Unit I

Service Marketing: Definition, Features and Problem Faced in Marketing Services!

Services marketing is a broad category of marketing strategies focused on selling anything that is not a physical product. This includes everything from personal services like medical care and spa treatments, to the rental of vehicles and spaces, to experiences like concerts and dance lessons. Any method that can communicate a service's appeal and benefits to customers is a valid approach, including informational content, promotional deals, advertisements, and many other kinds of marketing materials.

Service marketing is marketing based on relationship and value. It may be used to market a service or a product. With the increasing prominence of services in the global economy, service marketing has become a subject that needs to be studied separately. Marketing services is different from marketing goods because of the unique characteristics of services namely, intangibility, heterogeneity, perishability and inseparability.

In most countries, services add more economic value than agriculture, raw materials and manufacturing combined. In developed economies, employment is dominated by service jobs and most new job growth comes from services.

Jobs range from high-paid professionals and technicians to minimum-wage positions. Service organizations can be of any size from huge global corporations to local small businesses. Most activities by the government agencies and non-profit organizations involves services.

The American Marketing Association, defines services as activities, benefits, or satisfactions that are offered for sale or provided with sale of goods to the customer, that is, pre-sale and after-sales services. Berry states, ‘while a product is an object, devise or physical thing, a service is a deed, performance, or an effort’.

Features of Services:

1. Intangibility:

A physical product is visible and concrete. Services are intangible. The service cannot be touched or viewed, so it is difficult for clients to tell in advance what they will be getting. For example, banks promote the sale of credit cards by emphasizing the conveniences and advantages derived from possessing a credit card.

2. Inseparability:

Personal services cannot be separated from the individual. Services are created and consumed simultaneously. The service is being produced at the same time that the client is receiving it; for example, during an online search or a legal consultation. Dentist, musicians, dancers, etc. create and offer services at the same time.

3. Heterogeneity (or variability):

Services involve people, and people are all different. There is a strong possibility that the same enquiry would be answered slightly differently by different
people (or even by the same person at different times). It is important to minimize the differences in performance (through training, standard setting and quality assurance). The quality of services offered by firms can never be standardized.

4. Perishability:

Services have a high degree of perishability. Unused capacity cannot be stored for future use. If services are not used today, it is lost forever. For example, spare seats in an aeroplane cannot be transferred to the next flight. Similarly, empty rooms in five-star hotels and credits not utilized are examples of services leading to economic losses. As services are activities performed for simultaneous consumption, they perish unless consumed.

5. Changing demand:

The demand for services has wide fluctuations and may be seasonal. Demand for tourism is seasonal, other services such as demand for public transport, cricket field and golf courses have fluctuations in demand.

6. Pricing of services:

Quality of services cannot be standardized. The pricing of services are usually determined on the basis of demand and competition. For example, room rents in tourist spots fluctuate as per demand and season and many of the service providers give off-season discounts.

7. Direct channel:

Usually, services are directly provided to the customer. The customer goes directly to the service provider to get services such as bank, hotel, doctor, and so on. A wider market is reached through franchising such as McDonald’s and Monginis.

Problems in Marketing Services:

1. A service cannot be demonstrated.

2. Sale, production and consumption of services takes place simultaneously.

3. A service cannot be stored. It cannot be produced in anticipation of demand.

Types of Services

Core Services: A service that is the primary purpose of the transaction. Eg: a haircut or the services of lawyer or teacher.
Supplementary Services: Services that are rendered as a corollary to the sale of a tangible product. Eg: Home delivery options offered by restaurants above a minimum bill value.

Difference between Goods and Services

Given below are the fundamental differences between physical goods and services:

Goods	Services
A physical commodity	A process or activity
Tangible	Intangible
Homogenous	Heterogeneous
Production and distribution are separation from their consumption	Production, distribution and consumption are simultaneous processes
Can be stored	Cannot be stored
Transfer of ownership is possible	Transfer of ownership is not possible

Importance of Marketing of Services

Given the intangibility of services, marketing them becomes a particularly challenging and yet extremely important task.

A key differentiator: Due to the increasing homogeneity in product offerings, the attendant services provided are emerging as a key differentiator in the mind of the consumers. Eg: In case of two fast food chains serving a similar product (Pizza Hut and Domino’s), more than the product it is the service quality that distinguishes the two brands from each other. Hence, marketers can leverage on the service offering to differentiate themselves from the competition and attract consumers.
Importance of relationships: Relationships are a key factor when it comes to the marketing of services. Since the product is intangible, a large part of the customers’ buying decision will depend on the degree to which he trusts the seller. Hence, the need to listen to the needs of the customer and fulfill them through the appropriate service offering and build a long lasting relationship which would lead to repeat sales and positive word of mouth.
Customer Retention: Given today’s highly competitive scenario where multiple providers are vying for a limited pool of customers, retaining customers is even more important than attracting new ones. Since services are usually generated and consumed at the same time, they actually involve the customer in service delivery process by taking into consideration his requirements and feedback. Thus they offer greater scope for customization according to customer requirements thus offering increased satisfaction leading to higher customer retention.

Gap Model of Service Quality

The Gap Model of Service Quality (aka the Customer Service Gap Model or the 5 Gap Model) is a framework which can help us to understand customer satisfaction.

The model shows the five major satisfaction gaps that organizations must address when seeking to meet customer expectations. The model was first proposed by A. Parasuraman, Valarie Zeithaml, and Leonard L. Berry in 1985.

In the Gap Model of Service Quality, customer satisfaction is largely a function of perception. If the customer perceives that the service meets their expectations then they will be satisfied. If not, they’ll be dissatisfied. If they are dissatisfied then it will be because of one of the five customer service “gaps” shown below.

The gap model (also known as the "5 gaps model") of service quality is an important customer-satisfaction framework.

The five gaps that organizations should measure, manage and minimize:

· Gap 1 is the distance between what customers expect and what managers think they expect - Clearly survey research is a key way to narrow this gap.

· Gap 2 is between management perception and the actual specification of the customer experience - Managers need to make sure the organization is defining the level of service they believe is needed.

· Gap 3 is from the experience specification to the delivery of the experience - Managers need to audit the customer experience that their organization currently delivers in order to make sure it lives up to the spec.

· Gap 4 is the gap between the delivery of the customer experience and what is communicated to customers - All too often organizations exaggerate what will be provided to customers, or discuss the best case rather than the likely case, raising customer expectations and harming customer perceptions.

· Finally, Gap 5 is the gap between a customer's perception of the experience and the customer's expectation of the service - Customers' expectations have been shaped by word of mouth, their personal needs and their own past experiences. Routine transactional surveys after delivering the customer experience are important for an organization to measure customer perceptions of service.

Each gap in the customer experience can be closed through diligent attention from management. Survey software can be key to assisting management with this crucial task.

Mind the Gap: Understanding the Gap Between Customer Expectation and Customer

Perception

Between your thoughts about the customer experience your company provides, and your customers’ actual perception of your performance, lies a gap. But this gap isn’t vacant. It contains five customer service outcomes which, depending on how you handle them, can boost or break your reputation.

Here we explore why minding the gap needs to be a business priority and what you can do to ensure your customer experience consistently exceeds expectations.

What are Customer Expectations?

Customer Expectations are the beliefs and assumptions of what an organisation’s products, services and all-round customer service will be like. These ideas can come from an array of sources, including the company’s marketing function - such as, adverts, website and social media - online review sites, public perception of an industry, a friend’s recommendation or previous experience, either with the organisation or similar provider. It’s also influenced by factors such as the customers personal need for the product or service, lifestyle choices and background.

What are Customer Perceptions?

Customer Perceptions are how consumers feel and regard an organisation’s product or service after experiencing their offering first-hand.

There are several emotional and physical determinants customers apply when evaluating their experience. These include, accessibility, brand image, service promises communication, competence, courtesy, credibility, reliability, responsiveness and product or service attributes - the tangible characteristics of a product or service, for example, if buying a car, its size, colour, shape and engine size.

he Five GAP Model of Service Quality

When a customer’s experience fails to match up to a customer’s expectation, a gap arises.

The GAP Model of effective service quality developed by Parasuraman, Zeithaml, Berry (PZB) provides a combined view of the consumer-company relationship, highlighting five distinct gaps that contribute to an unsatisfactory customer experience.

1. The Knowledge Gap: The gap between management perception and customer expectation.

This gap occurs when management second-guess customers’ wants and needs. Only by researching what customers want at every interaction point, whether its completing an on-line loan application, or calling customer services with a payment query, can it be possible to know what customers’ truly value.

2. The Policy Gap: The gap between management perception and service quality specification.

This gap arises when management have an accurate grasp of what customers want but it isn’t translated into effective, understandable customer service policies. This lack of clarity on customer service standards can lead to employees delivering a flawed service.

3. The Delivery Gap: The gap between service quality specification and service delivery.

This gap is one of the most common and is formed when the customer service quality specified isn’t fulfilled by employees. This can be due to inadequate staff training, poorly communicated customer service guidelines or clumsy processes which hinder delivery. Unable to deliver consistently good customer service can de-motivate employees and frustrate customers, causing them to look elsewhere.

4. The Communication Gap: The gap between service delivery and external communications.

Building up a company’s products and services via online and offline advertising campaigns boosts customers’ expectations. Over-promising can leave customers disappointed and less likely to re-purchase if their service expectations aren’t met.

5. The Customer Gap: The gap between customer expectations and customer perceptions.

This gap lies in the difference between customers’ expectations, which are made up of a combination of company and customer-led influences (as outlined above), and customers’ perceptions after interacting with a company. If engaging with a company requires more effort than necessary, customers are likely to walk away.

Segmentation, Targeting and Positioning (STP) Model

What Is the STP Process in Marketing?

The STP Model consists of three steps that help you analyze your offering and the way you communicate its benefits and value to specific groups.

STP stands for:

· Step 1: Segment your market.

· Step 2: Target your best customers.

· Step 3: Position your offering.

This model is useful because it helps you identify your most valuable types of customer, and then develop products and marketing messages that ideally suit them. This allows you to engage with each group better, personalize your messages, and sell much more of your product.

Today, Segmentation, Targeting and Positioning (STP) is a familiar strategic approach in Modern Marketing. It is one of the most commonly applied marketing models in practice. In our poll asking about the most popular marketing model it is the second most popular, only beaten by the venerable SWOT / TOWs matrix. This popularity is relatively recent since previously, marketing approaches were based more around products rather than customers. In the 1950s, for example, the main marketing strategy was 'product differentiation'.

The STP model is useful when creating marketing communications plans since it helps marketers to prioritise propositions and then develop and deliver personalised and relevant messages to engage with different audiences.

Applying the STP Model

Follow the steps below to apply the STP Model in your organization.

Step 1: Segment Your Market

Your organization, product or brand can't be all things to all people. This is why you need to use market segmentation to divide your customers into groups of people with common characteristics and needs. This allows you to tailor your approach to meet each group's needs cost-effectively, and this gives you a huge advantage over competitors who use a "one size fits all" approach.

There are many different ways to segment your target markets. For example, you can use the following approaches:

· Demographic – By personal attributes such as age, marital status, gender, ethnicity, sexuality, education, or occupation.

Geographic – By country, region, state, city, or neighborhood.
Psychographic – By personality, risk aversion, values, or lifestyle.
Behavioral – By how people use the product, how loyal they are, or the benefits that they are looking for.

Example

The Adventure Travel Company is an online travel agency that organizes worldwide adventure vacations. It has split its customers into three segments, because it's too costly to create different packages for more groups than this.

Segment A is made up of young married couples, who are primarily interested in affordable, eco-friendly vacations in exotic locations. Segment B consists of middle-class families, who want safe, family-friendly vacation packages that make it easy and fun to travel with children. Segment C comprises upscale retirees, who are looking for stylish and luxurious vacations in well-known locations such as Paris and Rome.

Step 2: Target Your Best Customers

Next, you decide which segments to target by finding the most attractive ones. There are several factors to consider here.

First, look at the profitability of each segment. Which customer groups contribute most to your bottom line?

Next, analyze the size and potential growth of each customer group. Is it large enough to be worth addressing? Is steady growth possible? And how does it compare with the other segments? (Make sure that you won't be reducing revenue by shifting your focus to a niche market that's too small.)

Example

The Adventure Travel Company analyzes the profits, revenue and market size of each of its segments. Segment A has profits of $8,220,000, Segment B has profits of $4,360,000, and Segment C has profits of $3,430,000. So, it decides to focus on Segment A, after confirming that the segment size is big enough (it's estimated to be worth $220,000,000/year.)

Step 3: Position Your Offering

In this last step, your goal is to identify how you want to position your product to target the most valuable customer segments. Then, you can select the marketing mix that will be most effective for each of them.

First, consider why customers should purchase your product rather than those of your competitors. Do this by identifying your unique selling proposition , and draw a positioning map to understand how each segment perceives your product, brand or service. This will help you determine how best to position your offering.

Next, look at the wants and needs of each segment, or the problem that your product solves for these people. Create a value proposition that clearly explains how your offering will meet this requirement better than any of your competitors' products, and then develop a marketing campaign that presents this value proposition in a way that your audience will appreciate.

Example

The Adventure Travel Company markets itself as the "best eco-vacation service for young married couples" (Segment A).

It hosts a competition on Instagram® and Pinterest® to reach its desired market, because these are the channels that these people favor. It asks customers to send in interesting pictures of past eco-vacations, and the best one wins an all-inclusive trip.

The campaign goes viral and thousands of people send in their photos, which helps build the Adventure Travel Company mailing list. The company then creates a monthly e-newsletter full of eco-vacation destination profiles.

Communication Mix for services:

Marketing is a broad business function that includes product research and development, merchandising and distribution processes and pricing, as well as communication or promotion. The communication mix refers to specific methods used to promote the company or its products to targeted customers. Some depictions of the promotional mix include five elements, while others add a sixth – event sponsorship.

The Advertising Element

Advertising is often the most prominent element of the communication mix. In fact, marketing and advertising are often misconstrued as the same thing. Advertising includes all messages a business pays to deliver through a medium to reach a targeted audience. Since it involves the majority of paid messages, companies often allocate significant amounts of the marketing budget to the advertising function. While it can be costly, the advertiser has ultimate control over the message delivered, since it pays the television or radio station, print publication or website for placement.

Personal Selling and Direct Marketing

Personal selling is sometimes integrated with the direct marketing element. However, many companies make such extensive use of a sales force that it is important to consider this component distinctly. Distribution channel suppliers use salespeople to promote products for resale to trade buyers. Retail salespeople promote the value of goods and services to consumers in retail businesses.

Selling is more emphasized by companies that sell higher-end products and services that require more assertive efforts to persuade customers to buy.

Discounts and Promotions

Sales promotions or discounts are similar to advertising in that they are often promoted through paid communication. However, sales promotions actually involve offering a discounted price to a buyer. This may include coupons, percent-off deals and rebates. Along with ads to promote deals and coupon mailers, companies use exterior signs and in-store signage to call customer attention to the discounts.

Goals of this communication tool include increasing revenue and cash flow, attracting new customers and clearing out extra inventory.

Public Relations and Messaging

Public relations is sometimes somewhat similar to advertising in that much of it involves messages communicated through mass media. The major difference is you don't pay for the time or space for the message. A television or newspaper feature story mentioning a business, for instance, isn't paid for and can provide brand exposure.

The downside of PR is that you don't always control the messages. You can try to influence them through press releases and invites for media coverage, but the media could put a negative spin on the story.

Direct Marketing to Targeted Customers

Direct marketing includes some aspects of both sales promotions and personal selling. It is interactive communication with customers where the company's message seeks or implores a response from targeted customers. E-mail and direct mail are common formats. These messages are sent to customers with special offers or calls to action, often promoting limited-time deals or new product launches.

Mail-order clubs, online or print surveys and infomercials are other examples of direct marketing communication.

Event Sponsorship and Having a Presence

Event sponsorship is the element sometimes left out of the five-element communication mix. Many models include it within advertising. Event sponsorship occurs with a company pays to have a presence at a sports, entertainment, nonprofit or community events. The sponsorship may include a mix of benefits including booth representation during the event to hand out samples, gifts and literature, name mention during the event and ad spots connected to the event.

Unit II

Financial Services: Meaning, Features, and Scope

Financial services can be defined as the products and services offered by institutions. Like banks of various kinds for the facilitation of various financial transactions and other related activities in the world of finance like loans, insurance, credit cards, investment opportunities, and money management as well as providing information on the stock market and other issues like market trends.

Meaning of Financial Services is the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises.

Their companies are present in all economically developed geographic locations and tend to cluster in local, national, regional and international financial centers such as London, New York City, and Tokyo.

Definition of Financial Services:

Services and products provided to consumers; and businesses by financial institutions such as banks, insurance companies, brokerage firms, consumer finance companies, and investment companies all of which comprise the financial services industry.

Facilities such as savings accounts, checking accounts, confirming, leasing, and money transfer, provided generally by banks, credit unions, and finance companies. Financial Services may simply define as services offered by financial and banking institutions like the loan, insurance, etc.

The financial services concerns with the design and delivery of financial instruments and advisory services to individuals and businesses within the area of banking and related institutions, personal financial planning, investment, real assets, and insurance, etc.

Functions of Financial Services:

The following functions of financial services below are;

Facilitating transactions (exchange of goods and services) in the economy.
Mobilizing savings (for which the outlets would otherwise be much more limited).

Allocating capital funds (notably to finance productive investment).
Monitoring managers (so that the funds allocated will spend as envisaged).
Transforming risk (reducing it through aggregation and enabling it to carry by those more willing to bear it).

Characteristics and Features of Financial Services:

The following Characteristics and Features of Financial Services below are;

Customer-Specific:

They are usually customer focused. The firms providing these services, study the needs of their customers in detail before deciding their financial strategy, giving due regard to costs, liquidity and maturity considerations. Financial services firms continuously remain in touch with their customers, so that they can design products that can cater to the specific needs of their customers.

The providers of financial services constantly carry out market surveys so they can offer new products much ahead of need and impending legislation. Newer technologies are being used to introduce innovative, customer-friendly products and services which indicate that the concentration of the providers of financial services is on generating firm/customer-specific services.

Intangibility:

In a highly competitive global environment, brand image is very crucial. Unless the financial institutions providing financial products; and services have a good image, enjoying the confidence of their clients, they may not be successful. Thus, institutions have to focus on the quality and innovativeness of their services to build up their credibility.

Concomitant:

Production of financial services and the supply of these services have to be concomitant. Both these functions i.e. production of new and innovative services and supplying of these services are to perform simultaneously.

The tendency to Perish:

Unlike any other service, they do tend to perish and hence cannot be stored. They have to supply as required by the customers. Hence financial institutions have to ensure proper synchronization of demand and supply.

People-Based Services:

Marketing of financial services has to be people-intensive and hence it’s subjected to the variability of performance or quality of service. The personnel in their organizations need to select based on their suitability and trained properly so that they can perform their activities efficiently and effectively.

Market Dynamics:

The market dynamics depends to a great extent, on socioeconomic changes such as disposable income, the standard of living and educational changes related to the various classes of customers.

Therefore, they have to constantly redefine and refine taking into consideration the market dynamics.

The institutions providing their services, while evolving new services could be proactive in visualizing in advance what the market wants, or being reactive to the needs and wants of their customers.

The Scope of Financial Services:

The following scope of Financial services, and cover a wide range of activities. They can broadly classify into two, namely:

Traditional Activities:

Traditionally, the financial intermediaries have been rendering a wide range of services encompassing both capital and money market activities. They can group under two heads, viz.

Fund based activities and
Non-fund based activities.

A. Fund based activities:

The traditional services which come under fund based activities are the following:

Underwriting or investment in shares, debentures, bonds, etc. of new issues (primary market activities).
Dealing with secondary market activities.
Participating in money market instruments like commercial papers, certificates of deposits, treasury bills, discounting of bills, etc.
Involving in equipment leasing, hire purchase, venture capital, seed capital, etc.
Dealing in foreign exchange market activities.

B. Non-fund based activities:

Financial intermediaries provide services-based on non-fund activities also. This can calls “fee-based” activity. Today customers, whether individual or corporate, not satisfy mere provisions of finance. They expect more from their companies. Hence a wide variety of services, are being provided under this head.

They include:

Managing the capital issue i.e. management of pre-issue and post-issue activities relating to the capital issued by the SEBI guidelines and thus enabling the promoters to market their issue.
Making arrangements for the placement of capital and debt instruments with investment institutions.
The arrangement of funds from financial institutions for the client’s project cost or his working capital requirements.
Assisting in the process of getting all Government and other clearances.

Modern Activities:

Besides the above traditional services, the financial intermediaries render innumerable services in recent times. Most of them are like the non-fund based activities. Because of the importance, these activities have been in brief under the head “New-financial-products-and-services”. However, some of the modern services provided by them are given in brief hereunder.

Rendering project advisory services right from the preparation of the project report until the raising of funds for starting the project with necessary Government approvals.
Planning for M&A and assisting with their smooth carry out.
Guiding corporate customers in capital restructuring.
Acting as trustees to the debenture holders.
Recommending suitable changes in the management structure and management style to achieve better results.
Structuring the financial collaborations/joint ventures by identifying suitable joint venture partners and preparing joint venture agreements.
Rehabilitating and restructuring sick companies through an appropriate scheme of reconstruction and facilitating the implementation of the scheme.

More things…

Hedging of risks due to exchange rate risk, interest rate risk, economic risk, and political risk by using swaps and other derivative products.
Managing in-portfolio of large Public Sector Corporations.
Undertaking risk management services like insurance services, buy-back options, etc.
Advising the clients on the questions of selecting the best source of funds taking into consideration the quantum of funds required, their cost, lending period, etc.
Guiding the clients in the minimization of the cost of debt and the determination of the optimum debt-equity mix.
Promoting credit rating agencies for rating companies that want to go public by the issue of the debt instrument.
Undertaking services relating to the capital market, such as 1) Clearing services, 2) Registration and transfers, 3) Safe custody of securities, 4) Collection of income on securities.

Banking and E-Banking

Can you guess which is the largest bank in India? It is actually the State bank of India (SBI), which is also incidentally the oldest bank in India. The SBI has some 13,361 branches across the country. Banking is one of the most important sectors of the Indian economy. Let us educate ourselves about banking and e-banking.

Banking

A bank can be defined as an institution that accepts deposits from the public and gives out loans. However, this is also a broad sense of the many services the banking industry provides. In would not be incorrect to say that business and trade would come to a near standstill without banking services.

A bank helps in running the economy by promoting various economic activities. It collects the savings of people and mobilizes them by turning them into capital for businesses and companies. Money lying idle is not good for the economy and the banks help generate wealth from savings.

Types of Banks

There are broadly four types of banks that function in India. They are as below,

· Commercial Banks: The main functions of these banks is to accept deposits from people and make loans to those that require finance. Private commercial banks focus on financial objectives and returns. Government-owned Public sector banks tend to fulfil their social objectives before their financial objectives. Example: SBI, ICICI, HDFC, PNB etc

· Cooperative Banks: These bank’s main function is to provide cheap credit to those who do not have access to funds. They are governed by the State Cooperatives Societies Act. These banks are the main source for rural credit given to farmers and peasants.

· Specialized Bank: These are set up to meet some unique needs of an industry or a sector. They provide financial services to such industries. Some such specialized banks are import-export banks, development banks (IDBI), agricultural banks (NABARD) etc

· Central Bank: This is the apex bank in the country, the Reserve Bank of India (RBI). Its primary function is to control and supervise all the other banks in the country. It also makes and implements monetary policy of a country. The RBI is also the government’s banker.

Functions of Banking

1] Accepting Deposits

A bank is both the borrower and the lender in our economy. So from time to time it will borrow money from its customers and pay them an interest in return. This acceptance of deposit can be through any time of account, like

· Current Account: This type of account is used for the daily banking operations of a business. There is no limit to the amount or number of withdrawals.

· Savings Account: This is to inculcate the habit of savings in the public. Such an account will earn a nominal rate of interest. There are some limitations as to the number and the amount of the withdrawals

· Time Deposits: Also known as Fixed Deposits. Here the rate of interest is much higher but withdrawals may invite a penalty.

2] Lending Activities

The second most important function of the bank is to lend money. The money banks borrow from customers, it lends to other entities. This can be done in one of the various ways – term loans, overdraft, cash credits, discounting of bills etc.

By doing so, the bank will help generate capital in the economy and further financial activities. For the overall economic situation of a country, capital formation is an essential requirement, that banking industry helps to achieve.

3] Cheque Facilities

A cheque is the most used and developed credit instrument in our economy. The banks provide the very important services of collecting our cheques and drawing them on other banks. This is how funds get transferred to the payee account.

4] Allied Services

The bank also provides a plethora of other services, both banking and general utility services. Some examples are bill payments, underwriting bills, locker facilities, selling and buying of shares, insurance premium payments, and even taxation services in some cases.

e-Banking

Over the last few decades technology has changed everything around us including banking. It has made possible internet banking. Here the customer can do all his banking activities on the internet without physically going to a bank or any human interaction.

All of the bank’s data and the information is stored on servers. So there are services that the bank provides to the customer online and in real time. Customers can see their account statements, transfer funds, apply for loans, pay their bills all online. Hence the phenomenon of e-banking has caught on in the last few years. Almost all banks provide it now.

DISTRIBUTION OF BANKING PRODUCTS AND SERVICES.

A distribution channel is a route to the market for a supplier789. In the case of a bank, the distribution channel is the way the banking product or service takes from the bank to the customer. Most banks have multiple channels to serve their customers. Today, they can choose between branches, contact centers, ATMs and online channels, portals and web banks. Types of distribution channels

1. Branches. These are the face of the bank and the place where the client meets the bank. The distribution is made by the traditional counter. The bank’s president is far away and not always known to customers. However, the client manager is close, he advises, listens to the client, makes clients’ financial life easier790. According to a survey carried out by Accenture in September 2008, the branch is the most preferred channel for all the interactions that emotionally involve customers, such as buying complex products (76% preference) receiving financial advise (71%) and resolving an issue (59%). 73% of the customers visiting a branch say that they are looking for a personalized contact. In this respect, the branch is a distribution channel where the human factor plays a dominant role.

2. Specialized branches have been created as an alternative for the classic branches. These specialized branches are focused on a certain type of activity such as: operations for individuals, for small business or for corporate clients. Banks have opened such branches in supermarkets or malls. The main reason for establishing such branches was to have a close relationship with these corporate customers and to provide services of interests for their clients. Their primary activities are the consumer loans and basic operations for individuals (payments, foreign exchanges etc.). These branches are accessible all week long (even in Saturdays and Sundays) as long as the supermarkets and malls are open. BRD-GSG, ING Bank were the first banks to open such branches in Romania.

3. In order to better serve certain ranges of clients, banks have also created corporate branches or private banking branches. These clients require more sophisticated products and services and high standards of quality. Therefore the staff employed in these branches should be seniors in terms of products knowledge and the quality of service delivery.

4. Among the specialized branches, we can also mention: the mortgage branches whose focus is on selling mortgage loans. Raiffeisen Bank created such a branch named „Raiffeisen – Casa Ta” as a result of the high demand for mortgage loans and the complexity of these products.

5. Self banking branches were first created by ING. These branches have two areas: one where the customers are served by bank employees (usually 3 or 4 persons) during the normal working hours and one where the customers can use self banking devices. These can be used all day long (24h/24, 7 days/7) and the access to this area is given to all the bank customers who have a debit card. Here, the clients can make deposits, payments, cash withdrawals, invoice payments, repayments of loans installments. BRD-GSG, RBS have also created such self banking branches.

6. Mobile branches were first used by Raiffeisen Banca pentru Locuite. The bank did not have a branch network and the products were delivered by the help of sales agents. The bank started a banking caravan which reached the most important cities in Romania. The aim of this caravan was to promote and to sell the bank’s products. BRD-GSG has also created a flexible and movable branch. ( BRD BLITZ) located mainly in rural areas. In this respect, the branch wanted to reach the rural population (neglected by all others banks). These branches had a rapid installation (2 weeks) and can be easily relocated to another place (if necessary). The opening hours were 2-3 days/week, 3-4 hours/day.

7. Banking cafes were first settled in Romania by Banca Transilvania. The banking cafe is the result of a partnership between a bank and a cafe. The branch that is located in a cafe can offer a full range of products and services (information point which offer leaflets, brochures with the bank’s products and services to the existing and potential customers along with financial newspapers and magazines). This concept was later developed by ING, Volksbank, BRD. These banking cafes are in the major cities of Romania (where there is a large business community).
8. Direct mail is another distribution channel for banking products and services. In the same time, direct mail is also a promotional tool. The aim of delivering the banking products and services by mail can be, not only just simply informing the clients about a new product but also convincing the client to buy a certain product. The main advantage of delivering by mail is the fact that the bank can promote its products and services to a certain segment of clients. In this way, the bank can target a certain group of clients in order for the message and products to be tailored accordingly.

9. Automatic teller machines (ATMs) were first introduced in Romania in 1995 and they have evolved ever since. By the end of 2006, the number of ATMs overcame the number of branches. This fact is explained by the difference of operation costs involved by these two distribution channels. ATMs have been rapidly moving from just a cash-dispensing machine to a self-service banking channel. The driving forces of this movement are: firstly, the pursuit of operational efficiency and then, the battle for differentiation in the service being offered. ATMs can increase the marketing potential by providing services to clients in others places than the bank branches. ATMs are an alternative for crowded desks in branches. Cash withdrawals were moved from the cash desks to the ATMs and this transfer is encouraged by most of the Romanian banks by lower fares for these services. This can reduce the waiting time in branches. The numbers of ATMs users has increased in Romania. The clients appreciate the user-friendly feature of ATMs , the large number of operations that can be done through ATMs, the speed and the security of these devices and last but not least the theoretically unlimited availability of ATMs. Besides all these, all the transactions are automatic, which reduces the risk of human mistakes in transactions.

9. EFTPOS (Electronic Funds Transfer at Point of Sale) is a payment method that can be described as a distribution channel. EFTPOS is a system by which the clients pay the services they acquired just by using a bank card. This system is very used when shopping, travelling, buying tickets. In a society where time is money, there has been a huge request from the customers for more accessible distribution channels. The computers and the mobile phones were the best choice. As a result the banks have made considerable investments in the development of services that are not based in the branch and which are accessible through the Internet or mobiles phones. The development of electronic distribution channels has resulted in the appearance of a new concept: the virtual bank. This is the bank where the contact can be reached by a large variety of distribution channels, but maintaining the same interface and having access to the same services. The client has the possibility of choosing from a large variety of channels: phone, ATM, POS, Internet. As a result,, a new form of banking has appeared. „Martini banking” which signifies the presence of the banking products and services „anywhere and any time”.

10. Mobile banking appeared in Romania in 2003. At the beginning, only some services were available: account balance, information about exchange rates etc. At present, all the banks provide mobile banking and the range of services provided is very wide: payments, direct debits, information about the nearest ATM/branch etc.

11. Call centers - Raiffeisen Bank was the first bank to start up a call center in Romania in 2004. Up until that moment, the only possibility to contact the bank by phone was through the branches’ numbers. The only dedicated phone-line for a bank was the one related to card problems. The client used to pay the price of an ordinary phone call. By means of call centers, the contact with the bank was made through a toll-free phone-line which makes this distribution channel very accessible. Through call centers, all the information is received for free and one client can choose from a large range of services (information about accounts balance, payments, exchanges, applying for a credit etc.) The most important issue is to ensure the security of this service. The client is authenticated for each transaction by certain devices. Nowadays, the call centers are used as a marketing tool. Through it, the bank can start marketing researches, can sell products and services. As the mobile phone is an almost indispensable accessory, incomparably easier to handle than a computer, the phone banking is becoming a more advantageous alternative to Internet banking.

12. Internet banking. There is a debate about the impact of technology in services marketing, for example the Internet. The Internet-driven information revolution is widely seen to be transforming the way both business and consumer operate. This is particularly relevant in banking services, where transactions do not require interpersonal interaction. In such cases the Internet becomes a new distribution channel. However in other context the Internet is widely used as an information source or a promotional tool792. Internet banking was launched in Romania in 2003. At that time, the bank posted on the Internet information concerning only the bank and the range of products and services provided. Later on, the Internet became a distribution channel by providing an entire range of services: payments, information about account balances. The Internet facilitates payments for services (event the state taxes) by the help of virtual cards. The Internet is also a tool for acquiring new clients by online applications for different products. In terms of clients’ preference, the internet is more preferable to other distribution channels by simplicity, availability and customization793. The only constraint is the fact that the Internet is not accessible to all the clients.

13. As banking market is highly competitive, the banks have looked for new formats to successfully develop market and deliver its services. Further promising approaches to distribution can be found outside banking. In many sectors, a rapidly growing number of franchise systems works with self-employed entrepreneurs as franchisees, who sell the franchisor’s products or services, benefiting from a standardized sales and marketing concept. In Romania, ING and Volksbank operate through franchises. Besides, the banks started also to deliver through sales agents. The Romanian banks use this distribution channel for specialized services. Raiffeisen Bank , for example, have created teams of sales agents whose sales’ focus is on credit cards and loans for SMEs.

Retail Banking

Retail banking, also known as consumer banking, refers to the services banks provide to individual customers. Common retail banking services include checking and savings accounts, mortgages, credit cards, and auto loans. Retail banks focus on individuals, while investment banks focus on corporations and governments, and commercial banks focus on small and mid-sized businesses.

Retail banking, also known as "consumer banking," is what most American consumers think of when they hear the word "bank." Essentially, retail banking is the services banks provide to individual customers, such as checking and savings accounts.

Retail banking services are generally offered by financial institutions at local branches, where customers can withdraw and deposit money and speak directly with a banker about loan products or other needs. In addition, retail banking services are provided at ATMs, as well as through mobile and online banking platforms, which have soared in popularity in recent years.

Products offered by retail banks

The exact mix of products offered by retail banks can vary, but may include:

· Checking accounts -- many retail banks have several types of checking accounts, ranging from basic checking to interest-bearing checking accounts designed for customers with high balances

· Savings accounts -- like checking accounts, savings accounts come in several varieties

· Debit/ATM cards

· Credit cards

· Money orders/certified checks

· Wire transfers

· Mortgages (purchase and refinancing) and home equity loans

· Auto loans

· Personal loans

· Certificate of deposit (CD) and money market accounts

· Safe deposit boxes

· Banking products designed specifically for college students

In addition to these, many retail banks offer services such as retirement accounts like IRAs, brokerage accounts, college savings plans, insurance products, and more. For example, Bank of America offers brokerage and retirement services to its retail banking customers through its Merrill Lynch subsidiary.

Banks may offer other services to their customers in addition to those mentioned here. As an example, many retail banks offer notary services to their customers at no charge.

Other types of banking

In addition to retail banking, the other major types of banking include:

· Investment banking: Investment banks provide services to corporations, governments, and individuals. These services include raising financial capital by underwriting debt or equity issuances, and assisting in mergers and acquisitions.

· Commercial banking: Commercial banking refers to financial services provided to the corporate or institutional world. Many of the products offered by commercial banks are similar to those offered by retail banks, such as savings and checking accounts, but commercial banks may also offer things like foreign trade services, treasury management services, merchant services like credit card processing and gift cards, and more.

· Private banking: Similar to retail banking, private banking refers to banking and financial services provided to high-net-worth individuals. Private bankers provide financial and wealth management services on a much more personal level than traditional retail banks, which is why it can be considered a separate type of banking.

Unit III

MATCHING DEMAND CAPACITY IN BANKING

The key to efficiency and fast customer service in the service industry is the correct and dynamic matching of demand and capacity. Given the seasonality and unpredictability of the various types of banking services and transactions, this process may be difficult but not insurmountable. The important step is to separate the bank's factory-like transactions which are more or less standardized, like check encashment, withdrawals, and check deposits, from the personalized ones like opening accounts, loan application, or marketing a new service. It should be recognized that the former constitutes the bulk of banking transactions. Factory-like transactions are fairly predictable in terms of duration or cycle time, and occurrence. Their seasonality or peak-and-low periods during the day, week, and month can also easily be discerned from a careful study of past data. By matching the demand and capacity of its factory transactions, a bank can decongest its lobby or ATM booths, improve over-all customer satisfaction, and provide its staff with ample time and better composure to attend to the more personalized transactions.

Long-term capacity planning is a critical task of bank management. No plan or a wrong plan is planning for failure or bad service which leads to customer attrition. After the right the capacity is set and installed, whether tellers, verifiers, or ATMs, there is a need to dynamically match capacity to a changing demand pattern. In manufacturing, this short-term process is called production control. Both long- and short-term capacity matching has to be done carefully and adapted to the bank's particular environment. In many banks, capacity management is characterized by fire-fighting and gut-feel decision making. Tellers in a branch are added or subtracted from the front-line, according to across-the-board head office guidelines which are not consistent with local realities or demand pattern. Moreover, the branch manager may request head office for more personnel after overtime has become unmanageable or customer complaints due to long queues have mounted.

Perhaps the most blatant flaw committed by many banks is basing its capacity plans on its total dollar value of business, e.g. deposit base, loans outstanding, or total assets. To compound the error, a productivity index is derived by dividing the dollar value by the headcount. The head office may stipulate a standard index like so much dollars in deposits per employee. Branch managers are enjoined to observe this index by downsizing or risk getting adverse performance appraisal. Often this index is used by head office to reject the branch's "unreasonable" request for additional manpower. Basing capacity on value will either lead to overcapacity and idle resources, or under-capacity and long customer queues.

In banking, as in many other service establishments, what use capacity, consume resources, and drive costs are not the financial value of the transaction, but rather the volume of transactions. To process a $100 check deposit takes exactly the same teller or ATM time to process as a $200 one. A $100 passbook withdrawal or check encashment would take about the same time to transact as a $200. Even in the non-factory like transactions, there is no direct relationship between value of the service and the amount of bank resources utilized to deliver it. For instance, in general, a $2,000,000 loan will definitely take less than twice the time to process a $1,000,000 one. To correctly match capacity to demand, it is important therefore to derive the total volume of factory-like transactions and translate these to teller time or man hours, or machine hours for automated services. Thereafter, these hours can be translated to the number of tellers or ATMS required to meet the expected demand.

A branch may get the average number of checks encashed, check deposits, cash withdrawals, cash deposits, utility payments on a daily, weekly, or monthly basis, whichever is appropriate for its capacity planning. It is tempting to use the number of customers accounts, particularly the number of active accounts, to compute for capacity. While this is more accurate than dollar value, and easier to use than transactions, it is not as accurate than the latter, since clients will have different volumes and types of transactions. Tellering, whether manual or automated, is transaction driven, not client or value driven. The best way to determine teller deployment is to use the number of transactions - regardless of number of clients or value of transactions - and translate these to transaction hours, and then to headcount. With the increasing power of computer technology at the disposal of banks, getting an accurate count of transactions should not be difficult. But should it be tedious or impractical to do so, you may impute transaction hours based on weight, like 5-man hours to process 10 kilos of checks.

If a service transaction is done by one station or one-stop-shop, say by one empowered, multitasking, multi-skilled teller, capacity planning is simple and straightforward. But if the transaction should pass through several processes or stations, it is necessary to match and synchronized all their capacities to the demand volume being received by the first station. Usually, in a series of processes or hand-offs, there would exist the slowest process, or bottleneck, that would dictate the over-all capacity of all the processes or system capacity. It is a waste of resources and money if a front-line capacity like tellering is increased to match demand when the bottleneck capacity is determined by a slower backroom operation, like signature verification or computer processing. In this case, system capacity will remain lower than demand in spite of the investment. Both front-line and backroom capacities have to be adjusted to meet the demand.

The last step in capacity planning is fine tuning for unplanned activities that decrease capacity. These are machine downtime, and errors and rework. Machine or computer breakdown can slow down other albeit efficient processes. The normal response is to provide for an allowance in capacity planning to account for this, say 5%. The better response of course is to do preventive maintenance to eliminate downtime. Clerical errors, especially teller mistakes, and their correction consume a lot of man-hours and can significantly cut capacity just like downtime. Providing an allowance for these abnormalities is tantamount to tolerating them. It is much better to enjoin everybody to do his job right the first time.

Planning of service environment

Providing exceptional customer service in your bank or credit union is important, helping to attract and retain customers in a competitive landscape. As technology becomes more robust and customer-buying habits shift, banks and credit unions must constantly be looking for areas of innovation and ways to meet the demands of a 21st-century customer.

If you work in a bank or credit union and are looking for ways to improve your customer service, here are 8 proven methods that we have seen work across the 200+ financial institutions we work with.

1. Empower Your Employees

Your customer service employees are your frontline. As such, they need to have the right resources to provide exceptional customer or member service.

But many times, they don’t. Far too many banks and credit unions are falling behind when it comes to providing their employees the tools they need to most effectively do their job.

The result? Not only does customer service quality suffer, but so does employee morale.

Inefficient and disorganized knowledge base solutions result in confusion for your frontline staff. Bank employees can’t find the information they need which impacts their confidence and the confidence of customers. As a matter of fact, one of the top reasons why banking customers switch to another financial institution is because they feel they get the “runaround” from poorly trained bank or CU employees.

In order to change this, banks and credit unions need to ensure that every employee has:

· Access to accurate, up-to-date and consistent information

· Immediate answers to their questions (without having to lean on other employees)

· An easy way to search for information

All too often the critical information employees need to effectively answer customer questions is buried in long policy documentation or only available by asking the “key go-to people” i.e. lending and managers. In a recent SilverCloud poll, a majority of banks and credit unions reported that 30% or more of key “go-to” staffs daily time is spent supporting frontline staff questions. This inefficient system leaves customers waiting on hold and employees scrambling for information.

Empowering employees with fast access to information and streamlined processes is the first step to improving employee productivity and employee satisfaction.

2. Allow Consumers to Self-Service

Today’s consumers are increasingly more and more self-reliant. We’ve been conditioned by digital services like Netflix, Amazon, and Google to find what we want, whenever we want – so much so that we yearn for and expect it. Be it searching for a product or service, or changing the settings on our own account or service plan – the ability to do-it-ourselves is not only convenient and efficient, it’s empowering.

This is all-the-more true with the impact the coronavirus pandemic has had on the consumer banking industry, limiting in-person and in-branch service so much so that customers were left with no other option but to adopt digital and mobile banking.

Yet, most banks and credit unions digital properties don’t provide great self-service support or how-to answers. Instead, consumers are shuttled down a path to call, head into a branch, or worse yet – give up on what it is they are trying to do or find.

Empowering employees with fast access to information and streamlined processes is the first step to improving employee productivity and employee satisfaction.

Reasons why banks and credit unions need self-service support content across their digital platforms:

· 83% of SilverCloud customers report that the second most common reason consumers go to a banking web site or mobile app is to find a support phone number.

· 54% of all support inquiries come in on nights and weekends. Having a self-service support center ensures these off-hour inquiries don’t become missed opportunities.

· A self-service approach increases engagement, enhances the consumer experience, and reduces support calls.

The good news is most bank and credit unions already harness most of the support answers consumers seek. Building an excellent Digital Support Center to deliver those answers for web and mobile sites is very much within reach. Learn how Altamaha Bank & Trust leveraged SilverCloud to improve customer experience and product engagement across their digital channels.

3. Stay Consistent Across All Touch Points

According to an Ernst & Young Consumer Banking Survey, omni-channel experience was listed as one of the key areas for improvement among banks. The survey stated, “To stay competitive, banks and credit unions need to continue building out channel capabilities to provide 24/7 real-time access to banking, seamlessly, across channels.”

Providing consistent and accurate information across channels is a constant challenge for banks and credit unions. Yet, in today’s technological world, with customers banking online, on their mobile devices and on tablets in addition to at branch locations, providing consistent information is becoming more and more crucial for institutions hoping to provide the best in banking customer service.

According to a Banking Technology article, “Research from Google has shown that 46% of people managing their finances online switch between devices before completing the activity. Often customers will start research on a smartphone before migrating to a PC or tablet to dig deeper into the information they need.”

4. Educate Your Customers on Financial Literacy

The concept of educating potential and current customers on financial literacy is not necessarily new. What is new is how banks and credit unions are choosing to do it today, and whom they’re now targeting.

While financial literacy programs such as Operation HOPE and Junior Achievement, have existed outside of banks for many years, targeting low income and youth populations, it is only recently that banks have recognized the value in bringing educational initiatives in-house. In fact, Operation HOPE’s new model does just that, bringing its financial literacy program into bank branches. And these types of financial literacy programs are targeted to a wide range of customers across the socio-economic spectrum.

When it comes to financial education, the benefits for banks are huge and the avenues to deliver that education are many. As a special report put out by the Federal Reserve Bank of San Francisco stated, “At a time when competition in retail banking is fierce, targeted financial education programs can open new roads into untapped populations, such as the immigrant and underbanked markets. In addition, financial education programs can also create goodwill at the community level and strengthen relationships with local customers and community partners. In some cases, banks can also receive Community Reinvestment Act credit for providing financial education to low- and moderate-income individuals.”

5. Embrace Financial Technology

Staying in compliance with strict regulations and meeting customer demand for immediate, on-the-go service are issues banks and credit unions are constantly struggling. Yet, as banks and the financial sector as a whole catch up with advances in technology, they are finding great opportunities to improve their bottom line and increase customer satisfaction.

Some of the ways innovators in the banking sector are using financial technologies to improve their businesses are through:

· Exploring advances in mobile payment options

· Using biometrics, such as voice identification and eye scanning, to increase security

· Integrating systems and converting old data to new formats

· Installing drive-through video teller devices

· Taking advantage of customer data and social media (that banks have but are not using to its full potential) to enhance bank marketing and geographically targeted customer offers

These are just some of the many opportunities that financial technology is making available to banks. Due to a large number of start-up fintech (financial technology) companies, such as Square, Lending Club and OnDeck, there has been increasing innovation in the field. By looking to these startup companies for inspiration, banks and credit unions can gain an immense amount of knowledge and integrate systems and strategies that work best for their customer base.

6. Become An Advisor, Not Just a Lender, For Small Businesses

Small businesses, post-recession, are looking for more than just a lender. They are looking for a business partner. For community banks and credit unions, this customer need has created a unique opportunity. Yet, many banks and credit unions have not figured out quite how to move beyond the traditional lender role they have played for so long.

Synopsizing a recent study by McKinsey & Co., American Banker said, “Serving small-business customers more holistically is a goal that many community banks aspire to. But few are truly making a transition from the lender role to an adviser one, and there is a lot of revenue upside for those who do.”

By acting as an advisor to small business clients, banks gain an additional revenue stream through fee-based services. For example, Lead Bank in Garden City, MO has begun offering services such as strategic planning, capital raising and bookkeeping to supplement their traditional loan and deposit offerings. First Financial Bank in Cincinnati offers a minimal cash management service to its customers, which moves cash to a higher return investment once the account hits a certain level.

“In the Netherlands, SNS Bank has reorganized its branches into a network of advisory-focused, cashless banking shops that serve as a physical extension of the Web. Branches are store-like outlets, have open spaces, tablets that customers can use, and extended opening
Hours,” according to McKinsey and Company. “The original function of a bank branch – depositing and withdrawing cash – has disappeared. Instead, the focus is on a “consultant-style” mobile sales force specialized in selling complex products from both the bank itself and other providers.”

Offering additional services beyond traditional lending benefits the bank through additional revenue and the small business customer who gains a trusted financial partner.

7. Segment Your Client Base and Create Personalized Customer Experiences

With so much competition in the retail banking and credit union space, customers have choices. What’s more, consumer trust fell after the recession began in 2008. For institutions that wish to stay competitive and build customer trust, personalization and segmentation of both messaging and services is crucial.

According to an Ernst & Young Survey and a Forrester Inc. research report, Financial Service Brands Fail to Earn True Consumer Trust, “Financial service brands have long suffered from a lack of consumer trust, but the 2008 financial collapse undermined the brand relationship. Difficult as the road is, financial service brands must strive to secure brand trust to build their brand. One of the key drivers of earning back customer trust is through superior personalized product offerings. High quality products that meet customer needs are a key driver of trust in financial services.”

And with the massive amounts of customer data banks have in their possession, the untapped opportunities for personalization are almost endless.

Credit unions have been on to this idea for years. Member relationships and community are the foundation of these institutions. So it might not come as a surprise that member satisfaction is higher among credit unions than banks.

According to a study by First Data, “Even though credit unions are less widely used than national and local banks, they have the highest customer satisfaction: 92 percent of credit union customers are highly satisfied, compared to 84 percent for regional/local banks and 75 percent for national banks. The more personalized nature of the credit union membership experience may account for this higher satisfaction.” But that doesn’t mean there isn’t more that credit unions can do to improve their personalization strategies.

By personalizing messaging and services, customers are more likely to feel valued and their engagement with your bank or credit union is likely to increase. Today, there are a multitude of personalization technologies available to banks and credit unions that allow for:

· Marketing automation that includes CRMs, lead scoring, robust email marketing capabilities and ROI reporting

· Prioritization of high touch customers and members

· Individualized interactions based on customer communication preferences

· Information delivered specifically to a customer based on prior behavior and recent transactions

Through personalization technology, customers are also able to access the information they need immediately, without having to call the customer service line. And banks are able to proactively view and manage customer journeys to better target each customer on an individual level with products and services they need and want at that moment in time.

8. Test and Then Test Again

Just like no two customers are exactly alike, no two banks or credit unions are the same. What works for one bank and one customer segment may not work for another. The only way to know for sure what works in your bank or credit union is to test. And then test again. Testing things such as frequency, messaging and channel of communications; target markets for certain products; and special offers are just some of the very many areas possible for testing and honing.

At SilverCloud we help banks and credit unions offer the best in customer service and experience. Through a Consumer Support solution that centralizes, manages, and deploys support answers and product content across existing web, mobile, and online banking platforms, SilverCloud provides a consistent and intelligent buying experience for the customer. Learn more about the solutions that are helping banks and credit unions provide exceptional customer service that translates into revenue, loan and deposit growth.

Impact of Information Technology in Indian Banking Industry

Banking industry is a backbone of Indian financial system and it is afflicted by many challenging forces. One such force is revolution of information technology. In today’s era, technology support is very important for the successful functioning of the banking sector. Without IT and communication, we cannot think about the success of banking industry, it has enlarged the role of banking sector in Indian economy. For creating an efficient banking system, which can respond adequately to the needs of growing economy, technology has a key role to play. In past 10 years, banks in India have invested heavily in the technology such as Tele banking, mobile banking, net banking, ATMs, credit cards, debit cards, electronic payment systems and data warehousing and data mining solutions, to bring improvements in quality of customer services and the fast processing of banking operation. Heavy investments in IT have been made by the banks in the expectation of improvement in their performance. But important in the performance depends upon, differences in the deployment, use and effectiveness of IT.

Information technology in banking sector refers to the use of sophisticated information and communication technologies together with computer science to enable banks to offer better services to its customers in a secure, reliable and affordable manner and sustain competitive advantage over other banks. The significance of technology is greatly felt in the financial sector in view of the competitive advantage for banks resulting in the efficient customer service.

In the development of Indian Economy, Banking sector plays a very important and crucial role. With the use of technology there had been an increase in penetration, productivity and efficiency. It has not only increased the cost effectiveness but also has helped in making small value transactions viable. Electronic delivery channels, ATMs, variety of cards, web-based banking, and mobile banking are the names of few outcomes of the process of automation and computerization in Indian banking sector.

Transformation of Indian Banking: -

Indian banking has undergone a total transformation over the last decade. Moving seamlessly from a manual, scale-constrained environment to a technological leading position, it has been a miracle. Such a transformation takes place in such a short span of time with such a low cost.

Entry of technology in Indian banking industry can be traced back during the 1990s, the banking sector witnessed various liberalization measure. One of the major objectives of Indian banking sector reforms was to encourage operational self-sufficiency, flexibility and competition in the system and to increase the banking standards in India to the international best practises. With the ease of licensing norms, new private and foreign banks emerged-equipped with latest technology. Deregulation has opened up new opportunities to banks to increase revenues by diversifying into investment banking, insurance, credit cards, mortgage financing, depository services etc. The role of banking is redefined from a mere intermediary to service provider of various financial services under one roof acting like a financial supermarket.

Important events in evolution of Information Technology: -

§ Introduction of MICR based cheque processing

§ Arrival of card-based payments

§ Introduction of Electronic Clearing Services

§ Introduction of RTGS/NEFT

§ Introduction of Cheque Truncation System (CTS) or Image-based Clearing System (ICS)

§ Introduction of Core Banking Solutions (CBS)

§ Introduction of Automated Teller Machine (ATMs)

§ Introduction of Phone and Tele Banking

§ Introduction of Internet and Mobile Banking

Recent IT Trends of Indian banks: -

The banking industry is going through a period of rapid change to meet competition, challenges of technology and the demand of end user. Clearly technology is a key differentiator in the performance of banks. Banks need to look at innovation not just for product but for process also.

Today, technology is not only changing the environment but also the relationship with customers. Technology has not broken barriers but has also brought about superior products and channels. This has brought customer relationship into greater focus. It is also viewed as an instrument of cost reduction and effective communication with people and institutions associated with the banking business. The RBI has assigned priority to the up gradation of technological infrastructure in financial system. Technology has opened new products and services, new market and efficient delivery channels for banking industry. IT also provides the framework for banking industry to meet challenges in the present competitive environment. IT enables to cut the cost of global fund transfer.

Some of the recent IT devices described as below: -

Electronic Payment and Settlement System – The most common media of receipts and payment through banks are negotiable instruments like cheques. These instruments could be used in place of cash. The interbank cheques could be realized through clearing house systems. Initially there was a manual system of clearing but the growing volume of banking transaction emerged into the necessity of automating the clearing process.

Use of MICR Technology – MICR overcomes the limitation of clearing the cheques within banking hours and thus enables the customer to get the credit quickly. These are machine – readable codes added at the bottom of every cheque leaf which helped in bank and branch-wise sorting of cheques for smooth delivery to the respective banks on whom they are drawn. This no doubt helped in speeding up the clearing process, but physical delivery of cheques continued even under this partial automation.

CTS (Cheque Truncation System) – Truncation means stopping the flow of the physical cheques issued by a drawer to the drawee branch. The physical instrument is truncated at some point on route to the drawee branch and an electronic image of the cheque is sent to the drawee branch along with the relevant information like the MICR fields, date of presentation, presenting banks etc. This would eliminate the need to move the physical instruments across branches, except in exceptional circumstances, resulting in an effective reduction in the time required for payment of cheques, the associated cost of transit and delays in processing etc., thus speeding up the process of collection or realization of cheques.

Electronic Clearing Services (ECS) – The ECS was the first version of “Electronic Payments” in India. It is a mode of electronic funds transfer from one bank account to another bank account using the mechanism of clearing house. It is very useful in case of bulk transfers from one account to many accounts or vice-versa. The beneficiary has to maintain an account with the one of the banks at ECS Centre.

There are two types of ECS (Electronic Clearing Service)

ECS – Credit – ECS Credit clearing operates on the principle of ‘single debit multiple credits’ and is used for transactions like payment of salary, dividend, pension, interest etc.

ECS – Debit – ECS Debit clearing service operates on the principle of ‘single credit multiple debits’ and is used by utility service providers for collection of electricity bills, telephone bills and other charges and also by banks for collections of principle and interest repayments.

Electronic Fund Transfer (EFT) – EFT was a nationwide retail electronic funds transfer mechanism between the networked branches of banks. NEFT provided for integration with the Structured Financial Messaging Solution (SFMS) of the Indian Financial Network (INFINET). The NEFT uses SFMS for EFT message creation and transmission from the branch to the bank’s gateway and to the NEFT Centre, thereby considerably enhancing the security in the transfer of funds.

Real Time Gross Settlement (RTGS) – RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a ‘real time’ and on ‘gross basis’. This is the fastest possible money transfer system through the banking channel. Settlement in ‘real time’ means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. “Gross settlement” means the transaction is settled on one to one basis without bunching with any other transaction.

Core Banking Solutions (CBS) – Computerization of bank branches had started with installation of simple computers to automate the functioning of branches, especially at high traffic branches. Core Banking Solutions is the networking of the branches of a bank, so as to enable the customers to operate their accounts from any bank branch, regardless of which branch he opened the account with. The networking of branches under CBS enables centralized data management and aids in the implementation of internet and mobile banking. Besides, CBS helps in bringing the complete operations of banks under a single technological platform.

Development of Distribution Channels – The major and upcoming channels of distribution in the banking industry, besides branches are ATMs, internet banking, mobile and telephone banking and card-based delivery systems.

Automated Teller Machine (ATM) – ATMs are perhaps most revolutionary aspect of virtual banking. The facility to use ATM is provided through plastic cards with magnetic strip containing information about the customer as well as the bank. In today’s world ATM are the most useful tool to ensure the concept of “Any Time Banking” and “Any Where Banking”.

Phone Banking – Customers can now dial up the banks designed telephone number and he by dialling his ID number will be able to get connectivity to bank’s designated computer. By using Automatic voice recorder (AVR) for simple queries and transactions and manned phone terminals for complicated queries and transactions, the customer can actually do entire non-cash relating banking on telephone: Anywhere, Anytime.

Tele Banking – It is another innovation, which provided the facility of 24-hour banking to the customer. Tele-banking is based on the voice processing facility available on bank computers. The caller usually a customer calls the bank anytime and can enquire balance in his account or other transaction history.

Internet Banking – Internet banking enables a customer to do banking transactions through the bank’s website on the internet. It is system of accessing accounts and general information on bank products and services through a computer while sitting in its office or home. This is also called virtual banking.

Mobile Banking – Mobile banking facility is an extension of internet banking. Mobile banking is a service provided by a bank or other financial institution that allows its customers to conduct financial transactions remotely using a mobile device. Unlike the related internet banking it uses software, usually called an App, provided by the financial institution for the purpose. Mobile banking is usually available on a 24-hour basis. Some financial institutions have restrictions on which accounts may be accessed through mobile banking, as well as a limit on the amount that can be transacted. Transactions through mobile banking may include obtaining account balances and lists of latest transactions, electronic bill payments, and fund transfers between a customer’s or another’s accounts.

Conclusion: -

Information Technology offers enormous potential and various opportunities to the Indian Banking sector. It provides cost-effective, rapid and systematic provision of services to the customer. The efficient use of technology has facilitated accurate and timely management of the increased transaction volumes of banks which comes with larger customer base. Indian banking industry is greatly benefiting from IT revolution all over the world.

Another concept i.e Virtual Banking or Direct Banking is now gaining importance all over the world. According to this concept Banks offer products, services and financial transaction only through electronic delivery channels generally without any physical branch. Owing to lower branch maintenance and manpower cost such banks are able to offer competitive pricing for their product and services as compared to traditional banks.

The Indian banks lag far behind the international banks in providing online banking. In fact, this is not possible without creating sufficient infrastructure or presence of sufficient number of users. Technology is going to hold the keys to future of banking. So, banks should try to find out the trigger of change. Indian Banks need to focus on swift and continued infusion of technology.

Unit IV

Today’s banking customers have their minds on their money and their money on their mobile devices. From prequalifying for a loan via a smartphone to exploring credit card options on a laptop, customers have fully embraced the convenience that the digital age has brought to the banking industry.

But with the ever-expanding number of options available, it’s not uncommon for customers to seek services from more than one bank. A homeowner could have their mortgage through one financial institution, a personal loan through another, and several credit cards through different banks and retail stores.

Because of customer demands and increasing competition, banks need to adopt a modern, customer-focused approach to service, making the importance of a CRM in the banking industry more valuable than ever before.

What is a CRM in the Banking Industry?

Customer relationship management (CRM) is a necessity in any customer-focused industry. For banks, it’s an especially useful tool for meeting sales and marketing goals and exceeding customer expectations.

CRM software is a tailored solution that helps banks implement customer-centric strategies. Under one system, bank tellers and employees can:

· Store customer data such as contact information, products used, and interactions.

· Schedule appointments, send personalized emails, and respond to social media posts.

· Update customer profiles in real time with notes or new information.

· Visualize, nurture, and manage leads in their sales pipeline.

· Create reports that analyze customer behavior, marketing campaign performance, and more.

Most notably, the ROI from a CRM speaks for itself. Nucleus Research found that for every dollar spent, a CRM pays back $8.71.

The Business Benefits of Using a Banking CRM

CRMs are important in every industry, but for banking in particular they can help organizations deliver more personalized customer experiences.

According to a global study of financial service customers, Accenture found that 67 percent are willing to provide more information to banks if it means they will receive new benefits and 71 percent said they would use entirely computer-generated support for their banking processes.

Since customers are ready and willing to share their information with their banks, there’s no reason not to implement a CRM that can achieve the following benefits:

1. Leverage a 360-Degree View of Every Customer
A banking CRM is a consolidated system that can integrate with your other banking software programs to provide a single view of every customer account. From making a deposit at an ATM to requesting information about a certain type of loan, every pre-determined action a customer takes can be recorded in your CRM. This makes it quick and easy to gain deeper insights into their habits and personal preferences, which can help you align certain products to their financial goals.

2. Improve Customer Retention
With customers opting for online banking solutions as opposed to in-person experiences, strategizing a way to foster long-term relationships can be difficult for many organizations. With a banking CRM, there is a great deal of data available right at your fingertips, which can be used to proactively deliver personalized services. Since your CRM enables you to record customer notes and personal information, you can enhance every experience. For example, if a bank teller adds a note to a customer profile that says they were asking questions about a certain type of loan, the loan department can follow up by emailing them helpful resources that explain their options. Showing your customers that you’re listening to them and making efforts to improve their experience at your bank is a strategic way to promote loyalty.

3. Enable Quicker Processes
With a single, unified system, any bank employee can access a customer profile to quickly get up to speed on an account. For example, if a customer contacts a call centre, the employee they speak with can make real-time updates to their profile in the CRM. When the customer visits their local bank branch, the bank tellers will be able to see notes from their interaction with the call center. This can eliminate any duplicate conversations and provide the bank teller with a holistic understanding of the customer’s situation.

4. Use Insights to Improve Sales and Marketing Efforts
The data in your CRM can be compiled into reports so you can gain a much deeper understanding of your customers. From there, you can identify trends, successful campaigns, and areas for improvement that will help you anticipate customer needs and tailor your future marketing efforts. You can also use the data in your customer profiles to pinpoint areas for cross-selling and upselling. For example, if a customer makes a deposit inside the bank, the teller can have a full view of their profile and notify the customer of new products they may be interested in or qualify for, such as a platinum credit card.

5. Make Your Staff More Productive
With all customer information available under one CRM system, there’s no need for employees to search through emails or check multiple platforms for the answer to a quick question. Repetitive administrative tasks are eliminated so employees spend less time scrounging through data and more time fostering client relationships. According to Nucleus Research, sales representatives saw a productivity increase of 26.4 percent when social networking and mobile capabilities were utilized in their CRM. Users can also access a CRM from any device, such as a laptop, desktop, or smartphone, meaning there’s no limitation to where and when data can be viewed.

Service Quality

Service Quality by its very nature is an elusive, abstract and indistinct concept. Consumers do not easily articulate their requirement; also, there are difficulties in delimiting and measuring the concept. A handful of researchers have operationalised the concept. The premises of ‘Quality of service’ as the competitive edge in gaining market leadership has been well recognized both in academic research and by leading service organisation. However, it has become increasingly important for organizations to find ways, not only to reach the top, but to maintain that leadership in ever increasing competitive market place. In order to protect their long-term interest, service organisations are seeking ways to forge and maintain service quality. The changing focus of service quality from a mere competing instrument to that basic core of service concept in meeting and exceeding customer expectation is an emerging important issue in service organization. Banking services is no exception. The banking industry, being very competitive, not only focuses on providing wide product lines to create competitive advantages, but also emphasizes the importance of its services, particularly in maintaining service quality.

MEASUREMENT OF SERVICE QUALITY

Always there exists an important question: “Why should service quality be measured?” Measurement allows for comparison before and after changes, for the location of quality related problems and for the establishment of clear standards for service delivery.

Numerous studies have sought to uncover the attributes of global service that contribute most significantly to relevant quality assessment in traditional service environment.

Grönroos (1982) found that “service quality” comprises of three global dimensions. They are as follows:

1. Technical quality (the outcome of service): This dimension refers to the outcome or what is delivered or what the customer gets from the service and is called Technical product. The quality in designing the Basic Service Package (BSP) is reflected in the technical quality of service.

2. Functional Quality (the process of service): Customers are also influenced by how they receive the service process. The way service processes are handled in a service encounter is called Functional Quality.

3. Image: These two-dimension s together determines the image of the service provider called Corporate Image. Most consumers will evaluate a firm by taking into consideration its resources, history and ways of operating service activities. Therefore, a firm’s image at the corporate is the Corporate Image.

The dimensions of service quality are as follows.

A. Tangibles

Includes Physical Evidence of the service. They are:

· Physical facilities

· Appearance of the personnel

· Tools and equipment used to provide the service

· Physical representation of the service

· Other customers in the service facility

B. Responsiveness

It concerns with the willingness or readiness of employees to provide service. The measure includes:

· Timeliness of the service

· Mailing transaction slips immediately

· Efficient customer support

· Giving prompt service

C. Reliability

It involves consistency of performance and dependability. The important measures of reliability are:

· Performance of the initial service

· Accuracy in billing

· Keeping records correctly

· Performing the service punctually

D. Assurance

Assurance includes

· The knowledge of Employees

· The courtesy of contact person

· Their ability to convey trust and confidence

· Assuring the customers that the problem will be solved

E. Empathy

The important measures of Empathy are

· Learning customer’s specific requirement

· Providing individual attention

· Consideration for customers.

The above-mentioned dimensions are evaluated based on the Customers Expectations and Perceptions. Service quality is a measure of how well the service level delivered matches customer expectations. Delivering quality of service means conforming to customer expectations on a consistent basis. Fein burg and de Ruyter (1995) supported this idea as they postulate that the dimensions are instruments for measuring perceived service quality. They also posit that consumer-perceived service quality is usually seen as a multidimensional construct.

Organizing for service leadership

In a world that's moving faster and faster, with disruption around every corner, playing it safe is a very risky strategy: $41 trillion in enterprise value is already exposed to disruption. So to win big, organizations of all types must make a shift toward more flexible, networked structures to remain competitive, particularly in the wake of market turbluance caused by Covid-19 ambiguity.

Once achieved, the new dynamics of autonomy and alignment enable a positive change in the relationship between an organization and its employees and teams.

When small teams within an organization are self-organizing and driving innovation and improvement through customer interactions, leadership can focus on providing clear strategic intent and direction, providing a guiding light for its agile teams to follow. Think of the leading boat of a flotilla of small, maneuverable ships.

This networked structure, as opposed to a single hierarchical structure, enables more collaborative working both within and between teams, concludes David Cobb, an author, speaker, and lecturer in talent management, innovation, and leadership. His insight on this matter has been synthesized into a model he's constructed called the 'Broken Triangle.'

The Broken Triangle Model created by David Cobb

The model illustrates an organization that communicates company goals and encourages co-operative working to achieve them.

‍‍1. Co-operative working is recognized rather than individual effort.

2. Individuals are encouraged to learn that personal satisfaction comes from co-operative working.

3. Individual rewards are determined from contributions to the group effort.

4. There is no route to contribute to company goals other than through co-operative working.

5. There is no recognition or reward other than through co-operative working groups.

‍

A New Model for Leaders

Of course, you still need managers - you still need rules. The world hasn't changed that much yet. However, in more flexible organizational structures, managers become enablers rather than enforcers. They become people who remove impediments rather than create them through bureaucratic practices.

Shutting down debate and collaboration creates a blinkered vision and a limiting approach - one that reduces cognitive diversity and increases supremacy. And while some leadership thinkers lack ambition and remain fixated on outdated ideology, most, somewhat refreshingly, are looking to progress their outlook. They welcome democratizing decision-making by engaging people in designing solutions - and this gives companies a competitive edge posits Rita Trehan, the former Fortune 200 Chief Human Resources Officer turned global HR and transformation advisor.

Therefore, the challenge is to become an enabler and a catalyst of the network between customer-employee-organization: providing an ecosystem for positive engagements - a 'platform' concludes Cobb. Hence, the key to the successful leadership of agile organizations is striking a balance between alignment and empowerment.

He agues that 'Alignment' can be overused in organizations as a byword for top-down direction. Thus the solution for this is creating an orientation based on values, strategic intent, and creating customer value. Articulated well and with consistency, these three elements create a shared purpose within the agile organization. And in these progressive organizations, Robert Greenleaf's 1970's concept of Servant leadership is back in fashion, and for a good reason.

But "Servant leadership is often misconstrued as being soft or overly idealistic," says Cobb. That is far from the case. It's actually about inverting the pyramid of importance and status within an organization so that the entire organization is focused on supporting customer-facing teams, and so the customer. It is a much more effective model for leading the types of organizations that win in the new economy.

It is also a concept that fosters collaborative working, supplants individualism, and supports collectivism, enabling autonomy towards a common purpose.

'Service leadership' is a more appropriate term, because Servant leadership, when applied throughout an organization, creates a service culture, concludes Cobb. And so, this is the ultimate goal; achieving a customer-focused, an agile organization comprising an interdependent and connected network of small teams, relentlessly pursuing increased customer value through rapid development cycles, unencumbered by hierarchy or bureaucracy and led by managers that promote a service culture through collaborative working and rewarding collective achievement.

The financial and economic impact of service

Virtually all companies hunger evidence and tools to ascertain and monitor the payoff and payback of new investment in service. Many managers still see service and service quality as costs rather than as contributors to profit, partly because of the difficulty involved in tracing the link between service and financial returns. Determining the financial impact of service parallels the age-old search for the connection between advertising and sales.

Service quality’s result’s — like advertising’s results — are cumulative, and therefore evidence of the link may not come immediately or even quickly after investments. And like advertising, service quality is one of many variables — among them pricing, advertising, efficiency, and image — that simultaneously influence profits.

1. Service and profitability

Sales have traditionally been a numbers game. A better profit margin was just a matter of selling as many units as possible. However, modern customers want to have a deeper relationship with businesses. This is especially true of younger customers such as millennial’s.

Every customer knows how frustrating calling a company can be. This is especially true if they must be transferred to multiple departments and workers. Dedicated customer service can provide consistency for the customer. This means fewer transfers and quicker resolution of problems. Customer service can also use different remote access applications to provide seamless technical support. This establishes your business as one that cares about customer satisfaction. Satisfied customers are much likelier to return to do more business. This helps build your brand and grow your profits. Even for small and medium-sized businesses in Canada (SMBs), customer service probably feels expensive at times. There’s equipment and applications you need to acquire, people you have to train, and other resources that are all relegated to dealing with unexpected but desperately urgent needs from your customers.

2. Defensive marketing effects of service

Defensive marketing strategies refer to the actions of a market leader to protect its market share, profitability, product positioning, and mind share against an emerging competitor. If not undertaken, some amount of customers will leave the established business in favor of the competitor.

New customers are often unprofitable for a period of time after acquisition. In the insurance industry, for example, the insurer does not typically recover selling costs until the third or fourth year of the relationship. Capturing customer from other companies also an expensive proposition.

The money company makes from retention comes from four sources:

· Costs

· Volume of purchases

· Price premium

· Word-of-mouth communication

The defender may own the perception of “heritage” in the customer’s mind — but may also be stuck with that label despite massive advertising outlays aimed at changing it.

Lower Cost: The market leader may have to reduce its own prices (and profits) in order to prevent customers from defecting to the competition. This is particularly important when the threat comes from a lower-priced product. However, this strategy can also be used against a similarly priced product advertising some other feature, as long as the savings in price are perceived by customers to be of more value than that feature or quality.

Volume of purchase: Customer who are satisfied with a company’s service are likely in increase the amount of money they spend with that company or the types of service offered. A customer satisfied with broker’s services, for example, will likely invest more money when it becomes available.

Price premium: Most of the service quality leader in industry command higher prices than their competitors: FedEx collects more for overnight delivery than the U.S Postal Service, Hertz rental car cost more than Avis cars, and staying at the Ritz-Carlton is a more expensive undertaking than staying at the Hyatt. Therefore, offering high service quality often pays for itself in price increase.

Word-of-mouth Communication: Because word-o-mouth communication is considered more credible than other source of information, the best type of promotion for a service may come from other customers who advocated the service provided by the company

3. The key drivers of service quality, customer retention, and profits

Understanding the relationship between overall service quality and profitability is important, but it is perhaps more useful to managers to identify specific drivers of service quality that most relate to profitability. Doing so will help firms understand what aspects of service quality to change to influence the relationship and, therefore, where to invest resource.

Most evidence for this issue has come from examining the effect of specific aspects of service on overall service quality, customer satisfaction, and purchase intentions rather than on financial outcome such are retention or profitability.

4. Company performs measurement

Traditionally, organization have measured their performance almost completely on the basis of financial indicators such as profit, sales, and return on investment. This sort-term approach leads companies to emphasize financials to the exclusion of other performance indicators. Today’s corporate strategists recognition came when many companies strong financial records deteriorate because of unnoticed decline in operational processes, quality, or customer satisfaction.

· Changes to financial measurement: One way that service leaders are changing financial measurement is to calibrate the defensive effect of retaining and losing customers. The monetary value of retaining customer can be projected through the use of average revenues over the lifetime

· Customer perceptual measures: Customer perceptual measures are leading indicators of financial performance. Customers who are not happy with the company will defect and will tell others about their dissatisfaction. Perceptual measures reflect customer beliefs and feelings about the company and its product and services and can predict how the customer can behave in future.

· Operational measures: Operational measures involve the translation of customer perceptual measures into the standard or actions that must be set internally to meet customer’s expectation. Although virtually all companies count or calculate operational measures in some form, the balanced scorecard requires that these measures stem from the business process that have the greatest effect on customer satisfaction.

· Innovation and learning: The final area of measures involve the translation of customer perceptual measures into the standards or actions that must be set internally to meet customer’s expectation. Although virtually all companies count or calculate operational measures in some form, the balanced scorecard requires that these measures stem from the business processes that have the greatest effect on customer satisfaction.

· Effective non-financial performance measurement: According to field research conducted in 60 companies and survey responses from 297 senior executives, many companies do not identify and act on the correct non-financial measures. One example involves a bank that all customers, including those who banked by phone or ATM, a policy that caused some branch managers to offer free food and drinks in order to increase their score. According to the authors of the study, companies make four major mistakes:

1. Not linking measures to strategy

2. Not validating the links

3. Not setting the right performance strategy

4. Measuring incorrectly

“In business, the idea of measuring what you are doing, picking the measurements that count like customer satisfaction and performance… you thrive on that.” — Bill Gates

Marketing of Banking Services M.Com BI 08 Notes

4. Perishability:

5. Changing demand:

6. Pricing of services:

7. Direct channel:

Problems in Marketing Services:

Types of Services

Difference between Goods and Services

Gap Model of Service Quality

Perception

What are Customer Expectations?

What are Customer Perceptions?

he Five GAP Model of Service Quality

Segmentation, Targeting and Positioning (STP) Model

What Is the STP Process in Marketing?

Applying the STP Model

Step 1: Segment Your Market

Step 2: Target Your Best Customers

Step 3: Position Your Offering

The Advertising Element

Personal Selling and Direct Marketing

Discounts and Promotions

Public Relations and Messaging

Direct Marketing to Targeted Customers

Event Sponsorship and Having a Presence

Definition of Financial Services:

Functions of Financial Services:

Characteristics and Features of Financial Services:

Customer-Specific:

Intangibility:

Concomitant:

The tendency to Perish:

People-Based Services:

Market Dynamics:

The Scope of Financial Services:

Traditional Activities:

A. Fund based activities:

B. Non-fund based activities:

They include:

Modern Activities:

More things…

Banking and E-Banking

Banking

Types of Banks

Functions of Banking

1] Accepting Deposits

2] Lending Activities

3] Cheque Facilities

4] Allied Services

e-Banking

Retail Banking

Products offered by retail banks

Other types of banking

2. Allow Consumers to Self-Service

3. Stay Consistent Across All Touch Points

4. Educate Your Customers on Financial Literacy

6. Become An Advisor, Not Just a Lender, For Small Businesses

Impact of Information Technology in Indian Banking Industry

The financial and economic impact of service

1. Service and profitability

2. Defensive marketing effects of service

3. The key drivers of service quality, customer retention, and profits

4. Company performs measurement

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