3 marketing-driven strategies retail banks can adopt to enhance their value-chain

“Packaging and branding of products and services are going to be the key differentiator between banks,” said Dr. K.C. Chakrabarthy, Deputy Governors (2009-2014) of Reserve Bank of India (RBI)

Retail Banks are one of the key factors behind the rapid growth in Indian banking sector.

The prime focus of every retail bank in India, today, is to accelerate the transition, from ‘Mass Retail Banking’, to ‘Class Retail Banking’.

The 3-service level focal points to consider while devising a marketing strategy for retail banking:

• Customer Centricity:

                                                                                                                                                   Source: PwC

According to RBI’s reports on Retail banking growth, customer retention increases profitability of the bank by 35%. Customers today, have access and are well-aware of various banking options available and opt multiple banks for their varied requirements. To stay ahead of competitors, the financial firms must adopt efforts to enhance customer experience.

Financial crisis (2008) led to unemployment and low remuneration, due to which consumers reconsidered their old habits and purchasing patterns. Though India survived the crisis, consumers became more price-sensitive and cautious about their choice of institutions for financial requirements. A consumer research survey by Deloitte states that customer retention is built on 4 customer-centric principles – Safety, Value, Service, and Convenience.

1. Providing customers, the confidence with regards to their account safety is crucial to build customer loyalty. Enabling them to have full connectivity with their accounts through account notifications, updates & offers, service deductions, etc.
2. Legitimate provision of customer requirements and needs. (e.g.: competitive product pricing and service charges)
3. Provision of quality-based services through multiple channels of communication/interaction. Quick and standard response on any complaint/query.
4. Meticulous management of service channels, with minimal errors, user-friendly interface, and flexible options.

• Optimizing Distribution Channels: Retail Banking 2020: Evolutions or Revolution? – a report by PwC reveals that, “historically, banks with the best branch footprint have dominated their markets, gaining outsized share. By 2020, all banks will be direct banks, and branch banking will be changing fast. Leaders will offer an anytime, anywhere service, fully utilising all banking channels in an integrated fashion.” HSBC, a British-Hong Kong based multinational financial services company, terminated operations in over 24 branches in India (2016) – thanks to most of their customers’ preferring the firm’s digital platform for any engagements with the bank.   Similarly, Citi Bank, a New-York based multinational financial firm, closed 10% of its branches in India. Safe to say, the overheads reduced were substantial. Transforming banking services in congruence with the growing technology will enable access to more number of potential customers and increase in customer retention. With the right choice of distribution channels based on the customer needs and preferences, financial firms can eliminate delivery costs.  To facilitate this transition more smoothly; banks have also begun educating their traditional/long-term consumers on online banking and other digital delivery channels to ensure a minimal number of laggards in their consumer base.

• Data Analytics: To know your customer’s need even before they realise it. The key to successful product evolutions, marketing strategies, and support functions on a service level relies on being most informed on your customer’s behaviour and purchase trends. This would include reports gathered from market surveys, focus groups (both qualitative & quantitative studies), behaviour analytics within a product or during support, knowledge on the customer’s purchase patterns, preferences, response pattern, etc., enables a service provider to infer and make substantiated predictions on what tomorrow’s need of a customer will be. This assists organizations in being prepared with the right offering at the appropriate moment in time.

1. Data Collection & Analysis: There are effectively 2 types of data that retail banks primarily focus on collecting in order to better understand their customers:
   a) Functional Data – Credit Scores, Spend/Purchase data and data that is requirement for them to process loans or other retail banking privileges.
   b) Inferential Data – Quality audit of interactions during support, social media behaviour analytics, qualitative surveys, focus groups and other inferential data that allows retail banks to better understand their customers and subsequently enhance their value-chain in the appropriate spaces within it.
2.  Actionable intel for focused marketing: Analysis of such data at an individual level enables retail banks to develop a personalized offer to a customer. This can be procured through a meticulous social media intelligence partner or prior connections with proper channel marketing partners.

For example: Acquiring an information that a customer’s daughter/son is about to complete their senior-secondary school and is prospering multiple under-graduate schools for the next year, allows a retail bank to target the best offers around educational loan to this target-consumer and similar personas. (A wider category parameter would be to identify existing customers whose children are between the age of 16 to 21)

In the Indian Banking Sector, numerous factors like – customer demographics, economic health, technological advancements, market trends, etc., are prone to constant change. A well-defined strategy with more precision and personalization (focused-marketing) can help build a stronger position in the market and simultaneously gain further competitive edge.