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BMS PROGRAMME MUMBAI UNIVERSITY UNIVERSITY OF MUMBAI PROJECT REPORT ON “MARKETING OF BANKING SERVICES” IN PARTIAL FULFILLMENT OF BACHELOR OF MANAGEMANT STUDIES (BMS SEM –V) 2010-2011 SUBMITTED BY “NITISH KUMAR” PROJECT GUIDE “MISS NITYA VARGHESE” KARNALA SPORTS ACEDAMY BARNS COLLEGE OF ARTS, COMMERCE AND SCIENCE NEW PANVEL: - 410406 BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY CERTIFICATE CLASS: - TYBMS YEAR:-2010-2011 This is to certify that the work entered in this journal is the work of Mr. /Mr.……………………………………………………………………… ………………………………………………………………………………. of …………… division ………….. Have successfully completed the project report on the topic “……………………………………………………… ”. Terms of the year………………….. In the college as laid down by the college authority. ……………… ………………. Mrs.NITYA VARGHESE Mr. (Project guide) (Principle) Date…. /…/…. OBJECTIVES OF PROJECT BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY i) To analyze the role and need of banking as it is an upcoming era of Banking ii) To know how marketing of banking services can be beneficial in growth of Indian economy. iii) To know about the emergence of Banking in market. iv) To understand the nature of services rendered and various investment areas provided by banks v) To know about the recent trends & services of banking in Indian market vi) To understand the future prospects and challenges faced by banking activity CONTENTS BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY AN INTRODUCTION TO BANKING SECTOR IN INDIA PEST ANALYSIS 7P’s OF BANKING SECTOR BLUEPRINTING 4I’s OF BANKING RATER ANALYSIS FOR INDIAN OVERSEAS BANK MARKET SEGMENTATION COMPLAINT HANDLING–HDFC BANK CASE STUDY-I RATER SERVICE RECOVERY FISH BONE CASE STUDY-II (ICICI BANK) RATER BIBLIOGRAPHY ARTICLES SERVICE SECTOR BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY MARKETING A PROJECT ON MARKETING OF BANKING SERVICES BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY AN INTRODUCTION TO THE BANKING SECTOR IN INDIA Banks are the most significant players in the Indian financial market. They are the biggest purveyors of credit, and they also attract most of the savings from the population. Dominated by public sector, the banking industry has so far acted as an efficient partner in the growth and the development of the country. Driven by the socialist ideologies and the welfare state concept, public sector banks have long been the supporters of agriculture and other priority sectors. They act as crucial channels of the government in its efforts to ensure equitable economic development. The Indian banking can be broadly categorized into nationalized (government owned), private banks and specialized banking institutions. The Reserve Bank of India acts a centralized body monitoring any discrepancies and shortcoming in the system. Since the nationalization of banks in 1969, the public sector banks or the nationalized banks have acquired a place of prominence and has since then seen tremendous progress. The need to become highly customer focused has forced the slow-moving public sector banks to adopt a fast track approach. The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering. Conservative banking practices allowed Indian banks to be insulated partially from the Asian currency crisis. Indian banks are now quoting al higher valuation when compared to banks in other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed in approach and armed with efficient branch networks focus primarily on the ‘high revenue’ niche retail segments. The Indian banking has finally worked up to the competitive dynamics of the ‘new’ Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT solutions are perceived to be ‘futuristic’ and proactive players capable of meeting the multifarious requirements of the large customer’s base. Private Banks have been fast on the uptake and are reorienting their strategies using the internet as a medium The Internet has emerged as the new and challenging frontier of BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY marketing with the conventional physical world tenets being just as applicable like in any other marketing medium. The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamic entity. This transformation has been largely brought about by the large dose of liberalization and economic reforms that allowed banks to explore new business opportunities rather than generating revenues from conventional streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. Indian nationalized banks (banks owned by the government) continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization. The Indian banking can be broadly categorized into nationalized, private banks and specialized banking institutions. The Reserve Bank of India acts as a centralized body monitoring any discrepancies and shortcoming in the system. It is the foremost monitoring body in the Indian financial sector. The nationalized banks (i.e. government-owned banks) continue to dominate the Indian banking arena. Industry estimates indicate that out of 274 commercial banks operating in India, 223 banks are in the public sector and 51 are in the private sector. The private sector bank grid also includes 24 foreign banks that have started their operations here. The liberalize policy of Government of India permitted entry to private sector in the banking, the industry has witnessed the entry of nine new generation private banks. The major differentiating parameter that distinguishes these banks from all the other banks in the Indian banking is the level of service that is offered to the customer. Their focus has always centered around the customer – understanding his needs, preempting him and consequently delighting him with various configurations of benefits and a wide portfolio of products and services. These banks have generally been established by promoters of repute or by ‘high value’ domestic financial institutions. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY The popularity of these banks can be gauged by the fact that in a short span of time, these banks have gained considerable customer confidence and consequently have shown impressive growth rates. Today, the private banks corner almost four per cent share of the total share of deposits. Most of the banks in this category are concentrated in the high- growth urban areas in metros (that account for approximately 70% of the total banking business). With efficiency being the major focus, these banks have leveraged on their strengths and competencies viz. Management, operational efficiency and flexibility, superior product positioning and higher employee productivity skills. The private banks with their focused business and service portfolio have a reputation of being niche players in the industry. A strategy that has allowed these banks to concentrate on few reliable high net worth companies and individuals rather than cater to the mass market. These well-chalked out integrates strategy plans have allowed most of these banks to deliver superlative levels of personalized services. With the Reserve Bank of India allowing these banks to operate 70% of their businesses in urban areas, this statutory requirement has translated into lower deposit mobilization costs and higher margins relative to public sector banks. PEST ANALYSIS BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY TECHNOLOGICAL ENVIROMENT Technology plays a very important role in bank’s internal control mechanisms as well as services offered by them. It has in fact given new dimensions to the banks as well as services that they cater to and the banks are enthusiastically adopting new technological innovations for devising new products and services. The latest developments in terms of technology in computer and telecommunication have encouraged the bankers to change the concept of branch banking to anywhere banking. The use of ATM and Internet banking has allowed ‘anytime, anywhere banking’ facilities. Automatic voice recorders now answer simple queries, currency accounting machines makes the job easier and self-service counters are now encouraged. Credit card facility has encouraged an era of cashless society. Today MasterCard and Visa card are the two most popular cards used world over. The banks have now started issuing smartcards or debit cards to be used for making payments. These are also called as electronic purse. Some of the banks have also started home banking through telecommunication facilities and computer technology by using terminals installed at customers home and they can make the balance inquiry, get the statement of accounts, give instructions for fund transfers, etc. Through ECS we can receive the dividends and interest directly to our account avoiding the delay or chance of loosing the post. Today banks are also using SMS and Internet as major tool of promotions and giving great utility to its customers. For example SMS functions through simple text messages sent from your mobile. The messages are then recognized by the bank to provide you with the required information. All these technological changes have forced the bankers to adopt customer-based approach instead of product-based approach. ECONOMICAL ENVIROMENT BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY Banking is as old as authentic history and the modern commercial banking are traceable to ancient times. In India, banking has existed in one form or the other from time to time. The present era in banking may be taken to have commenced with establishment of bank of Bengal in 1809 under the government charter and with government participation in share capital. Allahabad bank was started in the year 1865 and Punjab national bank in 1895, and thus, others followed Every year RBI declares its 6 monthly policy and accordingly the various measures and rates are implemented which has an impact on the banking sector. Also the Union budget affects the banking sector to boost the economy by giving certain concessions or facilities. If in the Budget savings are encouraged, then more deposits will be attracted towards the banks and in turn they can lend more money to the agricultural sector and industrial sector, therefore, booming the economy. If the FDI limits are relaxed, then more FDI are brought in India through banking channels. POLITICAL/ LEGAL ENVIROMENT Government and RBI policies affect the banking sector. Sometimes looking into the political advantage of a particular party, the Government declares some measures to their benefits like waiver of short-term agricultural loans, to attract the farmer’s votes. By doing so the profits of the bank get affected. Various banks in the cooperative sector are open and run by the politicians. They exploit these banks for their benefits. Sometimes the government appoints various chairmen of the banks. Various policies are framed by the RBI looking at the present situation of the country for better control over the banks. SOCIAL ENVIROMENT BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY Before nationalization of the banks, their control was in the hands of the private parties and only big business houses and the effluent sections of the society were getting benefits of banking in India. In 1969 government nationalized 14 banks. To adopt the social development in the banking sector it was necessary for speedy economic progress, consistent with social justice, in democratic political system, which is free from domination of law, and in which opportunities are open to all. Accordingly, keeping in mind both the national and social objectives, bankers were given direction to help economically weaker section of the society and also provide need-based finance to all the sectors of the economy with flexible and liberal attitude. Now the banks provide various types of loans to farmers, working women, professionals, and traders. They also provide education loan to the students and housing loans, consumer loans, etc. Banks having big clients or big companies have to provide services like personalized banking to their clients because these customers do not believe in running about and waiting in queues for getting their work done. The bankers also have to provide these customers with special provisions and at times with benefits like food and parties. But the banks do not mind incurring these costs because of the kind of business these clients bring for the bank. Banks have changed the culture of human life in India and have made life much easier for the people. 7 P’S of BANKING SECTOR BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY It is very important for any bank to identify the 7 P’s of services so was understands their customers better and provide them with best of service. The 7 P’s are: 1. PRODUCT MIX 2. PRICE MIX 3. PLACE 4. PROMOTION 5. PEOPLE 6. PROCESS 7. PHYSICAL EVIDENCE PRODUCT MIX The product mix of a company includes all different product lines a company offers to its customers. The product line of a bank might easily include more than 100 different services. In today’s competitive scenario it has become very necessary for a bank to provide it’s customers with a wide variety of services and the best technology in order to attract them. Here is an example of some of the products offered by UTI Bank to its customers. SAVING ACCOUNT Offering Axis Bank's Savings Account is just the right product for everyone, salaried, employees or businessmen, high net worth individuals and NRI's. The unmatched package of Axis Bank Savings Bank account given below brings the benefits of better, efficient and hassle free banking. • ATM Network BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY A Savings Bank Account with Axis Bank entitles you to a free ATM card, which enables you to access your account anytime and at any ATM centre across the country. You can withdraw and deposit money and cheques with your ATM card. Unlike most other ATMs, a Axis Bank ATM allows you to withdraw up to Rs. 20,000 a day. In addition, cash can be withdrawn from any of the ATMs against your MasterCard (domestic/international). • 7-Day Banking At select branches spread over the country, you can bank on all the 7 days of the week (except for public holidays), over extended working hours. • Telebanking Telebanking service provides you instant access to your account. It offers you a wide range of services over the phone such as account information, Balance Enquiry, Transaction Details, Statement of Account, Status of your Cheque , etc. • iConnect-Internet Banking This is the concept of "the Bank on your desk-top". You can look-up the status of your account, query and undertake a range of financial transactions, simply by clicking the mouse. Now don't you think you have a great opportunity to see yourself laughing your way to the bank? CREDIT CARDS Offering Axis Bank has joined hands with Citibank, to give rise to a new kind of card power - unique and unmatched benefits and international utility at the most competitive rates. The Axis Bank Citibank International Silver Card, the MasterCard and 'Unique' Card offers quite a few benefits. Rewards BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY Axis Bank Citibank Card combines dual conveniences of high purchase power and flexible payment facility. Purchase of high-value items is now convenient and when it comes to payback time, your bill can be paid in installments, depending on your financial liquidity at a given moment. The Revolving Credit Facility lets you pay as little as 5% of your total outstanding every month. Giving you the power to buy now and pay later in parts! Dial-A-Draft One can use your Axis Bank Citibank Card to pay for your personal expenses at places where credit cards are not accepted yet. Like paying for investments, telephone and electricity bills, school fees and much more. Just call CitiPhone and the draft you need will be delivered to you! Credit Limit Increase You can call CitiPhone and ask for a Credit Limit Increase in the event that you have to make a large purchase on your card urgently. It's especially handy for paying off vehicle repairs, telephone bills and electricity bills. And for anniversaries, weddings, birthdays, or business trips or when a holiday goes beyond budget 24-Hour ATMs One can withdraw emergency cash up to 60% of your credit limit from 24-Hour ATMs in Ahmedabad, Bangalore, Calcutta, Chennai, Delhi, Hyderabad, Mumbai and Pune. While traveling overseas you can draw cash from MasterCard ATMs spread across the globe. The same is applicable for any Citibank branch. Also the cash you withdraw is insured against theft for a period of 12 hours after withdrawal. A never before facility is brought to you with the UTI Bank Citibank Card at a transaction fee of 2.5% or Rs.50 whichever is higher. All cash advances also carry a service charge from the date of the transaction. The cash withdrawal limit for the first year is Rs. 5,000. Photo card One may choose to have your photograph and signature digitally imprinted on the front of your Card in color. So that you get the extra recognition and security you expect as a Axis Bank Citibank card member BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY Concession on Personal Remittances Do you often need to remit funds to other cities using facilities such as Drafts/Telegraphic Transfers, etc.? Here's a benefit you would most appreciate. A 25% rebate on standard commission is offered on personal remittances at Axis Bank branches. Overdraft facility Axis Bank Citibank credit card provides you with an overdraft facility to the extent of 75% of the value of your holdings of Demat Shares and Units! Moreover, you get a waiver of 0.5% on interest rate chargeable under the scheme. All you need to avail yourself of these benefits is a Demat A/c with Axis Bank. Free ATM Card The Axis Bank Citibank Credit Card offers you a free ATM Card, which can be used at over 250 Axis Bank ATM centers all over India. All you have to do is open a saving bank/current Account with Axis Bank. Other features Axis Bank Citibank Card has the widest possible reach - welcomed by 1,10,000 Merchant Partners across India and Nepal and yet another 160 lakh Merchant Establishments worldwide. The card can be used both for major occasions, and also for everyday purchases like groceries, cosmetics, and petrol and auto accessories. It can also be used to buy high- value items like consumer durables (refrigerators, washing machines, microwave ovens, etc.). And even paying customs duty and hospital bills becomes convenient with the Card. PRODUCT WIDTH AND DEPTH Width Width of the product mix is the number of product lines a company is offering. The product width could be a narrow one or a wide one depending from bank to bank. A wide BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY mix encourages more sales since the banks are able to diversify and provide more to their customers and they also appeal to a larger target market. Depth Depth of the product mix is the number of product items in each product line. Banks with more schemes and services have more depths than those offering only a few. Here is table giving an example of Width and Depth in the Product Mix: Similarly, different banks plan out their product portfolios and based on that, the depth and width of their product mix can be determined. In today’s scenario, where there is cutthroat competition and new foreign banks entering the Indian markets, it has became more or less like a law to have very wide product lines with more and more number of products in each line. PRODUCT LEVELS Core Benefit: BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY It is the main or core reason why the customer will buy the service of the bank. More like the basic purpose or necessity. Basic Product: The core benefit is converted into a basic product. That is the service can used by the customer in order to fulfill his/her needs. Expected Product: It refers to the set of attributes and conditions expected by the customers when they purchase the service. Augmented Product: It is the additional feature that the banks provide which exceeds the customer’s expectations. Potential Product: Innovations and product differential is the bases of a Potential Product. If the banks alter its services according to the requirements of the individual customers it reaches this level. Core Basic Expected Augmented Potential Product Product Product Product Product The basic Safety of Timely service Goods waiting Mobile and necessity to use deposits Long banking rooms internet banking Loanable funds hours Extensive ATM Banking services in etc. Low interest network New Schemes order to handle rates Promotional tailored for finance more Discounts specific efficiently customers Thus it can be seen how a particular product passes through different levels. In today’s competitive scenario most banks try offering services at the Augmented and Potential level. PRICE MIX BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY The price mix in the banking sector is nothing but the interest rates charged by the different banks. In today’s competitive scenario where customer is the king, the banks have to charge them interest at a rate in accordance with the RBI directives. Banks also compete in terms of annual fees for services like credit cards, DMAT etc. Another important aspect of the bank’s pricing policy today is the interest charged on the Home Loans and Car Loans. With India’s economy progressing, there are more and more buyers seeking these loans but at a very competitive interest rate. Let’s understand this with an example. A particular buyer approaches a bank for a car loan for a period of 3 years. He is charged Rs. 20,000 as interest. However, if a sale representative of another bank comes to know of this deal, he will try to attract the customer by giving him a better deal i.e. a loan at a lower rate on interest. In this way, it is the customer that ultimately benefits. Here is an example of some of the prices charged by ICICI bank for their services ATM Card Issue Free – 2 ATM cards issued free if it joint account Add – on Card RS. 100 – Beyond 2 cards Duplicate Card Rs. 100 Other General Charges Current Account Savings Account Transaction Charges NIL NIL Charges for issue of NIL NIL Cheques book Issue of duplicate statement Rs. 25 per page Rs. 25 per page Account closure Rs.100 Rs.100 This example evinces some of the charges that the customer has to pay for the services provided by the bank. The pricing factor is very important because of the kind of competition that is prevailing today in the Indian market. However it is very important to understand that in the BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY banking sector, the main pricing policy is concerned with the interest rate charged. This interest rate is however regulated by the RESERVE BANK OF INDIA and THE INDIAN BANKING ASSOCAITION. Any one particular bank or a group of banks does not regulate it. The interest rate charged cannot be higher than that decide by the RBI and the INDIAN BANKING ASSOCIATION. Thus, inspite of the constraints in the pricing policy due to the RBI directives there are mainly three types of pricing methods adopted by banks. They are: Value pricing: Banks having unique or different products or schemes mainly do this type of pricing. They usually charge a combination of high and low prices depending on the customer loyalty as well as the products. This type of pricing strategy is usually coupled with promotion programmes. Going Rate pricing: The most commonly used pricing technique is the going rate pricing. In going rate pricing, the bank bases its price largely depending on the competitor’s prices. The banks however have to stay within the RBI directives and compete. The banks may charge higher or lower than their competitors. After 1991 when the foreign banks entered the Indian market this method of pricing has gained increasing importance. Mark up pricing: This is a pricing technique wherein the cost of the service is determined and a small margin is added to it and then the final price is offered to the customers. This type of pricing is the not very popular since in the banking sector it is not very easy to arrive at the cost of the service. Thus most banks use a combination of mark – up pricing and going rate pricing. THE MOST FAVORABLE PRICING STRATEGY BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY This model shows a pricing strategy, which should be adopted in order to ensure maximum satisfaction to both the bank as well as the customers. The price should be set in such a manner that the customer is assured that he is not being cheated or overcharged by the bank and at the same time the bank is able to reap maximum profits. Such a pricing stand helps the bank get maximum sales as well as profits since the customer feels that by entering such a transaction he is winning. PLACE MIX Place mix is the location analysis for banks branches. There are number a factors affecting the determination of the location of the branch of bank. It is very necessary a bank to situated at a location where most of its target population is located. Some of the important factors affecting the location analysis of a bank are: 1. The trade area 2. Population characteristics BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY 3. Commercial structure 4. Industrial structure 5. Banking structure 6. Proximity to other convenient outlets 7. Real estate rates 8. Proximity to public transportation 9. Drawing time 10. Location of competition 11. Visibility 12. Access It is not necessary that all the above conditions have to be satisfied while selecting the location but it should be tried to satisfy as many of them as possible. 1. The Trade Area: The trade area is a very important factor determining the place where a bank branch should be set up. For e.g. a particular location maybe a huge trading place for textiles, diamonds or for that case even the stock market. Such locations are ideal for setting up of bank branches. 2. Population Characteristics: The demography of a place is a very important factor. This includes: The income level of the population The average age The average male female population The caste, religion, culture and customs The average spending and saving habit of the people. These factors are very important for a bank as the help them decide the kind of business the branch will get. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY 3. Commercial Structure: The commercial structure refers to the level of commerce i.e. business activities taking place at a particular location. The higher the level of business activities taking place in a particular location the more preferable it is for setting up a bank branch. 4. Industrial Structure: This is nothing but a combination of the trade area analysis and the commercial structure. However the industrial structure focuses more on the kind of industries operating in a particular location. For example, an area like SEEPZ is marked with a lot of electronic manufacturing units. Thus the industrial stricture determines the kind of financial transactions that could take place in a particular location. 5. Banking Structure: The Banking structure refers to the existence of other banks in the area. Whether there is already an efficient network of other bank branches operating at that particular area. Thus the overall infrastructure needed for the working of a bank. 6. Proximity of other convenient outlets: This refers to the other branches of the same bank as well other commercial, entertainment and industrial outlets. 7. Real Estate Rates: This is mainly dealing with the cost factor involved in opening up a bank branch at a particular location. The real estate rate is a very strong factor influencing the location decision for a bank branch. 8. Proximity to public transportation: The location should be proximate to public transportation facilities. This means it should have bus stops close by as well as it should be proximate to railway stations so as to make it convenient for the common man. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY 9. Drawing Time: Drawing time refers to the time period during which a customer can draw money from the banks. It should be convenient to the customer and somewhat flexible to accommodate the customer’s needs. No bank has more than a certain amount with them and in case a customer wants to withdraw an amount more than that available with the bank, the bank needs to draw that amount from other banks. Hence, a location must be such that it facilitates minimum drawing time. 10. Location of Competition: The existence of other banks also means competition. If the level of competition is very high in a particular location, it is necessary that a bank does a lot of market research before opening a branch so as to estimate the kind of business it would get. 11. Visibility: The location of a branch should be such that it is visible and easily noticed by the customers as well other people. 12. Access: The bank branch should be very easily accessible to the customers. If this is not the case, the customer might switch to some other bank, which is more convenient to him and very easily accessible. The location should be such that it is very convenient for the customer to reach. Promotion Mix Promotion is nothing but making the customer more and more aware of the services and benefits provided by the bank. The banks today can use a lot of new technology to communicate to their customers. Two of the fastest growing modern tools of communicating with the customers are: 1. Internet Banking 2. Mobile Banking BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY This can be better explained with the example of ICICI bank. SMS services SMS functions through simple text messages sent from your cellular phone. These messages are recognized by ICICI bank to provide you with the required information. For example, when you enter ‘IBAL’ your cellular phone screen will display the current balance in your primary account. Thus with the help of SMS a wide range of query based transactions can be performed without even making a call. ICICI was the first organization in India to provide Wireless Application Protocol (WAP) based services. Mobile commerce using WAP technology, allows secure online access of the web using mobile devices. With WAP one can directly access the ICICI WAP server, check one’s account details and use other value added services. Thus different methods are used by different banks to promoter its services. A bank may have very attractive schemes and services to offer to their customers but they are of no use if they are not communicated properly to the customers. Promotion is o inform and remind the individuals and persuade them to accept, recommend or use of product, service or idea. However there some very important points that is to be considered before the promotion strategy is made. These points are: Finalizing the Budget Before the bank decides the kind of promotion that should be done, it very important to finalize the budget for it. The formulation of a sound budget is essential to remove the financial constraints in the process. The budget is determined on the basis of volume of business of the bank. In addition to this the intensity of competition also plays a decisive role. Selecting a suitable vehicle BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY Another very important task is to select a suitable vehicle for driving the message. There are a number of devices to advertise such as broadcast media, telecast media and the print media. The selecting of the mode of advertising is strongly influenced by the kind of budget decided. Usually for promoting banks the most effective and economical form of advertising has been the print media. Making possible creativity Making possible creativity is nothing but the kind of slogans, punch lines etc. that are supporting the message. They should be very creative but yet simple to be understood by the common man. It should appeal to the customers. It should be distinct from that of the competitors and should be successful in informing and sensing the customers. Testing the Effectiveness It should be borne in mind that the advertisement is first tested for its effectiveness. This should be done with the help of various techniques like testing effectiveness on a sample group. This helps determine the success of the advertisement and in case of any problem the advertisement can be altered and remedied. Instrumentality of Branch Managers At a micro level, it is the responsibility of the branch managers to promote and drive the message to the people in the local area. They should organize small programs in order to attract people and crate awareness in the local area about the new schemes of the bank. Different Ways of Promotion Public Relations: In today’s competitive scenario developing strong public relations is very important for any bank to be successful. Most banks today have a separate Public Relations department. However primarily it is considered as a responsibility of the various bank managers to develop a steady and strong relationship with their present customers as well as potential customers. This can be done by a constant follow up, small programmes etc. Personal Selling: BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY Personal selling is found to be one of the most effective and popular forms of promoting bank business. The main reason for this is that banking is a service in which trust plays a very important role. In personal selling, a bank representative goes to the customers and explains the scheme to the customers. Also he gives the customers any kind consultation he might need. He provides the customers all the information sought by him. The representative tries to persuade the customers to go for the scheme provided by the bank by telling him all the benefits. Here are some of the important features of personal selling It is a direct relation between the buyers and the seller It is oral presentation in conversation It is personal and social behavior It is found to be more effective in service oriented organizations It is based on the professional excellence or expertise of an individual Sales Promotion: Sales promotions are basically giving the customers some additional benefits, maybe at times just some small gifts, in order to promote the schemes. The more innovative the sales promotions the more positive are the results. Some of the most popular sales promotions techniques are gifts, contests, fairs and shows, discounts and commission, entertainment and traveling plans for bankers, additional allowance, low interest financing etc. It is very important that the sales promotions benefits are designed in such a manner that they are better than those of the competitors. Word – of – mouth Promotion: This form of promotions is not only very effective in banking services but in any kind of service. However it is more important in banking for the only reason that this is a service where trust plays a very important role. If a particular bank’s services are recommended by friends, relatives, or other well wishers the person is more influenced and inclined towards that bank. It is very important to note that the internal employees of the bank play a very important role in word – of – mouth promotion technique. This is because they can start the process by recommending the bank to their friends and relatives and after that it is like a chain, which spreads like a wild fire. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY Telemarketing: In recent times telemarketing has gained increasing importance as an effective tool for promotion. The telemarketing is a process of making use of sophisticated communication network for promoting the banks. This includes promoting through television, telephone, and radio. Nowadays, cell phones are used extensively for the same. This is the most popular form of promotion. Banks today have started using ‘SMS’ and many other services supported by cell phones to provide benefits to their customers and thus have tried to increase their sales. In today’s competitive and modern scenario it very important that banks makes use of telemarketing techniques very efficiently to have desirable results. Internet: The use of Internet as a promotional tool is increasing. More and more banks are using Internet to promote their services. The online banking has made it even easier for the customers to avail the bank’s services. No longer do people have to go to their bank branches for small petty matters like checking their balance etc. All this can be done with the help of a few clicks. Thus, these were the numerous ways in which a bank can promote its services and create more awareness amongst the people. People People are the employees that are the service providers. In a banking sector, the service provider plays a very important and determinant role in rendering the customers a satisfactory and a good service. It is extremely essential that the service provider understand what his customers expect from him. In the banking sector, the customer needs to be guided in a lot of matters, which is possible only with the help of the service provider. The position in the eyes of the customer will be perceived by appearance, attitude and behavior of the customer contact employees. Not only does the customer contact employee influence the customer’s perception but also the customer base of the organization does so. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY Process Mix The process mix constitutes the overall procedure involved in using the services offered by the bank. It is very necessary that the process is very customer friendly. In other words a process should be such that the customer is easily able to understand and easy to follow. Today if particular banks formalities are long and the procedure very complicated the overall process fails and the customer may not be inclined towards using that banks services. Let’s take for example the process for application for a car loan. Now this mainly involves 3 things. 1. Producing of proper documents 2. Filling up of application form 3. Paying for the initial down payment. Here the process may fail in the following cases: 1. If the customer is asked to produce a number of forms out of which some may not be necessary at all. Thus it is very necessary that the customer be asked for the minimum but most necessary document and not the other unnecessary documents. 2. In case of application form, the application form must be in a language best understood by the customers and it should not be very lengthy one or demanding a lot of unnecessary information. 3. Finally the payment of initial amount. The customer should be given options as to how he would like to pay by cheques or by credit card. Once again the amount should be very competitive not very high above the regular rates prevailing in the markets. The smaller and simpler the procedure, the better the process, and the customer will be more satisfied. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY PHYSICAL EVIDENCE Physical evidence is the overall layout of the place i.e. how the entire bank has been designed. Physical evidence refers to all those factors that help make the process much easier and smoother. For example, in case of a bank, the physical evidence would be the placement of the customer service executive’s desk, or the location of the place for depositing cheques. It is very necessary that the place be designed in such a manner so as to ensure maximum convenience to the customer and cause no confusion to him. Let us see an example as to how banks try to make little changes so as to make the service better for their customers. The Hong Kong Shanghai Banking Corporation (HSBC) has decided in introducing a common uniform for all the employees in all its branches all over India. The plan is possibly in line with the aggressive retail banking adopted by HSBC. A common uniform its nothing like a revolutionary change but however this little change makes it very easy for the customer to identify with his service provider and makes the entire process very easy for him. The more the bank does to make the service easier and better the more satisfied will be the customer. Thus, these are the 7 P’s of services. Each of them plays a very important and a pivotal role in determining the quality of the service provided to the customer. BLUEPRINTING A service blueprint is a picture or a map that accurately portrays the service system so that different people involved in providing it can understand and deal with it objectively regardless of their roles or their individual points of view. Blueprints are particularly useful at the designing and redesigning stages of service development. A service blueprint visually displays the service by simultaneously depicting the process of service delivery, the points of customer contact, the roles of customers and employees, and the visible elements of the BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY service. It provides a way to break the service down into its logical components and to depict the steps or tasks in the process, the means by which the tasks are executed and the evidence of the service as the customer experiences it. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY Standard Beginning Regardless of our mapping objective (to describe a new process or an existing process), type of map selected (flow chart, risk management, cross-functional, time elapsed), and state (as- is, should be, could be) selected, all process maps will have the same common beginning steps. 1. Begin by defining the objective and the process boundaries. Our objective in this case is to document the existing savings-deposit process for the purpose of training new cashiers. The process boundaries will begin with the customer’s bringing a deposit into the bank (the input) and end with the last step in the cashier’s handling of the transaction: issuing a receipt to the customer (the output). 2. List the basic steps that produce the output, using as brief a description as possible, such as a verb followed by a noun. These may include: complete deposit slip, greet customer, count cash, inspect deposit slip, post deposit, post passbook, authenticate passbook posting, store cash, store deposit slip, thank customer. Arrange these processes in the sequence in which they occur; this will help you construct your map logically and easily. 3. Record the map title and reference number at the top and centre of a landscape-formatted sheet. In the sample below, use “B1” as the reference number, where “B” refers to a series of savings-related process maps and “1” is the first map in the series. 4. Record your name and the date prepared below the map title line, at the left hand margin. Constructing the Map: What Symbols Do I Use? BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY 5. The starting point for this process is the customer. Use the “Start” symbol and place this symbol in the upper left hand corner of your paper. 6. Symbols must be connected by arrows to show flow, which may represent either the sequence of the processes or the movement (transportation) of the inputs from process to process. Automatically enter an arrow after posting a process, inspection, document/input, or decision symbol to your map. By convention, movement is from left to right, and from top to bottom; both directions are shown in the sample below. Alternating the vertical and horizontal flows can help you show activities that occur almost simultaneously, and can also save space on your sheet. For example, a down arrow is used to connect the Start Process (customer) with the first two inputs (passbook and cash). You could have just as well used a horizontal arrow and placed the two inputs to the right of the Start Process symbol. The choice is yours. Just remember, our objective is to present as clear and understandable a map as possible. 7. The customer’s deposit has three component inputs: the cash, the deposit slip (the bank’s voucher), and the passbook (the customer’s receipt). These three inputs have different processes performed on them, and are stored in different places at the end of the process, so they need to be identified by distinct symbols. Note that the passbook and deposit slip use the “Document” symbol, while the “Input” symbol is used to represent the cash. For the sake of clarity, insert the document name into the centre of the symbol. From this point forward assume that these documents flow with the arrows (transportation symbols) until otherwise indicated. At this point in the process, you have only two inputs: the passbook and the cash. Place these next to each other, with one arrow to the right, indicating that they flow together. 8. Your option for this step is to use either the “Process” or “Manual Operation” symbol. Because the customer must hand-write the document (rather than it being computer- generated, for example), the better option is to select the “Manual Operation” symbol. 9. At this point, the cashier processes the deposit. The first step is to ensure that the customer has submitted a valid deposit slip containing all required information (which is listed in the process description). Since this activity serves as a control point as well as a process point—the process cannot continue if the amount is not recorded, for example—you BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY can select either a process or an inspection symbol to represent the action. Because this step is an important control for the further processing of the deposit, the better option is to select the Inspection symbol. 10. There is not sufficient space left on the sheet to post the next step, even though there is space below the existing line of symbols. Since arrows move from left to right and top to bottom, you cannot, by convention, draw a big arrow from the right side of the paper across to the left margin in order to continue the flow in the space remaining on the paper. This means you continue on another sheet of paper. Select the “On Map” connector symbol from the list. This symbol is used twice: first where you discontinue, or break, the process, and second, where you resume it. (If you have two breaks on a map, you will have four On Map symbols.) To let the reader know which connectors go together (form a pair), insert a letter or number, assigned sequentially, in each symbol. The first pair, for example, might be labeled “A,” while the second pair would be labeled “B.” The reader knows which one of the pair represents the break in the flow, because there are no more symbols below or to the right of the connector symbol. The reader knows which one of the pair represents the resumption of the flow, because symbols will appear below or to the right of the connector symbol. 11. In this step, the cashier counted the cash and found it to be either correct or incorrect. This results in two possible courses of action that must be shown in the process. Use the decision symbol. Insert a word or two inside the symbol to reflect what condition is being decided; in this case, you are answering the question: “Amount correct?” The question has to be phrased so that it can be answered either “Yes” or “No.” Both courses of action are mapped. The decision symbol, therefore, has two arrows attached to it, one representing the “Yes” course of action, and the other, the “No” course of action. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY A. NO: This course of action represents a rework loop. The customer has to either make the correction to the deposit slip and initial the change, or make up/receive the difference in the amount of cash deposited so that it will equal the amount shown on the deposit slip. After the correction process, the arrow points back to the decision diamond because the cashier now decides again whether the actual cash counted agrees with the amount reflected on the deposit slip. If it does, then the process resumes the flow from the “Yes” arrow leaving the decision diamond. B. YES: The cashier has answered “Yes” to the question, “Does the amount of cash received agree with the amount shown on the deposit slip?” The process continues to the next step. 12. Up to this point, the three inputs—the passbook, deposit slip, and cash—have been flowing together. It is now time to separate their flow and to show storage of the cash. The deposit slip and the passbook will continue to flow together; redraw and label the document symbols for each of these inputs next to each other, followed by one arrow. (To emphasize that these documents flow together, you can overlap the documents as shown in the sample.) Redraw and label the cash symbol, followed by an arrow. Use the Storage symbol, and place it after the arrow leading from the Cash symbol to show that the cash has been dropped from the flow. If it adds clarity and not clutter, you can label the storage symbol (in this case, “Till”). Note that the act of the cashier placing the money in the till does not need a process box; it is sufficiently clear to show through the use of the cash symbol, arrows, and storage symbol that the cash is going into the till. This illustrates how the use of symbols can eliminate unnecessary and redundant process boxes. 13. The details of the inspection performed by the back office supervisor can be described in the second tier of the map. Alternatively, you can shadow the inspection box (refer to the “Tier Your Maps” section) and create a sub process map that describes what the back office supervisor actually does. 14.This step demonstrates a teaching point discussed above. Which point is represented here? Hint: Describe what is happening here. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY 15.The passbook/receipt, posted with the deposit (the output), is returned to the customer. This is the end of the process. Use the End Process symbol, (which is the same as the Start symbol) and label it to show that the Customer is the endpoint. This now completes the first tier of your Process Map. 16.In the second tier, record the description for each step. This task serves a dual purpose, because it forces you to proofread your symbols to make sure that you have complied with the requirements described in the “Proofread Map” section above. You will also be able to see for yourself whether your process map makes sense. Alternatively, you can complete these descriptions as you draw your symbols; you may find, however, that keeping up with the text while also posting symbols on your map is cumbersome. 17.Lastly, since you have used a second page, carry forward the Process Map title and number the map pages in the upper right hand corner. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE BMS PROGRAMME MUMBAI UNIVERSITY Cashier Process of Savings Deposit-B1 (Ref-1) Prepared by: Your Name 18 August 2005 Customer Deposit Passbook Slip (Ref-4) (Ref-2) Cash A (Ref-3) (Ref-1) Customer enters Customer Customer hands Cashier greets Cashier banking hall bearing completes deposit slip, passbook, customer, then counts cash passbook and cash. deposit slip. and cash to cashier. checks deposit slip and ticks to for name, account amount on number, agreement deposit slip. of written and numerical amounts. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE Page 36 BMS PROGRAMME MUMBAI UNIVERSITY Cashier Process of Savings Deposit-B1 A Amount N ? (Ref-6) o Y es Passbook Passbook Deposit Slip (Ref-7) Cash Deposit Slip Customer T (Ref-8) il Spindle l (Ref-5) No: Customer corrects Yes: Cashier Cashier Cashier posts deposit to Cashier Cashier passes and initials correction oposts transaction places cash customer’s passbook, thanks passbook to deposit slip or adjusts to bank’s books in till. calculates and posts new customer, customer; thanks amount of cash tendered. of account. balance, initials passbook placing the customer; balance, then passes deposit slip customer leaves passbook and deposit slip. on spindle for banking hall. end of day balancing. BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE Page 37 BMS PROGRAMME MUMBAI UNIVERSITY Process Mapping Symbols This symbol is used to indicate both the beginning and the Start/End end of your program. Operation, Identifies an activity or task in the process that changes an Process output. Usually the name of the activity or task is written inside.
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