The Changing Face of Bank Marketing

Bank Marketing Concept

The bank marketing is the practice of attracting and acquiring new customers through traditional media and digital media strategies. The use of these media strategies helps determine what kind of customer is attracted to a certain institution. This also includes different banking institutions purposefully using different strategies to attract the type of customer they want to do business with. Compared to other services, the banking products are distinguished by the fact that they are complex and abstract. Most of the customers do not easily understand what the financial services consist in, what benefit they bring and how they can be distinguished from one another. Digital banking is no longer a strange phenomenon in the developed world. Sticking to old strategies is setting a course to irrelevance. This means that a change is necessary for financial institutions. A change that integrates traditional marketing plans with digital strategies that produce measurable results.

Bank Marketing Strategy Framework

Identify the customer’s financial needs:

Bank marketing begins with research to identify and understand needs that exists in the market. There are two common types of needs: Articulated needs and Latent needs. Articulated need can be clearly described by the customers but latent needs are hidden and unknown. Innovation is an important ingredient in successfully tapping into latent needs.

Develop a Product or Service:

Bank has to be good at developing new products. It must also manage them in the face of changing tastes, technologies, Interest rates, exchange rate and competitions. Every product seems to go through a life cycle. It must go through several phases, and eventually die as new products that better serve consumer needs came along. The product life cycle presents two major challenges, First, because all products eventually decline, the bank must find new products to replace the declining one. Secondly, the bank must understand how its product age adapts its marketing strategies as product pass through life cycle.

Market Segmentation:

Every bank has to identity segments comprised of groups of customers that share a common set of characteristics including similar needs. Market segmentation allows us to target banks content to the right people in the right way, rather than targeting banks entire audience with a generic message. This helps bank increase the chances of people engaging with its ad or content, resulting in more efficient campaigns and improved return on investment. There are many different kinds of market segments a bank can create for example demographic segmentation, geographic, behavioral segmentation and psychographic segmentation. The bank can create more niche segments within the given segments.

Target a Meaningful Market:

Targeting strategy is a strategy for selection of potential customers the bank can sell its products/services to. Targeting is done to a specific target group as there are various segments in any market. Targeting is the processes of identifying the important target market and target audience which a company wants to sell its products to. Any banking product or service would not be of utility of every customer. And hence companies must be focused on whom the want to target. A good targeting strategy helps a company have focused sales growth, enhanced promotional strategy, build strong customer loyalty etc. Hence, targeting strategy is the backbone for any marketing firm.

Creating a Differentiated /Comparative Advantage:

A differentiation strategy is an approach business develop by providing customers with something unique, different and distinct from items their competitors may offer in the marketplace. The main objective of implementing a differentiation strategy is to increase competitive advantage. A differentiation strategy is an approach business develop by providing customers with something unique, different and distinct from items their competitors may offer in the marketplace. The main objective of implementing a differentiation strategy is to increase competitive advantage. A business will usually accomplish this by analyzing its strengths and weaknesses, the needs of its customers and the overall value it can provide.

Value Proposition:

Value Proposition is the reason why customers turn to a bank over another. It solves a bank’s customer’s problem or satisfies  customer’s need. Each Value Proposition consists of a selected bundle of products and/or services that caters to the requirements of a specific Customer Segment. In this sense, Value Proposition is an aggregation, or bundle, of benefits that a company offers customers. Some Value Propositions may be innovative and represent a new or disruptive offer. Others may be similar to existing market offers, but with added features and attributes. Value Proposition creates value for a Customer Segment through a distinct mix of elements catering to that segment’s needs. Values may be quantitative (e.g. price, speed of service) or qualitative (e.g. design, customer experience).

Positioning:

Market Positioning refers to the ability to influence consumer perception regarding a brand or product relative to competitors. The objective of market positioning is to establish the image or identity of a brand or product so that consumers perceive it in a certain way. With the growth of marketing vehicles such as new media, the internet and mobile communications there are multiple entry points through which to influence target customers but added complexity as well. Perceptions are not created overnight. They take a combination of direct customer experience with product, word of mouth, and years of market acceptance and use. Product positioning helps to define all seven elements in the Marketing Mix: Product, Price, Promotion, Place, People, Physical Evidence, and Process.

Why Bank Marketing Strategies Need to Change?

As a discipline, marketing has evolved over the past few decades to become what it is today. Earlier, marketing strategies are primarily a means of spreading brand awareness. Today, marketing has been reinvented to fit a much bigger role. Creating both value and revenue to the institution. It is a big step up from its previous communication role, no doubt. One that was necessitated by the evolution of three factors: the consumer, the technology, and data analytics.

Change in Customer Preference:

As consumer preferences change over time, companies must continue to evaluate the needs and wants of their target market and adjust accordingly in order to remain competitive.

• There is a rapid shift from traditional brick-and-mortar stores to modern shopping online, which has been driven by factors like convenience, cost, and the growing popularity of e-commerce platforms like Alibaba.com, Daraz etc.
• The increasing demand for natural, organic products, as consumers become more aware of the potentially harmful effects of chemical additives in food and other products.
• Changes in preferences related to preferred styles and designs of products. 

Change in Advertising Pattern:

Advertising is heading the way of the dinosaurs as consumers are beginning to trust objective web content and customer reviews more. The way they learn about financial products has changed. Therefore, so has the way they buy or subscribe to our financial services. Splurging on advertising is no longer reasonable nor a feasible strategy. Now, all eyes are now focused on digital content through social media platform.

Technological Advancement:

In the aftermath of covid, there has been a major shift in how businesses approach their marketing strategies. This change is largely due to the rapid pace of technological advances, which have opened up new avenues for reaching potential customers and engaging with existing ones. For example, many businesses today invest heavily in social media marketing, as this allows them to target specific groups of consumers and build relationships with them in a highly customizable way. 

Additionally, technological advancements have made it possible for businesses to collect data on consumers’ digital habits, which can be used to develop more targeted promotional campaigns that appeal specifically to their target market.

Change in Product Life Cycle:

Every product that a company launches has some types of life cycle. In this cycle, products go through distinct stages as they are introduced to the marketplace and then grow, mature, and decline over time. Every stage of product requires a different marketing strategy.

Change in Consumer Spending:

Changes in consumer spending can be caused by changes in their income, as well as shifts in market conditions and other external factors such as a economic crisis, natural disaster or pandemic. For example, consumers are likely to spend more on certain products or services when their income is higher, while they may also cut back significantly on spending when faced with economic uncertainty or a crisis.

One good example of how such changes can affect marketing strategies is the recent economic slowdown of Nepal. As the economic recession spreads throughout the country, people began to get laid off and lost their income, forcing many people to save more and to cut back on  their  spending. This means that bank has  to take immediate action in order to adjust their marketing efforts and ensure that their products remained competitive in a drastically changed environment. 

Data Analytics is a Game Changer:

Today, all the information an institution needs about its prospects can be accessed using the right data stream. We have analytics to thank for this. It is no longer touch and go, but rather a refined science.

We can easily utilize analytics to find prospective customers ready to spend on whatever we’re selling. The same way we can exploit it to identify the right digital media to deliver to our targeted audiences for maximum effect.

Strategies for the Enhancement of Bank Marketing

In the fierce competitive market, needs of customer keep changing. Hence, our marketing strategy must be dynamic and flexible to meet the changing scenario. Here are steps that form successful and effective marketing strategy for bank products.

• Emphasis on Credit:

In recent time, Nepalese banking has experienced a excess liquidity problem because of very low credit demand. So, emphasis should be given to enhance credit as they directly affect the profitability of bank.

• Digital Delivery Channels:

Digital delivery channels are very helpful in enhancing the marketing of various products and services. Thus, banks should sale the products and services through these channels. For this, adoption of  complete digitalization is very important for the banking sector. By embracing digitalization, banks can provide enhanced customer services. This is the future of the bank. So, every bank, without any delay must invest on digital and innovative technologies to safeguard competitive  capacity of the bank.

• Form a Saleable Product Scheme:

Bank should form a scheme that meets the needs of customers. A bunch of such schemes can also form a product. A bank product may include deposit scheme, an account offering more flexibilities, technically sound banking, tele/mobile/net banking, an innovative scheme targeted to special group of customers like children, females, old aged persons, businessman etc. In short, a bank product may consist of anything that you offer to customers.

• Effective Branding:

Man is a bundle of sentiments and emotions. This can effectively be helpful in branding our products. Considering the features of products and target group of customers, the product can be effectively branded so as to sound it catchy and appealing.

The branding should be done in such a way that the brand name must attract the attention of customers. It should be easy to remember. The target group and the silent feature of the product should resemble brand name. This will help a lot in making the brand successful. All employees and all our campaigns should refer the product by its brand name only so that to strike the same in the customer’s mind.

• Products for Women & Youth:

Banks should introduce new banking products for women and youth like special deposit account for women and youth, credit schemes for women and something to improve their access to banking which they require.

• Customer Awareness:

There is a need to educate the customers on bank products. Efforts should be made to widen and deepen the process of information flow for the benefit and education of customers. Today, the customers do not have any idea as to how much time is required for any type of banking service. The rural customers are not aware for what purpose the loans are available and how they can be availed. Customers do not know the complete rules, regulations and procedures of the bank and bankers preserve them for themselves and do not take interest in educating the customers. It is a need to educate the customers from the grassroots of banking.

• Advertisement:

Advertisement is an eminent part of marketing of bank products. Advertisement should be such that appeals to people. It should not follow the orthodox pattern of narrating a product. For effective advertisement, bank should understand people’s tastes and choices.

• Selling Products in Rural Areas:

For enhancing the marketing of their product, bank should sell their products in rural areas. For it, there is a need to open branches or extension counters in the rural areas.

• Informing Customers About Products:

The bank should embark upon aggressive marketing of its products, particularly at the time of launching a new product, which will inform the perspective customers regarding product and at the same time relieve staff at branch level from explaining the product to all customers.

• Customer Convenience:

In a service industry like banking where product differential is hard to maintain and quality of service depends upon the service provider, from whom it cannot be separated. So the bank employees have to render services to the satisfaction of the customer, not as per their own conveniences or whims.

• Re-orient Staff:

Sincerity of efforts in implementation of the measures is lacking among the bank staff. It is a fact that its employees are not able to rise up to the expectations of its customers. They lack in their behavior, attitude and efficiency. The phenomenon is glaring at urban centers. Therefore, it calls for an immediate attention which is missing link in the entire process of marketing, and the bank should undertake all such steps to motivate and reorient its staff.

• Marketing through social media:

Social media has become a major tool for banks to experience meaningful customer experience. Social media such as facebook, tiktok, you tube etc. offers an ideal opportunity for them to boost those connections so that customers can interact with their banks much more flexibly, conveniently and frequently. This is the fastest method to outreach of banking products and services to various market segments.

Conclusion:

Customers’ needs have been shifted. There is increased need for digital interaction, need for comprehensive offering beyond banking and demand for holistic advice and a long term partner. Consequently, operating model has also been changed. Bank cannot exist without the customers. Purpose of the bank is to create, win and keep to a customer. Customer is and should be the center of everything the banks can do. Organizational design should be oriented to the customer and the bank should ensure that the services are performed and delivered in the most effective way. Ultimate aim of a bank is to deliver total customer satisfaction. There is greater customer demand for digital, cross-channel solutions that enable banks to offer their clients holistic advice to suit individual needs. Bank marketing today heavily relies on digital marketing because that’s where everyone is today. Bank marketing today, therefore, should be focused on targeting different demographics by adopting new and better technologies, pushing digital apps and financial services and thus focus on customer outreach. Hence, all the banks have to invest in fintech to improve their performance in the new era.

References:

https://mediaboom.com/news/bank-marketing

https://www.lookdigitalsignage.com/blog/bank-marketing-strategy

https://www.livemint.com/brand-stories/digital-marketing-for-banks

https://thefinancialbrand.com/news/bank-marketing/end-of-the-   traditional-customer-banking-relationship-and-whats-replacing