Financial services distribution involves selecting convenient locations and channels for customers to access services. Distribution is driven by customer preferences for accessibility from anywhere using online and mobile platforms. Financial services are distributed directly through the provider or indirectly through brokers and agents. Effective distribution requires considering customers' needs and providing the right services through the right channels at the right locations and times. New technologies have greatly influenced distribution by enabling online and mobile banking that has increased accessibility and competition.

1. CHAPTER IV
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2. Place and Distribution
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3. Topic list
1.Introduction
2.The importance of place
3.Distribution considerations for financial services
4.How financial services are distributed
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4. 1. Introduction
―Place decisions involve thinking about physical distribution and finding the
most convenient location for customers to buy financial services. This could
be in a branch of a bank, on the internet or via an agent or a broker.
―Distribution is driven by customer preference. In today's society this usually
means being able to access services from anywhere, using the internet or
using a smart phone. For example, stocks and shares can now be traded
using a smart phone and some providers offer bank accounts which are
internet only accounts.
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5. ―Place is concerned with the selection of distribution channels
used to deliver goods to the consumer. The 'place' element of the
marketing mix is really concerned with the processes by which
the product reaches the consumer in a convenient way. Other
terms for 'place' include distribution, delivery systems or
distribution channels.
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6. 2. The importance of place
➢Getting 'place' right in marketing terms means effective
distribution. It describes how we make the right financial
services available in the right places at the right time. Place
therefore refers to:
▪ Distribution channels – the different ways in which the firm can get
its products and services to its customers
▪ Distribution coverage – how wide a range of the market the firm covers
▪ Locations of sales outlets, the arrangements of sales areas
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7. Issues for a bank to consider with respect to place could include:
▪ Is the place of purchase convenient for chosen customers and does it fulfil
their needs?
▪ Is the means of distribution appropriate?
▪ Should there be more automated teller machines (ATMs), with more
services?
▪ Do customers really want fully automated branches with almost no staff?
▪ Do some customers need more privacy to discuss their financial matters?
▪ Will drive–in banks be more successful?
▪ What about 'mini-branches' in shopping centres?
▪ Have we considered our fiduciary responsibility?
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8. 3. Distribution considerations for financial services
➢Distribution for financial services is two fold. It includes the
logistics of how products are made available to potential customers
as well as legal, regulatory and ethical responsibilities.
➢Financial service businesses may be restricted by legal and
ethical issues such as having a fiduciary responsibility (duty of
trust) for the financial well-being of their customers.
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9. a) Distribution channels
➢Distribution channels facilitate the movement of products from the point
of production to the final consumer. Some financial products are delivered
directly from the financial services provider to the consumer, but others,
for example insurance, pass through the hands of retailers, agents or other
channel members.
➢Distribution channel is the name given to the different ways in which the
customer can access the services offered by their banks. These channels
include:
• Automated teller machines
• Automated pay-in machines
• Telephone
• Internet banking
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10. ❑ Automated teller machines (ATMs)
➢The ATM has been one of the most notable developments in the
financial services industry of the late twentieth century. These
machines are located on the exterior walls of branches, inside
branches and at other locations – for example, in supermarkets,
petrol stations, sites of recently closed bank branches, etc.
➢A distinct advantage of ATMs is that they give the customer
access to cash 24 hours a day, 7 days a week.
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11. ATMs originally had only one purpose – to allow the customer to withdraw
cash. Now many ATMs can:
• Accept deposits
• Accept requests for marketing information
• Print the customer's balance
• Print a statement of the customer's most recent transactions
• Pay bills
• Change the customer's PIN
• Transfer funds between different accounts
• Top up a mobile phone
• Make a donation to specified charities
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12. b). Direct banking: telephone and internet
➢Banks offer customers a direct banking facility – indeed some of the newer
players in the market operate solely as direct banks.
➢With direct banking, the customers have access to their accounts 24 hours
a day, 7 days a week – either by providing them with telephone or internet
access to their accounts.
❖Telephone banking: As you may be aware, there are some financial
services organizations that operate solely as telephone banks, whilst many
others offer telephone banking as part of a wider range of options available
to their customers.
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13. When using telephone banking, a customer could carry out
the following money transmission transactions:
•Transferring funds between accounts
•Paying a bill
•Setting up or cancelling standing orders
•Amending or cancelling a direct debit
•Share dealing
•Arranging an overdraft
•Third party payments
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14. Examining some of these in more details
➢ Transferring funds
➢Paying a bill
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15. To make a bill payment over the phone, the bank would
need to know the following information:
•The name of the payee
•The payee's bank identification number
•The account number that should be credited
•The customer's reference to be provided to the
payee
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16. ❖Internet banking
Most banks have their own 'brochure' websites that allow
customers to obtain information on the products and
services offered, the history of the organization, contact
details, etc. However, this section is concerned with the use of
the internet to access bank services.
❑There are two types of internet banks:
• Stand-alone internet banks that offer competitive interest rates and
service charges due to them having lower overheads than those banks
that operate through the more expensive branch network
• Traditional banks that now provide internet banking facilities in
addition to branch and telephone services
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17. ❑ Once a person has opened an account with the bank, they
can then register for the bank's internet banking service.
This will allow the customer to:
•Transfer funds between their accounts
•View past transactions and statements
•Make third party payments
•View and amend automated payments
•Find out about other products and services that may
be of use to them
•Apply for other products or services
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18. The advantages of internet banking include:
▪Services are available 24 hours a day, 7 days a week
▪The time and effort it takes to visit branches are removed and
customers can transact their banking from home, office or any
site where they have access to the relevant technology – the
previously mentioned pc, tablet, or mobile phone
▪Fees are often lower than traditional banking fees
▪ Despite concerns about security, the technology used ensures
the privacy and safety of the customers' financial information
▪Customers can check the balances of their accounts, transfer
funds between accounts, and make electronic bill payments
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19. From the bank's point of view there are also disadvantages
from the growth of internet banking and telephone banking:
➢Loss of personal contact
➢Delivery fragmentation
➢Reduced cross-selling opportunity
➢Lack of business cohesion
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20. ❖Maximizing customer accessibility
― Size of the distribution system and second
―Variety of distribution locations
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21. ➢ Responding to different customer needs
Marketers must consider the differing needs of customers in designing
the channel of distribution and selecting channel members. The
distribution method used and the services available must be in line with
the needs of the target market:
• Some users, for example older customers, may prefer a personalized service
with human interaction, and therefore a branch with customer service
operatives is needed.
• For customers who prefer to conduct business online, an e-commerce
website can be created for direct selling. Alternatively, it is possible to sell
through other online retailers or distributors that can offer the product on
their own sites, such as comparison websites.
• A business can develop its own specialized sales team to prospect and close
deals directly with customers.
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22. 4.How financial services are distributed
Financial services are usually distributed using direct distribution or
indirect distribution.
➢Direct distribution means that the business sells the service itself
rather than through intermediaries such as a retailer or broker. For
example, current accounts and savings accounts are sold by the banks
themselves.
➢Indirect distribution means that the business uses an intermediary to
sell its services. In the case of financial services this usually means
using a broker or an agent and these may be online or in a branch.
For example, property insurance and car insurance is often sold
through a broker.
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23. ❖Agents and brokers
Agents, brokers, retailers and other channel members already have the
infrastructure and relationships to get the products to customers.
Understanding the needs of channel members and marketing effectively to
them will maximize revenue for everyone involved in the process.
❖The disadvantages associated with agency agreements include:
• The danger that an agent could mis-sell a product simply to gain a commission;
the mis-selling could damage the underlying brand
• The bank doesn't establish any relationships with its customers, so it misses out
on customer feedback or the opportunity for relationship marketing or cross-
selling
• There is a risk that agents could desert the bank, taking their customers with
them. Whilst it is possible to put contractual agreements in place to prevent this,
they are sometimes difficult to enforce.
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24. ❖The effective of technology on distribution
-New technologies have had and enormous influence
on the way the banking industry does business.
-Before 1990s, customers would expect to go to a
high street branch to conduct their financial affairs.
-Since then, we have seen a proliferation of ATMs,
the use of the internet, the rise of e-commerce
payments and all kinds of financial operations being
carried out via the internet.
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25. -Changes in communications technology mean that financial
marketers can now reach, and promote financial products to huge
groups of customers through a variety of media.
-An increasingly important role in banks is being played by
database technology (systems which handle large volumes of data),
which allows the targeting of potential customers for products and
permits a customer relationship management (CRM) approach.
-Online business has provide an opportunity to reach customers in
a more streamlined way and has enabled smaller organizations and
small business start-ups to compete effectively with larger players
in many markets.
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26. ❖Distribution Strategy
-A bank’s distribution strategy outlines how different distribution
channels will be used across the bank’s product range.
-Banks need to ensure that the distribution strategy is in line with
the corporate strategy. The method of distribution needs to mirror
the company image and focus on the needs of the market that they
are aiming at (the target market).
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27. At the end
Questions & Answers
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