Principle Concepts of Service Marketing adopted at Commercial Bank of Ceylon

By

Evan Pathiratne

Services Marketing Concepts Adopted at Commercial Bank of Ceylon

TABLE OF CONTENTS

Services Marketing Concepts Adopted at Commercial Bank of Ceylon

EXECUTIVE SUMMARY
Commercial Bank is the largest private bank in Sri Lanka, and the only Sri Lankan Bank to be listed two years consecutively in the worlds Top 1,000 Banks. It operates a network of 220 service points in Sri Lanka and a network of 521 ATMs, the single largest ATM network operated by a bank in the island. It also operates 17 service points in Bangladesh and is the 4th largest foreign bank in Bangladesh. The following; provides a concise high level overview of principle concepts of service marketing related to the banks operations. Todays customers can shop around the globe, find out more than ever before about the organizations theyre dealing with and share their views with hundreds of thousands, if not millions, of fellow customers. Their expectations - be they consumers, citizens or business customers - are soaring. And they can make or break brands overnight. (IBM Global CMO Study, 2012)

Services Marketing Concepts Adopted at Commercial Bank of Ceylon

CHAPTER 1 INTRODUCTION TO COMMERCIAL BANK OF CEYLON

Commercial Bank of Ceylon (hereafter referred as Com Bank) is noted as one of the best banks in Sri Lanka, according to its annual report published in 2011 below provides a snapshot of its most recent success.

Performance
Business volumes grew: Net Loans and Advances by 27.35% . Increased Deposit base by 22.59% and Total Assets by 19.20%. Gross and Net NPL Ratios improved to 3.43% and 2.08% from 4.22% and 2.78% in 2010. Post-Tax profit increased by 45.71% reaching Rs. 8.0 Bn. Mark.

Achievements
1. Only Sri Lankan Bank to be ranked among the top 1000 Banks in the world for the second time - by The Banker 2. Honored with 5 top accolades as the Best in Sri Lanka 3. Continued to maintain its supreme position as the entity with the largest market capitalization among all listed banks and financial institutions in the country 4. The Banks Bangladesh Operations Credit Rating upgraded to AAA from AA+ by the Credit Rating Information Services Ltd 5. Launched Islamic Banking Unit and Elite Branch for high-net worth customers 6. Opened the highest number of delivery points in a single year - 26 delivery points 7. Single largest ATM Network operated by a bank in Sri Lanka

Table 1. Snapshot of Com Bank Recent Success, (Source: Bank Annual Report 2011)

1.1 Sri Lankan Banking Sector and Competition

24 commercial banks now operate in Sri Lanka: 2 Government Banks, which account for the largest market share, along with 10 private sector banks and 12 foreign banks. Private sector banks control 40-45% of banking assets, while the 12 foreign banks possess about 10-15% of assets. There are also 76 financial service organizations operating in Sri Lanka; comprised of licensed specialized banks, licensed finance companies, specialized leasing companies and primary dealers. Three new banking licenses were issued in 2011 - one to Amana Bank, which specializes in Islamic banking; another to Axis Bank Ltd. of India; and a third, provisional license to a private sector group. Several banking outlets have opened in the Northern and Eastern Provinces since the conclusion of the war in 2009. As a result, more people in those areas now enter formal banking streams and enjoy improved access to financial services. Banking outlets continue to be largely concentrated in the Western Province, although the areas dominance is gradually receding.

Services Marketing Concepts Adopted at Commercial Bank of Ceylon

1.2 COM BANK BRANDS

Figure 1. Com Bank Brand Portfolio as at 2012

1.3 COM BANK PRODUCTS AND SERVICES

The bank has 3 main business operations Personal Banking, Corporate Banking and International Operations. Each of the offered products and services for the operations are listed below. Personal Banking Business Unit Current accounts, Savings (passbook and statement) and fixed deposit accounts, Credit cards, Shopping debit cards, Minors accounts, Teen Saver accounts, High-interest savings accounts, Certificates of deposit, Tiered savings accounts, Paymaster, Housing loans: fixed and floating rates, privilege, foreign currency, Personal loans: fixed and floating rates and top-up facility, Pawning and factoring. Leasing, Development loans, Agricultural and microfinance, Senior citizens deposit accounts, Foreign currency deposit accounts, Utility bill payment via ATM, internet or mobile phone, Mobile phone reload , SMS banking, Bancassurance, Mobile phone banking, Priority banking

Corporate Banking Business Unit Letters of credit, Shipping and other guarantees, Import and export finance, Structured trade finance services, Working capital financing, Project financing, Syndicated loans, Structuring of corporate debt instruments, Company valuation and restructuring, Off-shore banking facilities, Payment solutions for corporate clients, SWIFT facilities, Internet banking, Islamic banking, Investment advice and evaluation, Margin trading facilities, Escrow accounts for software, Bullion Trading, Current accounts, Savings and fixed deposit accounts.
Services Marketing Concepts Adopted at Commercial Bank of Ceylon

International Operations Business Unit Bangaladesh -Bonus savings accounts, Dream Planner savings accounts, DotCom teen saver accounts, Shamriddhi tiered savings accounts, Dollarmart FC account, Personal, term, SME, housing and auto loans, Lease financing, Import demand loans, Packing credit loans, Trust receipt loan ,Corporate privilege loans, Prodriddhi loans Maldives -ComBank eExchange: web-based money transfer facility

1.3 OPERATIONAL STRATEGIES FOR BETTER CUSTOMER SATISFACTION

Figure 2. Com Bank Operational Strategies from Business Unit Perspective

Com Bank Vision is to be the most technologically advanced, innovative and customer friendly financial services organization in Sri Lanka, poised for further expansion in South Asia. To achieve they have formed a mission statement that goes as to provide reliable, innovative, customer friendly financial services, utilizing cutting edge technology and focusing continuously on productivity improvement whilst developing our staff and acquiring necessary expertise to expand locally and regionally.
Services Marketing Concepts Adopted at Commercial Bank of Ceylon

CHAPTER 2 SERVICES MARKETING MIX OF COM BANK

Under this chapter the marketing mix related to the 7 Ps will be discussed in relation to how each P variable is strategically focused to provide best value to Com Bank customers.

2.1 Product
The product can be categorized into 2 main groups. They are Core products and Augmented product. Core are products which define the business(Ex- Savings Bank Account, Current Account, Term deposit, Recurring deposit, Cash credit etc). The product must be specifically designed in view of the needs of customers in well defined homogeneous market segment. These products provide a basis for the development of more sophisticated and marketing oriented products. The next type of product is Augmented product. This is usually a combination of two or more core products and they have strong marketing content as they cater to some specific customer needs. the basic characteristics of services is intangibility. Tangibilising the intangible service that is forming a physiological image on consumer heartshare and mindshare about the products was a challenge to commercial bank. They have done so by specializing their products (creating augmented products) for different consumer segments and branding them accordingly, as shown below. 1. Savings Accounts for different Age Demographics

Figure 3. Com Bank Savings Plans

Com Bank has made the effort to make their customers feel unique, and that they as a bank understand and care about the varied needs of its different customers. They have done this by creating different brands.
Services Marketing Concepts Adopted at Commercial Bank of Ceylon

Minor Saving - Start off with minimum deposit, Heath care benefits Teen Savings - Special branded debit card, shopping benefits Accounts designed to give a feeling of empowerment for teens.( Ex- low interest study loans, access to ComTel Tele Banking Facility and even attend career guidance seminars) Womens Savings Many healthcare benefits, and features that will aid in a womans typical lifecycle (Business Today,2012) Senior Citizens Savings This savings plan also is fine tuned to age demographic of 55+.

2. Debit and Credit Cards for different Income/Class Demographics

Figure 4. Com Bank Card Plans

Even though branches do not have the authority to design new products, they can operate by using matrix of Core-Formal-Augmented product in an effective manner. That is why banks are innovating more and more augmented products through proper value addition in their existing formal products The concept of product packages is by considering customers' behavior. Generally, a customer comes 3. Other The e-Banking platform supports bill payments to telephone, electricity, water, credit cards, insurance, pay TV, schools and rates. The platform comes with self registration, self-addition and registration of payment recipients, customizable templates for payments, multiple payments via a single basket, Com Bank offers Holiday Banking at selected branches island wide to cater to your needs 365 days of the year. And that includes Saturdays, Sundays and even Public Holidays.( At Colombo 07, Katunayake, Galle, Kandy , Majestic city etc) Com Bank offers Super Market Banking that combines shopping with banking. Bank and shop at Commercial Bank units located at Cargills Food City, Arpico Super centers, SunUp supermarkets. ( Do Cash & cheque deposits and withdrawals)
Services Marketing Concepts Adopted at Commercial Bank of Ceylon

2.2 Price
Characteristics that have impact on determining the prices of banking services are perishability and intangibility. In banking industry, price is the amount of money that will determine the exchange rate of bank product. Price determination of the banking products or services is subject to regulation either by the Government or by the Central Bank of Sri lanka . The chance of competition on the basis of price is limited. Com Bank does not provide the highest interest rates in its savings, compared with Finance institutes (Non state Banks) such as Vallibel Finance, Soft Logic Finance or LB Finance etc. But compared with Banks of similar caliber such as Hatton National Bank , they try to compete with to provide the highest interest. More than increasing the rates Com Bank has a strategy of providing the customers the message of how safe and secure the bank is , via print media advertising showing the AAA credit rating. As well as success stories provided under Table1 in their marketing pitch , allowing them to position themselves in the consumers as a safe bank to invest on an deal with.

2.3 Place
The critical aspects of a place/distribution strategy relate to the location of the banks to render their service. Effective distribution will allow delivery of the products or service at the right time and at the right place. The place where the banking products or service are delivered is currently an important element in Com bank marketing.

Figure 5. Com Bank Place Strategy

Services Marketing Concepts Adopted at Commercial Bank of Ceylon

Com Bank as at today has the largest bank owned ATM network, allowing the bank to reach out to customers in different geographies within Sri Lanka better that any other competing bank. Also it has a strong IT arm that constantly keeps on top of innovative trends in banking such as SMS banking (Sunday Observer,2012), Online Banking and Money transfers (Daily News,2012). All this has made the Bank to keep in touch with the busy life styles of its customers.

2.4 Promotion
Any marketing promotion campaign has the objectives of informing the prospective customer and then to persuade him making a purchasing decision. When a Com bank develops a new product, it makes its target customer segment aware of it through marketing promotion. This is done forms such as press advertisement, sales campaign, word of mouth, personal interaction and directly mailing etc Com Bank has found through their marketing research that apart from savings accounts and fixed deposit accounts, the awareness of existence of other deposit schemes are relatively less amongst rural savers. And also their research had pointed out that lending plans, gold loans and educational loans are very popular in the rural areas. As at now companies such as LB finance are exploiting this opportunity by even advertizing their Gold Loan plans on Buses. Apart from the normal marketing channels, Com Bank has a CSR strategy that is aligned with its promotional strategy. Few of the recent CSR initiatives that Com Bank has engaged in are given below. The Commercial Bank of Ceylon has extended a grant of Rs 1 million to award-winning Sri Lankan inventor Indresri Karunatilaka, to commercialize his invention of a wave less boat that can traverse inland waters without disturbing riverbeds. (Commercial Bank Corporate Website,2012) Commercial Bank donates an IT lab to Welikada prison. (Commercial Bank Corporate Website,2012) COM Bank take IT education to two more rural schools. (Financial Times, 2012) Commercial Bank takes English to rural Sri Lanka. (Financial Times, 2012) The above efforts allow the banks to subliminally communicate to the whole country that it has taken an effort to develop the Sri Lankan society as well. As per the press articles Sunday Times (2012) and Commercial Bank Corporate Website (2012), they have frequent promotional offers for their debit and credit cards. Ex- Dine and Smile campaigns which gets promoted at the retails outlets that the promotion is applicable. This is important when influencing buyers, because it allows the customers to make a buying decision away from the normal banking environment.

Services Marketing Concepts Adopted at Commercial Bank of Ceylon

2.5 People
Similar to a typical service industry, banking is a labour intensive industry. The human factor plays a critical role in the running of the business. Humans unlike machines have varying attitudes, moods, and different cultures. People are crucial to the success of any business. It is far more so in a service oriented industry like banking. Each employee in a bank irrespective of his position in the bank hierarchy is both a recipient and provider of service. Marketing as a business philosophy states that every employee is a salesman / brand ambassador of a company. Com Bank HR process takes account the cultural and ethnic balance in its recruitments. In the Com Banks North and East operations they take in a larger percentage of ethnic minorities compared with western province bank operations that is so that the customers in different geographic will feel more at home. The bank provides regular trainings and workshops to its front end staff on customer interaction. A typical customer coming into the bank may be in a stressed out situation to regarding a sensitive money transaction, or he/she may be an information seeker trying to make a buying decision but doesnt know what its the right path to take; typical scenarios like these are common in any banking operation. Com Bank has a HR strategy that gives performance feedback for its front end staff on a periodic basis. So they themselves can improve on their mistakes if any.

2.6 Process
The value of process in Bank marketing strategy can be viewed in perspective from 'value chain concept' by Michael Porter. The concept highlights the key organizational activities which go into marketing the final product to the customer. In the banking scenario, a standard value chain will encompass all activities right from the product conceptive stage down to its marketing at branch level. All such activities ultimately leads maximization of customer's satisfaction when the product is purchased. The value chain concept emphasizes that all these organizational activities have to be closely monitored and reviewed as an ongoing basis and all those activities which do not add value to the product used to be reviewed and modified. Com Bank has a marketing research unit that does research on the latest trends in customer purchases, their needs, and competitor research. This information is then provided to relevant business units which then provides a summary to their respective Deputy GM and Assistant GM. Afterwards brainstorming session will be done with the marketing staff to gauge the feasibility of a prospective new service offering. Com Bank customer care staff is given the responsibility of getting customer feedback, the findings will be provided to the Banks Quality Assurance department. This information will be used for existing product and services upgrades and enhancements. All such activities are done with the customer satisfaction as priority.

Services Marketing Concepts Adopted at Commercial Bank of Ceylon

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2.7 Physical Evidence

Tangibilising the intangible commodity is a major challenge for a bank marketer. Regarding physical evidence One among the important methods is the upkeep of branch premises and interior decorations. Com Bank provides creatively designed stationery, greeting cards , calendars and other gift items for its customers. Also Com Bank product brochures, its website and its annual reports are made with the standard Com Bank themes. Its also reflected in the Bank branch designs as well. Customers from a distance can identify a Com Bank branch.

CHAPTER 3 CHALLENGES & BARRIERS Barriers

One of the main challenges is keeping up with the non banking financial institutes. Such financial institutes target niche market where the customers are looking at the highest interest, they are short term deposit seekers, and are not that conscious of the security aspects. Central Bank mandates allows a Bank to provide interest rate at a restricted level, such restrictions are not present in non banking institutes ( Ex- Vallibel Finance , The Finance etc) .Therefore Com Bank constantly in its marketing message stresses the importance of the security and trust aspects of its savings options, trying to influence the buyer behavior.

Challenges
Keeping up with new technology is also a challenge. Particularly for a Bank, its essential its has ATM deployments to where its customers most require the Bank services. ATM deployment itself should be carefully planned (similar to the planning process involved in deciding a new retail outlet), afterwards the ATMs should be maintained , and also the case transfers should be done securely. The fact that Com Bank processes are heavily automated , as well as a any other Bank runs its operations on a Core Banking applications its should make sure it protects its self from hackers .Otherwise all the confidential data of its customers can be lost or stolen. It is imperative nowadays Bank have such protective measures, and communicates the existence of such measures to its customers in their marketing message.

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REFERENCES
1. Business Today (2012) ,Commercial Bank launches exclusive Savings Account for women ,[WWW] Available from:http://www.businesstoday.lk/article.php?article=7406 [Accessed 2012/10/30] 2. Commercial Bank Annual Report (2011) 3. Commercial Bank receives Finance Asias Best Bank award ,[WWW] Available from:http://www.combank.net/newweb/media-centre/229-commercial-bank-receivesfinanceasias-best-bank-award-[Accessed 2012/10/30] 4. Commercial Bank Corporate Website (2012) ,Dine & Smile at 20 restaurants with Commercial Bank Credit and Shopping Debit Cards ,[WWW] Available from: http://www.combank.net/newweb/media-centre/2012/07/31/223-dine-a-smile-at-20restaurants-with-commercial-bank-credit-and-shopping-debit-cards [Accessed 2012/10/31]

5. Commercial Bank Corporate Website (2012) ,Indresri Karunatilaka wins inaugural The Ray award powered by Commercial Bank, [WWW] Available from:http://www.combank.net/newweb/media-centre/2012/10/22/239-indresrikarunatilaka-wins-inaugural-the-ray-award-powered-by-commercial-bank[Accessed 2012/10/31] 6. Commercial Bank Corporate Website (2012) ,Commercial Bank donates an IT lab to Welikada prison ,[WWW] Available from: http://www.combank.net/newweb/media-centre/2012/08/29/228-commercial-bankdonates-an-it-lab-to-welikada-prison[Accessed 2012/10/31] 7. Daily News (2012) ,Commercial Bank rewards MoneyGram recipients,[WWW] Available from:http://www.dailynews.lk/2012/10/02/bus19.asp [Accessed 2012/10/31]
8.

Daily News (2012) ,Etisalat, ComBank to power mobile banking with USSD technology ,[WWW] Available from:http://www.dailynews.lk/2012/09/28/bus25.asp [Accessed 2012/10/31]

9. Financial Times (2012) ,Mother Sri Lanka, COMBank take IT education to two more rural schools, ,[WWW] Available from:http://www.ft.lk/2012/10/27/mother-sri-lankacombank-take-it-education-to-two-more-rural-schools/ [Accessed 2012/10/29] 10. Financial Times (2012) ,CDB signs up for SLIPS through COMBank ,[WWW] Available from:http://www.ft.lk/2012/09/18/cdb-signs-up-for-slips-through-combank/[Accessed 2012/10/31] 11. Financial Times (2012) , Commercial Bank takes English to rural Sri Lanka ,[WWW] Available from: http://www.ft.lk/2012/10/13/commercial-bank-takes-english-to-ruralsri-lanka/ [Accessed 2012/10/31]
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12. Global CMO Study (2012), IBM Corporation 13. Sunday Times (2012) Commercial Bank of Ceylon and Dialog join in Managed Services venture ,[WWW] Available from:http://www.sundaytimes.lk/120923/businesstimes/commercial-bank-of-ceylon-and-dialog-join-in-managed-services-venture12940.html[Accessed 2012/10/30] 14. Sunday Observer (2012), ComBank launches advanced e-Banking ,[WWW] Available from:http://www.sundayobserver.lk/2012/10/21/fin18.asp[Accessed 2012/10/23
15.

Sunday Times (2012) Discounts at hotels for Com Bank credit card holders ,[WWW] Available from:http://sundaytimes.lk/index.php?option=com_content&view=article&id=25027:discounts-at-hotelsfor-com-bank-credit-card-holders&catid=77:news&Itemid=563

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