Branding Banking Products and Services

BBRANDING BANKING PRODUCTS AND SERVICES Table of Contents Executive Summary………………………………………………………………………………………………………………… 3 Business Case for Brand ………………………………………………………………………………………………………….. 4 Elements of branding ………………………………………………………………………………………………………….. 4 Importance of branding ………………………………………………………………………………………………………. Consumer banking ……………………………………………………………………………………………………………… 4 Corporate banking ……………………………………………………………………………………………………………… 5 Brand management checklist ………………………………………………………………………………………………. 5 Branding in Banking ……………………………………………………………………………………………………………….. The main Challenges in Branding ………………………………………………………………………………………….. 5 Branding of Bank of Baroda …………………………………………………………………………………………………….. 6 The brand index …………………………………………………………………………………………………………………….. 7 Pros and Cons of Bank Branding ………………………………………………………………………………………………. Branding- From Bank to Products and Services ………………………………………………………………………….. 8 Marketing mix ……………………………………………………………………………………………………………………….. 8 People ………………………………………………………………………………………………………………………………. 9 Process ……………………………………………………………………………………………………………………………… Physical appearance……………………………………………………………………………………………………………. 9 Priority Banking Branding Programs of Standard Chartered ………………………………………………………. 10 Advertisement Strategy ………………………………………………………………………………………………………… 10 Bringing Ads to Home ……………………………………………………………………………………………………….. 0 Conclusion …………………………………………………………………………………………………………………………… 11 Appendix …………………………………………………………………………………………………………………………….. 13 Executive Summary Branding of banking products and services has become essential in an unregulated world with customers being very discerning before opting for any particular product or service.

Through the course of this report, we look at the importance of branding for any organisation and extend that to the banking sector. We trace the evolution of branding of banks in India and look at certain branding stories. We also look at the fundamental differences that exist between the branding of banking products and services in more mature markets and India and look at Standard Chartered and HSBC. The appendix to this report contains the transcript of an interview with Mr. Dheeraj Ahluwalia, Head, Consumer Banking, Standard Chartered, India. Business Case for Brand Elements of branding

Brand is defined as name, term, design, symbol, or combination of these elements that identifies a business, product, or service and distinguishes it from its competitors Trade name also known as corporate brand is a phrase or symbol that identifies and promotes a company of a particular corporation. Brand equity is defined as value of a product. It? s the difference between prices paid for the product because of being of a particular brand Importance of branding Branding is a relatively new concept for the financial industry. They are slowly realizing that they need to manage their strategic assets, too.

Consumer and wholesale markets are saturated branding becomes a deciding factor. There is an increasing onus on each brand? s to differentiate. Consistent brand experience prevents customers from switching to rival banks thus customer retention costs decreases. Consumer banks invest more in marketing activities than their wholesale counterparts. Latest trends in developing world, the emphasis is on trustworthiness and for financial strength and stability. But all the investment made in branding is taken well care of, brand Scorecards to track and correlate the impact of marketing expenditure with business performance ?

Confirms your credibility: Branding confirms the credibility. So that next time when consumer goes to market he will ask for the same product with its brand name not the generic name. ? Connects your target prospects emotionally: Consumers get emotionally attached to the product due to its brand ? Motivates the buyer: Brand name creates an intrinsic motivation to buy that product again and again ? Concretes User Loyalty: Consumer gets loyal by using the product again and again ? Strategic Resource: Brand helps in lowering customer acquisition costs ?

Increase in profitability: Allows banks to charge premium on their products Consumer banking In consumer banking functional drivers of demand, like the quality of product and service, are the start point for customer choice. For most complex and high-value products, consumers prefer a face-to-face exchange, a fact that is reflected by many leading banks returning to their retail branch roots. Increasing consumer access to the internet allowing potential customers to compare and review a wide range of financial products means that price and product fundamentals are scrutinized in more detail.

But for the majority of consumer? s image attributes often swing the final decision. Corporate banking A business-to-business purchasing decision should theoretically be more rational and informed than a consumer purchasing decision. However the brand and reputation are still extremely important. In our experience „hygiene factors? include price and technical capability. But the two most significant drivers of demand in business banking are personal relationships and brand reputation. This is because a degree of practical competence is assumed to be present across the competitor set.

A typical brand valuation analysis would incorporate data sets taken from market research including areas such as relationship depth, product penetration, and share of mind, satisfaction and quality indices and an assessment of recent marketing activity Brand management checklist How strategically a bank values and manages its brand can be found by getting simple answer to these questions. ? ? ? ? ? Do you know what you want your brand to stand for? Does the message your clients receive reflect your brand Do the messages your employees receive reflect your brand?

To what degree are the interactions with your clients guided by brand Is brand incorporated in organizational decision-making? Branding in Banking Banking is unique in its nature as a service. This service in its very basic nature, a customer places his or her money with a bank without any collateral security in return. Therefore the whole service offered by banks lays its foundation on trust. A bank earns its income based on the spread. This spread refers to the differential between the rate at which a bank accepts unsecured deposits from the general public and the rate at which it ends. Higher the spread, higher will be the profits of the bank. The bank also has to ensure to generate a minimum volume of deposits and move a substantial volume of credit in order to maintain reasonable levels of profits. Other sources of revenue for a bank include fee based incomes from activities such as Wealth management, Demat services, Bill payment services, escrow account services, foreign exchange services; ATM services and so on and so forth. Unless and until the customer trusts the bank completely, he or she will never use these services.

Therefore building trust with the customers, potential users of the bank? s services is one of the most important functions of a bank and that is accomplished through proper branding. The main Challenges in Branding ? Brand relevance is difficult to maintain with so many client types ? ? A firm faces the challenge of staying relevant to its many different types of clients in the financial services world. Banks serve a variety of clients with differing needs, which in turn makes it difficult to build a brand that is relevant to all groups.

For customers with high degree of experience and knowledge in financial services the brand is a status symbol . For more traditional customers with low experience in financial services, the brand reflects personal confidence and trust. The fundamental challenge for brand management lies in the management of customer segment specific marketing strategies without diluting the overall brand value. Difficulty in Differentiating on the basis of product offerings Product innovations in financial services are short-lived since it is relatively easy to copy new product offerings.

There is not much scope for differentiation in terms of services that banks offer. The nature of the depository services and loan services in terms of interest rates offered is more or less identical across all, with all the banks sharing their ATM networks, the ATM penetration too, is no longer a differentiating factor. Even the foreign exchange services are identical across banks. Difficulty in managing client /advisor relationship Difficulty in differentiating based on product offerings elevates the importance of the client /advisor relationship as the driver of client loyalty.

It creates another challenge for banks since the most influential way of reaching the client is actually the most difficult to manage. As a result, financial services firms face the challenge of managing the process of educating client advisors and other staff who have direct contact with the client, to ensure that they deliver a consistent, branded experience. Branding of Bank of Baroda Before Branding: ? Share in deposits fell from 5. 07% to 4. 07% ? The bank? s logo, had virtually no recall value ? Economic Times brand survey: bank was not among the top 150 brands of India ?

Products per customer ratio at BOB was 1. 16 while the global best practice was 4 Branding: 3 pronged strategy: ? Brand ambassador: Rahul Dravid ? New tagline „India? s International Bank? ? Logo was modified Post Branding: ? Rahul Dravid cricket bats and souvenirs were given to customers ? Products per customer ratio became 3 ? Economic Time BOB ranking had improved to 20th among service brands ? In 45 days, 1. 2 million new accounts opened & INR 6. 5 billion was mobilized The brand index It is expressed on a scale of 0 to 100. It quantifies the strength of the bank’s brand relative to its main competitors.

Each competitor is scored out of 100 on each chosen attribute. The attributes are weighted and aggregated into an index for each brand. Pros and Cons of Bank Branding ADVANTAGES 1. Brand Differentiation: Due to the High and trusted brand this company scores over the competitors 2. Creates Brand Personality and Identity: E. g. Bank of Baroda rebranding helped it to get associated with young crowd 3. Premium Charges: With this banks can charge more for its product and services than the competitors 4. New products with same brand name: Leverage on the value and trust they have in the market 5.

Competitive advantage: Even if the competitors are selling the same products and services DISADVANTAGES 1. Cost: Requires a lot of advertising and PR over a long period of time, which can be very costly 2. Impersonal: poorly designed branding could give customers the impression of lost personal touch 3. Fixed Image: If the brand is focused too strongly on one product, it can limit the ability to sell other products. Time Scale: Need to promote the brand for a considerable amount of time before it will become well know 4. Branding- From Bank to Products and Services

Marketing spends as a percentage of PAT are on the rise for all banks. This is in line with the increased competition in this segment with the entry of more foreign and private banks. Greater emphasis is on differentiation in value offerings rather than capturing simple mindspace as a banking group as a whole. New avenues of branding and marketing opening up as more channels of banking open up. Internet and mobile banking and the increasing stress on financial inclusion means there is a vast market to be explored provided the scales are met. Banks? e-commerce facilities are becoming a critical part of their brand equity.

This change in approach from branding the bank as a whole to branding products and services is best exemplified by SBI. Their initial communication was veered towards patriotism with the favourite Indian bank being captured through the following themes: • • • • With you all the way Pure banking nothing else The Banker to every Indian The Nation banks on us This has gradually given way to greater focus on products and services with education loans, mobile banking and green banking initiatives the thrust of recent campaigns. Marketing mix When we talk of product companies the marketing mix consists of 4P? – Product, Price, Place, promotion. Packaging for some time now is making strong claim to be the 5th P. But in the services industry in absence of physical product the marketing mix composition is changed to have People, Process and People. People Any bank biggest asset is its employees. They are the real interface of bank with the customer . The capability of human resource is major determinant in the success of bank. The sterling performance of HDFC bank is many times attributed to Ketan Parekh charismatic leadership. It? s not that only the ability of CEO is important but quality must be reflected throughout the organizational level.

Industry expert argue that the phenomenal success of YES bank a young private player is attributed to quality of its team. It will not incorrect to say that marketing act as differentiator in commoditized financial product market where there is not much difference in the product offering. And people are the vehicles through which marketing promise is delivered. If this promise is kept the bank will have an ability to keep customer engaged and maintain a healthy customer relationship. Process With the advent of foreign bank cutting edge western technology has also entered India.

The banking process is going a realm of changes. Gone are the days when we had to wait for days to get a saving account opened. Now banks are coming with service levels which has self-imposed penalty . For e. g. Standard Chartered bank pays its customer Rs 500 if there is delay of more than half an hour in opening a saving account. We should also not forget that many of the loans such as auto loans are sourced to bank by dealer. A simple and fast process which gives minimum Turnaround Time (TAT) is the biggest differentiator in the market. The computing facilities at disposal today enable personalized services like client? expenditure profile for his credit card spends giving the percentage of spend in grocery, entertainment, garment,jewellery etc. All these have to be backed by robust processes at backend. Physical appearance Today banking is not transaction but an experience. The physical setting of the bank has changed from what it used to be before. Gone are the days of dark den bank branches with walls littered with “Pan Spit”. Now we are in era of branches flaunting luxury sofas, coffee vending machine and similar such assortments. Another thing which we will increasingly see in India is the friendly design for physically challenged people.

So the banks now attempt to project itself caring as well as trendy . The physical change reflects that no bank want to be considered as archaic in the market Priority Banking Branding Programs of Standard Chartered The bank also tries to emotionally connect with its premium customer by establishing contact outside the banking premises . Some of the customer delight program which standard chartered has undertaken in recent time are briefly described below ? ‘Cirque Selecte’ Priority banking customers are invited to event according to their preferences in sports, music, dining, literature and entertainment.

Few examples are Shankar Mahadevan concert, golf competition, Mumbai marathon etc. The attempt is to create memories in the customer mind. ? ‘Money Talks’ are seminars on financial and investment-related subjects, giving customers a platform for interacting with eminent personalities from the world of finance. ? ‘E-$aver Account and Marathon Savings Account’ Priority customers enjoy an interest rate as attractive as that of time deposits while enjoying the transaction convenience and the flexibility to withdraw the money anytime ? Exquisite Audemars Piguet Launch’ Co-sponsored by SCB International Banking and The Peak Malaysia every year, preferred clients are invited to this high profile, posh cocktail event. Again it is to associate with the customer mind in a positive way Advertisement Strategy The banking sector? s advertisement market in UK was worth ? 83m in 2010. The same pattern is seen across the globe. For example Japan market grew 3X to ? 610m from 2007-2010. Now the print media ads are appearing in electronic media via internet advertisements on web through computers and tablets and also smart phones.

Ads which appeared on glossy magazine appear on tablets. Applications cum ads are tailored for android based phone and blackberry. Federal Bank is seen spending heavily in promotional activities. They are sponsoring Marathons and also they are main sponsors of Kochi Tuskers (IPL TEAM). Bringing Ads to Home Use of TiVo and similar devices has resulted in customer skipping ads can be considered as possible threat for the same. But collaboration with electronic manufactures to have in built ads may be a viable option in which these ads are like screen saver in the same way bank logo can be integrated with the UID of the device.

Occupying the consumer mind space and thus influencing them emotionally in making financial decision. Conclusion Thus we see how the banking space still has a long way to evolve when it comes to branding activities. By the very nature of the industry, such activities are highly important given the reluctance to switch. Messages that are conveyed need to be consistent and at the same time instil confidence in the customer. The coming decade is likely to witness many innovations in this space with the RBI likely to ease restrictions on foreign banks in India and also because of the increased competition prevalent in this space

Appendix Interview with Mr. Dheeraj Ahluwalia, Head, Consumer Banking, Standard Chartered, India Team: Sir how do you define your customers at a broad level? Sir: Well, Customers can be broadly divided into two segments:1. Bankable customer 2. Non Bankable Customer For bankable customer, branding matters a lot. They see the differences in terms of quality of service being provided to them, and the value proposition of products being offered. In a country like India, high level of emotional quotient is involved when it comes to selection of a bank.

People choose the one which is in vicinity, the one in which he or she has other family members’ account. For non-bankable customers, banks reach them through CSR, priority sector lending etc. Rural sector has great potential to achieve economies of scales and to make banking sector viable and sustainable. They might not know about processes, or the balance sheet of a bank. But they can associate themselves through logo, slogan and benefits they get through banks. Team: How did the financial crisis change the strategy in terms of