Volume | 3 Issue | 2

Re-engineering Operations: Marketing Financial Services - Product, Process and Pricing- Special Reference to Banks

ISSN | 2319-5576

Re-engineering Operations: Marketing Financial Services - Product, Process and Pricing- Special Reference to Banks
Dr. Usha N. Patil* Abstract: Reengineering is a new management concept that involves fundamental reinvention of business processes to achieve dramatic improvements in performance. It entails investment on new technologies in the areas of management, marketing, sales and customer relations to enable companies serve their clients more efficiently and effectively and to achieve the highest level of customer satisfaction. This research paper attempts to explore major financial business model of product to be a successful marketer. It is divided into five sections. Section 1 The Introduction of banking industry product, need for re engineering and re engineering requisites. Section 2 Business process reengineering cycle and objectives of the business model. Section 3 Product reengineering Section 4 imperatives for banking transformation and product reengineering and finally Section 5 conclusions Keywords: Business Process Reengineering, Banking, Business Model, Marketing, Financial Service The range of products too was limited. Most of the products or services offered SECTION 1 were similar in features across the banking industry and interest rates were controlled INTRODUCTION TO BANKING by the regulator, giving no scope for any INDUSTRY PRODUCTS: competition between the players. The only parameters that were left out were the quality of customer service and delivery of The Indian banking industry is more than a customer service. Consumers were captive century old and all along till a decade ago and had no alternative but to accept what financial products offered by the banks was offered to them by the industry. were simple and traditional. Banks looked at the market with blinkers on and as a result of which imagination and aggressiveness took back seat. Prior to independence, only certain wealthy individuals knew banks and the branch heads were knows as agents. After independence, banks had become development oriented and started looking at various sectors of industry, trade and agriculture. Banking industry saw a tremendous growth in terms of its network and business volumes without any significant marketing efforts. In the beginning of the last decade as the Indian economy progressed towards liberalization and with the advent of technological revolution the regulators opened new vistas to the players, which totally changed the face of the industry. These factors ignited the engine, which moved forward the financial services industry by leaps and bounds at a greater speed. The industry extended its arms in multi-directions against the induced competition from non-banking finance companies and new private sector banks.

*Head, Department of Economics, Gopikabai Sitaram Gawande College, Umarkhed. [150]

Volume | 3 Issue | 2

APOTHEOSIS: Tirpudes National Journal of Business Research (TNBJR)

ISSN | 2319-5576

NEED FOR RE ENGINEERING The combined effect of the above mentioned developments brought a tremendous change in the attitude of the service provider and the consumer. Banking is now turned into buyers market and the customer could demand not merely necessities but also luxuries. At present, banking is no longer about money alone as even customers financial management is being adopted by offering better delivery options from time to time. Only those who can foresee and fulfill customers requirements and communicate faster could be the winners. It is, therefore, unwise for banks of any size to think that they can remain immune to sustaining the marketing efforts to meet the challenging needs of todays customer for the players to survive in the industry. RE - ENGINEERING REQUISITES Now, the customers have choice of banks and a variety of products to choose from. The tariffs have crashed, as pricing has become a vulnerable criterion in marketing the financial products in the de-regulated market. The perennial danger in the launching of a successful financial product after a through market research is that it can be duplicated by a smart competitor in no time. The entire effort in innovation and design of a product will become a matter of historical interest and competitor reaps the benefit by just possessing the hacking skills. Launching of a product is not done as a reflex action, But after a series of careful and calculated steps, as the ground is
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slippery. It is to be conceived, created, tested, nurtured and refined like a formation of natural pearl in an oyster out of a raindrop. With all these hurdles a new business model, which develops the products that revolve on the following three Ps, would make headway into the successful marketing of financial products. This will sustain internal-external pressures only if re-engineered from time to time and achieve the objectives against each p. Product Attractive Process Deliverable Pricing Competitive A product to be successful, should be attractive with a process that is smoothly and effectively deliverable and priced competitively. This is to be scrupulously observed right from the product design till the ultimate delivery and review of the product performance to create a separate niche in the market and to win the customer loyalty.

SECTION 2 BUSINESS PROCESS REENGINEERING CYCLE BPR is a concept that was proposed in 1990s by MIT professor Michael Hammer and Campy, Chairman of the CSC management consultancy company. In this book "Corporate Restructuring - Enterprise Revolution Declaration". They defined BPR as: "in order to take a leap to improve the cost, quality, service, speed

Volume | 3 Issue | 2

Re-engineering Operations: Marketing Financial Services - Product, Process and Pricing- Special Reference to Banks

ISSN | 2319-5576

and other operational foundation of the modern enterprise, the enterprise should take fundamental rethinking and radical reform in business process." Business process re-engineering is a business management strategy, originally pioneered in the early 1990s, focusing on the analysis and design of workflows and processes within an organization. BPR aimed to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. In the mid-1990s, as many as 60% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to have plans to do so. BPR seeks to help companies radically restructure their organizations by focusing on the ground-up design of their business processes. According to Davenport (1990) a business process is a set of logically Objectives of the business model: Product development in the sky a. Need Identification b. Wrapping of the product development c. Product Branding e. Product life cycle and reengineering Technology support is the backbone Pricing of Product Fig.2

related tasks performed to achieve a defined business outcome. Re-engineering emphasized a holistic focus on business objectives and processes related to them, encouraging full-scale recreation of processes rather than iterative optimization of sub processes. Business process re-engineering is also known as business process redesign, business transformation or business process change management. Show Fig 1

Fig 1. Business process re-engineering

Most of banks around the world follow similar cycle referred above. The difference lies in the effectiveness and the speed with which one completes each component of cycle. The objectives listed above will ensure position in the market at
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Volume | 3 Issue | 2

APOTHEOSIS: Tirpudes National Journal of Business Research (TNBJR)

ISSN | 2319-5576

a competitive pricing by keeping the processes simple and smart. PRODUCT DEVELOPMENT There is always a gap that exists between the range of customer requirements and the availability of products in the market and various means of bridging this gap are the starting point of evolution and designing of many of the new products. Well designed products with focus on service and technology will convert old style conservative bank into high profile institutions, which could snatch the market share of giants in the industry. This leads us to consider the following key factors for product development.
a. Need Identification

through questionnaire and customer response cards from multiple touch points like branches. ATMs, Call centre and online banking by using the artificial intelligence and logic banks can also harness existing customer data to extrapolate future buying behavior. Need matrix is generally as detailed below Fig.3 Need matrix Individual Customers Safety Corporate Customers Safety

b. Wrapping of the product c. Product Branding d. Product life cycle and re-engineering a. Need Identification The challenge for todays banker is to continuously develop products and services, which meet the customers requirements in a more convenient and more efficient way. Also, the challenge is to develop a range of option, which allows a customer to choose the product or service and meets the best of their specific requirements. The advantage for banks now is that can collect customer data and requirements

Liquidity Liquidity Payment & receipt Payment & receipt Mechanisms & Mechanisms & convenience convenience Investment Trade facilitation Avenues Fig.3 It is essential to revert to the need matrix from time to time to look for ways and means to introduce more and better products and services. Field staff should be encouraged to maintain open channel of communication with top management to make them feel and to give feedback anytime. In fact need identification has given birth to Market Pull model of product development, where the customers ideas or suggestions have strong influences on product innovation.

Market Pull model

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Re-engineering Operations: Marketing Financial Services - Product, Process and Pricing- Special Reference to Banks

ISSN | 2319-5576

New Market Needs

Marketing Fig 4

New Facilities/Services

b. Wrapping of the product Quality dimensions for the core product are reliability, features, conformance, i.e., meeting specifications to justify expectations, design in terms of aesthetics, attractiveness, look and feel, tangible service quality and intangibles viz., responsiveness, prompt help, listen to customers, individual care. Wrapped around the core product, like rings of onion, is providing additional flavor, texture, protection etc., which can be diagrammatically represented as below Fig 5 Intangibles cannot be easily measured and are mostly subjective. But it enhances the day for customers by providing single point of contact, turnaround time for core services, time guarantees, extra working hours, total accuracy of services, automatic compensation if guarantee is not met with. c. Product Branding Branding pattern can be at two levels, one at organization level and the other at product level and the brand name is derived by linking the two. Alternatively, the brand name reflects the target segment or special features of the product. Employing the professional agency to christen an attractive brand name would have an impact in the market and acts as a catalyst to cross sell the other financial products many a times. There are occasions when a product is known only by brand name like piggy bank for children savings account. Inviting suggestions from the staff members sometimes leads to discovery of effective brand name which develops
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Fig 5 Core Product Many academics have observed that the core product represents 20 percent of the impact and 80 percent of costs, while the product surrounding services and intangible aspects of product have 80 percent of the impact on customer choice and represents only 20 percent of the product cost.

Volume | 3 Issue | 2

APOTHEOSIS: Tirpudes National Journal of Business Research (TNBJR)

ISSN | 2319-5576

innovative thinking and participative Technological developments have accelerated to a level due to which product life cycles have shortened considerably and forced the players to cut product development time. d. Product life cycle and re-engineering Product life cycle diagram is explored in the form of curve compared to life of people, political systems and corporations as well as products. We start, we grow, we blossom, we fruit, we wither and we die. Product life cycle is shown in Fig. 6

e. Technology support is the backbone: The marriage of technology and banking has changed the face of global banking like never before. Therefore, banks aim at IT strategy and business strategy, which are developed in tandem. But the rate of technical innovation is very high and every innovation opens an opportunity for business development. Keeping an eye on the potential of information technology and an attempt to exploit the same will give the customers a superior product. Sometimes, acquiring latest technology will demand a technology push model for product development. Technology push model is characterized by high level of investment in information technology, systems and procedures and operations. Under this model, new technological tools influence the operations and systems of the organization which determine the new products or service to be extended to the customers.

It is a good practice to start quest for new product before the favorite product peaks. There is life beyond the curve only if a new product is started or the product is reengineered before reaching the peak as shown as sigmoid curves Fig 7.

Fig 7 A learning pattern is a result of two parallel

Volume | 3 Issue | 2

Re-engineering Operations: Marketing Financial Services - Product, Process and Pricing- Special Reference to Banks

ISSN | 2319-5576

Sigmoid curves culture. Technology Push Model

New Technology

Operations and Systems Fig 8

New Facilities/Services

Normally, available technology and market demands influence the product design or re-engineering process. This leads to the adoption of balanced model for product development. Balanced model is an integration of Market pull and Technology push model and takes into account the positive features and reduces the deficiencies of both the models. It is ideal to attempt to follow this model to introduce or refine a product, as it is safe and at the same time is an aggressive approach.

Pricing of Product: Pricing is no longer fixed to reflect status. Today it is a matter of value for the customer. Leading banks sitting pretty on low cost resources have an advantage in pricing in the market and get away with marginal pricing whereas smaller banks have to pay up in pricing to compensate for comparative weaknesses in distribution networks and brand strengths. In many cases the pricing has become vital and unless it is competitive it can make or break the success of the product.

Price determination factors shown as Fig 9

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APOTHEOSIS: Tirpudes National Journal of Business Research (TNBJR)

ISSN | 2319-5576

Fig 9

SECTION 3 PRODUCT REENGINEERING Product reengineering: Customers today look to get a complete solution rather than a single/one-off product constructed using the latest and state of the art products. With the amount of existing competition and the presence of similar products in the marketplace differentiation is the key to be unique and to jump ahead of the competition. The ramification is companies investing in their non core products as addition or extension of previous products or to interface with new technologies, new standards or new devices. Great demand for new and innovative products at lowers costs creates huge challenges for companies. The rate at which new products can be brought into the market and marketed into new locations or categories apart from product differentiation determines the survival in the market. Arisen out of this market

requirement is outsourcing in the product engineering space. SECTION 4 IMPERATIVES FOR BANKING TRANSFORMATION AND PRODUCT REENGINEERING Four imperatives for banking transformation Attract and retain customers Make your customer an organizing principle to re-align data insights, operations, technology and systems.

Engage your customers in insightful conversationsnot just a pleasant banking experience. Provide a consistent crosschannel experience, such as those from retailers or airlines, including self-service, mobile apps and social integration.

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Re-engineering Operations: Marketing Financial Services - Product, Process and Pricing- Special Reference to Banks

ISSN | 2319-5576

Capture every customer moment of truth in real-time across both staffed and automated channels, to trigger appropriate actions. Market and sell services and products based on life events as informed by customer data and predictive analytics. SECTION 5 CONCLUSION Reengineering is a new endeavor, and firms applying it to front-office, customerfacing activities may learn from the projects discussed here. Reengineering opportunities in marketing and sales may be characterized as: fundamental generating entirely new definitions of what is valued by customers; radical repositioning information technology, a major cost and asset of companies; dramatic - requiring breakdown of internal and external boundaries; and process oriented - changing how customers are

engaged and acquired, and relationships are intensified.

how

Any financial organization, as corporate citizen, does justify its existence not merely to make profits but also has a social responsibility to offer to its customers with useful products that upgrade their life standards, provide financial security and convenience to conduct their transactions at an acceptable cost. This objective can be an action supported by vision and foresight, to understand the implications and by channeling the resources, talent and energy in right direction and with right attitude. There is no doubt that in the next decade, financial industry will change beyond recognition but the principles of product creation will remain mainly on the consumer as projected in the business model detailed herein . HarperCollins Publishers, Inc. Keenan, W. (1993), "If I Had a Hammer," Sales & Marketing Management, 145 (December), 5661.Pearlstein, S. (1993), 4. "A Rage to Reengineer," Washington Post, (July 25), H, 1:2. Roach, S. S. (1991), "Services Under Siege: The Restructuring Imperative," Harvard BusinessReview,69(SeptemberOctober),82-91. 5. Voss, B. (1993), "Reengineering: Setting a Course for Radical Change," Journal of Business Strategy, 14 (6), 52-57. Whitehill, R. (1994), "Softer Side Racks Up
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1. REFERENCES Dunn, D, and Thomas, C. (1994), "Partnering with Customers," Journal of Business & Industrial Marketing, 9:1,34-40. 2. Dunn, D, Thomas, C. and Young, R. (1985), "Banking: The Marketing Battle Heats Up." Business, (January-March), 34:1, 28-37 3. Hammer, M. and Champy, J. (1993), Reengineering the Corporation: A Manifesto For Business Revolution, New York:

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APOTHEOSIS: Tirpudes National Journal of Business Research (TNBJR)

ISSN | 2319-5576

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Kamesam Article of RO: FSPPP, IBA Bulletin issue, March, 2010 12. A.A.kumar & Vinay Gupta paper of Global Trust Bank ltd. April 2009

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