Financial Services

by | Apr 21, 2023

Incentive Compensation Management in Financial Services

Globally, the financial services market is expected to reach USD 936.51 billion by 2030, at a CAGR of 26.2% from 2022 to 2030. According to an EY report, India’s fintech market is expected to increase from $50 billion in 2021 to $200 billion in revenue by 2030. The report also predicts around $1 trillion worth of assets under management in the same time frame. This growth is attributed to the (financial services) industry’s ability to constantly adapt to new technologies, market trends, and regulatory changes. 

Overall, the financial services industry will continue to undergo significant changes in the coming years, driven by technological innovation, changing customer expectations, and regulatory developments.

Such growth must be supported by a strong on-the-ground salesforce comprising in-house salespeople and external agent channels. However, one can only achieve growth when salespeople connect with the company’s objectives while having the drive to reach their ambitions. Organizations need incentive plans to entice, engage, and motivate the sales force.

Solid incentive plans/schemes that provide the sales team with a long-term goal can make this happen. These incentive plans need to maintain the same degree of motivation daily. That’s where the strategy and finance teams come into play as they collaborate to create innovative contests or bonanzas to bring short-term focus. It also instills a feeling of healthy competition among the team members. Salespeople can achieve individual, team, and organizational goals with contests and core incentive plans.

In crafting an effective incentive strategy, it’s crucial for organizations to not only design attractive plans but also to streamline the timely disbursal of incentives and commissions. This process becomes particularly intricate when dealing with various channels, such as in-house sales teams, advisors, brokers, and distributors. Often, organizations rely on these channel partners to submit accurate invoices reflecting the commissions they’ve earned. Unfortunately, challenges arise, including difficulties in generating precise invoices, format variations, and submission delays, all of which can result in payment delays impacting all channel partners.

Enter Incentivate – a solution that tackles this predicament head-on. With its built-in invoicing module, Incentivate simplifies the entire process for channel partners. The platform ensures accuracy and consistency by autonomously creating invoices on behalf of these partners. Moreover, it facilitates the seamless transmission of these invoices through various communication channels, allowing for digital acknowledgment through various eSignature platforms. This expedites the invoicing process and minimizes the likelihood of delays in payouts for all channel partners. In essence, Incentivate streamlines the invoicing workflow, providing a hassle-free solution that enhances efficiency and ensures a smoother incentive disbursement process.

Today, Incentivate’s expertise in understanding the financial services industry and its associated drivers better than many has helped several financial organizations. Incentivate’s no-code builder, pre-configured data models, and in-built connectors have made processing incentives easy for sales operations & finance personnel. 

Common Data Sources Integrated

As a financial services organization, you’ll be overwhelmed with unstructured and disorganized transaction data. Organizations adopt various available Loan Origination Systems (LOS) and Loan Management Systems (LMS) as the business grows. In addition, they may use solutions like SAP, Oracle, Bitrix24, and Nextiva to maintain the telesales data of outbound callers. This necessitates a strong and scalable system that enables real-time computing. HRMSs such as Oracle, Workday, Darwinbox, GreytHR, Keka, and others are also critical. However, they may be unable to manage complex hierarchies observed in the financial services industry.

When it comes to incentive plans that are derived from associates or relationship managers, they should be handled with care. In cases where there are no robust solutions available, organizations tend to resort to using spreadsheets. Digitization & automation being in the DNA, Incentivate has successfully established pull-push integrations with in-house applications wherever needed. It may work on-demand or according to predefined schedules, helping you experience seamless connections with these platforms and simplifying your life.

Typical Components in a Financial Services Incentive Compensation Plan

Financial services organizations use various compensation plans across multiple metrics in a rapidly changing industry. The nature of loans they provide, the vintage of salespeople, and the vision they want to achieve also drive the metrics they may use to pay incentives. Disbursal amount is the central component around which incentive plans revolve. However, several other supporting metrics are mandatory to focus upon to ensure qualitative growth for the financial services organization. Here’s a quick list of typical incentive components in the financial services industry implemented by Incentivate.

Financial services

Disbursal Amount

Incentive paid to the salesperson when the agreed-upon amount is paid into (their client) the borrower’s account and is available for use. The cash is debited from the financial services provider’s account and credited to the borrower’s account.

No. of Logins

Incentive paid upon creation of a loan case for a new client. Login identifies the client’s account creation for disbursal of the loan amount.  

Login to disbursal duration

The disbursal duration is the number of days required to disburse the client’s first part of the loan amount to the customer. Financial services organizations pay varying incentives ranging from positive % to negative % of the amount as the number of days needed to disburse increases after logins are created.


Yield refers to the return on investment (ROI) or the profit a financial investment generates. Yield is an important metric for financial institutions as it helps to assess an investment’s profitability. A higher yield typically indicates a more profitable investment, while a lower yield indicates a less profitable one. An incentive is accordingly paid, and if the yield drops below the organization’s expectations, the salesperson may have to pay a negative amount (penalty).


Delinquency in banking refers to a situation where a borrower fails to pay their loan as agreed upon in the loan agreement. In other words, delinquency occurs when borrowers fall behind on their payments, typically for 30 to 90 days. In such a case, the salesperson is impacted with a negative incentive, which may be a flat fee or calculated as a percentage of the delinquent amount.

Delinquency vs MOB 

MOB or Months on Board refers to the length of time that a customer has held a loan account with a particular financial services organization. It measures the customer’s loyalty and engagement with the institution, and the delinquency penalty may vary based on how long the customer has been on board.


Financial services organizations employ tele-callers to support the sales process by generating leads. Any conversions through these efforts attract an incentive which may be a flat fee per conversion or an incentive amount against achieving a specified lead target.


Beyond sales primarily focusing on selling financial products to customers, financial services organizations employ personnel to collect defaulted / delinquent amounts that customers fail to pay on time. In such cases, an incentive is paid to the collection executive.

Customer Satisfaction

Recently, financial services organizations have started incentivizing non-selling staff or operational personnel based on how customers rate their overall experience doing business with the institution. Such an incentive helps maintain a good and sustainable customer base that helps the organization in the long term.

Cross Selling

Cross-selling refers to selling additional financial products or services to existing customers. This can include offering customers a credit card, mortgage, or investment product besides their current account or loan. An incentive is paid to the salesperson in such cases.


Financial services organizations use sales contests as one of the most important tools for success. Contests are more tactical and motivate the right behaviors on a day-to-day basis. They also provide proper motivation for causing a spike in critical metrics that you may want to focus on for a shorter period, such as 2 to 4 weeks. Contests such as ‘King of Disbursals,’ ‘Race to 10 Logins,’ ‘Single largest disbursal’, and similar ones instill healthy competition in the salesforce.

Incentivate makes it easy to build up these contests on the fly. It also allows you to construct leaderboards to monitor contests. You may monitor based on certain teams/cohorts, specific regions, specific goods, etc.

Financial services

Processing & Payout Frequency

Financial services is a fast-paced industry, and so are its sales personnel. With most of their time spent in the field, it can become tedious for them to maintain their drive and momentum without a clear understanding of their earning potential and incentives.

Financial services organizations realize this need; however, they need more ability in existing incentive solutions to help their cause. Incentivate creates dynamic dashboards for the entire sales team, which are updated on a regular basis and offer customized insights tailored to each individual. They provide relevant information and updates, helping sales personnel to meet their goals. While Incentivate helps in almost near real-time processing, payout periods vary depending on how your incentive programs are set up.

Few financial services organizations opt to provide monthly incentives, while some pay incentives every quarter or over a longer period. There can be scenarios where some metrics are paid monthly while others annually. Such complexities, at times, are mandatory to increase motivation amongst the salesforce. Incentivate can easily manage these complication levels in your incentive plans, helping your sales team to stay ahead of the competition.

Financial Services

Challenges Addressed

Financial services organizations may offer different products; however, the quantity of data generated daily and the variations in incentive plans by-products, geographies, teams, etc., leads to a highly complex task that is virtually impossible to handle through spreadsheets. Additionally, even if done through spreadsheets, it does not allow you to share valuable insights with your sales team to maximize their potential. Over the last decade, we’ve handled various issues for several financial services organizations. Here’s a quick excerpt from our learnings:

Misaligned goals

When the goals of individual employees or departments are not aligned with the organization’s overall goals, it can lead to incentive challenges. For example, if sales representatives are incentivized solely based on the number of new accounts opened, they may prioritize quantity over quality, leading to mis-selling or fraud. Incentivate helps identify cases that can be managed via plan tweaks using Incentivate’s builder functionality.

Lack of oversight

Lack of proper oversight and monitoring can lead to incentive challenges, as employees may exploit loopholes and engage in unethical behavior. For example, if a manager is not monitoring the behavior of a sales team, individual sales representatives may engage in unethical behavior to meet their targets. Incentivate’s hierarchy management helps configure the most convoluted hierarchies and display the most granular performance to leaders.

Short-term focus

Short-term focus on performance goals can lead to incentive challenges, as employees may prioritize immediate gains over long-term success. This can result in risky behavior, such as taking on excessive risks or engaging in unethical practices. Incentivate can flag such behaviors and highlight them from a proper action-taking perspective.

Increased visibility for sales representatives

Incentivate designs personalized dashboards for everyone aligned with their incentive plan and update them almost near-real-time. This ensures your salespeople have enough visibility into how their incentives are calculated. If salespeople need help understanding their incentives, they may end up shadow accounting, which eats up a significant part of their sales time and reduces the sales bandwidth, eventually impacting your revenue goals.


Incentivate is the world’s only zero-compromise incentive management solution. The smallest tweaks to incentive plan parameters can be made by your organization’s personnel using Incentivate’s Builder functionality without writing a single line of code. It allows an admin to take control of the application and helps him tweak and set up new incentive plans or contests. An admin can quickly set up parameters to be changed and used for a given period and even design intuitive dashboards and what-if calculators.


When an organization fails to provide timely insights and establish transparency, it can demotivate salespeople and ultimately lead to their departure. Incentivate addresses these challenges, allowing salespeople to access comprehensive insights and better connect with the company. With a greater understanding of the nuances of the business, they feel more engaged and invested in the organization. Furthermore, real-time insights enable them to make informed decisions and avoid missing out on potential sales compensation. Ensuring the satisfaction of a salesperson is crucial for any organization, and all these factors work towards achieving that end goal.

Financial Compliance

Incentivate significantly enhances financial compliance and expedites the turnaround time for releasing partner commissions. Upon calculating commission or incentive amounts, Incentivate’s cutting-edge e-Invoicing module allows for the instantaneous generation of invoices for channel partners. These invoices can be effortlessly dispatched through any communication channel, offering digital acknowledgment options across a diverse array of eSignature platforms.

What sets Incentivate apart is its seamless process: channel partners can swiftly acknowledge and generate invoices with just a click of a button. This streamlined workflow ensures that these invoices, free from the hassles of errors or variations in formats, are promptly received by finance systems for efficient disbursals. The traditional challenges associated with erroneous invoices, diverse formats, and delays in raising invoices from the channel partner’s end are completely eradicated, allowing for a smoother and error-free financial transaction process.


As a fast-paced industry, engaging with & motivating salespeople is the key for financial services organizations. This is possible only through a good incentive plan and an aptly supporting solution to monitor the overall performance of your salesforce. Incentivate effortlessly helps you set your goals and, as a result, is a go-to solution for leading financial services organizations today.

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