Arjun Singh Rathore
Banks as their primary role are considered to take in funds, called deposits, from those with money, pool them, and lend them, called loans and advances, to those who need funds. Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money). But in the modern day banking the concept of banking has gone through drastic change as per the approach towards the prospective customers. Previously it was the customer who were in a mode of approaching the banks to meet their banking requirements but now with a healthy competition around, the banks have to reach out to their customers with tailor made products to meet the ever growing banking and financial requirements of the customers. Moreover the banks have also drastically changed from traditional banking to financial super markets, and now they are in the process of graduating from off-line to on-line sale of their products and services. Apart from the specialised banking, the modern day banking now revolves around three main pillars –
1. Marketing;
2. Segregation of Products (Retail & Corporate);
3. Digitization
Marketing
Marketing is not just advertising of products, but it is the process of planning and the final execution of the concept, with competitive pricing, promotion and distribution of ideas, goods and services to satisfy customer and organizational objectives. Basically, the marketing of the banking products is a business technique devised to sell products and services keeping in mind the needs and requirements of existing as well as prospective customers. Marketing of a banking product starts with the product concept to the viability of the product, followed by advertising with a focus on social marketing to finally closure of sale. Bank marketing is the sum of functions directed at providing services to satisfy customer’s 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.
Features of Bank Marketing include, Intangibility-as banking products can’t be seen or felt like manufactured products, Inseparability-in banking the product and the seller are inseparable, Perishability-banking products are introduced and delivered at the same time as they can’t be stored and inspected before delivering and Variability-as standardisation of banking products is difficult.
Financial needs of the customers have grown up to a large extent, loans and advances is no longer the only need of today’s customer but facilities like quick cash accessibility, money transfer, asset security, increased returns on deposits and financial advice are on priority. 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.
Segregation of Products (Retail & Corporate)
Depending on the individual or company, banking services vary from time to time, as per need. The retail banking model is geared for the general public, with bank branches located across the country that deals with retail consumers on a daily basis. Whereas on the other hand, corporate banking assists firms in raising capital, giving credit and providing guidance. It provides corporate houses with customized credit that is tailored to their individual demands.
Retail banking is a type of financial service that is available to general consumers, also known as personal banking, provides customers with basic banking services, credit and financial counselling. As of date the retail banking has transformed Banks into a kiosk where customers select and purchase the product or service they require to achieve their particular objectives.
Corporate Banking or HNI accounts, till recently were also a part of the same retail banking units have been segregated to aim towards the business community in a much better way. It’s being a business world on a smaller scale, has been designated as Large Corporate Branch (LCB) or Large Credit Units (LCU), offering a wide range of services, including credit (Both Working Capital and Term Loan), treasury, fixed asset requirement finance, commercial services and employer services, among others. It’s also known as Business Banking which is specialised in nature and caters to a wide range of clients, from small to mid-sized local firms to big business houses.
For a better customer service to both the categories it’s the need of the hour to separate both the retail and corporate segments as they differ as far as their product-line, clientele, processing cost, transactions, charges and loan size is concerned.
In retail banking customers are the focus of retail banking products whereas corporate banking services are focused on the needs of the business. The clientele of retail banking is extensive and in comparison the customers of corporate banking are rather limited. Processing cost is always on lower side in retail banking which is comparatively on higher side in corporate banking. In retail banking the transactions are of lower value which is again on higher side in corporate banking. Handling charges in retail banking are minimal whereas handling fee in business banking are greater. Loan size in retail banking is up to 5 Crores and corporate/large banking is more than 5 crores.
Digitization
When today’s customers evaluate financial institutions, they don’t compare different banks anymore, they compare experiences. Everything in their lives as consumers is better than ever, with real-time, smart digital services being delivered daily via their smartphone. Booking a flight, planning a holiday, shopping online, it’s all easy, instant, and seamless. On boarding takes a few clicks and more importantly, unhappy customers can switch providers in a heartbeat.
Quote unquote, “Smart digital platforms power these superior experiences as this digital-first model has changed the game forever. There has been a fundamental shift in how business gets done, where staying relevant means becoming an active part of a customer’s digital life.”
To survive when giants like Google make their way into people’s financial lives, banks must have the right framework in place to compete. This framework is the digital-first platform, supported by four different channels- Omni-Channel Banking, Smart Banking, Modular Banking and Open Banking. Each of these four channels is fundamental to success in the banking industry of the future.
Modern day banking includes, Internet Banking, Telephone/PC Banking, Network Systems and more! Customer gets his bank account ID and password and he/she can check his account, pay his bill and print his/her receipt through his/her home personal computer/smart phone which is connected with Internet.
Digitalization has turned the world upside down. With the constant up-gradation in technology, all the sectors have benefitted, the banking sector being no different. Remember a time when one had to stand in long queues to deposit cheques or when people could not transfer money on a bank holiday? Well, we have left those kinds of days behind us. Now, the transfer of money from one account to another is just one click away. Payment to vendors has become so easy. Out shopping for vegetables? Forgot your wallet? UPI payments are just a click of your phone away. Modern-day banking has made life easier and simpler. Electronic signature has replaced physical signature. There was a time when buying something meant the hassle of dressing up and stepping out but shopping these days is also a click away. Liked a dress online? E-banking to your aid.
Covid-19 has changed the dynamics of monetary transactions. Most people were out of jobs, out of cash, and had to stand in long queues outside the banks for cash withdrawal. These hassles made people turn to digital banking. It was at this time that UPI payments such as Paytm, Google Pay, BHIM, etc gained their footing in the Indian banking sector.
One of the most important and prominent features of internet banking is its 24×7 availability, most of the banking transactions can be done even after the banking hours and are not time restricted. Another one is that one can keep a proper track on all their transactions. It is also very quick i.e., people do not have to visit their bank’s branches for any transaction, it can be done directly with a touch or a click.
To conclude, the future belongs to those banks who will lay their emphasis on sale oriented marketing, with segregation of retail and corporate clients to address to their needs in more specific way, combined with the strengthening of digitation platform to make banking more convenient and 24X7 just on the tap of their smart phones.
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