Introduction to Banking Products

Banking

Basic Definition: A system of trading money which:

provides a safe place to save excess cash, known as deposits.

supplies liquidity to the economy by loaning this money out to help businesses grow and to allow consumers to purchase consumer products, homes, cars etc.

Institutions which deal in money and credit.

An intermediary, which handles other people’s money both for their advantage and to its own profits.

A financial institution that links the flow of funds from savers to the users.

Plays an important role in the economy of any country as they hold the saving of the public.

• Central Bank: The Reserve Bank of India is the central Bank that is fully owned by the Government

• Public Sector Banks: State Bank, Regional rural banks

• Private Sector Banks: Foreign Banks,

Scheduled and Non- Scheduled Banks

• Co-operative Sector: State Co-operative Banks, Central Co-operative Banks, Primary Agriculture Credit Societies

• Development Banks/Financial

Institutions: IDBI, SIDBI, NABARD

Issue of banknotes (promissory notes issued by a banker and payable to bearer on demand)

Processing of payments by way of telegraphic transfer, internet banking or other means

Issuing bank drafts and bank cheques Accepting money on term deposit Lending money by way of overdraft,

installment loan or otherwise

Providing documentary and standby letters of credit (trade finance), guarantees, performance bonds, securities underwriting commitments and other forms of off-balance sheet exposures

Safekeeping of documents and other items in safe deposit boxes

Currency exchange

Acting as a 'financial supermarket' for the sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products

Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order.

Netting and settlement of payments.Credit intermediationCredit quality improvementMaturity transformation

“ Bank marketing is the aggregate of functions, directed at providing services to satisfy customers financial (and other related) needs and wants, more effectively and efficiently than the competitors keeping in view the organizational objectives of the bank.”

The existence of the bank has little value without the existence of the customer.

Aim is not only to create and win more and more customer but also to retain them through effective customer service.

Appropriate promise to a customer through a range of services (products) and also to ensure effective delivery through satisfaction is important.

Identifying the most profitable markets now and in future;

Assessing the present and future needs of customers;

Setting business development goals and making plans to meet them

Managing the various services and promoting them to achieve the plans

Adapting to a changing environment in the market place.

Designed after taking into account the strengths and weaknesses of the organization.

bank with clientele from various segments could think of “market penetration” by offering the existing range of services to existing customers. 

Bank which are not facing acute competition could think of “Market Development” by offering the existing services to new customers.

design new product range for their customers of various segments

Banks deal with individuals, group of persons and corporate

More or less homogenous groups in terms of their needs and expectations.

Market segments, targeting one or more segments, developing products and marketing programs tailor-made for these segments.

Agricultural Sector1. Marginal2. 2 to 5 acres3. 5 to 10 acres4. 10 acres and above

Industrial Sector1. Tiny 2. Co-operative3. Small-sized4. Large- sized

Services Sector Household Sector1. Marginal2. Low Income3. Middle Income4. High Income

Market Targeting in which each segment’s attractiveness is measured and a target segment is chosen based on its attractiveness.

Positioning which is the act of establishing a viable competitive position of the firm and its offer in the target segment chosen.

consists of usual four ‘Ps’ of Product, Price, Place and Promotion of marketing mix

Product: The products offered are the services which includes various types of bank accounts, different types of loans, investment services, Credit cards, Demat accounts, online banking, mobile banking and many more.

Buyers look for satisfaction which differs from person to person.

Keeping in view the level of satisfaction of a particular segment, the banks have to frame the pricing strategies.

The interest charged and the interest paid should have a co-relation between them.

It refers to the establishment and functioning of a network of branches and other offices through which banking services are delivered.

Objective is to get the right product ,at right places at right time at the least cost.

Extensive branch network- access to large section of people

Proximity may play a determinant role in selecting the bank.

Banks are coming up with extension counters, specialized branches, mobile branches, banks acquisition and amalgamation so as to have sufficient point of contacts with the customer.

With the advent of technology other point of contacts have come up. Such as:

ATM Telephone banking Online banking Mobile banking Video banking etc.

Advertising

Publicity

Sales Promotion

Personal Selling Push and Pull Strategies

It involves the people(5th P) of the bank i.e. the employees.

Employees should also be treated as internal customers, and sort of marketing mix should be followed.

Quality Human resource can be a point of differentiation

The quality of service provided during the buyer-employee interaction.

Efforts for previous strategies will turn futile if the interaction does not takes place satisfactorily.

It involves :Process (6th P)Physical evidence (7th P)

Refers to the systems used to assist the organization in delivering the service.

Aids to the promotion of customer satisfaction

It involves: speeding delivery of services reducing the paper work standardization of procedures customization as per individual demand simplicity etc.

It includes signage, reports, punch lines, other tangibles, employee’s dress code etc.

The company’s financial reports are issued to the customers to emphasis or credibility.

Signage: Each and every bank has its logo by which a person can identify the company. It creates visualization and corporate identity for the banks.

Tangibles: banks give pens, writing pads to the customers.

Punch lines: Depicts the philosophy and attitude of the bank. Banks have influential punch lines to attract the customers.

Referral services

Direct mailing Cold calling Offering items having your brand identity Using the media Getting celebrities to endorse the product or service.

Sponsoring events

Using permission-based Marketing

Recommendation of Talwar’s committee,1975: Establishment of customer service

committee/staff committee in the every branch.

Customer meets to be held at the branches at least once in a half year.

15th of every month (next day if 15th is a holiday) to be observed as customer’s day at branches and administrative offices. 

Provision of complaint-cum-suggestion box in every branch.

Provision of ‘May I help you’ counter in branches.

Immediate credit of cheques up to Rs.2,500 which has since been increased to Rs.15,000.

Payment of penal interest in case of delay of collection of cheques.

In the year 1995 ‘Banking Ombudsman’ was established by RBI with objective of resolving customer grievances in a quick and inexpensive manner.

Bankers need to understand the rural psychology

Employing local literate youth for confidence building

Banker must be aware of agriculture aspects, cultural and communal aspects, institutional facilities etc.

Process of change should be known to him

Status of various development plans should be known

R:Retail Business for Rural Community As

(Consumer & Producer)

U: Urban facilities, Investment, Infrastructure

R: Animal Husbandry & Allied Activities A: Agri Production(Field Crops,

Plantation)L: Linkages & Synergy

Horticulture, Plantation, Vegetable growing, Floriculture, aromatic and medicinal plants, Bio-diesel plants etc. for high investment Opportunities

Post Harvest and Food Processing Seed Multiplication & Processing Dairy Farming, Sericulture, Aqua-

Culture & Others. Irrigation Projects & Wasteland

Developments. Rural Tourism & Other emerging areas.

Industrial Credit and Investment corporation of India bank - largest private sector bank in market capitalization

Second largest overall in terms of assets.

largest issuer of credit cards in India

Product : Saving account: offers a power

packed Savings Account with a host of convenient features and banking channels to transact through.

Senior citizen services: convenience with benefits

Fixed Deposits : Safety, Flexibility, Liquidity and Returns

Recurring Deposits: Affordability and higher earnings.

Roaming Current: access your accounts at over 500 networked branches across the country.

Loans: Home Loans. Personal Loans. Car Loans, two Wheeler Loans, Commercial Vehicle Loans. Loans against Securities, educational loans etc

Investments: ICICI Bank Tax Saving ,Foreign Exchange Services, Senior Citizens Savings Scheme, 2004.

Cards: Credit card, ATM card, travelers card Demat services Online money transfer Mobile banking

Pricing 1. Pricing Decisions related to interest,

fee or commission.

2. RBI and IBA

3. Raising Number of Customers

Place1. Services are sold through branches

2. Making Promised Services available to the ultimate users.

3. Branches OF ICICI: 1900 in India and 33 in Mumbai.

Promotion1. Advertising - Television, radio, movies, theatres2. Print Media- Hoardings, newspaper, magazines 3. Publicity- Road shows, campus visits, sandwich

man, Sponsorship4. Sales Promotion- Gifts, discount and

commission, incentives, etc.5. Personal Selling- Cross-sale (selling at

competitors place), personalized service 6. Telemarketing- ICICI one source Call center

(mind space)

Process1. Standardization- ICICI bank has got

standardized procedures got typical transactions

2. Customization- Specialty counters at each branch to deal with customers of a particular scheme

3. Simplicity- Separate counters exist with clear indication

4. Customer Involvement- Money matters and signature

Physical Evidence1. Signage

2. Financial Reports- The Company’s financial reports are issued to the customers to emphasis or credibility

3. Tangibles- Pens, Writing Pads to the internal customers. Passbook and Cheque books to the customers.

4. Punch lines- “Hum Hai Naa”

5. Employee’s Dress Code- ICICI bank follows a dress code for their internal customers

People1. All people directly or indirectly involved

in the consumption of banking services.

2. Workers, Employees, Management and other Consumers

3. Employees of a Bank represents the

organization to its customers.

4. Internal Marketing

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