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 Foreign
• ICICI BANK Banks
• HDFC  HSBC
• State Bank of India
• Punjab National Bank  Standard Chartered
• AXIS bank Bank
• Corporation bank  Barclays Bank
• IDBI  Deutsche Bank
• Bank Of Baroda
 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
Political/legal environment Analysis

Economic environment Analysis

Social environment Analysis

Technological environment Analysis

Political/legal environment

 Government and RBI policies

 Declaration of measures like waiver of short-term
agricultural loans, to attract the farmer’s votes.
 Exploitation of various banks in the cooperative sector,
open and run by the politicians.
 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

It includes all different product lines a company offers to

its customers.

Savings Account
ATM Network
7-Day Banking
Telebanking
iConnect-Internet Banking
 Credit Cards
Rewards
Dial-A-Draft
Credit Limit Increase
24-Hour ATMs
Concession on Personal Remittances
Overdraft Facility
Free ATM Card
Other Features
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  NIL NIL

Charges
Charges for issue of  NIL NIL
Cheques book

Issue of duplicate  Rs. 25 per page Rs. 25 per page

statement
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.
 
1.Producing of proper documents
2.Filling up of application form
3.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 -
– Industry is competitive
– Difficult to win back a lost customer
– Most customers don’t complain but just
opt out
RATER Analysis - Indian Overseas
Bank
Zeithaml, Bitner and Parsuraman
Zeithaml, Bitner and Parsuraman

RELIABILITY

RESPONSIVENESS ASSURANCE

EMPATHY TANGIBILITY
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
– the money they invest is secure
– the interest rate that is being provided to them is at par or
higher.
– 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.