Banking Services Marketing

    

Introduction 

    Banks are the most significant Bodies in the Indian financial market. Dominated by public sector Banks, the Industry has so far acted as an efficient partner in the growth and the development of the country.

    Size of the banking sector has gone up over six times from Rs.5,984 bn

    in 1995 to over RS.36,105 bn in 2006.  

This transformation has been largely brought about by:

liberalization and economic reforms.

Increased Competition from Domestic & foreign Banks.

More Services Offered e.g. Credit cards, Insurance, Foreign Currency loans and Investment Banking.

Increase in FDI from 49% to 74% for Private banks.

Increase in Retail Finance – Consumer Credit

    

Banking Industry : Overview  

First bank established in 1786 named As ‘General Bank Of India’.

In 1920 ,three Presidency banks merged to form ‘Imperial Bank of India’. Post Independence this

bank was named as SBI in year 1955.

Post liberalization reforms, we have approximately:

- 222 Commercial Banks

- 28 Public sector banks

- 29 Private Banks

- 31 Foreign banks

With a combined network of more than 60,000 branches and 17,000 ATMs across the Country.    

Major Players in Banking sector 

Indian Banks 

ICICI BANK

HDFC

State Bank of India

Punjab National Bank

AXIS bank

Corporation bank

IDBI

Bank Of Baroda

  

Foreign Banks HSBC

Standard Chartered Bank Barclays Bank

Deutsche Bank

CitiBank

Bank of America

    

4 I’s of BANKING 

Intangibility

  - No physical Attribute to touch, feel or sense any service.

Inseparability

  - Cannot be separated from Creator-Seller of the Services.

Inventory/Perishability

  - Cannot be stored, saved and then used later.

Inconsistency/Variability

  - Different customers may get different levels of services

    

PEST ANALYSIS 

o Political/legal environment Analysis

 

o Economic environment Analysis

 

o Social environment Analysis

 

o Technological environment

Analysis

    

Political/legal environment 

o Government and RBI policies

o Declaration of measures like waiver of short-term agricultural loans, to attract the farmer’s votes.

o Exploitation of various banks in the cooperative sector, open and run by the politicians.

o Chairmen of the various banks appointed by the govt.

 

Various policies are framed by the RBI for better control over the banks. 

    

Economic environment 

Existence of banking in one form or the other from time to time.

Commencement of the present era in banking with establishment of bank of Bengal in 1809 under the government charter and with government participation in share capital.

 

Every year RBI declares its 6 monthly policy and accordingly the various measures and rates are implemented which has an impact on the banking sector. 3

 

Union budget affects the banking sector to boost the economy by giving certain concessions or facilities. For e.g. encouragement of the savings in the Budget, relaxation of the FDI limits.

    

      Social environment 

Nationalization of the banks in 1969 –

Only big business houses and the effluent sections of the society getting benefits of banking in India 

To adopt the social development in the banking sector and speedy economic progress, consistent with social justice.

 

Help economically weaker section of the society and provide need-based finance to all the sectors of the economy with flexible and liberal attitude.

    e.g. various types of loans to farmers, working women, professionals, traders, education loans, housing loans, consumer loans etc.  

Banks having big clients or big companies have to provide services like personalized banking to their clients.

 

Banks have changed the culture of human life in India and have made life much easier for the people.    

Technological environment 

Much important and wider role of technology in bank’s internal control mechanisms and services offered by them.

 

Change of the concept of ‘branch banking’ to ‘anywhere banking’.

 

An era of ‘cashless society’ with ‘electronic-purse’.

 

Use of SMS and Internet as major tool of promotions and utility to customers.

 

Simplified operations and customer handling.

 

Home banking and Internet banking.

 

All these technological changes have forced the bankers to adopt Customer-Based Approach instead of Product- Based Approach.    

7 P’S OF  BANKING SECTOR

    

PRODUCT MIX 

ATM Network

7-Day Banking

Telebanking

iConnect-Internet Banking

 

It includes all different product lines a company offers to its customers. 

Savings Account

    

Rewards

Dial-A-Draft

Credit Limit Increase

24-Hour ATMs

Concession on Personal Remittances

Overdraft Facility

Free ATM Card

Other Features

 

Credit Cards

    

PRICE MIX 

It is nothing but the interest rates charged by the different banks. 

ATM Card Issue  

Free – 2 ATM cards issued free if it joint account  

Add – on Card  

RS. 100 – Beyond 2 cards  

Duplicate Card  

Rs. 100 

    

Other General Charges 

   

Current Account  

Savings Account

   

Transaction Charges  

NIL  

NIL  

Charges for issue of Cheques book  

NIL  

NIL  

Issue of duplicate statement  

Rs. 25 per page  

Rs. 25 per page  

Account closure  

Rs.100  

Rs.100 

    

The Most Favorable Pricing Strategy    

PLACE MIX 

It is the location analysis for banks branches. Some of the factors affecting the location analysis are :- 

The Trade Area

Population Characteristics

Commercial Structure

Proximity to other convenient Outlets

Real Estate Rates

Proximity to Public Transportation

Location of Competition

Visibility

Access

    

PROMOTION MIX 

It is making the customer more and more aware of the services and benefits provided by the banks.

Different ways of promotion are :- 

Public Relations

Personal Selling

Sales Promotion

Word-of-mouth Promotion

Telemarketing

Internet

    

PEOPLE 

An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organisation wants to obtain a form of competitive advantage. Consumers make judgements and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, aptititude, and service knowledge to

provide the service that consumers are paying for.

    

PROCESS 

The process mix constitutes the overall procedure involved in using the services offered by the bank. A process should be such that the customer is easily able to understand and easy to follow.

 

Let’s take for example the process for application for a car loan.

Now this mainly involves 3 things.

 

Producing of proper documents

Filling up of application form

Paying for the initial down payment.

 

The smaller and simpler the procedure, the better

the process, and the customer will be more satisfied.  

 

    

PROCESS CONT….. 

It Refers to the systems used to assist the organisation in delivering the service.

 

For example:- Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company. 

  

  

PHYSICAL EVIDENCE 

Physical evidence is the overall layout of the place i.e. how the entire bank has been designed. Physical evidence refers to all those factors that help make the process much easier and smoother.

For example, in case of a bank, the physical evidence would be the placement of the customer service executive’s desk, or the location of the place for depositing cheques.

The more the bank does to make the service easier

and better the more satisfied will be the customer. 

    

Service Quality 

Reasons why a customer should be given QUALITY

SERVICES -o Industry is competitive

o Difficult to win back a lost customer

o Most customers don’t complain but just opt out

    

RATER Analysis - Indian Overseas Bank 

Zeithaml, Bitner and Parsuraman 

RELIABILITY 

ASSURANCE 

TANGIBILITY 

EMPATHY 

RESPONSIVENESS    

Reliability 

Ability to perform the promised service dependably and accurately.

“No Excuses” service delivery.

Indian Overseas Bank

Faces stiff competition

Existing customers have faith, loyalty and trust in this bank.

Provide them best and reliable services

For e.g., no person likes to wait to withdraw his/her money. Indian Overseas Bank has ensured that whoever comes in for cash withdrawal will receive his/her cash within five to ten minutes.

  

  

Assurance 

Employee’s knowledge and courtesy and the ability of the firm and its employees to inspire trust and confidence.

Indian Overseas Bank

Every customer treated with utmost care

Problem solved with great enthusiasm.

Customers are assured

o the money they invest is secure

o the interest rate that is being provided to them is at par or higher.

o the money they have invested will be returned to them as and when required with proper interest.

Empower their customer contact people

Regularly train them in skills to build trust and loyalty between employees and customers.

Assigned some of their staff members to build relationships with the customers by getting to know them personally.

    

            Tangibility 

The appearances of physical facilities, equipments, personnel and communication materials.

Indian Overseas Bank

Entire premise is air-conditioned.

Computerized systems in place - quick, accurate and efficient service can be provided to the customers.

Tables and chairs are conveniently located.

Personnel always have a cheerful and helping behaviour.

Entire place done up in bright colours - customer can immediately feel the warmth and the radiance of the place.

    

Empathy 

The caring, individualized attention the firm provides its customers.

Indian Overseas Bank

Employees are always polite humble and helpful.

Ready to go out of the way.

Regularly holds seminars and training workshops for employees so that they can understand the consumer better and thus serve them better.

  

  

Responsiveness 

The willingness to help the customer and provide him with immediate and fast service.

Indian Overseas Bank

Prompt at providing customers with information and services they seek.

Prompt when it comes to resolving complaints of customers.

The customers, in their feedback form, mentioned this as one of the most important factor that has prompted them to continue with this bank.

    

SERVICE RECOVERY 

Service recovery pertains to the actions taken by an organization in response to a service failure. When a customer complains, he expects 3 types of fairness-  

Outcome Fairness : Charging the customer for a service which was a result of a mistake on bank’s part.

 

Procedural Fairness : No efforts made by any of the employees to help the customer.

 

Interaction fairness : Non-fulfillment of the promises to the customer, lack of apologizing act.

    

Complaint Handling-HDFC Bank 

Even the best firms are going to find themselves facing complaints from customers.

How to diffuse them and then turn them into positive experiences for all involved.

Turned to the airline industry for inspiration.

Maps the customer flow at its branch.

                'May I help you' desk at the reception.

                Efficiency parameters for each sub-process.

Monitors how long it takes for customer transactions as well as complaints to get processed.

‘Moments of truth' surveys modeled after the airline industry's Satisfaction surveys.

Believes that unless they change to create convenience for their customer and add to his brand experience, they will fail to capture the loyalty.

    

COMPLAINT RESOLUTION MODEL   (CRM) of HDFC Bank 

Not as a mere complaint but as an issue.

If there is any complaint either by an employee or a customer in any branch; it will be looked into and resolved in 24 hours.