Phases in Marketing
1. Phases in Marketing
Through the continuous modification and rectification in banking and implementation of financial sector reforms as per the recommendation of the committee on Financial system the functioning of banks in India has undergone dramatic changes. Starting from very conservative traditional banking where the service of banks was confined to a few in the society, now due to liberalization and privatization, a Uturn has taken place in Indian banking. The hallmark of the changed concept aimed at having a full view of customersneeds. That is, fulfilling the identified needs in the best possible manner by required service. These splendid changes have three phases.
Traditional banking period
Development banking period, and
bank marketing period
12.1 Traditional Banking
This period is also known as Pre-nationalization period. The basic symbol of this period was strong accounting orientation of bankers down the time. In other words, meticulous maintenance of accounts books and an inward-looking approach in transacting business with the customer. Investment of banks funds is based on liquidity principles. In loaning, the quality of security is more important and the requirement of the customer gets least importance. The customer was presented with readymade banking products with an option to take it or leave it. Due to the limited banking network then available, the customer had little alternatives. So the banking business kept prospering even with a limited clientele base and a set of inflexible rules and regulations meticulously observed both in letter and spirit. During that period there was strong banker customer relationship but the customers were selected the few in a society. This period is popularly known as period of class banking.
12.2 Development Banking Period
It is otherwise known as post-nationalization period. There was dramatic change with the nationalization of 14 major commercial banks in 1969. Inspired by the well-known socio-economic objectives of nationalization went in for phenomenal branch expansion during the seventies to cover every nook and corner of the country. Financial assistance on a very large scale was made available to the economically weaker sections of the society. The sheer magnitude of development banking effort undertaken by public sector banks during this period remains unmatched by the banking industry anywhere else in the world.
As far as the evolution of bank marketing is concerned, the bankers came out of their ivory towers and reached out to the masses. A large number of deposit and loan schemes were developed during this period according to the requirements of different sections of society as per the national priorities. Even though bankers reached out to the masses, then, orientation and mind set still did not evolve much beyond the take it or leave it syndrome of the pre-nationalization era.
The basic reason is that the banker was still operating sellersmarket. The inference of this scenario suggests that the banker of this period never found it necessary to ascertain what the customer actually wanted. What the banker did was present a few products to the customers and push hard enough amongst the customers in order to achieve the predetermined levels of deposits and advances fixed by the bank.
In other words, the bank adopted a selling stance. The discipline of bank marketing did travel some distance in as much as marketing tools like market segmentation, product diversification and expansion were experimented with.
For instance, the State bank came out with its market segmentation scheme and innovative loan products like, IRDP, Differential Interest Rate Scheme and Crop loans, were extensively marketed. But the basic content of marketing had yet to be absorbed by the bankers at large.
12.3 Bank Marketing Period
It is also known as modern period. The frantic pace of branch expansion and credit disbursement during the development banking period has direct impact on the health of public sector banks. The real outcome was the proliferation of loss-making branches. The problem of communication and transport network in the countryside, rising customer dissatisfaction with banking services, and resultant apathy of bank staff towards developmental work are the basic reasons for this. The RBI urged commercial banks to take stock of the state of affairs, to consolidate their gains and go slow on branch expansion, thus ushering in the period of consolidation. The bank visualizes the risk inherent in continuing to do business as before. So there is a growing awareness that marketing was an essential tool in the hands of the banker, an inescapable necessity without which perhaps survival itself might become difficult in future.
The most important factors which have given a momentum to the bank marketing in the country are Financial Disintermediation. The basic job of a banker is to accept deposits from investors and or depositors and after providing funds for statutory obligation like SLR and CRR bank extend loan to borrowers. The difference between deposit interest rate and the loan interest rate is the banker s spread. Thus the bank acts as an interlinking factor and this is called financial intermediation.