Akanksha chawla XIMB

Akanksha ChawlaXIMB

Case Study on Digital Marketing

Executive Summary

Executive Summary Digital Marketing Vs. Branch Banking Customer Insight Road Map Digital Banking Model

The role of branches as the hub of transactions in India’s banking sector is undergoing a silent transformation as more and more individuals move to the digital medium for services that once could only be provided through branches. Banks are increasingly viewing branches as a place where they can render services beyond basic banking such as advising people on their savings or selling them investment products. The change is more visible in private and foreign banks in India as they push more and more functions online and use branches as a hub for sourcing loans and providing financial advisory services.This is an era of Millennials, 72% of the Millennials would like to bank with non-financial Services companies with which they do business (like Google or Amazon)* compared to 27% for those who are above 55. Understanding the needs of GenY is a Business Need.The Financial products of Banks have very low differentiation, rate of Interest and terms and conditions being the only differentiating factors. Therefore, “Quality of Services” is the only way of capturing higher market share.Primary research indicates that, People don’t not associate ING Vysya with the word Digital Banking, over banks like HDFC, ICICI Bank. Increasing visibility and effectively engaging the GenY is important through Digital banking Model.Understanding the Customer and addressing the major concern over use of Digital Banking such as Security, Ease of use and Locational Accessibility is important to develop a roadmap for the strategy to leverage Digital Banking Advantage.Another major weakness is the Lack of Customer Relationship Building through the digital platforms. A Digital Plan should not Operate in Silos but in tandem with the Brick and Mortar Banking for better and enhanced customer support and relationship building.In reality, the major sustainable competitive advantage lie in technology, product experience and organizational culture among banks.

*Accenture Report, “The Digital Disruption of the Bank”

Digital Marketing Vs. Branch Banking Why do customers buy from where they buy?

Digital Banking• Fast and Secure Processing• Accessible at Finger tip• Maximize customer contact capability• One Stop shop to multiple customer needs• Easy place to check Balance, Transfer Funds and Pay Bills and other Facilities like FD/ RD, Mobile

Recharge etc

Branch Banking• NEFT/ RTGS Transactions of Larger amounts for those who are skeptical for Theft• Depositing Cash• Creation of DD • Basic Formalities like change of Names, address and other details• Unavailability of Internet


“Data from RBI indicates that the rate at which the urban branches were increasing is seeing a decline, while semi-urban and rural branches have picked up in pace in the last few years. Digital banking no doubt has had a role to play in this,” - Saurabh Tripathi, partner and director at The Boston Consulting Group (BCG)

SWOT Analysis of Digital Marketing


Strength Weakness

Threat Opportunity

New Age marketing Competitive advantage for economies of scale Rich customer resources Customer See Same bank through Multiple Touch points –

Omni Channel Simplicity and Immediacy at the convenience of the

customer

Risk of losing customers due to poor online banking experience

Increase of cyber crime Online banking risks, credit card skimming and data leakage

leading to operational and reputational risk

Low Internet Penetration Poor CRM Lack of security Tendency to missell due to lack of face-to-face interface Low literacy of online financial services

Greater penetration and improved touch points Low cost- Lesser Cost to the Bank per Transaction Increased demand for financial products Scope for better customer account maintenance and data

analytics

Primary Research: Introduction to the Respondents


22%

73%

4%

Age of the Respondents

18-24 25-31 32-38 39-45 45+

Employed with a Private Firm

others

Self Employeed

Employed with Government Services

0% 5% 10%15%20%25%30%35%40%45%50%

47%

43%

6%

4%

Occupation of the Respondents

Below 3,00,000

5,00,000 to 8,00,000

8,00,000 to 12,00,000

3,00,000 to 5,00,000

12,00,000 onwards0%5%

10%15%20%25%30%35%40%45% 41%

22%18%

12%

6%

Annual Income of the People

No Yes0%

20%

40%

60%

80%

100%

120%

4%

96%

Appreciation of Digital Banking

Around 73% of the people are in the range of 25 to 31 years, which is the major target generation for the Digital banking

The Annual Income of the respondents were appreciably varying. This was important to gauge the different needs of different income range customers

About 47% of the of the respondents are Employed with the Private Firms, while 43% are other like part time or freelancers or students

The Survey clearly shows the acceptance and appreciated for Digital Platforms of Banking. 96% of them already uses Digital Platforms

*The entire data report and analysis is attached in Appendix

Primary Research: Perception of Other Banks for Digital Banking


Rank Bank Name*

1 American Express

2 HDFC Bank

3 Axis Bank

4 ICICI Bank

5 ING Vysya

6 IDBI Bank

7 State Bank of India

The Factor Analysis of the Ranking of the Banks based on the perception of the Respondents

The Factor Analysis of the Ranking of the Banks based on the perception of the Respondents

Understanding the Perception of the Respondents

The ranking was based on the preference of the respondents , the bank which comes first in their minds This means that the visibility of American Express and HDFC Bank and ICICI Bank are higher and they are preferred to the customers for the digital banking platforms

Fund Transfer upto 50,000Fund Transfer for a large amount like 1,00,000 or more

Fund Transfer upto few 1000's

Checking the balance

Any other Additional Features

Movie tickets Booking

Mobile Recharge

Understanding the usage pattern for the Digital Banking Usage

The major transactions which takes place are Fund Transfer below 50,000 and Checking the Balance

* These Banks were selected based on the general perception of their visibility in India

Primary Research: Respondents BehaviorExecutive Summary Digital Marketing Vs. Branch

Banking Customer Insight Road Map Digital Banking Model

Any other

Mobile App of the BankSocial Media such as Facebook

0%

50%

100%43%

55%2%

Major Access Points for Digital banking

33%

67%

Safety of Digital banking

Yes No

80%

20%

Preference for Banking Platform

Digital Banking using Mobile App or Social MediaBranch Banking

Transactional Security

Ease of use of the mobile App

Informational Security

Other add on services (like mobile recharges and movie ticket booking etc)

Important Concern of the Respondents while using Digital Banking in Descending Order of Preference by Factor Analysis

Low ATM AccessibilityWritten FormsTime ConsumingBank Branch is not nearbyBank Branch fixed timing

Important Disadvantages of going to a Brick and Mortar Bank (At the Top is the most important Concern) by Factor Analysis

In a Nut Shell:

Thus, While social media is not considered as the major access point for digital banking (2%), Mobile app of the bank is seen as a very important tool (55%)

The Most Important Factors for for the users of Digital Banking is the Transactional Security and Ease of Use of the mobile App are the major concerns

The major disadvantages for the Brick and Mortar Bank is perceived to be the Low ATM Accessibility and lower visibility i.e. Bank Branch not nearby and higher time consumption

These points are kept in mind to create the Digital banking Model for ING Vysya

*The entire data report and analysis is attached in Appendix

Secondary ResearchAccenture Digital Disruption

48% are interested in real time forward looking spending analysis

71% considers banking relationship to be transactional rather than relationship Driven

27% would consider branchless digital bank

51% want their banks to proactively recommend them products


HDFC Bank ICICI Bank Axis Bank ING Vysya Bank

Deposits (in Rs. Mn)

1962470 2926136 2526136 413340

Advances (in Rs. Mn)

2397206 2902494 1969660 317720

Benchmarking: ROE, Deposits and Advances**

**data from RBI

• Lower CRAR of ING Vysya vs other banks suggests that it is less capable than others to deal with various types of liabilities and risks

• Higher Deposits to Advances Ratio of ING Vysya vs other banks shows the bank hasn’t got enough customers to lend loans to

HDFC Bank ICICI Bank Axis Bank ING Vysya Bank0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

0

5

10

15

20

25

20.34

13.1

18.53

14.24

4.28%2.70% 3.09%

3.02%

16.80%18.74%

17.00%

13.24%

Benchmarking ROE, Net interest Margin, CRAR**

Return On Equity Net Interest Margin CRAR

HDFC Bank

ICICI Bank

Axis Bank

ING Vysya Bank 0

1

2

Deposits/Advances**

Understanding the different Behavior Preferences Per Channel and Creating the Strategies

Focused • Set Budget

Goals• Apply for

Mortgage• Buy Stocks• Bill Payments• Opening

RD/FD accounts etc.

Physical• Signing for

Mortgage• Depositing Cash• Using ATM for

cash withdrawals

• NEFT transfer of huge Cash amounts

Casual• See Spending

Patterns• View Stock

Portfolio• Balance View• Fund Transfer

upto 50,000

Quick• View Stock

Prices• Payments• View

Account balance

• Mobile Recharges


Bank Social Media Score* HDFC Bank 5.14 ICICI Bank 4.78 American Express 4.64 State Bank of India 3.64 Kotak Mahindra Bank 3.32

Yes Bank 3.22 Citi Bank 2.82 Bank of Baroda 2.82 South Indian Bank 2.7 Bank Of India 2.52


Secondary Research: Building Blocks- Situation In India

* Social Media score is of 2010 at www. ifbimconnect.wordpress.com

Ranking Bank Name Bank Category Daily Online Visitors

1 HDFC Bank New Private 4173602 ICICI Bank New Private 4002663 Axis Bank New Private 1598404 SBI SBI & Associates 132534

5 Kotak Mahindra Bank New Private 43956

6 Union Bank of India Nationalised 29748

7 IDBI Bank Other PSU 21756

11 Oriental Bank of Commerce Nationalised 15096

13 Syndicate Bank Nationalised 12654

12 PunjabNational Bank Nationalised 12654

14 ING Vysya Bank Private Banks 9324

Based on the above data, In India, the visibility and perception for ING Vysya for Digital Marketing is low

Digitalization with a Human Touch - 'Quality Service' the sole differentiator for acquiring

market share


By and large, the products offered by banks across pan India are similar. Products differ from bank to bank in terms of minor variations in interest rates, margins etc. This being the case, in a technology and product neutral environment, the sole differentiator for acquiring market share is the 'quality service' to customers. Quality service is generally associated with transparency in terms, quickness in response, courteous behavior, trust and a strong sense of commitment to serve. The product knowledge is also essential. Quality can be defined on the basis of service as a function of efficient use of technology, product knowledge in terms of its features (including pricing) and rendering of personalized service. The lesser the tendency to misssell, the better will be the service. In reality, there are differences in technology, product experiences, and organizational culture among banks. As banks are moving towards similar technology and products/services, good service becomes the differentiator in acquiring market share.

Leveraging on the Customer

data through the various digital

platforms of the current

capability

Understand the

Customer using Data Analytics

Branch Banking and Digital

Banking go hand in hand; Higher the accessibility,

higher is the brand recall

Increase visibility

Set up two way communication

channels through effective use of social media and increase

touch points like suggestive products to

the customer based on his online activities

Security should be important as it will

build up trust

Effective CRM

Way Forward: Dedicated Team for Digital Banking, Analytics and Social Media

Understanding Customer using Data Analytics- its

an Iterative Process•Data Analytics:•As it is clearly seen, Digital Banking is on the rise, analyzing the Customer Transaction history using Social Analytical Tools •Improvisation: •Leveraging the insights from the customer transactional History to improve the products and service offerings

Increase visibility

•Branch Banking:• ING Vysya Bank is a Old Private sector Bank however, its visibility in Tier I and III cities is low, For the Indian Market, a physical Presence is important to garner trust as in India Word of Mouth is the best way to market•Digital Banking: •Enhancing the Social Media Presence and Improving the Mobile App for ING Vysya Bank by Engaging the GenY the next generation of Banking Users

Giving a Human Touch

•Improved CRM: •Eliminating the major weakness of Digital Banking with providing Quality Service and Quick Problem Resolution, detailed information about Theft and fraud and means to protection and promote transparency •Customer Focused Organization Culture: •Creating a culture where every employee of ING Vysya is dedicated and committed to give the best service to the employees •Creating a dedicated Social Media Team to give quick Response and never shy/run away from complains


Understand Generation Y: social media is ideal for a better understanding of client behaviour and client interests. The most advanced banking players in this respect are leveraging these new networks to help develop new applications for their products. Significantly, 70% of users say they believe recommendations made through social media, whereas only 20% trust conventional advertising

Digital Banking 2.0Executive Summary Digital Marketing Vs. Branch

Banking Customer Insight Road Map Digital Banking Model

Create your own distribution vision of the future

Develop a portfolio of mini-transformations to deliver the vision• The bank needs to select the

most important things it wants to change so as to translate its vision into action

• Identify the key priority areas

Lock in an integrated roadmap and execute• Maintain and monitor the

portfolio of mini-transformations• Elaborate a high level business

case for pursuing them and monitor progress

• Identify the implications for IT and Governance, and monitor accordingly

Digital Banking 2.0: Action Plan for the Future

Branches are becoming more sales and advice oriented Branches: Right size and boost sales performance• Light Size Network: Optimize Branch Network by adapting both the Location and Branch formats to customers needs• Structure better the time spent on sales. Concentrated periods of commercial activity tend to be more effective and efficient than periodic bursts of activity.

• Industrialize The Sales And Support Process: This can be one of the most productive aspects of any branch transformation. Doing so requires choosing a few routines and processes (activity planning, selection of contacts, standard execution drills, using an activity registry) and aligning each one to a member of the organization so as to ensure they are performed in a controlled fashion. In combination with the right campaigns this can boost sales by 20%-30%

• Provide branch staff with high quality leads, by using the bank’s own data and combining this with customer insights from additional behavioral data• Improve performance management: In order to successfully transform a bank’s branch network staff and managers will require strong performance management

disciplines (for example, operational KPIs that staff can influence, and effective performance dialogues) and proactive skills development

The role of call centers is changing as banks migrate their basic activities to digital channels (notably the web and mobile), and clients dial a call or video center to seek advice and support

Call centers: Make it the preferred channel for

support

• Increase service to sales conversion: the average call center, aided by the intelligent call routing of customers to the best agents, use of CRM, and an approach to performance management that aims to develop the appropriate mindset.

• Upgrade quality to become the preferred channel: increasingly using the call center to provide high quality service and advice (and sales) for customers. This remote phone channel is, today, typically exclusive to certain segments and not available to the full customer base.

• Be ready for video: Visual aspect starts to assume a new importance• Free-up capacity: Reduce the waiting time, call back facilities, scope to improve their demand management with better forecasting and staffing, to reduce call

times, and to optimize call routing


In India A Bank cannot do away with the Branch Banking, But have to keep a tab on the Digital Space as well


Create the “Apple Experience” - Make digital channels the channels of choice

Digital: Open the Digital Bank before non-banks do

• Increase penetration: Stimulate more customers to use the bank’s apps and websites more often. Create a “wow” experience for clients: innovations might include easier log-on, faster and more flexible transactions, and well laid-out screens.

• Make information easily accessible: for the Aggregator sites to endorse you willingly, If banks do not provide clear and transparent information these aggregators will direct customers to someone else’s site.

• Address security concerns: some 45% of consumers say this is the single most important reason why they don’t bank online. It may be more a matter of perception than reality, but if so banks have to alter that perception.

• Multichannel processes: Optimize to eliminate leakage and improve experience:• Attract high-quality traffic and leads: Use event marketing to attract traffic. This will become an essential part of the initial phase of the purchasing process as customers

increasingly search for information on the internet, notably via aggregators and online benchmarks, before deciding which product to buy (through any channel).• Use CRM and behavioral data: Banks are sitting on an enviable wealth of information, but so far most have only used the tip of the iceberg.• Use targeted personalized marketing: The Internet enables banks to target ‘segments’ as tiny as just a single consumer. For example, to ascertain exactly who has logged on to a

page and then to customize offers or investment advice to that individual

Improve ‘end-to-end’ processes to reduce ‘leakage’ – Great Client experience across all the 3-4 channels per person

Multichannel processes: Optimize to eliminate leakage

and improve experience• Leakage of the kinds: Missing telephone numbers and email addresses on the web, or poor communication between call centre and branch over a customer’s follow

up visit, were among the issues raised. Inadequate search engines and complex forms result in promising leads being missed.• Optimized Processes: Bank is responsible for integrating products, services and channels in a way that ensures delivery of an integrated value proposition to every

customer. Revenue ‘leakage’ can be as much as 60 – 80 % of total generated leads as a result. To improve these processes and identify sources of such ‘leakage’, banks should take what we call an ‘end-to-end’ approach

• Gaining awareness and After sales support are important

Digital Banking 2.0: Action Plan for the Future

Appendix Respondents Data and Analysis:

Banks Benchmarking:

SPSS Analysis:

RBI data used: www.rbi.org.in

Primary ResearchCSV file for

primary research Analysis Report

Bank Benchmarking

SPSS analysis of the Primary Research

http://www.rbi.org.in/

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