Sunday, February 8, 2009

Financial Services Marketing

A highly unique and specialized branch of marketing, the marketing of financial services includes a gamut of complex activities - both pre-sales and post sales. Financial Institutions are always on the prowl to increase their account balances, increase their customer base, retain customers, post high profits and in turn acquire new customers. All this and much more relevance to the financial services marketing activity can be achieved through some understanding of the strategic perspectives of financial services. The Banks and financial institutions cited in this article are the ICICI Bank, the HDFC Bank, the UTI Bank, Reliance Money, Kotak Securities and Tata AIG.
 
A highly unique and specialized branch of marketing, the marketing of financial services includes a gamut of complex activities - both pre-sales and post sales. Moreover, a buyer's market has made its presence in the financial services industry, making it necessary to imbibe a strategic insight into this marketing activity. Predicting consumer behavior, market segmentation and targeting a niche market all form part of the strategies to market financial services. Competitive markets, intricate product characteristics and intangibility have made the job of the financial service-marketer very profound and challengingIn the direction of achieving excellence in marketing through easy and anywhere banking, it can be said that financial institutions have made great progress in educating their customers. A generous mention may be made on the recent proliferation of the Internet as a medium of knowledge and communication that has helped customers become aware of the various products offered by different financial institutions. A virtual relationship of trust is being established between the financial institution and the customer, given the increased access to financial data across the board about various products and services offered by the financial institution the customer transacts with and the competitor financial institution. This relationship remains the key substance when it comes to marketing financial services. It should also be kept in mind by the marketer that such relationships are built when right services are marketed to the right customer. Financial Institutions are always on the prowl to increase their account balances, increase their customer base, retain customers, post high profits and in turn acquire new customers. All this and much more relevance to the financial services marketing activity can be achieved through some understanding of the strategic perspectives of financial services.
 
Bracing competition
In the era of increasing financial priorities, maximization of financial goals and achieving income through financial investments, the Indian financial sector has seen mushrooming growth of financial institutions. Offering a gamut of services and attracting new customers with unique services has been an age-old tactic used by these financial institutions. Competition for banks and financial institutions is in the form of rival institutions that adopt unique marketing strategies to attract new customers and retain old ones. UTI Bank, in an attempt to carve for itself a special position in customer service and support, started offering call centre facilities to its customers, in order to address issues faced by customers, and eliminate the load that branch operators would handle. A dedicated helpdesk and a single window service helped in standardizing replies to customers. Tata AIG's introduction of a new health plan in 2003 was a laudable move towards bracing competition. It introduced HealthFirst, a comprehensive health policy. As Soumya Sundar put it, this innovative product of Tata AIG' "is a comprehensive health policy that pays out a flat sum, rather than reimbursing, your medical expenses - for hospitalisation and post-hospitalisation, critical illness and surgery."[1] Offering benefits like hospital cash allowance of up to Rs. 250 per unit per day, surgical illnesses benfits of up to Rs. 12, 500 per unit per surgical procedure and critical illness covers of about Rs. 1.25 lakhs per unit, to its policy holders this policy became one of its kind in the insurance market.[2]
 
Kotak Securities started targeting small time investors in 2006 when it initiated its new offer to small time investors with more than Rs. 5000 of surpluses to invest in capital markets.[3] Considering the low risk appetite of these small investors, Kotak Securities took a step to unleash a new scheme called "Auto Invest" that allows these small investors to invest in safe and
slow moving stocks. As Prasanth Prabhakaran, Senior Vice-President, Kotak Securities said, "The product will open the doors of capital markets to potential investors who dread the risks involved."[4] This new product was well-received in the Indian consumer market.
 
Leveraging technology
Technology helps Financial Institutions identify where they are lacking and how these gaps can be sealed. Services like online banking, online bill-payments for insurance premiums and credit cards, online trading and E-Broking have all become very popular in recent times, thus helping financial institutions overcome the challenge of reaching customers and making financial services more user-friendly.
For example, the ICICI Bank offers mobile banking that has many perceived advantages.
The iMobile service launched by the ICICI Bank is a downloadable Mobile Banking Application. Working on GPRS and SMS, this application works on all GSM mobile phones. This free-to-use application offers facilities like fund-transfer, demat, credit card and bill payment services, mobile recharge, locator services, and others all on the cell phone through a single, secure application. Working with ICICI Bank through this initiative is Obopay India, a mobile payments solutions company.
 
Source: www.ciol.com
"HDFC Bank's "NetSafe" cards are a stupendous invention in the field of online banking. (Box No. 2)
NetSafe - a hidden gem in secure online shopping
Online shoppers are often concerned about revealing their credit card information. The way NetSafe works is that it uses the balance in your account (Savings account or Credit Card Balance) to "generate" a temporary credit card - a valid Visa Credit Card no, expiry date and CVV number. However, the credit card number is valid for use only for 24 hours, and only upto the limit that you set (which limit must of course be within your account balance). Therefore:You don't have to reveal your own credit/debit card number and the only risk you carry is for the limit that you set for your Netsafe card and that too only for 24 hours
 

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