Jayesh new project bank marketing


Published on

Published in: Economy & Finance, Business
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Jayesh new project bank marketing

  2. 2. Bank Marketing DECLARATION I MR. JAYESH GAONKAR student of Shri BhausahebVartak Arts, Com.& Sc. College of T.Y.B.Com (Banking&Insurance) (Semester-V) hereby declare that I havecompleted my project on “Bank Marketing” in the academicyear 2012-2013.The information submitted is true & original to best of myknowledge.Place- MumbaiDate- Signature ofstudent
  3. 3. Bank Marketing 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. AmeyaGhatge and also Our Course Co-ordinator Prof.Mrs.Rakhi Pitkarfor helping inspiring me at every stage of this project, formotivating me and giving me access to such valuableinformation, without which my project would be incomplete. I would like to thank our Library Staff for providingappropriate 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 thecorrect and up to date information required for the making ofthis project. This project report is the combination of all efforts of all theabove mentioned people and myself. I have carried out sincereefforts on my part to make this project. ThankingYou…………..
  4. 4. Bank Marketing CERTIFICATEIt will be given by college on letter head.
  5. 5. Bank Marketing Executive summaryObjective 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 bankScope The Role of marketing in the banking industry continues to change. For manyyears the primary focus of bank marketing was public relations. Then the focusshifted to advertising and sales promotionSummary This project is primarily concerned with the concept of BANK MARKETING.Which give detail idea about the Bank marketing activity? This aggregate of functionsis the sum total of all individual activities consisting of an integrated effort todiscover, create, arouse and satisfy customer needs. Marketing concept is essentiallyabout the thing which contributes towards banks’ success.Conclusion Here we conclude that this project give a detail idea of the Bank marketingfunctions, directed at providing services to satisfy customers’ financial needs andwants, more effectively and efficiently that the competitors keeping in view theorganizational objectives of the bank.
  6. 6. Bank Marketing Research & MethodologyThis project consist data which are collected from various sources. Normally there aretwo sources of collecting the data i.e. primary data and secondary data. In this projectI have taken both primary as well as secondary data.PRIMARY RESEARCHPrimary Research has been done to validate the information given in the project. Thisresearch has been extensively done via visit to a bank (Corporation Bank and ICICIBank). Interview from Mr. Rajesh Sheth, Branch Manager of Corporation Bank andtwo SDM (Marketing Department Managers) of ICICI Bank Mr. Rakesh L. Singh andhave really proved helpful in completion of the project.SECONDARY RESEARCHThe 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.
  7. 7. Bank Marketing INDEXSR. 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 Industry10. Market Segmentation11. Marketing Mix for Banking Services12. Strategies for Segmentation13. Marketing Mix for banking services14. Strategies for effective bank marketing in India15. Technology in Banking16. Bank Marketing in the Indian Perceptive17. Bank Marketing in the Indian Perceptive18. Case Study19. Conclusion20. References
  8. 8. Bank MarketingTHE FINANCIAL SYSTEMThe financial system consists of variety of institutions, markets and instruments thatare related in the manner shown in the below figure, it provides the principal meansby which saying are transformed into investment. Given its role in the allocation ofresources, the efficient functioning of the financial system is of critical importance toa modern economy. Financial manager negotiate loans from financial institutions,raises resources in financial marked and invests surplus funds in financial market. Invery significant way he manages the interface between the form and its financialenvironment.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 away so that each sector of economy like industry, agriculture and services can bedeveloped rationally. Financial sector development is the locomotive force foreconomic development of a country.
  9. 9. Bank MarketingORIGIN OF THE WORK ‘BANK’According to some economists the word ‘Bank’ has been derived from the Germanword BANC which means a Joint Stock Firm while others say that it has been derivedfrom the Italian world ‘BANCO’ which means a heap or mound.There is still another group of people who believe that word bank has been derivedfrom the Greek work ‘BANQUE’ which means a bench. In the olden days, Jewsentered into money transactions sitting on benches in a marked place. When a bankerwas not in a position to meat his obligations, the on which he was carrying on themoney business was broken into pieces and the was taken as bankrupt. Thus both thewords Bank or bankrupt are said to have origin from the word ‘Banque’.DEFINITION OF BANKAccording to Oxford English Dictionary, Bank is, “An establishment for custody ofmoney received from or on behalf of, its customers. Its essential duty is the paymentof the orders given on it by the customers, its profit mainly from the investment ofmoney 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 inIndia”. According to Section 5B, “banking means the accepting of deposit of moneyfrom the public for the purpose of leading or investment, which are repayable ondemand or otherwise and are withdrawable by cheque, draft, and order or otherwise.”Different economists, banking professionals and authorities explained their viewpointregarding bank or commercial bank. It has been rightly said by A.K. Basu that ageneral definition of a bank or banking is by no means easy, as the concepts ofbanking differ from age to age, and country to country.
  10. 10. Bank MarketingFINANCE AND BANKING IN INDIAIndia is a vast country, before 1947, undivided India was equal to Europe excludingRussia in its area. It is situated in south of Asia. In spite of a part of Asia, it isseparated from it. It is separated by Himalayas in North India. India has vast oceans inSouth, East and West. Due to its vastness it is also called sub continent. That vastcountry 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’. Perhapsdue to fame of king Bharat, it was called ‘Bharatvarsh. Greek called it Indus on thename of river Sindh. Iranians called it Hindu. Chinese travelers called it Tienchu andYintu. Ipsing called ‘Arya Desh’ and Brahmrashtra. Bible has called it Hoddu. Inmedieval period, it was called ‘Hindustan’ and Hind. European called it India. AfterIndependence, it is return as Bharat Ganrajya or Indian Republic in IndianConstitution.
  11. 11. Bank MarketingBANK MARKETINGWe define bank marketing as follows: “Bank marketing is the aggregate of functions,directed at providing services to satisfy customers’ financial (and other related) needsand wants, more effectively and efficiently that the competitors keeping in view theorganizational objectives of the bank”. Bank marketing activity. This aggregate offunctions is the sum total of all individual activities consisting of an integrated effortto 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 thetotal satisfaction to customers and the bank should ultimately develop customerorientation among all the personnel of the bank. Different banks offer differentbenefits by offering various schemes which can take care of the wants of thecustomers.Marketing helps in achieving the organizational objectives of the bank. Indian bankshave duel organizational objective – commercial objective to make profit and socialobjective which is a developmental role, particularly in the rural area.Marketing concept is essentially about the following few thing which contributetowards banks’ success:
  12. 12. Bank Marketing 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 inducethe people to do business with a particular bank. Marketing is an organizationalphilosophy. 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 stepin applying the marketing concept is to have a whole hearted commitment to customerorientation by all the employees. Marketing is an attitude of mind. This means that thecentral focus of all the activities of a bank is customer. Marketing is not a separatefunction for banks. The marketing function in Indian Bank is required to be integratedwith operation.
  13. 13. Bank MarketingMARKET RESEARCH IN INDIAN BANKSAfter enquiring with all the public and 14 private sector banks whether they hadundertaken any market research studies. The following board areas of market researchwere 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 bank’s advertising effectiveness, (f) Measurement of market potentials,In response to the inquiry information was received from 17 banks. Out of thesebanks, 14 are public sector banks and 3 are private sector banks. Twonationalized banks and two private sector banks informed that they have notconducted any markets research studies.
  14. 14. Bank Marketing INCREASING IMPORTANCE OF MARKETING IN BANKING INDUSTRYThe various other factors which have led to the increasing importance of marketing inthe banking industry are categorized as follows:  Government InitiativesThe Indian economy embarked on the process of economic reform and various policymeasures initiated by the government resulted in the increasing competition in thebanking industry, thereby highlighting the importance of effective marketing. TheNarasimham Committee Report evidence of the Government’s desires to ‘Re-regulate’ the banking industry so as to encourage efficiency through competition. TheGovernment initiatives include:  Deregulation of Interest RatesThe bank may reduce their Minimum Lending Rates so as to attract customers(individual and corporate). Such reduction in lending rates reduce the spread betweenthe deposit rates and lending rates, i.e. the banks margins would decline and theywould have to increase their volumes or provide attractive services so as to maintainprofits. This calls for bank marketing.  Increasing Emphasis on Bank Profitability:With the Narasimhan Committee Report, banks have been directed to improve theirefficiency, productivity and profitability. Banks are required to be self-sufficient. Infact, the report has adopted the BIS standards of capital adequacy (though in a phasedmanner).  Foreign BanksForeign banks offer stiff competition to the Indian Banks and with their superiorservices and technology offers them a competitive advantage. Thus Indian Banks haveto effectively apply marketing concepts to attract customers.
  15. 15. Bank Marketing  Entry of New Private BanksIn the early ‘90s new competition emerged in the form of new Private Banks, whobrought along with them a high technology-based banking matching withInternational Standards and have made a significant dent in the banking business bycapturing substantial share in the profits of the banking industry.  Reduction of Statutory Liquidity Ratio:With the Government’s aim of reducing the SLR to 25 percent, the banks will havesurplus funds for which they will have to attract users.
  16. 16. Bank MarketingSocial Environment  Increasing Urbanization, Education and Awareness:The higher literacy level, migration to urban areas and higher awareness due to theboom in the mass media has important implications for the retail banker. He needs tobe conscious of the fact the increasing proportion of people are aware of financialservice 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 theboom in the mass media has important implications for the retail banker. He needs tobe conscious of the fact the increasing proportion of people are aware of financialservice 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 DevelopmentModernization of Technology has facilitated the introduction of new banking servicesas to attract new customers. An example of this is the ‘Automated Teller Machines’ orthe facility of ‘Any Time Money’. Also in foreign countries, banks are experimentingwith money transmission at Point of sale, e.g., petrol station linked with bankingnetwork.
  17. 17. Bank MarketingConsumer Behavior and SegmentationNeed for segmentationPhilip Kotler has described the dilemma of the seller (especially, a seller dealing withmasses, e.g. banks) as follows:“How the seller determines which buyer’s characteristics produce the best partitioningof a particular market? The seller does not want to treat all customers alike nor doeshe want to treat them all differently”.Banks deal with individuals, group of persons and corporates, all of whom have theirlikes and dislikes. No bank can afford to assess the needs of each and every individualbuyer (actual or potential).Segmentation of the market into more or less homogenous groups, in terms of theirneeds and expectations from the banking industry, provides a solution to this problem.This involves dividing the market into major market segments, targeting one or moreof this segments, and developing products and marketing programs tailor-made forthese segments.In the first segmentation, the market is divided from a unitary whole, to groups ofbuyers who might require separate products and marketing mix. The marketertypically tries to identify different segments in the market and develop profiles ofresulting market segments.The second step is market targeting in which each segment’s attractiveness ismeasured and a target segment is chosen based on tits attractiveness.
  18. 18. Bank MarketingThe third step is product positioning which is the act of establishing a viablecompetitive position of the firm and its offer in the target segment chosen.Initiation of Segmentation in IndiaStation Bank of India was the first Indian Bank to adopt the concept of marketsegmentation. In 1972, it reorganized itself on the basis of major market segmentsdividing 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 SegmentationSegmentation in a right fashion makes the ways for profitable marketing. This helpspolicy planner in formulating and innovating the policies and at the same time alsosimplifies the task of bank professionals while formulating an innovating the strategicdecisions. The following criteria make possible rig segmentation.An important criterion for market segmentation the economic system in which wefind agricultural sector, industrial sector, services sector, household sector,institutional sector and rural sector requiring of weight age while segmenting.
  19. 19. Bank Marketing  Agricultural Sector:In the agricultural sector, there are four category rise since the needs of all thecategories cant’s be identical.The mechanization of agriculture, the improved or scientific system of activation, thehelp of nature, the magnitude of risk, the availability infrastructural facilitiesinfluence the level of expectations vis-à-vis the needs and requirements. The bankingorganizations are supposed to know and under stand the changing requirements ofdifferent 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. Theexpectations of all the categories can not be uniform.The banking organizations are supposed to have an indepth knowledge of thechanging needs and requirements of the industrial segment.
  20. 20. Bank Marketing  Services sector:It is an important sector of the economy where the banking organizations getprofitable business. The two categories of organizations such as profit-making andnot-for-profit making are found important in the very context.The banking organizations need to identify the changing needs and requirements ofthe services sector. With the frequent use of information technologist and with themounting pressure of inflation and competition, we find a change in the hierarchy ofneeds.  Household Sector: This is also constitutes an important sector where different income group havedifferent needs and requirements. In below figure we find the different segments ofthe household sector.
  21. 21. Bank MarketingMARKETING MIX FOR BANKING SERVICESThe formulation of marketing mix for the banking services is the prime responsibilityof the bank professional who based on their expertise and excellence attempt tomarket the services and schemes profitably.The bank professionals having world class excellence make possible frequency in theinnovation process which simplifies their task of selling more but spending less. Thefour submixes of the marketing mix, such as the product mix, the promotion mix, theprice mix and the place mix, no doubt, are found significant even to the bankingorganizations but in addition to the traditional combination of receipts, the marketingexperts 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 ofmarketing mix. It is right to mention that the quality of people/employees serving anorganization assumes a place of outstanding significance. This requires a strongemphasis on the development of personally-committed, value-based, efficientemployees who contribute substantially to the process of making the efforts costeffective. In addition, we also find some of the marketing experts talking about a newmix, i.e. physical appearance. In the corporate world, the personal care dimensionthus becomes important. The employees re supposed to be well dressed, smart andactive. Besides, we also find emphasis on “Process” which gravitates our attention onthe way of offering the services. It is only not sufficient that you promise qualityservices. It is much more impact generating that your promises reach to the ultimateusers without any distortion. The banking organizations, of late, face a number ofchallenges and the organizations assigning an overriding priority to the formulation
  22. 22. Bank Marketingprocesses get a success. The formulation of marketing mix is just like the combinationof ingredients, spices in the cooking process.MARKETING MIX IN BANKING INDUSTRIES1. PROMOTION:Promotion mix includes advertising, publicity, sales promotion, Word– of – mouthpromotion, personal selling and telemarketing.2. PRICE:The price must be high enough to cover costs and make a profit but low enough toattract customers. There are a number of possible pricing strategies. The mostcommonly used are:3. PRODUCT:The business has to produce a product that people want to buy.They have to decidewhich ‘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 ofbusiness for them.5. PEOPLE:Sophisticated technologies no doubt, inject life and strength to a bank’s efficiency butthe moment there is a lack of productive human restheirces even the new generationof 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 tocertain rules and principles in the banking operations.7. PHYSICAL EVIDENCE:
  23. 23. Bank MarketingThe physical evidences include the logo, the layout of the branch, the passbooks,cheque books, the furniture, the reports, punch lines, other tangibles, employee’s dresscode etc.  THE PRODUCT MIX:The banks primarily deal in services and therefore, the formulation of product mix isrequired to be in the face of changing business environmental conditions. Of coursethe public sector commercial banks have launched a number of polices andprogrammers for the development of backward regions and welfare of the weakersections of the society but at the same it is also right to mention that theirdevelopment-oriented welfare programmes are not optimal to the national socio-economic requirements. The changing psychology, the increasing expectations, therising income, the changing lifestyles, the increasing domination of foreign banks andthe changing needs and requirements of customers at large make it essential that theyinnovate their service mix and make them of world class. Against this background, wefind it significant that the banking organizations minify, magnify combine and modifytheir 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 technicalfaults. Technical perfection in service is meant prompt delivery, quick disposal,presentation of right facts and figures, right filing proper documentation or so. Ifcomputers starts disobeying the command and the customers get wrong facts, the useof technology would be a minus point, and you don’t have any excuse for your faults.  PRODUCT PORTFOLIO:
  24. 24. Bank MarketingThe bank professional while formulating the product mix need to assign dueweightage to the product portfolio. By the concept product portfolio, emphasis is onincluding the different types of services/ schemes found at the different stages of theproduct life cycle. The portfolio denotes a combination or an assortment of differenttypes of products generating more or less in proportion to their demand. The qualityof product portfolio determines the magnitude of success. It is excellence of bankprofessionals 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 givendue place. Like this, the composition or blending of a service mix is considered to besound, 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
  25. 25. Bank Marketingsignificant. The bank professionals are supposed to perform the responsibility ofcomposing the same. A sound product portfolio is essential but its process ofconstitution is difficult. An organization with a sound product portfolio gets aconducive environment and successes in increasing the sensitivity of marketingdecisions. The banking organizations need a sound product portfolio and the bankprofessionals bear the responsibility of getting it done suitably and effectively.If the banks rely solely on their established services and schemes, themultidimensional problems would crop up in the long run because when the wellestablished services/schemes would start saturating or generating losses, thecommercial viability of banks would of course, be questioned. The bankingorganizations relying substantially on a profitable scheme and ding nothing for newscheme likely to get a profitable market in the future are to face is to face a crisis likesituation. It is in this context, that we find designing of a sound product portfolioessential to an organsition. We can’t deny that the product portfolio of the foreignbanks is found sound since they keep their eyes moving. The innovation, diffusion,adoption and elimination processes are taken due care. The public sector commercialbanks need to innovate their service and this makes a strong advocacy in favour ofanalyzing the product portfolio.  DESIGNIGN AN ATTRACTIVE PACKAGEIn the formulation of product mix for the banking organization, the designing ofpackage is found important. In this context, we find packaging decision related to theformulation of a mix of different schemes and services. Developing an attractivepackage required professional excellence and therefore, the bank professionals arerequired 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 ofthe fact that a number of schemes and services are included in the service mix of bankproduct and all the services or schemes can’t be preferred by all. Of course we findsome of the public sector commercial banks now evincing stage. This makes it
  26. 26. Bank Marketingessential that a bank manager thinks in favour of developing a package. Theimportance of packaging can’t be underestimated considering the functions itperforms and the effects which we witness in the process of attracting and satisfyingthe customers. In addition to other aspects, it is also pertinent that a bank manager isfamiliar with the package developed by the leading competitive banks since thiswould help them in innovating the package. It is an important component of theproduct mix and a bank manager while formulating or designing a package needs toassign due weightage to the formulation process. While developing a package, it isessential that the packages offered are efficacious in establishing an edge over thepackages of competitors. Thus needs and preferences of the target market in additionto the packages offered by the competitors need due weightage while designing apackage.In the designing process the bank professionals can make a package, an idealcombination of both, the core and peripheral services. The main thing in the process isto make it profitable, convenient and productive to the customers so that they prefer totransact with the bank. For the bank professional, it is an important persuasive effortthat helps in increasing the business even without developing or innovating theservices or schemes.  PRODUCT DEVELOPEMNT:In almost all the services, the development of a product is an ongoing process. Thebanking organizations also need to develop new services and schemes. We can’t denythat the development of product especially in the banking services is found difficultsince they don’t have any discretion, however they can do it, of course in a limitedway. By minifying, combining, modifying and magnifying, the banking organizationscan give to the services or scheme a new look. The regulations of the Reserve Bank ofIndia, no doubt stand as a barrier but professionally sound marketers make it possibleeven without violating the rules and regulations. The banking organizations in generalhave been found developing product by including some new properties or features.
  27. 27. Bank MarketingGenerally we find two processes for the development of product. The first process isfound 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 expressedneeds of the target.  PROACTIVE PROCESS:In the pro-active process, we find product to market needs. This makes it essential thatthe branch managers are aware of the changing needs of the target market. There aresix stages for the development of the product, such as idea generation, screening ofthe concept, assessing of market potential, analyzing the cost, test marketing and finalcommercial launching. The bank professionals have to be careful at all the stages sothat whatever the services or schemes are developed are found instrumental in gettinga positive response. The customers and competitors help bank professionalsubstantially in generating a new idea. The screening of the product concept focuseson the process of narrowing down the list of the ideas generated to a small number ofconcepts.  PROMOTION MIXIn the formulation of marketing mix the bank professionals are also supposed to blendthe promotion mix in which different components of promotion such as advertising,publicity, sales promotion, word-of-mouth promotion, personal selling andtelemarketing are given due weightage. The different components of promotion helpbank professionals in promotion the banking business.Advertising: Like other organizations, the banking organizations also us this component of thepromotion 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 sothat its instrumentality helps bank organization both at micro and macro levels.
  28. 28. Bank MarketingFinalizing the Budget:This is related to the formulation of a budget for advertisement. The bankprofessionals, senior executives and even the police planners are found involved inthe process. The formulation of a sound budget is essential to remove the financialconstraint in the process. The business of a bank determines the scale ofadvertisement budget.Selecting a Suitable vehicle:There are a number of devices to advertise, such as broadcast media, telecast mediaand the print media. In the face of budgetary provisions, we need to select a suitablevehicle. The latest developments in the print technology have made print mediaeffective. 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 ofleading advertising professionals for that very purpose.Instrumentality of branch managers:At micro level, a branch manager bears the responsibility of advertising locally inhis / her command area so that the messages, appeals reach to the target customers ofthe command area. Of course we find a budget for advertisement at the apex level butthe business of a particular branch is considerably influenced by the localadvertisements. If we talk about the cause-related marketing, it is the instrumentalityof a branch manager that makes possible the identification of local events, momentsand make advertisements condition-oriented.Public Relations:
  29. 29. Bank Marketing Almost all the organization need to develop and strengthen the public relationsactivities to promote their business. We find this component of the promotion mixeffective even in the banking organizations. We can’t deny that in the bankingservices, the effectiveness of public relations is found of high magnitude. It is in thiscontext that we find a bit difference in the designing of the mix of promoting thebanking services. Of course in the consumer goods manufacturing industries, we findadvertisements occupying a place of outstanding significance but when we talk aboutthe service generating organizations in general and the banking organizations inparticular, we find public relations and personal selling bearing high degree ofimportance.Personal Selling:The personal selling is found instrumental in promoting the banking business. It is justa process of communication in which an individual exercise his/her personalpotentials, tact, skill and ability to influence the impulse buying of the customers.Since we get in immediate feed back, the personal selling activities energies theprocess of communication very effectively.The personal selling in an art of persuasion. It is a highly distinctive form ofpromoting sale. In personal selling, we find inter-personal or two-way communicationthat makes the ways for a feed back. There is no doubt in it that the goods or servicesare found half sold when the outstanding properties are well told. This are of tellingand selling is known as personal selling in which an individual based on his/herexpertise attempts to transform the prospects into customers.Dynamics of Personals SellingThe dynamics of personal selling are found instrumental in activating the sellingactivities. Sales preparations are considered most crucial for the actual sales. Pre-saleactivities and post-sale services can’t be left neglected to improve the marketingactivities. The customers may be interested in knowing the main features of theservices, how a particular service would help them, rationale behind the technical
  30. 30. Bank Marketingservices and proof in regard to its uses. The pre-sale activities would bring thepositive results, if preparations are adequate.Some of the customers are found highly aware of the developments, they are foundwell informed. On the other hand, we also find other category of customers who are indark. Here, the branch managers are expected to match the level of awareness ofcustomers. As for instance, Mr. A goes up the matrix but Mr. B has not enough timefor the branch managers. The branch managers are supposed to prepare a synopsis oftheir sales talk. Not surprisingly the highly aware customers are found in apposition tomake independent decisions and know all about. While selling to the less awarecustomers, the managers should stress on the main features of the services and theexpected benefits of these services.Sales Promotion:It is natural that like other organizations, the banking organizations also think in favorof promotional incentives both to the bankers as well as the customers. The bankingorganizations make provisions for incentives offered to the customers are known ascustomers’ promotion. There are a number of tools generally used in the differentcategories of organizations in the face of the nature of goods and services sold bythem. The gift, contests, fairs and shows, discount and commission, entertainment andtraveling plans for bankers, additional allowances, low interest financing and
  31. 31. Bank Marketingretaliatory are to mention a few found instrumental in promoting the bankingbusiness.As and when the banking organizations offer new services and schemes, the tools ofsales promotion are required to be innovated. This is with the motto of stimulating thenew and old customers. An important thing in the very context is the changing needsand requirements of customers/prospects. The bank professionals bean outstandingtask of studying the competitors’ strategies which would he them in initiating theprocess of innovation. Here it is important to mention the promotional incentives tothe customers would focus on decisions related to the selection of a tool. There are anumber of considerations to streamline the process. The bank professionals aresupposed to study the market conditions and make necessary suggestions, especiallyregarding the incentives.It is a blending process and bank professional have to be sure the whatever theprovisions, they make are fulfilled on priority basis. More incentives more efficiencyor a vice-versa conditions more efficiency, more-incentives motivate bankerssubstantially.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 bankingindustry, we find use of different components of promotion and in the context it isessential that we also talk about word-of-mouth communication which makes theprocess of influencing the prospects effective by sensitizing the word-of-mouthrecommendations.The persons engaged in communication, the hidden sales force that plays anincremental role in increasing the demand. An important question regarding the word-of-mouth communication is related to its intensity of sensitizing the persuasionprocess.
  32. 32. Bank MarketingThe problem before the bank professionals is to identify the persons to be included inthe list of word-of-mouth promoters. It is supposed that a bank manager is well awareof the social composition of his/her command area. The oral publicity plays animportant role in eliminating the negative comments and improving the services. Thishelps you know the feedback which may simplify the task of improving the quality ofservices.  THE PRICE MIXIn the formulation of product mix, the pricing decisions occupy a place of outstandingsignificance. The pricing decisions or the decisions related to interest and fee orcommission charged by banks are found instrumental in motivating or influencing thetarget market. The Reserve Bank of India and the Indian Banking Association areconcerned with the regulations. The rate of interest is regulated by the RBI and othercharges are controlled by the Indian Banking Association. To be more specific in theIndian setting, we find this component of the marketing mix significant because thebanking organizations are also supposed to sub serve the interests of weaker sectionsand the backward regions.The public sector commercial banks in particular are supposed to play developmentalrole with societal approach. It is natural that these specific roles of the public sectorcommercial banks complicate the problem of pricing.Pricing policy of a bank is considered important for raising the number of customer’svis-à-vis the accretion of deposits. Of course, there are a number of factors toinfluence the process but it is also right to mention that the key role in the entireprocess is played by the Reserve Bank of India. A National Consumer SurveyConducted by the L.H. Associates reveals that the quality of Consumer service wasone of the three top issues and the consumers ranked the quality of their bank
  33. 33. Bank Marketingrelationships more even more important than the fees charged for the services. To bemore specific when we find a number of domestic and foreign banks working in theIndian economy, the Reserve Bank of India bears the responsibility of making thebusiness environment conductive.The non-banking organizations and foreign banks have been found attractingcustomers by offering to them a number of incentives. The potential customers orinvestors frame their investment plans in the face of pricing decisions made by thebanking organizations. While formulating the pricing strategies, the banks have alsoto take the value satisfaction variable into consideration. The value and satisfactioncan’t be quantified in terms of money since it differs from person to person, keepingin view the level of satisfaction of a particular segment, the banks have to frame theirpricing strategies. The policy makers are required to be sure that the services offeredby them are providing satisfaction to the customers concerned. The pricing decisionsmay be to bit liberal, if the potential customers are found shifting to the non-bankinginvestments. 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 strategyis concerned with interest and fee charged and second, the strategy is related to theinterest paid. Since both the strategies throw a vice-versa impact, it is pertinent thatbanks attempt to establish a correlation between the two. It is essential that both thebuyers 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 whiledesigning the pricing strategies. McIver and Naylor opine that a marketing managerhas to regard price as a variable to be traded off against product quality and promotionrather that as an absolute where the lowest price is not desirable.
  34. 34. Bank Marketing  THE PLACE MIXThis component of the marketing mix is related to the offering of services. The twoimportant decision making areas are making available the promised services to theultimate users and selecting a suitable place for bank branches.The selection of a suitable place for the establishment of a branch is significant withthe viewpoint of making the place accessible and in addition, the safety and securityprovisions are also found important. The banking organizations are not free to open abranch since the Reserve Bank of India regulates the subject of branch expansion butso far as the management of branch is concerned, the branch managers have option toselect a place which is convenient to both the parties, such as the users and thebankers. In the Indian perspective, the protection to the bank’s assets and safety to theusers and bankers need due weightage. The vulnerable area or regions need adequateprovisions to make the branch safe. The management of office is also found
  35. 35. Bank Marketingsignificant with the viewpoint of making the services attractive. The furnishing, civicamenities and parking facilities can’t be overlooked.Another important decision making area is related to the offering of services. Thisdraws our attention on the behavioral profile of bankers. The bankers in general andthe front-line-staff in particular bear the responsibility of making available theservices-promised to the ultimate users without any distortion often a gap is foundgenerated by front-line-staff that makes an invasion on the image of bank. The bankprofessionals or a branch manager is required to be sure that whatever the promise hasbeen made regarding the quality of services are not distorted. The RBI and thedifferent public sector commercial banks are required to manage the distributionprocess intelligently and professionally. Thus, the place mix is found to be animportant decision making area which requires due attention, both at macro and microlevels. If the banking organizations sell the promises it is essential that the end usersget the same without any distortion.  THE PEOPLESophisticated technologies, no doubt, inject life and strength to our efficiency but theinstrumentality of sophisticated technologies start turning sour if the human resourcesare not managed in a right fashion. Generation of efficiency is substantiallyinfluenced by the quality of human resources. It is against this background that amajority of the management experts make a strong advocacy in favour of developingquality people and late, the people management has been include dint he marketingmix of organizations is general and the service generating organizations in particular.Not only the public sector commercial banks but almost all the public sectororganization and albeit other government departments, of late, have been facing theproblem of quality people resulting into inefficiency, deceleration in the rate ofoverall 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
  36. 36. Bank Marketingthe unfair practices. The public sector commercial banks need to assign on overridingpriority to the development of quality people majority of the management of theexperts have realized the significance of quality people in the development of anorganization and the boardrooms are also found changing their attitudes.The first task before the banking organizations at the apex level is to overhaul therecruitment processes. While fixing criteria for selection, they need to assign dueweighted to the ethical values. The education and training facilities are required to beinnovated. The process of identification and inculcation need to be managed carefully.The foreign banks and the private sector commercial banks reward for efficiency andat the same time also demotivate the inefficient bankers. This helps them in improvingthe efficiency of even the inefficient people. The development of human resourcesmakes the ways for the formation of human capital. Incentives, of course, injectefficiency and the organizations offering more incentives succeed in motivating thepeople. • 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.
  37. 37. Bank Marketing • 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 bank’s 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-businesssystems” since these would provide better marketing and service to clients, facilitatecross-selling and customerization of schemes and hence, a better packaging for theproduct. This would help Indian banks “thing customer”.All these would, thus, help in the effective management of time. Recourse tomechanized systems like ledger posting machine, cash counting machine and chequesorting machine would result in reduction in the number of tedious and routine jobs tobe handled manually saving time for the people to focus on the customer.
  38. 38. Bank MarketingSTRATEGIES FOR EFFECTIVE BANK MARKETING IN INDIAIntroduction:Since the inception of globalization in India, banking sector has undergone variouschanges. Introduction of asset classification and prudential accounting norms,deregulation of interest rate and opening up of the financial sector made Indianbanking sector competitive. Encouragement to foreign banks and private sector banksincreased competition for all operators in banking sector. The protective regime bythe authority is over. Indian banks are exposed to global competition. Evencompetition within the country has increased manifold. The almost monopoly positionenjoyed by the public sector banks of India is no more existence. Under thisdevelopment Indian banks needs to reinvent the marketing strategy for growth.
  39. 39. Bank MarketingThe spread of the bank in Indian rural and semi urban areas are highly different fromstate to state and region to region. Many states have fewer networks of bank branchesin the rural areas. Under such scenario different marketing approach for differentareas is required. If the bank follows the same marketing strategy for all areas thesuccess would be difficult.Marketing approach for urban area:The urban areas of India are developed taking into account all parameters ofdevelopment. The level of income of the people, the literacy rate and level ofeducation as well as awareness of the people about rights of the customer are higherthan that of the rural and even semi urban areas. Thus here for effective bankmarketing different approach is necessary than that of rural areas.The marketing strategy should be based on customer service and the use of moderntechnology in banking. Under competitive environment for the success of thebusiness, better customers and retaining existing customers is possible only withcustomer service.Use of modern technology in urban areas will also go long way for marketing ofbanking services. Technology based service like credit card, debit card, ATM;anywhere banking, internet banking, and mobile banking are necessary for urbanareas. This is because it enables customers to perform banking transactions at theirconvenience. 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 ofthe public sector banks have also started this practice and they find it successful. Toattract business and wholesale customers, banks need to adopt technology basedproduct 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 thecountry, cash management facility, DD boutiques etc. are necessary.Another strategy for effective marketing is bank need to change the focus from thetraditional banking to universal banking. In urban areas the extend and variety ofeconomic activities demands that one institution should meet all financial need of a
  40. 40. Bank Marketingcustomer. Under such an expectation of people universal banking would provesuccessful approach for bank marketing. The term ‘universal banking’ in generalrefers 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, corporatecan get loans and avail of other handy services, while individuals can bank andborrow.For increasing customer base and retention of the existing cliental universal bankingapproach is effective strategy. Universal banking offers number of benefits tocustomers as well s the banks. For instance, economies of scale arise in multi-productfirms because costs of offering various activities by different units are greater than thecosts when they are offered together.Marketing approach for rural areas:Prior to nationalization of banks in 1969, the rural areas were virtually withoutbanking 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 inthe rural areas also. Today more than 50 percent branches of the banks are found inthe 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 ruralbanking is highly regularized activity by the Government in India. Lending as well asinterest rate is regularized. Thus under such environment different marketingapproach is required. For effective rural marketing product development, promotionand communication is important. All these parameters banks have to balance withsocio-economic factors prevailing in the rural areas. Bank need to innovate productthat could attract the depositors.
  41. 41. Bank MarketingVarious loan schemes that are suitable for them for getting funds at right time andalso they find convenient to repay. For instance traditional saving bank account maybe given fixed deposit concept that once a particular limit of balance is reached thefunds from saving account is automatically coveted into fixed deposit attractinghigher interest rate.Banks need to develop some scheme which would attract them to bank with. Forloans and advances products which are suitable to farmers, small traders, small scaleagro based rural industries are already in existence. Banks need to see the how valueaddition can be mad to this existing scheme. Banks also needs to tie up with NonGovernment 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 inthe rural areas over and above the business. Another potential area which can beexplored by the banks in the rural area is retail banking. With the steady increase inthe income of the rural people there is ample scope for retail loan products likehousing loans and loan for consumer durables.Conclusion:Banking sector has undergone various changes after the new economic policy basedon privatization, globalization and liberalization adopted by Government of India.Introduction of asset classification and prudential accounting norms, deregulation ofinterest rate and opening up of the financial sector made Indian Banking sectorcompetitive. Encouragement to foreign banks and private sector banks increasedcompetition for all operators in banking sector. Banks in India prior to adoption ofnew economic policy was protected by Government and was having assured marketdue to almost state monopoly in banking sector. However, under the newenvironment, Indian banks needs to reinvent the marketing strategy for growth. InIndia geographical development is not even throughout the country, there are full-fledged urban areas covering the metropolitan cities and other big cities. On the otherhand there are underdeveloped rural areas too. For effective bank marketing differentapproach for different areas is required. In urban areas customer services is of
  42. 42. Bank Marketingparamount importance as the level of literacy and therefore awareness of the people ismore. Also technology based marketing would have higher degree of success due totypical urban life style of the people. Universal banking providing all financial serviceunder one roof will have more success in urban areas. In the rural areas for bankmarketing personalized banking will go in long way. Also banks need to offerinnovative 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 inrural marketing.TECHNOLOGY IN BANKINGTechnology is proving to be a vital tool in enhancing banking activities around theglobe. The advent of ATMs and Internet Banking are key pointers to this. The role ofan information system can in no way be underestimated. The expanding role ofinformation systems have aided banks achieving Anytime, Anywhere and Anyhowbanking. The improvement in telecommunication infrastructure is redefining the wasbanking 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 usedin 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-officeand back-office operations. However, Indian banks should not be content with the
  43. 43. Bank Marketingintegration of their activities. Banks in advanced countries are planning to have globalelectronic banking. Electronic banking or e-Banking is a generic name for a range oftechnologies that allow the electronic exchange of information related to bankingtransactions.As Electronic Networks become more robust and widespread, they are beginning toattract the attention of retail banks – like ATMs and phone banking. However theytend to be viewed merely as one more cheap distribution channel. Accordingly banksare replicating the branch banking experience online, even to the extent of creating 3Dvirtual branches for their customers to navigate through. Such an approach ischaracteristic of early attempts to use new technology platform.EVOLUTION OF E-BANKINGThe story of technology in banking started with the use of punched card machines likeAccounting Machines or Ledger Posting Machines. The use of technology, at thattime, was limited to keeping books of the bank. It further developed with the birth ofonline real time system and vast improvement in telecommunications during late1970’s and 1980’s.it resulted in a revolution in the field of banking with “conveniencebanking” as a buzzword. Through Convenience banking, the bank is carried to thedoorstep of the customer.The 1990’s saw the birth of distributed computing technologies and Relational DataBase Management System. The banking industry was simply waiting for thesetechnologies. Now with distribution technologies, one could configure dedicatedmachines called front-end machines for customer service and risk control whilecommunication 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 morebeneficial and cost effective. Technology in the form of E-banking has made itpossible to find alternate banking practices at lower costs. More and more people areusing electronic banking products and services because large section of the banksfuture customer base will be made up of computer literate customer, the banks must
  44. 44. Bank Marketingbe able to offer these customer products and services that allow them to do theirbanking by electronic means. If they fail to do this will, simply, not survive. Newproducts and services are emerging that are set to change the way we look at moneyand the monetary system.Indian Banks Cash in on Delivery ChannelsFrom 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 hasincreased by leaps and bounds. Srikanth R.P. & Chitra Padmanabhan look at theevolution and impact of various delivery channels in the Indian banking scenario andforecast 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 quitea different story not so long ago. Customers patronizing PSU banks were greeted withthe 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 otherway around. A person in a city like Bombay usually had to wait for a weekend todeposit 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 becomemore customers – friendly. Now power has shifted into the hand of the customer.
  45. 45. Bank MarketingATM (AUTOMATED TELLER MACHINES)Traditionally, banking players relied extensively on their reach to effectively putemerging banks out of competition. This forced new banks develop strategies, thatcould help them reach out to end-customers cost effectively. The solution came in theform of a delivery channel known as Automated Teller Machines or ATMs. Andwhen new private banks started installing ATMs across the length and breadth of thecountry, customers started flocking in droves. A case in point is ICICI Bank. Duringthe liberalization of the banking sector, ICICI Bank which did not have a hugenational network, realized that it could use IT to enhance its value-added offerings.Alok Shende, Industry manager for IT practice at Frost & Sullivan, summaries theevolution of the Indian banking industry perfectly when he says, “Banks followed twobroad approaches when adopting technology. The first approach was evolutionary.
  46. 46. Bank MarketingBanking players who had large brick and mortar legacy particularly the public sectorbanks, kept the banking channels intact and automated the bottleneck points. Thisapproach was adopted by around 80 percent of the industry. However, some banksadopted a revolutionary approach and changed the banking scenario altogether. StateBank of India is a good example of the evolutionary approach, whereas HDFC Bankand ICICI Bank are good examples of the revolutionary approach.“Some banks have gone a step ahead and share their ATMs with other banks”. Forinstance, 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 8ATMs to one branch office, thus effectively reaching out to a large customer base, ata substantially lower cost.ABN Amro launched Royalties; India’s first banking rewards programmed. In theprogrammed, the customer gets rewarded every time he uses any of the bank’selectronic access channels. If the customer bites the bait, it not only reduces the workload, but also translates into huge cost savings.As PSU banks gear up to win back their customers through the aggressive deploymentof ATMs, the already vibrant ATM market has got a further boost. In India, ATMmanufacturers like NCR and HMA Diebold are extremely bullish, as India is thefastest growing market for ATMs currently. India has close to 7,500 ATMs andanalysts predict the market to grow at a rate of 60-70 percent year-on-year. Looking atthe boom in ATMs NCR has decided to invest $6 million to set up its ATMmanufacturing plant in India.Says Lars Nyberg, chairman and chief executive officer of NCR, “India isundoubtedly the hottest market for ATMs today. Our decision to manufacturer in
  47. 47. Bank MarketingIndia is to accelerate supply to the local market. Initially, the manufacturing facility inBangalore will have a capacity of produce 8,000-10,000 ATMs per year. “Thepotential of the Indian market has prompted NCR to design at ATM specifically forthe Indian market.Total cost advantageWhile ATMs do help banks to attract customers, there is also one more critical aspectto consider – the immense cost savings from which a bank can benefit due to atransaction taking place over an ATM vis-à-vis a branch. Typically, it costs a bankclose to Rs. 50 per transaction if conducted in a branch. The same if done an ATMcosts about Rs. 15. A look at the volume of ATM transactions conducted reflects thelevel of success of this delivery channel.Internet BankingThe other important delivery channel, from a bank’s perspective & Internet banking.The adoption of Internet banking by the bank’s customers is important since the costsper transaction are even lower than those of an ATM. A net-based transaction coststhe bank only around Rs. 4. Thus, banks are trying to get customers to switch over tothis mode of banking registered users for Internet banking in India at over two millioncurrently.It represents a significant opportunity for banks. In addition, as a delivery channel,Internet banking does not require physical infrastructure, thus saving on prohibitivereal estate costs.
  48. 48. Bank MarketingPrivate Banks like ICICI Bank, HDFC Bank, UTI Bank and ABN Amro Bank haveseen a steady surge in the number of users registered for Internet banking does notrequire physical infrastructure, thus saving on prohibitive real estate costs.Most banks today have facilities to enable internet banking customers to payinsurance premiums and utility bills over the Net. Though Internet banking as aconcept has not caught the fancy of a majority of customers as yet-even the smallpercentage that does use it, makes a difference to the overall cost. Almost all leadingbanks in India are hoping that just as ATMs saw a period of inaction before they wereaccepted by Indian masses, Internet banking too would be adopted once customers arecomfortable with the technology. For instance, in 1998 India had just 500 ATMstoday it has close to 7,500.RoadblocksWhile Internet banking is a potential and powerful delivery channel, it has failed tomake a significant impact due to a variety of reasons. RBI in its report, ‘Trend andprogress of Banking in India, 2001-02, says Internet banking has failed to take off dueto a combination of psychological, technological and socio-economic factors. Further,the report states that additional hurdles relating to legal and infrastructural problemshave also affected growth.Although the government has made considerable progress in initiating a trustenvironment, with some Public Certification Authorities (PCA) already licensed tooperate, the adoption of trust technology is still a daunting factor for many users.
  49. 49. Bank MarketingWhat needs to be developed is a simple way of integrating trust into online bankingservices.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 conductfinancial 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 asroadblocks in the adoption of Internet banking.MOBILE BANKINGWhat’s M-Banking?M-Banking allows a customer to request for account balance, cheque books, chequestatus, demand drafts, and banker’s cheques as well as stop payments, make fixeddeposits enquiry and transfer bills online. HDFC customers, for instance, can paytheir Max Touch and BPL Mobile both provides cellular services – Bombay StateElectricity Supply, and Maharashtra State Electricity Board bills. Says ShyamlalSaxena, 33, Vice President (Liabilities Product Management), HDFC: “WE are, in asense, content providers of banking information.”
  50. 50. Bank MarketingIs it better?M-banking is no different from Net Banking; in fact it has many limitation. You stillcannot transfer fund from one bank to another and, given the high air-time charges, itworks out much more expensive than Net Banking. And for the mobile phone toaccess a site, the contents must be in Wireless Markup Language.Once the mobile users’ population grows, access rates will fall, allowing customers touse more air-time. By then, the Reserve Bank of India would also have put its owngateway in place to do online what it does today on paper.M-banking uses two kinds of communication technologies. One is WAP (Wirelessapplication Protocol) and the other is SMS (Short Messaging Services). WAP is moreuser-friendly, as it allows download of graphic information. SMS, in contrast, allowstext-only access. But as the time taken to download text is much less compared tographics, SMS is cheaper to use.E- BANKING SERVICES: (a) Bill payment serviceEach bank has tie-ups with various utility companies, service providers and insurancecompanies, across the country. It facilitates the payment of electricity and telephonebills, mobile phone, credit card and insurance premium bills. To pay bills, a simpleone-time registration for each biller is to be completed. Standing instructions can beset, online to pay recurring bills, automatically. One-time standing instruction willensure 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 transferAny amount can be transferred from one account to another of the same or anyanother bank. Customers can send money anywhere in India. Payee’s accountnumber, his bank and the branch is needed to be mentioned after logging in theaccount. The transfer will take place in a day or so, whereas in a traditional method, it
  51. 51. Bank Marketingtakes about three working days. ICICI Bank says that online bill payment service andfund transfer facility have been their most popular online services. (c) Credit card customersCredit card users have a lot in store. With Internet banking, customers can not onlypay their credit card bills online but also get a loan on their cards. Not just this, theycan also apply for an additional card, request a credit line increase and God forbid ifyou lose your credit card, you can report lost card online. (d) Railway passThis is something that would interest all the aam janta. Indian Railways has tied upwith ICICI bank and you can now make your railway pass for local trains online. Thepass 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 ofservice tax. (e) Investing through Internet bankingOpening a fixed deposit account cannot get easier than this. An FD can be openedonline through funds transfer. Online banking can also be a great friend for lazyinvestors Now investors with interlinked demat account and bank account can easilytrade in the stock market and the amount will be automatically debited from theirrespective bank accounts and the shares will be credited in their demat account.Moreover, some banks even give the facility to purchase mutual funds directly fromthe online banking system.So it removes the worry about filling those big forms for mutual funds, they will nowbe just a few clicks away. Nowadays, most leading banks offer both online bankingand demat account. However if the customer have there demat account withindependent share brokers, then need to sign a special form, which will link your twoaccounts. (f) Recharging your prepaid phoneNow there is no need to rush to the vendor to recharge the prepaid phone, every timethe talk time runs out. Just top-up the prepaid mobile cards by logging in to Internetbanking. By just selecting the operators name, entering the mobile number and theamount for recharge, the phone is again back in action within few minutes. (g) Shopping at your fingertipsLeading banks have tie ups with various shopping websites. With a range of all kindof products, one can shop online and the payment is also made conveniently throughthe account. One can also buy railway and air tickets through Internet banking.
  52. 52. Bank MarketingBANK MARKETING IN THE INDIAN PERSPECTIVEThe level of income, expectations, the rate of literacy, the geographic anddemographic considerations, the rural or urban orientation, the changes in economicsystems the frequent use of, technologies are some of the key factors governing thedevelopment plan of an organization. To be more specific in a welfare country likeours, the public sector commercial banks are supposed to play a decisive role infuelling the processes of socio-economic emancipation. This makes it clear that thebanking 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 tothe changing socio-economic requirements. Willingly or unwillingly, they have alsoto bear the social costs by advancing credit facilities to the weaker sections and thevulnerable regions. The foreign banks and a few of the private sector commercialbanks have been found making sincere efforts to improve the quality of their services.
  53. 53. Bank MarketingThe customers in general appreciate the functional style and service mix of foreignbanks. This makes a strong advocacy favour of practicing marketing principles in thepublic sector commercial banks.The nationalization of the Reserve Bank of India is a landmark in the development ofIndian banking system which in a true sense paved avenues for qualitative-cumquantitative improvements. Acquisition of extensive powers of supervision andcontrol by the Reserve Bank of India under the Banking Regulations 1949 openednew vistas for the expansion of banking facilities. The structure of public sector bankwas further strengthened in 1959. To curb concentration of economic power andpromote a judicious use of the financial resources for the economic developmentactivities, the banking system was regulated and supervised by the RBI subsequentlyin 1969 the Government acquired a direct control over a substantial segment of thebanking system signifying its commitment to reshape the banking system so as tomeet progressively and serve better the needs of the development of economy inconformity with the changing national policy and objective. The fruitful 11 results ofnationalization of 14 commercial banks in 1969 encouraged. government tonationalize more commercial banks in 1980. These developments necessitated afundamental change in the functional responsibilities of the public sector commercialbanks. Here it is pertinent to mention that nationalization was with the motto ofimproving the quality of services but the public sector commercial banks starteddisappointing the masses. Of late, the quality of services is so poor that customers ingeneral are found dissatisfied. This makes it essential that the Reserve Bank of Indiaand the policy makers of the public sector commercial banks think in favour ofconceptualizing modern marketing principles which would bring a radical change inthe process of quality upgradation.The first task before the public sector commercial banks is to formulate the marketingmix which suits the national socio-economic requirements. They need to synchroniesthe core and peripheral services in such a way that product attractiveness is increasedsubstantially. To be more specific the peripheral services need frequent innovation,since this would be helpful in excelling competition. The personal selling and publicrelations activities need an intensive care. It is pertinent to mention that the leadingforeign banks have been found promoting telemarketing and the public sector
  54. 54. Bank Marketingcommercial banks need to make it possible. Since we have world class communi-cation technologies, the task is easier. The word-of-mouth promotion also needs duecare and for that we need to improve the quality of services vis-à-vis the cooperationof opinion leaders. The Reserve Bank of India and the Indian Banking Associationneed an attitudinal change. The boardrooms also need to change their attitudes. Thegap between the services-promised and services-offered is required to be bridgedover. This requires professional excellence. The professionals need to make possible afair synchronization of performance-orientation and employee orientation. This is notpossible unless the banking regulations are made liberal. The quality ofpeople/employees serving the banking organizations needs an overriding priority. Thebankers need to know about the behavioral management. The front-line-staff needempathy in their behavior. This requires intensive training facilities. The dominationof trade unions is required to be minimized. The contractual job system needs dueattention.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 theinnovative marketing principles.In view of the above, it is right to mention that in the face of new perception ofquality developed by the foreign and private sector commercial banks, the publicsector commercial banks have no option but to improve the quality of services. Themarketing principles bear the efficacy of initiating qualitative improvements. It isagainst this background that we go through the problem of bank marketing. Of latethe foreign banks have been found promoting the use of sophisticated informationtechnologies. This makes it essential that we realize gravity of the situation and makepossible a rational use of technologies which is not to aggravate the problem ofretrenchment. The marketing principles would be helpful in making an assault on themulti-dimensional problems. Of course, we find good auguries because the policymakers have been found exploring ways for implementing the marketing principlesbut till now, the efforts are at the very nascent stage. It is high time that the publicsector commercial banks conceptualize innovative marketing for bringing the bankingsystem on the rail.
  55. 55. Bank MarketingThe first thing is that the future of bank marketing is gonna be fabulous. If you arethinking to go for field than you must...You can study the charts how it raised sincelast 5 years and you will he impressed. In past bank were not in competition with eachother in India but now they are and that’s where bank marketing is coming up...e.g. InAhmadabad ICICI rose by 70% in terms of advancing loans to local public...Salesguys are doing very well., This is going to rise until 80% of Indians are not havingcredit cards.. Compare the banking to developed countries and you will find bankmarketing in India to be great.The bank of the future has to be essentially a marketing organization that also sellsbanking products. New distribution channels are being used; more & more banks areoutsourcing services like disbursement and servicing of consumer loans, Credit cardbusiness.Direct Selling Agents (DSAs) of various Banks go out and sell their products. Theymake house calls to get the application form filled in properly and also take yourpassport-sized photo. Home banking has already become common, where you ~anorder a draft or cash over phone/internet and have it delivered horn. ICICI bank wasthe 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 chequebooks 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 includingconsumer loans, housing loans and vehicle loans have been introduced by a number ofbanks.Public Sector Banks like SBI have also started focusing on this area. SBI plans toopen 100 new branches called Personal Banking Branches (PBB) this year. The PBBswill also market SBIs entire spectrum of loan products: housing loans, car loans,personal loans, consumer durable loans, education loans, loans against share,financing against gold.
  56. 56. Bank MarketingThe bank of the future has to be essentially a marketing organization that also sellsbanking products. New distribution channels are being used; more & more banks areoutsourcing services. ICICI bank was the first among the new private banks to launchits net banking service, called Infinity.Products like debit cards, flexi deposits, ATM cards, personal loans includingconsumer loans, housing loans and vehicle loans have been introduced by a number ofbanks.Public Sector Banks like SBI have also started focusing on this area. SBI plans toopen 100 new branches called Personal Banking Branches (PBB) this year. The PBBswill also market SBIs entire spectrum of loan products: housing loans, car loans,personal loans, consumer durable loans, education loans, loans against share,financing against gold. CONCLUSIONBanking sector has undergone various changes after the new economicpolicybased on privatization, globalization and liberalization adopted bygovernment of India. Introduction of asset classification and prudentialaccounting norms, deregulation of interest rate and opening up of thefinancial sector made Indian banking sector competitive. Encouragementto foreign banks and private sector banks increased competition for alloperators in banking sector. Banks in India prior to adoption of neweconomic policy was protected by government and was having assuredmarket due to almost state monopoly in banking sector. However, underthe new environment, Indian banks needs to reinvent the marketingstrategy for growth. In India geographical development is not eventhroughout the country, there are fully fledged urban areas covering the
  57. 57. Bank Marketingmetropolitan cities and other big cities. On the other hand there are underdeveloped rural areas too. For effective bank marketing differentapproach for different areas is required. In urban areas customer servicesis of paramount importance as the level of literacy and thereforeawareness of the people is more. Also technology based marketing wouldhave higher degree of success due to typical urban life style of the people.Universal banking providing all financial service under roof will havemore success in urban areas. In the rural areas for bank marketingpersonalized banking willgo in long way. Also banks need to offer innovative tailor made depositsand advances products to suit individual customers. Delivery of advancesof right amount and at right time is essential in rural marketing.QUESTIONNAIRE1. 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?
  58. 58. Bank Marketing 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 decidedto 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, "CorporationBank has revised its benchmark prime lending rate (BPLR) from 12 per cent to 12.50per cent with effect from August 2, 2010."This is post the rate increase of Punjab National Bank (PNB) and Union Bank ofIndia. The two revised their BPLR rates. They did so after the apex bank, the ReserveBank 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 fromAugust 1, Union Bank did that by increasing it to 12.25 per cent from the earlierfigure of 11.75 per cent. This will be effective from August 4.
  59. 59. Bank MarketingIt is now expected that the other banks will follow the same path, thus reducing themoney supply in the market.ICICI Bank and HDFC Bank have also raised their rates.ICICI Bank Launches Platinum Identity Credit CardSubmitted by Harish Dhawan on Fri, 05/16/2008 -ICICI Bank, India’s biggest private sector bank, has made announcement about thelaunching of its ‘ICICI Bank Platinum Identity Credit Card,’ which will target thediscerning 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 andgolfing privileges together with a powerful rewards program and distinguished servicebenefits.The bank would charge a nominal fee on an annual basis, and the card has a creditlimit of Rs 2.5 lakh plus.Sachin Khandelwal, head- cards product group, ICICI Bank said, “This card islaunched keeping in mind the fact that our customers have matured and demandingmore 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,
  60. 60. Bank Marketingthe Platinum Identity product has been designed to make cardholders feel truly specialas well as to meet their evolved needs specially related to travel and lifestyle. This is aglobal offering at a truly competitive price point.”The different features of the card include accelerated rewards program, exclusiverewards catalogue, an influential air mile conversion option and travel advantages thatcomprise Rs 10 million air accident insurance and complete fuel surcharge waiveracross pumps.Besides the card also offers a full-fledged concierge service, named i-Assist, whichwill 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
  61. 61. Bank Marketing www.wikiepedia.com www.banknetindia.com
  62. 62. Bank Marketing