Saturday, November 05, 2005

Banks, technology and advertising

Of late in magazines, billboards one can see a spate of ads on new "technology". New technology mostly relates to SMS banking, a service in which you can get your balances et al by sending SMSes. Alternatively, it is a service that alerts you when cheques are cleared, cheques deposited on behalf of the bank. Some banks offer a service called an ATM locator service. So, if you are in the middle of nowhere, send an SMS and get a list of ATMs near that location. Then there are ads proclaiming online services and the like.

My question is, do these ads work? Are they necessary in the first place? Are they reaching the target audience?

Most people in the olden days (read 60s, 70s, 80s) chose a bank based on the proximity of the branch to either their office or home. Other than that, they also opened an account with the bank which was most convenient at the place where they had to send remittances. So, most of the people in our building had an account with Sangli Bank (even though we had no clue about its standing as a bank). A great section of the populace opens their bank accounts only with this reason.The added attraction is that some banks offered locker facilities and hence it was important that this branch was nearby so that one did not have to commute too much with valuables.

Today, its been ages since I ever visited the branch of my bank, but since I have a salary account at XYZ bank, I have an account there. This is the second biggest reason (IMHO - no data) for people to open new accounts. Related similar reasons for businessmen - proximity to their own offices, clients, special foreign/LC services, flexibility, good managers (service) and so on.

Point being, if Corporation bank (assuming it is a small bank that wants to take on the ICICIs) advertises it that has a new mobile service, well, I dont care nor does the average Ramu on the street. This advertising is not going to draw more account opening enquiries. It may increase awareness to a certain extent, but only to a limited extent.

The way for banks to win new customers is by getting more corporates to open salary accounts with them or by getting new businesses to work with them or by capturing the populace near their branches, ATMs and so on. Advertising their new technology prowess is best done through direct communications with their customers, Point of contacts (ATMs, drop boxes and the like) and so on. Any other advertising is a waste of good money, money that should be used to improve services. Money that should be used to remove unnecessary charges from the monthly statement. Money that should spread the word of mouth goodness of the bank.


Nilu said...

The number of people who are 'salaried' in India is probably 1% or less. Even in Urban centres, that figure will not exceed 10%.

That being the case and assuming that the proximity factor is the same for two banks(as we have no way for determining that now), the SMS advertising seems a good ploy. Whether the average guy on the street would use it or not, he may find it attractive. And all other things being equal - does that not win the deal?

Neelakantan said...

At a high level your point is taken. But say an IDBI bank for instance is resorting to some high volume advertising in a business magazine for an ATM locator service.
Am i going to go to IDBI bank because of this service? No
Would other existing account holders be aware of this service? Ideally through internal mailers they should be.
How many branches do they have? Pretty few.