Service marketing by banking sector

Service marketing New and innovative methods of marketing services used by banking sector Introduction
A bank is a financial institution licensed by a government. Its primary activities include borrowing and lending money.Banks no longer restricted themselves to traditional banking activities, but explored newer avenues to increase business and capture new market. -In the 1990s, greater emphasis being placed on technology and innovation. -New concept like personal banking, retail banking, total branch automation, etc were introduced Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to high net worth individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profitmaking, private enterprises. However, some are owned by government, or are non-profit organizations. Banks offer many different channels to access their banking and other services1- Bank branch 2- ATM 3- Mail 4- Telephone banking 5- Online banking 6- Mobile banking 7- Video banking New innovative method of marketing services used by banking sector 1- E-banking-Enables people to carry out most of their banking transaction using a safe website which is operated by their respected bank. 2- Core banking- it include knowing customer needs. Depositing and lending of money. Providing core banking solution. 3- Corporate banking- it includes providing financial solution to large corporate and MNC's. 4- Mobile banking- it helps in balance inquiry, fund transfer, cheque book request etc. 5- Plastic money-Plastic money are the alternative to the cash or standard money, it is convinent to carry and generic term for all types of bank cards, debit cards, credit cards, smart cards. 6- NRI banking-This facility is designed for diverse banking requirements of the vast NRI population spread across the globe. 7- TOTAL BRANCH AUTOMATION-this is one of the latest towards paper less transactions, it is more customer friendly and flexible that has speed up bank transaction and with less error possibility.

Marketing mix of banking sector

The marketing mix of banking sector includes 7 p's that are explained below so that they can understand their customers better and provide them good services.

Products BANKS PRODUCTS:

(A) DEPOSITS: Savings, Current, Fixed etc.

(B) ADVANCES:a) Term Loan,b) Clean Loan, c) Bills Discounting, d) Advances, e) Pre-shipment Finance, f) Post-shipment finance, g) Secured and Unsecured lines of credit. (2) Non-fund oriented: a) Guarantees, and b) Letter of Credit. (C) INTERNATIONAL BANKING: a) Letter of Credit, and b) Foreign Currency. (D) CONSULTANCY: a) Investment Counselling, b) Project Counselling, c) Merchant Banking, and d) Tax Consultancy. (E) MISCELLANEOUS: a) Traveller Cheques, b) Credit card, c) Remittances, d) Collections, e) Sale of Drafts, f) Standing instructions, and g) Trusteeship.

PriceThe price mix in the banking sector is nothing but the interest rates charged by the different banks. Let's understand this with an example. A particular buyer approaches for a car loan say for a period of 3 years. He is charged Rs. 20,000 as interest. however if a sales representative of another bank comes to know of this deal he will try to attract the customer by giving him a better deal that is a loan at a lower rate on interest. In this way due to the high level of competition the customer benefits.

Pricing
This type of pricing is mainly done by banks having unique or different products or schemes. 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: -Mark up pricing: Place

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. Like population characteristics, commercial, proximity of other commercial outlets.

Promotion
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

Process
The process mix constitutes the overall procedure involved in using the services offered by the bank. 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

Physical evidence
Physical evidence is the overall layout of the place. How the entire bank has been designed. Physical evidence refers to all those factors that helps 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 the place is designed in such a manner so as to ensure maximum convenience to the customer and cause no confusion to him

Interpretation and recommendation

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. 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 marketing with the conventional physical world tenets being just as applicable like in any other marketing medium. - Since for Indian banks globalization can be a good opportunity that they can exploit that will lead to increased revenue, size and scale.

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Bank Letters Definition: Banking has been under the Banking Regulation Act 1949 as:Accepting for the purpose of banking or investment of deposits of money from the public and withdraw able by cheque, draft or otherwise.

Meaning: Bank is a financial institution which is run by the Government as well as private sector to assist the public in general to lend money to persons for doing business in order to better their living standards or for development purposes. It provides interest on funds deposited with it by the depositors and charges interest from the persons who borrow money from the Bank. Apart from lending and depositing money, bank renders a number of other services, which are known as subsidiary or ancillary services, such as working as remittance of funds from one place to another, providing safe deposit lockers, working as an agent for the customer etc.

Functions of a Bank:

There are some important functions of a Bank which they perform are:

1. 2. 3. 4. 5. 6. 7. 8. 9.

To accept deposit of money from the public. To grant loans and advances to traders, industrialists, professionals and other sections of society. Remittance of funds from one place to another. To collect and discount bills of exchange and other negotiable instruments. Acting as an agent on behalf of customers by honoring their standing instructions etc. To provide safe deposit lockers to customers for safety of their valuables. To supply credit, financial or status information of customers. To issue letter of credit, guarantee, travelers cheque, and gift vouchers etc. To act as an advisor and guide to customers

Types of Banking Correspondence: There can be classifications of all banking letters into four groups and they are as follows: 1. There are banking correspondence that relates to opening, closing and transfer of accounts of customers. 2. There are banking correspondence that relates to operations in accounts of customers deposit, collection and payment of cheques, drafts, bills etc. 3. There are banking correspondence that relates to Loans and Advances including overdrafts, cashcredits, demand and term loans, discounting of bills, letters of credit, guarantees etc. 4. There are banking correspondence that relates to subsidiary or ancillary services like remittances, safe deposit lockers, agency services, supplying credit or status information and travelers cheques etc.

They can be discussed in detail as under: -

1. Customers Account: The relationship between customer and banker develops when a customer opens his account with the bank. All other services offered by banks are based on it. The customer has to fill in the Account Opening Form for opening an account in the bank by supplying specimen signatures and giving introduction. The bank account may be introduced by anyone who is either already a customer of the bank or well known to the bank.

Types of Bank Account: - The customers accounts can be current accounts, saving bank accounts, fixed/term deposit accounts or other deposit accounts. There are different set of rules for different type of accounts in individual bank. Current account works best for traders and other business people so that they can freely operate upon the accounts by numerous transactions in a single day. In current account, no interest is paid on a current account of a customer but some charges are levied by bank in proportion to the pages of ledger filed in. Saving Bank Account works best for service class peoples as the number of transactions are few and irregular. The bank offers some interest to the saving bank account holders on the credit balances maintained with the bank between the close of 12th day and the last day of each calendar month. The other deposit accounts are those where the transactions are less and more interest is allowed by the bank. There is also facility of transfer of accounts from one branch to branch or place in the bank. The bank account can also be closed anytime depending upon the rules of the concerned bank.

Specimen of Letter for Customers request for opening an Account GENERAL TRADERS 15, Kamla Market Delhi-110006 Ref.No. GTL/Bank/98/2314 10th May 1998 The Manager Bank of India Chandni Chowk Delhi Dear Sir, We wish to open a current account in our companys name with your esteemed branch. We request you to; please let us know as to what formalities are to be fulfilled for this purpose. We would like to bring it to your kind notice that our company is a sole proprietor concern. Presently we are not dealing with any other nationalized bank anywhere in Delhi.

Please give us necessary account opening forms and also let us know the other formalities to be fulfilled for opening an account with you. We anticipate an early compliance in this matter.

Yours Faithfully, For GENERAL TRADERS

Sole Proprietor

Specimen of Banks Reply

BANK OF INDIA Chandni Chowk Branch, Delhi

B.O. Chandni Chowk Delhi-110006 Ref.No. BOI/H/Gen/8965 15th May 1998

Dear Sir, This letter is in reference to your letter No. Ref.No. GTL/Bank/98/2314 dated 10th May 1998. We are enclosing herewith the required Account Opening Form (A.O.F) for opening a current account for sole proprietor firms or companys. It will be advisable that you visit us during business hours along with A.O.F with the rubber stamp of your firm to be affixed on it. You are requested to sign in the form in our presence and the account has to be introduced by a person having an account with us.

Yours Faithfully,

Branch Manager

Enc: as above

Specimen of Letter for Customers request for Pass Book or Statement of Account

KHANNA BROTHERS 25, Kirti Nagar, New Delhi -110015 Ref.No. KBR/Accts/99/5612 20th April 1999 The Manager, Krishna International Bank, South Extension Part-2 New Delhi Dear Sir, Re: Our current A/c No. 16723 with you. We want to bring it to your kind notice that we havent received the statement of account for the above mentioned current account. We have opened current account with your bank for more than three months and have a heavy turnover in the accounts. It would be difficult for us to tally our bank accounts in the absence of upto date bank entries so we request you to please send us the statement of our account with your bank with latest upto date entries. We would also like to request to you for sending us statement of our accounts regularly every month in the future.

Yours Faithfully, For KHANNA BROTHERS

Proprietor

Banks Reply KRISHNA INTERNATIONAL BANK South Extension Part-2, New Delhi B.O South Extension Part-2 New Delhi No. CA/Misc/99/8123 25th April 1999 M/s Khanna Brothers 25, Kirti Nagar New Delhi -110015 Dear Sirs,

Ref.No. KBR/Accts/99/5612 dated 20th April 1999

Reg. Current A/c No. 16723 With reference to the above mentioned details, we are enclosing herewith upto date statement of your current account. We have also taken notice of your request of sending statement regularly month-wise in the future. Please acknowledge receipt. Yours Faithfully,

Authorized Official Enc: as above

2. Operations on Customers Accounts: - After the opening of bank account, the customer operates it by way of depositing cash, cheques, bills etc in the account and withdrawing amount by issuing and drawing cheques or otherwise. There are many types of correspondence that take place during this course of operation on accounts between the bank and customer.

Specimen of letter for customer notifying delay in collection of cheques, drafts, bills etc deposited in account

MAX INDIA LIMITED 12 floor Devika Towers Nehru Place New Delhi Ref.: MIL/Accts/Bank/1002 24th March 2007 Dear Sir, Our Current Account No. 456 with you This is to inform you that we deposited two cheques for Rs. 5000/- and Rs. 7000/ respectively on 10th March 2007, for credit to our above said account. After checking our Account Statement of 24th March 2007, we find that these amounts have not be credited to our account. We would like to know the reason for delay as they were local cheques and the normal course of realization is three to five days for local cheques. It is now past 14 days that the cheques have not been realized so far. We, therefore, request you to kindly arrange for the early realization without any further delayo as we need the abovesaid amount for the clearance of our pending bills of the company. We hope you will do the needful as early as possible.

Yours faithfully, For MAX INDIA LTD.

Accounts Manager

Stop Payment Instructions The instructions given by the customer to the bank regarding the stop payment of a particular cheque giving full details of the cheque and to exercise proper precaution in the matter. While writing the letter to the bank regarding the stop payment of the cheque the following points should be kept in mind they are:

1. Explain the reason for the stop payment, whether lost or misplaced or the payment to be withheld. 2. The exact particulars of the cheque must be given such as cheque number, date, amount and name of payee, etc. 3. Give a firm request to stop its payment and for the proper precautions be taken to deal with this matter. 4. Mention the date and time of writing the letter to the bank on the letter. 5. Request the bank to acknowledge the receipt of your letter for future reference. Customers request for Stop Payment of a Cheque XYZ LTD. 5, Ansari Road Delhi Ref.:XYZ/bank/245 20th March 2007 The Manager, Bank of India, Tilak Nagar Branch, New Delhi. Dear Sir, Stop Payment-Cheque No. 450623 dated 21st March 2007 of Rs. 5000/We request you to kindly stop the payment of our cheque no. 450623 dated 21st March 2007 for Rs. 5000/- favouring M/s ABC Consulting Services issued in our current account No. 456 with you. Please acknowledge receipt. Yours faithfully, For XYZ Ltd.

Accounts Assistant STANDING INSTRUCTIONS: When any customer requests his bank in writing for making certain payments on regular basis for insurance premium, rent or for any other purpose then they are called STANDING INSTRUCTIONS. In banks there are generally printed forms for carrying out standing instructions. There are some important pre-requisites for standing instructions and they are as follows: 1. The customer should have account in the bank current account or saving account in giving standard instructions. 2. There has to be sufficient credit balance so as to enable Bank to debit the amount and remit. 3. The customer should specify the amount to be paid by the bank so that it could be easily remitted every month. It is not possible for the bank to remit the different amounts every month. 4. The bank should be given an authority to debit the customers account. 5. The payment to be remitted or effected by the bank should be at regular intervals weekly,

fortnightly, monthly or quarterly. Advantages of Standing Instructions: 1. They are very useful in those cases where regular payments of the same amount are to be made through the bank. It saves customers time and botheration of visiting bank and giving letters every time. 2. They ensures timely regular payment of amount and avoids any delay because the bank effects the payment on due date every time automatically. Disadvantages of Standing Instructions: 1. They are of no use where sufficient or adequate credit balance cannot be arranged or maintained by the customer because in such case the standing instructions cannot be implied by the bank. 2. There are times when payments are delayed due to rush of work with the bank or due to their staffs negligence. It may results in undesired complications and problems to the customer. Essentials for drafting Standard Instructions: 1. The customer should request the bank for making payments on his behalf. 2. The customer should give complete details about the payments like policy number, period date of payment, specific amount, name of payee etc. 3. The customer should assure the bank that he will maintain sufficient credit balance in his saving or current account on or before the due date. 4. The customer should give his account number and put his signatures as on banks record so that the bank is authorized to debit account and effect remittance. Customer giving Standing Instructions for Payment of Shop Rent and School Fees Dated The Branch Manager, Union Bank of India, Nehru Place, New Delhi Dear Sir, Re: Standing Instructions Kindly arrange to pay the following amounts to debit of my saving bank account No. 23123 with your branch: Name of Payee Amount Date On A/c of 1. Mr. Ravi Kumar Rs.5000/- On or before 10th of Rent for shop every month. 3, Karol Bagh, N.Delhi

2. Principal S.D School Rs. 1200/- On or before 15th of School Fees of Master Ram Nagar, N.Delhi every month. Vijay of Class IV

I assure you to maintain sufficient credit balance in my above mentioned account on or before the dates of payment. Please make the payments regularly through my account. If there are any extra bank charges then they can also be debited from account. Please acknowledge receipt.

Yours Faithfully,