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- MumbaiDate-

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.

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.

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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.

Services sector:

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It is an important sector of the economy where the banking organizations get

profitable business. The two categories of organizations such as profit-making and

not-for-profit making are found important in the very context.

The banking organizations need to identify the changing needs and requirements of

the services sector. With the frequent use of information technologist and with the

mounting pressure of inflation and competition, we find a change in the hierarchy of

needs.

Household Sector:

This is also constitutes an important sector where different income group have

different needs and requirements. In below figure we find the different segments of

the household sector.

MARKETING MIX FOR BANKING SERVICES

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The formulation of marketing mix for the banking services is the prime responsibility

of the bank professional who based on their expertise and excellence attempt to

market the services and schemes profitably.

The bank professionals having world class excellence make possible frequency in the

innovation process which simplifies their task of selling more but spending less. The

four submixes of the marketing mix, such as the product mix, the promotion mix, the

price mix and the place mix, no doubt, are found significant even to the banking

organizations but in addition to the traditional combination of receipts, the marketing

experts have also been talking about some more mixes for getting the best result. The

“People” as a submix is now found getting a new place in the management of

marketing mix. It is right to mention that the quality of people/employees serving an

organization assumes a place of outstanding significance. This requires a strong

emphasis on the development of personally-committed, value-based, efficient

employees who contribute substantially to the process of making the efforts cost

effective. In addition, we also find some of the marketing experts talking about a new

mix, i.e. physical appearance. In the corporate world, the personal care dimension

thus becomes important. The employees re supposed to be well dressed, smart and

active. Besides, we also find emphasis on “Process” which gravitates our attention on

the way of offering the services. It is only not sufficient that you promise quality

services. It is much more impact generating that your promises reach to the ultimate

users without any distortion. The banking organizations, of late, face a number of

challenges and the organizations assigning an overriding priority to the formulation

processes get a success. The formulation of marketing mix is just like the combination

of ingredients, spices in the cooking process.

MARKETING MIX IN BANKING INDUSTRIES

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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:

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:

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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:

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.

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We find the composition of a family sound, if members of all the age groups are given

due place. Like this, the composition or blending of a service mix is considered to be

sound, if well established and likely to be profitable schemes are included in the mix.

It is against this background that a study and analysis of product portfolio is found

significant. The bank professionals are supposed to perform the responsibility of

composing the same. A sound product portfolio is essential but its process of

constitution is difficult. An organization with a sound product portfolio gets a

conducive environment and successes in increasing the sensitivity of marketing

decisions. The banking organizations need a sound product portfolio and the bank

professionals bear the responsibility of getting it done suitably and effectively.

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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

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

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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.

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

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six stages for the development of the product, such as idea generation, screening of

the concept, assessing of market potential, analyzing the cost, test marketing and final

commercial launching. The bank professionals have to be careful at all the stages so

that whatever the services or schemes are developed are found instrumental in getting

a positive response. The customers and competitors help bank professional

substantially in generating a new idea. The screening of the product concept focuses

on the process of narrowing down the list of the ideas generated to a small number of

concepts.

PROMOTION MIX

In the formulation of marketing mix the bank professionals are also supposed to blend

the promotion mix in which different components of promotion such as advertising,

publicity, sales promotion, word-of-mouth promotion, personal selling and

telemarketing are given due weightage. The different components of promotion help

bank professionals in promotion the banking business.

Advertising:

Like other organizations, the banking organizations also us this component of the

promotion mix with the motto of informing, sensing and persuading the customers.

While advertising, it is essential that we know about the key decision making areas so

that its instrumentality helps bank organization both at micro and macro levels.

Finalizing the Budget:

This is related to the formulation of a budget for advertisement. The bank

professionals, senior executives and even the police planners are found involved in

the process. The formulation of a sound budget is essential to remove the financial

constraint in the process. The business of a bank determines the scale of

advertisement budget.

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Selecting a Suitable vehicle:

There are a number of devices to advertise, such as broadcast media, telecast media

and the print media. In the face of budgetary provisions, we need to select a suitable

vehicle. The latest developments in the print technology have made print media

effective. The messages, appeals can be presented in a very effective way.

Making possible creativity:

The advertising professionals bear the responsibility of making the appeals, slogans,

messages more creative. The banking organizations should seek the cooperation of

leading advertising professionals for that very purpose.

Instrumentality of branch managers:

At micro level, a branch manager bears the responsibility of advertising locally in

his / her command area so that the messages, appeals reach to the target customers of

the command area. Of course we find a budget for advertisement at the apex level but

the business of a particular branch is considerably influenced by the local

advertisements. If we talk about the cause-related marketing, it is the instrumentality

of a branch manager that makes possible the identification of local events, moments

and make advertisements condition-oriented.

Public Relations:

Almost all the organization need to develop and strengthen the public relations

activities to promote their business. We find this component of the promotion mix

effective even in the banking organizations. We 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.

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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

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

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customers, the managers should stress on the main features of the services and the

expected benefits of these services.

Sales Promotion:

It is natural that like other organizations, the banking organizations also think in favor

of promotional incentives both to the bankers as well as the customers. The banking

organizations make provisions for incentives offered to the customers are known as

customers’ promotion. There are a number of tools generally used in the different

categories of organizations in the face of the nature of goods and services sold by

them. The gift, contests, fairs and shows, discount and commission, entertainment and

traveling plans for bankers, additional allowances, low interest financing and

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

business.

As and when the banking organizations offer new services and schemes, the tools of

sales promotion are required to be innovated. This is with the motto of stimulating the

new and old customers. An important thing in the very context is the changing needs

and requirements of customers/prospects. The bank professionals bean outstanding

task of studying the competitors’ strategies which would he them in initiating the

process of innovation. Here it is important to mention the promotional incentives to

the customers would focus on decisions related to the selection of a tool. There are a

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number of considerations to streamline the process. The bank professionals are

supposed to study the market conditions and make necessary suggestions, especially

regarding the incentives.

It is a blending process and bank professional have to be sure the whatever the

provisions, they make are fulfilled on priority basis. More incentives more efficiency

or a vice-versa conditions more efficiency, more-incentives motivate bankers

substantially.

Word-of-Mouth Promotion:

Much communication about the banking services actually take place by word-of-

mouth information which is also known as word-of-mouth promotion. In the banking

industry, we find use of different components of promotion and in the context it is

essential that we also talk about word-of-mouth communication which makes the

process of influencing the prospects effective by sensitizing the word-of-mouth

recommendations.

The persons engaged in communication, the hidden sales force that plays an

incremental role in increasing the demand. An important question regarding the word-

of-mouth communication is related to its intensity of sensitizing the persuasion

process.

The problem before the bank professionals is to identify the persons to be included in

the list of word-of-mouth promoters. It is supposed that a bank manager is well aware

of the social composition of his/her command area. The oral publicity plays an

important role in eliminating the negative comments and improving the services. This

helps you know the feedback which may simplify the task of improving the quality of

services.

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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

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

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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

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.

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THE PEOPLE

Sophisticated technologies, no doubt, inject life and strength to our efficiency but the

instrumentality of sophisticated technologies start turning sour if the human resources

are not managed in a right fashion. Generation of efficiency is substantially

influenced by the quality of human resources. It is against this background that a

majority of the management experts make a strong advocacy in favour of developing

quality people and late, the people management has been include dint he marketing

mix of organizations is general and the service generating organizations in particular.

Not only the public sector commercial banks but almost all the public sector

organization and albeit other government departments, of late, have been facing the

problem of quality people resulting into inefficiency, deceleration in the rate of

overall productivity and profitability or so. The front-line staff are rough and indecent,

the branch managers are helpless and even the bankers have been found involved in

the unfair practices. The public sector commercial banks need to assign on overriding

priority to the development of quality people majority of the management of the

experts have realized the significance of quality people in the development of an

organization and the boardrooms are also found changing their attitudes.

The first task before the banking organizations at the apex level is to overhaul the

recruitment processes. While fixing criteria for selection, they need to assign due

weighted to the ethical values. The education and training facilities are required to be

innovated. The process of identification and inculcation need to be managed carefully.

The foreign banks and the private sector commercial banks reward for efficiency and

at the same time also demotivate the inefficient bankers. This helps them in improving

the efficiency of even the inefficient people. The development of human resources

makes the ways for the formation of human capital. Incentives, of course, inject

efficiency and the organizations offering more incentives succeed in motivating the

people.

Having better and cost-effective control over operations.

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Enriching the job content of employees at all level (by reducing the drudgery

of mundane operations and increasing the analytical content of their work).

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

environment.

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

Automated processing of back-office operations like processing of forms,

policy customerization and product selection, pricing and preparation of

quotations, etc.

Computer assisted telephone and intelligent voice processing for customer call

handling, new business marketing or handling after office hours enquires.

Image processing for documents storage and retrieval, folder management (or

all documents related to a customer), and workflow management for the

movement of documents with the bank.

Artificial intelligence and expert systems for complex decision-making like

the appraisal of the creditworthiness of clients, designing of innovative

instruments and strategy formulation.

Relational Database Management System (RDBMS) for the systematic use of

information which would facilitate the cross-selling of products.

Electronic Data Interchange (EDI) for company-wise communication and

inter-connection of systems for the benefit of both the bank’s MIS and the

customer.

Office Management Systems for accounting and administrative support.

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All the above systems should be “client-based systems” and not “line-of-business

systems” since these would provide better marketing and service to clients, facilitate

cross-selling and customerization of schemes and hence, a better packaging for the

product. This would help Indian banks “thing customer”.

All these would, thus, help in the effective management of time. Recourse to

mechanized systems like ledger posting machine, cash counting machine and cheque

sorting machine would result in reduction in the number of tedious and routine jobs to

be handled manually saving time for the people to focus on the customer.

STRATEGIES FOR EFFECTIVE BANK MARKETING IN INDIA

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Introduction:

Since the inception of globalization in India, banking sector has undergone various

changes. Introduction of asset classification and prudential accounting norms,

deregulation of interest rate and opening up of the financial sector made Indian

banking sector competitive. Encouragement to foreign banks and private sector banks

increased competition for all operators in banking sector. The protective regime by

the authority is over. Indian banks are exposed to global competition. Even

competition within the country has increased manifold. The almost monopoly position

enjoyed by the public sector banks of India is no more existence. Under this

development Indian banks needs to reinvent the marketing strategy for growth.

The spread of the bank in Indian rural and semi urban areas are highly different from

state to state and region to region. Many states have fewer networks of bank branches

in the rural areas. Under such scenario different marketing approach for different

areas is required. If the bank follows the same marketing strategy for all areas the

success would be difficult.

Marketing approach for urban area:

The urban areas of India are developed taking into account all parameters of

development. The level of income of the people, the literacy rate and level of

education as well as awareness of the people about rights of the customer are higher

than that of the rural and even semi urban areas. Thus here for effective bank

marketing different approach is necessary than that of rural areas.

The marketing strategy should be based on customer service and the use of modern

technology in banking. Under competitive environment for the success of the

business, better customers and retaining existing customers is possible only with

customer service.

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Use of modern technology in urban areas will also go long way for marketing of

banking services. Technology based service like credit card, debit card, ATM;

anywhere banking, internet banking, and mobile banking are necessary for urban

areas. This is because it enables customers to perform banking transactions at their

convenience. Business hours of a bank are also an important factor for urban banking.

India many private sector banks, especially co-operative banks and now even some of

the public sector banks have also started this practice and they find it successful. To

attract business and wholesale customers, banks need to adopt technology based

product and service which is suitable to such class of customer. For instance RTGS,

collection of out station cheques, issuing the cheques at par at any branch in the

country, cash management facility, DD boutiques etc. are necessary.

Another strategy for effective marketing is bank need to change the focus from the

traditional banking to universal banking. In urban areas the extend and variety of

economic activities demands that one institution should meet all financial need of a

customer. Under such an expectation of people universal banking would prove

successful approach for bank marketing. The term ‘universal banking’ in general

refers to the combination of commercial banking and investment banking, i.e.,

issuing, underwriting, investing and trading in securities.

A universal bank is a supermarket for financial products. Under one roof, corporate

can get loans and avail of other handy services, while individuals can bank and

borrow.

For increasing customer base and retention of the existing cliental universal banking

approach is effective strategy. Universal banking offers number of benefits to

customers as well s the banks. For instance, economies of scale arise in multi-product

firms because costs of offering various activities by different units are greater than the

costs when they are offered together.

Marketing approach for rural areas:

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Prior to nationalization of banks in 1969, the rural areas were virtually without

banking facility. At that time unorganized sector was dominating in the rural finance.

After nationalization of banks in 1969 branches of the banks were started gradually in

the rural areas also. Today more than 50 percent branches of the banks are found in

the rural areas. However, the distribution of banks in the rural areas is highly uneven.

Here banks have to face competition with the unorganized sector. Moreover the rural

banking is highly regularized activity by the Government in India. Lending as well as

interest rate is regularized. Thus under such environment different marketing

approach is required. For effective rural marketing product development, promotion

and communication is important. All these parameters banks have to balance with

socio-economic factors prevailing in the rural areas. Bank need to innovate product

that could attract the depositors.

Various loan schemes that are suitable for them for getting funds at right time and

also they find convenient to repay. For instance traditional saving bank account may

be given fixed deposit concept that once a particular limit of balance is reached the

funds from saving account is automatically coveted into fixed deposit attracting

higher interest rate.

Banks need to develop some scheme which would attract them to bank with. For

loans and advances products which are suitable to farmers, small traders, small scale

agro based rural industries are already in existence. Banks need to see the how value

addition can be mad to this existing scheme. Banks also needs to tie up with Non

Government Organizations and various Self Help Group for different types of loans,

micro financing etc. This will help the bank for building good image and reputation in

the rural areas over and above the business. Another potential area which can be

explored by the banks in the rural area is retail banking. With the steady increase in

the income of the rural people there is ample scope for retail loan products like

housing loans and loan for consumer durables.

Conclusion:

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Banking sector has undergone various changes after the new economic policy based

on privatization, globalization and liberalization adopted by Government of India.

Introduction of asset classification and prudential accounting norms, deregulation of

interest rate and opening up of the financial sector made Indian Banking sector

competitive. Encouragement to foreign banks and private sector banks increased

competition for all operators in banking sector. Banks in India prior to adoption of

new economic policy was protected by Government and was having assured market

due to almost state monopoly in banking sector. However, under the new

environment, Indian banks needs to reinvent the marketing strategy for growth. In

India geographical development is not even throughout the country, there are full-

fledged urban areas covering the metropolitan cities and other big cities. On the other

hand there are underdeveloped rural areas too. For effective bank marketing different

approach for different areas is required. In urban areas customer services is of

paramount importance as the level of literacy and therefore awareness of the people is

more. Also technology based marketing would have higher degree of success due to

typical urban life style of the people. Universal banking providing all financial service

under one roof will have more success in urban areas. In the rural areas for bank

marketing personalized banking will go in long way. Also banks need to offer

innovative tailor made deposits and advances products to suit individual customers.

Delivery of advances of right amount of right amount and at right time is essential in

rural marketing.

TECHNOLOGY IN BANKING

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Technology is proving to be a vital tool in enhancing banking activities around the

globe. The advent of ATMs and Internet Banking are key pointers to this. The role of

an information system can in no way be underestimated. The expanding role of

information systems have aided banks achieving Anytime, Anywhere and Anyhow

banking. The improvement in telecommunication infrastructure is redefining the was

banking is being conducted.

Information Technology made its presence felt in banks in India a few decades ago.

However, it is still being used as support systems. Most of the software packages used

in bank work on stand-alone systems and are not integrated.

Banks in India need to have an integrated system that takes care of all the front-office

and back-office operations. However, Indian banks should not be content with the

integration of their activities. Banks in advanced countries are planning to have global

electronic banking. Electronic banking or e-Banking is a generic name for a range of

technologies that allow the electronic exchange of information related to banking

transactions.

As Electronic Networks become more robust and widespread, they are beginning to

attract the attention of retail banks – like ATMs and phone banking. However they

tend to be viewed merely as one more cheap distribution channel. Accordingly banks

are replicating the branch banking experience online, even to the extent of creating 3D

virtual branches for their customers to navigate through. Such an approach is

characteristic of early attempts to use new technology platform.

EVOLUTION OF E-BANKING

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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 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

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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.

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.

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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

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.

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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.

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.

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Roadblocks

While Internet banking is a potential and powerful delivery channel, it has failed to

make a significant impact due to a variety of reasons. RBI in its report, ‘Trend and

progress of Banking in India, 2001-02, says Internet banking has failed to take off due

to a combination of psychological, technological and socio-economic factors. Further,

the report states that additional hurdles relating to legal and infrastructural problems

have also affected growth.

Although the government has made considerable progress in initiating a trust

environment, with some Public Certification Authorities (PCA) already licensed to

operate, the adoption of trust technology is still a daunting factor for many users.

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

services.

Says Shende, “The compelling restraint for the user is the fear of security breaches.

As long as the perceived notion that the Internet is not a safe place to conduct

financial transactions prevails, large scale adoption will be challenging.” In addition,

the low penetration of PCs and access to the Internet are crucial issues which act as

roadblocks in the adoption of Internet banking.

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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.”

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.

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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 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.

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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.

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

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fundamental change in the functional responsibilities of the public sector commercial

banks. Here it is pertinent to mention that nationalization was with the motto of

improving the quality of services but the public sector commercial banks started

disappointing the masses. Of late, the quality of services is so poor that customers in

general are found dissatisfied. This makes it essential that the Reserve Bank of India

and the policy makers of the public sector commercial banks think in favour of

conceptualizing modern marketing principles which would bring a radical change in

the process of quality upgradation.

The first task before the public sector commercial banks is to formulate the marketing

mix which suits the national socio-economic requirements. They need to synchronies

the core and peripheral services in such a way that product attractiveness is increased

substantially. To be more specific the peripheral services need frequent innovation,

since this would be helpful in excelling competition. The personal selling and public

relations activities need an intensive care. It is pertinent to mention that the leading

foreign banks have been found promoting telemarketing and the public sector

commercial banks need to make it possible. Since we have world class 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

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innovative marketing principles.

In view of the above, it is right to mention that in the face of new perception of

quality developed by the foreign and private sector commercial banks, the public

sector commercial banks have no option but to improve the quality of services. The

marketing principles bear the efficacy of initiating qualitative improvements. It is

against this background that we go through the problem of bank marketing. Of late

the foreign banks have been found promoting the use of sophisticated information

technologies. This makes it essential that we realize gravity of the situation and make

possible a rational use of technologies which is not to aggravate the problem of

retrenchment. The marketing principles would be helpful in making an assault on the

multi-dimensional problems. Of course, we find good auguries because the policy

makers have been found exploring ways for implementing the marketing principles

but till now, the efforts are at the very nascent stage. It is high time that the public

sector commercial banks conceptualize innovative marketing for bringing the banking

system on the rail.

The first thing is that the future of bank marketing is gonna be fabulous. If you are

thinking to go for field than you must...You can study the charts how it raised since

last 5 years and you will he impressed. In past bank were not in competition with each

other in India but now they are and 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

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the first among the new private banks to launch its net banking service, called Infinity.

It allows the user to access account information over a secure line, request cheque

books and stop payment, and even transfer funds between ICICI Bank accounts.

Citibank has been offering net banking to its Suvidha program to customers.

Products like debit cards, flexi deposits, ATM cards, personal loans including

consumer loans, housing loans and vehicle loans have been introduced by a number of

banks.

Public Sector Banks like SBI have also started focusing on this area. SBI plans to

open 100 new branches called Personal Banking Branches (PBB) this year. The PBBs

will also market SBI's entire spectrum of loan products: housing loans, car loans,

personal loans, consumer durable loans, education loans, loans against share,

financing against gold.

The bank of the future has to be essentially a marketing organization that also sells

banking products. New distribution channels are being used; more & more banks are

outsourcing services. ICICI bank was the first among the new private banks to launch

its net banking service, called Infinity.

Products like debit cards, flexi deposits, ATM cards, personal loans including

consumer loans, housing loans and vehicle loans have been introduced by a number of

banks.

Public Sector Banks like SBI have also started focusing on this area. SBI plans to

open 100 new branches called Personal Banking Branches (PBB) this year. The PBBs

will also market SBI's entire spectrum of loan products: housing loans, car loans,

personal loans, consumer durable loans, education loans, loans against share,

financing against gold.

Bank Marketing

CONCLUSION

Banking sector has undergone various changes after the new economic policy based on privatization, globalization and liberalization adopted by government of India. Introduction of asset classification and prudential accounting norms, deregulation of interest rate and opening up of the financial sector made Indian banking sector competitive. Encouragement to foreign banks and private sector banks increased competition for all operators in banking sector. Banks in India prior to adoption of new economic policy was protected by government and was having assured market due to almost state monopoly in banking sector. However, under the new environment, Indian banks needs to reinvent the marketing strategy for growth. In India geographical development is not even throughout the country, there are fully fledged urban areas covering the metropolitan cities and other big cities. On the other hand there are under developed rural areas too. For effective bank marketing different approach for different areas is required. In urban areas customer services is of paramount importance as the level of literacy and therefore awareness of the people is more. Also technology based marketing would have higher degree of success due to typical urban life style of the people. Universal banking providing all financial service under roof will have more success in urban areas. In the rural areas for bank marketing personalized banking willgo 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.

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QUESTIONNAIRE

1. Can you briefly explain something about Bank Marketing?

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

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

4. What is the marketing mix at ICICI bank?

5. In banking sector who are their competitors?

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

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

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

Bank Marketing

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.

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.

Bank Marketing

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

ICICI Bank, India’s biggest private sector bank, has made announcement about 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, 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.

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BIBLIOGRAPHY

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

Marketing In Banking & Insurance, N.V Maroo.

Webliography

www.google.com

www.rbi.org.in

www.topnews.in

www.wikiepedia.com

www.banknetindia.com

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