Marketing strategies play
a major role in determining the growth of financial services industry. Various
marketing strategies adopted by the major financial service providers like
marketing and distribution strategies of banks are different in urban and rural
areas due to diverse demographic and socio-economic nature of these markets.
Private Banks are mostly concentrated in urban areas due to higher income,
better infrastructure, higher investor base and concentration of 5 commercial
activities in the urban areas of the country. The distribution channels used by
such banks include bank branches, ATMs, internet banking, phone banking, direct
selling agents, call centres, etc. The distribution networks developed by
public banks in urban as well as rural areas are a result of policy measures
due to which the number of public sector bank branches is higher as compared to
private or foreign banks. Private sector banks are also penetrating into the
rural areas by using the non-branch delivery systems like the Business
Facilitator (BF) model or Business Correspondent (BC) model proposed by RBI in 2006.
the BF model, banks utilize the network of intermediaries such as the NGOs,
post offices for banking services such as creating awareness and educating on
the financial products, collecting and processing information of borrowers,
selling banking products and financial services to rural households, etc. The
activities in a Business Correspondent model include all those of the BF model
and further include disbursing small value credit, etc. Intermediaries under
these models have knowledge about the local population and provide feedback
about the requirements of the local population .As the local population has
trust in these intermediaries it is possible to cross-sell various products.
Cross-selling helps in customer retention, reduces customer acquisition costs.
It also benefits the customer through fair prices for the products, easier processing
and customized products. The usage of such non branching delivery channels has
been very less. However, with rising incomes in the semi urban and rural areas,
there is further scope for private banks to adopt such non branching delivery
In addition to the branch and non-branch
delivery systems adopted respectively by public and private sector banks, banks
also use simple-to-use cash dispensing and collecting machines similar to ATMs
which have operating instructions in vernacular languages too. Banks have also
initiated credit plus services such as setting up of rural training centres for
small enterprises, farmers clubs, knowledge centres, credit counselling centres
for educating the semi-urban and rural population with respect to minimizing
yield risk and price risk in agriculture. This, further, leads to lower lending
rates and lower credit risk.
Distribution Channels- Banks
Building Bank Networks in Rural areas
has undertaken several initiatives to increase bank networks in rural areas
which are summarized below:
2006 onwards, RBI approved setting new branches condition to 50% of such
branches being opened in unbanked areas.
2006, Rural Regional Banks (RRB’s) were allowed to market mutual fund units
based on the approval from their Board of Directors. These RRB’s, can enter
into distribution agreements with private or foreign mutual fund houses for
marketing their schemes based on terms and conditions specified by RBI.
Business Correspondent Model
correspondents are retail agents engaged by banks for providing banking
services at locations other than bank branch/ATM. BC’s are enabled to provide
low cost services.
of small value deposit.
of small value credit.
awareness about savings and other products.
more Business Correspondent can do?
the under-banked and unbanked population about the importance of banking,
investment options, deposit schemes, interest rates.
Banking assistance in process such as opening bank accounts, fixed/recurring
the instalments for loans, EMI’s, payments and fees from customers.
of small amounts of loans.
How Business Correspondent Model
in maintaining better assets in banks.
the customer base by reaching out to the customers.
the concept of doorstep banking.
alternative to physical branches.
Kiosk Banking Model
Kiosk banking model is an initiative taken by the RBI for those living in the
village areas and deprived of basic banking services due to non-availability of
bank branch in their locality. In such circumstances the person is not needed
to go to bank, instead the bank comes to village where the person can make
idea behind the functioning of kiosk is that it should be supported by the
banks in private, public and cooperative sectors. These acts as links between
deposits, withdrawals, remittances, insurances and overdraft services.
provides internet based, bio-metrically enabled banking service to the rural
customers through business correspondent model.
this alternate channel, customers can do online, real time banking transaction
at his place without the help bank.
SBI Kiosk Banking
Is Technology a solution?
significant problem regarding implementation of banking models for rural
banking is lack of consistency in service delivery by its outsourcing partners.
Though 278 million accounts have been opened under the Pradhan Mantri Jan Dhan Yojna, 30% of the accounts lie dormant.
Agent inactivity and lack of product knowledge adds to the problem.
How can Technology helps?
of the ways IoT can help would be to track the agents as they venture out on
their daily, weekly, or monthly client visits. IoT sensors can be placed on
their vehicles, bicycles, motorbikes, or vans. Data captured on travelled
times, duration of the visit, and the number of breaks taken are important
parameters that can be used to ascertain the accuracy of the agent’s claims
about visiting clients and dispensing services.
attached to the micro-ATMs carried by the agents, along with the account usage
data, can be verified with the location data to determine whether customers
actually can access and use their accounts as needed. This is useful in
detecting fraud such as misappropriation during loan disbursement, cash
withdrawals, or deposits.
IoT, banks can test new business models by partnering with innovative ecosystem
partners. For instance, data analytics companies, such as Satsure and Stesalit,
use data from IoT sensors, along with the satellite data, to conduct precision
farming, climate forecasting and remote crop monitoring analytics. Banks can
partner with such companies to assess farming conditions in different regions
on a periodical basis.
opportunities for IoT and banking are just begin to emerge. The impact that IoT
will bring to this sector is enormous.