-
el of performance, and the managers have to maintain the
performance level in these factors to su stain the resultant
competitive advantag es (see Figure 9).
Both factors of lower administration cost per insuranc e
contract, joint ventures and internal development locating
at quadrant (III) are rated as having a low level of im-
portance and performance, and the management should
not put efforts into improving the performance in these
factors (see Figure 9).
Factors such as provide lower premium insurance to
bank distribution and marketing partnership locating at
the quadrant (IV) are perceived as less critical to success,
although the bancassurance performed well in these fac-
tors. This indicates a problem of over-investment in these
less critical factors and a reduction in investment is en-
couraged (see Figure 9).
In order to improve the performance of bancassurance,
administrator should have some of efforts originally in-
vested in the factors of lower administration cost per in-
surance contract, internal development, provide lower
premium insurance to bank distribution, and marketing
partnership moved to factors such as creation of inte-
grated groups and joint ventures. On the other hand, the
administrator should not expand resources in the factors
of short time of product innovation, small subsidiary
set-up cost, service quality, and sales promotion (see Fi-
gure 9).
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