INDEX
Bank Marketing
GOKHALE EDUCATION SOCIETYS
SHRI BHAUSAHEB VARTAK ARTS, COM. & SC.COLLEGE
&
SHETH K.V. PAREKH ARTS & COM. JR. COLLEGE
Gokhale Mahavidyalay Marg, Borivali (west) Mumbai-400 091.
NAAC B & ISO 9001-2008
PROJECT REPORT ON:Bank MarketingSUBMITTED BY:
Mr. JAYESH GAONKART.Y.B.COM (BANKING & INSURANCE) (SEMESTER-
V)
SUBMITTED TO:
UNIVERSITY OF MUMBAI
PROJECT GUIDE:
PROF. MR. AMEYA A. GHATGE
ACADEMIC YEAR: 2012-2013DECLARATION
I MR. JAYESH GAONKAR student of Shri Bhausaheb Vartak Arts,
Com.& Sc. College of T.Y.B.Com (Banking& Insurance)
(Semester-V) hereby declare that I have completed my project on
Bank Marketing in the academic year 2012-2013.
The information submitted is true & original to best of my
knowledge.
Place- Mumbai
Date-
Signature of student
ACKNOWLEDGEMENT
I am highly obliged to acknowledge our Principal Dr.Mrs.S.V.SANT
and for giving me an opportunity to conduct a detail study and
analysis of topic relevant to my project.
I would like to thank my Project Guide Prof.Mr. Ameya Ghatge and
also Our Course Co-ordinator Prof.Mrs.Rakhi Pitkar for helping
inspiring me at every stage of this project, for motivating me and
giving me access to such valuable information, without which my
project would be incomplete.
I would like to thank our Library Staff for providing
appropriate books on right time. Last but not least all my friend,
family members who support me while preparing my project.
These people have immensely helped me in getting the correct and
up to date information required for the making of this project.
This project report is the combination of all efforts of all the
above mentioned people and myself. I have carried out sincere
efforts on my part to make this project.
Thanking You..
Certificate
It will be given by college on letter head.Executive summary
Objective
This project is prepared to obtain essential understanding about
the concept of BANK MARKETING .To acquires the current status of
the bank market sources. Marketing helps in achieving the
organizational objectives of the bank
Scope
The Role of marketing in the banking industry continues to
change. For many years the primary focus of bank marketing was
public relations. Then the focus shifted to advertising and sales
promotion
Summary
This project is primarily concerned with the concept of BANK
MARKETING. Which give detail idea about the Bank marketing
activity? This aggregate of functions is the sum total of all
individual activities consisting of an integrated effort to
discover, create, arouse and satisfy customer needs. Marketing
concept is essentially about the thing which contributes towards
banks success.
Conclusion
Here we conclude that this project give a detail idea of the
Bank marketing functions, directed at providing services to satisfy
customers financial needs and wants, more effectively and
efficiently that the competitors keeping in view the organizational
objectives of the bank.
Research & Methodology
This project consist data which are collected from various
sources. Normally there are two sources of collecting the data i.e.
primary data and secondary data. In this project I have taken both
primary as well as secondary data.
PRIMARY RESEARCH
Primary Research has been done to validate the information given
in the project. This research has been extensively done via visit
to a bank (Corporation Bank and ICICI Bank). Interview from Mr.
Rajesh Sheth, Branch Manager of Corporation Bank and two SDM
(Marketing Department Managers) of ICICI Bank Mr. Rakesh L. Singh
and have really proved helpful in completion of the project.
SECONDARY RESEARCH
The secondary data about the project is collected through
various sources i.e.
Books on the very topic.
Various Websites.
Newspaper Articles.
Magazines containing the information about the topic.
INDEX
SR. NO.DESCRIPTION Pg no.
Executive summary
1. The Financial System
2. Origin of The Word BANK
3. Definition of Bank and marketing
4. Finance and banking in India
5. Users of Banking Services
6. Meaning of Marketing
7. Meaning of Bank Marketing
8. Market Research in Indian Banks
9. Increasing Importance of Marketing in Banking Industry
10. Market Segmentation
11. Marketing Mix for Banking Services
12. Strategies for Segmentation
13. Marketing Mix for banking services
14. Strategies for effective bank marketing in India
15. Technology in Banking
16. Bank Marketing in the Indian Perceptive
17. Bank Marketing in the Indian Perceptive
18. Case Study
19. Conclusion
20. References
THE FINANCIAL SYSTEM
The financial system consists of variety of institutions,
markets and instruments that are related in the manner shown in the
below figure, it provides the principal means by which saying are
transformed into investment. Given its role in the allocation of
resources, the efficient functioning of the financial system is of
critical importance to a modern economy. Financial manager
negotiate loans from financial institutions, raises resources in
financial marked and invests surplus funds in financial market. In
very significant way he manages the interface between the form and
its financial environment.
Financial System placed a very important role in the development
of a country. Through Financial System, entire money or money
equals are channelized in such a way so that each sector of economy
like industry, agriculture and services can be developed
rationally. Financial sector development is the locomotive force
for economic development of a country.
ORIGIN OF THE WORK BANK
According to some economists the word Bank has been derived from
the German word BANC which means a Joint Stock Firm while others
say that it has been derived from the Italian world BANCO which
means a heap or mound.
There is still another group of people who believe that word
bank has been derived from the Greek work BANQUE which means a
bench. In the olden days, Jews entered into money transactions
sitting on benches in a marked place. When a banker was not in a
position to meat his obligations, the on which he was carrying on
the money business was broken into pieces and the was taken as
bankrupt. Thus both the words Bank or bankrupt are said to have
origin from the word Banque.
DEFINITION OF BANK
According to Oxford English Dictionary, Bank is, An
establishment for custody of money received from or on behalf of,
its customers. Its essential duty is the payment of the orders
given on it by the customers, its profit mainly from the investment
of money left unused by them.
Banking Regulation Act, 1949 (Sec. 5 (c)), has defined the
banking company as, Banking Company means any company which
transacts business of banking in India. According to Section 5B,
banking means the accepting of deposit of money from the public for
the purpose of leading or investment, which are repayable on demand
or otherwise and are withdrawable by cheque, draft, and order or
otherwise.
Different economists, banking professionals and authorities
explained their viewpoint regarding bank or commercial bank. It has
been rightly said by A.K. Basu that a general definition of a bank
or banking is by no means easy, as the concepts of banking differ
from age to age, and country to country.
FINANCE AND BANKING IN INDIA
India is a vast country, before 1947, undivided India was equal
to Europe excluding Russia in its area. It is situated in south of
Asia. In spite of a part of Asia, it is separated from it. It is
separated by Himalayas in North India. India has vast oceans in
South, East and West. Due to its vastness it is also called sub
continent. That vast country has given different names in different
times. In Vedic period, it was called Arya-V-arat. In Bir period
and ancient period, it as called Bharatvarash. Perhaps due to fame
of king Bharat, it was called Bharatvarsh. Greek called it Indus on
the name of river Sindh. Iranians called it Hindu. Chinese
travelers called it Tienchu and Yintu. Ipsing called Arya Desh and
Brahmrashtra. Bible has called it Hoddu. In medieval period, it was
called Hindustan and Hind. European called it India. After
Independence, it is return as Bharat Ganrajya or Indian Republic in
Indian Constitution.
BANK MARKETING
We define bank marketing as follows: Bank marketing is the
aggregate of functions, directed at providing services to satisfy
customers financial (and other related) needs and wants, more
effectively and efficiently that the competitors keeping in view
the organizational objectives of the bank. Bank marketing activity.
This aggregate of functions is the sum total of all individual
activities consisting of an integrated effort to discover, create,
arouse and satisfy customer needs. This means, without exception,
that each individual working in the bank is a marketing person who
contributes to the total satisfaction to customers and the bank
should ultimately develop customer orientation among all the
personnel of the bank. Different banks offer different benefits by
offering various schemes which can take care of the wants of the
customers.
Marketing helps in achieving the organizational objectives of
the bank. Indian banks have duel organizational objective
commercial objective to make profit and social objective which is a
developmental role, particularly in the rural area.
Marketing concept is essentially about the following few thing
which contribute towards banks success:
1) The purpose of the bank is to create, win, and keep a
customer.
2) The customer is and should be the central focus of everything
the banks does.
3) It is also a way of organizing the bank. The starting point
for organizational design should be the customer and the bank
should ensure that the services are performed and delivered in the
most effective way. Service facilities also should be designed for
customers convenience.
4) Ultimate aim of a bank is to deliver total satisfaction to
the customer.
5) Customer satisfaction is affected by the performance of all
the personal of the bank.
All the techniques and strategies of marketing are used so that
ultimately they induce the people to do business with a particular
bank. Marketing is an organizational philosophy. This philosophy
demands the satisfaction of customers needs as the pre-requisite
for the existence and survival of the bank. The first and most
important step in applying the marketing concept is to have a whole
hearted commitment to customer orientation by all the employees.
Marketing is an attitude of mind. This means that the central focus
of all the activities of a bank is customer. Marketing is not a
separate function for banks. The marketing function in Indian Bank
is required to be integrated with operation.
MARKET RESEARCH IN INDIAN BANKS
After enquiring with all the public and 14 private sector banks
whether they had undertaken any market research studies. The
following board areas of market research were considered for the
study:
(a) New service development,
(b) New service product acceptance,
(c) Research and development of existing financial service,
(d) Bank images study,
(e) Measuring banks advertising effectiveness,
(f) Measurement of market potentials,
In response to the inquiry information was received from 17
banks. Out of these banks, 14 are public sector banks and 3 are
private sector banks. Two nationalized banks and two private sector
banks informed that they have not conducted any markets research
studies.
INCREASING IMPORTANCE OF MARKETING IN BANKING INDUSTRY
The various other factors which have led to the increasing
importance of marketing in the banking industry are categorized as
follows:
Government Initiatives
The Indian economy embarked on the process of economic reform
and various policy measures initiated by the government resulted in
the increasing competition in the banking industry, thereby
highlighting the importance of effective marketing. The Narasimham
Committee Report evidence of the Governments desires to Re-regulate
the banking industry so as to encourage efficiency through
competition. The Government initiatives include:
Deregulation of Interest Rates
The bank may reduce their Minimum Lending Rates so as to attract
customers (individual and corporate). Such reduction in lending
rates reduce the spread between the deposit rates and lending
rates, i.e. the banks margins would decline and they would have to
increase their volumes or provide attractive services so as to
maintain profits. This calls for bank marketing.
Increasing Emphasis on Bank Profitability:
With the Narasimhan Committee Report, banks have been directed
to improve their efficiency, productivity and profitability. Banks
are required to be self-sufficient. In fact, the report has adopted
the BIS standards of capital adequacy (though in a phased
manner).
Foreign Banks
Foreign banks offer stiff competition to the Indian Banks and
with their superior services and technology offers them a
competitive advantage. Thus Indian Banks have to effectively apply
marketing concepts to attract customers.
Entry of New Private Banks
In the early 90s new competition emerged in the form of new
Private Banks, who brought along with them a high technology-based
banking matching with International Standards and have made a
significant dent in the banking business by capturing substantial
share in the profits of the banking industry.
Reduction of Statutory Liquidity Ratio:
With the Governments aim of reducing the SLR to 25 percent, the
banks will have surplus funds for which they will have to attract
users.
Social Environment
Increasing Urbanization, Education and Awareness: The higher
literacy level, migration to urban areas and higher awareness due
to the boom in the mass media has important implications for the
retail banker. He needs to be conscious of the fact the increasing
proportion of people are aware of financial service and are,
therefore demanding and expecting higher quality services.
Increasing Urbanization, Education and Awareness: The higher
literacy level, migration to urban areas and higher awareness due
to the boom in the mass media has important implications for the
retail banker. He needs to be conscious of the fact the increasing
proportion of people are aware of financial service and are,
therefore demanding and expecting higher quality services.
Decline in Traditional Indian Values (Borrowing as Taboo),
Rising Consumerism, Rise in the Percentage of Working Women.
Technology Development
Modernization of Technology has facilitated the introduction of
new banking services as to attract new customers. An example of
this is the Automated Teller Machines or the facility of Any Time
Money. Also in foreign countries, banks are experimenting with
money transmission at Point of sale, e.g., petrol station linked
with banking network.
Consumer Behavior and Segmentation
Need for segmentation
Philip Kotler has described the dilemma of the seller
(especially, a seller dealing with masses, e.g. banks) as
follows:
How the seller determines which buyers characteristics produce
the best partitioning of a particular market? The seller does not
want to treat all customers alike nor does he want to treat them
all differently.
Banks deal with individuals, group of persons and corporates,
all of whom have their likes and dislikes. No bank can afford to
assess the needs of each and every individual buyer (actual or
potential).
Segmentation of the market into more or less homogenous groups,
in terms of their needs and expectations from the banking industry,
provides a solution to this problem.
This involves dividing the market into major market segments,
targeting one or more of this segments, and developing products and
marketing programs tailor-made for these segments.
In the first segmentation, the market is divided from a unitary
whole, to groups of buyers who might require separate products and
marketing mix. The marketer typically tries to identify different
segments in the market and develop profiles of resulting market
segments.
The second step is market targeting in which each segments
attractiveness is measured and a target segment is chosen based on
tits attractiveness.
The third step is product positioning which is the act of
establishing a viable competitive position of the firm and its
offer in the target segment chosen.
Initiation of Segmentation in India
Station Bank of India was the first Indian Bank to adopt the
concept of market segmentation. In 1972, it reorganized itself on
the basis of major market segments dividing customers on the basis
of activity and carved out 4 major market segments, viz. Commercial
and Institutional, Small Industries and Small Business Segment,
Agriculture, Personal and Services Banking. The objectives of this
scheme were:
Deeper penetration and coverage of market by looking
outwards.
Adequate flexibility of organization to accommodate growth and
rapid change,
Delegation of work for releasing senior management for more
futuristic tasks.
Criteria for Segmentation
Segmentation in a right fashion makes the ways for profitable
marketing. This helps policy planner in formulating and innovating
the policies and at the same time also simplifies the task of bank
professionals while formulating an innovating the strategic
decisions. The following criteria make possible rig
segmentation.
An important criterion for market segmentation the economic
system in which we find agricultural sector, industrial sector,
services sector, household sector, institutional sector and rural
sector requiring of weight age while segmenting.
Agricultural Sector: In the agricultural sector, there are four
category rise since the needs of all the categories cants be
identical.
The mechanization of agriculture, the improved or scientific
system of activation, the help of nature, the magnitude of risk,
the availability infrastructural facilities influence the level of
expectations vis--vis the needs and requirements. The banking
organizations are supposed to know and under stand the changing
requirements of different categories of farmers.
Industrial Sector: The banking organizations sub serves the
interests of the industrial sector. The large-sized, small-sized
co-operative and tiny industries use the services of banks. The
expectations of all the categories can not be uniform.
The banking organizations are supposed to have an indepth
knowledge of the changing needs and requirements of the industrial
segment.
Services sector: It is an important sector of the economy where
the banking organizations get profitable business. The two
categories of organizations such as profit-making and
not-for-profit making are found important in the very context.
The banking organizations need to identify the changing needs
and requirements of the services sector. With the frequent use of
information technologist and with the mounting pressure of
inflation and competition, we find a change in the hierarchy of
needs.
Household Sector: This is also constitutes an important sector
where different income group have different needs and requirements.
In below figure we find the different segments of the household
sector.
MARKETING MIX FOR BANKING SERVICES
The formulation of marketing mix for the banking services is the
prime responsibility of the bank professional who based on their
expertise and excellence attempt to market the services and schemes
profitably.
The bank professionals having world class excellence make
possible frequency in the innovation process which simplifies their
task of selling more but spending less. The four submixes of the
marketing mix, such as the product mix, the promotion mix, the
price mix and the place mix, no doubt, are found significant even
to the banking organizations but in addition to the traditional
combination of receipts, the marketing experts have also been
talking about some more mixes for getting the best result. The
People as a submix is now found getting a new place in the
management of marketing mix. It is right to mention that the
quality of people/employees serving an organization assumes a place
of outstanding significance. This requires a strong emphasis on the
development of personally-committed, value-based, efficient
employees who contribute substantially to the process of making the
efforts cost effective. In addition, we also find some of the
marketing experts talking about a new mix, i.e. physical
appearance. In the corporate world, the personal care dimension
thus becomes important. The employees re supposed to be well
dressed, smart and active. Besides, we also find emphasis on
Process which gravitates our attention on the way of offering the
services. It is only not sufficient that you promise quality
services. It is much more impact generating that your promises
reach to the ultimate users without any distortion. The banking
organizations, of late, face a number of challenges and the
organizations assigning an overriding priority to the formulation
processes get a success. The formulation of marketing mix is just
like the combination of ingredients, spices in the cooking
process.
MARKETING MIX IN BANKING INDUSTRIES
1. PROMOTION:
Promotion mix includes advertising, publicity, sales promotion,
Word of mouth promotion, personal selling and telemarketing.
2. PRICE:
The price must be high enough to cover costs and make a profit
but low enough to attract customers. There are a number of possible
pricing strategies. The most commonly used are:
3. PRODUCT:
The business has to produce a product that people want to
buy.They have to decide which market segment they are aiming at
age, income, geographical location etc.
4. PLACE:
Banks need to take into consideration the place factor as it
decides the volume of business for them.
5. PEOPLE:
Sophisticated technologies no doubt, inject life and strength to
a banks efficiency but the moment there is a lack of productive
human restheirces even the new generation of information
technologies would hardly produce the desired results.
Other than these are;
6. PROCESS:
All the major activities of banks follow RBI guidelines. There
has to be adherence to certain rules and principles in the banking
operations.
7. PHYSICAL EVIDENCE:
The physical evidences include the logo, the layout of the
branch, the passbooks, cheque books, the furniture, the reports,
punch lines, other tangibles, employees dress code etc.
THE PRODUCT MIX: The banks primarily deal in services and
therefore, the formulation of product mix is required to be in the
face of changing business environmental conditions. Of course the
public sector commercial banks have launched a number of polices
and programmers for the development of backward regions and welfare
of the weaker sections of the society but at the same it is also
right to mention that their development-oriented welfare programmes
are not optimal to the national socio-economic requirements. The
changing psychology, the increasing expectations, the rising
income, the changing lifestyles, the increasing domination of
foreign banks and the changing needs and requirements of customers
at large make it essential that they innovate their service mix and
make them of world class. Against this background, we find it
significant that the banking organizations minify, magnify combine
and modify their service mix.
It is essential that ever product is measured up to the accepted
technical standards. This is due to the fact that no consumer would
buy a product which contains technical faults. Technical perfection
in service is meant prompt delivery, quick disposal, presentation
of right facts and figures, right filing proper documentation or
so. If computers starts disobeying the command and the customers
get wrong facts, the use of technology would be a minus point, and
you dont have any excuse for your faults.
PRODUCT PORTFOLIO: The bank professional while formulating the
product mix need to assign due weightage to the product portfolio.
By the concept product portfolio, emphasis is on including the
different types of services/ schemes found at the different stages
of the product life cycle. The portfolio denotes a combination or
an assortment of different types of products generating more or
less in proportion to their demand. The quality of product
portfolio determines the magnitude of success. It is excellence of
bank professionals that help them in having a sound product
portfolio.
We find the composition of a family sound, if members of all the
age groups are given due place. Like this, the composition or
blending of a service mix is considered to be sound, if well
established and likely to be profitable schemes are included in the
mix. It is against this background that a study and analysis of
product portfolio is found significant. The bank professionals are
supposed to perform the responsibility of composing the same. A
sound product portfolio is essential but its process of
constitution is difficult. An organization with a sound product
portfolio gets a conducive environment and successes in increasing
the sensitivity of marketing decisions. The banking organizations
need a sound product portfolio and the bank professionals bear the
responsibility of getting it done suitably and effectively.
If the banks rely solely on their established services and
schemes, the multidimensional problems would crop up in the long
run because when the well established services/schemes would start
saturating or generating losses, the commercial viability of banks
would of course, be questioned. The banking organizations relying
substantially on a profitable scheme and ding nothing for new
scheme likely to get a profitable market in the future are to face
is to face a crisis like situation. It is in this context, that we
find designing of a sound product portfolio essential to an
organsition. We cant deny that the product portfolio of the foreign
banks is found sound since they keep their eyes moving. The
innovation, diffusion, adoption and elimination processes are taken
due care. The public sector commercial banks need to innovate their
service and this makes a strong advocacy in favour of analyzing the
product portfolio.
DESIGNIGN AN ATTRACTIVE PACKAGE
In the formulation of product mix for the banking organization,
the designing of package is found important. In this context, we
find packaging decision related to the formulation of a mix of
different schemes and services. Developing an attractive package
required professional excellence and therefore, the bank
professionals are required to be aware of the different key issues
influencing the formulation process. What the package should
basically be or do for the particular target. We re aware of the
fact that a number of schemes and services are included in the
service mix of bank product and all the services or schemes cant be
preferred by all. Of course we find some of the public sector
commercial banks now evincing stage. This makes it essential that a
bank manager thinks in favour of developing a package. The
importance of packaging cant be underestimated considering the
functions it performs and the effects which we witness in the
process of attracting and satisfying the customers. In addition to
other aspects, it is also pertinent that a bank manager is familiar
with the package developed by the leading competitive banks since
this would help them in innovating the package. It is an important
component of the product mix and a bank manager while formulating
or designing a package needs to assign due weightage to the
formulation process. While developing a package, it is essential
that the packages offered are efficacious in establishing an edge
over the packages of competitors. Thus needs and preferences of the
target market in addition to the packages offered by the
competitors need due weightage while designing a package.
In the designing process the bank professionals can make a
package, an ideal combination of both, the core and peripheral
services. The main thing in the process is to make it profitable,
convenient and productive to the customers so that they prefer to
transact with the bank. For the bank professional, it is an
important persuasive effort that helps in increasing the business
even without developing or innovating the services or schemes.
PRODUCT DEVELOPEMNT: In almost all the services, the development
of a product is an ongoing process. The banking organizations also
need to develop new services and schemes. We cant deny that the
development of product especially in the banking services is found
difficult since they dont have any discretion, however they can do
it, of course in a limited way. By minifying, combining, modifying
and magnifying, the banking organizations can give to the services
or scheme a new look. The regulations of the Reserve Bank of India,
no doubt stand as a barrier but professionally sound marketers make
it possible even without violating the rules and regulations. The
banking organizations in general have been found developing product
by including some new properties or features. Generally we find two
processes for the development of product. The first process is
found proactive since the needs of the target market are
anticipated and highlighted. The second process is reactive and in
this context the banks respond to the expressed needs of the
target.
PROACTIVE PROCESS: In the pro-active process, we find product to
market needs. This makes it essential that the branch managers are
aware of the changing needs of the target market. There are six
stages for the development of the product, such as idea generation,
screening of the concept, assessing of market potential, analyzing
the cost, test marketing and final commercial launching. The bank
professionals have to be careful at all the stages so that whatever
the services or schemes are developed are found instrumental in
getting a positive response. The customers and competitors help
bank professional substantially in generating a new idea. The
screening of the product concept focuses on the process of
narrowing down the list of the ideas generated to a small number of
concepts.
PROMOTION MIX
In the formulation of marketing mix the bank professionals are
also supposed to blend the promotion mix in which different
components of promotion such as advertising, publicity, sales
promotion, word-of-mouth promotion, personal selling and
telemarketing are given due weightage. The different components of
promotion help bank professionals in promotion the banking
business.
Advertising:
Like other organizations, the banking organizations also us this
component of the promotion mix with the motto of informing, sensing
and persuading the customers. While advertising, it is essential
that we know about the key decision making areas so that its
instrumentality helps bank organization both at micro and macro
levels.
Finalizing the Budget:
This is related to the formulation of a budget for
advertisement. The bank professionals, senior executives and even
the police planners are found involved in the process. The
formulation of a sound budget is essential to remove the financial
constraint in the process. The business of a bank determines the
scale of advertisement budget.
Selecting a Suitable vehicle:
There are a number of devices to advertise, such as broadcast
media, telecast media and the print media. In the face of budgetary
provisions, we need to select a suitable vehicle. The latest
developments in the print technology have made print media
effective. The messages, appeals can be presented in a very
effective way.
Making possible creativity:
The advertising professionals bear the responsibility of making
the appeals, slogans, messages more creative. The banking
organizations should seek the cooperation of leading advertising
professionals for that very purpose.
Instrumentality of branch managers:
At micro level, a branch manager bears the responsibility of
advertising locally in his / her command area so that the messages,
appeals reach to the target customers of the command area. Of
course we find a budget for advertisement at the apex level but the
business of a particular branch is considerably influenced by the
local advertisements. If we talk about the cause-related marketing,
it is the instrumentality of a branch manager that makes possible
the identification of local events, moments and make advertisements
condition-oriented.
Public Relations: Almost all the organization need to develop
and strengthen the public relations activities to promote their
business. We find this component of the promotion mix effective
even in the banking organizations. We cant deny that in the banking
services, the effectiveness of public relations is found of high
magnitude. It is in this context that we find a bit difference in
the designing of the mix of promoting the banking services. Of
course in the consumer goods manufacturing industries, we find
advertisements occupying a place of outstanding significance but
when we talk about the service generating organizations in general
and the banking organizations in particular, we find public
relations and personal selling bearing high degree of importance.
Personal Selling: The personal selling is found instrumental in
promoting the banking business. It is just a process of
communication in which an individual exercise his/her personal
potentials, tact, skill and ability to influence the impulse buying
of the customers. Since we get in immediate feed back, the personal
selling activities energies the process of communication very
effectively.
The personal selling in an art of persuasion. It is a highly
distinctive form of promoting sale. In personal selling, we find
inter-personal or two-way communication that makes the ways for a
feed back. There is no doubt in it that the goods or services are
found half sold when the outstanding properties are well told. This
are of telling and selling is known as personal selling in which an
individual based on his/her expertise attempts to transform the
prospects into customers.
Dynamics of Personals Selling
The dynamics of personal selling are found instrumental in
activating the selling activities. Sales preparations are
considered most crucial for the actual sales. Pre-sale activities
and post-sale services cant be left neglected to improve the
marketing activities. The customers may be interested in knowing
the main features of the services, how a particular service would
help them, rationale behind the technical services and proof in
regard to its uses. The pre-sale activities would bring the
positive results, if preparations are adequate.
Some of the customers are found highly aware of the
developments, they are found well informed. On the other hand, we
also find other category of customers who are in dark. Here, the
branch managers are expected to match the level of awareness of
customers. As for instance, Mr. A goes up the matrix but Mr. B has
not enough time for the branch managers. The branch managers are
supposed to prepare a synopsis of their sales talk. Not
surprisingly the highly aware customers are found in apposition to
make independent decisions and know all about. While selling to the
less aware customers, the managers should stress on the main
features of the services and the expected benefits of these
services.
Sales Promotion: It is natural that like other organizations,
the banking organizations also think in favor of promotional
incentives both to the bankers as well as the customers. The
banking organizations make provisions for incentives offered to the
customers are known as customers promotion. There are a number of
tools generally used in the different categories of organizations
in the face of the nature of goods and services sold by them. The
gift, contests, fairs and shows, discount and commission,
entertainment and traveling plans for bankers, additional
allowances, low interest financing and retaliatory are to mention a
few found instrumental in promoting the banking business.
As and when the banking organizations offer new services and
schemes, the tools of sales promotion are required to be innovated.
This is with the motto of stimulating the new and old customers. An
important thing in the very context is the changing needs and
requirements of customers/prospects. The bank professionals bean
outstanding task of studying the competitors strategies which would
he them in initiating the process of innovation. Here it is
important to mention the promotional incentives to the customers
would focus on decisions related to the selection of a tool. There
are a number of considerations to streamline the process. The bank
professionals are supposed to study the market conditions and make
necessary suggestions, especially regarding the incentives.
It is a blending process and bank professional have to be sure
the whatever the provisions, they make are fulfilled on priority
basis. More incentives more efficiency or a vice-versa conditions
more efficiency, more-incentives motivate bankers
substantially.
Word-of-Mouth Promotion:
Much communication about the banking services actually take
place by word-of-mouth information which is also known as
word-of-mouth promotion. In the banking industry, we find use of
different components of promotion and in the context it is
essential that we also talk about word-of-mouth communication which
makes the process of influencing the prospects effective by
sensitizing the word-of-mouth recommendations.
The persons engaged in communication, the hidden sales force
that plays an incremental role in increasing the demand. An
important question regarding the word-of-mouth communication is
related to its intensity of sensitizing the persuasion process.
The problem before the bank professionals is to identify the
persons to be included in the list of word-of-mouth promoters. It
is supposed that a bank manager is well aware of the social
composition of his/her command area. The oral publicity plays an
important role in eliminating the negative comments and improving
the services. This helps you know the feedback which may simplify
the task of improving the quality of services.
THE PRICE MIX
In the formulation of product mix, the pricing decisions occupy
a place of outstanding significance. The pricing decisions or the
decisions related to interest and fee or commission charged by
banks are found instrumental in motivating or influencing the
target market. The Reserve Bank of India and the Indian Banking
Association are concerned with the regulations. The rate of
interest is regulated by the RBI and other charges are controlled
by the Indian Banking Association. To be more specific in the
Indian setting, we find this component of the marketing mix
significant because the banking organizations are also supposed to
sub serve the interests of weaker sections and the backward
regions. The public sector commercial banks in particular are
supposed to play developmental role with societal approach. It is
natural that these specific roles of the public sector commercial
banks complicate the problem of pricing.
Pricing policy of a bank is considered important for raising the
number of customers vis--vis the accretion of deposits. Of course,
there are a number of factors to influence the process but it is
also right to mention that the key role in the entire process is
played by the Reserve Bank of India. A National Consumer Survey
Conducted by the L.H. Associates reveals that the quality of
Consumer service was one of the three top issues and the consumers
ranked the quality of their bank relationships more even more
important than the fees charged for the services. To be more
specific when we find a number of domestic and foreign banks
working in the Indian economy, the Reserve Bank of India bears the
responsibility of making the business environment conductive.
The non-banking organizations and foreign banks have been found
attracting customers by offering to them a number of incentives.
The potential customers or investors frame their investment plans
in the face of pricing decisions made by the banking organizations.
While formulating the pricing strategies, the banks have also to
take the value satisfaction variable into consideration. The value
and satisfaction cant be quantified in terms of money since it
differs from person to person, keeping in view the level of
satisfaction of a particular segment, the banks have to frame their
pricing strategies. The policy makers are required to be sure that
the services offered by them are providing satisfaction to the
customers concerned. The pricing decisions may be to bit liberal,
if the potential customers are found shifting to the non-banking
investments. In this context, it is pertinent that pricing is used
as motivational tool.
The banking organizations are required to frame two-fold
strategies. First, the strategy is concerned with interest and fee
charged and second, the strategy is related to the interest paid.
Since both the strategies throw a vice-versa impact, it is
pertinent that banks attempt to establish a correlation between the
two. It is essential that both the buyers as well as the sellers
have a feeling of winning as shown in figure.
The banks have to take the value satisfaction variable into
consideration while designing the pricing strategies. McIver and
Naylor opine that a marketing manager has to regard price as a
variable to be traded off against product quality and promotion
rather that as an absolute where the lowest price is not
desirable.
THE PLACE MIX
This component of the marketing mix is related to the offering
of services. The two important decision making areas are making
available the promised services to the ultimate users and selecting
a suitable place for bank branches.
The selection of a suitable place for the establishment of a
branch is significant with the viewpoint of making the place
accessible and in addition, the safety and security provisions are
also found important. The banking organizations are not free to
open a branch since the Reserve Bank of India regulates the subject
of branch expansion but so far as the management of branch is
concerned, the branch managers have option to select a place which
is convenient to both the parties, such as the users and the
bankers. In the Indian perspective, the protection to the banks
assets and safety to the users and bankers need due weightage. The
vulnerable area or regions need adequate provisions to make the
branch safe. The management of office is also found significant
with the viewpoint of making the services attractive. The
furnishing, civic amenities and parking facilities cant be
overlooked.
Another important decision making area is related to the
offering of services. This draws our attention on the behavioral
profile of bankers. The bankers in general and the front-line-staff
in particular bear the responsibility of making available the
services-promised to the ultimate users without any distortion
often a gap is found generated by front-line-staff that makes an
invasion on the image of bank. The bank professionals or a branch
manager is required to be sure that whatever the promise has been
made regarding the quality of services are not distorted. The RBI
and the different public sector commercial banks are required to
manage the distribution process intelligently and professionally.
Thus, the place mix is found to be an important decision making
area which requires due attention, both at macro and micro levels.
If the banking organizations sell the promises it is essential that
the end users get the same without any distortion.
THE PEOPLE
Sophisticated technologies, no doubt, inject life and strength
to our efficiency but the instrumentality of sophisticated
technologies start turning sour if the human resources are not
managed in a right fashion. Generation of efficiency is
substantially influenced by the quality of human resources. It is
against this background that a majority of the management experts
make a strong advocacy in favour of developing quality people and
late, the people management has been include dint he marketing mix
of organizations is general and the service generating
organizations in particular.
Not only the public sector commercial banks but almost all the
public sector organization and albeit other government departments,
of late, have been facing the problem of quality people resulting
into inefficiency, deceleration in the rate of overall productivity
and profitability or so. The front-line staff are rough and
indecent, the branch managers are helpless and even the bankers
have been found involved in the unfair practices. The public sector
commercial banks need to assign on overriding priority to the
development of quality people majority of the management of the
experts have realized the significance of quality people in the
development of an organization and the boardrooms are also found
changing their attitudes.
The first task before the banking organizations at the apex
level is to overhaul the recruitment processes. While fixing
criteria for selection, they need to assign due weighted to the
ethical values. The education and training facilities are required
to be innovated. The process of identification and inculcation need
to be managed carefully.
The foreign banks and the private sector commercial banks reward
for efficiency and at the same time also demotivate the inefficient
bankers. This helps them in improving the efficiency of even the
inefficient people. The development of human resources makes the
ways for the formation of human capital. Incentives, of course,
inject efficiency and the organizations offering more incentives
succeed in motivating the people.
Having better and cost-effective control over operations.
Enriching the job content of employees at all level (by reducing
the drudgery of mundane operations and increasing the analytical
content of their work).
Improving the quality of decision-making, a must in the fast
changing environment.
Thus, the key focus areas in which information technology can be
employed are:
Automated processing of back-office operations like processing
of forms, policy customerization and product selection, pricing and
preparation of quotations, etc.
Computer assisted telephone and intelligent voice processing for
customer call handling, new business marketing or handling after
office hours enquires.
Image processing for documents storage and retrieval, folder
management (or all documents related to a customer), and workflow
management for the movement of documents with the bank.
Artificial intelligence and expert systems for complex
decision-making like the appraisal of the creditworthiness of
clients, designing of innovative instruments and strategy
formulation.
Relational Database Management System (RDBMS) for the systematic
use of information which would facilitate the cross-selling of
products.
Electronic Data Interchange (EDI) for company-wise communication
and inter-connection of systems for the benefit of both the banks
MIS and the customer.
Office Management Systems for accounting and administrative
support.
All the above systems should be client-based systems and not
line-of-business systems since these would provide better marketing
and service to clients, facilitate cross-selling and
customerization of schemes and hence, a better packaging for the
product. This would help Indian banks thing customer.
All these would, thus, help in the effective management of time.
Recourse to mechanized systems like ledger posting machine, cash
counting machine and cheque sorting machine would result in
reduction in the number of tedious and routine jobs to be handled
manually saving time for the people to focus on the customer.
STRATEGIES FOR EFFECTIVE BANK MARKETING IN INDIA
Introduction:
Since the inception of globalization in India, banking sector
has undergone various changes. Introduction of asset classification
and prudential accounting norms, deregulation of interest rate and
opening up of the financial sector made Indian banking sector
competitive. Encouragement to foreign banks and private sector
banks increased competition for all operators in banking sector.
The protective regime by the authority is over. Indian banks are
exposed to global competition. Even competition within the country
has increased manifold. The almost monopoly position enjoyed by the
public sector banks of India is no more existence. Under this
development Indian banks needs to reinvent the marketing strategy
for growth.
The spread of the bank in Indian rural and semi urban areas are
highly different from state to state and region to region. Many
states have fewer networks of bank branches in the rural areas.
Under such scenario different marketing approach for different
areas is required. If the bank follows the same marketing strategy
for all areas the success would be difficult.
Marketing approach for urban area: The urban areas of India are
developed taking into account all parameters of development. The
level of income of the people, the literacy rate and level of
education as well as awareness of the people about rights of the
customer are higher than that of the rural and even semi urban
areas. Thus here for effective bank marketing different approach is
necessary than that of rural areas.
The marketing strategy should be based on customer service and
the use of modern technology in banking. Under competitive
environment for the success of the business, better customers and
retaining existing customers is possible only with customer
service. Use of modern technology in urban areas will also go long
way for marketing of banking services. Technology based service
like credit card, debit card, ATM; anywhere banking, internet
banking, and mobile banking are necessary for urban areas. This is
because it enables customers to perform banking transactions at
their convenience. Business hours of a bank are also an important
factor for urban banking. India many private sector banks,
especially co-operative banks and now even some of the public
sector banks have also started this practice and they find it
successful. To attract business and wholesale customers, banks need
to adopt technology based product and service which is suitable to
such class of customer. For instance RTGS, collection of out
station cheques, issuing the cheques at par at any branch in the
country, cash management facility, DD boutiques etc. are
necessary.
Another strategy for effective marketing is bank need to change
the focus from the traditional banking to universal banking. In
urban areas the extend and variety of economic activities demands
that one institution should meet all financial need of a customer.
Under such an expectation of people universal banking would prove
successful approach for bank marketing. The term universal banking
in general refers to the combination of commercial banking and
investment banking, i.e., issuing, underwriting, investing and
trading in securities.
A universal bank is a supermarket for financial products. Under
one roof, corporate can get loans and avail of other handy
services, while individuals can bank and borrow.
For increasing customer base and retention of the existing
cliental universal banking approach is effective strategy.
Universal banking offers number of benefits to customers as well s
the banks. For instance, economies of scale arise in multi-product
firms because costs of offering various activities by different
units are greater than the costs when they are offered
together.
Marketing approach for rural areas: Prior to nationalization of
banks in 1969, the rural areas were virtually without banking
facility. At that time unorganized sector was dominating in the
rural finance. After nationalization of banks in 1969 branches of
the banks were started gradually in the rural areas also. Today
more than 50 percent branches of the banks are found in the rural
areas. However, the distribution of banks in the rural areas is
highly uneven. Here banks have to face competition with the
unorganized sector. Moreover the rural banking is highly
regularized activity by the Government in India. Lending as well as
interest rate is regularized. Thus under such environment different
marketing approach is required. For effective rural marketing
product development, promotion and communication is important. All
these parameters banks have to balance with socio-economic factors
prevailing in the rural areas. Bank need to innovate product that
could attract the depositors. Various loan schemes that are
suitable for them for getting funds at right time and also they
find convenient to repay. For instance traditional saving bank
account may be given fixed deposit concept that once a particular
limit of balance is reached the funds from saving account is
automatically coveted into fixed deposit attracting higher interest
rate.
Banks need to develop some scheme which would attract them to
bank with. For loans and advances products which are suitable to
farmers, small traders, small scale agro based rural industries are
already in existence. Banks need to see the how value addition can
be mad to this existing scheme. Banks also needs to tie up with Non
Government Organizations and various Self Help Group for different
types of loans, micro financing etc. This will help the bank for
building good image and reputation in the rural areas over and
above the business. Another potential area which can be explored by
the banks in the rural area is retail banking. With the steady
increase in the income of the rural people there is ample scope for
retail loan products like housing loans and loan for consumer
durables.
Conclusion:
Banking sector has undergone various changes after the new
economic policy based on privatization, globalization and
liberalization adopted by Government of India. Introduction of
asset classification and prudential accounting norms, deregulation
of interest rate and opening up of the financial sector made Indian
Banking sector competitive. Encouragement to foreign banks and
private sector banks increased competition for all operators in
banking sector. Banks in India prior to adoption of new economic
policy was protected by Government and was having assured market
due to almost state monopoly in banking sector. However, under the
new environment, Indian banks needs to reinvent the marketing
strategy for growth. In India geographical development is not even
throughout the country, there are full-fledged urban areas covering
the metropolitan cities and other big cities. On the other hand
there are underdeveloped rural areas too. For effective bank
marketing different approach for different areas is required. In
urban areas customer services is of paramount importance as the
level of literacy and therefore awareness of the people is more.
Also technology based marketing would have higher degree of success
due to typical urban life style of the people. Universal banking
providing all financial service under one roof will have more
success in urban areas. In the rural areas for bank marketing
personalized banking will go in long way. Also banks need to offer
innovative tailor made deposits and advances products to suit
individual customers. Delivery of advances of right amount of right
amount and at right time is essential in rural marketing.
TECHNOLOGY IN BANKING
Technology is proving to be a vital tool in enhancing banking
activities around the globe. The advent of ATMs and Internet
Banking are key pointers to this. The role of an information system
can in no way be underestimated. The expanding role of information
systems have aided banks achieving Anytime, Anywhere and Anyhow
banking. The improvement in telecommunication infrastructure is
redefining the was banking is being conducted.
Information Technology made its presence felt in banks in India
a few decades ago. However, it is still being used as support
systems. Most of the software packages used in bank work on
stand-alone systems and are not integrated.
Banks in India need to have an integrated system that takes care
of all the front-office and back-office operations. However, Indian
banks should not be content with the integration of their
activities. Banks in advanced countries are planning to have global
electronic banking. Electronic banking or e-Banking is a generic
name for a range of technologies that allow the electronic exchange
of information related to banking transactions.
As Electronic Networks become more robust and widespread, they
are beginning to attract the attention of retail banks like ATMs
and phone banking. However they tend to be viewed merely as one
more cheap distribution channel. Accordingly banks are replicating
the branch banking experience online, even to the extent of
creating 3D virtual branches for their customers to navigate
through. Such an approach is characteristic of early attempts to
use new technology platform.
EVOLUTION OF E-BANKING
The story of technology in banking started with the use of
punched card machines like Accounting Machines or Ledger Posting
Machines. The use of technology, at that time, was limited to
keeping books of the bank. It further developed with the birth of
online real time system and vast improvement in telecommunications
during late 1970s and 1980s.it resulted in a revolution in the
field of banking with convenience banking as a buzzword. Through
Convenience banking, the bank is carried to the doorstep of the
customer.
The 1990s saw the birth of distributed computing technologies
and Relational Data Base Management System. The banking industry
was simply waiting for these technologies. Now with distribution
technologies, one could configure dedicated machines called
front-end machines for customer service and risk control while
communication in the batch mode without hampering the response time
on the front-end machine.
Intense competition has forced banks to rethink the way they
operated their business. They had to reinvent and improve their
products and services to make them more beneficial and cost
effective. Technology in the form of E-banking has made it possible
to find alternate banking practices at lower costs. More and more
people are using electronic banking products and services because
large section of the banks future customer base will be made up of
computer literate customer, the banks must be able to offer these
customer products and services that allow them to do their banking
by electronic means. If they fail to do this will, simply, not
survive. New products and services are emerging that are set to
change the way we look at money and the monetary system.
Indian Banks Cash in on Delivery Channels
From the staid over-the-counter delivery mode to ATMs, tele
banking, Net banking, and now mobile banking the number of delivery
channel deployed by banks has increased by leaps and bounds.
Srikanth R.P. & Chitra Padmanabhan look at the evolution and
impact of various delivery channels in the Indian banking scenario
and forecast which delivery channel could be the next killer app
for banking players.
While today each and every bank touts The customer is King
mantra, it was a quite a different story not so long ago. Customers
patronizing PSU banks were greeted with the typical babu culture,
where getting even a cheque encash used to take ages. Customers had
to adjust their schedule to the bank and very rarely were it the
other way around. A person in a city like Bombay usually had to
wait for a weekend to deposit a cheque, because by the time he
reached home, the bank would have closed. Today, while the timings
of banks have not changed drastically banks have become more
customers friendly. Now power has shifted into the hand of the
customer.
ATM (AUTOMATED TELLER MACHINES)
Traditionally, banking players relied extensively on their reach
to effectively put emerging banks out of competition. This forced
new banks develop strategies, that could help them reach out to
end-customers cost effectively. The solution came in the form of a
delivery channel known as Automated Teller Machines or ATMs. And
when new private banks started installing ATMs across the length
and breadth of the country, customers started flocking in droves. A
case in point is ICICI Bank. During the liberalization of the
banking sector, ICICI Bank which did not have a huge national
network, realized that it could use IT to enhance its value-added
offerings.
Alok Shende, Industry manager for IT practice at Frost &
Sullivan, summaries the evolution of the Indian banking industry
perfectly when he says, Banks followed two broad approaches when
adopting technology. The first approach was evolutionary. Banking
players who had large brick and mortar legacy particularly the
public sector banks, kept the banking channels intact and automated
the bottleneck points. This approach was adopted by around 80
percent of the industry. However, some banks adopted a
revolutionary approach and changed the banking scenario altogether.
State Bank of India is a good example of the evolutionary approach,
whereas HDFC Bank and ICICI Bank are good examples of the
revolutionary approach. Some banks have gone a step ahead and share
their ATMs with other banks. For instance, ABN Amro Bank has a
private ATM sharing agreement with UTI Bank.
Banks are also developing new strategies to leverage their ATM
outlets. For instance, rather than set up a branch in every suburb,
ICICI Bank has hit upon a ratio of 8 ATMs to one branch office,
thus effectively reaching out to a large customer base, at a
substantially lower cost.
ABN Amro launched Royalties; Indias first banking rewards
programmed. In the programmed, the customer gets rewarded every
time he uses any of the banks electronic access channels. If the
customer bites the bait, it not only reduces the work load, but
also translates into huge cost savings.
As PSU banks gear up to win back their customers through the
aggressive deployment of ATMs, the already vibrant ATM market has
got a further boost. In India, ATM manufacturers like NCR and HMA
Diebold are extremely bullish, as India is the fastest growing
market for ATMs currently. India has close to 7,500 ATMs and
analysts predict the market to grow at a rate of 60-70 percent
year-on-year. Looking at the boom in ATMs NCR has decided to invest
$6 million to set up its ATM manufacturing plant in India.
Says Lars Nyberg, chairman and chief executive officer of NCR,
India is undoubtedly the hottest market for ATMs today. Our
decision to manufacturer in India is to accelerate supply to the
local market. Initially, the manufacturing facility in Bangalore
will have a capacity of produce 8,000-10,000 ATMs per year. The
potential of the Indian market has prompted NCR to design at ATM
specifically for the Indian market.
Total cost advantage
While ATMs do help banks to attract customers, there is also one
more critical aspect to consider the immense cost savings from
which a bank can benefit due to a transaction taking place over an
ATM vis--vis a branch. Typically, it costs a bank close to Rs. 50
per transaction if conducted in a branch. The same if done an ATM
costs about Rs. 15. A look at the volume of ATM transactions
conducted reflects the level of success of this delivery
channel.
Internet Banking
The other important delivery channel, from a banks perspective
& Internet banking. The adoption of Internet banking by the
banks customers is important since the costs per transaction are
even lower than those of an ATM. A net-based transaction costs the
bank only around Rs. 4. Thus, banks are trying to get customers to
switch over to this mode of banking registered users for Internet
banking in India at over two million currently.
It represents a significant opportunity for banks. In addition,
as a delivery channel, Internet banking does not require physical
infrastructure, thus saving on prohibitive real estate costs.
Private Banks like ICICI Bank, HDFC Bank, UTI Bank and ABN Amro
Bank have seen a steady surge in the number of users registered for
Internet banking does not require physical infrastructure, thus
saving on prohibitive real estate costs.
Most banks today have facilities to enable internet banking
customers to pay insurance premiums and utility bills over the Net.
Though Internet banking as a concept has not caught the fancy of a
majority of customers as yet-even the small percentage that does
use it, makes a difference to the overall cost. Almost all leading
banks in India are hoping that just as ATMs saw a period of
inaction before they were accepted by Indian masses, Internet
banking too would be adopted once customers are comfortable with
the technology. For instance, in 1998 India had just 500 ATMs today
it has close to 7,500.
Roadblocks
While Internet banking is a potential and powerful delivery
channel, it has failed to make a significant impact due to a
variety of reasons. RBI in its report, Trend and progress of
Banking in India, 2001-02, says Internet banking has failed to take
off due to a combination of psychological, technological and
socio-economic factors. Further, the report states that additional
hurdles relating to legal and infrastructural problems have also
affected growth.
Although the government has made considerable progress in
initiating a trust environment, with some Public Certification
Authorities (PCA) already licensed to operate, the adoption of
trust technology is still a daunting factor for many users. What
needs to be developed is a simple way of integrating trust into
online banking services.
Says Shende, The compelling restraint for the user is the fear
of security breaches. As long as the perceived notion that the
Internet is not a safe place to conduct financial transactions
prevails, large scale adoption will be challenging. In addition,
the low penetration of PCs and access to the Internet are crucial
issues which act as roadblocks in the adoption of Internet
banking.
MOBILE BANKING
Whats M-Banking?
M-Banking allows a customer to request for account balance,
cheque books, cheque status, demand drafts, and bankers cheques as
well as stop payments, make fixed deposits enquiry and transfer
bills online. HDFC customers, for instance, can pay their Max Touch
and BPL Mobile both provides cellular services Bombay State
Electricity Supply, and Maharashtra State Electricity Board bills.
Says Shyamlal Saxena, 33, Vice President (Liabilities Product
Management), HDFC: WE are, in a sense, content providers of banking
information.
Is it better?
M-banking is no different from Net Banking; in fact it has many
limitation. You still cannot transfer fund from one bank to another
and, given the high air-time charges, it works out much more
expensive than Net Banking. And for the mobile phone to access a
site, the contents must be in Wireless Markup Language.
Once the mobile users population grows, access rates will fall,
allowing customers to use more air-time. By then, the Reserve Bank
of India would also have put its own gateway in place to do online
what it does today on paper.
M-banking uses two kinds of communication technologies. One is
WAP (Wireless application Protocol) and the other is SMS (Short
Messaging Services). WAP is more user-friendly, as it allows
download of graphic information. SMS, in contrast, allows text-only
access. But as the time taken to download text is much less
compared to graphics, SMS is cheaper to use.
E- BANKING SERVICES:
(a) Bill payment service
Each bank has tie-ups with various utility companies, service
providers and insurance companies, across the country. It
facilitates the payment of electricity and telephone bills, mobile
phone, credit card and insurance premium bills. To pay bills, a
simple one-time registration for each biller is to be completed.
Standing instructions can be set, online to pay recurring bills,
automatically. One-time standing instruction will ensure that bill
payments do not get delayed due to lack of time. Most
interestingly, the bank does not charge customers for online bill
payment.
(b) Fund transfer
Any amount can be transferred from one account to another of the
same or any another bank. Customers can send money anywhere in
India. Payees account number, his bank and the branch is needed to
be mentioned after logging in the account. The transfer will take
place in a day or so, whereas in a traditional method, it takes
about three working days. ICICI Bank says that online bill payment
service and fund transfer facility have been their most popular
online services.
(c) Credit card customers
Credit card users have a lot in store. With Internet banking,
customers can not only pay their credit card bills online but also
get a loan on their cards. Not just this, they can also apply for
an additional card, request a credit line increase and God forbid
if you lose your credit card, you can report lost card online.
(d) Railway pass
This is something that would interest all the aam janta. Indian
Railways has tied up with ICICI bank and you can now make your
railway pass for local trains online. The pass will be delivered to
you at your doorstep. But the facility is limited to Mumbai, Thane,
Nasik, Surat and Pune. The bank would just charge Rs 10 + 12.24
percent of service tax.
(e) Investing through Internet banking
Opening a fixed deposit account cannot get easier than this. An
FD can be opened online through funds transfer. Online banking can
also be a great friend for lazy investors Now investors with
interlinked demat account and bank account can easily trade in the
stock market and the amount will be automatically debited from
their respective bank accounts and the shares will be credited in
their demat account. Moreover, some banks even give the facility to
purchase mutual funds directly from the online banking system.
So it removes the worry about filling those big forms for mutual
funds, they will now be just a few clicks away. Nowadays, most
leading banks offer both online banking and demat account. However
if the customer have there demat account with independent share
brokers, then need to sign a special form, which will link your two
accounts.
(f) Recharging your prepaid phone
Now there is no need to rush to the vendor to recharge the
prepaid phone, every time the talk time runs out. Just top-up the
prepaid mobile cards by logging in to Internet banking. By just
selecting the operator's name, entering the mobile number and the
amount for recharge, the phone is again back in action within few
minutes.
(g) Shopping at your fingertips
Leading banks have tie ups with various shopping websites. With
a range of all kind of products, one can shop online and the
payment is also made conveniently through the account. One can also
buy railway and air tickets through Internet banking.
BANK MARKETING IN THE INDIAN PERSPECTIVE
The level of income, expectations, the rate of literacy, the
geographic and demographic considerations, the rural or urban
orientation, the changes in economic systems the frequent use of,
technologies are some of the key factors governing the development
plan of an organization. To be more specific in a welfare country
like ours, the public sector commercial banks are supposed to play
a decisive role in fuelling the processes of socio-economic
emancipation. This makes it clear that the banking organization
need a new vision, a new approach and an innovative strategy. They
are supposed to bring about greater mobility in the financial
resources to cater to the changing socio-economic requirements.
Willingly or unwillingly, they have also to bear the social costs
by advancing credit facilities to the weaker sections and the
vulnerable regions. The foreign banks and a few of the private
sector commercial banks have been found making sincere efforts to
improve the quality of their services. The customers in general
appreciate the functional style and service mix of foreign banks.
This makes a strong advocacy favour of practicing marketing
principles in the public sector commercial banks.
The nationalization of the Reserve Bank of India is a landmark
in the development of Indian banking system which in a true sense
paved avenues for qualitative-cum quantitative improvements.
Acquisition of extensive powers of supervision and control by the
Reserve Bank of India under the Banking Regulations 1949 opened new
vistas for the expansion of banking facilities. The structure of
public sector bank was further strengthened in 1959. To curb
concentration of economic power and promote a judicious use of the
financial resources for the economic development activities, the
banking system was regulated and supervised by the RBI subsequently
in 1969 the Government acquired a direct control over a substantial
segment of the banking system signifying its commitment to reshape
the banking system so as to meet progressively and serve better the
needs of the development of economy in conformity with the changing
national policy and objective. The fruitful 11 results of
nationalization of 14 commercial banks in 1969 encouraged.
government to nationalize more commercial banks in 1980. These
developments necessitated a fundamental change in the functional
responsibilities of the public sector commercial banks. Here it is
pertinent to mention that nationalization was with the motto of
improving the quality of services but the public sector commercial
banks started disappointing the masses. Of late, the quality of
services is so poor that customers in general are found
dissatisfied. This makes it essential that the Reserve Bank of
India and the policy makers of the public sector commercial banks
think in favour of conceptualizing modern marketing principles
which would bring a radical change in the process of quality
upgradation.
The first task before the public sector commercial banks is to
formulate the marketing mix which suits the national socio-economic
requirements. They need to synchronies the core and peripheral
services in such a way that product attractiveness is increased
substantially. To be more specific the peripheral services need
frequent innovation, since this would be helpful in excelling
competition. The personal selling and public relations activities
need an intensive care. It is pertinent to mention that the leading
foreign banks have been found promoting telemarketing and the
public sector commercial banks need to make it possible. Since we
have world class communication technologies, the task is easier.
The word-of-mouth promotion also needs due care and for that we
need to improve the quality of services vis--vis the cooperation of
opinion leaders. The Reserve Bank of India and the Indian Banking
Association need an attitudinal change. The boardrooms also need to
change their attitudes. The gap between the services-promised and
services-offered is required to be bridged over. This requires
professional excellence. The professionals need to make possible a
fair synchronization of performance-orientation and employee
orientation. This is not possible unless the banking regulations
are made liberal. The quality of people/employees serving the
banking organizations needs an overriding priority. The bankers
need to know about the behavioral management. The front-line-staff
need empathy in their behavior. This requires intensive training
facilities. The domination of trade unions is required to be
minimized. The contractual job system needs due attention.
The bank professionals need to assign due weightage to their
physical properties. They are supposed to look smart, active and
attractive. Thus we need multi-dimensional changes which make a
strong advocacy in favour of implementing the innovative marketing
principles.
In view of the above, it is right to mention that in the face of
new perception of quality developed by the foreign and private
sector commercial banks, the public sector commercial banks have no
option but to improve the quality of services. The marketing
principles bear the efficacy of initiating qualitative
improvements. It is against this background that we go through the
problem of bank marketing. Of late the foreign banks have been
found promoting the use of sophisticated information technologies.
This makes it essential that we realize gravity of the situation
and make possible a rational use of technologies which is not to
aggravate the problem of retrenchment. The marketing principles
would be helpful in making an assault on the multi-dimensional
problems. Of course, we find good auguries because the policy
makers have been found exploring ways for implementing the
marketing principles but till now, the efforts are at the very
nascent stage. It is high time that the public sector commercial
banks conceptualize innovative marketing for bringing the banking
system on the rail.
The first thing is that the future of bank marketing is gonna be
fabulous. If you are thinking to go for field than you must...You
can study the charts how it raised since last 5 years and you will
he impressed. In past bank were not in competition with each other
in India but now they are and thats where bank marketing is coming
up...e.g. In Ahmadabad ICICI rose by 70% in terms of advancing
loans to local public...Sales guys are doing very well., This is
going to rise until 80% of Indians are not having credit cards..
Compare the banking to developed countries and you will find bank
marketing in India to be great.
The bank of the future has to be essentially a marketing
organization that also sells banking products. New distribution
channels are being used; more & more banks are outsourcing
services like disbursement and servicing of consumer loans, Credit
card business.
Direct Selling Agents (DSAs) of various Banks go out and sell
their products. They make house calls to get the application form
filled in properly and also take your passport-sized photo. Home
banking has already become common, where you ~an order a draft or
cash over phone/internet and have it delivered horn. ICICI bank was
the first among the new private banks to launch its net banking
service, called Infinity. It allows the user to access account
information over a secure line, request cheque books and stop
payment, and even transfer funds between ICICI Bank accounts.
Citibank has been offering net banking to its Suvidha program to
customers.
Products like debit cards, flexi deposits, ATM cards, personal
loans including consumer loans, housing loans and vehicle loans
have been introduced by a number of banks.
Public Sector Banks like SBI have also started focusing on this
area. SBI plans to open 100 new branches called Personal Banking
Branches (PBB) this year. The PBBs will also market SBI's entire
spectrum of loan products: housing loans, car loans, personal
loans, consumer durable loans, education loans, loans against
share, financing against gold.
The bank of the future has to be essentially a marketing
organization that also sells banking products. New distribution
channels are being used; more & more banks are outsourcing
services. ICICI bank was the first among the new private banks to
launch its net banking service, called Infinity.
Products like debit cards, flexi deposits, ATM cards, personal
loans including consumer loans, housing loans and vehicle loans
have been introduced by a number of banks.
Public Sector Banks like SBI have also started focusing on this
area. SBI plans to open 100 new branches called Personal Banking
Branches (PBB) this year. The PBBs will also market SBI's entire
spectrum of loan products: housing loans, car loans, personal
loans, consumer durable loans, education loans, loans against
share, financing against gold.
CONCLUSION
Banking sector has undergone various changes after the new
economic policy
based on privatization, globalization and liberalization adopted
by government of India. Introduction of asset classification and
prudential accounting norms, deregulation of interest rate and
opening up of the financial sector made Indian banking sector
competitive. Encouragement to foreign banks and private sector
banks increased competition for all operators in banking sector.
Banks in India prior to adoption of new economic policy was
protected by government and was having assured market due to almost
state monopoly in banking sector. However, under the new
environment, Indian banks needs to reinvent the marketing strategy
for growth. In India geographical development is not even
throughout the country, there are fully fledged urban areas
covering the metropolitan cities and other big cities. On the other
hand there are under developed rural areas too. For effective bank
marketing different approach for different areas is required. In
urban areas customer services is of paramount importance as the
level of literacy and therefore awareness of the people is more.
Also technology based marketing would have higher degree of success
due to typical urban life style of the people. Universal banking
providing all financial service under roof will have more success
in urban areas. In the rural areas for bank marketing personalized
banking will
go in long way. Also banks need to offer innovative tailor made
deposits and advances products to suit individual customers.
Delivery of advances of right amount and at right time is essential
in rural marketing.
QUESTIONNAIRE
1. Can you briefly explain something about Bank Marketing?
2. In the field of marketing where does their bank stand?
3. What types of product and services are provided by their
bank?
4. What is the marketing mix at ICICI bank?
5. In banking sector who are their competitors?
6. What are their future strategies to attract their
customers?
7. Are the customers satisfied with the services provided
by?
the bank?
8. What are social and development initiatives taken by
ICICI
bank?
Case StudyCorporation Bank raises interest ratesFollowing the
trend of the biggies in the sector, Corporation Bank has finally
decided to raise its interest rates. The main ones have been raised
by 50 basis points.
The bank in a statement filed with the Bombay Stock Exchange
said, "Corporation Bank has revised its benchmark prime lending
rate (BPLR) from 12 per cent to 12.50 per cent with effect from
August 2, 2010."
This is post the rate increase of Punjab National Bank (PNB) and
Union Bank of India. The two revised their BPLR rates. They did so
after the apex bank, the Reserve Bank of India (RBI) decided to
raise the bar for the key rates.
While PNB upped its rate to 11.75 per cent from earlier figure
of 11 per cent from August 1, Union Bank did that by increasing it
to 12.25 per cent from the earlier figure of 11.75 per cent. This
will be effective from August 4.
It is now expected that the other banks will follow the same
path, thus reducing the money supply in the market.
ICICI Bankand HDFC Bank have also raised their rates.
ICICI BankLaunches PlatinumIdentity CreditCard
Submitted byHarish Dhawanon Fri, 05/16/2008 -
ICICI Bank, Indias biggest private sector bank, has made
announcementabout the launching of its ICICI Bank PlatinumIdentity
Credit Card, which will target the discerning and wealthy customers
in order to meet their developing requirements, with a focus on
travel as well as lifestyle.
The card offers up a high value scheme, as it brings together
shopping, travel and golfing privileges together with a powerful
rewards program and distinguished service benefits.
The bank would charge a nominal fee on an annual basis, and the
card has a credit limit of Rs 2.5 lakh plus.
Sachin Khandelwal, head- cards product group,ICICI Banksaid,
This card is launched keeping in mind the fact that our customers
have matured and demanding more exclusive offers. We will offer our
customers value and privileges which are, the best in the industry.
Keeping in line with the changing lifestyle of our customers, the
Platinum Identity product has been designed to make cardholders
feel truly special as well as to meet their evolved needs specially
related to travel and lifestyle. This is a global offering at a
truly competitive price point.
The different features of the card include accelerated rewards
program, exclusive rewards catalogue, an influential air mile
conversion option and travel advantages that comprise Rs 10 million
air accident insurance and complete fuel surcharge waiver across
pumps.
Besides the card also offers a full-fledged concierge service,
named i-Assist, which will address the lifestyle needs of the
cardholders.
BIBLIOGRAPHY
Banking Theory Law and Practice, Dr. S. Guruswamy.
Marketing In Banking & Insurance, N.V Maroo.Webliography
www.google.com www.rbi.org.in www.topnews.in www.wikiepedia.com
www.banknetindia.com