An Overview of Marketing Strategies of Banking Sector in Bangalore

An Overview of Marketing Strategies on Banking Sector in the present

Scenario

Munnu Prasad. V
St. Josephs College of Commerce
No. 163, Brigade Road,
Bangalore 560 025
Telephone 080-65836437 / 25360644/46
Email: pgdept@sjcc.edu.in

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

Abstract
Bank is an establishment for custody of money received from or on behalf of, its customers. Its essential
duty is the payment of the orders given on it by the customers, its profit mainly from the investment of
money left unused by them. Marketing is satisfying needs and wants through an exchange process
(Philip Kotler).
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 than the competitors keeping
in view the organizational objectives of the bank.
This review is focused on the marketing strategies of Banks in the present scenario. The rigorous
marketing of Banks is done in many forms. I have selected, for my study, the marketing that is conducted
in the target segment which primarily comprises of College and School Students and teachers.
The targeted segment of the bank for marketing a product is the campus. Here they offer low rates and
moderate interest for customer savings.
The review helped me to analysis the bank facility usage of students who gets an account along with their
admission to the college or school. The college or school ID card serves the purpose of a debit card
through which their accounts are accessible.
The methodology of research mainly used Secondary Data. Primary Data was also collected informally
(i.e., in the friendly manner through casual conversation) to support the secondary dada.
The Banks Marketing done on campus is not that effective method of inducing the habit of savings. So, the
Banks has to encourage the Students by giving the appropriate offers for their savings in the banks (like
little high interest for example; savings left for 6-12 months)

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

Overview
Chapter Number
Chapter 1

Chapter 2

Chapter 3

Chapter 4

Particulars

Page Number

Research Design

Introduction and Marketing

5 10

Strategies
Review of Bank Marketing & their
Conversion Success

11 12

Suggestions & Recommendations

13

Conclusion

14

Bibliography

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

Research Design
Title of the Project
An Overview of Marketing Strategies on Banking Sector in the present Scenario

Nature and Statement of Problem

To find out the Pros and Cons of Marketing Strategies used by the Banking Business to Market there
Service oriented Products for attracting the customers.

Objectives of the Study

To understand the Tool of Strategy used by banks for marketing there product (Bundle of Services) to
prospected customers and other users of banking service

Scope
It involves the area of Marketing in the Banking Sector.

Data Collection
Primary Data:
Personal interview method used for collecting data (Only to verify the marketing effectiveness). This
research requires less primary data from the organizations and also from the customers.
Secondary Data:
Secondary data is existing data that was collected by someone else or for other purposes other than the
current one. This research requires some secondary data in the form of historical information from various
relevant sites, journals, articles, company reports and databases.

Methodology Followed:
Collection of data against various parameters with the application of subject

Limitations

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

The limitation of the report is limited to BangaloreIntroduction

DEFINITION OF BANK
According to Oxford English Dictionary, a Bank is, An establishment for custody of money received
from or on behalf of, its customers. Its essential duty is the payment of the orders given on it by the
customers, its profit mainly from the investment of money left unused by them.
Banking Regulation Act, 1949 (Sec. 5(c)), has defined the banking company as follows, Banking
Company means any company which transacts business of banking in India. According to Section 5B,
Banking means the accepting of deposit of money from the public for the purpose of leading or
investment, which are repayable on demand or otherwise and are withdraw able by cheque, draft, order or
otherwise.
Different economists, banking professionals and authorities explained their viewpoints regarding banks or
commercial banks. It has been rightly said by A.K. Basu that a general definition of a bank or banking is
by no means easy, as the concepts of banking differ from age to age, and country to country.

Banks 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 than the competitors keeping in view
the organizational objectives of the bank.
EVOLUTION OF THE MARKETING CONCEPT
The Role of marketing in the banking industry continues to change. Form 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 frame work,
and social responsibility will remain important, customer satisfaction must receive the greatest emphasis
in the years ahead.
According to most surveys conducted, the chief concerns of most banking executives are still focused on
legal and regulatory issues. Community banks are particularly concerned with eliminating barriers that
give unfair advantages to financial services competitors, such as credit unions. However, anotherconcern
pertains to technology: keeping nonblank competitors out of the payment system.
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 reduction
Credit portfolio management
Declining Earnings/ more failuresMarket /
Productivity improvement
customer focus
Investment to stay competitive
Capital adequacy
Stock market value
Stock market value
Asset/liability management
Industry Overcapacity
Electronic Banking
5

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

When this gateway system was first proposed, access to the internet was fairly new and only a few banks
had the resources and knowledge required to set up their own direct-access lines for customers. Customers
have shown a growing interest in online banking services, and banks have responded by quickly putting in
place proprietary sites on the World Wide Web and offering PC banking.
(HTTP://PAKISTANMBA.JIMDO.COM)

MARKETING AND COMPETITION

In view of the declining profitability and productivity of the banking sector and extremely low rate of
profit percentage, the determination of the financial health of the system requires drastic remedial
measures not only to build up investor confidence but also to combat competition from all over. It is time
that the pros and cons of the oncoming banking era are properly understood and advantage taken of
various opportunities. This will require an efficient marketing approach to bank management in which
target markets will be tackled successfully along with effective satisfaction levels and in which the usual
basic elements product, pricing, promotion and distribution will be taken care of in a proper format of an
efficiently working marketing organization.
The nationalised banks must face competition from private banks, non-banking financial institutions,
foreign banks and others. The competition is in the fields of deposits and credits, foreign trade, consumer
credit and miscellaneous banking activities. The competition will benefit customers and force the banking
system to raise its productivity, minimize expenses, and remain sensitive to evolving issues. Narasimham
Committee Reports while recommending internal autonomy long with compliance with prudential norms
suggested rule-based credit policies, fiscal balance and a gradual movement towards liberatlisation.
To deal with the competition from foreign banks, the Indian banks should go in for diversification and
extension of services as well as expansion of products and business. Economic freedom and innovative
spirit have contributed greatly to the success of the market-oriented financial sector in the Western
countries. Directed credit and investment has done just the opposite. Interventionism is not necessarily bad
provided it is associated with a committed leadership. Indian financial sector had for more than four
decades, neither full economic freedom nor a well disciplined interventionism so that it cost operational
flexibility as well as functional autonomy both of which were concerned with profitability performance
and related factors.
MARKETING CONCEPTS
Its application to Banking, when we 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 a marketing mix to satisfy customers at a profit for the bank.
iii) Planning for each of the source markets & each of the use markets (A Bank needs to be doubly market
oriented it has to attract funds as well as were of funds & services.
iv) Organisation & Administration.
BANK MARKETING
We define bank marketing as follows: 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 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
6

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

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)
2)
3)
4)

The bank cannot exist without the customers.

The purpose of the bank is to create, win, and keep a customer.
The customer is and should be the central focus of everything the banks does.
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
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 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 customers 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.

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

INCREASING IMPORTANCE OF MARKETING IN BANKING INDUSTRY

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
NBFCs are very attractive for the public, because of the wide gap of interest rates offered by banks on
term deposits and that offered by the NBCSs. 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.
MARKETING CONCEPTS ITS APPLICATION TO BANKING
When we 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 its has to attract funds as well as users of funds and services).
iv. Organization and Administration.
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 simplify 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.
8

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

In the corporate world, the personal care dimension thus becomes important. The employees re 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 late, face a number of challenges and the organizations assigning an overriding
priority to the formulation processes get a success.

Marketing strategies

Financing rapid industrial growth

With the Indian economy growing at a blistering pace on the back of strong industrial and
services growth, the Indian companies are looking to build up capacity to meet future
demand.

Banks play a pivotal role in financing this industrial growth.

Technological innovations & challenges

Financial inclusion & Rural and Microfinance

Banks are aggressively adopting the latest technology in order to improve product offerings,
customer service, operational efficiency and risk management systems.

In the quest for new markets and customer segments, as well as with the RBI directives in
this area, banks are looking at the rural and un-banked segments in a new light as a huge
business opportunity.

Convergence to a single solution provider

With pressures on the spreads and the competition in the urban markets increasing rapidly,
banks need to develop new ways to sustain profitability.

Banks led to a plethora of new products, hence becoming a one stop shop for all financial
solutions.

Roadmap by RBI for foreign banks

The RBI has laid out a two phased roadmap for giving greater freedom to the foreign banks in
India.

This has spurred the entry of several other foreign banks in India, along with acting as a
signal to the domestic players to pull up their socks to face the new competitors.

Growth in retail lending

The under banked Indian population as well as the high margin on retail products makes this
a very attractive market for the banks.

The all-inclusive nature of this growth in terms of sectors covers all consumer segments as
well as product segments.
St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

Demand for derivatives & other risk management products

The increasingly dynamic business scenario and financial sophistication also increase the
need for customized exotic financial products.

The complex and peculiar nature of risks faced by the companies are passed onto the banks.

Innovative financial tools and advanced risk management methods are required by the banks
to capitalize on this business opportunity.

Consolidation

The process of consolidation in India aims at ironing out these deficiencies.

The Indian banking industry may soon be characterized by fewer but very competitive banks.

Basel III

The proposed Basel III guidelines seek to improve the ability of banks to withstand periods of
economic and financial stress by prescribing more stringent capital and liquidity requirements
for them. (ICRA Comment - Proposed Basel III Guidelines: A Credit Positive for Indian
Banks, September 2010)

Capital account convertibility

With the possible introduction of capital account convertibility in India, it will provide
additional inflow and outflow of foreign currency.

This exposes banks to additional exchange risk apart from providing an additional source of
revenue generation.

Global expansion plans

Most Indian banks including the PSU banks already have branches abroad, albeit with
minimal presence in terms of market share.

E.g. ICICI and SBI

SME Financing

10

SMEs, with the recent growth, are the new goldmine that the banks have hit upon. With a
host of services ranging from bill discounting, factoring and even venture capital funding,
banks are knocking at their doors, ready to customize offerings to suit their needs and acquire
these customers.

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

Review of Bank Marketing & their Conversion Success

Banks Marketing, Bangalore:
Banks opt for marketing in the following ways in the present scenario:
1. Bank Markets their products on campus:
Pros:
a. Educates the Students on how important Banks are during their journey of Life
b. Creating a habit of savings for future as well as creates a cash pool to meet future emergencies.
c. Helping them to have a secured life with proper Savings (Fixed Deposit/Recurring
Deposit/Certificate Deposit).
d. Extended facilities for saving time such as ATM facilities, Online Transactions, etc.
Cons:
a. In Effective identification of the Segments. Example; where banks targeted the school
students.
b. The products offered to students are not fully understood.
c. Banks costs increase.
d. The conversion ratio of user is less. Example; if issued for 1000 students, there will be hardly
10 users of the product offered.
2. Bank markets their products at Events (like College Fest, Corporate Programmes, etc.)
Pros:
a. Banks market their Brands in the Programmes/College Fest, to increase their Brand image.
b. Banks at programs/fests, try to introduce their New Product by developing new innovative
ideas. Example; The South Indian Bank Ltd. went for marketing their Mahila Account, which
gives more Benefit for Ladies.
c. Banks by sponsoring the corporate events help themselves find potential users.
Cons:
a. The Banks may not select the right events or programs to sponsor. If the selection of the event
is not done correctly it may lead to ineffective marketing.
b. The participants of the bank sponsored programs/fests will not pay much attention to the list of
sponsors. Thus leading to ineffective marketing.
3. Banks Budget for Marketing:
Pros:
a. Banks are provided with a certain amount of funds to be used during a financial year for marketing
their products. These funds help the bank to market a Bundle of Services.
b. The funds allocated will help the bank to determine how extensively they will be able to market a
particular product and which segment they are to focus on
11

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

Cons:
a. The Funds used by the banks will be to extend their service to all the users. However the
marketing channel/way will not be proper Example: Where banks marketing bundle of
service to the school childrens.
b. The Banks use their funds because the allocated funds should be used for that
Quarter/Financial year, so they try to make use of these funds in any which. They dont
look for effectiveness in the marketing.
4. Banks opening a Zero Balance account with certain restrictions: (Axis Bank Azhadhi
Account)
Pros:
a. Banks opening a Zero Balance account to customers through marketing will help to increase in
the number of users.
b. Banks idea of zero balance accounts will help in obtaining a large number of account holders.
Much more than the existing number.
Cons:
a. This accounts opened with customers who may not be aware of the other benefits offered from
the bank. Example: Online Transactions cant be done.
b. The account holder can not set his limit of transactions, because at the bank dealing with
actual monetary value happens and restrictions of the transactions will discourage them from
using the accounts.
c. On of the major problem is the Branch. If the customer has to get any information regarding
his account or making any requisition he/she has to visit the Branch of their account. The
distance of travelling will be long.

12

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

Suggestions & Recommendations.

Most of the banks are starting to adopt technology very fast. However the technology that the bank has set
up can be used only to market their products to their existing customers. Hence, banks are failing to use the
existing technology effectively.

Before banks start to market their products a proper analysis of the market is required. Once this is
done they will be in a better position to determine benefits and the effectiveness of their marketing
strategy.
A proper targeting of the market must be done for their various Bundles of services.
Banks should use various tools of promotion to create awareness of their product to all the
potential users as well as other targeted customers of the product.
An appropriate tool of marketing must be used by the bank to ensure the development of their
Brand name. Hence proper selection of the channel of market their products must be done.
When the banks are marketing and attempting to promote their zero balance accounts, they must
ensure that copies of the application forms are sent to all the respective branches, to ensure easy
accessibility for their potential customers.

13

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

Conclusion:
The marketing done by banks has its own set of advantages and drawbacks. Hence it is vital for banks to
conduct a proper analysis of the market and its marketing strategies before it consider marketing its brand
and bundle of service (Product).
In the present day the segmentation and targeting done by banks are not effective. Hence appropriate steps
must be taken to effectively segment and target the market. i.e., the selection of the segment should ensure
the generation of users in a short or very short time period.

14

St. Josephs College of Commerce

An Overview of Marketing Strategies of Banking Sector in Bangalore

Bibliography
Websites:
a. http://www.ebook3000.com/Principles-of-Service-Marketing-andManagement_22164.html
b. http://www.banknetindia.com/banking/bproducts.htm
c. http://www.slideshare.net/1954bvr/marketing-concepts-for-bankingbvraghunandan
d. http://www.emeraldinsight.com/journals.htm?articleid=1656617
e. http://shodhganga.inflibnet.ac.in/bitstream/10603/562/10/10_chapter%202.pdf
f. HTTP://PAKISTANMBA.JIMDO.COM

Research Papers and Journal:

a. STRATEGIES FOR EFFECTIVE BANK MARKETING IN INDIA Full research paper for 9th BiAnnual Conference of EACES By Dr. Pankaj Trivedi Professor of Finance and Economics K.J.
Somaiya Institute of Management Studies and Research, Mumbai. INDIA
b. Bank Marketing in India: The State of the Art, J.D. Singh, (1985) "Bank Marketing in India: The State of
the Art", International Journal of Bank Marketing, Vol. 3 Iss: 2, pp.48 63

c. International Referred Research Journal, January, 2011. ISSN- 0974-2832 VoL.II *ISSUE-24,
INNOVATIVE MARKETING STRATEGIES IN THE BANKING SECTOR, * Rashmi Dardad, *

Principal, M.S.S. Commerce College, Washi , New Mumbai.

d. Proposed Basel III Guidelines: A Credit Positive for Indian Banks, ICRA Comment, September 2010

Books:
Introduction to Marketing, Armstrong and Philip Kotler (2007)
Principles of Service Marketing and Management, Christopher Lovelock and Wright (ISBN: 013676875X)

15

St. Josephs College of Commerce