Banking is a very big service industry in India. Before early 1990s banks used to operate in an isolated and customer unfriendly manner. They had no understanding of marketing and the very need of it. In subsequent years, due to a continuous process of economic reforms, deregulation, liberalization, and many other policy decisions, Indian banks witnessed an unprecedented change in their operational environment. Initially, Indian banks had to face some challenges such as uncertain commercial viability, lack of cost efficiency, absence of any directed marketing strategy, etc. They had to compete with new players in the market like foreign banks and their Indian subsidiaries, which offered new age technology and cost effective services. This caused an absolute shift in Indian banking market. The perspective changed from The Seller to The Buyer and customer became the key focus area, even for the nationalized banks.
These days, bankers completely focus on their customers. Banks are actively putting serious efforts in marketing their products and services. To retain good customers and to anticipate their future demands, banks look forward to various marketing techniques and approaches today.
Deryk Weyer of Barclay’s Bank gave the most comprehensive definition of bank marketing (Mehrotra) as, “a process, consisting of identifying the most profitable markets now and in future; assessing the present and the future needs of the customers; setting business development goals and making plans to meet them; and managing various services and promoting them to achieve the plans – all in the context of a changing environment in the market.”
Along with the need of marketing in banks, the need for a systematic approach to marketing cannot be overstressed. The basic approach of bank marketing in India involves (Mehrotra):
- Identifying current and future profitable markets
- Identifying customers’ financial needs and wants
- Setting services to fulfill those needs
- Setting pricing for the services
- Advertising to promote services for existing and prospective customers
Marketing in Indian banks is centered on following 6 “P’s” (Shodhganga):
Product. This includes goods and services offered by the banks to satisfy various customer needs. Bank products can be categorized into three groups namely, core products, formal products, and augmented products.
Core products define the bank’s normal business such as Savings Bank Account, Current Account, Term deposit, Recurring deposit, etc. These are the basic tools of commercial banking and do not have strong marketing content.
Second is the formal product, which is a combination of two or more core products. Banks use these products as strong marketing tools as they cater to specific customer needs. KCC accounts of Corporation bank, unfixed deposits of Citibank are examples of such formal products.
Augmented products are a further modification of formal products with some value addition. These products have some ancillary benefits attached. A very good example for an augmented product is ATM card. These days, most of the banks give ATM card free of cost when you open a savings account.
Today, banks operate by using a smart matrix of core-formal-augmented products to offer products & services having strong marketing potential.
Price. This includes interest, fees, and commission charged by the banks and the interest paid by them. In India, banks decide their products but the RBI or the Government of India decides their price. However, some policies of RBI have brought substantial deregulation, which has given freedom to banks to evolve their pricing strategy. Although complete deregulation is still to materialize, price is becoming an important tool for bankers for marketing. The banks have to frame smart pricing strategies, which can attract the buyers and ensure a healthy topline for banks themselves.
Promotion. If a product or service is available with other banks too, then it is important for a bank to persuade customers to associate with itself. To make the customers aware about their products and services, banks rely on promotions. This includes offline advertisements, promotional offers, personal selling, and online marketing tools such as direct emailing, PPC ads, etc.
Place. This refers to the establishment and functioning of a bank’s branches and offices to get the right product at the right place at the right time. For buyers, proximity of a bank plays an important role in its selection. Apart from expanding their branch network, banks in India, are adopting various strategies related to place such as establishing extension centers or satellite offices, special counter of certain customers such as NRI’s, senior citizens, mobile office, home banking and installation of ATM machines, etc. The latest strategy adopted by the banks to overcome the limited branch network is strategic alliance. An example of such strategic alliance is a recent alliance between Global Trust Bank and Vijaya Bank.
Process. It includes all the organizational activities and processes, which gives uniqueness to the bank products. The uniqueness of a product or service is important to acquire competitive advantage over peers. Some examples of processes used by a bank to deliver quality services are standardization of core banking procedures, customization as per consumer choice, speeding delivery of services, reducing paperwork, etc.
Physical evidence. Bank products are intangible. Physical evidence can be used as a strong marketing tool by making these intangible services tangible. Such physical evidence includes upkeep of branches and their interior décor, customized designing of bank stationary, attractively designed brochure or catchy tag lines. For example, punch line of SBI bank says, “With you all the way.” Customers connect and relate to such punch lines easily.
The role of marketing in banking is continuously changing due to increasing awareness among customers, demand for quality services, growing competition and technological advancement in the field. This is necessitating continuous innovation in marketing the Indian banking sector. Aforesaid six elements are not of much use in isolation, but with the right blend, they can give excellent results.
Shodhganga. “Marketing Strategies of the Banking Industry.” 21 March 2017 http://shodhganga.inflibnet.ac.in/bitstream/10603/562/10/10_chapter%202.pdf.
Mehrotra, Shyamji. “Marketing of Banking Services.” 21 March 2017 http://www.scribd.com/doc/19639288/Marketing-of-Banking-Services-1.
Bhattacharyay, Biswa N. “Marketing Approach to Promoting Banking Services.” April 1989. 21 March 2017 http://www.vikalpa.com/pdf/articles/1989/1989_apr_jun_35_41.pdf.
College of Agriculture Banking. “Marketing of Banking Services in Rural Areas.” College of Agriculture Banking. 21 March 2017 http://cab.org.in/Lists/Knowledge%20Bank/DispForm.aspx?ID=19.
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