The Hindu Business Line : Banking on publicity

Most private banks are spending huge sums on brandbuilding and acquiring new customers, but what they should actually concentrate now is on retaining their existing clientele.

FOR me, a bank is a large solid safe institution where I can park my meagre savings and feel sure they will be around till when I want them. I am sure I echo the sentiments of millions of people across India. The history of banking in India would no doubt reveal a fascinating study of an industry that has developed over the years with an odd mix of need-based growth, Government-led growth and, more recently, market-oriented growth.

Since my early days, I remember a little piggy bank in my house which had been parked there by a large bank. A friendly bank employee would call on our house at fixed intervals to empty the piggy bank and take the money to deposit in my bank account. My parents, just as other parents of that generation, encouraged the savings habit. Thrift was a virtue, and a spendthrift was someone no one wanted as a son-in-law.

Many of the readers of this column might think I am describing either an imaginary scenario or some bizarre era. We've come a long way, and so has the banking industry. The late '60s, '70s and the '80s saw the nationalised banks playing the role defined by the Government of the day. This might have meant concentrating on some Integrated Rural Development Programme or participating in some infamous `loan mela.' Whatever the case, profit was not the primary objective and when `prudential accounting norms' were introduced, I personally recall one nationalised bank's results turning from a profit of around Rs 300 crore to a loss of around Rs 30 crore, simply because it had to clean up its books and adhere to accounting norms the way the world saw them.

That was a phase most bankers would like to forget in a hurry. A phase where wake-up calls resounded across the country that loans were expected to be collected when they fell due and profit was not a bad word.

This was probably when advertising began to come of age for the large nationalised banks. Till then some sporadic advertising, mostly of an announcement nature, was the order of the day. The `me-too' nature of nationalised banks could be epitomised by the fact that they chose to advertise through a Joint Publicity Committee. Any hope of product or image differentiations was obviously not even felt. The Government owned all the banks that mattered and they couldn't be bothered with the image individual banks projected.

In an era of liberalisation, banks had to cope with two things. The private banks who were aggressively positioning themselves as customer-friendly and technology-savvy on the one hand and their own baggage of history on the other.

Today's banking scenario presents a vastly different picture. The audience is young. They are committed to consumerism. They are also very tech-savvy and aspirational. They want to bank with institutions they can relate to.

Against this backdrop, banks have suddenly realised the need to advertise and have significantly increased their advertising and publicity spends.

In this context one came across a nice little book titled Indian Banks. Profitability, Popularity and Publicity written by Banker and Economist, N. K. Thingalaya. A quick glance threw up interesting nuggets of information. The largest spenders in the category are ICICI Bank and State Bank of India. ICICI Bank spends a reported Rs 68.68 crore, while SBI spends Rs 67.36 crore.

At the risk of drawing an unfair conclusion, I cannot resist mentioning that these two banks also report the highest profits among banks in the industry.

The other big spenders in the public sector arena are Bank of Baroda, Canara Bank, Union Bank of India, Punjab National Bank and Corporation Bank. The leaders in the private sector group include HDFC Bank and UTI Bank.

A look at some of the baselines banks have persisted with is revealing. Punjab National Bank calls itself `The name you can bank upon." Similarly, Canara Bank's tagline says `Serving to grow, growing to serve,' while Central Bank says `Customised Banking Innovations.' Similarly, if the Union Bank of India positions itself as `Good People to Bank With,' Indian Overseas Bank counters with `Good People to Grow With'.

Thingalaya's book certainly gives adequate food for thought.

The appointment of celebrity brand ambassadors is a new trend in the banking industry. Dream girl Hema Malini sells dreams for the Bank of Rajasthan, while Juhi Chawla re-positions the image of Dena Bank in a dramatic manner (though the commercial where the Mahalaxmi image suddenly gives way to Chawla, was a little too much for me). Yet, goddess of wealth or Kurkure cruncher, Chawla provides a much-needed recall to the brand.

As deposit rates remain soft and retail banking takes the front seat, banks will have to reach out to customers more aggressively and in a more appealing manner. One point I must make is that while banks are spending increasing amounts on customer acquisition, and they have to, one wishes they would also pause to think of customer retention. Nationalised banks have the legacy of a huge customer base. Private banks have been growing the market and also profiting from the migration of younger customers. Customer retention would prove most advantageous in the medium to long term. Banks, like everyone else will have to think of establishing and nurturing relationships with their customers. Advertising is the first step down that long yet essential road.

(The author is CEO, Canco Advertising.)

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