Marketing of services in banking sector

1. INDIAN
BANKING
INDUSTRY

2. Banking
• Banking Regulation Act of India, 1949
defines Banking as “accepting, for the
purpose of lending or of investment of
deposits of money from the public,
repayable on demand or otherwise or
withdrawal by cheque, draft order or
otherwise.” The Reserve Bank of India
Act, 1934 and the Banking Regulation
Act, 1949, govern the banking
operations in India.

3. Structure of Banks in India

4. Broad Classification of Banks in
India
1) The RBI: The RBI is the supreme monetary and banking
authority in the country and has the responsibility to control the
banking system in the country. It keeps the reserves of all
scheduled banks and hence is known as the “Reserve Bank”.
2) Public Sector Banks:
 State Bank of India and its Associates (8)
 Nationalized Banks (19)
 Regional Rural Banks Sponsored by Public Sector Banks (196)
3) Private Sector Banks:
 Old Generation Private Banks (22)
 Foreign New Generation Private Banks (8)
 Banks in India (40)

5. 4) Co-operative Sector Banks:
 State Co-operative Banks
 Central Co-operative Banks
 Primary Agricultural Credit Societies
 Land Development Banks
 State Land Development Banks
5) Development Banks: Development Banks mostly provide
long term finance for setting up industries. They also provide
short-term finance (for export and import activities)
 Industrial Finance Co-operation of India (IFCI)
 Industrial Development of India (IDBI)
 Industrial Investment Bank of India (IIBI)
 Small Industries Development Bank of India (SIDBI)
 National Bank for Agriculture and Rural Development
(NABARD)
 Export-Import Bank of India

6. Evolution Of Banking Industry
HISTORY OF BANKING IN INDIA
• The first bank in India was established in
1786. From 1786 till today it has gone
through three distinct phases:
• Phase1: Early phase from 1786 to 1969
• Phase2: Nationalization of Indian Banks
and up to 1991prior to Indian banking
reforms
• Phase3: New phase of Indian Banking
system with the advent of the Indian
Financial Banking sector reforms after
1991.

8. Process involved in banking
industry

9. Marketing:
• Segmentation is important for banking and insurance companies as all
the consumer segments cannot be targeted in the same manner. The
banks and insurance companies target different customer segments
with suitable plans and services. So, in this period they were mainly
forced to rely on marketing to retain their customer base. The
marketing activities in the banking industry are mainly made up of
sales support, branding and advertising activities. However, its overall
aim is to maximize profits by driving sales higher.
Sales:
• Sales is also an important function in the banking value chain which is
because of the importance of sales for banks. The banking scenario is
highly competitive and apart from entering new markets and finding
new customers, it is important that the banks retain their existing
customers.
Product:
• From loans to deposits, banks provide several kinds of products and
services. However, in a banking context, rather than just having a great
product portfolio, it becomes impertinent for the banks to provide
great service.
Transactions:
• Technology has made this task easier and millions of transactions are
carried out everyday throughout the world online and offline. From
ATMs to online payments, simply millions exchange hands in the form
of transactions

10. Process in SBI
Flow of activities:
• All the major activities of SBI banks follow RBI guidelines.
There has to be adhered to certain rules and principles in
the banking operations. The activities have been
segregated into various departments accordingly.
Standardization:
• SBI bank has 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.

11. CONTD…..
Number of steps:
• Numbers of steps are usually specified and a specific
pattern is followed to minimize the time taken.
Simplicity:
• In SBI 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 on 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.

12. Flower of Service

13. Information
Information about:
• Prices
• Reminders of FD and RD
• Conditions of service
• Internet banking and ATM privacy
• Schedule and service hours
• Products offered
• Notification of changes
• Summaries of account activity

14. Order-Taking
• Applications
• Order entry
• Online transactions
• Online funds transfer
• Obtaining other associated products
like insurance, mutual funds ..etc

15. Billing
• Verbal statements
• Passbook entries
• Online account statements
• Receipts of installments towards
loans, mutual funds, RDs, premiums in
case of insurance…etc
• ATM transaction receipt

16. Payments
• Cash and Cheque
• Electronic modes
• Online and mobile modes
• Banks wallet
• Bank’s app
• Through electromagnetic cards:
– Credit card
– Debit Card
– Smart card

17. Consultation
• Customized advice
• Personal counseling
• Tutoring/training in product use
• Management or technical consulting
• Internet banking training
• ATM and privacy of passwords

18. Hospitality
• Proper Greetings, polite behavior
• Treating customers as guests
• Good waiting room
• Toilets and washrooms
• TV, newspapers
• Drinking water facility
• Lounges

19. Safekeeping
• safekeeping of valuables
• Parking facility
• Storage space
• Security personnel
• Caring for Goods Purchased (or
Rented) by Customers- Packaging

20. Exceptions
Exceptions involve supplementary
services that fall outside the normal
service delivery. Exceptions include
special requests, and problem solving.
• Handling Special Communications
• Complaints
• Compliments
• Suggestions
• Special Requests in Advance of
Service Delivery – FD, RD, mutual
funds before its maturing date

21. Recent Technological
Development
• Internet Banking (E-Banking)
• Information Only System
• Electronic Information Transfer Systems
• Fully Electronic Transactional System
• Automated Teller Machine (ATM)
• Credit Cards/Debit Cards
• Smart Cards
• Core Banking Solution
• RTGS (Real Time Gross Transaction)
• Electronic Clearing Service (ECS)
• Mobile Banking
• NEFT (National Electronic Funds Transfer)

22. PRICING STRATEGIES
ADOPTED IN
BANKING SECTOR

23. Competitive Pricing
Competitive pricing is setting the price of a
product or service based on what the
competition is charging. This pricing method
is used more often by businesses selling
similar products, since services can vary
from business to business, while the
attributes of a product remain similar.
• Eg: Pricing of State bank of India, ICICI
bank – Competitive Pricing – for FDs, RDs
and Saving accounts.

24. Premium Pricing
Premium pricing is the practice of keeping the
price of a product or service artificially high in
order to encourage favorable perceptions among
buyers, based solely on the price. The practice is
intended to exploit the (not necessarily
justifiable) tendency for buyers to assume that
expensive items enjoy an exceptional reputation,
are more reliable or desirable, or represent
exceptional quality and distinction. Moreover, a
premium price may portray the meaning of
better quality in the eyes of the consumer.
• Eg: Pricing of ICICI bank – Pricing at Premium

25. Relationship-Based Pricing
Relationship-Based Pricing (RBP) is a concept
in the banking industry. RBP is a pricing and
billing framework where pricing is determined
based on a customer's overall purchases and
circumstances, rather than being delivered on
a product-by-product basis. RBP enables banks
to use customer-centric parameters to
determine pricing, such as the level of overall
business the customer does with a bank or the
types of services purchased.
• Eg: for loans, cross selling of insurance,
mutual funds, FDs

26. Differential Pricing
Differential pricing is a type of pricing strategy in which a product or a
service is charged differently based on various parameters like the
customer, characteristics the quantity of product, different circumstances
or mode used etc. It follows the key pricing principle that some
customers are willing to pay more than others for a product as they may
value the product more. The end result of a successful differential pricing
is maximization of the profit by selling more products at maximum price
a customer is willing to pay.
• Eg: Internally, certain methods of conducting business transactions
are cheaper for the bank & customers.
It encourages customers to move away from voluminous payment of
salaries by cheques, to electronic funds transfer.
It is less expensive for the bank to handle thousands of “salaried
payments” electronically, than by cheques – due to the time involved,
and also offers various benefits to the customers.

27. Perceived Value or Value Pricing
In Perceived-Value Pricing method, a firm sets the price of a product by
considering what product image a customer carries in his mind and how
much he is willing to pay for it.
In other words, pricing a product on the basis of what the customer is
ready to pay for it, is called as a Perceived-value pricing. The perceived
value is made up of several elements such as buyer’s experience with the
product, service support, warranty quality, customer support, supplier’s
reputation, trustworthiness, etc.
Bank marketers should use this strategy to get beyond the stage of “what
does it cost us to deliver this service?” to “what is the perceived value
(benefit) of this service to the
customer?”.
This enables the bank to charge a higher price.
• Eg: Pricing of Kotak Mahindra Bank – Value – based pricing policy

28. Promotional strategies
• Advertising: Television, radio, movies, theatres
• Print media: hoardings, newspaper, magazines
• Publicity: road shows, campus visits, sandwich
man, Sponsorship
• Sales promotion: gifts, discount and commission,
incentives, etc..
• Personal selling: Cross-sale (selling at
competitors place), personalized service.
• Telemarketing

29. Promotional measures of ICICI bank
• The promotion strategy of ICICI Bank comprises of direct and
indirect communication to the customers.
• It has been a huge boost for ICICI Bank to hire Amitabh Bacchan,
the famous actor, in the advertisements.
• Promotions are also done through films like Baghban.
• Technology has been used to its maximum potential in tracking
the customer’s wishes and demands.
• ICICI and Amway have formed an alliance for a credit card that
can be used at international level.
• The bank has also patched with Indian Railways and many
services are provided for the benefit of the customer.
• ICICI Bank’s tag line is very appropriate ‘Hum Hain Na’ because it
promotes credibility, trust and financial solutions to every
customer. It has been successful in its endeavor to project a
sophisticated image with modern concept.

30. Promotional Measures of Bank of
Baroda
• Bank of Baroda uses various methods of promotions mostly through
outdoor advertisements, TV commercials, print advertisements through
major newspapers, billboard advertisements on its branches.
• Over the years Bank of Baroda hired Rahul Dravid, PV Sindhu, K Srikanth
as its brand ambassador.
• Bank of Baroda also sponsors various events in colleges for promotion of
its products.
• Bank of Baroda has specialised vehicles to provide information about its
products and services and also avail its services on the spot.
• Various government schemes are also spread through aggressive
marketing through its employees.
• It also promotes its products online on its own website and apps and
also on its partner websites.
• Bank of Baroda also does personalized advertisements through mobile
marketing by sending messages on phones. It also has various reward
programs to promote more transactions.

31. Role of people in banking
industry
• Banking Industry has a very strong relationship with its customers and
hence its employees and management needs to be on its feet to serve
the best to its customers.
• All people directly or indirectly involved in the consumption of banking
services are an important part of the extended marketing mix.
Knowledgeable Workers, Employees, Management and other
Consumers 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.
• The basic objective of internal marketing is to develop motivated and
customer conscious employees.
• 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 people don’t meet customers’ expectations, then neither does the
service. Therefore, investing in peoples' quality in service business
means investing in product quality.

32. Customer Relationship Strategies
Adopted By SBI
While formulating marketing strategy, a bank
should focus attention on:-
• Consumer sovereignty
• Attitude
• Responsiveness and personal skills of
bank staff
• Revitalizing the marketing department
• Top management support to the
marketing department
• Participation of marketing personnel in
key bank decisions.

33. SBI carried out various marketing initiatives
to enhance its reach. They includes:-
• Segregating and targeting existing high
value customers,
• Cross sales of other products,
• Setting up call centers and outbound
sales force to secure new customers
• Plans were also made to utilize database
marketing to pursue large and medium
sized
• corporate, government and trade finance
customers.
• Database marketing was expected to
draw increased revenue from cross
selling, lower costs and increased
customer loyalty.

34. SBI also introduced various other ways of
reaching out to customers like:-
• Extension of hours of work(SBI increased daily
working hours by two hours and Sunday banking
was introduced) and
• Aggressive marketing through print and television
media.
SBI`s Strategies in the current scenario:-
• Brand SBI is very strong, while people may be
generally cautious about some other brands. They
can not only tap the potential better but can also
provide a safe and transparent insurance alternative
to the public.
• The bank is entering into many new businesses with
strategic tie ups - Pension Funds, General Insurance,
Custodial Services, Private Equity, Mobile Banking,
Point of Sale Merchant Acquisition, Advisory
Services, structured products etc - each one of
these initiatives having a huge potential for growth.

35. Some of the strategies to cope with the current scenario are
listed below:
• SBI is planning to hire 11,000 employees in the current fiscal. It
is also focusing at the top end of the market, on whole sale
banking capabilities to provide India's growing mid / large
Corporate with a complete array of products and services.
• Today, the Bank is the largest provider of infrastructure debt
and the largest arranger of external commercial borrowings in
the country. It is the only Indian bank to feature in the Fortune
500 list.
• The Bank is changing outdated front and back end processes to
modern customer friendly processes to help improve the total
customer experience. With about 8500 of its own 10000
branches and another 5100 branches of its Associate Banks
already networked, today it offers the largest banking network
to the Indian customer.
• The Bank is also in the process of providing complete payment
solution to its clientele with its over 8500 ATMs, and other
electronic channels such as Internet banking, debit cards,
mobile banking, etc.
• Country's largest lender, State Bank of India (SBI) has prepared
a blueprint to go retail in its international operations. Such
strategy would help the bank to promote its lead in syndication
of loans in the overseas market, at a cheaper cost.

36. History:- Become operational on April 1,1935
Nationalized in the year 1949
Major objectives:-
Regulate the issue of banknote
Maintain reserve with a view to securing monetary stability
To operate the credit and currency system of the country to
its advantage
Functions of RBI
The function are classified into-
1. Banker of the banks
2. Promotional functions
3. Manager of foreign exchange and control
4. Issuer of currency
5. Developmental role
6. Regulator & Supervisory functions
How it controls banks & economy : Tools
CRR
REPO RATE & REVERSE REPO RATE
STATUTORY LIQUIDITY RATIO(SLR) & BANK RATE
REGULATORYAUTHORITY-RBI

37. Particular Description Implication
Issuance of
New Banking
Licenses
•The entity must have a
public shareholding of at
least 51% . Additionally,
it should possess sound
credentials.
•In 2003, the RBI
guidelines also specified
a new holding structure
for a new banks.
Increasing the
number of banks
would promote
financial inclusion,
foster competition,
and thereby reduce
costs and improve the
quality of banking
servises.
Priority Sector
Leading
Domestic banks are to
tender 40% of their
advances towards
priority sector, while the
limit for foreign banks is
at 32% of their total
advances.
Provsion to easy,
adequate and timely
credit to priority
sector that otherwise
would not receive
easy finance.

38. FDI Limit in
Banks
The aggregate foreign
investment (FDI, FII and
NRI) cannot exceed 74%
in private sector banks
while the ceiling is at
20% for nationalized
banks, and its associate
banks.
The FDI inflows would
help to their capital
requirement, and
ensure better and
improved risk
management, thereby
making the Indian
banking sector more
competitive.
Basel III
Norms
Under Basel III norms,
being implemented in
phases, the bank need to
have a core capital ratio
of 8% and a total CRAR of
11.5% against 9% now.
These would have to
strengthen the
regulation, supervision,
and risk management of
Indian banking sector
thereby reducing the
risk of spillover from
financial sector to real
economy.

39. RATER
Reliability
• Keeping Promises
• Reliable information
• Show sincere interest in solving
customer problems
• Consistent Performance
• Quick & Prompt
• Error Free Service

40. Assurance
• Feeling of Security
• Assured Safety
• Knowledgeable Employee
• Kind and Polite
• Trustworthy
• Assured Execution Time
• Employees have knowledge to
answer question

41. Tangibles
• Centrally Located
• Employees professionally dressed
• Attractive Printed Material
• Availability of Equipment
• Visually Appealing Layout

42. Empathy
• Understanding Needs
• Conveniently Located
• Suitable Working Hours
• Willing to Help
• Sincere Concern
• Customers’ best interests are at heart
• Employees understand the specific
needs of customer

43. Responsiveness
• Customer Support
• Less Waiting Time
• Quick in locating and eliminating
errors
• Respond Quickly
• Employees give prompt services
• They are always willing to help
• They are never too busy to respond
the requests