Unit – 3

Retail Strategy and Channels for

delivery
Main Channels for Delivery of Banking Services

The six main channels used for the delivery of banking services. The
channels are: 1. Branch Banking 2. Mobile Banking 3. ATM Channel of
Banking 4. Mobile Banking or Phone Banking, Tele-Banking 5. PC
Banking, y, Self Service Banking 6. Internet Banking, Online Banking,
E-Banking.

Channel # 1. Branch Banking:

A branch of a bank is a place, office, unit where all banking operations are
done under the single roof. People go to the branch for their banking
requirements. This is the most popular and therefore most important channel
of the Bank.

It is a place where customers can visit personally and can make use of
different kind of services and banking products in one place. In case of any
difficulty the customers are able to seek advise of the bank staff, remove their
all doubts, get their all clarifications about banking operations.

Branch in fact is a place that serves as a channel of sales and services and
bank employees can play vital role of customer satisfaction with smile. The
branch is a channel that can boost the image of the entire bank by developing
personal relations with customers and enhancing the customer relationship
management of the bank.

Extension Counters:

The Extension Counter is a part of Branch Banking. Whenever any Branch

deals with some huge Business House, A big Institution or Organization may
be Government or Private it has to perform banking transactions in Bulk. In
addition to keeping the accounts of such big houses, branch has to provide
banking services to the staff of these organizations which may run in
thousands in number. Other ancillary services are also required to be
provided by the branch.

In case such organizations are not located very near to the branch the dealing
branch opens a counter in the premises of such organization to facilitate the
easy access to banking requirements and deploys some staff on such
Extension Counters. The business conducted by these extension counters is
always on behalf of the main branch and is taken into the account of the
branch itself.

In other words the counter functions like a mini branch and provides all
banking services either on the counter itself or through the main Branch.
Previously banks were required to obtain license from RBI for opening
extension counters now RBI has permitted all banks without obtaining its
permission.

Channel # 2. Mobile Banking:

In the era of stiff competition every bank want to reach to maximum people to
enhance their customer base. In this process some of the banks have started
Mobile banking services. A mobile van is equipped with necessary
equipment’s and a few staff members are assigned the duty on such vans.

These vans roam about the local area in order to provide door to door service
to its customers. But in such a system very limited banking services are
provided. The main services include receipt and payment of cash only. Some
ancillary services like balance enquiry, cheque collection are also provided.

Channel # 3. ATM Channel of Banking:

In simple words The ATM is known as Automated Teller Machine. Before the
introduction of ATM in 80’s the people were familiar with one teller only. A
human being sitting behind the cash counter and making cash payments or
receiving cash from customers. For cash transactions one was required to go
to the teller physically and that too within the working hours of the bank. The
invention of the ATM has changed the entire scenario.

Now you can withdraw money 24 hours a day without going to bank through
an ATM installed in a nearby place. It has provided customers an option to
access the banking services beyond the regular banking hours. ATM is a
machine for receiving and dispensing cash round the clock. In its initial stage
it was able to dispense cash only without able to perform any other function.

With advancement of technology the present time ATMs have been equipped
with multitask technology and can perform following services:

i) Cash withdrawal,

ii) Cash Deposits,

iii) Balance Enquiry,

iv) Providing mini statement,

v) Deposit cheques, and

vi) Fund Transfers.

Some more advance ATMs provides services like paying utility Bills,
Recharging Mobile services, Cheque Book requests. Etc.

The services from ATM can be availed only after one applies with the bank a
request to issue him an ATM card. On receiving the request bank issues an
ATM Card. This card carries a Personal Identification Number popularly
known as (PIN). This number is generated by the computers of the bank at
random. Only the customer and nobody else know this number.

This number in inscribed on a magnetic strip along with the Account number
of the customer from which customer would like transact his banking
transactions. This magnetic strip is in fact data storage devise about the
particular customer and is secret one. While using the ATM card with
magnetic strip fixed on its back works as tool to access the account to be
operated.

As soon as the customer swipes the card, his account number is activated.
ATM reads the information contained in the magnetic strip and finding the
valid account number synchronized with PIN number, it advises the customer
to enter the PIN number. After ensuring the authenticity of the user the ATM
provides a field containing different services. Customer is free to choose
among the list of services and proceed with the desired transactions.
Channel # 4. Mobile Banking or Phone Banking, Tele-Banking:

It is matter of surprise that many people are using mobile or phone banking
without knowing that restricted services are being provided to them. Like
ATM it is another electronic banking Channel which provides round the clock
24 hours banking for the customers. You deposit some amount in cash or
through cheques a SMS shall flash on your mobile informing that such and
such amount has been credited in your such and such account.

Likewise the moment any withdrawal is made from your account a similar
message shall be sent on your mobile. This phone banking is one part that
banks are doing themselves to keep their customers updated about the
transactions of their respective accounts.

On the other part customers can approach to their banks and request for
using the Phone banking or tele-banking. The bank shall enable its customers
with their computerized system of IVR. This IVR technology is known as
Interactive Voice Response which automates interactions with telephone
callers.

Banks are increasingly turning to IVR to reduce the cost of services, inquiries
and support calls. The system is enabled with input and responses to be
gathered via spoken words with voice recognition.

The IVR solutions enable users to retrieve information from banks or are send
information, requests and make queries. With the invention of IVR the
practice of phone banking is increasing day by day because it helps in
accessing the bank services from anywhere like Home, Office, Workplace or
anywhere else.

The banks computers are connected with telephone (IVR is phone technology)
and the telephone is linked with the modem. The customers are identified by
a code word/keyword (in case of ATM it is PIN) after due identification of the
callers a suitable reply or solution is sent on phone. With the help of phone
banking the customers may get reply of their enquiries or services without
going to bank.

IVR system also contains pre-recorded solutions. In case of Land Line the
customer after dialing to the bank receives the guided instructions to proceed
further like keying his/her account number. For identification six digit date of
birth is also to be dialed.
IVR system provides number for availing the service. Each number pertains to
different service. The customer has to press the number of desired service.
Than IVR indicates further actions and following the same a customer can get
the desired service.

Services provided through Phone banking are limited like:

1. Asking for account balance,

2. Status of a cheque deposited for collection,

3. Request for cheque book or statement of account,

4. Record stop payments, and

5. Information on bank products.

Off course enquires relating to banking services are also attended.

In case of Mobile banking a set of text messages or SMS can be used. Bank
balance, cheque status, status of loan applications can be obtained through
this system. As already stated the banks send SMS on mobile to keep its
customers informed about any type of transaction in their accounts.

It is under active consideration of RBI to provide mobile banking services for

transfer of amounts also. It approved it would be within reach of everyone to
transact banking business through mobile phones in near talkes.

Channel # 5. PC Banking, y, Self Service Banking:

The internet banking as known today has gone through many phases of
development. In each phase it was known by different names. In its initial
stage in early 80s it was known as Home Banking means the banking
transactions that can be done while sitting at home. During contemporary
period it was also known as Self Service banking.

Initially the customers were able to perform some routine banking functions
at home For availing home banking services telephone or cable connections
were required and transactions were performed with the help of a terminal,
keyboard and a monitor (TV or PC).

With the help of this facility customers were able to access to bank services
like inquiry of account balance, moving funds between accounts, payment of
bills and buy/sell investments or securities. All this was done by the
customers themselves on their own system while sitting home, office, or work
place.

That is why it was also known as self service banking although everything was
done online. It was than a luxury for the customers. In New York this services
were started in 1981 by some banks. In the year of 1983 it was started in U.K.
by Bank of stock land. But the facility at that time was limited some restricted
areas and also to only some select class of customers.

But now the internet banking or online banking has changed the entire
scenario of banking industry throughout the world. From luxury it has
become necessity. Banks are no longer confined to branches only, it has
become a world vide phenomena.

Channel # 6. Internet Banking, Online Banking, E-Banking:

In India now most of the banks have their own websites for the purpose
of offering banking services on the internet. The Reserve Bank of India
has also issued guidelines for internet banking which all the banks are
required to follow. The multinational and private sector banks have been
successful in setting up internet banking but some Public Sector banks
had been lagging behind because of their inherent difficulties.

Most of the public sector banks have very large network of their
branches and good number of them are located in far flung remote areas
and they face lack of connectivity. These banks have very large base of
customers and include illiterate customers also. Some are still following
old dated and traditional type of application methods and are not flexible
for change.

Providing infrastructure for starting internet banking to wide spread

network of branches in one go may not be possible. But it is really
credible that these banks have done much and are now near to a stage
when all will be web enabled.

As per RBI planning the banks were to enabled for internet

banking in three levels:
1) The basic level service in which the bank’s websites disseminate
information on different products and services to customers. It may
receive and reply to customers’ queries through e- mails. It is also known
as Information Only Service which provides general purpose information
like interest rates, branch location, bank products and their features etc.

2) Simple transactional websites which allow customers to submit their

instructions, applications for different services, and queries on their
account balances. They do not permit any fund based transactions on
their account. It is also known as Electronic Information Transfer system
which provides specific information like account balances, transaction
details, statement of account etc.

3) The third level of internet banking services offered by fully –

transactional websites which allow customers to operate on their
accounts for transfer of funds, payments of different bills, subscribing to
other products of the bank, and to transact purchase and sale of
securities. It is also known as Fully Electronic Transactional System.

This system requires high degree of security controls as it comprises

technology covering computerization, networking and security, inter-
bank payment gateway and legal infrastructure.

Types Of Bank Account In India

Bank accounts help you keep your money safe. At the same time, they
also help you compound your investment or savings by allowing you to
earn interest on your deposits.

Banks operating in India fall under four categories: private banks, public
sector banks or nationalized banks, foreign banks and cooperative banks.
All four of these categories of banks allow citizens to open a bank
account in India.

To understand how to select a bank account that suits your

requirements, you need to know the kinds of bank accounts that all four
types of banks offer.

There are six kinds of bank accounts from which you can choose:

1. Savings Account

These are deposit accounts meant to help consumers save their money. A
savings account can be opened by any individual in India who holds an
Aadhaar card and a PAN card, both of which are mandatory to open a
bank account in India.
Key Features of a Savings Account

Limit- There is no limit to the amount of money that can be saved in a

savings account. The number of transactions may be capped in some
cases, depending on your bank.

Balance-A consumer is expected to maintain a mandatory minimum

balance in most cases to maintain a savings account.

Exception to minimum balance requirements is for select accounts, such

as savings accounts that have been opened under the Indian federal
government’s financial inclusion plan called the Pradhan Mantri Jan Dhan
Yojana (PMJDY).
Under PMJDY, one savings account with zero balance is opened per
person. These accounts fall under the Basic Savings Bank Deposit
Accounts, which limit the number and value of deposits that can be
made, and withdrawals are capped at four per month, including ATM
withdrawals.

Interest - A consumer earns interest on the deposits made in a savings

account. This interest rate varies from one bank to another. For
example, interest rate for savings bank deposit is 2.70% for account balance
of up to INR 1 lakh at India’s largest public Benefit - sector bank, State
Bank of India. While, interest rate for savings bank deposit is 3% for account
balance below INR 50 lakh at India’s largest private sector bank, HDFC
Bank.

. Savings accounts serve as the easiest way to earn interest on idle

money lying in banks.

2. Current Account

Current accounts are mostly business accounts where money is

frequently transferred between financial accounts. These accounts are
best suited for transactions by corporations and business owners for
daily business activities.

Key Features of a Current Account

Limit - There is no limit to how much money can be put in a current

account. Current accounts also do not have a transaction limit.
Balance - A current account has a higher minimum balance requirement
than savings accounts.

Interest - Consumers do not earn any interest on current accounts.

Benefit - These accounts allow an overdraft facility, which permits

consumers to withdraw more money from the account that there is
actually in the account.

3. Salary Account

These accounts are opened by banks upon the request of big

corporations and businesses that pay their employees through banks.
Each employee is eligible to maintain a salary account in which the
company they are employed with credits a monthly salary.

Key Features of a Salary Account

Limit - There is no limit to how much money can be put in a salary

account. Each employee receives salaries based on disbursal from their
employees. Independent transactions can be made by employees to
transact between this kind of bank account with another.

Balance - A salary account is a zero balance account and employees can

withdraw all the money credited in the account at any point.

Interest -Employees do not earn any interest on salary accounts.

Benefit - These accounts can be converted into savings accounts at any

point in time. Upon inactivity for more than three months, banks hold the
rights to convert these accounts into savings accounts, the regulation for
which is different.

4. NRI Account

These accounts are opened by no

n-resident Indians who wish to maintain a financial bank account in

India. There are three kinds of NRI accounts that can be opened:

Non-Residential Ordinary Account (NRO)

These accounts hold deposits in Indian rupee denomination. The money

deposited is from proceeds earned in India.

Key Features of an NRO

Limit - There is no limit to how much money can be put in an NRO

account.
Balance - Any amount of balance can be maintained.

Interest -The principal and the interest earned on that principal fall
under the taxable category.

Benefit -These accounts are unaffected by the rate of conversion. An

NRI can open a current account, a savings account or a fixed deposit
account via the NRO account.

Non-Residential External Account (NRE)

These accounts hold deposits in Indian rupee denomination. The money

deposited, however, is not from proceeds earned in India; in other words,
the money deposited is earnings or savings from the country where the
non-resident Indian lives.

Key Features of an NRE

Limit: There is no limit to how much money can be put in an NRE

account.

Balance: Any amount of balance can be maintained.

Interest: The principal and the interest earned on that principal do not
fall under the taxable category.

Benefit: These accounts bear the impact of a prospective change in the

rate of conversion. An NRI can open a current account, a savings account
or a fixed deposit account via the NRE account.

Foreign Currency Non-Residential Account (FCNR)

These accounts hold deposits in the currency approved by the central

bank of India, the Reserve Bank of India. Any NRI or a person of Indian
origin can hold deposits in an approved currency in which they earn their
income. If the income is earned in a currency other than the approved list
of currencies, then an approved currency is chosen for the conversion of
the earnings or the proceeds to be deposited. FCNR accounts are often
called FCNR (B) accounts where the (B) stands for banks.

Key Features of an FCNR

Limit. There is no limit to how much money can be put in an FCNR

account.

Balance. Any amount of balance can be maintained.

Interest. The principal and the interest earned on that principal do not
fall under the taxable category.

Benefit. These accounts bear the impact of a prospective change in the

rate of conversion. An NRI can open only a fixed deposit account with a
minimum maturity of one year via the FCNR account.

5. Recurring Deposit (RD) Accounts

These accounts are opened as deposit accounts by consumers who are

interested in earning interest on their money. Commonly known as RDs,
these accounts are the easiest ways to earn an income higher than that
offered by savings accounts.

Key Features of a Recurring Deposit

Limit. The minimum limit to open an RD differs from one bank to

another. Consumers can opt for a minimum limit as low as INR 1,000 per
month and open an RD account with any bank of their choice.

Balance. RDs are deposit accounts that allow consumers to collect a

monthly amount set at the beginning of the tenure of the account.

Interest. A fixed amount is deducted every month and collected in the

RD account, where it earns interest month-on-month. This interest is
often higher than savings accounts.

Benefit. The flexible tenure of the RD makes it a consumer-friendly

financial decision. Consumers can opt for anywhere from six months to
up to 10 years to deposit their money in an RD and earn interest on the
deposited amount. RD accounts can be discontinued before the end of
the tenure without losing the interest earned.

6. Fixed Deposit (FD) Accounts

These accounts are opened to earn interest on deposits for a fixed period
of time until maturity. Fixed deposits are among the safest financial
instruments to save and earn interest on idle money.

Key Features of a Fixed Deposit

Limit. There is no limit to how much money can be put in a fixed deposit
account. The higher the money allocation, the more interest is paid at the
end of the account’s tenure.

Balance : An FD account holds a lump sum amount as investment.

Interest : The bank pays an interest on this deposit. This interest is paid
once the tenure of the FD is complete. Upon breaking the FD in the
middle of its tenure, consumers risk losing out on the interest and often
receive only the principal amount.

Benefit : FDs are risk-free investments with high returns. Most banks in
India offer an FD interest rate higher than savings accounts’ interest
rates and RDs’ interest rates, owing to the fixed tenure benefit a bank
enjoys in the case of FDs. Banks can hold big sums for a fixed period and
consumers can make higher volatility-free returns, turning the financial
instrument into a win-win for banks and consumers.

Bottom Line

Banking in India is tailor-made by the public sector, as well as private

banks, to suit different kinds of requirements for different age groups
and genders to equip all citizens to become financially enabled.

As the country is taking small yet bold steps toward financial inclusion,
citizens’ awareness and knowledge will go a long way in further
empowering the collective efforts of the nation in growing together.

Technology and Banking Delivery

Channels
Technology has touched every aspect of our lives in the recent years and
banking has been no exception. Huge strides made by information
technology have allowed banks to provide much better levels of service
to their customers at drastically lower costs. The deployment of
technology has also changed the channels via which customers
interact with their banks. In this article, we will trace these changing
channels of banking service delivery.

Traditional Delivery Format: bank Branches

Bank branches form the traditional channel for delivery of banking

services. Almost every bank in the world has branches although of late
banks have reduced the reliance on these branches and are attempting to
replace expensive branches with inexpensive technologies.

However, for the moment, branches still remain one of the most popular
methods of delivering banking services because they enable banks to
offer all services from the same location. Also, the size of the bank
 branches, in terms of real estate, has reduced considerably in the past
few years. This is because of the technological innovation that has made
it possible to have better storage and processing without utilizing any
space. Technology has affected every area of banking and this includes
traditional models like bank branches.

Modern Delivery Formats

The modern service delivery formats vary significantly from the branch
based model. First of all the focus is on efficiency. This means that the
banks aim to provide more and more services at the least cost possible.
Secondly the focus is on educating the customers and making them
accustomed to banking via these new channels.

Here is a list of some channels for providing banking services that have
been developed recently.

1. Automated Systems:

Automated systems have become extremely popular in the past few

years. This is because they generally cost less than humans performing
the same service. For instance the maintenance cost of an Automated
Teller Machine (ATM) is far less than that of a human teller. Also, the
machine can provide service 24 by 7 which a human cannot possible do.
Therefore, along with ATM’s a wide variety of other automated systems
have also been deployed in bank branches. Some of the other automated
system include cash deposit machine, machines which update pass books
or provide bank statements or machines to recharge debit cards with
predetermined values. Automates systems are now predominant in
developed countries like United States and Europe where labor costs are
high. These systems have also started reaching developing countries in
the third world.

2. Telephone Banking:

Telephone banking is the provision of banking services over a telephone

line. Therefore, telephone banking is also equipped with providing almost
all the services that a traditional brick and mortar bank can. However,
phone banking faces an additional challenge. Phone bankers also need to
identify whether they are speaking to the correct person or else they may
end up divulging sensitive information to the wrong person. Mechanisms
have been created in order to ensure this. Such mechanisms include
phone banking passwords and confirmation of personal information that
can only be provided by the account holder.

Phone banking provides customers with extreme convenience as they can

avail the service 24 by 7 and from any geographical location. Also, phone
banking allows banks to reduce costs as they can outsource their call
 centers to lower cost countries like India where the work can be done at
a fraction of the cost. Hence, a win-win situation is created.

3. Internet:

Internet banking is the provisioning of banking services over the web.

Like phone banking, internet banking can be used to replicate all the
services that are offered in brick and mortar branches. Also, like phone
banking, identification of customers is a problem. Internet banking faces
its unique sets of risks like phishing attacks and hacking of customer
accounts. However, the development in technology has allowed the banks
to build secure systems which can defend against such attacks.

The main reason behind the massive thrust on internet banking is that
the processing capability gets transferred from bank staff to users.
Hence, if a user needs a bank statement, they can obtain it themselves.
The requirement of bank staff is completely eliminated and this helps the
bank save massive costs. It is for this reason that banks insist on
educating customers about internet banking and prefer to deal with
customers in that manner. Some banks charge customers additional
money if the avail a service in a brick and mortar bank branch that can
also be availed online.

4. Smartphone:

Developments in information technology have made it possible for people

to conduct banking transactions while on the go. The cell phones of
people are connected with high speed internet. Also, mobile applications
have been developed which enable customers to obtain all the services
that they would be able to avail at a branch. Once again the threats of
security attacks and hacking are present. However, these are risks that
are being mitigated.

The banking industry believes that mobile banking of m-banking is the

future of the industry wherein people will be able to avail any service
they require at the click of a few buttons. Technology is therefore
enabling banks to provide customers with unprecedented service levels
while simultaneously providing their shareholders with unprecedented
return on equity,

Technological developments in computing are certain to find more

applications in the baking world. Therefore, the forerunners in the
banking industry understand that their business has become intertwined
with technology and the next industry leader will be someone who is able
to utilize technology to the maximum.
 Kiosk Banking

Kiosk banking is an initiative by the Reserve Bank of India (RBI) to foster

financial inclusion and security in rural and remote areas of the country
where access to all banking facilities is limited, mostly due to the lack of
a bank branch in the area.

Understanding Kiosk Banking

Financial inclusion through kiosk banking is essential for ensuring

financial security of all citizens of the country, regardless of who they are
and where they reside in the country. In kiosk banking, because of the
lack of bank branches, the customer cannot go to the bank. Instead, the
bank comes to the area to process transactions, allow credit, and enable
access of these services to low income groups. Kiosk are small booths
with internet connections established in villages with personnel to help
the customers avail basic bank services. Most mainstream banks in all
the sectors, private, public and cooperative, open a kiosk for the people.
The services provided are usually withdrawals, deposits, remittances,
etc. The kiosks act as a touchpoint for the banks and the people. When
requests are initiated in the kiosk, usually like the opening of a bank
account or request for making a deposit, they are transferred to the
nearest branch which processes it.

Highlights of Kiosk Banking

 Services that a kiosk banking offers are opening of accounts, deposit and
withdrawal of cash, money transfer to other branches of the bank, etc.
Checking of account details is also possible.
 Kiosks also exist in urban areas in the form of ATMs. Urban kiosks are
unmanned mechanical devices that are watched by security personnel
and they prompt self operation.
 The poorer groups of society can open a ‘no-frills’ bank account, which is
essentially a zero minimum balance bank account, along with other
benefits specific to low income groups in remote areas.

POS mean on a bank

POS in banking means that you use your debit card to purchase at a
point of sale (POS)

location, such as a store’s cash register or POS system. In addition, POS

on bank statements is the transaction type labeled “POS”.

You may wonder here, “What is a POS purchase?”. If so, you need to
understand POS and how it works. A POS system combines software and
devices that merchants use to record and complete sales transactions.
And here is the process of using a debit card in a POS transaction:
 Cashiers insert your card into the reader.
 You enter the 4-digit personal identification number (PIN) on a terminal.
 POS checks your entry by validating the PIN stored on the card’s chip.
 POS verifies online with data on the chip if your bank account has
enough money to complete the purchase, and if so, updates the account
with the purchase information.

What is POS debit?

POS debit means a point of sale debit in banking terms. A POS debit card
transaction means that you use your debit card with PIN to purchase.
However, there is still one more important thing you need to keep in
mind with the question “What does POS debit mean?”. It’s different from
direct benefit transfer (DBT) purchases, which means that no PIN was
required when you swipe or insert your debit card for that purchase.
Any such transactions that you make get posted to your account
immediately. Then, you can review your POS transaction meaning on
your bank statement by the spending amount and sometimes even the
merchant’s name.

What is the difference between POS and debit?

POS transaction includes all purchases made by either an ATM card or a
debit card with an access device, whether authenticated using a PIN or a
signature.
On the other hand, debit card transactions can include POS transactions
completed with a debit card, as well as signature-authenticated purchase
transactions that are switched via the national credit card networks.
The decrease in cash transactions after COVID-19 and the needs to
understand product demand have led to the adoption of advanced POS
systems that can help merchants track and reconcile credit card
transactions.

Unit-4
What is CRM in banking?

CRM is a term that has been around for years but it’s not always clear
what the acronym stands for. CRM is simply Customer Relationship
Management and encompasses all of the activities involved in managing
your customers, from marketing to sales to customer service.

It can be applied broadly or very specifically depending on which

industry you’re working in.
In banking, CRM helps banks manage their relationships with existing
clients as well as attract new ones by focusing on key issues such as
customer retention and acquisition strategies.

For example, one of the most important aspects of CRM for bankers is
capturing information about current accounts so that they can offer
better-informed advice and personalized products to these customers in
the future. This means building up an extensive knowledge base about
individual

What is a CRM in the Banking Industry?

Customer relationship management (CRM) is a necessity in any

customer-focused industry. For banks, it’s an especially useful tool for
meeting sales and marketing goals and exceeding customer expectations.

CRM software is a tailored solution that helps banks implement

customer-centric strategies. Under one system, bank tellers and
employees can:

Store customer data such as contact information, products used, and

interactions.

Schedule appointments, send personalised emails and respond to social

media posts.

Update customer profiles in real-time with notes or new information.

Visualise, nurture, and manage leads in their sales pipeline.

Create reports that analyse customer behaviour, marketing campaign

performance, and more.

The importance of CRM in banking

Frequently, bankers understand what CRM stands for and how it

functions. Yet, not all realize the importance of CRM in banking and don’t
integrate such systems in their businesses. It looks that your bank can be
lucrative even without a CRM but don’t confuse yourself as customer-
focused products boost everything related to the interaction process
significantly. We can mark three key utilities of CRM:

To retain potential and existing clients - It would be distressing to

neglect a customer after a strong promo campaign, wouldn’t it? CRM
facilitates tracking and remembering all leads like phone calls, emails,
and other requests from users.
To control employees and set standards - While staff in banks without
CRM handle various accounting methods like Excel or even their own
memory, all-in-one solutions get rid of chaos and bring everything
together. This enhances the performance.

To collect data and consolidate it - Management tools establish

unified databases which combine essential information like contacts and
orders. With CRM, it is possible to analyze and plan the sales process
more accurately.

One of the benefits of CRM in the banking sector includes a kind o

f guidelines for bank owners. If you start your first business and don’t
know how to interact with clients, ready packages will be suitable.

In this case, you borrow developers’ vision who rely on the best world
practices and CRM standards. Nevertheless, consulting with professional
development teams is the best option for new managers and chief
executives. We suggest all-in-one services for all who need advanced
CRM in banking. We come with comprehensive analysis, consultations,
and full-stack development of custom personalized systems.

Segmented Marketing

How does that saying go? It costs twice as much to acquire a new
customer as to keep

an existing one? Banks can use their CRM systems to segment

customers based on their account information, engagement history, the
types of services they use, etc.

They can build campaigns with messaging that resonates. Competition

for customers is high, so relevant offerings and cross-sell opportunities
are crucial for keeping

existing customers engaged with your institution.

Types of Bank deposit customers

Banks open accounts for various types of customers like individuals,

partnership firm, Trusts, companies, etc. While opening the accounts, the
banker has to keep in mind the various legal aspects involved in opening
and conducting those accounts, as also the practices followed in
conducting those accounts. Normally, the banks have to deal with
following types of deposit customers.

Individuals

Joint Hindu Families

Partnership Firms

Limited Liability Companies

Clubs and Associations

Trusts

1. Individuals

The depositor should be properly introduced to the bank and KYC norms
are to be observed. Introduction is necessary in terms of banking
practice and also for the purpose of protection under section 131 of the
Negotiable Instruments Act. Usually, banks accept introductions from the
existing customers, employee of the bank, a locally well-known person or
another bank.

A joint account may be opened by two or more persons and the account
opening form etc., should be signed by all the joint account holders.
When a joint account is opened in the name of two persons, the account
operations may done by

Either or survivor

Both jointly

Both jointly or by the survivor

Former or survivor

When the Joint account is in the names of more than two person, then the
following operations are made:

All of them jointly or by survivors

Any one of them or by more than one of them jointly

Non-resident individuals (NRIs)

Non-Resident Indian means, a person, being a citizen of India or a person

of Indian origin residing outside India. A person is considered Indian
Origin when he or his parents or any of his grand parents were Indian
National. If at any time held an Indian passport, (nationals of Bangladesh
and Pakistan are not deemed to be of Indian origin), a spouse (who is not
a Bangladeshi or Pakistan national), of a person of Indian origin shall also
be deemed to be of Indian origin. Non-resident falls generally into the
following two categories:

A person who stay abroad for the purpose of employment or to carry on

business activities or vocation or for any other purpose for an indefinite
period of stay outside India and

Indian National working abroad for a specific period.

Facilities for maintaining bank accounts are available in India to Indian

National or origin, living abroad. The exchange control procedures
relating to these facilities have been simplified. The details of various
deposit schemes available to NRI’s are as follows:

Various Types of NRI Accounts

Ordinary Non-resident Rupee Accounts (NRO Accounts);

Non-Resident (External) Rupee Accounts (NRE Accounts);

Non-resident (Non-Repatriable) Rupee Deposits (NRNR Accounts); and

Foreign Currency (Non-Resident) Accounts (Banks) Scheme (FCNR (B)

Accounts).

While NRO and NRE accounts can be kept in the form of current, savings
bank, recurring deposit or term deposit accounts, deposits under NRNR
and FCNR (B) schemes can be kept only in the form of term deposits for
periods ranging from six months to three years.

2. Joint Hindu Family (JHF):

Joint Hindu Family (JHF) (also known as Hindu Undivided family) is a

legal entity and is unique for Hindus. It has perpetual succession like
companies; but it does not require any registration. The head of JHF is
the Karta and members of the family are called co-parceners. The JHF
business is managed by Karta.

3. Partnership firms

A partnership is not a legal entity independent of partners. It is an

association of persons. Registration of a partnership is not compulsory
under Partnership Act. However, many banks insist on registration of a
partnership. In any case, ie stamped partnership deed or Partnership
letter should be taken when an account is opened for a partnership. The
partnership deed will contain names of the partners, objective of the
partnership, and other operational details, which should be taken note of
by the bank in its dealings.

4. Joint stock companies (Limited Liability Companies)

A company is registered under companies Act has a legal status

independent of that of the share-holders. A company is an artificial
person which has perpetual existence with limited liability and common
seal. Memorandum and Articles of Association, Certificate of
Incorporation, Resolution passed by the Board to open account, name
and designations of persons who will operate the account with details of
restriction placed on them are the essentials documents required
to open an account.

5. Clubs, Societies and Associations

The clubs, societies, association etc., may be unregistered or registered.

Account may be opened only if persons of high standing and reliability
are in the managing committee or governing body. Copy of certificate of
registration and Copy of bye-law, certified to be the latest, by the
Secretary/President are required to be obtained and also a certified copy
of the resolution of the Managing Committee/Governing body to open the
bank account and giving details of office bearers etc., to operate the
account.

6. Trust Account:

Trusts are created by the settler by executing a Trust Deed. A trust

account can be opened only after obtaining and scrutinizing the trust
deed. The Trust account has to be operated by all the trustees jointly
unless provided otherwise in the trust deed. A trustee cannot delegate
the powers to other Trustees except as provided for in the Trust Deed. A
cheque favoring the Trust shall not be credited to the personal account of
the Trustee.

THE CONCEPT OF MARKETING

Marketing management is the process of planning and executing the

conception, pricing, promotion and distribution of ideas, goods and
services to create exchanges that satisfy individual and organizational
objectives. Basically, marketing is a business technique devised to sell
products and services keeping in mind the needs and requirements of
existing and prospective customers. Marketing is based on five concepts:

Product concept

Production concept

Marketing concept

Social marketing concept

Selling concept

IMPLEMENTING THE MARKETING CONCEPT

To implement the marketing concept/ companies need to focus on 3 basic

areas:

Target market: The first step is to identify the target market. This can
be by market research and deciding which target market will give the
best returns.

Value proposition: In this concept/ the companies decide what strategy

they need to adopt. The combination of above- the-line (ATL) and below-
the-line (BTL) activities should be adopted. The kind of value should the
firm create and deliver also decides marketing success.

Demands of the target market: A preferred step in marketing

research is the consumer preferences study. The study will help the firm
determine the needs wants and demands of the target market.

Marketing of Banking Services

Bank marketing is the sum of functions directed at providing services to

satisfy customers' financial needs and wants more efficiently and
effectively than the competitors in consonance with the organisational
objectives.

Application of marketing techniques in banking means a coordinated

organizational effort to reach to the customer to fulfil specific needs for
getting patronage through use of people, products or services, price,
promotion, branch outlets and distribution policies for maximising
customer satisfaction.
In a competitive market, banks sell their services through branch
counters throughout the entire country through the employees who act
as salesmen recruited by the management.

Features of Bank Marketing

Banking products cannot be seen or felt like manufactured products

(intangibility)

In banking products' marketing/ the product and the seller are

inseparable (inseparability)

Banking products are introduced and delivered at the same time; they
cannot be stored and inspected before delivering (perishability)

Standardisation of banking products is difficult (variability)

NEED FOR BANK MARKETING

Awareness among customers: Modem technology has caused

awareness among customers of the developments in the financial system.
Financial needs of the customers have grown up to a large extent like
quick cash accessibility, money transfer, asset security, increased return
on surplus funds, financial advice, deferred payments etc. With a wide
network of bank branches, customers expect the banks to offer a more
and better service to match their demands and this has forced banks to
take up marketing in right earnest.

Quality of service as a key factor

With the economic development, fast change has been seen in every
activity, and banking has been no exemption. Service quality is a key
aspect in the competitive world, which is market driven and banks have
faced this emerging scenario. In fact, it cannot be ignored that quality
will in future be the sole determinant of successful banking ventures and
marketing has to focus on this most crucial aspect.

Growing Competition

Increased competition is a matter of concern for Indian banking industry

and other agencies both, local and foreign, offering value-added services.
Competition is no more confined to resource mobilization but also to
lending and other areas of banking activity. The foreign commercial bank
with superior technology, speed in operations and imaginative
positioning of th

eir services has also provided the necessary reasons to the Indian banks
to innovate and compete in the market.

Technological Advances

Technological innovation has resulted in financial product development

especially in the international and investment banking areas. The
western experience has showed that technology has not only made
execution of work faster but has also resulted in greater availability of
manpower for customer.

Objectives of Bank Marketing

The core objectives of bank marketing are:

 Maximising the profitability

 Providing high return on investment to investors

 Developing an image and reputation
 Developing new products to meet the needs of emerging customer
requirements

The specific objectives of bank marketing are:

 Increase in deposits
 Increase in loans
 Diversification of products
 Directing customers to specific products.

The achievement of these objectives requires that the marketing sector

should perform the following functions:

 Analysis of customer behaviour, attitudes and market segmentation

 Conducting market research to collect, investigate analyse
customers' attitudes and market developments to achieve
maximum attainment of objectives
 Designing new products and/or services
 Focusing on Advertising, publicity and promotion
 Keeping check on pricing
 Defining strategies, administering and controlling the marketing
programme
  Predicting changing customer profiles and consequent product
changes

Bank Marketing in India

Initially, the marketing concept was introduced in the Indian banking

sector in the form of advertising and promotion. The first big step in the
direction of bank marketing was initiated by State Bank of India in 1971.

Group-wise segmentation was launched by SBI to understand the specific

needs of groups of customers. The bank recognised itself on the basis of
major market segments, dividing the borrowing customers bases on
activity and four major market segments, i.e. commercial and
institutional, small industries and business, agriculture and personal and
services banking segments.

A few schemes like home loan accounts, education loans, instalment

credit etc. were introduced to the traditional services range.

Foreign banks also adopted different marketing techniques successfully

in India in fund mobilisation and promotion of consumer credit.

Post liberalisation there was remarkable growth in competition in the

financial sector, especially in the banking sector.

The public sector banks along with old private sector banks, new
generation banks, and foreign banks revamped marketing strategy.

Competition leads to quality gap as some competitors, especially foreign

banks and new private banks provide quality core and peripheral
services using advanced information technologies and develop

Aggressive marketing and technological innovation help private banks to

make inroads into the bank market.

In most banks, management personnel had little idea and experience

about marketing in a competitive environment. They previously focused
mainly on deposit mobilisation and achieving deposit targets.

The current marketing strategy shifted away from deposits to capturing

prime customers wanting credit facilities, raising funds from the market,
offering more and more technology oriented products and even
recruiting and retaining skilled

personnel

The marketing of loans has become a major occupation of management

at all levels.
 Indicator Pre-liberalization Post-liberalization
Customer Mandated by committee Consciously practised
feedback reports and law as a way of banking
Product Done based on regulator's
Willingly undertaken
Innovation guidelines/suggestions
Tools Manual Technology based
Delivery channels like
Delivery ATMs, Tele- banking,
Branch
Channel Internet Banking, Mobile
Banking
Branch Similar to government Providing supermarket
Ambience offices buying experience
Orientation Inward looking Outward looking
Consumer Less importance of
Customer-oriented
Status customers

Table: Competition in the Indian industry before and after liberazation:

Challenges of Bank Marketing in India

 Competitive Environment and Technology: Huge capital base,

latest technology, innovative and globally tested products/services
are the areas where the domestic banks need to improve to keep
pace with technology, innovation, and globally accepted products.
 Transformation of Human Capital: Another important challenge
is the transformation of human capital. There is the need to
develop and manage the human resources to make them adaptable
to the changing environment. Banks should provide on-the-job
training to the staff to work with latest technology.
 Rural Marketing: The Indian banks face challenge to enhance
rural marketing to increase their customers. Banks should open
their branches not only in the urban and semi-urban areas but also
in the rural areas.

Marketing trends in the Indian banking industry

Insight-Driven Marketing
The significance of consumer insight and data for financial marketers will
be more important than ever. In the past, a majority of financial
marketers had no access to big data because they lacked the skills and
budget to make an impact. New tools and technologies make advanced
analytics available for all sized organisations, while digital channels and
the desire for personalized offers make the investment in data analytics
mandatory for success.

Integration of Mobile Communication

Mobile has become a part of a bank's or credit union's marketing plan as
consumers do a significant proportion of their researching, shopping and
buying on their smartphones. This includes a mobile optimized and
responsive website, and may also involve custom apps and mobile
targeted campaigns. Leading organizations in the retail and other
industries are already leveraging the mobile device for location-based
offers and sales messaging. As consumers switch to online and mobile
banking channels, marketing budgets must do the same.

Increasing Focus on Return on Investment (ROI)

Marketing campaigns should be measured to gauge success. The
advanced tools can now look at the customer purchase journey to
determine what blend of channels were used in the decision process.

With costs being cut across most organizations, the need of validating
the return on marketing investment has never been more important.
Being able to link specific revenue outcomes to marketing initiatives can
"close the loop" for financial marketers. These same marketers must now
shift where they spend their budgets to reflect this potential.

Customization and Personalization

With the improved consumer experience and the potential of advanced
data analytics in banking, personalized communication must get a higher
priority in the years to come.
The benefits of personalization can be in the form of higher response and
conversion rates, brand loyalty and repeat customers, amplified reach
and increased relevance. Consumers are inclined towards custom
solutions based on their personal situation in real time.
Consumers expect emails to have more relevant content. Consumers will
have less tolerance for online and mobile advertising that is too highly
personalized.
Optichannel Marketing
Besides multichannel or omnichannel, the concept of Optichannel in
marketing refers to the ability to communicate and support a consumer's
shopping and buying process using the channel that is best for them
given the consumer's overall objective. The aim is to support a smooth
transition between digital and physical delivery channels as well as
between digital and mass media communication channels for the best
possible experience.
Financial marketers need to look beyond single channel silos of
marketing, where there is a disconnect between the ways a consumer
absorbs marketing and how banks and credit unions send messages.

Social Media Mainstream

Social media marketing has become mainstream in financial industry
since most of adults today use social media. Of all the social networks,
Facebook is the most popular for marketers since the network is the
largest and the network has built a top-notch ad system. Facebook's data
and targeting tools help marketers to personalize their social campaigns.
Twitter, Snapchat and Instagram are also becoming more popular in
certain areas of the population. The present challenge for financial
marketers is to link social media campaigns to sales. This challenge is
what is holding most marketers back from increasing investments in
social marketing.

BANK MARKETING STRATEGIES

Market strategies are designed after taking into account the strengths
and weaknesses of the bank. The factors which play significant role in
framing marketing strategies include market penetration, market
development and new product range for customers of various segments.
Blogging: A blogging strategy for a bank can increase traffic to its site,
build its social media profiles, and establish expertise. To produce a well-
designed, SEO-optimized blog the following aspects are taken into
consideration:

 Delivering a great user experience.

 Providing a call-to-action that ties in the services.
 Using images and videos to diversify content.
 Establishing a consistent and easily readable post format.
 Social Media: It is a must-use tool for bank marketing and
establishing a brand presence amongst your competitors. The
following points are remembered while creating content that is
self-promoting:
 Posting frequently or regularly.
  Preparing for negative customer feedback, broadcasting the same
message across all channels.
 Facilitating word of mouth through customer engagement.

Customer Service: Unique customer service can be built into the

marketing strategy and ultimately used to boost brand image. A great
brand image helps to define a bank more distinctly in the marketplace,
and it can create a sense of perceived value in the minds of consumers
which often equates to profitability over the long haul. Effective customer
service can be delivered through: integrate self-service with agent
assistance; handling calls more intelligently; initiate proactive contact;
make more effective use of customer data and segmentation; use inbound
marketing to reach customers outside the branch, etc.

 Digital media
 Customers are connected to digital media very easily.
 Graphics, videos, audio (radio or podcast), and web pages are
extensively used to innovatively engage with customers.
 With digital media/ content marketing strategies can be developed
to connect with customers and position your bank for the best kind
of marketing.
 Building a strong bank brand often requires more thought towards
strategy, creativity, and innovation to effectively drive consumer
engagement and to maximize the advantages of today's digital
media channels and display opportunities.
 Rewards programmes: For designing a rewards program for
customers, three primary goals are considered. There is an
increase in consumer loyalty when they become committed to a
brand and make repeat purchases over time.
 Extending customer retention.
 Cross-promoting services and products.
 Increasing customer loyalty through consistent use of debit card.
 Customer retention is influenced because the longer you stay with
the bank, the more free money you earn.
 Rewards program providing the perfect opportunity to cross-
promote their savings accounts. Banks have a wide choice in their
marketing plans.
 Attracting and acquiring customers with price-based promotions,
or develop new customer relationships with a more brand-based
strategy.
 Strategic Partnerships
 Partnership with organisations helps make a strong customer base.
This could be through entertainment companies, real estate
agencies, or nonprofits.
 Connecting with partners and Grafting strategic programs
positions bank distinctively among competitors.
  Banks need to realize that they offer parity services and potential
customers have an extremely difficult time differentiating between
banks.
 Customer Data Analysis
 Data gives a clear insight into your existing customer base.
 With data, banks can better understand behaviour patterns and
offer relevant deals that fit within their customers' daily lives.
 Banks need to leverage their data to better understand and serve
their existing client base.

Major Components of Bank Marketing

The marketing strategy of a business consists of seven components which

are named as marketing mix. The combinations of marketing mix of a
bank vary with the situation or environment. The marketing mix includes
product, price, place, promotion, process, people and physical evidence.
These are considered as the 7 Ps or 7 elements of bank marketing
strategy. An appropriate blend of these Ps is necessary for a well-
orchestrated marketing strategy.

1. Product: The bank services are of intangible nature. Different

varieties of products are attractive, innovative and competitive.
Service/product of an optimal mix of core and peripheral
dimensions will increase the attraction of the product. Banking
products are divided into core products, formal products and
augmented products/peripheral services. For a bank, core products
are savings, banks, term deposits, current accounts, cash credits,
overdrafts, term loans, etc. Formal products include two or more
core products having strong marketing content to meet some
customer needs, e.g. unfixed deposit scheme. The Augmented
product is a formal product related to peripheral services, e.g.,
ATM card or credit card.
2. Price: Price includes the interest, fees and commission charged
and paid by the bank. Price decides the profitability of the banks.
Indian Banks have not felt any need to develop their own pricing
strategy. But the scenario has steadily changed to deregulated
market due to liberalisation. Through RBFs credit policy, banks
have flexibility in their pricing policy.
3. Place: This component requires placing or distribution of services
to the ultimate customers. The service mix of banks moves through
different distribution channels, such as, the branches, the
executives and the staff. A suitable location/ point for the
establishment of a bank branch is very important. It should give
convenience and comfort to the customers. The behavioural profile
and efficiency of the bank personnel is also equally important.
Effective marketing requires good appearance and comfortable
surroundings.
 4. Promotion: It involves communication with the
customers/prospective customers on almost all the aspects of the
marketing mix like advantages of different products, details of how
it is delivered, details on the interest and commission paid and
charged by the bank, etc. Marketing promotion aims to inform the
prospective customers and to persuade them through
advertisement, personal interaction and sales campaign. Four
components of promotion strategy are advertising, sales promotion,
personal selling and publicity.

(a) Advertising: It includes non-personal presentation and promotion of

ideas, goods and services by an identified sponsor. In bank marketing, it
is the bank which directly talks about itself, and pays for doing so. The
bank tells the prospective customer the features of its products and how
it satisfies the customer.
(b) Sales Promotion: It is effective in motivating the customers and
bank employees. It comprises of short term activities to boost the
banking business. It helps in increasing market share and promoting
loyalty towards a brand. The tools of sales promotion include gifts,
contests, fairs and shows, discounts and commissions, low interest
financing, entertainment and travelling.
(c) Personal Selling: It involves informing the prospective customers
and persuading them to purchase products through personal
communication. In personal selling, inter-personal communication
happens. Moreover, personal selling may be interchanged with
persuasion.
(d) Public Relations and Publicity: Public relation is a two-way
communication system to develop mutual understanding between a
banking organisation and its customer. Most probably it is in the form of
a press release to newspapers and banking magazines or financial news.
In banks, there is a Public Relations Department and Public Relations
Officer. The other components of public relations are press bits
distributed during press conference, speeches, seminars, annual
reports, charitable donations, sponsorships, community relations, etc.

5. Process: With 156 reforms in the banking industry, basic changes

in banking systems and procedures are necessary for achieving
customer satisfaction. Customer-friendly and marketing-oriented
processes will give uniqueness to the product. The work-flow in a
bank branch should be customer-oriented and the reporting system
should be abolished to reduce the workload of the bank staff.
Information and communication technology-based systems and
procedures will smoothen the banking process.
6. People: They are an important component of bank marketing
strategy as human factor is very influential in services marketing.
The quality of service provided by a bank depends on the quality of
people available to the bank. A combination of dedicated and
 committed team of efficient professionals and new information
technology could produce the best results.
7. Physical Evidence: Banking products are intangible, so banker
needs to use the instrument of physical evidence in different forms
in banks. Proper upkeep of branch premises and interior decoration
of branches are originally part of place strategy. Another area of
physical evidence is the stationery items like cheque book, pass
book supplied to customers and other stationery materials in use.

Customers' Opinion on Marketing Strategy

 Customer awareness on new marketing strategies during

liberalisation period reflected the customer's opinion on marketing
strategy.
 Commercial banks have been provided the freedom to compete
with each other and with other financial agencies after
liberalisation period. They have been forced to apply new
marketing strategies during this period.
 Most of the customers are quite aware of banks' new marketing
strategies. Awareness is high in urban branches, followed by semi-
urban branches and rural branches. There is considerable
difference among locations regarding customers' opinion.
 Customer's opinion on need for marketing in the liberalised
banking scenario revealed that majority of people treated
marketing as very much essential. Only a few customers rejected it.
 Marketing is considered very much essential in public sector banks
(PSBs) in comparison to old private sector banks (OPSBs).
 There was considerable difference in the opinion of urban/ semi
urban and rural respondents regarding bank marketing.

Aggressive Bank Marketing

 The concept of aggressive marketing is extensively used in many

banks, especially in new generation banks in the form of aggressive
lending and mobilising deposits at higher rates of interest.
 Majority ban personnel/ opposed aggressive marketing'in banking
in the context of financial and banking crisis in the developed
countries.
 Sector-wise analysis revealed that a little less than half of PSBs
opposed it while more than half of OPSBs opposed it.
 While a higher percentage of employees in rural branches was
against aggressive marketing in banks, majority in urban branches
favoured it.
  Aggressive marketing customers expect proper and timely services
and relationship marketing.
 Banks are aggressively marketing a new form of high cost credit
intended to boost their fee income at the expense of the most
vulnerable consumers.

Methods of Introducing New Products

 Personal contact: It involves face-to- face selling and includes

data-based marketing, relationship marketing and benefit selling to
effectively communicate to consumers. A major advantage of
personal contact is the opportunity to ask and answer questions
and offer rebuttals to consumer objections or misperceptions.
 Media: Print media and electronic media have become a major
source of knowledge regarding banks and bank products. Sector-
wise and location- wise analysis revealed the difference in opinion
of customers regarding media as a source of knowledge.
 Telephone contact: Telemarketing is a method of direct
marketing in which a salesperson contacts customers to buy
products or services, either over the phone or through a
subsequent face to face or Web conferencing appointment
scheduled during the call.
 Pamphlets: They can be used as a source of knowledge about
products. Sector-wise analysis revealed that use of pamphlet is
higher in urban branches in comparison with rural areas.
 Existing customers: New bank marketing strategies focus on
retaining existing customers and drawing in new customers
interaction showed that banks are very much conscious about
competition from other financial agencies including new generation
banks and foreign banks. So to compete with others, new
strategies, including effective use of customer relationship
marketing, are required.
 Websites: It refers to a broad category of advertising that takes
many different forms, but generally involves any marketing activity
conducted online. The interactive space of the Internet simplifies a
bank's ability to track, store, and analyze data about a customer's
demographics, personal preferences, and online behaviour.

The banking system is on the threshold of change and continuity in

growth and development, of individual customer needs and corporate
practices, technology and competitions. The role of marketing in the
banking industry continues to change. For several years the primary
focus of bank marketing was public returns. Then the focus shifted to
advertising and sales promotion. That was followed by concentration on
the development of a sales culture. At present, the target is on the
individual customer meeting and even anticipating their needs and
developing trusting, long- term relationships by delivering high quality
personalized service. Marketing both as a philosophy and an activity will
contribute immensely to the realization of goals both immediate and
future.

Market Segmentation: Definition, Example, Types, Benefits

What Is Market Segmentation?

Market segmentation is a marketing term that refers to aggregating
prospective buyers into groups or segments with common needs and
who respond similarly to a marketing action. Market segmentation
enables companies to target different categories of consumers who
perceive the full value of certain products and services differently from
one another.

Understanding Market Segmentation

Companies can generally use three criteria to identify different market
segments:

1. Homogeneity, or common needs within a segment

2. Distinction, or being unique from other groups
3. Reaction, or a similar response to the market
4. Market segmentation is an extension of market research that seeks
to identify targeted groups of consumers to tailor products
and branding in a way that is attractive to the group. The objective
of market segmentation is to minimize risk by determining which
products have the best chances of gaining a share of a target
market and determining the best way to deliver the products to the
market. This allows the company to increase its overall efficiency
by focusing limited resources on efforts that produce the
best return on investment (ROI).

Types of Market Segmentation

There are four primary types of market segmentation. However, one
type can usually be split into an individual segment and an organization
segment. Therefore, below are five common types of market
segmentation.

Demographic Segmentation
Demographic segmentation is one of the simple, common methods of
market segmentation. It involves breaking the market into customer
demographics as age, income, gender, race, education, or occupation.
This market segmentation strategy assumes that individuals with similar
demographics will have similar needs.

Example: The market segmentation strategy for a new video game

console may reveal that most users are young males with disposable
income.
Firmographic Segmentation
Firmographic segmentation is the same concept as demographic
segmentation. However, instead of analyzing individuals, this strategy
looks at organizations and looks at a company's number of employees,
number of customers, number of offices, or annual revenue.

Example: A corporate software provider may approach a multinational

firm with a more diverse, customizable suite while approaching smaller
companies with a fixed fee, more simple product.

Geographic Segmentation
Geographic segmentation is technically a subset of demographic
segmentation. This approach groups customers by physical location,
assuming that people within a given geographical area may have similar
needs. This strategy is more useful for larger companies seeking to
expand into different branches, offices, or locations.

Example: A clothing retailer may display more raingear in their Pacific

Northwest locations compared to their Southwest locations.

Behavioral Segmentation
Behavioral segmentation relies heavily on market data, consumer
actions, and decision-making patterns of customers. This approach
groups consumers based on how they have previously interacted with
markets and products. This approach assumes that consumers prior
spending habits are an indicator of what they may buy in the future,
though spending habits may change over time or in response to global
events.

Example: Millennial consumers traditionally buy more craft beer, while

older generations are traditionally more likely to buy national brands.

Psychographic Segmentation

Often the most difficult market segmentation approach, psychographic

segmentation strives to classify consumers based on their lifestyle,
personality, opinions, and interests. This may be more difficult to
achieve, as these traits (1) may change easily and (2) may not have
readily available objective data. However, this approach may yield
strongest market segment results as it groups individuals based on
intrinsic motivators as opposed to external data points.

Example: A fitness apparel company may target individuals based on

their interest in playing or watching a variety of sports.

Examples of Market Segmentation

Market segmentation is evident in the products, marketing, and
advertising that people use every day. Auto manufacturers thrive on their
ability to identify market segments correctly and create products and
advertising campaigns that appeal to those segments.

Cereal producers market actively to three or four market segments at a

time, pushing traditional brands that appeal to older consumers and
healthy brands to health-conscious consumers, while building brand
loyalty among the youngest consumers by tying their products to, say,
popular children's movie themes.

A sports-shoe manufacturer might define several market segments that

include elite athletes, frequent gym-goers, fashion-conscious women, and
middle-aged men who want quality and comfort in their shoes. In all
cases, the manufacturer's marketing intelligence about each segment
enables it to develop and advertise products with a high appeal more
efficiently than trying to appeal to the broader masses.

What Is Market Segmentation?

Market segmentation is a marketing strategy in which select groups of
consumers are identified so that certain products or product lines can be
presented to them in a way that appeals to their interests.

Why Is Market Segmentation Important?

Market segmentation realizes that not all customers have the same
interests, purchasing power, or consumer needs. Instead of catering to
all prospective clients broadly, market segmentation is important
because it strives to make a company's marketing endeavors more
strategic and refined. By developing specific plans for specific products
with target audiences in mind, a company can increase its chances of
generating sales and being more efficient with resources.

What Are the Types of Market Segmentation?

Types of segmentation include homogeneity, which looks at a segment's
common needs, distinction, which looks at how the particular group
stands apart from others, and reaction, or how certain groups respond to
the market.

What Are Some Market Segmentation Strategies?

Strategies include targeting a group by location, by demographics—such
as age or gender—by social class or lifestyle, or behaviorally—such as by
use or response.

What Is Marketing Mix - 4 P and and 7 P of Marketing

Definition of Marketing Mix

The marketing mix is defined by the use of a marketing tool that
combines a number of components in order to become harden and
solidify a product’s brand and to help in selling the product or service.
Product based companies have to come up with strategies to sell their
products, d coming up with a marketing mix is one of them.

What is Marketing Mix?

Marketing Mix is a set of marketing tool or tactics, used to promote a
product or services in the market and sell it. It is about positioning a
product and deciding it to sell in the right place, at the right price and
right time. The product will then be sold, according to marketing and
promotional strategy. The components of the marketing mix consist of
4Ps Product, Price, Place, and Promotion. In the business sector, the
marketing managers plan a marketing strategy taking into consideration
all the 4Ps. However, nowadays, the marketing mix increasingly includes
several other Ps for vital development

What is 4 P of Marketing
Product in Marketing Mix:

A product is a commodity or services, produced or built to satisfy the

need of an individual or a group. The product and servic can be
intangible or tangible as it can be in the form of services or goods. It is
important to do extensive research before developing a product or
service as it has a fluctuating life cycle, from the growth phase to the
maturity phase to the sales decline phase.
A product of service has a certain life cycle that includes the growth
phase, the maturity phase, and the sales decline phase. It is important for
marketers to reinvent their products to stimulate more demand once it
reaches the sales decline phase. It should create an impact in the mind of
the customers, which is exclusive and different from the competitor’s
product. There is an old saying stating for marketers, “what can I do to
offer a better product to this group of people than my competitors”. This
strategy also helps the company to build brand value.
Price in Marketing Mix:
Price is a very important component of the marketing mix definition. The
price of the product or service is basically the amount that a customer
pays for to enjoy it. Price is the most critical element of a marketing plan
because it dictates a company’s survival and profit. Adjusting the price of
the product of service, even a little bit has a big impact on the entire
marketing strategy as well as greatly affecting the sales and demand of
the product and service in the market. Things to keep on mind while
determining the cost of the product or service are, the competitor’s
price, list price, customer location, discount, terms of sale, etc.,
Place in Marketing Mix:
Placement or distribution is a very important part of the marketing mix
strategy. We should position and distribute our product in a place that is
easily accessible to potential buyers/customers.
Promotion in Marketing Mix:
It is a marketing communication process that helps the company to
publicize the product or service and its features to the public. It is the
most expensive and essential components of the marketing mix, that
helps to grab the attention of the customers and influence them to buy
the product or avail the services. Most of the marketers use promotion
tactics to promote their product and service reach out to the public or
the target audience. The promotion might include direct marketing,
advertising, personal branding, sales promotion, etc.
What is 7 P of Marketing:
The 7Ps model is a marketing model that modifies the 4Ps model. As
Marketing mix 4P is becoming an old trend, and nowadays, marketing
business needs deep understanding of the rise in new technology and
concept. So, 3 more new P’s were added in the old 4Ps model to give a
deep understanding of the concept of the marketing mix.
People in Marketing Mix:
The company’s employees are important in marketing because they are
the ones who deliver the service to clients. It is important to hire and
train the right people to deliver superior service to the clients, whether
they run a support desk, customer service, copywriters, programmers…
etc. It is very important to find people who genuinely believe in the
products or services that the particular business creates, as there is a
huge chance of giving their best performance. Adding to it, the
organisation should accept the honest feedback from the employees
about the business and should input their own thoughts and passions
which can scale and grow the business.
Process in Marketing Mix:
We should always make sure that the business process is well structured
and verified regularly to avoid mistakes and minimize costs. To maximise
the profit, Its important to tighten up the enhancement process.
Physical Evidence in Marketing Mix:
In the service industries, there should be physical evidence that the
service was delivered. A concept of this is branding. For example, when
you think of “fast food”, you think of KFC. When you think of sports, the
names Nike and Adidas come to mind.
Marketing Mix Product
All products can be broadly classified into 3 main categories. These are :

1. Tangible products: These are items with an actual physical

presence such as a car, an electronic device, and an item of
clothing or a consumer good.
2. Intangible products: These are items that have no physical
presence but can be felt indirectly. An insurance policy is an
 example of this. Online items such as software, applications or even
music and video files are also intangible products.
3. Services: Services are also intangible products but they are the
result of an economic activity that does not result in ownership. It
is a process that creates benefits for customers. Services depend
highly on who is performing them and remain difficult to reproduce
exactly.

Importance of Marketing Mix

The marketing mix is a remarkable tool for creating the right marketing
strategy and its implementation through effective tactics. The assessment
of the roles of your product, promotion, price, and place plays a vital part
in your overall marketing approach. Whereas the marketing mix strategy
goes hand in hand with positioning, targeting, and segmentation. And at
last, all the elements, included in the marketing mix and the extended
marketing mix, have an interaction with one another.
Cross-Selling in Banking Industry: Definition, Strategies
What Is Cross-Selling?

Cross selling occurs when you sell another product or service that is
different from the one you’ve already sold to an existing customer. The
products or services you are cross selling should be complementary to
the ones your customers are already purchasing.

Cross selling is used in every industry from automotive sales to

ecommerce, to banking and salon services. Car salespeople cross sell
warranties with the purchase of used vehicles.

What is Cross Selling in the Banking Sector?

The banking sector uses cross selling techniques to their fullest potential.
This method of selling helps boost sales for financial advisors, bankers,
and tax professionals. In banking, after you’ve established a trusting
relationship with your clients, there’s a great opportunity for selling
other products you think would be useful to them.

It’s important to note that cross selling in banking must be done properly
and knowledgeably. Financial advisors must be mindful of only selling
their clients products they can afford and understand. If a financial
advisor sells their client on something that ends up landing them in
financial trouble, the trust and credibility is gone.

What is Upselling?

Upselling occurs when you try to sell your customer additional or more
expensive products in addition to what they’re already planning on
purchasing. Upselling is all about selling the value that comes with
purchasing the upgraded, better version of a product or service. It
usually involves comparison charts to show how much more a customer
can get with their money if they purchase up a level.

This tactic is especially useful when selling memberships. By showing a

customer a comparison of the different membership levels, they can see
how much more they’ll get for their money by choosing a premium
membership over a basic membership.

Cross Selling vs. Upselling in Banking

While cross selling and upselling in banking are both useful techniques
for boosting sales, they are completely different. They can be used
individually or together for maximum results. An example of upselling a
banking client would be pitching to upgrade their credit card from the
basic, entry-level card to the premier level credit card with higher cash
back rates and a longer 0% interest period.

On the other hand, if a banker is looking to cross sell their client, they
would pitch them to open a new credit card account to supplement the
checking account they just opened. These two products work in tandem
with each other. Having a credit card over a checking account isn’t an
upgrade or an upsell, it’s a completely different product. The two are
related and both add value in their own way.