The banking sector is an integral part of the economy. Hence this sector plays a key role in the wellbeing of the economy. A weak banking sector not only jeopardizes the long-term sustainability of an economy, it can also be a trigger for a financial crisis which can lead to economic crises. Majority of the banking institutions are now putting emphasis on marketing to make customer aware about the services and benefits offered by them. Marketing is the crucial connection between banks and customers, no banks can expect to succeed without putting substantial investments in its marketing efforts. Banks nowadays are coming up with surprising and impressing ways to lure the customers and retaining their customer base. These days’ banks are focusing heavily on building long term relationships with their existing customers and thereby gaining new customers. Hence, relationship marketing becomes very important for the banks. It is concerned with mapping out all the touch point and evaluating what services are provided, by whom, and when, and how, and what is expected by customers.
The definition of bank marketing is as follows: “Bank marketing is the aggregate of functions, directed at providing services to satisfy customers’ financial (and other related) needs and wants, if more effectively and efficiently than the competitors keeping in view the organizational objectives of the banks.” All the techniques and strategies of marketing are used so that ultimately they induced the people to do business with the particular bank. To create and keep a customer means doing all those things so that people would like to do business and continue to do it with the particular bank rather than with the competitors. It cannot stay in business if it does not attract and hold enough customers, no matter how efficiently it operates.
The reasons for marketing scope to have importance in banking and for banks to interest in marketing subject can be attributed to the following factors:
• Change in demographic dynamics
• Cut throat competition in the service industry
• Increased profit consciousness of the banks
• Deregulation of interest rates
• Entry of various private and foreign banks
• Increasing awareness, education and urbanization
• Indigenous growth of non-banking financial institutions
• Disintermediation
• Advent of the technology
• Increasing the reach of innovative banking products
Following trends have been observed in the marketing strategies of banks recently:
1. Advertising remains the undisputed promotional tool for banks so far among the other promotional tools. Advertising, which includes direct mail, accounted for the largest share of marketing expenditures at 52 percent, compared to 58 percent in 2016. Public relations accounted for 35 percent of marketing budgets compared to 21 percent in 2016.
2. Consumer expectations are growing. With the increase in the education of the consumers, they are now demanding more and more value added services and are ready to pay premium for it.
3. Mobile banking is the need for today. It has become the blessing for the consumers who don’t have the time to visit the bank personally. 47 mobile banking offers to banks is that it drastically cuts down the costs of providing service to the customers. Also service providers are increasingly using the complexity of their supported mobile banking services to attract new customers and retain old ones.
4. Social media is also a tool for marketing the banking services. Seventy percent of banks used social media for marketing purposes in 2017. Twenty-nine percent used social networking (i.e., Face book, Twitter, etc.). Face book, used by 76% of banks, is the most popular among various social media outlets, followed by Twitter at 37%. The main reasons for using social media were for communication and competitiveness.
5. Due to increased use of technological bases has increased the operational efficiency of the Indian banks. Marketer said e-newsletters were the most effective form of Internet marketing, followed by search engine marketing and then sponsorships.
6. Marketing expenditure has witnessed the tremendous growth in last few years as the percentage of total banking expenditure. Despite the overall state of the economy and the banking industry, marketing expenditures were up in 2016. Nearly 60 percent of banks said they planned to increase their marketing expenditures in 2018, the same amount as in 2017. Most of the banks view marketing as a strategic driver for their business.
7. Focus on Incremental New Customer Growth: Instead of generating as many accounts as possible, banks will be focusing on the potential value of relationships including the likelihood of engagement and retention.
8. Gathering Email Addresses: With other communication channel cost increasing and the improved results achieved when email is combined with more traditional channels, the importance of collecting (and using) email addresses has never been more important.
With the increased competition and awareness about the banking sectors, customers are now becoming over demanding about the services offered. New and new trends are being witnessed now days. Banks have also realized that social channels need to be used differently in financial services than with retail or other industry verticals. As opposed to trying to find 'friends' of our brands, social media has been used most effectively for customer service (Twitter) and for the promotion of broad based public relations initiatives. No communication channel is 'free'. While email may seem like a far less costly channel to use for reaching customers, the lack of clear targeting and message development may prove costly as customer’s opt-out of future communications or simply ignore email messages. In my experience within the banking industry, email has not proven to be as good of a replacement for channels like direct mail as it has been a good supplement for improved results.