Marketing in Banking Services Final

Marketing In Banking Services
EXECUTIVE SUMMARY
In today’s business there are multi dimensional problems &

opportunities. The subject matter of marketing is drawing more & more
attention from companies, institutions & nation. Business has recognised
the main difference between selling & marketing & they are now
convinced to give more attention & importance to marketing. Pricing,
advertising & marketing research are being used to win over consumer
resistance.
The concept of bank marketing assumes new weights &

dimensions. It consist of identifying the most profitable markets now & in
future, assessing the present & future needs of the customer, setting
business development goals, making plans to meet them & managing the
various services & promoting them to achieve the plans.
Marketing of banking services is concerned with Product, Place,

Contribution, Pricing & Promotion decisions in the changing, socio-
economic & business environment. It means organizing right activities &
programmes at the right place, at the right time, at the right price with right
communication & promotion.
Banking is one Industry where there is no middlemen serving the

customer. The bank deals with customer directly. However with
liberalization & globalization of the economy, middlemen are gradually
emerging in the banking industry. Foreign bank & new private bank like
City bank, Global Trust Bank & ICICI Bank are offering their franchise in
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the marketing their services. This has introduced the middlemen in

marketing of banking services.
In banking services, the marketing strategies starts with developing

customer profiles by which the bank can collect & analyse all relevant
information on customers. The preference & prejudices of the customer
are identified with the help of these profiles & this enables the bank to
enhance its marketing activities. In order to satisfy customer needs new
service may be introduced or the existing services of the bank may be
modified. Customer satisfaction plays an important role in banking
services.
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1. EVOLUTION OF THE MARKETING CONCEPT
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. That was
followed by focus on the development of a sales culture.
Although all the elements of the marketing concept – customer
satisfaction, profit integrated framework and social responsibility – will
remain important, customer satisfaction must receive the greatest
emphasis in the years ahead. The chief concerns of most bank executives
still focus on legal and regulatory issues, according to most surveys.
Community banks are particularly concerned with eliminating barriers that
give unfair advantages to financial services competitors, such as credit
unions. However, another concern pertains to technology: keeping
nonblank competitors out of the payment system.
1.1. Bankers Identify Near-Team and Long Term Concerns
1991 2015
Maintaining profitability
Service quality
Credit Portfolio Management
Maintaining profitability
Service Quality
Market / customer focus
Regional Economy
Operations/systems/technology
Cost Management / Expense
Credit portfolio management
reduction
Productivity improvement
Declining Earnings/ more failures
Investment to stay competitive
Market / customer focus
Stock market value
Capital adequacy
Asset/liability management
Stock market value
Electronic Banking
Industry Overcapacity
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2. BANK MARKETING
“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 is an 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:
1) The bank cannot exist without the customers.
2) The purpose of the bank is to create, win, and keep a customer.
3) The customer is and should be the central focus of everything the
banks does.
4) 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
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effective way. Service facilities also should be designed for

customers’ convenience.
5) Ultimate aim of a bank is to deliver total satisfaction to the
customer.
6) 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.
Marketing is much more than just advertising and promotion; it is a

basic part of total business operation. What is required for the bank is the
market orientation and customer consciousness among all the personal of
the bank. For developing marketing philosophy and marketing culture, a
bank may require a marketing coordinator or integrator at the head office
reporting directly to the Chief Executive for effective coordination of
different functions, such as marketed research, training, public relations,
advertising, and business development, to ensure customer satisfaction.
The Executive Director is the most suitable person to do this coordination
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work effectively in the Indian public sector banks, though ultimately the
Chief Executive is responsible for the total marketing function.
Hence, the total marketing function involves the following:

a) Market research i.e. identification of customer’s financial
needs and wants and forecasting and
researching future financial market
needs and competitors’ activities.
b) Product Development i.e. appropriate products to meet
consumers’ financial needs.
c) Pricing of the service i.e., promotional activities and
distribution system in accordance with
the guidelines and rules of the Reserve
Bank of India and at the same time
looking for opportunities to satisfy the
customers better.
d) Developing market i.e., marketing culture – among all the
customer-consciousness ‘Personnel’ of
the bank through training.
Thus, it is important to recognize the fundamentally different

functions that bank marketing has to perform. Since the banks have to
attract deposits and attract users of funds and other services, marketing
problems are more complex in banks than in other commercial concerns.
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3. 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,
(g) Market research of competitive service products,
(h) Customer’s opinion study,
(i) Customer profile study, and
(j) Market share analysis.
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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4. MARKETING CONCEPTS – ITS APPLICATION

TO BANKING
When apply marketing to the banking industry, the bank marketing

strategy can be said to include the following:
i. A very clear definition of target customers.
ii. The Development of marketing mix to satisfy customers at a profit
for the bank.
iii. Planning for each of the ‘source’ markets and each of the ‘user’
markets (A bank needs to be doubly market – oriented – it has to
attract funds as well as users of funds and services).
iv. Organization and Administration.
4.1 Consumer Behavior and Segmentation
4.1.1. 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.
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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 its 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.
These concepts can be applied in personal banking by an Indian
Bank. Traditionally, Indian Banks have not had any conscious strategy for
selecting customers from the personal banking area, apart from some
banks which have a geographic concentration strategy such as
concentrating on a particular region or state. These banks will have to
segment the market on certain basis, and identify market segments or
niches which they want to cater to. For example, a bank like SBI may not
be able to cater high income groups (say, managers, professional, NRIs,
etc. who earn above Rs. 4,00,000 p.a. and who want a higher quality of
products / services and who are willing to pay for them), as the services
required by such a profile of customers are entirely different from the kind
of products / services SBI can offer.
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5. Market segmentation in banking services
In Banking Services, the banks are expected to satisfy rural

customers, urban customers, high-earning and low-earning customers,
small-scale and large-scale entrepreneurs and so on. Hence,
segmentation of market is considered to be important.
According to Philip kotlar,’’ market segmentation is the sub-division
of a market into homogenous sub-set of customers where any sub-set
may conceivably be selected on a market target to be reached with a
distinct marketing mix.
SEGMENTATION IN BANKS
(A) (B) (C) (D) (E) (F)

AGRICULTURAL HOUSEHOLD INSTITUTIONAL SERVICE TRADE & INDUSTRIAL
SECTOR SECTOR SECTOR SECTOR COMMERCE SECTOR
(I)Financial (i) Private

Sub-segment Sub- (i) Religious (i)Wholesalers
services sector
segment
(i) 10 acres & (i) Above (ii) Educational (ii) Non- (ii) Retailers (ii) Public
Rs.1 lac financial sector
above
P.A services
(ii)5 to 10 acres (ii)Rs.50,000 (iii) charitable & (iii) Merchant (iii) Co-
to club Exporters operative
Rs.1,00,000 sector
(iii) 2 acres & (iii) Rs.25,000 (iv) Large-
to scale
below
Rs.50,000 sector
(iv) Landless (iv) Rs.25,000 (v) Small-

scale
& below
sector
(v) Above (vi) Tiny
Sector
Rs. 5,000
(vi) Rs.
2,000 to
Rs.5,000
(vii) Below
Rs. 2,000
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5.1 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.
5.2 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
weightage while segmenting.
5.3 Agricultural Sector:-

In the agricultural sector, there are four category rise since the
needs of all the categories cant’s be identical.
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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 organization are supposed to know
and understand the changing requirements of different categories of
farmers.
5.4 Industrial Sector:

The banking organizations subserve 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 cant’s be
uniform.
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The banking organizations are supposed to have indepth
knowledge of the changing needs and requirements of the industrial
segment.
5.5 Services sector:

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

requirements of the services sector. With the frequent use of information
technologist and with the mounting pressure of inflation and competition,
we find a change in the hierarchy of needs.
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5.6 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.
5.7 Household Segment:

The high income group, middle income group, low income group,
substance level group and marginal income group have different hierarchy
of need which influence the level of their expectations.
5.8 Gender Segment:

In the gender segments, we find male and female having different
needs and requirements. The banking organizations are supposed to
identify the level expectations of both sexes.
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Some of the women are housewives and therefore they have

different need and requirements whereas some of them are working ladies
having different needs and requirements.
In the profession segments, find different categories of professions

and therefore find a change in their needs and requirements.
The technocrats, bureaucrats, corporate executives, intellects,

white and blue – collar employees have different needs and requirements
and therefore the banking organizations should know their expectations.
Some of the organizations are known as cultural organizations,
some of them are not for –profit making, some of them are philanthropic
and some of them are related to trade and commerce. The emerging
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trends in the social transformation process determine the hierarchy of
needs.
Markets segmentation thus simplifies the task of understanding the

customers/prospects. The bank professional find it convenient to formulate
and innovate the marketing mix of world class which simplify the process
of excelling competition.
In the Indian perspective where we find agrarian economy

contributing substantially to the transformation of national economy, it is
pertinent that the banking organizations assign due weightage to the rural
sector of the economy where we find tremendous opportunities.
The urbanization is likely to gain the momentum and villages,

outskirts of big towns and cities are to be developed on a priority basis.
Almost all the organizations are to get tremendous opportunities there.
The marketing resources if of innovative nature would make the ways for
capitalizing on the same profitably.
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6. MARKETING MIX FOR BANKING
SERVICES
The formulation of marketing mix for the banking services is the

prime responsibility of the bank professional who based on their expertise
and excellence attempt to market the services and schemes profitably.
The bank professionals having world class excellence make
possible frequency in the innovation process which simplifies their task of
selling more but spending less. The four submixes of the marketing mix,
such as the product mix, the promotion mix, the price mix and the place
mix, no doubt, are found significant even to the banking organizations but
in addition to the traditional combination of receipts, the marketing experts
have also been talking about some more mixes for getting the best result.
The “People” as a submix is now found getting a new place in the
management of marketing mix. It is right to mention that the quality of
people/employees serving an organization assumes a place of
outstanding significance. This requires a strong emphasis on the
development of personally-committed, value-based, efficient employees
who contribute substantially to the process of making the efforts cost
effective.
In addition, we also find some of the marketing experts talking
about a new mix, i.e. physical appearance. In the corporate world, the
personal care dimension thus becomes important. The employees are
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
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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.
6.1 THE PRODUCT MIX:-

The banks primarily deal in services and therefore, the formulation
of product mix is required to be in the face of changing business
environmental conditions. Of course the public sector commercial banks
have launched a number of polices and programmers for the development
of backward regions and welfare of the weaker sections of the society but
at the same it is also right to mention that their development-oriented
welfare programmes are not optimal to the national socio-economic
requirements. The changing psychology, the increasing expectations, the
rising income, the changing lifestyles, the increasing domination of foreign
banks and the changing needs and requirements of customers at large
make it essential that they innovate their service mix and make them of
world class. Against this background, we find it significant that the banking
organizations minify, magnify combine and modify their service mix.
It is essential that ever product is measured up to the accepted
technical standards. This is due to the fact that no consumer would buy a
product which contains technical faults. Technical perfection in service is
meant prompt delivery, quick disposal, presentation of right facts and
figures, right filing proper documentation or so. If computers starts
disobeying the command and the customers get wrong facts, the use of
technology would be a minus point, and you don’t have any excuse for
your faults.
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6.1.1. 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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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.
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 is 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
organsation. 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.
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6.1.2. DESIGNIGN AN ATTRACTIVE PACKAGE
In the formulation of product mix for the banking organization, the

designing of package is found important. In this context, 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 are 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 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.
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6.1.3.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
specially 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 process 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.
6.2. 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.
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6.2.1. 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.
6.2.2. Finalising 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.
6.2.3. 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.
6.2.4. 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.
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6.2.5. 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.
6.2.6. 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. It is not meant that the banking organizations are not required
to advertise but it is meant that the bank executives unlike the executives
of other consumer goods manufacturing organizations focus on public
relations and personal.
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6.2.7. 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 feedback, 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.
6.2.8. 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
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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 opposition to make independent decisions and know all
about. While selling to the less aware customers, the managers should
stress on the main features of the services and the expected benefits of
these services.
6.2.9. Sales Promotion:
It is natural that like other organisations, the banking organizations

also think in favour of promotional incentives both to the bankers as well
as the customers. The banking organizations make provisions for
incentives to the bankers and call this bakers’ promotion. Like this, the
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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 retalitary are to mention a few found instrumental in
promoting the banking business.
As and when the banking organizations offer new services and

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

whatever the provisions, they make are fulfilled on priority basis. More
incentives more efficiency or a vice-versa conditions more efficiency,
more-incentives motivate bankers substantially.
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6.2.10. 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 salesforce who play
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.
It is important that a branch manager has an in-depth knowledge of

his/ her command area and a list of word-of-mouth promoters is prepared.
Organizing dinner, offering to them a gift and seeking their cooperation are
the process to use this tool of promotion. A satisfied group of customers is
considered to be the most successful hidden promoters. A branch
manager showing his/her excellence in improving the quality of services in
his/ her command area, establishing an edge over the services of the
competing banks, promoting LGD marketing (lunch, golf, dinner
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marketing) successds in instrumentalising the word-of-mouth promotion. It
is against this background that this component of the promotion mix is
found getting due place.
In this component of the promotion mix, we find two important

considerations, first the bank professionals are required to make it sure
that the promised services reach to the ultimate users and second, the
word-of-mouth promoters are offered small but new incentives which have
not been offered by their competitors. The list of word-of-mouth promoters
is to be based on a survey result or on the personal experiences of a
branch manager. A revision in the list is made possible as and when
circumstances necessitate so. The innovative peripheral services offered
by the banks are well publicized and the word-of-mouth promoters focus
on the same intelligently.
6.3. 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 subserve the
interests of weaker sections and the backward regions. The public sector
commercial banks in particular are supposed to play developmental role
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with societal approach. It is natural that this specific role of the public
sector commercial banks complicate the problem of pricing.
Pricing policy of a bank is considered important for raising the

number of customers 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 as even more important than the fees charged for the
services. To be more specific when we find a number of domestic and
foreign banks working in the Indian economy, the Reserve Bank of India
bears the responsibility of making the business environment conductive.
The non-banking organizations and foreign banks have been found
attracting customers by offering to them a number of incentives. The
potential customers or investors frame their investment plans in the face of
pricing decisions made by the banking organizations. While formulating
the pricing strategies, the banks have also to take the value satisfaction
variable into consideration. The value and satisfaction can’t be quantified
in terms of money since it differs from person to person, keeping in view
the level of satisfaction of a particular segment, the banks have to frame
their pricing strategies. The policy makers are required to be sure that the
service 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.
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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.
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.
The RBI has to be more liberal so that the public sector commercial
banks make decisions in the face of changing business conditions. There
is no doubt in it that the commercial banks bear the responsibility of
energizing the social marketing, they are also supposed to bear the social
costs. It is also right that the foreign banks have been found making the
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business environment more competitive. These emerging trends
necessitate a close look on the pricing problem. The policy makers find it
difficult to bring a change since the regulations of the RBI make things
more critical. The expenses are not regulated by the RBI and the banking
organizations are forced to increase the budgetary provisions. The
sources of revenue are regulated which complicates the task of bank
professionals. This makes it essential that the Reserve Bank of India, the
Government of India and the banking organizations thing over this
complicated issue with a new vision.
6.4. 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
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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 behavioural 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
have 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.
6.5. THE PEOPLE MIX
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
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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 foreign banks and the private sector commercial banks reward
for efficiency and at the same time also demotivate the inefficient bankers.
This helps them in improving the efficiency of even the inefficient people.
The development of human resources makes the ways for the formation of
human capital. Incentives, of course, inject efficiency and the
organizations offering more incentives succeed in motivating the people.
• Having better and cost-effective control over operations.
• Enriching the job content of employees at all level (by reducing the
drudgery of mundane operations and increasing the analytical
content of their work).
• Improving the quality of decision-making, a must in the fast
changing environment.
6.5.1.Thus, the key focus areas in which information technology can

be employed are:-
• Automated processing of back-office operations like processing of

forms, policy customerization and product selection, pricing and
preparation of quotations, etc.
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• Computer assisted telephone and intelligent voice processing for
customer call handling, new business marketing or handling after
office hours enquires.
• Image processing for documents storage and retrieval, folder
management (or all documents related to a customer), and
workflow management for the movement of documents with the
bank.
• Artificial intelligence and expert systems for complex decision-
making like the appraisal of the creditworthiness of clients,
designing of innovative instruments and strategy formulation.
• Relational Database Management System (RDBMS) for the
systematic use of information which would facilitate the cross-
selling of products.
• Electronic Data Interchange (EDI) for company-wise
communication and inter-connection of systems for the benefit of
both the bank’s MIS and the customer.
• Office Management Systems for accounting and administrative
support.
All the above systems should be “client-based systems” and not

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

Recourse to mechanized systems like ledger posting machine, cash
counting machine and cheque sorting machine would result in reduction in
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the number of tedious and routine jobs to be handled manually saving
time for the people to focus on the customer.
6.6. THE PROCESS MIX
• Flow of activities:
All the major activities of banks follow RBI guidelines. There has to
be adherence to certain rules and principles in the banking operations.
The activities have been segregated into various departments accordingly.
• Standardization:
Banks have got standardized procedures got typical transactions.

In fact not only all the branches of a single-bank, but all the banks have
some standardization in them. This is because of the rules they are
subject to. Besides this, each of the banks has its standard forms,
documentations etc. Standardization saves a lot of time behind individual
transaction.
• Customization:
There are specialty counters at each branch to deal with customers

of a particular scheme. Besides this the customers can select their deposit
period among the available alternatives.
• Number of stores:
Numbers of steps are usually specified and a specific pattern is

followed to minimize time taken.
• Simplicity:
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In banks various functions are segregated. Separate counters exist
with clear indication. Thus a customer wanting to deposit money goes to
‘deposits’ counter and does not mingle elsewhere. This makes procedures
not only simple but consume less time. Besides instruction boards in
national boards in national and regional language help the customers
further.
• Customer involvement:
ATM does not involve any bank employees. Besides, during usual
bank transactions, there is definite customer involvement at some or the
other place because of the money matters and signature requires.
6.7. THE PHYSICAL EVIDENCE MIX
The physical evidences include signage, reports, punch lines, other

tangibles, employee’s dress code etc. The company’s financial reports are
issued to the customers to emphasis or credibility. Even some of the
banks follow a dress code for their internal customers. This helps the
customers to feel the ease and comfort.
Signage:
Each and every bank has its logo by which a person can identify
the company. Thus such signages are significant for creating visualization
and corporate identity.
Tangibles:
Banks give pens, writing pads to the internal customers. Even the
passbooks, chequebooks, etc reduce the inherent intangibility of services.
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7. STRATEGIES FOR EFFECTIVE BANK

MARKETING IN INDIA
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.
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• Marketing approach for urban area:
The urban areas of India are developed taking into account all
parameters of development. The level of income of the people, the literacy
rate and level of education as well as awareness of the people about
rights of the customer are higher than that of the rural and even semi
urban areas. Thus here for effective bank marketing different approach is
necessary than that of rural areas.
The marketing strategy should be based on customer service and
the use of modern technology in banking. Under competitive environment
for the success of the business, better customers and retaining existing
customers is possible only with customer service. Use of modern
technology in urban areas will also go long way for marketing of banking
services. Technology based service like credit card, debit card, ATM,
anywhere banking, internet banking, and mobile banking are necessary
for urban areas. This is because it enables customers to perform banking
transactions at their convenience. Business hours of a bank are also an
important factor for urban banking. India many private sector banks,
especially co-operative banks and now even some of the public sector
banks have also started this practice and they find it successful. To attract
business and wholesale customers, banks need to adopt technology
based product and service which is suitable to such class of customer. For
instance RTGS, collection of out station cheques, issuing the cheques at
par at any branch in the country, cash management facility, DD butiques
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
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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.
Universal banking with focus on retail customers made the ICICI
banks to acquire first position in Indian banking sector. Universal banking
approach is beneficial to bank also. For banks economies of scale relate
to cost-savings through sharing of overheads and improving technology by
jointly providing generically similar groups of services. Since universal
banking basically provides financial services the inputs like manpower,
infrastructure is more or less same. Necessary changes in the inputs can
be made easily. For instance training can be given to staff for providing
different financial services to customers. Moreover the most important
benefit for the bank is that it is useful to increase the fee based income of
the bank. Financial sector passing from lower interest rate regime at
present and added to this the process of disintermediation is affecting the
main and the traditional source of income for the banks i.e. interest
income. All banks are striving hard to increase their fee based income to
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improve their bottom line. Universal banking can help the banks here
positively.
• Marketing approach for rural areas:-
Prior to nationalization of banks in 1969, the rural areas were

virtually without banking facility. At that time unorganized sector was
dominating in the rural finance. After nationalization of banks in 1969
branches of the banks were started gradually in the rural areas also.
Today more than 50 percent branches of the banks are found in the rural
areas. However, the distribution of banks in the rural areas is highly
uneven. Here banks have to face competition with the unorganized sector.
Moreover the rural banking is highly regularized activity by the
Government in India. Lending as well as interest rate is regularized. Thus
under such environment different marketing approach is required. For
effective rural marketing product development, promotion and
communication is important. All these parameters banks have to balance
with socio-economic factors prevailing in the rural areas. Bank need to
innovate product that could attract the depositors. 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 t develop some scheme which would attract them to
bank with. For loans and advances products which are suitable to tarmers,
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small traders, small scale agro based rural industries are already in
existence. Banks need to see the how value addition can be mad to these
existing scheme. Banks also needs to tie up with Non Government
Organisations 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.
Marketing through customer services in rural areas is different from
that of urban areas. Here personalized banking is the success mantra for
banks. Because of high level of illiteracy people prefer to undertake
banking transaction themselves. They hesitate to depend upon technology
based service. For effective marketing in rural areas bank should have
staff with right soft skill like concern for customers’ problem, positive
attitude, good communication and negotiation skill. At every level of
dealing with the customer bank need to educate them for banking
activates and process. To attract the customers from the unorganized
sector most important factor is to provide. The borrower the required
finance of right amount at right time.
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TECHNOLOGY IN BANKING
Technology is proving to be a vital tool in enhancing banking
activities around the globe. The advent of ATMs, and Internet Banking are
key pointers to this. The role of an information system can in no way be
underestimated. The expanding role of information systems have aided
banks achieving Anytime, Anywhere and Anyhow banking. The
improvement in telecommunication infrastructure is redefining the was
banking is being conducted.
Information Technology made its presence felt in banks in India a
few decades ago. However, it is still being used as a 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 systems 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
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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.
7.1. Indian Banks Cash in on Delivery Channels
From the staid over-the-counter delivery mode to ATMs, tele

banking, Net banking, and now mobile banking the number of delivery
channel deployed by banks has increased by leaps and bounds. Srikanth
R.P. & Chitra Padmanabhan look at the evolution and impact of various
delivery channels in the Indian banking scenario and forecast which
delivery channel could be the next killer app for banking players.
While today each and every bank touts ‘The customer is King’
mantra, it was a quite a different story not so long ago. Customers
patronizing PSU banks were greeted with the typical ‘babu’ culture, where
getting even a cheque encashed used to take ages. Customers had to
adjust their schedule to the bank and very rarely was 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 customer – friendly. Now power
has shifted into the hand of the customer.
7.2. 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
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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.
Says O.P. Srivastava, head of the retail channel infrastructure
group at ICICI Bank, “When the banking sector was liberalized we knew
that to get a lead over the well entrenched PSU banks, we had to take the
help of delivery channels like ATMs. This was the only way to counter the
reach of national players. “ICICI Bank is the most aggressive deployer of
ATMs and has seen its base surge from 125 ATMs in January 2000 to
1,200 ATMs today. Such has been the impact of ATMs that ICICI Bank’s
customer base has grown from two million to five million in the last two
years. Srivastava attributes this increase to the increase in ATM outlets.
HDFC Bank, is the other big player from the banking industry which
has aggressively used ATMs to its advantage. Says Mudit Saxena, vice-
president for retail marketing and head of Net Banking at HDFC Bank,
“The average per-day transaction at an HDFC Bank ATM is 350-400, with
some ATMs recoding as many as 700 transactions per day”. Other tech
savvy banks like UTI Bank and ABN Amro Bank have also become
extremely aggressive in installing ATMs.
In the case of UTI Bank, the ATMs have added a fillip to the bank’s
customer base. Says V K Ramani, president for IT at UTI Bank, “Form the
first year of ATM installation, we have seen a surge in our customer base.
Currently, we have 647 ATMs servicing a base of 1.3 million customers.
Over 90 percent of cash withdrawals are done through ATMs. The number
of ATM transactions have also increased from one million in September
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2001 to over 2.5 million in September 2002.” With growth figures like this,
it’s no wonder that every branch manager wants an ATM installed in his
area of operations.
Alok Shende, Industry manager for IT practice at Frost & Sullivan,

summarieses 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.
ABN Amro launched Royalties, India’s first banking rewards
programme. In the programme, 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
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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.
7.3. 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
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banking registered users for Internet banking in India at over two million
currently.
It represent 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.
7.3.1. 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.
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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.
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.
7.4. ATM 2.0 – Video Teller Machine
In ISTANBUL Ziraat Bank, the oldest bank in Turkey, introduced

a new Video Teller Machine, or VTM, which enables clients to use private
banking services with a Ziraat Bank representative through a video link. It
is introduced in 18th January 2009.
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The VTM technology is aimed for small towns which do not have
Ziraat Bank branches or big shopping centres where there is a need for a
lot of employees.
The system recognizes the users from their fingerprints and then
lets them get all the private banking services they would have in a
“normal” branch.
It can also be used by the non-customers for money transfering and

paying bills.
Recep Tayyip Erdogan, the president of Turkey tried the system

and the newly printed Turkish Lira (formerly known as New Turkish Lira).
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One of the greatest features of the system is that VTM service
points will allow customers to process their banking needs on 365 days a
year, 24 hours a day through a video link with a customer representative
of Ziraat Bank.
MOBILE BANKING
Introduction of 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 provide cellular services – Bombay State Electricity Supply,
and Maharashtra State Electricity Board bills. Says Shyamlal Saxena, 33,
Vice President (Liabilities Product Management), HDFC: “WE are, in a
sense, content providers of banking information.”
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Better form of service

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 Protocal) 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.
SMS Banking
Texting has become a common way to communicate between

people. It’s easy. It’s convenient. And, you can access text messaging
from just about any mobile phone. Now, with SMS Banking, customer can
use text messaging to communicate with every bank, conduct banking
transactions, and even pay bills.
SMS Banking is a core module of Mobile, mobile banking solution.

SMS Banking utilizes the SMS (Short Messaging Service) already built
into most mobile phones. The user can “pull” or request information from
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the bank such as account balance, bill payment details, etc., or can
receive alerts and/or notifications from the bank such as a notification
when a charge has been made on a credit card, when a bill is due to be
paid, etc.
8. 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 organisation. 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 organisation 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
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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 nationalisation 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 fruitfu11 results of
nationalisation of 14 commercial banks in 1969 encouraged. government
to nationalise more commercial banks in 1980. These developments
necessitated a fundamental change in the functional responsibilities of the
public sector commercial banks. Here it is pertinent to mention that
nationalisation 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
conceptualising 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
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formulate the marketing mix which suits the national socio-economic
requirements. They need to synchronise 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 communication 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 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
synchronisation 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 behavioural
management. The front-line-staff need empathy in their behaviour. This
requires intensive training facilities. The domination of trade unions is
required to be minimised. The contractual job system needs due attention.
The bank professionals need to assign due weightage to their physical
properties. They are supposed to look smart, active and attractive. Thus
we need multi-dimensional changes which make a strong advocacy in
favour of implementing the innovative marketing principles.
In view of the above, it is right to mention that in the face of new
perception of quality developed by the foreign and private sector
commercial banks, the public sector commercial banks have no option but
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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 realise 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.
The first thing is that the future of bank marketing is going to be
fabulous. If customers are thinking to go for field than they must. 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 customer will
find bank marketing in India to be great.
The bank of the future has to be essentially a marketing
organisation 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 their passport-sized photo. Home banking has
already become common, where customer an order a draft or cash over
phone/internet and have it delivered horn. ICICI bank was the first among
the new private banks to launch its net banking service, called Infinity. It
allows the user to access account information over a secure line, request
cheque books and stop payment, and even transfer funds between ICICI
Bank accounts. Citibank has been offering net banking to its Suvidha
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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
organisation 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.
Page 57
9. 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 Narasimhan Committee Report
evidence of the Government’s desire 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
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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.
 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.
 Social Environment Increasing Urbanization, Education and

Awareness:-
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The higher literacy level, migration to urban areas and higher
awareness due to the boom in the mass media have 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 have 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.
 Credit is Easier to Obtain Growing Importance of Non-Banking

Financial Institutions:-
Fixed Deposits being offered by the NBFC’s are very attractive for
the public, because of the wide gap of interest rates offered by banks on
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term deposits and that offered by the NBCS’s. further, they offer a variety
of specialized services to their customers so as to attract
and retain them.
 Disintermediation:
The increasing role of capital markets in mobilizing funds is
reducing the importance of banks as intermediaries. Companies are
directly approaching the savers through the capital markets. Mutual funds
help in attracting the small investors who do not want to take much risk.
CASE STUDY ANALYSIS
ATM NETWORK AT PHL BANK
The PHL Bank Limited is a medium

sized private sector bank established two
years ago and is based in Mumbai. The bank
is promoted by premier Housing Loans, a
joint venture company and one of the biggest players in the Housing
Finance sector.PHL was established in 1988 to largely service
individuals, looking for housing loans and is the first private sector
company in this industry. PHL grew substantially in ten years and
today has a customer base of over 5 lakh people and a turnover of
Rs.650 crores. The bank was one of the numerous private sector banks
that came into existence in India in last five years.
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For a two year old bank, PHL has shown average performance,
as there are several other banks which have grown at almost double
the growth rate of PHL Bank. The bank has spread its branches in five
cities and has a asset base of Rs.75 crore, which makes it relatively
small in size. Out of 35 odd private sector top banks, PHL Bank
stands at rank 29, size wise and at rank 16 for its branches and reach
across the country. Though the bank is small, it was considered one of
the best in term of infrastructure and technology and in providing a

range of services for its customers such as ATMs, facility to operate
account from any branch, telephone banking and internet-banking.
These are being offered for almost one year now and bank
managers are very confident that there is unlimited growth potential
for PHL. “What matters to the customers is the convenience we offer.
Technology, IT and web, all combined have created a revolution in
the way banking is carried worldwide. India is catching up and
options of such conveniences are hard to resist. Once people get used
to non-traditional banking, the need for physical branches lessens and
then the size or coverage of network will not really matter.
they aren’t focusing on opening more branches in cities, instead
they prefer to invest in technological interface to bring customer
closer to bank by various ways and means”, Ranjana Seth, the
marketing manager of Delhi office says, “We have 20 ATM counters
all across these five cities and have on an average 900-1,000
customers per ATM which is significantly less than the industry norm
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of 2,500 customers per ATM teller. Lesser waiting time, faster service
and ease are some additional benefits you get from our services apart
from the usual cash withdrawal, balance and cheque book request, and
deposit etc., provided by these machines all over. Another step we’ve
taken to provide better service is enhancing the count of money one
can withdrew at one time from normal 5,000 to 10,000and alongwith
it, customers can also put request for demand draft here, which will be
delivered to them in 24 hours, if the amount is more than 10,000 and
they can pick it up if it is for a lesser amount.
However, the operations vice president is worried about the
problem that he can foresee. The banks ATMs were not doing large
volume of business in term of rupee value. Even when the limit of
money to be drawn is more and the network is widely accessible, the
ATMs aren’t picking up enough business. Several hypotheses were
advanced to why volume was less than expectation.
- He system in which the bank participated was not
best.
- Customers of the bank were not sufficiently familiar
with the service.
- The services had not been promoted properly
amongst existing customers.
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- The service is not advertised / promoted as a part
of advertisement to attract present or potential
customers.
To understand the reasons behind this phenomenon, VP,
operations decided to go for a consumer’s survey. The task was given
to a market research organisation, will the following brief:-
 The sample will be collected from their customers and potential

customers and size would be 500. Survey will be conducted by
personally visiting the house / office of card holder after taking an

appointment.
 They should be in age group of 22-40 years. It was felt that people
in this age group are the ones, using ATMs more often.
 The sample must contain atleast 40 per cent women respondents.
 The respondents should not be working in any bank else they will
not be interviewed.
 The general purpose of survey would be to determine the

demographic characteristics, their usage habits, their attitude about
cash withdrawals and other services and ATM network locations.
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 More specifically, the bank wanted to obtain
the following information from its existing
customers:-
 How often the respondents used the card?

 What is the typical usage frequency in a month and what was the
date of the last transaction?
 What proportion of their entire banking is done via the card?
Was it used for cash withdrawal or deposits only. How many times
is it used for other activities?
 Which transactions are performed by respondents during banking
hours and which one in odd hours?
 How likely would the respondent be to use their cards for:

(a) Making utility bills payments
(b) Transfer of funds between account
(c) Give it to family members
 Which is one transaction respondent’s use most on their ATM?
 Which is the one they use least on?
What is their biggest concern for their cash withdrawal transactions

on ATM
(a) It will be billed wrongly in account
(b) They won’t get the money but still be
billed
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(c) It is coming from someone else’s
account
(d) Someone else is using their account
(e) It is not safe
 Classification of information, i.e. age, education, employment

status, marital status and family.
The information sought from the potential customer is also the same
as discussed above, for any other ATM service they are using.
Alongwith it, a few more topics to be covered while interviewing
potential customers was:
- Awareness of PHL bank services and ATMs.
- The biggest satisfaction of using their existing
bank and ATM service.
- The three things, they are not satisfied within their
existing bank and ATM service.
The whole research exercise is expected to be completed in one
month’s time and presented to the company for further analysis.
ILLUSTRATED CASE ANALYSIS
PHL Bank has substantially invested in acquiring technological

infrastructure excellence as is evident from the range of services they
offer to customers. The bank offers interactive customer service and
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options such as internet banking, tele-banking and networked
branches, etc., not to mention the Automatic Table Machine (ATM)
network, which is bigger than most banks.
The bank, by industry standards, is relatively small in size but

still the infrastructure advancements achieved by the bank tell a lot
about the long-term planning and commitment it is displaying. By
their own admission, the bank is heading towards a stage where the
customer would not need to operate from home conveniently.
Customer service through innovative methods alongwith above
average infrastructure are major competitive advantage the bank has
achieved so far. However, it is unable to fully leverage upon these
advantages as is evident from its growth and performance which is
seen as ‘average’ when compared to some other banks which have
shown tremendous growth in the same time period.
REASONS BEHIND THE CUSTOMER SURVEY
The customer survey is conducted by the bank to understand

the usage habits and attitudes of its customers and to know the
awareness level in the market about the services offered by the bank.
Some advantages which bank would get from the survey are:
• It will provide data on the nature of transactions carried out
more often and the frequency and usage pattern of ATMs by
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customers. It would also give insight into preferences of the
banks customers, i.e., whether the prefer ATMs or human
interaction. The data can help to identify the most useful
services from the least useful & mould the offering
accordingly.
• Bank can understand the usage- preference & reasons behind

consumer behaviour – using or not using specific services.
These can be further utilized by the bank to minimize or
reduce the factors which discourage users.
• Bank would an exclusive database of potential customers &

their expectations. Based on this, the bank may try to bridge
the gap between expectations & actual product offering to
reinforce its marketing effects.
COMPARISION BETWEEN PRIVATE SECTOR
& PUBLIC SECTOR BANKS
 Product Mix adopted by banks:-
SBI Bank provided various types of accounts i.e. saving account,

current account & deposit account. Saving account provides the benefit of
Card Convenience, Monitoring Your Account Monitor and controls your
Page 68
savings through SBI Internet Banking or SBI Passbook facility. SBI Bank
gives 12 types of loans products.
SBI Term Deposits SBI Loan For Pensioners

SBI Recurring Deposits Loan Against Mortgage Of Property
SBI Housing Loan Loan Against Shares & Debentures
SBI Car Loan Rent Plus Scheme
SBI Educational Loan Medi-Plus Scheme
SBI Personal Loan Rates of Interest
left are services, SBI offers to its customers, domestic treasury, SBI
Vishwa Yatra foreign travel card, broking services, revised service
charges, ATM services, internet banking, e-pay, e-rail, RBIEFT, safe
deposit locker, gift cheques, MICR codes, foreign inward remittances
ICICI Bank offers a Savings Account with a host of convenient

features & Safety, Flexibility, Liquidity and Returns is a combination of
fixed deposit account. Bank also provide Recurring Deposit account,

one can invest small amounts of money every month that ends up with
a large saving on maturity. ICICI bank offered investment such as ICICI
Bank Tax Saving Bonds, Government of India Bonds, and Investment in
Mutual Funds, Initial Public Offers by Corporate, Investment in Pure
Gold”, Foreign Exchange Services and Senior Citizens Savings
Scheme, 2004 for customers. ICICI Bank offers wide variety of Loans
Products to suit the customer’s requirements. i.e. Home Loans,
Personal Loans, & Car Loans.
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The home loan gives some of the key benefits to the customer.
Such as Guidance throughout the process, Home loan amounts suited to
their needs, Home Loan tenure up to 20 years, Simplified Documentation,
Doorstep Service.
The personal loan also given some additional Key Benefits like
Loan up to 15 lacks, No security/guarantor required, Faster Processing,
Minimum Documentation, Attractive Interest Rates and 12-60 Months
repayment options.
Now Demat Services is the essential

service in every bank. ICICI Bank
Demat Services boasts of an ever-
growing customer base of over 7 lacs
account holders. They offer the features of E-Instructions, Transfer
securities 24 there a day, 7 days a there through Internet & Interactive
Voice Response (IVR) at a lower cost, Digitally Signed Statement,
Corporate Benefit Tracking, Mobile Request, Mobile Alerts etc.
 Pricing Mix in banks

ICICI Bank is required to frame two- fold strategies. First, the
strategy is concerned with interest and fee charged and the second
strategy is related to the interest paid. Since both the strategies throw an
impact, It is essential that both the buyers as they as the sellers have
feeling of winning.
The pricing decisions or the decisions related to interest and fee or
commission charged by SBI Banks are found instrumental in motivating or
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influencing the target market. The quality of service provided has direct
relationship with the fees charged.
Thus while deciding the price mix customer decided which bank
provides more services easier with satisfactory price.
 Place where banks are located

The number of branches OF ICICI is 1900 in India and 33 in
Mumbai. The Bank has a network of 1,449 branches and about 4,721
ATMs in India and presence in 18 countries, as well as some 24 million
customers (at the end of July 2007).The services are sold through the
branches. The 2 important decision making areas are:
 Making available the promised services to the ultimate users
 Selecting a suitable place for bank branches.
The State Bank of India, with over 16000 branches, has the largest
branch network in India. & one of the largest ATM networks in the region
i.e. More than 8500 ATMs across India.
 Promotional Activities of the Banks

The different components of promotion help both banks
professionals in promotion their product.
Advertising
Television, radio, movies, theatres, ICICI / SBI uses this

component for promoting the product with the motto of informing, sensing
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and persuading the customers. The advertising professionals bear the
responsibility of making the appeals, slogans, messages more creative.
The slogan of ICICI Bank is “HUM HAI NA" and “WITH YOU ALL - THE
WAY” is the slogan of SBI bank.
Print media:-
Hoardings, newspaper, magazines. There are a number of devices

to advertise, such as broadcast media, telecast media and the print media
 Publicity:
Road shows, campus visits, Sponsorship.
 Sales promotion:
Gifts, discount and commission, incentives, etc. ICICI / SBI think in

favour of their promotional incentives both to the bankers as well as the
customers. The banking organizations make provisions for incentives.
 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 ICICI gets immediate feedback,
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the personal selling activities energies the process of communication very
effectively.
 Telemarketing:
ICICI / SBI one sterile Call center
 Physical Evidence ( physical attributes) of

the banks
Physical evidence is the material part of a service. There are many
examples of physical evidence:
•Internet
•Paperwork
•Brochures
•Furnishings
•Business cards
•The building itself (such as prestigious offices or scenic
headquarters) the physical evidences also include signage, reports,
punch lines, other tangibles, employee’s dress code etc.
Signage:
Each and every bank has its
logo by which a person can
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identify the company. Thus such signage is significant for creating
visualization and corporate identity.
Punch lines:
Banks have influential punch lines to attract the customers. Like ICICI
Bank punch line is HUM HAI NA. And the SBI Bank Is WITH YOU ALL -
THE WAY
Employee’s dress code:

ICICI bank follows a dress code for their internal customers. This helps the
customers to feel the ease and comfort. There is no dress code followed
by SBI bank. Ti is unique type of physical evidence followed by ICICI bank
for showing mannerisms.
 The People who create awareness
All people directly or indirectly involved in the consumption of

banking services are an important part of the extended marketing mix.
Knowledge Workers, Employees, Management and other Consumers
Page 74
often add significant value to the total product or service offering. It is the
employees of a bank which represent the organization to its customers. In
a bank organization, employees are essentially the contact personnel with
Customer. Therefore, an employee plays an important role in the
marketing operations of a service
organisation.
205,896 employees are

working in a SBI Bank. They are
effectively managing the customers
and kind communicates. SBI bank
understands the needs of customers
and therefore it is leveraging
technology to service customers quickly and conveniently. SBI Banks
aims at providing and enabling favorable environment to foster growth and
learning for their employees.
ICICI is conscious in its potential in internal marketing - the

attraction, development, motivation and retention of qualified employee-
customers through need meeting job-products. A service company can be
only as good as its people. A service is a performance and it is usually
difficult to separate the performance from the people. If the bank doesn’t
meet customers' expectations, there are no uses of the services.
QUESTIONNAIRE
1. WHAT IS BANK MARKETING?
Page 75
2. HOW MARKETING MIX IS USED IN BANK FOR

MARKETING OF BANKING SERVICES?
3. WHICH STRATEGIES ARE USED FOR MARKETING

BANKING SERVICES?
4. WHICH STEPS ARE TAKEN FOR APPROACHING

ILLERATE CUSTOMERS?
Page 76
5. WHAT ARE THE FUTURE ASPECTS FOR

MARKETING?
6. HOW MARKETING STRATEGY IS DONE IN RURAL

AREA?
7. BY HOW MANY WAYS YOU ARE PROMOTING YOUR

PRODUCT?
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8. HOW MANY % ARE THERE FOR MARKETING

EXPENSES ARE THERE OF TOTAL EXPENDITURE IN
YOUR BANK?
FINDINGS OF QUESIONNERIES
Bank marketing is directed at providing services to satisfy
customers financial (and other related) needs and wants, more
effectively and efficiently. It is an activity which aggregates the
functions is the sum total of all individual activities consisting of an
integrated effort to discover, create, arouse and satisfy customer
needs. Different banks offer different benefits by offering various
schemes which can take care of the wants of the customers. .
Expenditure of the bank for advertisement & promotion is very
miner i.e. 2.5% on total proportion.
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The marketing strategy for rural areas, by and large,

assigns a responsible role on branch officials in bringing out socio-
economic transformation of the rural society. There is need for a
total marketing approach from the personnel to penetrate all levels
in all areas of banking operations. Efforts need to be made to
design and launch suitably tailored services to meet its changing
needs of the rural population.
Page 79
First of all, the banker should be aware of the “Human
Groups and Institutions” in the area of operation. This means that
one should be aware of the role of agriculture in the rural economy,
cultural aspects of the society, community aspects, family and farm
patterns, institutional facilities, etc. Secondly, the ‘Process of
Change’, if any, taking place in the rural scenario, should be known
to him. Thirdly, there could be ‘Planned Changes’, generally
emanating from administration of voluntary organisations, such as
resettlement, land reforms, community development, agricultural
extension work, education etc, of which the field staff should be
familiar. Fourthly, a general idea of the status of various
development projects under execution, welfare measures, schemes
under implementation, etc. will help the banker to approach illiterate
customer.
CONCLUSION
Banking sector has undergone various changes after the new
economic policy based on privatization, globalization and liberalization
adopted by Government of India. Encouragement to foreign banks and
private sector banks increased competition for all operators in banking
Page 80
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
BIBLIOGRAPHY
Page 81
 BOOK SEARCH:-
 Case study in marketing management
- Editors of excel
 Marketing In Banking And Insurance
- Romeo S. Mascarenhas.
 Principles of Marketing
- Thomas C. Kinnear
- Kennethl Bernhardi
 WEB SEARCH:-
 http://images.google.co.in/imgres?
imgurl=http://dogangokhan.files.wordpress.com/2009/01/v
ideo_teller_machine_01.jpg&imgrefurl=http://dogangokha
n.wordpress.com/2009/01/18/atm-20-video-teller-machine
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 http://www.khoj.com/marketing+of+banking+statergies/1.h
tml
 http://www.icmrindia.org/
 http://pakistanmba.jimdo.com/
 http://www.iibf.org.in/portal/documents/Marketing.%20of
%20Banking%20Services_june03.pdf/
 http://www.seromo.com/images/multi_channel.jpg.hlml/
 http://www.textually.org/textually/archives/archives/image
s/set2/24basic.1.600.jpg/
 http://www.statebank.com/
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Marketing in Banking Services Final

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Marketing In Banking Services

In today’s business there are multi dimensional problems &

The concept of bank marketing assumes new weights &

Marketing of banking services is concerned with Product, Place,

Banking is one Industry where there is no middlemen serving the

the marketing their services. This has introduced the middlemen in

In banking services, the marketing strategies starts with developing

The Role of marketing in the banking industry continues to change.

“Bank marketing is the aggregate of functions, directed at providing

effective way. Service facilities also should be designed for

All the techniques and strategies of marketing are used so that

Marketing is much more than just advertising and promotion; it is a

Hence, the total marketing function involves the following:

Thus, it is important to recognize the fundamentally different

3. MARKET RESEARCH IN INDIAN BANKS

In response to the inquiry information was received from 17 banks.

4. MARKETING CONCEPTS – ITS APPLICATION

When apply marketing to the banking industry, the bank marketing

4.1 Consumer Behavior and Segmentation

4.1.1. Need for segmentation

This involves dividing the market into major market segments,

5. Market segmentation in banking services

In Banking Services, the banks are expected to satisfy rural

(A) (B) (C) (D) (E) (F)

(I)Financial (i) Private

(iv) Landless (iv) Rs.25,000 (v) Small-

5.2 Criteria for Segmentation

5.3 Agricultural Sector:-

The mechanization of agriculture, the improved or scientific system

5.4 Industrial Sector:

5.5 Services sector:

The banking organizations need to identify the changing needs and

5.7 Household Segment:

5.8 Gender Segment:

Some of the women are housewives and therefore they have

In the profession segments, find different categories of professions

The technocrats, bureaucrats, corporate executives, intellects,

Markets segmentation thus simplifies the task of understanding the

In the Indian perspective where we find agrarian economy

The urbanization is likely to gain the momentum and villages,

The formulation of marketing mix for the banking services is the

6.1 THE PRODUCT MIX:-

The bank professional while formulating the product mix need to

6.1.2. DESIGNIGN AN ATTRACTIVE PACKAGE

In the formulation of product mix for the banking organization, the

In almost all the services, the development of a product is an

6.2. PROMOTION MIX

In the formulation of marketing mix the bank professionals are also

Like other organizations, the banking organizations also us this

6.2.2. Finalising the Budget:

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

6.2.3. Selecting a Suitable vehicle:

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

6.2.4. Making Possible creativity:

The advertising professionals bear the responsibility of making the

6.2.5. Instrumentality of branch managers:

At micro level, a branch manager bears the responsibility of

6.2.6. Public Relations:

Almost all the organization need to develop and strengthen the

6.2.7. Personal Selling:

The personal selling is found instrumental in promoting the banking

6.2.8. Dynamics of Personals Selling