Marketing Branchless Banking

CGAP Group, Date Posted: Thursday, May 12, 2011

MTN Mobile Money ad in Cote d'Ivoire Many branchless banking implementations have struggled with low customer uptake and high levels of inactivity. Inadequate investment in marketing, especially advertising, has come under the spotlight as a key culprit. However, several high-profile deployments that made huge initial investments in marketing have re-tooled their strategy after disappointing results. Marketing a new product like mobile money especially to an unbanked, mostly rural population requires more than flashy ads and blanketing every agent shop with the right shade of green or red. Beyond brand awareness, customers need to understand what the product is, why they should use it and how they can get started. Weve collected examples of branchless banking advertisements from around the world and interviewed providers about the lessons theyve learned and how theyve adapted their marketing strategies. The results including case studies and examples of marketing collateral are in this compilation deck. Some of the things weve learned are: Mass media marketing is important to build the brand, but not enough While a heavy investment in above the line marketing (TV, radio and other mass media) is important to raise awareness and establish the brand and product as legitimate, it is not sufficient. Increasingly, branchless banking providers are shifting resources into below the line marketing. Educationbased marketing, preferably done face-to-face, is increasingly seen as critical to customer adoption Below the line marketing (especially face-to-face interaction) has been critical in many markets, especially those with low literacy rates. Some providers believe it takes 15-30 minutes of personal interaction before a customer understands a branchless banking or mobile money offering. Until a critical mass of customers is reached (when they start teaching one another), providers need to find a way to do education-based marketing. Keep the messages simple and use scenarios that are relevant to the average customer M-PESAs simple yet

effective Send Money Home advertisement is well known and conveyed a simple solution to a problem faced by many Kenyans. However, many implementations since then have tried to market multiple messages or more complex functionalities. These ads were not only confusing to unbanked people but seemed to advertise a premium service for high-end users. Successful ads have used simple messages and are relevant to the average (often unbanked and rural) potential customer. Check out our deck to see many marketing examples ranging from M-PESAs classic Send Money Home (and the strikingly similar ads it inspired) to Haitis TchoTcho Mobile ad featuring a grandmother using TchoTcho Mobile to keep her money away from the prying hands of her family.
- Claudia McKay & Paul Breloff

Consumer Bank Marketing Undergoing Changes

by Tanya Irwin,
Jul 5, 6:56 AM
The consumer business of big banks is at a crossroads. After years of deep freeze, many organizations are starting to ramp up consumer efforts online and consequently marketing in consumer banking is undergoing a big change, according to a report from Change Sciences. The 73-page report evaluated the consumer experience of 14 bank websites in 2011, evaluating the use of social media, mobile support, the role of bank home and product pages, the use of video, and the role of product innovation. Sites evaluated included those of Ally Bank , Bank of America, BB&T, Capital One, Chase, Citibank, EverBank. HSBC Direct, ING Direct, PNC Bank, PNC Virtual Wallet, SunTrust, US Bank and Wells Fargo. PNC Virtual Wallet scored at the top in the overall site ranking, followed by EverBank, Ally Bank and ING Direct. Coming in at the bottom were Chase and SunTrust. According to the report, the online-only consumer-direct banks (with the notable exception of PNC's Virtual Wallet) are currently doing the best job of connecting with consumers online. "Among the big national and regional banks, there are pockets of change (call them noble experiments) but they are not yet more than this," according to Steve Ellis, a Change Sciences principal and one of the authors of the study. "Transforming how they connect with consumers in a comprehensive way over the next few years will clearly be the big banks' opportunity to lose." If consumers have been burned and are truly fed up with their banks, where is the impact on the balance sheet? Whether Ally and ING Direct really "threaten" the big banks isn't the issue, Ellis says. "Consumer banking is about marketing and how marketing gets done is changing. Banks like Ally and ING Direct are simply ahead in the consumer banking marketing game. What they have succeeded in doing (perhaps with the luxury of a blank slate) is engaging with customers online in a new and powerful way." Social media and an always-on, always connected internet have radically changed the tone of business online, according to the report. Increasingly, consumers expect and demand accountability from the companies they do business with.

The Key to Making Mobile Banking Profitable? Marketing, Aite Says

Bank Technology News | April, 2011 By Penny Crosman
Although the obsessive balance checking mobile banking customers do doesn't benefit banks in and of itself, there are ways banks can gain from consumers' accelerating mobile banking and payment habits, research shows Aite's latest survey of mobile banking usage, for which it polled more than 1,000 U.S. consumers, turned up five new facts. 1. Other than being younger, mobile banking users are not different from general banking customers. "Thats important, said senior analyst Ron Shevlin in an interview yesterday. "In the evolution of online banking and bill pay, the early adopters were affluent consumers. That's not the case with mobile banking, that's been mainstream right from the start." Mobile banking early adopters have a similar average income as the non-adopters ($52,952 versus $52,821). "In the past banks have rationalized their investment in online banking and bill payment using with retention, assuming they were reaching their most important, affluent customers," Shevlin says. "Thats out the window with mobile banking because these are mainstream consumers. The way to justify the investment in mobile banking will be through marketing -- driving up-selling and cross-selling." 2. Mobile banking users frequently check their account balances. All mobile banking users surveyed had checked account balances once in the fourth quarter of 2010; 32% had checked them more than ten times. This is not surprising to anyone who knows a twenty-something living on the edge of their means and constantly wondering whether they have enough in their account to cover a purchase; banks own debit card commercials often portray balance checks as a key reason to use mobile banking. These customers arent using the feature because it's cool but to become more disciplined about managing their finances and make sure they don't overdraw. Aite Group believes this behavior, in addition to the FDIC restrictions on overdraft fees, will drive down banks' overdraft fee revenue. 3. Mobile banking users are using electronic coupons. The survey found 38% of mobile banking customers use electronic coupons more than they did two years ago, and 28% of non-mobile customers are also ramping up their use of the coupons. This is not surprising as mobile coupons themselves have only become prominent in the past two years. "We believe the right delivery mechanism for those offers will be through the mobile device," Shevlin says. In a couple of years, when mobile payment is more mainstream, the customer at Best Buy ready to buy a high-definition TV will use his mobile device to determine which card to use, the impact on his account balance, and whether or not there are any coupons or better deals to consider. 4. Bank customers have begun making purchases on their mobile phones. Aite's research found that overall about 40% of mobile banking customers made a purchase using their mobile device in the fourth quarter of 2010. Among Gen Y and Gen X mobile banking users,

the number is 45% and 43%, respectively. Aite analysts say this means banks can steer mobile purchases toward bank cards. 5. Mobile banking customers are using checks less. Among mobile banking users, 61% have been using checks less than they did two years ago. They're using debit cards more: 43% of Gen Y and Baby Boomer mobile banking users are ramping up their debit card use; 35% of Gen Xers. As the Aite report indicates, banks that apply savvy marketing skills can turn all this debit and mobile banking activity in their favor.

India need more commercial banks:

Ashvin Parekh, E&Y
ET Now Aug 5, 2010,

India| Government| funds

Ashvin Parekh, Partner and National Leader, Financial Services, E&Y in an interview with ET Now discusses banking business in India. First of all let us look at the scenario that we currently have close to about a 100 commercial banks operating in India there are some who believe that we have too few banks and there are others who insist that there are too many already operational, which side are you on? Well I seem to be of the view that there are three factors which lead me to believe that the number banks could increase. We need more banks, we need more midsized banks so they can start off with small size but they need to become midsized in a span of time. Three factors, one is the capital requirement in the banking system is of the order of about between US$20 to US$30 billion and that's huge capital. Now with the government taking a certain view on that 51% holding in the public sector banks and I mean they will certainly go a little easy on putting more capital into or allowing the public sector banks to raise much more capital sort of. So there is a need for more banks on that account. The second is intrusion part and we are very glad that both the government and the regulators has taken the intrusion part very seriously. After the last two reports which came out we are now seeing that there is an emphasis on the geographies going out to the rural markets and really covering as many, I mean, making banking accessible to more people so there is the second important part. And the third important part to my mind is the aspect of Basel II norms which will require more capital in the banking system. These things do lead us to believe that there is a room for this and a need for. A more banking companies in the country there will be, therefore perhaps that kind of a view that will really prevail in the new policy, draft policy discussion paper that is going to come out.

One more worry for banks: Wal-Mart

FORTUNE -- America's biggest banks are in retreat, tightening lending, increasing fees, and closing branches. But one company still wants to become your neighborhood bank: WalMart. While the banking sector has been in turmoil, Wal-Mart has aggressively courted customers' pocketbooks, partnering with financial services companies to offer money transfers, check cashing and bill payments, and putting virtual checking accounts -- refillable pre-paid debit cards -- in the hands of more than two million customers. The company downplays its desire to garner a banking license, but recent changes in the banking and regulatory landscape have only increased the eventual likelihood of a Wal-Mart Bank. The latest evidence that Wal-Mart plans to continue its push into financial services was the news last week that it had taken an equity stake in Green Dot, which manages the retailer's prepaid debit cards and is currently seeking regulatory approval to acquire a small Utah-based bank for $15.7 million. Wal-Mart has attempted to acquire its own banking license several times since 1999. In 2007 it dropped plans to acquire an industrial-bank charter in Utah after heavy lobbying by the banking industry. Banks argued that Wal-Mart might steer lending toward favorable suppliers and away from competitors. Had Wal-Mart succeeded, its Utah "industrial loan corporation" could have handled all of its card processing and allowed the retail giant to take deposits and make loans. While it must now partner with companies like Green Dot and SunTrust (STI, Fortune 500) to provide such services in the United States, this shaving of the profit margin hasn't slowed Wal-Mart (WMT, Fortune 500) down. Last week Wal-Mart opened its 1,000th "Money Center" and announced that it planned to expand to 500 more stores. It also trumpeted the launching of a Wal-Mart credit card in Canada, where it received a banking license just last month. In Mexico, where it has operated a bank since 2007, Wal-Mart has plans to open up to 150 new branches and take deposits in the checkout line. Back in the U.S., through a partnership with SunTrust, Wal-Mart has nearly doubled the number of bank branches in its stores over the last five years to a total of 83. "Wal-Mart's income from the provision of financial services is currently an insignificant part of their overall income," says Rajesh Narayanan, finance professor at Louisiana State University. "But the rapidity which they have expanded their services in this arena suggest that their eyes are on a larger prize." Low prices, big opportunity For Wal-Mart, the benefits of offering financial services are clear. In addition to the $3 or so that customers pay for things like applying for and refilling debit cards, and having checks processed or printed, Wal-Mart steers shoppers toward making purchases in its stores through cash-back incentives. It also benefits from offering what amounts to a mall of services within its own stores, which offers everything from groceries and retail goods to fast food restaurants, drugstores, eyeglass centers, portrait studios, gas stations and salons.

A captive consumer becomes particularly important when sales are slow, as they have been for Wal-Mart, whose CFO, Tom Schoewe, recently complained that Wal-Mart customers were increasingly using food stamps and "living paycheck to paycheck." Wal-Mart needs these customers to keep spending. It's helping out by giving them an easy and -- compared to usury fees at many check-cashing locations -- cheap way to handle their money. (See also Why Wal-Mart's sales should have everyone worried.) The market for Wal-Mart's debit card is large, with the company's literature noting that 28 million people in the United States don't have a bank account and that 45 million more are relying on check-cashing centers, pay-day loan providers and money-wire services for their banking needs. Wal-Mart, which has rolled out the catchy slogan of "saving people money so they can live better," figures its services tap into a market that equals at least 25% of the U.S. population. The idea is to take Sam Walton's ethos of lowering "the cost of living for everyone" and apply it to financial services as well. Just in the debit card department, Wal-Mart estimates it can take in its still-generous fees while reducing what the average check-cashing customer pays by 25% to 50%. Although Wal-Mart does not break out the fee revenue it makes on its money services, last year the company estimated that customers would register $2 billion in deposits on the cards and save approximately $450 million in fees. Climbing the financial ladder While Wal-Mart has focused on the low income market, the concern among payment processors like Visa (V, Fortune 500) and Mastercard (MA, Fortune 500) and among community banks is that Wal-Mart will keep inching up the food chain and possibly end up with that banking charter it has been eyeing for more than a decade. As Jane Thompson, WalMart's president of financial services told The New York Times back in 2007, Wal-Mart's debit cards and other payment services are "foundational products," from which Wal-Mart could expand "up the credit ladder of financial services." Wal-Mart did not respond to a request for comment for this story. Certain aspects of the financial regulation currently being debated by lawmakers could continue to impede Wal-Mart's bank charter gambit. But on measure, Professor D. Anthony Plath, who teaches finance at the University of North Carolina at Charlotte, says Wal-Mart has never been in a better position to force the issue. Regulators have already curtailed overdraft fees and cracked down on the way credit-card companies punish customers who miss or delay payments. Lawmakers are now showing a strong interest in capping fees on debit transactions. Meanwhile, consumers are being hit with new fees -- and the end of free checking -- at many banks trying to shore up this ever-important source of revenue. A new well-funded competitor like Wal-Mart would make this fee shift more difficult and drive down fees across the board. "If there has ever been a time when you can make an argument for increased competition, now is the time," says Plath, who notes that Wal-Mart has already met all regulatory demands, has the necessary capital, has a balance sheet that is stronger than many commercial banks and serves an ignored market. He projects that Wal-Mart will obtain a banking license within the next few years, calling it "pretty much a fait accompli," and that

the company will then bring to market a series of "lifeline services," such as simple savings and deposit accounts carrying very low costs, and loans to consumers shut out by their community banks. "Wal-Mart is going to accelerate the evolution of the banking industry," he says. "They would be a different kind of bank, but the kind of bank the industry may need right now."

Bank Marketing: A Two Pronged Approach

Tuesday, June 15, 2010 By Dr. (Mrs.) Varsha Varde

Bank marketing is the design and delivery of customer needed services worked out by keeping in view the corporate objectives of the bank and environmental constraints. Bank marketing in general and Customer Relationship Management (CRM) in particular are of vital importance for Indian banks particularly in the current context when banks are facing tough competition from other agencies, both local and foreign, that offer value added services. Competition is confined not only to resource mobilization but also to lending and other revenue generating areas of services offered by banks. Under the circumstances, it has become essential to develop a close relationship with valued customers and come out with innovative measures to satisfy their needs. Customer expectations for quality services and returns are increasing rapidly and, therefore, quality in future will be the sole determinant of successful banking corporations. It is thus high time that Indian banks organically realize the imperative of proactive Bank Marketing and Customer Relationship Management and take systematic steps in this direction. Marketing Approach Banking industry is essentially a service industry which provides various types of banking and allied services to its clients. Bank customers are such persons and organizations that have surplus or shortage of funds and those who need various types of financial and related services provided by the banking sector. These customers belong to different strata of economy, different geographical locations and different professions and businesses.

Naturally, the need of each individual group of customers is distinct from the needs of other groups. It is, therefore, necessary to identify different homogenous groups and even subgroups of customers, and then with utmost precision determine their needs, design schemes to suit their exact needs, and deliver them most efficiently. Banks generally have been working out various services and products at the level of the Head Office and these are traded through their retail outlets (branches) to different customers at the grassroots level. This is the so called top to bottom approach. However, bank marketing requires a change in this traditional outlook. It should be bottom to top approach with customers at the grassroots level as the focal point for working out various products/schemes to suit the needs of different homogenous groups of customers. Thus, bank marketing approach, in general, is a group or collective approach. Customers Relationship Management, on the other hand, is an individualistic approach which concentrates on certain select customers from the homogeneous groups, and develops sustainable relationship with them for adding value to the bank. This may be termed as a selective approach. Thus, bank marketing concept, whether collective approach or selective approach, is a fundamental recognition of the fact that banks need customer oriented approach. In other words, bank marketing is the design and delivery of customer needed services worked out by keeping in view the corporate objectives of the bank and environmental constraints. The following chart gives an overview of the Two Pronged Approach to Bank Marketing.

Comparative study of promotional strategies adopted by public and private sector banks in India
by S.L. Gupta, Arun Mittal
Introduction In financial services, people are primarily bothered about security of their funds and default risks. After the year 1969, the deposits of banks increased more than 80 times as a result of the nationalisation of banks. Paul Cox, (2007) revealed a fact that financial service providers are not perceived highly trusted, so that they might have difficulty in selling risk-based products. The effort to promote banking business is quite distinguished affair. At present, it has become very tricky due to the changing trends of industry, increasing competition and efficiency of regulatory environment, and the financial system. The complexity in the banking services is also an issue of vital importance. This is the time when banks are offering new and innovative services, frequently in the market. The content of promotional tools should help the customer in making most valuable decision. This can be firmly said that welldesigned promotional strategies are very important to promote banking services effectively. In marketing any product or service, customer satisfaction has been given the prime importance. The most frustrating aspect of bank marketing are lack of management support, lack of inter-departmental cooperation, crisis management, government intrusion and advertising & media problems (Berry & Lindgreen, 1980). Sarin & Anil (2007) recommended that manpower in service organisations must work with the focus of satisfying the customer. Banking should bring out the areas requiring improvement and which further throw light on the measures to improve the quality of services. Promotional packages are very important for financial service industry (Ananda & Murugaiah, 2003). Thus the orientation of banks should be with a much wider focus in relation to consumer and market needs, and the consequent marketing strategies. The challenges put forth by the changing environment have to be effectively tackled to identify the consumer needs and providing valuable services through product innovation (Nair Raman, 2006). In banking the temporal and spatial dimensions are perceived as more important than traditional dimensions based on outcome and process elements (Kristina Heinonen, 2006). Tokunbo Simbowale (2005) examined the usage of marketing concepts & techniques and recommended that a wellstructured marketing department in banks is essential for profitability & effectiveness. A study by Krishna, Suryanarayana & Srikant (2005) recommended that promotional strategies should be designed as per the nature of the services to be promoted. The advertisers should seek a narrative approach to communicate the service experience rather than a logical, argumentative approach. Narrative approach involves storytelling methodology using sequence of events (Sehgal Roli, 2004). Location convenience, speed of service, competence and friendliness of bank personnel are also the most important points with maximum value in banking services (Laroche, & Manning, 1986). Meidan (1976) revealed that about 90% of the respondents banked at the branch nearest to their home place and place of work. Convenience, in terms of location, was also found to be the single most important factor for selecting a branch. It has been generalized in the studies that services marketing

advertisement is more challenging than the advertising of tangible products (Ray and Bose, 2006). Winning new customers costs 10 times more than simply holding onto existing ones. The case should be taken in the marketing of financial services very seriously (Farrokhtakin, Stavash, 2000). While formulating marketing strategy, a bank should focus attention on (i) consumer sovereignty, (ii) attitude, (iii) responsiveness and personal skills of bank staff, (iv) revitalizing the marketing department, (v) top management support to the marketing department, (vi) participation of marketing personnel in key bank decisions (Kumar Ashok, 1991). With the same perspective, the prime objectives of the study are: (i) To know about the various promotional tools of Private and Public sectors banks in India (ii) To make a comparative analysis of customers' perception for promotional strategies of private and public sector banks in India (iii) To find out the key promotional tools for banking services on the basis of customers' responses Research Methodology The present study is descriptive in nature, which is based on empirical evidences in the form of primary data. The data collection has been done from 300 customers presently availing banking services. The respondents were approached with systematic random sampling where every 3rd visitor was approached when he/she was coming out of the bank after availing the service. The response rate was found to be 65%. The branches of the banks have been selected out of the representative districts of the states near to Delhi and NCR (National Capital Region) on judgment bases for making the samples true representatives. The study includes the customers of 10 leading banks out of which 5 are from public sector (SBI and Associates, PNB, CBI, OBC and Bank of Baroda) and 5 from private sector (ICICI, HDFC, AXIS, IDBI, Kotak Mahindra Bank). A structured questionnaire has been used for collection of data comprising open and close-ended questions. Likert scale has been used as a scaling technique in the questionnaire. Structured interviews have been taken of 2-2 employees of the above stated banks for getting the initial information about the promotional strategies adopted by leading private and public sector banks in India. Data Analysis and Interpretation The responses have been captured in a scale of 5 to 1 from strongly agreed to strongly disagree. Similarly in other questions '5' is for very effective and '1' is for not at all Effective. Table 1 show that the promotional strategies of private and public sector banks are almost similar. Both types of banks take the help of almost all type of media to promote their services. The first objective of the study deals with the analysis of the promotional strategies adopted by both. The analysis is done on the basis of review of existing literature and with personal contact and informal interview with the personnel of the private and public sector banks. The major difference in the promotional strategies adopted by banks is in the two techniques of the promotion and they are "Personal Selling" and "Direct Marketing". The difference is that public sector banks do not adopt the strategies of promotion as personal selling and direct marketing; on the other hand the same are adopted by private sector banks. The reasons for this are high reliability and less profit orientation of public sector banks. Public sector banks do not go for innovative strategies of promotion, however they go for interactive marketing through internet but that is not promoted so much like private sector

banks. This has been demonstrated in Table 2 that the respondents in the present study are mixed and are seem representative, they include--farmers (19%), shopkeepers, students (31%), highly (23%) as well as low educated (25%) persons. Table 3 states that the maximum respondents (48.33%) were availing the services of Saving Accounts, which is followed by current account service holders (28.33), only few are availing the service of fixed deposits (11%) and Loans (7%). The loan takers also include the students in the form of education loans. Most of the respondents answered that they were influenced by Friends and Relatives (42%) for choosing the services from a particular bank. This is the power of "word of mouth". This shows that the impact of opinion leadership and reference group is very much in banking services however advertising (21%) also affects the decision of selecting a particular bank (Table 4). As per the responses given in Table 5, the difference between public and private sector banks is known to the maximum number of people (85%). Table 6 gives a clear idea about the question related to the perception of customers about private and public sector banks the results are not so surprising. People think that the advertisements and promotional efforts of private sector banks are more effective than public sector banks with a weighted mean score 3.51 for 5. The respondents strongly agreed that Private Sector Banks do more advertisement than Public Sector Banks (3.81). Further, one more aspect, that is very important in the case of services and especially in financial services i.e. truthfulness, and completeness in advertising. The respondents look agree with the statement that the information provided by Public Sector Banks is more reliable than private sector banks because that is truer and complete (3.62).

BMI Bank announces special promotion on credit cards

Bahraini retail and commercial banking institution, BMI Bank announced the launch of a special promotion on its range of Visa credit cards, offering customers the opportunity to win four vacation packages in addition to cash prizes. Starting May, every certain amount spent using a BMI Bank Visa credit card entitles the customer to a single entry into the draw with prizes given away on a monthly basis. The promotion, which runs from May until the 31st of December 2011, is open to both existing and new customers. Commenting on the announcement of these value added incentives, Jamal Al-Hazeem, Chief Executive Officer of BMI Bank said: "In line with our commitment to consistently provide our customers with rewarding products and services, I am pleased to announce the launch of our new promotion offering them the opportunity to win fabulous vacation packages including a Cruise and a European holiday as well as cash when they use their credit cards on ordinary purchases. As we look at the current market landscape and listen to what our customers tell us, we plan to continuously introduce bigger and better benefits for our customers throughout 2011 through product and service innovation. We will continue with the building of our retail business in Bahrain through the introduction of customer-centric products and services as well as enhancing our network of branches and ATMs, making it convenient for our customers to bank with us." In addition to the current promotion, the Bank also offers its credit card customers a range of value added services including free real time SMS alerts every time they use their credit cards, Purchase Protection Insurance and Secured Wallet Insurance. BMI Bank currently offers a Classic and Gold credit card as well as Sapphire - a credit card for its premium banking customers. In addition to being free for life with no annual or renewal fees, the cards also offer up to 2% cash back over the first 3 months from the date of activation. The Bank's La Carte credit card co-branded with Geant Hypermarket Bahrain, offers customers exclusive discounts, an installment option of up to 18 months and loyalty points when items are purchased from Geant hypermarket, Le Marche and Last Chance supermarkets in Bahrain. BMI Bank also owns the Diners Club International cards which offer accolades reward points, access to over 140 airport lounges, travel accident insurance and global cash access at over 650,000 ATMs worldwide.