This document discusses consumer psychology and marketing of banking products. It covers how consumer psychology has changed from individualistic and need-based to being shaped by available products. It contrasts traditional banking, which focused on standardized products and mass consumers, with new age banking that utilizes IT, cross-selling, and aggressive marketing. The new banking environment has led to varied customer needs in urban and rural areas. The document provides recommendations for banks to better understand customer preferences and match various financial products to their requirements.

1. Consumer Psychology and Marketing of Banking Products Karnataka Bank Staff Training College, December 10, 2008 B.V.Raghunandan, SVS College, Bantwal

2. Consumer Psychology Individualistic Need Based Reacting to the Environment Shaping the Needs to the Product offered in case of no choice Both Rational and Irrational Dominant Social Psychology

3. Marketing Concepts: A Business Attitude Production Concept Product Concept Selling Concept Marketing Concept Societal Concept

4. Marketing Vs Banking Product Research Target Consumers Market Study Flexible Operation Free Operating Atmosphere Salesmanship & Promotion Consumer Sovereignty Standardised Product Mass Consumers No Market Study Professionalism Rigid Operation Regulated Atmosphere Social Banking RBI Sovereignty Marketing Banking

5. Consumer Psychology in Traditional Banking No Choice Standardised Service Robotic Response Parasite Endless Patience Resigned for Production Concept Choice Based on Caste or Regionalism Convenience (Location) Single Branch Monopoly Generally Rational decisions

6. Change Agents Liberalisation Narasimham Committee BIS at Basel IT and Networking New Generation Banks Capital Market Reforms FII & Foreign Insurance Companies Business Groups setting up Finance Co Bank Subsidiaries Offering financial services

7. New Age Banking IT Absorption & Networking Cross Selling of Products Agency Sale of Products Bancassurance Listed Entities Capital Adequacy Interest Rate Differential Financial Services Bigger Role of Insurance Companies Risk Management Consolidation Advertisement Aggressive Marketing Wasteful Marketing Practices More Consumer Care Flexible Timing Lesser Procedure ATM as Delivery Channel & as a Branch Expansion Strategy

8. Consumer Psychology in New Age Banking Spill over Effect of Traditional Banking Varied Needs of Customers Strong Segmentation of Markets Urban -Rural Divide Fusion of Marketing & Banking More Emotional Increased Distrust

9. Preferences of Urban Customers Category I : Personal even if Inefficient Category II : Impersonal & Efficient Category III : Personal & Efficient

10. Preferences of Rural Customers Relationship Marketing Early Banking Personal Service Higher Level of Patience Needs Guidance Basic Banking

11. Banking Products Own Products: Risk Free- Show the superiority for Retirement Benefits and Free of Entry & Exit Load Mutual Funds: Growth with Risk- Emphasise that it is not your product, suggest SIP for a Minimum of three years Insurance Products: Risk Coverage with limited return

12. Conflicts Profit Vs Customers Your Products Vs Third Party Products Dividing Marketing & Banking Rational Choice & Emotional Choice Consumer Sovereignty Vs Counselling Customer Service Vs Compliance with Regulation

13. Agenda for Action Investors’ Meet Creation of Database of Consumers Matching the Products to the Requirement of Customers Creation of a Library at Branch Level Attending the Social Function particularly in Rural Areas Joining Social Organisations and Social Causes

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