bank marketing

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1. Introduction

Bank marketing in general and Customer Relationship Management (CRM) in particular are of vital importance for Indian banks, particularly in the current context when banks are facing tough competition from other agencies, both local and foreign, that offer value-added services.

Competition is confined not only to resource mobilization but also to lending and other revenue generating areas of services offered by banks. Under the circumstances, it has become essential to develop a close relationship with valued customers and come out with innovative measures to satisfy their needs. Customer expectations for quality services and returns are increasing rapidly and, therefore, quality in future will be the sole determinant of successful banking corporations. It is, thus, high time that Indian banks organically realize the imperative of proactive Bank Marketing and Customer Relationship Management and take systematic steps in this direction.

2. Marketing Approach

Banking industry is essentially a service industry which provides various types of banking and allied services to its clients. Bank customers are such persons and organizations that have surplus or shortage of funds and those who need various types of financial and related services provided by the banking sector. These customers belong to different strata of economy, different geographical locations and different professions and businesses. Naturally, the need of each individual group of customers is distinct from the needs of other groups. It is, therefore, necessary to identify different homogenous groups and even sub-groups of customers, and then with utmost precision determine their needs, design schemes to suit their exact needs, and deliver them most efficiently.

Banks, generally, have been working out various services and products at the level of the Head Office and these are traded through their retail outlets (branches) to different customers at the grass-roots level. This is the so called 'Top to Bottom' approach. However, bank marketing requires a change in this traditional outlook. It should be 'bottom to top' approach with customers at the grass-roots level as the focal point for working out various products / schemes to suit the needs of different homogenous groups of customers. Thus, bank marketing approach, in general, is a group or "Collective" approach.

Customers Relationship Management, on the other hand, is an individualistic approach which concentrates on certain select customers from the homogeneous groups, and develops sustainable relationships with them for adding value to the bank. This may be termed as a "Selective" approach.

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Thus, bank marketing concept, whether "collective" approach or "selective" approach, is a fundamental recognition of the fact that banks need customer oriented approach. In other words, bank marketing is the design and delivery of customer needed services worked out by keeping in view the corporate objectives of the bank and environmental constraints.

The following chart gives an overview of the Two Pronged Approach to Bank Marketing.

Various components of the above chart are further elaborated in the sections which follow.