Introduction

Indian banking sector has been growing constantly. As a result, there has been a huge upsurge in
ATM transactions and also in internet and mobile banking. Banking Laws (Amendment) Bill
passed by the Indian Parliament in 2012, has changed the banking landscape in the country. It
allows the Reserve Bank of India (RBI) to prepare guidelines to issuing new banking licenses.
The sector is expected to create up to two million new jobs.
Total banking services sector assets in India has touched US$ 1.8 trillion in FY13 and are
expected to cross US$ 28.5 trillion by 2025. Bank deposits have also grown at a CAGR of 21.2%
over FY0613. The banking sector credit is expected to grow at a CAGR of 18.1% and reach to
US$ 2.4 trillion by 2017.

HDFC Bank
HDFC Bank Ltd. has become the largest private sector bank in India in terms of Market
capitalization after surpassing ICICI bank. The brand with a worth of US$ 9.4 billion is in the list
of top 50 most valuable Indian Brands. State Bank of India (SBI) is the only public sector bank
to appear in this list. The company primarily operates in following business segments:
a) Wholesale Banking
b) Retail Banking
c) Treasury
d) Other Banking businesses

Unique Aspects of the banking Industry

Banking industry has evolved over the time in India. Form being limited to just deposit and
withdraw activities banks now offer a wide variety of the financial services. The Globalization,
technological innovations has shaped the industry for good. Following are some the aspects
which are unique in banking industry.
1. Services like ATM, Internet banking, RTGS, NEFT has made the banking more efficient
and fast.
2. Cross selling opportunities are wide in the banking with the number of financial
instruments available is large.
3. The consolidation of all these services can be integrated with one banking account, a
unique proportion.
4. The Mobile wallet , Mobile banking , Social media banking are some of the latest
innovations in the banking which are quite unique since they offer alternative channel of
banking with ease , efficiency and at very low cost.
5. The quantum of losses are highest in the banking industry and banking industry affects
the entire countrys economy unlike any other sector.

Prerequisites for Effective Marketing

Banking operations are becoming customer oriented with each passing day. Banking
supermarket which offers one-stop for all integrated financial services is rising exponentially.
The ability of banks to offer clients access to several markets for different classes of financial
instruments has become a valuable core-edge. Convergence in the industry to cater for the
changing demographic expectations is now more evident.
Banking business is the business of receiving money on current or deposit account,
paying and collecting cheques drawn by or paid in by customers, the making of advances to
customers, and includes such other business as the authority may prescribe (Wikipedia.org).
Banking services designed are quite similar and easy to copy or emulate, thus banks try to
differentiate themselves on the cost which is never sustainable as the consumers are cost
conscious and likely to go with the bank providing cheaper services. Hence, it becomes

imperative for new age banks to design and market products and services which are innovative.
Today, the banking industry has become extremely competitive, where banks are not the only
players. Even other financial institutions are also competing in that same space. Therefore,
marketing of bank products to attract new customers and retain old ones is potentially an
effective tool that banks can use to gain strategic advantage and service in todays everincreasing banking competitive environment.
Marketing of bank products and services makes sense because it helps to attract new
potential banking customers. Though, it is economical to maintain relation with old customers
then to attract new ones. This happens because the expense in customer acquisition is incurred
only in the beginning. As the relationship grows, old customers buy more and, if satisfied,
generate positive word-of-mouth promotion for the company. Additionally, these customers take
less time to carry out transactions as they have faith in the bank and are less price conscious.
With the significant increase in worlds population and the ever increasing demand for
banking services, following parameters would be the key for a Banks success:

Speed

Service
Quality

Customer
Satisfaction

Portfolio of
services
offered

Satisfied customers are always good for a service company as they bring multiple opportunities
of doing future business. Banking companies which are serious about business find value in
keeping a track of customer satisfaction. They perceive this as a strategic success indicator.
Customer satisfaction now a days is being measured through NPS (Net Promoter Score) which

can easily tell about the positive and negative sentiments customers have for a particular
company or brand.

Banking Sector Overview

The total banking asset in India at present is $1.8 trillion.

The total deposit in the banking sector in the FY-13 were approx. $1.3 trillion. The
deposit growth has been CAGR of 21.2 % annually between 2005-2013.

The total banking sector credit is expected to grow at a CAGR of 18% to reach $2.4
trillion by 2017.

The total share of banking sector in total banking and financial sector employment has
been 27.5%

The total number of scheduled commercial banks in India is 157.

Indian Banking Structure

Top five Govt. banks by Market Capitalization and by Net profit

By Market Capitalization (USD Billion)

By Net profit (USD Billion)

Top five Private Banks by Market Capitalization and by Net profit

By Market Capitalization (USD Billion)

By Net profit (USD Billion)

Growth Pattern

The sector is witnessing a tremendous

Growth and the contribution to GDP has been increasing by the day. Two of the indicator if this
phenomenon is Deposit to GDP ratio and Credit to GDP ratio.
As we can see from the graph the Deposit to GDP has increased by 10% from FY07 to FY13.
The aggregate deposit to the percentage of GDP has increased to 67% from 61%. These
improvement can be attributed to the demand from the retail customers.
The Credit to GDP has been increased by 17.7% from 45 to 53.This indicates the enhanced
landing to industry from SCB. The branch network is also growing owning to financial inclusion
mandate and demand from the rural and semi-urban sector. The private sector banks are
increasing at a faster rate (7.1%) compared to public sector banks (-1.1%).The proportion of
branches opened in unbanked center has witnessed a great growth owing to aggressive rural
expansion by private sector banks.

Key Trends
1. Focus on rural markets and emerging sectors: With the increase in the disposable
income in rural India and rising aspiration of the people banks are now looking at the

rural for the next generation of growth where untapped potential is high. Apart from this
the banks are also sharpening their focus on the emerging sectors like education, IT,
healthcare etc.
2. Shift to fee based business model: For the improvement in margins banks are leveraging
the opportunities of cross selling like insurance. Many banks has started tie-up with
insurance majors like PNB with Metlife etc. Apart from this mutual funds, credit cards
has been another focus area.
3. Digital technology and innovations: With the advent of digital age banks are
increasingly putting more and more emphasis on the digital network which promotes
transparent practices. RBI has also decided to set up India based payment system which
will facilitate utility bill , school fee , medical bills payment through bank account
4. Increase focus on the mobile banking: With 900 million mobile connection and 50
million smart phones in the market the potential for mobile banking is enormous. Banks
are increasingly adopting mobile based channels to lower the cost and increase the
efficiency.

Customers Needs
1. Reachability and accessibility: When it comes to the most important need, accessibility
is the most important sector. Considering the diverse geography of the India, its very
difficult for the banks to establish branches in every nook and corner. However with 60%
of our population in the rural sector, accessibility is the first step towards availing the
service.
2. Efficiency: most the customers hates to stay in the quaue for the long hours for the very
mundane tasks like withdrawing the money, money deposit, balance enquiry etc. Hence a
quick and fast way to perform these activities are the basic needs of the customers.
3. Hours of operation: With a large portion of the population availing the banking service
are employed somewhere and for the small activities they need to take the leave from the
work because by the time their working hours gets over the banks are closed. Therefore
the hour of the banks needs to increase, may be through shift system or by some other
means.

4. Less paper work and easy processes: Most of the customers complaints that the paper
work is huge in banks even for small tasks and when it comes to loan disbursal the
process is a nightmare for any normal citizen. Therefore the process should be simplified
and the amount of paperwork involved should be minimized.
5. Educating the customers about the new services and offerings: Many of the customers
doesnt even know the offering provided by the banks and in this way they are not
availing the services which could be mutually beneficial for both the customers and the
banks. Therefore bank need to inform and educate the customers periodically about the
new offerings.
6. Digital services: With as many as 900 million mobile subscriber the consumer want to
take full advantage of the benefits which mobile technology offers. Customer wants easy
to use mobile solution for their banking needs.

Environment of the banking service business

The banking industry is growing a very healthy pace in India. Some of the factors which can be
attributed to this growth in the banking sector are following.

Innovation in service

Robust Demand
Increase in the working population and rise in
the disposable income will rise demand for
banking products.
Rural markets are expected to bring the
growth momentum back for the banks.
Housing and personal finance will remain a key
demand area for the banking services.

Mobile , internet banking , RTGS , NEFT , ATM

etc will bring a revolution in the banking
services in india.
The alternet channel of banking like kiosk ,
branchless banking etc will create more
opportunities for the banks to serve the unbanked populations.

Advantage
India

Business fundamental

Policy Support

Rising fee income will increase the revenue for

the banks

Wide policy support by the govt. to strengthen

the banking system

High economic growth , robust demand , lower

npa and high interest margins will ensure that
the fundamentals

Increase in the participation by the private

players will also ensure that there is enough
liquidity in the system

Marketing Implications for Existing and New Players

All the players in banking services sector face severe implications of effective or ineffective
marketing. But, they differ for different type of player. All the banks, be it a private or public
sector bank, are trying to woo customers with their services and product portfolio. The existing
players which are mostly Public sector banks are now losing out on their customer base due to
heavy competition. Existing players had the advantage of closed economy due to which they
operated for decades with minimum competition. But, with liberalization and participation of
private sector banks and foreign banks, the bar for customer service has been raised. Public
sector banks are finding it very difficult to transform themselves to remain competitive and
sustain in this new market.
While private banks have used marketing mix to advertise their services and differentiate
themselves from other banks, public sector banks are still catching up. ICICI bank coming up
with series of advertisements with tagline Khayaal aapka emphasizing their focus on
customer service is one such example. Even young players like Kotak Mahindra bank have
realized the importance of marketing mix. Hence, they are differentiating themselves on
Interest Rates provided. They are also trying to reach to the customers by opening new
branch and ATMs in all major cities and towns.