MIB: Marketing in Banking

I always wondered about the importance of Marketing in Banking till I did my Summers @ one of the fastest growing banks of India. My initial perception was that banking would require more of branding and less of other marketing tools needed in a typical FMCG company. Now I believe that Banks have a huge potential for marketing and let me tell you, marketing in bank will be more challenging than marketing in FMCG sector.

Banking products are:

• Sold to the customers who are either not aware of the product or would have done some extensive research over the net before visiting a branch. 
• HIGH INVOLVEMENT products which means the customer takes time to zero in on the product after extensive research. 
• A huge challenge for the marketer in terms of convincing the customer to buy a product than in FMCG.

To know more, we need to understand how the banking industry has undergone a Himalayan change in the last few years.

Traditional Banking --> One Stop Shop for Financial Products

With the introduction of new offerings in terms of financial products and consulting to customers banks have been rejuvenated. Apart from these new offerings banks are also remodeling themselves as distribution centers for many other partner products. Till few years back, Banks were known for CASA (bank terminology for Current Accounts and Savings Account) and Loans.But now it has become an One stop shop for all the financial products - Insurance, Mutual Funds, Credit Cards, Gold coins, FOREX etc...

With these changes, it has become essential for banks to market itself better to the customers to sell the variety of products available in the basket. The challenge for the bank is to differentiate itself from other banks in the service offered to the customers!

Marketing In Banking

Marketing in banking is very different from what we study in the books. Generally in B schools, the marketing that we learn might help us selling a product in FMCG market.But its completely different in the case of Banking.  According to me, Marketing in banks are mainly based on: Technology, Relationship with the customers and Branding.

Technology plays a key role in banks for marketing the products. In FMCG, there is less of technology and more of strategy involved in selling the product. Customers look for reducing their perceived risk while buying these high involvement financial products in the banks - these are provided by the latest technology available in a bank. Core banking, mobile banking, net banking are few examples of the technological initiatives taken by the banks to stay ahead of the competition in the market.

Unlike FMCG, a bank staff's relationship with the customers helps in understanding the latent need of the customers i.e the personal  rapport the staff enjoy with the customers make the customers share their personal needs and financial commitments with the bank staff. This helps staff in customizing the existing products to suit the needs of the customers. There is no separate sales team available in most of the branches, the bank staff act as the sales team with their own sales targets along with their normal duties of the day to day operation.

In a crowded financial market that sells a high involvement product/service brand plays a major role in customers decision. Hence it is essential for the banks to build a good brand name. Today, SBI is successful because of the brand and the TRUST associated with the brand. Branding is a relatively new concept for the financial industry. They are slowly realizing that they need to manage their strategic assets too.There are multiple competitive advantages associated with strong brands. Banks serve a variety of clients with differing needs, which in turn makes it difficult to build a brand that is relevant to all the groups.

One of the Guarded Secrets of the Banks

They use CASA - the current account and the savings account as a tool to push the products. The first product a banker tries to push will be these accounts. Once a customer creates these accounts, it is easy to track his financial position and pitch products to the customer accordingly. The AQB- average quarterly balance of the customer in a SB account along with the Fixed Deposit amount act as an indicator of his financial position, Fixed deposits are, in a way, not profitable  to the banks compared to the other products like insurance, mutual funds etc :) But they still push it to gain the all important customer confidence, share of wallet and data.