Page 146 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 9: Financial Considerations

Notes

Case Study It’s a Hard Core Job to Implement Core Banking
Services at Mera Bank

era Bank introduced core-banking services to mesmerize the demanding
customers. In doing so it introduced organization-wide changes in
Minfrastructure, technology and competitive services to customers. But hold on-
are employees ready to accept the change suggested by the top management?
As we all know, the Banking Industry has observed sea changes after the amendments.
The Banking Regulation Act in 1993, which allowed the private sector banks to enter this
industry. Privatization brought in competition, cost cutting, enhanced customer
expectations. As a result, quickness, promptness, and urge to retain the loyalty of the
customers, multiplicity of services to customers, sophistication and modern technology
have become the password to success.
Changing Trends in the Banking Industry
Indian banking can be broadly categorized into nationalized (government-owned), private
banks and specialized banking institutions. The Reserve Bank of India, acts as a centralized
body monitoring any discrepancies and shortcomings in the system. Since the
nationalization of banks in 1969, the public sector banks or the nationalized banks have
acquired a place of prominence and have since then seen tremendous progress. The need
to become highly customer-focused has forced the slow-moving public sector banks to
adopt a fast track approach. These customer-friendly programmes included revamping of
the product and service portfolio by introducing new product and service schemes (like
credit cards, hassle-free housing loan schemes, educational loans and flexi-deposit schemes)
integration of the branch network by using advanced networking technology and customer
personalization programs (through ATMs and anytime banking etc.). Many banks have
started capitalizing on the recent stock market surge by adding (Initial Public Offering)
IPO financing options and schemes in their product mix. IPO finance has received a positive
response from the investors and is becoming popular amongst the business community.
The objective of all these strategies is very clear - to bridge the service and product gap
that was inherent in the banking system. To cater to the increasing customer demands and
the surge in business volumes, many public sector banks have ploughed back funds to
invest heavily in technology upgrades and systems like LANs, WANs, VSATs, etc.
Marketing and brand-building programmes were also given a new thrust in the new
liberalized banking scenario. Promotional budgets were hiked to cater to the new and
large discerning target audience. Banks were now keen on marketing their products and
services through various mediums to reach their core customers. Direct marketing, Internet
marketing, hoarding, press ads, television sponsorships, image makeovers, etc. became
an integral part of a bank’s marketing mix. To meet the personalized needs of the customer
and in order to differentiate its services, banks repositioned themselves in specialized
fields, like housing loans, car finance, educational loans etc. to optimally service the
customer. Permission marketing became the new strategy that banks began to propound
i.e. feeding the customer (with his or her consent) with product and service information
and thereby enticing him towards the bank’s product-service portfolio.
Waking up to these events in the private and public sector banks, Mera Bank also introduced
Core Banking services to its customers.
Contd...

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