Marketing In Retail Banking

Retail banking, also known as consumer banking or personal banking, is

banking that provides financial services to individual consumers rather than
businesses. Retail banking is a way for individual consumers to manage their
money, have access to credit, and deposit their funds in a secure manner.

Services offered by retail banks include checking and savings

accounts, mortgages, personal loans, credit cards, and certificates of deposit
(CDs).

How Does Retail Banking Work?

Many financial services companies aim to be the one-stop-shop retail
banking destination to their individual consumers. Consumers expect a range
of basic services from retail banks, such as checking accounts, savings
accounts, personal loans, lines of credit, mortgages, debit cards, credit cards,
and CDs.1

Most consumers use local branch banking services, which provide onsite
customer service for all of a retail customer's banking needs. Through local
branch locations, financial representatives provide customer service and
financial advice. Financial representatives are also the lead contact for
underwriting applications related to credit-approved products.

Though a consumer may not use all these retail banking services, the primary
service is a checking and savings account to deposit money. This is a
common, secure way for individuals to store their cash.

Furthermore, it allows them the ability to earn interest on their money. Most
savings accounts offer rates based on the fed funds rate. Checking and
savings accounts also come with a debit card to allow for ease of withdrawal
of funds and payment for goods and services.

Retail banks are also an important source of credit for individuals. They offer
consumers credit to purchase big-ticket items such as homes and cars. This
extension of credit can take the form of mortgages, auto loans, or credit cards
and is an important facet of the economy as it provides liquidity to ordinary
consumers, which helps the economy grow.

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

• Sir Frederick Seebohmn define 'the creation and delivery of customer - satisfying services at a profit to
the bank'

• Kenneth Andrew defines Bank Marketing as 'the matching of bank's resources with the customer's
needs in the most profitable manner'.

Customer is the centre of attraction in retail banking and marketing and all the activities have to be
focussed towards

• Identifying the customers' needs,

• Developing appropriate products to satisfy their needs,

• Providing them with efficient delivery channels for availing the products.

• Making them avail the products continuously.

Features of Bank Marketing

1. Banking products cannot be seen or felt like manufactured products

(intangibility)
2. In banking products' marketing/ the product and the seller are inseparable
(inseparability)
3. Banking products are introduced and delivered at the same time; they
cannot be stored and inspected before delivering (perishability)
4. Standardisation of banking products is difficult (variability)

Importance of bank marketing

Awareness among Customers : Modern technology has made customers aware of the
developments in the economic environment, which includes the financial system. Financial
needs of the customers have grown multifold into various forms like quick cash accessibility,
money transfer, asset security increased return on surplus funds, financial advice, deferred
payments etc. With a wide network of branches, even in a dissimilar banking scenario,
customers expect the banks to offer a more and better service to match their demands and this
has compelled banks to take up marketing in right earnest.

Quality as a Key Factor: With the opening up of the economy, fast change has been experienced
in every activity, and banking has been no exemption. Quality is the watchword in the
competitive world, which is market driven and banks have had to face up to this emerging
scenario. In fact, it may not be out of place to reiterate that quality will in future be the sole
determinant of successful banking ventures and marketing has to focus on this most crucial
need of the hour.

Growing Competition: Increased completion is being faced by the Indian banking industry from
within the system with 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 their superior technology, speed in
operations and imaginative positioning of their services has also provided the necessary impetus
to the Indian banks to innovate and complete in the market place.

Technological Advances: Technological innovation has resulted in financial product

development especially in the international and investment banking areas. The western
experience has demonstrated that technology has not only made execution of work faster but
has also resulted in greater availability of manpower for customer contact. Marketing Strategy
in Banking Sector

Role of Marketing in Banking Industry

 Marketing has lately entered the banking industry not in the form of marketing concept, but in
the forms of advertising and promotion concept. It has been realized that marketing transcends
advertising and friendliness.

 Earlier, it was recognized that personal selling was not necessary. The bankers even eliminated
the word selling and they called the function of customer-contact business development
function. But gradually they have begun to realize that marketing is a lot more than smiling and
friendly tellers.

 Customers relationship, commitment and loyalty ensure a successful customer service and
banks will keep their strong customer-centric orientation image to the customers, which will
help banks in further development.

 Customer satisfaction represents a modern approach for quality in enterprises and

organizations and serves the development of a truly customer-focused management and
culture.

 Also, In case of the banking industry, customer retention plays the critical role in
customer service. Customer retention is potentially an effective tool that banks can use
to gain a strategic advantage and survive in today’s ever-increasing banking competitive
environment.
 The key factors influencing customers satisfaction and ensuring customer ‟ retention of a bank include
the range of services, rates, fees and prices charged.

 It is apparent that superior service alone is not sufficient to satisfy customers. Prices are essential, if
not more important than service and relationship quality.

 Launching new schemes with advertisements attracts new depositors. However, what ultimately
sustains the process of generation of new deposits and continues the acceleration of deposit
mobilization is the quality of customer service as perceived by clients.

 Banks performance in different banking services like withdrawal of cash, ‟ collection of cheques,
quality and adequacy of infrastructural facilities available to customers, attitudes of bank employees
towards customers, promptness, and general attitude have to be analyzed and evaluated before
strategy formulation.

 There is a need for professionalism and market-oriented banking in our country. Market oriented
banking will require a new culture: a disciplined, professional, and committed manpower; employees
trained for specialized services; specialized branches; strong marketing organization in different banks;
aggressive selling; meeting new customers‟ expectations; and cost effective and efficient services for
gaining customer satisfaction and loyalty.

 Banks should remember that, it is so tough to make a customer enter a bank, but it is a fraction of
second for a customer to move from one bank to another.

 Competition is increasing at a regular basis and customers are enjoying it. The more the competition,
the better the services banks needs to provide for business retention.

without any human interaction.