‘Khatirdari chodo, banking nibhao’
In 2016, IDFC bank came out with a TV ad highlighting how ‘sarkari babus’ do not pay attention to the customers grievance, unless, she has a high account value. ICICI Banklaunched a series of five ads for its iMobile. The ads highlighted ease of banking through the app. Similarly, last year Kotak Mahindra, rolled out its campaign featuring Ranveer Singh, promoting its digital bank service 811, trying to put itself as banker to everyone. In a world, where public sector banks hold a monopoly over banking—SBI’s tag line is “Banker to every Indian” –private banks must compete for the smaller market segment.
According to Naresh Gupta, managing partner and CSO, Bang in the Middle public sector banks such as SBI, Oriental Bank of Commerce (OBC), Bank of Baroda, among others don’t struggle to acquire new consumers as these are the preferred government banks besides these have tie-ups with corporates.
“The scene is however different in case of private banks. A customer usually upgrades from a public sector to private bank with rise in income. Hence, private banks rely heavily on advertising and marketing to acquire new customers,” Gupta said.
This becomes more evident from data sourced from annual filings. The total advertisement and publicity expenditure of 19 PSBs in FY18 stood at a meagre Rs 48.8 lakh in FY18. Compared to this, private bank such as Yes Bank spent 200 times more, Rs 95 crore, on advertising. Foreign banks such as HSBC and Citi Bank’s expenditure touched Rs 100 crore and Rs 99 crore, respectively, during the same period.
In Rs Lakhs
|Bank of Baroda||6.3||7.1||7.5||9.9||11|
|State Bank of India||.60||28||30||2.8||3.5|
|HDFC Bank Limited||14.3||18.7||24.8||20.4||17.1|
|YES Bank Limited||5,978||7,029||8,354||10,046||9,591|
Source: Company website, RBI, BSE
Private sector banks compete in market in two ways- either by improving upon the consumer experience or through the rate of interest. For instance, Kotak Mahindra offers the highest rate of interest on saving deposits, meanwhile, Yes Bank is believed to be the best bank (amongst the PVBs) when it comes to customer experience, according to a survey conducted by Kantar.
But PVBs heavily advertise products such as credit cards, mutual funds, insurance rather than promoting core banking facilities such as deposits and loans simply because they are not profitable. Additionally, secondary products tend to attract more customers than their core business.
The opinion on whether advertising has the pull to attract customers, is however, divided.
However, Harish Bijoor, CEO, Harish Bijoor Consults Inc, a brand and marketing consultancy firm pointed out that advertisements make marginal to nil impact on the customer acquisition of a bank.
On the other hand, foreign banks such as HSBC, Standard Chartered, and Citi Bank target high net worth individuals (HNI), non-resident Indians (NRI) and customers dealing in foreign exchange. Due to their niche customer pool, these banks spend heavily on marketing especially on below-the-line (BTL) activations. For instance, Standard Chartered is the main sponsor of The Economist India Summit and CNBC – India Business Leader Awards.
For Ajay Kakar, CMO, Aditya Birla Capital, its largely due to a customer’s unwillingness to go through a barrage of paperwork that ads have zero and limited impact, when it comes to banks acquiring new customers.
“Banks need to focus on a targeted segment rather than following the age-old ‘feel good’ campaigns. A bank can’t raise its customer base through ‘who am I?’ campaigns but rather have to focus more on ‘why me?’ campaigns,” he opined.
As zero balance accounts becomes a reality and customers can open up accounts within minutes rather than days, the market is expected to go through a turn around. More important, with companies like PayTM and Airtel picking up banking operations it would become utmost important for banks to compete for customer eyeballs. As the market matures, one can expect even the public sector entities trying to woo customers with a promise of better service. To take one example, BSNL and MTNL were no longer major players once the telecom industry changed. Not only did they lose out due to customer satisfaction, but also because they weren’t able to advertise as much as private sector did. This despite having superior quality products and services in certain areas. Public sector banks may suffer the same fate if they do not change with times. After all, in a changed India, anyone can be the banker to every Indian.