ICICI MARKETING

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GOVERNMENT BUSINESS
State Bank of India's linkage with Government business is widespread. No
wonder that out of 9315 branches in India, about 7000 branches are conducting
Government Business. The large network of our branches provides easy access to
the common man to deposit the following Government dues and pension
payments.
SME (small scale industries)
State Bank of India has been playing a vital role in the development of
small scale industries since 1956.The Bank has financed over 8 lakhs SSI units in
the country. It has 55 specialized SSI branches, 99 branches in industrial estates
and more than 400 branches with SIB divisions.
The Bank finances for Small Business activities which are of special significance
to a large number of people as many of these activities can be started with
relatively lower investment and with no special skills on the part of the
entrepreneurs.184
1. The ICICI bank and SBI can work towards reducing transaction cost and
speedy decision making. The banks can achieve this by creating flat
organizational structure with minimum hierarchy. Here the staff also needs
to show innovative and creative abilities. Similarly in case of lending these
banks, should adopt less complex procedure. The important factor for
considering by these banks is flexibility by adopting simplified banking
procedures and practice.
2. Meaningful appraisal of customers services is an essential activity of ICICI
bank and SBI. This can be done with customer surveys at regular intervals.
Information collected through such surveys after analyzing, will throw light
for rectification, refinement, which will go in a long way to improve
customer services in banks.
3. The banks should maintain feedback team, which should be given
authority to solve customers complaints satisfactorily. In fact each and
every operational branch should have a response team for such complaints
redressal and feedback. These customers complaints should be reviewed at
monthly meetings at branch level and rectify the deficiencies prevailing
either in system or service.
4. Relationship banking means having a mutually beneficial and long term
relationship not only with the existing customers but also with the
prospective customers. ICICI banks and SBI should use this technique to
attract and retain customers.
Suggestions regarding service charges:
The major reason that has emerged by the present study for customers
dissatisfaction with the ICICI bank (7.0%) and SBI (10.8%) bank is service
charges. Both the banks should consider the following suggestion in respect
of service charges. 185
The amount required to open saving account with both the banks Rs. 5000/-
which needs to be reduced because, the middle class customers find it too
high amount for opening of saving account.
In case of cheque bouncing the customer of both ICICI bank and SBI has to
pay between Rs. 300 to Rs. 500 whereas in public sector banks its is Rs. 50
to Rs. 75 only as fines and charges. These two banks needs consider the
huge difference in charges and accordingly fix their charges.
7.4 SWOT ANALYSIS OF ICICI BANK
Strengths of ICICI Bank
ICICI is the second largest bank in terms of total assets and market share
Total assets of ICICI is Rs. 4062.34 Billion and recorded a maximum profit
after tax of Rs. 51.51 billion and located in 19 countries
One of the major strength of ICICI bank according to financial analysts is
its strong and transparent balance sheet
ICICI bank has first mover advantage in many of the banking and financial
services. ICICI bank is the first bank in India to introduce complete mobile
banking solutions and jewelry card
The bank has PAN India presence of around 2,567 branches and 8003
ATMs
ICICI bank is the first bank in India to attach life style benefits to banking
services for exclusive purchases and tie-ups with best brands in the industry
such as Nakshatra, Asmi, Ddamas etc
ICICI bank has the longest working hours and additional services offering
at ATMs which attracts customers
Marketing and advertising strategies of ICICI have good reach compared to
other banks in India 186
Weaknesses of ICICI Bank
Customer support of ICICI section is not performing well in terms of
resolving complaints
There are lot of consumer complaints filed against ICICI
The ICICI bank has the most stringent policies in terms of recovering the
debts and loans, and credit payments. They employ third party agency to
handle recovery management
There are also complaints of customer assault and abuse while recovering
and the credit payment reminders are sent even before the deadlines which
annoys the customers
The bank service charges are comparatively higher
The employees of ICICI are bank in maximum stress because of the
aggressive policies of the management to win ahead in the race. This may
result in less productivity in future years
Opportunities of ICICI Bank
Banking sector is expected to grow at a rate of 17% in the next three years
The concept of saving in banks and investing in financial products is
increasing in rural areas as more than 62% percentage of Indias population
is still in rural areas.
As per 2010 data in TOI, the total number b-schools in India are more than
1500. This can ensure regular supply of trained human power in financial
products and banking services
Within next four years ICICI bank is planning to open 1500 new branches
Small and non performing banks can be acquired by ICICI because of its
financial strength
ICICI bank is expected to have 20% credit growth in the coming years.
ICICI bank has the minimum amount of nonperforming assets 187
Threats of ICICI Bank
RBI allowed foreign banks to invest up to 74% in Indian banking
Government sector banks are in urge of modernizing the capacities to
ensure the customers switching to new age banks are minimized
HDFC is the major competitor for ICICI, and other upcoming banks like
AXIS, HSBC impose a major threat
In rural areas the micro financing groups hold a major share
Though customer acquisition is high on one side, the unsatisfied customers
are increasing and make them to switch to other banks
7.5 MARKETING EFFORTS OF ICICI BANK
Unlike other banks in India, all of whom began as private banks and
became nationalized or public banks through the intervention of the government
laws, the concept of ICICI Bank came from ICICI. This was an institution set up
for public purposes. Yet, this bank is one of those which have a group of very
satisfied customers and high deposits. This what all banks try for and these may be
considered as the proof of marketing success of ICICI bank.
Unlike other banks in India, ICICI Bank was not established as a bank, but
the beginning was as ICICI. This started in 1950s with support from World Bank,
government of India and certain Industrialists. Its purpose was to provide
development finance for Indian business1
. Development of this organization led to
ICICI Bank. The purpose was to collect funds directly and thus at a lower cost.
This aspect of Indian finance can be seen even now as practically all banks are
profitable. At the time of establishment, this was a small organization with only
1,200 staff as compared to 30,000 people working for the bank today.188
From the beginning itself, the bank knew that its success as a bank will
depend on customer satisfaction. One of these aspects was for the staff. They
made it easy for members of staff to contact each other. This is called People
finder. Every employee has his/her own profile on it as also their own areas of
interest. This helps employees to locate persons suitable for getting advice when
they do not know what should be done. This system of collecting information has
been used by ICICI Bank in all areas, and today all these are computerized data.
These are "documents and ideas and in harnessing external structured data such as
content and databases versus internal structured data, such as data warehouses,
enterprise resource-planning applications and databases" .
Has the bank been right in its marketing strategies all the time?
It is a bank that has a very developed outlook by Indian standards. Yet, it has tried
methods for better service to many of them. In 2005, it tried to go deep into rural
areas. It was not very successful then and its rural loans had to come down to Rs.
10 billion in September 2007 from Rs. 20 billion in March. On the way, it was
cheated of Rs. 2 billion at State and Central government warehouses in Kolhapur
district.
The bank is again looking at the rural areas for business. "As we focus on
enhancing our capabilities to serve our corporate and retail customers across
India's towns and cities, it is also our endeavour to proactively reach out to rural
India and to the vast numbers of our people who do not have access to formal
financial services." - Managing director and CEO Chanda Kochhar.
There is also a proposed merger with Bank of Rajasthan which will give it
some 200 branches in rural and semi-rural areas. This is a large number for a bank
which has only some 2000 branches now. But, it has still some way to cover 189
before it can reach its earlier levels of penetration. The loans given in those areas
still amount to only Rs. 17.3 billion.
What are the positive strategies for gaining customers of the bank?
The most important asset of any public service organization (whether it has an
objective to make profits or not) are the people that it serves. This is handled by
Customer Relationship and management of that is called Customer Relationship
Management. This can also be spelled out in various terms like additional numbers
of customers served, or even additional profits obtained from each customer5
. How
does one know whether these goals are being achieved?
The measurement of customer also reflects in the organization through
increased profits, increases in numbers of customers serviced, etc. This is not easy
for a large bank like ICICI. It has more than 13 million customers/clients to be
dealt with. There are also many aspects to be dealt with 2025 ATMs, many call
centres, banking through Internet and mobile banking. The customers also keep
shifting from one medium to another. ATMs and electronic transfers are the way
now to handle more than half the money. There are also special ATMs which have
the ability for large deposits to be made.
Yet the bank is handling all these customers and their various requirements.
This is through customer service. Training of personnel to a high level is done as
also more of direct marketing to customers telling them that they can get better
facilities if they switch their account to ICICI. Customers are studied more
through studies and communications required for them from departments within
the bank are well prepared. Total information about the service that will be given
to them is also made clear. In short, know the customers and their requirements
better; then provide them with service they require.190
All products and services require marketing efforts to succeed and ICICI Bank is
no exception. It continues to develop its services to customers and change them
with changes in their demand. After all, my grandfather is different to me.



ICICI Banks Strategy for
Promotion of Financial Inclusion
Introduction
People from low-income groups live in high-risk and unpredictable environment,
making access to financial services vital for their sustenance. Dealing with life
cycle events, emergencies and planning for future are some aspects in which
financial intervention can help. A large part of this financially under-served
segment resides in rural India. Integration of rural India into economic mainstream
will boost rural household incomes and have a multiplier effect on the demand for
goods and services across the economy while promoting financial inclusion.
However, considering the sheer size of the population and the geographic spread,
neither the existing bank branch based infrastructure nor the standard financial
products are optimal to meet the financial needs of the rural populace. Seasonality
in income, coupled with dependence on weather, necessitates creation of financial
products that mitigate such risks. At the same time, traceable credit histories need
to be built that will help in designing products that meet needs such as housing,
health, education, child care etc. Further, varying financial needs of different
customer segments viz. manual labourers, farmers, traders, and rural
entrepreneurs calls for customised financial products.
Focus on Underserved Segments
ICICI Bank has taken up specific initiatives to ramp up financial literacy as well as
intermediation to the underserved and underbanked segments in both rural and
urban areas.
Customers Financial Behaviour
In the absence of a formal Credit Bureau, extending financial service to low income
segments becomes a challenge. To overcome this challenge, ICICI Banks financial
intermediation models, both through the microfinance institutions and business
correspondents have been designed to build a repository of information with regard
to financial behavior of the customers. Through Financial Information Network and
Operations Limited (FINO (Refer Annexure I for details on FINO)), the technology
platform it has helped conceptualise, and the biometric card, the Bank is able to
collect demographic information of the customers. It would be possible to trace
details such as credit history, savings habit and investment patterns of individuals.
This information would be useful to incentivise those with good credit history and
to discourage wilful default, at the same time developing better-suited financial
products.
This information, when shared across the industry, will enable the underserved
segments to have access to financial services in a well-defined credit analysis
framework. It will also go a long way in channelising funds from funding agencies
involved in promoting financial inclusion. They can track and monitor the end use
of their funds, thus being able to assess the impact of their interventions.
ICICI Banks Financial Intermediation Models:
With focus on low-income segments, ICICI Bank has come up with innovative
delivery channels:
Microfinance
ICICI Bank works closely with MFIs and NGOs to adapt its products to suit consumer
needs.
Two innovative models have helped achieve scale in serving the low-income
household:
a) Partnership Model being implemented with NGOs and MFIs: Under this model
ICICI Bank forges an alliance with existing MFIs wherein the MFI undertakes the
promotional role of identifying, training and promoting the micro-finance
clients and the ICICI Bank finances the clients directly on the recommendation
of the MFI, so the customer and portfolio resides in the Banks book.
b) Securitisation of Portfolios of MFIs: Under this model ICICI Bank buys out
portfolios from MFIs. The MFI continues to service the clients and acts as the
collection agent. Here again, the MFI shares the credit risk with the Bank. A
variant of the securitisation model is on-tap securitisation, wherein the MFI
receives an advance purchase consideration to create a portfolio of loans that
could then be periodically sold to ICICI Bank.
The guiding principles on the basis of which these models have evolved have been
to separate the MFIs balance sheet risk from its operational risk, and leveraging
the core competencies of a Bank (financial strength) and an MFI (social
mobilization, client management) to achieve scale.
Technology
The Bank has been actively looking at technology solutions to scale up the micro
finance portfolio. Further, the Bank has been considering adopting a 'Core Banking
System' (CBS) for managing the loan portfolio generated under the partnership
model. In this regard, the Bank has found an able partner in FINO to provide
technology solutions to the micro finance sector. The technology solution
comprises of core banking and smart card systems. In light of the technology
solutions available through FINO, the Bank has designed a new process for
delivering loans under the partnership model.
Some of the key aspects where a strong technology platform will add value to the
micro finance operations include reduction in transaction cost; better data
management and reporting capacities and capability to interface with multiple
peripherals, etc. This will also enable enhanced disclosure and transparency in the
operations of MFIs, setting a platform for robust securitisation / buyout
opportunities to meet the priority sector lending objectives of the regulator.
Business Correspondent
In line with the RBI guidelines ICICI Bank employs Business Correspondent (BC)
model to extend financial services, especially the much-needed savings services to
rural customers.
In the pilot stage, the transactions by BC are being done with the help of an 'e-
Passbook' and an Authentication Device (AD). The e-Passbook can display and store
the customer KYC information, customer account details and the transactions in
each account. It also has a unique feature of biometric authentication by the way
of fingerprints, thereby mitigating the risk related to PIN (Personal Identification
Number) in the rural scenario.
ADs provide Customer interface with user-friendly menu options, enabling
transactions. An authorized operator is enrolled by capturing the fingerprints of all
the 10 fingers to mitigate fraud risk, can operate each AD. The transaction is
recorded on the AD, which at specific intervals would be uploaded and updated in
the Bank's system through a normal telephone line, which is a widely available
infrastructure even in remote rural areas. Further connectivity through GSM and
CDA would also be made possible to ensure that the transaction details are
updated in the Banks system at higher frequency.
How does this Align with the Overall Rural & Agri Strategy of ICICI Bank?
ICICI Bank has adopted inclusive banking strategy to provide financial
intermediation to farmers, traders and processors as well as the underserved
segments. The elements on which the Banks rural strategy is based are multiple
products that meet customer requirements, offered through technology-based
channels.
Multiple products
ICICI Bank offers a complete suite of products and services to meet the individual
financial requirements of customer segments. Savings, investments and insurance
products are made available to its rural and agri customer base. The Bank also
offers microfinance services to low-income households and crop loans, farm
equipment loans, commodity based loans to farmers.
Hybrid channels
ICICI Bank employs delivery channels backed by technological innovations to
achieve scale and outreach in a sustainable manner. The Banks channel
architecture includes branch and non-branch channels. Branches act as a business
hub providing banking services on the one hand, while facilitating the fulfilment of
products that have been sourced by the business facilitators and business
correspondents.
Non-branch channels are of two types, business facilitators and business
correspondents. Business facilitators, referred to as Vikas Sahyogis, are
outsourced channels that generate business opportunities for the Bank. Network of
Vikas Sahyogis has been set to act as referral or sourcing agents for loans,
insurance and investment products such as mutual funds. These centres are
operated by local people with existing relationship with the Banks customer
segments. Vikas Sahyogis include agri input dealers, tractor dealers, automobile
dealers and diesel dealers.
Annexure: I
Financial Information Network & Operations Ltd
Solution for the rural masses
The FINO team has developed a platform using a biometric enabled multiapplication
hybrid smart cards and biometric enabled handheld devices to cater to
the needs of Local Financial Institutions (LFIs) serving the rural masses. The
platform has been sized for 12 - 50 mn customers at the moment but can easily be
expanded if the needs are larger. FINO's solution is a comprehensive solution which
encompasses three key components:
1. Core banking system component which is built as a shared back end banking
engine that provides accounting, MIS, reporting and monitoring facility for all
asset and liability products that the micro sector requires.
2. Distribution component that enables offline data capture from end user
specific unique, biometric enabled hybrid multi-application Smart Cards. These
smart cards can hold upto 15 different types of end consumer financial and
non-financial relationships on a single card. In the field, these cards can
interact with various offline channel enablers like FINO's biometric enabled
Point of Transaction devices (POT), Mobile POS/PDAs etc. and existing magstripe
based on-Line networks of ATMs, PCs, POS and Kiosks. Captured end
consumer data is periodically transferred to a centralized location using
connectivity options like PSTN (GSM/CDMA options are being planned).
Authentic identification and non-repudiation of transactions is achieved through
the biometric finger print templates stored in the card of the end user. The
finger print verification is done at the device level where a live fingerprint of
the end user is captured and verified using against the stored fingerprint
template on the card.
3. Credit Bureau component which enables creation of knowledge base and
financial credit worthiness, credit rating profile of the end user.
Benefits of FINO System
Biometric Identity
FINO offers a biometric fingerprint enabled smart card that allows foolproof
customer identification without any requirement for a PIN / password as in
traditional channel delivery systems. This is a completely offline solution and
requires only a smart card reading device and a fingerprint sensor at any point of
transaction
De-duplication
By capturing the customers fingerprint for each smart card that is issued, FINO's
robust fingerprint identification engine ensures that there will be no duplicate identity
created for the same customer.
Numbering Logic
FINO systems relies on multiple number logic thereby ensuring security and uniqueness
of transactions in the system. There are two types of numbering logics that FINO
system uses:
URN: Unique relationship number, is a banking bin based number that is unique to a
card chip (also called FINO chip number). This number is used for transaction
identification over the FINO network.
FID: FINO ID number is a unique geographical locater printed on the facia of the card.
This 17 digit number among other data sources is based on census data of India and is
structured to capture details like year of birth, gender, state and village codes besides
a serial number. Thus FID uniquely identifies the individual belonging to a village.
Besides the above internal numbering logic, FINO systems have a provision of mapping
account ID belonging to back-end of a third party entity. For example account ID in
core banking solutions of Banks etc. Such a provision ensures that there is a seam less
flow of information specific to a consumer not only internal to FINO system but also in
third party back ends.
IT Application on Card
FINOs smart card can provide a highly secure off line transaction platform to run any
application thereby saving on the costs associated with on line systems. Since all rural
transactions are based on human relationships and are made possible by human
interactions (agent based systems), FINO system ensures that that the system does
not change the way of working for agencies serving the rural sector. Currently FINO
smart cards are provisioned to support 15 different types of financial and non-financial
applications. These applications can be from a single principle entity or multiple
entities.
How FINO Smart Cards can bring down the Cost of credit delivery for agencies
Low cost of ownership
FINO systems have been developed with a perspective of being an Independent
Sectoral resource. The solutions are on offer on a utility model Pay as you use
concept. Being able to provide an end to end biometric enabled hybrid smart card
solution comprising of back end core banking module, distribution module and core
banking module ensures that FINO is a one stop shop for all the needs of MFIs, co-op
banks, credit franchisees in traditional credit disbursement system in India as well as
for Banking correspondents as per the recent guideline by RBI.
With FINO system integration services LFIs can easily integrate FINO system within
their existing delivery model. As explained earlier, seamless mapping of third party
consumer ID with FINO ID and URN number ensures that data flow is seamless between
6
the LFI and FINO system. FINO system can also be integrated easily with existing on
line channel delivery systems like ATMS, Kiosks, Point of sale etc.
FINO's best in class core banking solution is scalable and upgradable thereby ensuring
that LFIs can easily design and offer a suite of products to the rural masses.
Shared Demographic Data
FINO smart card ensures that there is one time collection of demographic data for a
particular consumer. FINO enrollment application is being designed to cater to one
time data collection for all relationships such as savings, loans, insurance etc. This
mechanism ensures that once the data is collected for a particular local financial
institution the same can be used by other financial institutions serving the same rural
geography. Thus for existing FINO consumers other LFIs can just focus on growing their
business rather than worry about operational issues of identity creation. FINO will
develop the product application specific to the LFI and can port it on the same card.
Thus the using the same card the end consumer can interact with multiple LFIs at
marginal cost to the new LFI.
Shared Biometric enabled Multi application card
FINO Smart cards are unique IDs for the consumer and hold the consumer demographic
data, relationships and finger print on the card.. Consumers are uniquely identified by
the biometric finger print authentication at the field level (devices). In addition FINO
card can store upto 15 financial and non-financial applications. Thus for every new
product/application the LFI only needs to develop a product application which can be
remotely ported on the smart card in the field. In addition FINO system also provides
for origination services in the field thereby ensuring that the communication for
new relationship is communicated quickly to the principals.
Low cycle times
With FINO electronic infrastructure cycle times associated with product features like
fund transfers, cheque/Demand draft clearing and settlement is greatly reduced. FINO
systems are highly flexible, customizable, scalable and ready for deployment keeping
in mind the methods of operation adopted by various financial institutions operating in
local country.