Bank Marketing: An Analysis

Bank Marketing

GOKHALE EDUCATION SOCIETY’S

SHRI BHAUSAHEB VARTAK ARTS, COM. & SC.COLLEGE
&
SHETH K.V. PAREKH ARTS & COM. JR. COLLEGE

Gokhale Mahavidyalay Marg, Borivali (west) Mumbai-
400 091.

NAAC B & ISO 9001-2008

PROJECT REPORT ON:
Bank Marketing

SUBMITTED BY:
Mr. JAYESH GAONKAR

T.Y.B.COM (BANKING & INSURANCE) (SEMESTER- V)

SUBMITTED TO:
UNIVERSITY OF MUMBAI

PROJECT GUIDE:
PROF. MR. AMEYA A. GHATGE

ACADEMIC YEAR: 2012-2013

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DECLARATION

I MR. JAYESH GAONKAR student of Shri Bhausaheb
Vartak Arts, Com.& Sc. College of T.Y.B.Com (Banking&
Insurance) (Semester-V) hereby declare that I have
completed my project on “Bank Marketing” in the academic
year 2012-2013.
The information submitted is true & original to best of my
knowledge.

Place- Mumbai
Date-

Signature of
student

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ACKNOWLEDGEMENT

I am highly obliged to acknowledge our Principal
Dr.Mrs.S.V.SANT and for giving me an opportunity to conduct
a detail study and analysis of topic relevant to my project.

I would like to thank my Project Guide Prof.Mr. Ameya
Ghatge and also Our Course Co-ordinator Prof.Mrs.Rakhi Pitkar
for helping inspiring me at every stage of this project, for
motivating me and giving me access to such valuable
information, without which my project would be incomplete.

I would like to thank our Library Staff for providing
appropriate books on right time. Last but not least all my friend,
family members who support me while preparing my project.

These people have immensely helped me in getting the
correct and up to date information required for the making of
this project.

This project report is the combination of all efforts of all the
above mentioned people and myself. I have carried out sincere
efforts on my part to make this project.

Thanking
You…………..

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CERTIFICATE

It will be given by college on letter head.

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Executive summary

Objective

This project is prepared to obtain essential understanding about the concept of
“BANK MARKETING “.To acquires the current status of the bank market sources.
Marketing helps in achieving the organizational objectives of the bank

Scope

The Role of marketing in the banking industry continues to change. For many
years the primary focus of bank marketing was public relations. Then the focus
shifted to advertising and sales promotion

Summary

This project is primarily concerned with the concept of BANK MARKETING.
Which give detail idea about the Bank marketing activity? This aggregate of functions
is the sum total of all individual activities consisting of an integrated effort to
discover, create, arouse and satisfy customer needs. Marketing concept is essentially
about the thing which contributes towards banks’ success.

Conclusion

Here we conclude that this project give a detail idea of the Bank marketing
functions, directed at providing services to satisfy customers’ financial needs and
wants, more effectively and efficiently that the competitors keeping in view the
organizational objectives of the bank.

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Research & Methodology

This project consist data which are collected from various sources. Normally there are
two sources of collecting the data i.e. primary data and secondary data. In this project
I have taken both primary as well as secondary data.

PRIMARY RESEARCH

Primary Research has been done to validate the information given in the project. This
research has been extensively done via visit to a bank (Corporation Bank and ICICI
Bank). Interview from Mr. Rajesh Sheth, Branch Manager of Corporation Bank and
two SDM (Marketing Department Managers) of ICICI Bank Mr. Rakesh L. Singh and
have really proved helpful in completion of the project.

SECONDARY RESEARCH

The secondary data about the project is collected through various sources i.e.
• Books on the very topic.
• Various Websites.
• Newspaper Articles.
• Magazines containing the information about the topic.

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INDEX
SR. NO. DESCRIPTION Pg no.

Executive summary
1. The Financial System
2. Origin of The Word BANK
3. Definition of Bank and marketing
4. Finance and banking in India
5. Users of Banking Services
6. Meaning of Marketing
7. Meaning of Bank Marketing
8. Market Research in Indian Banks
9. Increasing Importance of Marketing in Banking Industry

10. Market Segmentation
11. Marketing Mix for Banking Services
12. Strategies for Segmentation

13. Marketing Mix for banking services
14. Strategies for effective bank marketing in India

15. Technology in Banking
16. Bank Marketing in the Indian Perceptive
17. Bank Marketing in the Indian Perceptive
18. Case Study
19. Conclusion
20. References

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THE FINANCIAL SYSTEM

The financial system consists of variety of institutions, markets and instruments that
are related in the manner shown in the below figure, it provides the principal means
by which saying are transformed into investment. Given its role in the allocation of
resources, the efficient functioning of the financial system is of critical importance to
a modern economy. Financial manager negotiate loans from financial institutions,
raises resources in financial marked and invests surplus funds in financial market. In
very significant way he manages the interface between the form and its financial
environment.

Financial System placed a very important role in the development of a country.
Through Financial System, entire money or money equals are channelized in such a
way so that each sector of economy like industry, agriculture and services can be
developed rationally. Financial sector development is the locomotive force for
economic development of a country.

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ORIGIN OF THE WORK ‘BANK’

According to some economists the word ‘Bank’ has been derived from the German
word BANC which means a Joint Stock Firm while others say that it has been derived
from the Italian world ‘BANCO’ which means a heap or mound.

There is still another group of people who believe that word bank has been derived
from the Greek work ‘BANQUE’ which means a bench. In the olden days, Jews
entered into money transactions sitting on benches in a marked place. When a banker
was not in a position to meat his obligations, the on which he was carrying on the
money business was broken into pieces and the was taken as bankrupt. Thus both the
words Bank or bankrupt are said to have origin from the word ‘Banque’.

DEFINITION OF BANK

According to Oxford English Dictionary, Bank is, “An establishment for custody of
money received from or on behalf of, its customers. Its essential duty is the payment
of the orders given on it by the customers, its profit mainly from the investment of
money left unused by them”.

Banking Regulation Act, 1949 (Sec. 5 (c)), has defined the banking company as,
“Banking Company means any company which transacts business of banking in
India”. According to Section 5B, “banking means the accepting of deposit of money
from the public for the purpose of leading or investment, which are repayable on
demand or otherwise and are withdrawable by cheque, draft, and order or otherwise.”

Different economists, banking professionals and authorities explained their viewpoint
regarding bank or commercial bank. It has been rightly said by A.K. Basu that a
general definition of a bank or banking is by no means easy, as the concepts of
banking differ from age to age, and country to country.

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FINANCE AND BANKING IN INDIA

India is a vast country, before 1947, undivided India was equal to Europe excluding
Russia in its area. It is situated in south of Asia. In spite of a part of Asia, it is
separated from it. It is separated by Himalayas in North India. India has vast oceans in
South, East and West. Due to its vastness it is also called sub continent. That vast
country has given different names in different times. In Vedic period, it was called
‘Arya-V-arat’. In Bir period and ancient period, it as called Bharatvarash’. Perhaps
due to fame of king Bharat, it was called ‘Bharatvarsh. Greek called it Indus on the
name of river Sindh. Iranians called it Hindu. Chinese travelers called it Tienchu and
Yintu. Ipsing called ‘Arya Desh’ and Brahmrashtra. Bible has called it Hoddu. In
medieval period, it was called ‘Hindustan’ and Hind. European called it India. After
Independence, it is return as Bharat Ganrajya or Indian Republic in Indian
Constitution.

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BANK MARKETING

We define bank marketing as follows: “Bank marketing is the aggregate of functions,
directed at providing services to satisfy customers’ financial (and other related) needs
and wants, more effectively and efficiently that the competitors keeping in view the
organizational objectives of the bank”. Bank marketing activity. This aggregate of
functions is the sum total of all individual activities consisting of an integrated effort
to discover, create, arouse and satisfy customer needs. This means, without exception,
that each individual working in the bank is a marketing person who contributes to the
total satisfaction to customers and the bank should ultimately develop customer
orientation among all the personnel of the bank. Different banks offer different
benefits by offering various schemes which can take care of the wants of the
customers.

Marketing helps in achieving the organizational objectives of the bank. Indian banks
have duel organizational objective – commercial objective to make profit and social
objective which is a developmental role, particularly in the rural area.

Marketing concept is essentially about the following few thing which contribute
towards banks’ success:

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1) The purpose of the bank is to create, win, and keep a customer.
2) The customer is and should be the central focus of everything the banks does.
3) It is also a way of organizing the bank. The starting point for organizational
design should be the customer and the bank should ensure that the services are
performed and delivered in the most effective way. Service facilities also
should be designed for customers’ convenience.
4) Ultimate aim of a bank is to deliver total satisfaction to the customer.
5) Customer satisfaction is affected by the performance of all the personal of the
bank.

All the techniques and strategies of marketing are used so that ultimately they induce
the people to do business with a particular bank. Marketing is an organizational
philosophy. This philosophy demands the satisfaction of customers needs as the pre-
requisite for the existence and survival of the bank. The first and most important step
in applying the marketing concept is to have a whole hearted commitment to customer
orientation by all the employees. Marketing is an attitude of mind. This means that the
central focus of all the activities of a bank is customer. Marketing is not a separate
function for banks. The marketing function in Indian Bank is required to be integrated
with operation.

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MARKET RESEARCH IN INDIAN BANKS

After enquiring with all the public and 14 private sector banks whether they had
undertaken any market research studies. The following board areas of market research
were considered for the study:

(a) New service development,

(b) New service product acceptance,

(c) Research and development of existing financial service,

(d) Bank images study,

(e) Measuring bank’s advertising effectiveness,

(f) Measurement of market potentials,

In response to the inquiry information was received from 17 banks. Out of these
banks, 14 are public sector banks and 3 are private sector banks. Two
nationalized banks and two private sector banks informed that they have not
conducted any markets research studies.

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INCREASING IMPORTANCE OF MARKETING IN BANKING
INDUSTRY

The various other factors which have led to the increasing importance of marketing in
the banking industry are categorized as follows:

 Government Initiatives
The Indian economy embarked on the process of economic reform and various policy
measures initiated by the government resulted in the increasing competition in the
banking industry, thereby highlighting the importance of effective marketing. The
Narasimham Committee Report evidence of the Government’s desires to ‘Re-
regulate’ the banking industry so as to encourage efficiency through competition. The
Government initiatives include:

 Deregulation of Interest Rates
The bank may reduce their Minimum Lending Rates so as to attract customers
(individual and corporate). Such reduction in lending rates reduce the spread between
the deposit rates and lending rates, i.e. the banks margins would decline and they
would have to increase their volumes or provide attractive services so as to maintain
profits. This calls for bank marketing.

 Increasing Emphasis on Bank Profitability:
With the Narasimhan Committee Report, banks have been directed to improve their
efficiency, productivity and profitability. Banks are required to be self-sufficient. In
fact, the report has adopted the BIS standards of capital adequacy (though in a phased
manner).

 Foreign Banks
Foreign banks offer stiff competition to the Indian Banks and with their superior
services and technology offers them a competitive advantage. Thus Indian Banks have
to effectively apply marketing concepts to attract customers.

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 Entry of New Private Banks
In the early ‘90s new competition emerged in the form of new Private Banks, who
brought along with them a high technology-based banking matching with
International Standards and have made a significant dent in the banking business by
capturing substantial share in the profits of the banking industry.

 Reduction of Statutory Liquidity Ratio:
With the Government’s aim of reducing the SLR to 25 percent, the banks will have
surplus funds for which they will have to attract users.

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Social Environment

 Increasing Urbanization, Education and Awareness:

The higher literacy level, migration to urban areas and higher awareness due to the
boom in the mass media has important implications for the retail banker. He needs to
be conscious of the fact the increasing proportion of people are aware of financial
service and are, therefore demanding and expecting higher quality services.

 Increasing Urbanization, Education and Awareness:

The higher literacy level, migration to urban areas and higher awareness due to the
boom in the mass media has important implications for the retail banker. He needs to
be conscious of the fact the increasing proportion of people are aware of financial
service and are, therefore demanding and expecting higher quality services.

Decline in Traditional Indian Values (Borrowing as Taboo), Rising Consumerism,
Rise in the Percentage of Working Women.

 Technology Development

Modernization of Technology has facilitated the introduction of new banking services
as to attract new customers. An example of this is the ‘Automated Teller Machines’ or
the facility of ‘Any Time Money’. Also in foreign countries, banks are experimenting
with money transmission at Point of sale, e.g., petrol station linked with banking
network.

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Consumer Behavior and Segmentation

Need for segmentation

Philip Kotler has described the dilemma of the seller (especially, a seller dealing with
masses, e.g. banks) as follows:

“How the seller determines which buyer’s characteristics produce the best partitioning
of a particular market? The seller does not want to treat all customers alike nor does
he want to treat them all differently”.

Banks deal with individuals, group of persons and corporates, all of whom have their
likes and dislikes. No bank can afford to assess the needs of each and every individual
buyer (actual or potential).

Segmentation of the market into more or less homogenous groups, in terms of their
needs and expectations from the banking industry, provides a solution to this problem.

This involves dividing the market into major market segments, targeting one or more
of this segments, and developing products and marketing programs tailor-made for
these segments.

In the first segmentation, the market is divided from a unitary whole, to groups of
buyers who might require separate products and marketing mix. The marketer
typically tries to identify different segments in the market and develop profiles of
resulting market segments.

The second step is market targeting in which each segment’s attractiveness is
measured and a target segment is chosen based on tits attractiveness.

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The third step is product positioning which is the act of establishing a viable
competitive position of the firm and its offer in the target segment chosen.

Initiation of Segmentation in India

Station Bank of India was the first Indian Bank to adopt the concept of market
segmentation. In 1972, it reorganized itself on the basis of major market segments
dividing customers on the basis of activity and carved out 4 major market segments,
viz. Commercial and Institutional, Small Industries and Small Business Segment,
Agriculture, Personal and Services Banking. The objectives of this scheme were:

• Deeper penetration and coverage of market by looking outwards.

• Adequate flexibility of organization to accommodate growth and rapid change,

• Delegation of work for releasing senior management for more futuristic tasks.

Criteria for Segmentation

Segmentation in a right fashion makes the ways for profitable marketing. This helps
policy planner in formulating and innovating the policies and at the same time also
simplifies the task of bank professionals while formulating an innovating the strategic
decisions. The following criteria make possible rig segmentation.

An important criterion for market segmentation the economic system in which we
find agricultural sector, industrial sector, services sector, household sector,
institutional sector and rural sector requiring of weight age while segmenting.

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 Agricultural Sector:

In the agricultural sector, there are four category rise since the needs of all the
categories cant’s be identical.

The mechanization of agriculture, the improved or scientific system of activation, the
help of nature, the magnitude of risk, the availability infrastructural facilities
influence the level of expectations vis-à-vis the needs and requirements. The banking
organizations are supposed to know and under stand the changing requirements of
different categories of farmers.

 Industrial Sector:

The banking organizations sub serves the interests of the industrial sector. The large-
sized, small-sized co-operative and tiny industries use the services of banks. The
expectations of all the categories can not be uniform.

The banking organizations are supposed to have an indepth knowledge of the
changing needs and requirements of the industrial segment.

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 Services sector:

It is an important sector of the economy where the banking organizations get
profitable business. The two categories of organizations such as profit-making and
not-for-profit making are found important in the very context.

The banking organizations need to identify the changing needs and requirements of
the services sector. With the frequent use of information technologist and with the
mounting pressure of inflation and competition, we find a change in the hierarchy of
needs.

 Household Sector:

This is also constitutes an important sector where different income group have
different needs and requirements. In below figure we find the different segments of
the household sector.

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MARKETING MIX FOR BANKING SERVICES

The formulation of marketing mix for the banking services is the prime responsibility
of the bank professional who based on their expertise and excellence attempt to
market the services and schemes profitably.

The bank professionals having world class excellence make possible frequency in the
innovation process which simplifies their task of selling more but spending less. The
four submixes of the marketing mix, such as the product mix, the promotion mix, the
price mix and the place mix, no doubt, are found significant even to the banking
organizations but in addition to the traditional combination of receipts, the marketing
experts have also been talking about some more mixes for getting the best result. The
“People” as a submix is now found getting a new place in the management of
marketing mix. It is right to mention that the quality of people/employees serving an
organization assumes a place of outstanding significance. This requires a strong
emphasis on the development of personally-committed, value-based, efficient
employees who contribute substantially to the process of making the efforts cost
effective. In addition, we also find some of the marketing experts talking about a new
mix, i.e. physical appearance. In the corporate world, the personal care dimension
thus becomes important. The employees re supposed to be well dressed, smart and
active. Besides, we also find emphasis on “Process” which gravitates our attention on
the way of offering the services. It is only not sufficient that you promise quality
services. It is much more impact generating that your promises reach to the ultimate
users without any distortion. The banking organizations, of late, face a number of
challenges and the organizations assigning an overriding priority to the formulation

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processes get a success. The formulation of marketing mix is just like the combination
of ingredients, spices in the cooking process.

MARKETING MIX IN BANKING INDUSTRIES

1. PROMOTION:

Promotion mix includes advertising, publicity, sales promotion, Word– of – mouth
promotion, personal selling and telemarketing.

2. PRICE:

The price must be high enough to cover costs and make a profit but low enough to
attract customers. There are a number of possible pricing strategies. The most
commonly used are:

3. PRODUCT:

The business has to produce a product that people want to buy.They have to decide
which ‘market segment’ they are aiming at –age, income, geographical location etc.

4. PLACE:

Banks need to take into consideration the place factor as it decides the volume of
business for them.

5. PEOPLE:

Sophisticated technologies no doubt, inject life and strength to a bank’s efficiency but
the moment there is a lack of productive human restheirces even the new generation
of information technologies would hardly produce the desired results.

Other than these are;

6. PROCESS:

All the major activities of banks follow RBI guidelines. There has to be adherence to
certain rules and principles in the banking operations.

7. PHYSICAL EVIDENCE:

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The physical evidences include the logo, the layout of the branch, the passbooks,
cheque books, the furniture, the reports, punch lines, other tangibles, employee’s dress
code etc.

 THE PRODUCT MIX:

The banks primarily deal in services and therefore, the formulation of product mix is
required to be in the face of changing business environmental conditions. Of course
the public sector commercial banks have launched a number of polices and
programmers for the development of backward regions and welfare of the weaker
sections of the society but at the same it is also right to mention that their
development-oriented welfare programmes are not optimal to the national socio-
economic requirements. The changing psychology, the increasing expectations, the
rising income, the changing lifestyles, the increasing domination of foreign banks and
the changing needs and requirements of customers at large make it essential that they
innovate their service mix and make them of world class. Against this background, we
find it significant that the banking organizations minify, magnify combine and modify
their service mix.

It is essential that ever product is measured up to the accepted technical standards.
This is due to the fact that no consumer would buy a product which contains technical
faults. Technical perfection in service is meant prompt delivery, quick disposal,
presentation of right facts and figures, right filing proper documentation or so. If
computers starts disobeying the command and the customers get wrong facts, the use
of technology would be a minus point, and you don’t have any excuse for your faults.

 PRODUCT PORTFOLIO:

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The bank professional while formulating the product mix need to assign due
weightage to the product portfolio. By the concept product portfolio, emphasis is on
including the different types of services/ schemes found at the different stages of the
product life cycle. The portfolio denotes a combination or an assortment of different
types of products generating more or less in proportion to their demand. The quality
of product portfolio determines the magnitude of success. It is excellence of bank
professionals that help them in having a sound product portfolio.

We find the composition of a family sound, if members of all the age groups are given
due place. Like this, the composition or blending of a service mix is considered to be
sound, if well established and likely to be profitable schemes are included in the mix.
It is against this background that a study and analysis of product portfolio is found

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significant. The bank professionals are supposed to perform the responsibility of
composing the same. A sound product portfolio is essential but its process of
constitution is difficult. An organization with a sound product portfolio gets a
conducive environment and successes in increasing the sensitivity of marketing
decisions. The banking organizations need a sound product portfolio and the bank
professionals bear the responsibility of getting it done suitably and effectively.

If the banks rely solely on their established services and schemes, the
multidimensional problems would crop up in the long run because when the well
established services/schemes would start saturating or generating losses, the
commercial viability of banks would of course, be questioned. The banking
organizations relying substantially on a profitable scheme and ding nothing for new
scheme likely to get a profitable market in the future are to face is to face a crisis like
situation. It is in this context, that we find designing of a sound product portfolio
essential to an organsition. We can’t deny that the product portfolio of the foreign
banks is found sound since they keep their eyes moving. The innovation, diffusion,
adoption and elimination processes are taken due care. The public sector commercial
banks need to innovate their service and this makes a strong advocacy in favour of
analyzing the product portfolio.

 DESIGNIGN AN ATTRACTIVE PACKAGE

In the formulation of product mix for the banking organization, the designing of
package is found important. In this context, we find packaging decision related to the
formulation of a mix of different schemes and services. Developing an attractive
package required professional excellence and therefore, the bank professionals are
required to be aware of the different key issues influencing the formulation process.
What the package should basically be or do for the particular target. We re aware of
the fact that a number of schemes and services are included in the service mix of bank
product and all the services or schemes can’t be preferred by all. Of course we find
some of the public sector commercial banks now evincing stage. This makes it

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essential that a bank manager thinks in favour of developing a package. The
importance of packaging can’t be underestimated considering the functions it
performs and the effects which we witness in the process of attracting and satisfying
the customers. In addition to other aspects, it is also pertinent that a bank manager is
familiar with the package developed by the leading competitive banks since this
would help them in innovating the package. It is an important component of the
product mix and a bank manager while formulating or designing a package needs to
assign due weightage to the formulation process. While developing a package, it is
essential that the packages offered are efficacious in establishing an edge over the
packages of competitors. Thus needs and preferences of the target market in addition
to the packages offered by the competitors need due weightage while designing a
package.

In the designing process the bank professionals can make a package, an ideal
combination of both, the core and peripheral services. The main thing in the process is
to make it profitable, convenient and productive to the customers so that they prefer to
transact with the bank. For the bank professional, it is an important persuasive effort
that helps in increasing the business even without developing or innovating the
services or schemes.

 PRODUCT DEVELOPEMNT:

In almost all the services, the development of a product is an ongoing process. The
banking organizations also need to develop new services and schemes. We can’t deny
that the development of product especially in the banking services is found difficult
since they don’t have any discretion, however they can do it, of course in a limited
way. By minifying, combining, modifying and magnifying, the banking organizations
can give to the services or scheme a new look. The regulations of the Reserve Bank of
India, no doubt stand as a barrier but professionally sound marketers make it possible
even without violating the rules and regulations. The banking organizations in general
have been found developing product by including some new properties or features.

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Generally we find two processes for the development of product. The first process is
found proactive since the needs of the target market are anticipated and highlighted.
The second process is reactive and in this context the banks respond to the expressed
needs of the target.

 PROACTIVE PROCESS:

In the pro-active process, we find product to market needs. This makes it essential that
the branch managers are aware of the changing needs of the target market. There are
six stages for the development of the product, such as idea generation, screening of
the concept, assessing of market potential, analyzing the cost, test marketing and final
commercial launching. The bank professionals have to be careful at all the stages so
that whatever the services or schemes are developed are found instrumental in getting
a positive response. The customers and competitors help bank professional
substantially in generating a new idea. The screening of the product concept focuses
on the process of narrowing down the list of the ideas generated to a small number of
concepts.

 PROMOTION MIX

In the formulation of marketing mix the bank professionals are also supposed to blend
the promotion mix in which different components of promotion such as advertising,
publicity, sales promotion, word-of-mouth promotion, personal selling and
telemarketing are given due weightage. The different components of promotion help
bank professionals in promotion the banking business.

Advertising:

Like other organizations, the banking organizations also us this component of the
promotion mix with the motto of informing, sensing and persuading the customers.
While advertising, it is essential that we know about the key decision making areas so
that its instrumentality helps bank organization both at micro and macro levels.

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Finalizing the Budget:

This is related to the formulation of a budget for advertisement. The bank
professionals, senior executives and even the police planners are found involved in
the process. The formulation of a sound budget is essential to remove the financial
constraint in the process. The business of a bank determines the scale of
advertisement budget.

Selecting a Suitable vehicle:

There are a number of devices to advertise, such as broadcast media, telecast media
and the print media. In the face of budgetary provisions, we need to select a suitable
vehicle. The latest developments in the print technology have made print media
effective. The messages, appeals can be presented in a very effective way.

Making possible creativity:
The advertising professionals bear the responsibility of making the appeals, slogans,
messages more creative. The banking organizations should seek the cooperation of
leading advertising professionals for that very purpose.

Instrumentality of branch managers:
At micro level, a branch manager bears the responsibility of advertising locally in
his / her command area so that the messages, appeals reach to the target customers of
the command area. Of course we find a budget for advertisement at the apex level but
the business of a particular branch is considerably influenced by the local
advertisements. If we talk about the cause-related marketing, it is the instrumentality
of a branch manager that makes possible the identification of local events, moments
and make advertisements condition-oriented.

Public Relations:

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Almost all the organization need to develop and strengthen the public relations
activities to promote their business. We find this component of the promotion mix
effective even in the banking organizations. We can’t deny that in the banking
services, the effectiveness of public relations is found of high magnitude. It is in this
context that we find a bit difference in the designing of the mix of promoting the
banking services. Of course in the consumer goods manufacturing industries, we find
advertisements occupying a place of outstanding significance but when we talk about
the service generating organizations in general and the banking organizations in
particular, we find public relations and personal selling bearing high degree of
importance.

Personal Selling:
The personal selling is found instrumental in promoting the banking business. It is just
a process of communication in which an individual exercise his/her personal
potentials, tact, skill and ability to influence the impulse buying of the customers.
Since we get in immediate feed back, the personal selling activities energies the
process of communication very effectively.

The personal selling in an art of persuasion. It is a highly distinctive form of
promoting sale. In personal selling, we find inter-personal or two-way communication
that makes the ways for a feed back. There is no doubt in it that the goods or services
are found half sold when the outstanding properties are well told. This are of telling
and selling is known as personal selling in which an individual based on his/her
expertise attempts to transform the prospects into customers.

Dynamics of Personals Selling

The dynamics of personal selling are found instrumental in activating the selling
activities. Sales preparations are considered most crucial for the actual sales. Pre-sale
activities and post-sale services can’t be left neglected to improve the marketing
activities. The customers may be interested in knowing the main features of the
services, how a particular service would help them, rationale behind the technical

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services and proof in regard to its uses. The pre-sale activities would bring the
positive results, if preparations are adequate.

Some of the customers are found highly aware of the developments, they are found
well informed. On the other hand, we also find other category of customers who are in
dark. Here, the branch managers are expected to match the level of awareness of
customers. As for instance, Mr. A goes up the matrix but Mr. B has not enough time
for the branch managers. The branch managers are supposed to prepare a synopsis of
their sales talk. Not surprisingly the highly aware customers are found in apposition to
make independent decisions and know all about. While selling to the less aware
customers, the managers should stress on the main features of the services and the
expected benefits of these services.

Sales Promotion:

It is natural that like other organizations, the banking organizations also think in favor
of promotional incentives both to the bankers as well as the customers. The banking
organizations make provisions for incentives offered to the customers are known as
customers’ promotion. There are a number of tools generally used in the different
categories of organizations in the face of the nature of goods and services sold by
them. The gift, contests, fairs and shows, discount and commission, entertainment and
traveling plans for bankers, additional allowances, low interest financing and

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retaliatory are to mention a few found instrumental in promoting the banking
business.

As and when the banking organizations offer new services and schemes, the tools of
sales promotion are required to be innovated. This is with the motto of stimulating the
new and old customers. An important thing in the very context is the changing needs
and requirements of customers/prospects. The bank professionals bean outstanding
task of studying the competitors’ strategies which would he them in initiating the
process of innovation. Here it is important to mention the promotional incentives to
the customers would focus on decisions related to the selection of a tool. There are a
number of considerations to streamline the process. The bank professionals are
supposed to study the market conditions and make necessary suggestions, especially
regarding the incentives.

It is a blending process and bank professional have to be sure the whatever the
provisions, they make are fulfilled on priority basis. More incentives more efficiency
or a vice-versa conditions more efficiency, more-incentives motivate bankers
substantially.

Word-of-Mouth Promotion:

Much communication about the banking services actually take place by word-of-
mouth information which is also known as word-of-mouth promotion. In the banking
industry, we find use of different components of promotion and in the context it is
essential that we also talk about word-of-mouth communication which makes the
process of influencing the prospects effective by sensitizing the word-of-mouth
recommendations.

The persons engaged in communication, the hidden sales force that plays an
incremental role in increasing the demand. An important question regarding the word-
of-mouth communication is related to its intensity of sensitizing the persuasion
process.

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The problem before the bank professionals is to identify the persons to be included in
the list of word-of-mouth promoters. It is supposed that a bank manager is well aware
of the social composition of his/her command area. The oral publicity plays an
important role in eliminating the negative comments and improving the services. This
helps you know the feedback which may simplify the task of improving the quality of
services.

 THE PRICE MIX

In the formulation of product mix, the pricing decisions occupy a place of outstanding
significance. The pricing decisions or the decisions related to interest and fee or
commission charged by banks are found instrumental in motivating or influencing the
target market. The Reserve Bank of India and the Indian Banking Association are
concerned with the regulations. The rate of interest is regulated by the RBI and other
charges are controlled by the Indian Banking Association. To be more specific in the
Indian setting, we find this component of the marketing mix significant because the
banking organizations are also supposed to sub serve the interests of weaker sections
and the backward regions.

The public sector commercial banks in particular are supposed to play developmental
role with societal approach. It is natural that these specific roles of the public sector
commercial banks complicate the problem of pricing.

Pricing policy of a bank is considered important for raising the number of customer’s
vis-à-vis the accretion of deposits. Of course, there are a number of factors to
influence the process but it is also right to mention that the key role in the entire
process is played by the Reserve Bank of India. A National Consumer Survey
Conducted by the L.H. Associates reveals that the quality of Consumer service was
one of the three top issues and the consumers ranked the quality of their bank

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relationships more even more important than the fees charged for the services. To be
more specific when we find a number of domestic and foreign banks working in the
Indian economy, the Reserve Bank of India bears the responsibility of making the
business environment conductive.

The non-banking organizations and foreign banks have been found attracting
customers by offering to them a number of incentives. The potential customers or
investors frame their investment plans in the face of pricing decisions made by the
banking organizations. While formulating the pricing strategies, the banks have also
to take the value satisfaction variable into consideration. The value and satisfaction
can’t be quantified in terms of money since it differs from person to person, keeping
in view the level of satisfaction of a particular segment, the banks have to frame their
pricing strategies. The policy makers are required to be sure that the services offered
by them are providing satisfaction to the customers concerned. The pricing decisions
may be to bit liberal, if the potential customers are found shifting to the non-banking
investments. In this context, it is pertinent that pricing is used as motivational tool.

The banking organizations are required to frame two-fold strategies. First, the strategy
is concerned with interest and fee charged and second, the strategy is related to the
interest paid. Since both the strategies throw a vice-versa impact, it is pertinent that
banks attempt to establish a correlation between the two. It is essential that both the
buyers as well as the sellers have a feeling of winning as shown in figure.

The banks have to take the value satisfaction variable into consideration while
designing the pricing strategies. McIver and Naylor opine that a marketing manager
has to regard price as a variable to be traded off against product quality and promotion
rather that as an absolute where the lowest price is not desirable.

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 THE PLACE MIX

This component of the marketing mix is related to the offering of services. The two
important decision making areas are making available the promised services to the
ultimate users and selecting a suitable place for bank branches.

The selection of a suitable place for the establishment of a branch is significant with
the viewpoint of making the place accessible and in addition, the safety and security
provisions are also found important. The banking organizations are not free to open a
branch since the Reserve Bank of India regulates the subject of branch expansion but
so far as the management of branch is concerned, the branch managers have option to
select a place which is convenient to both the parties, such as the users and the
bankers. In the Indian perspective, the protection to the bank’s assets and safety to the
users and bankers need due weightage. The vulnerable area or regions need adequate
provisions to make the branch safe. The management of office is also found

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significant with the viewpoint of making the services attractive. The furnishing, civic
amenities and parking facilities can’t be overlooked.

Another important decision making area is related to the offering of services. This
draws our attention on the behavioral profile of bankers. The bankers in general and
the front-line-staff in particular bear the responsibility of making available the
services-promised to the ultimate users without any distortion often a gap is found
generated by front-line-staff that makes an invasion on the image of bank. The bank
professionals or a branch manager is required to be sure that whatever the promise has
been made regarding the quality of services are not distorted. The RBI and the
different public sector commercial banks are required to manage the distribution
process intelligently and professionally. Thus, the place mix is found to be an
important decision making area which requires due attention, both at macro and micro
levels. If the banking organizations sell the promises it is essential that the end users
get the same without any distortion.

 THE PEOPLE

Sophisticated technologies, no doubt, inject life and strength to our efficiency but the
instrumentality of sophisticated technologies start turning sour if the human resources
are not managed in a right fashion. Generation of efficiency is substantially
influenced by the quality of human resources. It is against this background that a
majority of the management experts make a strong advocacy in favour of developing
quality people and late, the people management has been include dint he marketing
mix of organizations is general and the service generating organizations in particular.

Not only the public sector commercial banks but almost all the public sector
organization and albeit other government departments, of late, have been facing the
problem of quality people resulting into inefficiency, deceleration in the rate of
overall productivity and profitability or so. The front-line staff are rough and indecent,
the branch managers are helpless and even the bankers have been found involved in

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the unfair practices. The public sector commercial banks need to assign on overriding
priority to the development of quality people majority of the management of the
experts have realized the significance of quality people in the development of an
organization and the boardrooms are also found changing their attitudes.

The first task before the banking organizations at the apex level is to overhaul the
recruitment processes. While fixing criteria for selection, they need to assign due
weighted to the ethical values. The education and training facilities are required to be
innovated. The process of identification and inculcation need to be managed carefully.

The foreign banks and the private sector commercial banks reward for efficiency and
at the same time also demotivate the inefficient bankers. This helps them in improving
the efficiency of even the inefficient people. The development of human resources
makes the ways for the formation of human capital. Incentives, of course, inject
efficiency and the organizations offering more incentives succeed in motivating the
people.

• Having better and cost-effective control over operations.

• Enriching the job content of employees at all level (by reducing the drudgery
of mundane operations and increasing the analytical content of their work).

• Improving the quality of decision-making, a must in the fast changing
environment.

Thus, the key focus areas in which information technology can be employed are:

• Automated processing of back-office operations like processing of forms,
policy customerization and product selection, pricing and preparation of
quotations, etc.

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• 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-business
systems” since these would provide better marketing and service to clients, facilitate
cross-selling and customerization of schemes and hence, a better packaging for the
product. This would help Indian banks “thing customer”.

All these would, thus, help in the effective management of time. Recourse to
mechanized systems like ledger posting machine, cash counting machine and cheque
sorting machine would result in reduction in the number of tedious and routine jobs to
be handled manually saving time for the people to focus on the customer.

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STRATEGIES FOR EFFECTIVE BANK MARKETING IN INDIA

Introduction:

Since the inception of globalization in India, banking sector has undergone various
changes. Introduction of asset classification and prudential accounting norms,
deregulation of interest rate and opening up of the financial sector made Indian
banking sector competitive. Encouragement to foreign banks and private sector banks
increased competition for all operators in banking sector. The protective regime by
the authority is over. Indian banks are exposed to global competition. Even
competition within the country has increased manifold. The almost monopoly position
enjoyed by the public sector banks of India is no more existence. Under this
development Indian banks needs to reinvent the marketing strategy for growth.

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The spread of the bank in Indian rural and semi urban areas are highly different from
state to state and region to region. Many states have fewer networks of bank branches
in the rural areas. Under such scenario different marketing approach for different
areas is required. If the bank follows the same marketing strategy for all areas the
success would be difficult.

Marketing approach for urban area:

The urban areas of India are developed taking into account all parameters of
development. The level of income of the people, the literacy rate and level of
education as well as awareness of the people about rights of the customer are higher
than that of the rural and even semi urban areas. Thus here for effective bank
marketing different approach is necessary than that of rural areas.

The marketing strategy should be based on customer service and the use of modern
technology in banking. Under competitive environment for the success of the
business, better customers and retaining existing customers is possible only with
customer service.
Use of modern technology in urban areas will also go long way for marketing of
banking services. Technology based service like credit card, debit card, ATM;
anywhere banking, internet banking, and mobile banking are necessary for urban
areas. This is because it enables customers to perform banking transactions at their
convenience. Business hours of a bank are also an important factor for urban banking.
India many private sector banks, especially co-operative banks and now even some of
the public sector banks have also started this practice and they find it successful. To
attract business and wholesale customers, banks need to adopt technology based
product and service which is suitable to such class of customer. For instance RTGS,
collection of out station cheques, issuing the cheques at par at any branch in the
country, cash management facility, DD boutiques etc. are necessary.

Another strategy for effective marketing is bank need to change the focus from the
traditional banking to universal banking. In urban areas the extend and variety of
economic activities demands that one institution should meet all financial need of a

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customer. Under such an expectation of people universal banking would prove
successful approach for bank marketing. The term ‘universal banking’ in general
refers to the combination of commercial banking and investment banking, i.e.,
issuing, underwriting, investing and trading in securities.

A universal bank is a supermarket for financial products. Under one roof, corporate
can get loans and avail of other handy services, while individuals can bank and
borrow.

For increasing customer base and retention of the existing cliental universal banking
approach is effective strategy. Universal banking offers number of benefits to
customers as well s the banks. For instance, economies of scale arise in multi-product
firms because costs of offering various activities by different units are greater than the
costs when they are offered together.

Marketing approach for rural areas:

Prior to nationalization of banks in 1969, the rural areas were virtually without
banking facility. At that time unorganized sector was dominating in the rural finance.
After nationalization of banks in 1969 branches of the banks were started gradually in
the rural areas also. Today more than 50 percent branches of the banks are found in
the rural areas. However, the distribution of banks in the rural areas is highly uneven.
Here banks have to face competition with the unorganized sector. Moreover the rural
banking is highly regularized activity by the Government in India. Lending as well as
interest rate is regularized. Thus under such environment different marketing
approach is required. For effective rural marketing product development, promotion
and communication is important. All these parameters banks have to balance with
socio-economic factors prevailing in the rural areas. Bank need to innovate product
that could attract the depositors.

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Various loan schemes that are suitable for them for getting funds at right time and
also they find convenient to repay. For instance traditional saving bank account may
be given fixed deposit concept that once a particular limit of balance is reached the
funds from saving account is automatically coveted into fixed deposit attracting
higher interest rate.

Banks need to develop some scheme which would attract them to bank with. For
loans and advances products which are suitable to farmers, small traders, small scale
agro based rural industries are already in existence. Banks need to see the how value
addition can be mad to this existing scheme. Banks also needs to tie up with Non
Government Organizations and various Self Help Group for different types of loans,
micro financing etc. This will help the bank for building good image and reputation in
the rural areas over and above the business. Another potential area which can be
explored by the banks in the rural area is retail banking. With the steady increase in
the income of the rural people there is ample scope for retail loan products like
housing loans and loan for consumer durables.

Conclusion:

Banking sector has undergone various changes after the new economic policy based
on privatization, globalization and liberalization adopted by Government of India.
Introduction of asset classification and prudential accounting norms, deregulation of
interest rate and opening up of the financial sector made Indian Banking sector
competitive. Encouragement to foreign banks and private sector banks increased
competition for all operators in banking sector. Banks in India prior to adoption of
new economic policy was protected by Government and was having assured market
due to almost state monopoly in banking sector. However, under the new
environment, Indian banks needs to reinvent the marketing strategy for growth. In
India geographical development is not even throughout the country, there are full-
fledged urban areas covering the metropolitan cities and other big cities. On the other
hand there are underdeveloped rural areas too. For effective bank marketing different
approach for different areas is required. In urban areas customer services is of

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paramount importance as the level of literacy and therefore awareness of the people is
more. Also technology based marketing would have higher degree of success due to
typical urban life style of the people. Universal banking providing all financial service
under one roof will have more success in urban areas. In the rural areas for bank
marketing personalized banking will go in long way. Also banks need to offer
innovative tailor made deposits and advances products to suit individual customers.
Delivery of advances of right amount of right amount and at right time is essential in
rural marketing.

TECHNOLOGY IN BANKING

Technology is proving to be a vital tool in enhancing banking activities around the
globe. The advent of ATMs and Internet Banking are key pointers to this. The role of
an information system can in no way be underestimated. The expanding role of
information systems have aided banks achieving Anytime, Anywhere and Anyhow
banking. The improvement in telecommunication infrastructure is redefining the was
banking is being conducted.

Information Technology made its presence felt in banks in India a few decades ago.
However, it is still being used as support systems. Most of the software packages used
in bank work on stand-alone systems and are not integrated.

Banks in India need to have an integrated system that takes care of all the front-office
and back-office operations. However, Indian banks should not be content with the

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integration of their activities. Banks in advanced countries are planning to have global
electronic banking. Electronic banking or e-Banking is a generic name for a range of
technologies that allow the electronic exchange of information related to banking
transactions.

As Electronic Networks become more robust and widespread, they are beginning to
attract the attention of retail banks – like ATMs and phone banking. However they
tend to be viewed merely as one more cheap distribution channel. Accordingly banks
are replicating the branch banking experience online, even to the extent of creating 3D
virtual branches for their customers to navigate through. Such an approach is
characteristic of early attempts to use new technology platform.

EVOLUTION OF E-BANKING

The story of technology in banking started with the use of punched card machines like
Accounting Machines or Ledger Posting Machines. The use of technology, at that
time, was limited to keeping books of the bank. It further developed with the birth of
online real time system and vast improvement in telecommunications during late
1970’s and 1980’s.it resulted in a revolution in the field of banking with “convenience
banking” as a buzzword. Through Convenience banking, the bank is carried to the
doorstep of the customer.

The 1990’s saw the birth of distributed computing technologies and Relational Data
Base Management System. The banking industry was simply waiting for these
technologies. Now with distribution technologies, one could configure dedicated
machines called front-end machines for customer service and risk control while
communication in the batch mode without hampering the response time on the front-
end machine.

Intense competition has forced banks to rethink the way they operated their business.
They had to reinvent and improve their products and services to make them more
beneficial and cost effective. Technology in the form of E-banking has made it
possible to find alternate banking practices at lower costs. More and more people are
using electronic banking products and services because large section of the banks
future customer base will be made up of computer literate customer, the banks must

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be able to offer these customer products and services that allow them to do their
banking by electronic means. If they fail to do this will, simply, not survive. New
products and services are emerging that are set to change the way we look at money
and the monetary system.

Indian Banks Cash in on Delivery Channels

From the staid over-the-counter delivery mode to ATMs, tele banking, Net banking,
and now mobile banking the number of delivery channel deployed by banks has
increased by leaps and bounds. Srikanth R.P. & Chitra Padmanabhan look at the
evolution and impact of various delivery channels in the Indian banking scenario and
forecast which delivery channel could be the next killer app for banking players.

While today each and every bank touts ‘The customer is King’ mantra, it was a quite
a different story not so long ago. Customers patronizing PSU banks were greeted with
the typical ‘babu’ culture, where getting even a cheque encash used to take ages.
Customers had to adjust their schedule to the bank and very rarely were it the other
way around. A person in a city like Bombay usually had to wait for a weekend to
deposit a cheque, because by the time he reached home, the bank would have closed.
Today, while the timings of banks have not changed drastically – banks have become
more customers – friendly. Now power has shifted into the hand of the customer.

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ATM (AUTOMATED TELLER MACHINES)

Traditionally, banking players relied extensively on their reach to effectively put
emerging banks out of competition. This forced new banks develop strategies, that
could help them reach out to end-customers cost effectively. The solution came in the
form of a delivery channel known as Automated Teller Machines or ATMs. And
when new private banks started installing ATMs across the length and breadth of the
country, customers started flocking in droves. A case in point is ICICI Bank. During
the liberalization of the banking sector, ICICI Bank which did not have a huge
national network, realized that it could use IT to enhance its value-added offerings.

Alok Shende, Industry manager for IT practice at Frost & Sullivan, summaries the
evolution of the Indian banking industry perfectly when he says, “Banks followed two
broad approaches when adopting technology. The first approach was evolutionary.

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Banking players who had large brick and mortar legacy particularly the public sector
banks, kept the banking channels intact and automated the bottleneck points. This
approach was adopted by around 80 percent of the industry. However, some banks
adopted a revolutionary approach and changed the banking scenario altogether. State
Bank of India is a good example of the evolutionary approach, whereas HDFC Bank
and ICICI Bank are good examples of the revolutionary approach.

“Some banks have gone a step ahead and share their ATMs with other banks”. For
instance, ABN Amro Bank has a private ATM sharing agreement with UTI Bank.

Banks are also developing new strategies to leverage their ATM outlets. For instance,
rather than set up a branch in every suburb, ICICI Bank has hit upon a ratio of 8
ATMs to one branch office, thus effectively reaching out to a large customer base, at
a substantially lower cost.

ABN Amro launched Royalties; India’s first banking rewards programmed. In the
programmed, the customer gets rewarded every time he uses any of the bank’s
electronic access channels. If the customer bites the bait, it not only reduces the work
load, but also translates into huge cost savings.

As PSU banks gear up to win back their customers through the aggressive deployment
of ATMs, the already vibrant ATM market has got a further boost. In India, ATM
manufacturers like NCR and HMA Diebold are extremely bullish, as India is the
fastest growing market for ATMs currently. India has close to 7,500 ATMs and
analysts predict the market to grow at a rate of 60-70 percent year-on-year. Looking at
the boom in ATMs NCR has decided to invest $6 million to set up its ATM
manufacturing plant in India.

Says Lars Nyberg, chairman and chief executive officer of NCR, “India is
undoubtedly the hottest market for ATMs today. Our decision to manufacturer in

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India is to accelerate supply to the local market. Initially, the manufacturing facility in
Bangalore will have a capacity of produce 8,000-10,000 ATMs per year. “The
potential of the Indian market has prompted NCR to design at ATM specifically for
the Indian market.

Total cost advantage

While ATMs do help banks to attract customers, there is also one more critical aspect
to consider – the immense cost savings from which a bank can benefit due to a
transaction taking place over an ATM vis-à-vis a branch. Typically, it costs a bank
close to Rs. 50 per transaction if conducted in a branch. The same if done an ATM
costs about Rs. 15. A look at the volume of ATM transactions conducted reflects the
level of success of this delivery channel.

Internet Banking

The other important delivery channel, from a bank’s perspective & Internet banking.
The adoption of Internet banking by the bank’s customers is important since the costs
per transaction are even lower than those of an ATM. A net-based transaction costs
the bank only around Rs. 4. Thus, banks are trying to get customers to switch over to
this mode of banking registered users for Internet banking in India at over two million
currently.

It represents a significant opportunity for banks. In addition, as a delivery channel,
Internet banking does not require physical infrastructure, thus saving on prohibitive
real estate costs.

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Private Banks like ICICI Bank, HDFC Bank, UTI Bank and ABN Amro Bank have
seen a steady surge in the number of users registered for Internet banking does not
require physical infrastructure, thus saving on prohibitive real estate costs.

Most banks today have facilities to enable internet banking customers to pay
insurance premiums and utility bills over the Net. Though Internet banking as a
concept has not caught the fancy of a majority of customers as yet-even the small
percentage that does use it, makes a difference to the overall cost. Almost all leading
banks in India are hoping that just as ATMs saw a period of inaction before they were
accepted by Indian masses, Internet banking too would be adopted once customers are
comfortable with the technology. For instance, in 1998 India had just 500 ATMs
today it has close to 7,500.

Roadblocks

While Internet banking is a potential and powerful delivery channel, it has failed to
make a significant impact due to a variety of reasons. RBI in its report, ‘Trend and
progress of Banking in India, 2001-02, says Internet banking has failed to take off due
to a combination of psychological, technological and socio-economic factors. Further,
the report states that additional hurdles relating to legal and infrastructural problems
have also affected growth.

Although the government has made considerable progress in initiating a trust
environment, with some Public Certification Authorities (PCA) already licensed to
operate, the adoption of trust technology is still a daunting factor for many users.

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What needs to be developed is a simple way of integrating trust into online banking
services.

Says Shende, “The compelling restraint for the user is the fear of security breaches.
As long as the perceived notion that the Internet is not a safe place to conduct
financial transactions prevails, large scale adoption will be challenging.” In addition,
the low penetration of PCs and access to the Internet are crucial issues which act as
roadblocks in the adoption of Internet banking.

MOBILE BANKING

What’s M-Banking?

M-Banking allows a customer to request for account balance, cheque books, cheque
status, demand drafts, and banker’s cheques as well as stop payments, make fixed
deposits enquiry and transfer bills online. HDFC customers, for instance, can pay
their Max Touch and BPL Mobile both provides cellular services – Bombay State
Electricity Supply, and Maharashtra State Electricity Board bills. Says Shyamlal
Saxena, 33, Vice President (Liabilities Product Management), HDFC: “WE are, in a
sense, content providers of banking information.”

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Is it better?

M-banking is no different from Net Banking; in fact it has many limitation. You still
cannot transfer fund from one bank to another and, given the high air-time charges, it
works out much more expensive than Net Banking. And for the mobile phone to
access a site, the contents must be in Wireless Markup Language.

Once the mobile users’ population grows, access rates will fall, allowing customers to
use more air-time. By then, the Reserve Bank of India would also have put its own
gateway in place to do online what it does today on paper.

M-banking uses two kinds of communication technologies. One is WAP (Wireless
application Protocol) and the other is SMS (Short Messaging Services). WAP is more
user-friendly, as it allows download of graphic information. SMS, in contrast, allows
text-only access. But as the time taken to download text is much less compared to
graphics, SMS is cheaper to use.

E- BANKING SERVICES:

(a) Bill payment service

Each bank has tie-ups with various utility companies, service providers and insurance
companies, across the country. It facilitates the payment of electricity and telephone
bills, mobile phone, credit card and insurance premium bills. To pay bills, a simple
one-time registration for each biller is to be completed. Standing instructions can be
set, online to pay recurring bills, automatically. One-time standing instruction will
ensure that bill payments do not get delayed due to lack of time. Most interestingly,
the bank does not charge customers for online bill payment.

(b) Fund transfer

Any amount can be transferred from one account to another of the same or any
another bank. Customers can send money anywhere in India. Payee’s account
number, his bank and the branch is needed to be mentioned after logging in the
account. The transfer will take place in a day or so, whereas in a traditional method, it

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takes about three working days. ICICI Bank says that online bill payment service and
fund transfer facility have been their most popular online services.

(c) Credit card customers

Credit card users have a lot in store. With Internet banking, customers can not only
pay their credit card bills online but also get a loan on their cards. Not just this, they
can also apply for an additional card, request a credit line increase and God forbid if
you lose your credit card, you can report lost card online.

(d) Railway pass

This is something that would interest all the aam janta. Indian Railways has tied up
with ICICI bank and you can now make your railway pass for local trains online. The
pass will be delivered to you at your doorstep. But the facility is limited to Mumbai,
Thane, Nasik, Surat and Pune. The bank would just charge Rs 10 + 12.24 percent of
service tax.

(e) Investing through Internet banking

Opening a fixed deposit account cannot get easier than this. An FD can be opened
online through funds transfer. Online banking can also be a great friend for lazy
investors Now investors with interlinked demat account and bank account can easily
trade in the stock market and the amount will be automatically debited from their
respective bank accounts and the shares will be credited in their demat account.
Moreover, some banks even give the facility to purchase mutual funds directly from
the online banking system.
So it removes the worry about filling those big forms for mutual funds, they will now
be just a few clicks away. Nowadays, most leading banks offer both online banking
and demat account. However if the customer have there demat account with
independent share brokers, then need to sign a special form, which will link your two
accounts.

(f) Recharging your prepaid phone

Now there is no need to rush to the vendor to recharge the prepaid phone, every time
the talk time runs out. Just top-up the prepaid mobile cards by logging in to Internet
banking. By just selecting the operator's name, entering the mobile number and the
amount for recharge, the phone is again back in action within few minutes.

(g) Shopping at your fingertips

Leading banks have tie ups with various shopping websites. With a range of all kind
of products, one can shop online and the payment is also made conveniently through
the account. One can also buy railway and air tickets through Internet banking.

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BANK MARKETING IN THE INDIAN PERSPECTIVE

The level of income, expectations, the rate of literacy, the geographic and
demographic considerations, the rural or urban orientation, the changes in economic
systems the frequent use of, technologies are some of the key factors governing the
development plan of an organization. To be more specific in a welfare country like
ours, the public sector commercial banks are supposed to play a decisive role in
fuelling the processes of socio-economic emancipation. This makes it clear that the
banking organization need a new vision, a new approach and an innovative strategy.
They are supposed to bring about greater mobility in the financial resources to cater to
the changing socio-economic requirements. Willingly or unwillingly, they have also
to bear the social costs by advancing credit facilities to the weaker sections and the
vulnerable regions. The foreign banks and a few of the private sector commercial
banks have been found making sincere efforts to improve the quality of their services.

Bank Marketing

The customers in general appreciate the functional style and service mix of foreign
banks. This makes a strong advocacy favour of practicing marketing principles in the
public sector commercial banks.

The nationalization of the Reserve Bank of India is a landmark in the development of
Indian banking system which in a true sense paved avenues for qualitative-cum
quantitative improvements. Acquisition of extensive powers of supervision and
control by the Reserve Bank of India under the Banking Regulations 1949 opened
new vistas for the expansion of banking facilities. The structure of public sector bank
was further strengthened in 1959. To curb concentration of economic power and
promote a judicious use of the financial resources for the economic development
activities, the banking system was regulated and supervised by the RBI subsequently
in 1969 the Government acquired a direct control over a substantial segment of the
banking system signifying its commitment to reshape the banking system so as to
meet progressively and serve better the needs of the development of economy in
conformity with the changing national policy and objective. The fruitful 11 results of
nationalization of 14 commercial banks in 1969 encouraged. government to
nationalize more commercial banks in 1980. These developments necessitated a
fundamental change in the functional responsibilities of the public sector commercial
banks. Here it is pertinent to mention that nationalization was with the motto of
improving the quality of services but the public sector commercial banks started
disappointing the masses. Of late, the quality of services is so poor that customers in
general are found dissatisfied. This makes it essential that the Reserve Bank of India
and the policy makers of the public sector commercial banks think in favour of
conceptualizing modern marketing principles which would bring a radical change in
the process of quality upgradation.

The first task before the public sector commercial banks is to formulate the marketing
mix which suits the national socio-economic requirements. They need to synchronies
the core and peripheral services in such a way that product attractiveness is increased
substantially. To be more specific the peripheral services need frequent innovation,
since this would be helpful in excelling competition. The personal selling and public
relations activities need an intensive care. It is pertinent to mention that the leading
foreign banks have been found promoting telemarketing and the public sector

Bank Marketing

commercial 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 due
care and for that we need to improve the quality of services vis-à-vis the cooperation
of opinion leaders. The Reserve Bank of India and the Indian Banking Association
need an attitudinal change. The boardrooms also need to change their attitudes. The
gap between the services-promised and services-offered is required to be bridged
over. This requires professional excellence. The professionals need to make possible a
fair synchronization of performance-orientation and employee orientation. This is not
possible unless the banking regulations are made liberal. The quality of
people/employees serving the banking organizations needs an overriding priority. The
bankers need to know about the behavioral management. The front-line-staff need
empathy in their behavior. This requires intensive training facilities. The domination
of trade unions is required to be minimized. The contractual job system needs due
attention.

The bank professionals need to assign due weightage to their physical properties.
They are supposed to look smart, active and attractive. Thus we need multi-
dimensional changes which make a strong advocacy in favour of implementing the
innovative marketing principles.

In view of the above, it is right to mention that in the face of new perception of
quality developed by the foreign and private sector commercial banks, the public
sector commercial banks have no option but to improve the quality of services. The
marketing principles bear the efficacy of initiating qualitative improvements. It is
against this background that we go through the problem of bank marketing. Of late
the foreign banks have been found promoting the use of sophisticated information
technologies. This makes it essential that we realize gravity of the situation and make
possible a rational use of technologies which is not to aggravate the problem of
retrenchment. The marketing principles would be helpful in making an assault on the
multi-dimensional problems. Of course, we find good auguries because the policy
makers have been found exploring ways for implementing the marketing principles
but till now, the efforts are at the very nascent stage. It is high time that the public
sector commercial banks conceptualize innovative marketing for bringing the banking
system on the rail.

Bank Marketing

The first thing is that the future of bank marketing is gonna be fabulous. If you are
thinking to go for field than you must...You can study the charts how it raised since
last 5 years and you will he impressed. In past bank were not in competition with each
other in India but now they are and that’s where bank marketing is coming up...e.g. In
Ahmadabad ICICI rose by 70% in terms of advancing loans to local public...Sales
guys are doing very well., This is going to rise until 80% of Indians are not having
credit cards.. Compare the banking to developed countries and you will find bank
marketing in India to be great.

The bank of the future has to be essentially a marketing organization that also sells
banking products. New distribution channels are being used; more & more banks are
outsourcing services like disbursement and servicing of consumer loans, Credit card
business.
Direct Selling Agents (DSAs) of various Banks go out and sell their products. They
make house calls to get the application form filled in properly and also take your
passport-sized photo. Home banking has already become common, where you ~an
order a draft or cash over phone/internet and have it delivered horn. ICICI bank was
the first among the new private banks to launch its net banking service, called Infinity.
It allows the user to access account information over a secure line, request cheque
books and stop payment, and even transfer funds between ICICI Bank accounts.
Citibank has been offering net banking to its Suvidha program to customers.

Products like debit cards, flexi deposits, ATM cards, personal loans including
consumer loans, housing loans and vehicle loans have been introduced by a number of
banks.

Public Sector Banks like SBI have also started focusing on this area. SBI plans to
open 100 new branches called Personal Banking Branches (PBB) this year. The PBBs
will also market SBI's entire spectrum of loan products: housing loans, car loans,
personal loans, consumer durable loans, education loans, loans against share,
financing against gold.

Bank Marketing

The bank of the future has to be essentially a marketing organization that also sells
banking products. New distribution channels are being used; more & more banks are
outsourcing services. ICICI bank was the first among the new private banks to launch
its net banking service, called Infinity.

Products like debit cards, flexi deposits, ATM cards, personal loans including
consumer loans, housing loans and vehicle loans have been introduced by a number of
banks.

Public Sector Banks like SBI have also started focusing on this area. SBI plans to
open 100 new branches called Personal Banking Branches (PBB) this year. The PBBs
will also market SBI's entire spectrum of loan products: housing loans, car loans,
personal loans, consumer durable loans, education loans, loans against share,
financing against gold.

CONCLUSION

Banking sector has undergone various changes after the new economic
policy
based on privatization, globalization and liberalization adopted by
government of India. Introduction of asset classification and prudential
accounting norms, deregulation of interest rate and opening up of the
financial sector made Indian banking sector competitive. Encouragement
to foreign banks and private sector banks increased competition for all
operators in banking sector. Banks in India prior to adoption of new
economic policy was protected by government and was having assured
market due to almost state monopoly in banking sector. However, under
the new environment, Indian banks needs to reinvent the marketing
strategy for growth. In India geographical development is not even
throughout the country, there are fully fledged urban areas covering the

Bank Marketing

metropolitan cities and other big cities. On the other hand there are under
developed rural areas too. For effective bank marketing different
approach for different areas is required. In urban areas customer services
is of paramount importance as the level of literacy and therefore
awareness of the people is more. Also technology based marketing would
have higher degree of success due to typical urban life style of the people.
Universal banking providing all financial service under roof will have
more success in urban areas. In the rural areas for bank marketing
personalized banking will
go in long way. Also banks need to offer innovative tailor made deposits
and advances products to suit individual customers. Delivery of advances
of right amount and at right time is essential in rural marketing.

QUESTIONNAIRE

1. Can you briefly explain something about Bank Marketing?

2. In the field of marketing where does their bank stand?

3. What types of product and services are provided by their
bank?

4. What is the marketing mix at ICICI bank?

5. In banking sector who are their competitors?

6. What are their future strategies to attract their
customers?

7. Are the customers satisfied with the services provided by?

Bank Marketing

the bank?

8. What are social and development initiatives taken by ICICI
bank?

Case Study

Corporation Bank raises interest rates

Following the trend of the biggies in the sector, Corporation Bank has finally decided
to raise its interest rates. The main ones have been raised by 50 basis points.

The bank in a statement filed with the Bombay Stock Exchange said, "Corporation
Bank has revised its benchmark prime lending rate (BPLR) from 12 per cent to 12.50
per cent with effect from August 2, 2010."

This is post the rate increase of Punjab National Bank (PNB) and Union Bank of
India. The two revised their BPLR rates. They did so after the apex bank, the Reserve
Bank of India (RBI) decided to raise the bar for the key rates.

While PNB upped its rate to 11.75 per cent from earlier figure of 11 per cent from
August 1, Union Bank did that by increasing it to 12.25 per cent from the earlier
figure of 11.75 per cent. This will be effective from August 4.

Bank Marketing

It is now expected that the other banks will follow the same path, thus reducing the
money supply in the market.

ICICI Bank and HDFC Bank have also raised their rates.

ICICI Bank Launches Platinum Identity Credit Card
Submitted by Harish Dhawan on Fri, 05/16/2008 -

ICICI Bank, India’s biggest private sector bank, has made announcement about the
launching of its ‘ICICI Bank Platinum Identity Credit Card,’ which will target the
discerning and wealthy customers in order to meet their developing requirements,
with a focus on travel as well as lifestyle.

The card offers up a high value scheme, as it brings together shopping, travel and
golfing privileges together with a powerful rewards program and distinguished service
benefits.

The bank would charge a nominal fee on an annual basis, and the card has a credit
limit of Rs 2.5 lakh plus.

Sachin Khandelwal, head- cards product group, ICICI Bank said, “This card is
launched keeping in mind the fact that our customers have matured and demanding
more exclusive offers. We will offer our customers value and privileges which are,
the best in the industry. Keeping in line with the changing lifestyle of our customers,

Bank Marketing

the Platinum Identity product has been designed to make cardholders feel truly special
as well as to meet their evolved needs specially related to travel and lifestyle. This is a
global offering at a truly competitive price point.”

The different features of the card include accelerated rewards program, exclusive
rewards catalogue, an influential air mile conversion option and travel advantages that
comprise Rs 10 million air accident insurance and complete fuel surcharge waiver
across pumps.

Besides the card also offers a full-fledged concierge service, named i-Assist, which
will address the lifestyle needs of the cardholders.

BIBLIOGRAPHY

Banking Theory Law and Practice, Dr. S. Guruswamy.

Marketing In Banking & Insurance, N.V Maroo.

Webliography

 www.google.com
 www.rbi.org.in

 www.topnews.in

Bank Marketing

 www.wikiepedia.com

 www.banknetindia.com

Bank Marketing: An Analysis

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