They would need to pick branches with over 2500-3000 potential customers, to pay back costs of even one person per branch. If we assume that people costs in branches are fixed, smaller branches could become viable. However, with the recent spate of VRS programmes in public sector banks, this may no longer be valid. One of the key problems that plagues public sector banks is 'incentivisation'. The incentives of branch managers and personnel selling policies will have to be aligned to ensure effective distribution.
Insurance products are different from bank products and require special training.
The key question that has to be answered is whether to use trained bank staff or to place insurance specialists in branches. Working this out appropriately will be essential for success. Banks will experience concerns about the risk of insurance sales coming at the expense of bank products. The other risk is that of the manufacturer's poor servicing impacting the bank brand negatively. These are real fears and need to be managed.