Business Development

strategies to improve
personal finance
products

What is a strategy
Strategies are means by which
organization objectives will
be achieved, under changing
environmental situations
STRATEGY IS A PLAN OF
ACTION TO ACHIEVE A VISION
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Levels of Strategy
Corporate
Transaction
Large
Mid
Office
Car/Two
Other
Corporate
Corporate
Banking
consumer
wheeler
Credit
Credit
Loans
loan

Corporate
Strategy

Busines
s Level
Strateg
y

F
FunctionfF
Functional
Strategy

Corporate Level Strategy

- Corporate Policy(Business &

operational)
- Corporate targets for different
Business units and different
schemes
Business Level Strategy
- At the level of business units, actions
plans for different lines of business to meet
corporate objectives/targets
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Functional Level Strategy

Branch Managers/ Marketing Managers

to
run a functional activity within the overall
corporate policy and business level
approaches
- Marketing
- Distribution channels
- Customer Service
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Market Structure
Market Leader

(about 30 to 40%
market share)
Market Challenger (about 25 to 25%
market share)
Market follower
(about 15 to 20%
market share)
Market nicher
(about 10% share)

Strategies of Market Leader

Expanding total market
Defending existing Market Share
Expanding Market Share
Market Maker/ Market Mover make rates

competitive vis-a-vis other players

More innovative products and intensive and
creative advertisement

Strategies of Market Challenger

Attacking the market leader at your areas of

influence
Identify markets not served by Market Leader
Bring in superior products, better technology,
delivery channels
Increased advertisements

Strategies of Market follower

Hold on to the current customer base
Increase market share. Status-quo is not

growth
Exploit distinctive advantage of location, loyal
customers
Bring variation in the products

Strategies
of Market nicher
Create exclusive and special customers with
custom made products (e.g. Home Stay vs
regular hotels)
This strategy could be highly profitable
Specialisation in small segment
E.g. Urban Coop Banks

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Marketing Strategy for Banks

The strategic decisions are greatly

influenced by Changing Situations. Two

decades ago Banks would not venture into
Housing Loans or Loans against Consumer
durable terming it as inflationary. Today
they are the most important components of
Personal finance products
Competition from New generation private
sector banks and foreign banks is mainly
responsible for the PSBs to go for retail
finance products aggressively

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Business Development Strategy

How the strategy works? - Promotion of Business
Persuasion
- Change of attitude of customers
- negative to positive
Information to customers
Information on the product from different
view points
Recall value
Repeated contacts to maintain continuity of
efforts and to kindle interest
Reinforcing
Converting interest into action sales takes place
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Dimensions of Promotion Strategy

Advertising
- proper media
- proper message
- creativity to be unique(receiving
capacity
of target audience to be kept in mind)
- repetitive advertisement
- cost effectiveness
- based on the feedback message to be
modified
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Dimensions of

Promotion Strategy

contd

Public Relations
An exercise of conveying impression of past deeds and
future plans
It is an art of planning two-way communication and
image building
- Public meetings/seminars
- Press meet/Press coverage
- financial news
- CSR activities
- Community relations
- Sponsorship
- Annual reports
- lobbying with VIPs/Opinion Makers
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Dimensions of Promotion
Strategy contd
Sales Promotion

- Incentives to Customers
- Gifts/ discounts/ contests
- Incentives to staff
- monetary/non monetary
- Personal Selling (involves effective communication which
requires pre sale preparations, ready for questions and
ability to convince customers)
- at the counter
- door-to-door
- in small groups of different segments
- word of mouth
- goodwill of existing customers
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What are the Personal Finance

Products?
Personal finance Products could be
classified into 4 groups
Liability Products
Credit/Cards
Asset Products
Third Party Products
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Liability Products

Various types of Savings

Bank Accounts
Current Accounts
Recurring Deposits
Fixed Deposits of different
types
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Cards
Credit Cards

- Visa
- Master
- Amex
- Rupay
Debit Cards
Special multi-purpose cards
Foreign Travel Cards (chip based, pre funded
balance in foreign currency)
Prepaid Gift cards
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3rd Party Products

These are not products reflected in the Banks
Balance sheet. These are sold for fees. These
are fee-based products
LIC Policies
General Insurance Policies
Mediclaim Insurance policies
Sale of Mutual Funds

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Asset Products
Home Loans
Car / Two wheeler loans
Gold Loans
Education Loans
Loans against Rent Receivable
Loan against Property
Loan to Pensioners
Personal Loans
Loan against NSC/LIC Policies/Shares
Loan against Reverse Mortgage
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Key characteristics of Personal finance products (asset

products)

These are facilities targeted to individual customers

Focused towards mass market segment covering

large number of customers

These kind of loans are high yielding
Credit risk is diversified over large number of
borrowers
The loans are schematic in nature and does not
require elaborate credit skills for the staff
The success lies in generating large volumes of
business.
Thus these are essentially, IT backed products for
sales, service and follow up
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Key characteristics of Personal finance

products (asset products). contd
To generate large volume, advertisements in

different media, on a sustained basis is

required
This sector is highly price sensitive. Hence
very competitive terms have to be quoted for
customer acquisition and customer retention
Delinquencies are high in unsecured retail
loans like credit card receivables
Services of large field sales force is essential,
which is normally outsourced
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Infrastructure
requirement
A good IT package for sourcing the account and the follow

up. Because of the large volume of business, individual

attention to each account is very difficult
Dedicated Marketing Managers
Appoint a team of DSAs. Nearly 60% to 70% of the business
is canvassed by the field sales force
Outsourced agency for due diligence of borrowers
Recovery Agents for follow up of accounts
Repossession agencies for seizure and sale of assets.
Centralised loan processing centers for quicker TAT and
developing specialisation and effective marketing. E.g Retail
factories of BOB, Rapid Retail Centers in IOB, Personal
Banking Branch in SBI
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Specific Strategies for Home Loan

and Vehicle Loans
Tie up with reputed builder, so that processing the loan

application becomes quicker and documentation easier.

A concession in process charges may be announced.
Conduct Home Loan Melas bringing different builders
and customers together.
Putting up stalls of the Bank at various Real estate
exhibitions.
Placing DSAs at different Car show rooms for customer
acquisition
Launch short duration Campaigns with special interest
rate/ concession in processing charges
Regular Advertisement campaign
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Direct Selling Agents (DSAs)

A concept pioneered by Foreign Banks, nurtured

by new generation Pvt sector Banks; now adopted

by all Banks
DSAs are agencies appointed by Banks for
sourcing business, for a fee
DSAs are primarily used for sourcing Retail Loan
and credit card business.
DSA appoints their own field staff and
telemarketing staff
There are many instances of miss-selling, causing
Reputational risk to the Bank
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Direct Selling Agents

The direct selling agents should be

appointed as per the guidelines of RBI

and they should sign an agreement of
code of conduct

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Dedicated Marketing Managers

These specialist officers are recruited to handle
the following:
Market intelligence
Potential sourcing
Product / Corporate presentations
Right selling to the correct target group
Sales conversion
CRM
Managing DSAs
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