Marketing Strategy - Axis Bank

Historical background

• The first major event of Indian banking was the creation if Imperial Bank of India by merging Bank of Bengal, Bank of Bombay and Bank of Madras in 1920

• Between 1906 to 1913 Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank and Bank of Mysore were setup

• Other two banks setup under colonial rule are Allahabad Bank and Punjab National Bank

• The Current Banking regulator came in to existence on April 1, 1935 • In 1949 Government of India promulgated Banking regulation Act 1949 through

which RBI was vested with extensive powers for the supervision of banking in India as the Central Banking Authority

• In 1955 the Imperial Bank was nationalized and State Bank of India along with its subsidiaries were nationalized

• In the year 1969 all other private banks were also nationalized and the private banking in India was almost reduced to zero

• It was post liberalization in 1991 when the banking sector was opened-up again for private players

• Today we have 23 Private bank and 29 foreign private Banks having their operations in India

• Axis Bank (Formerly known as UTI) begun operations in 1994 • It got itself renamed as Axis Bank from UTI Bank in the year 2007

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Marketing trends in banking sector

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Traditional Banking Period up to 1969

Development Banking period 1969 to mid 1980’s

Bank Marketing period After mind 1980’s

Accounting Orientation

Selling Orientation

Towards Marketing Orientation

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Period Banker’s Major Orientation

Banks approaches towards customers and market underwent changes and focus was gradually shifted to marketing their products.

Marketing trends in banking sector .contd.

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The fantastic increase in needs and expectation of banking customers, important factors for this change are

• The spread of Television, including access to international channels,

• Rise of Indian middle-class with considerable financial resources and higher propensity towards consumption,

• Entry of foreign and private sector banks in India,

• Break-up of the joint family system in urban India,

• Govt. intervention for protecting the interest of consumers.

Origin

• The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI) and – Life Insurance Corporation of India (LIC). – General Insurance Corporation Ltd (GIC). – National Insurance Company Ltd. – The New India Assurance Company. – The Oriental Insurance Corporation. – United Insurance Company Ltd.

• It got itself renamed as Axis Bank from UTI Bank in the year 2007.

• Oglivy and Mather was the company engaged for this rebranding exercise.

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Growth

• Third largest Private Sector Bank in India • 1947 Branches and 11,245 ATM’s spread across the country • Has operations in Singapore, Dubai, Hong Kong, and Abu Dhabi • Balance sheet size of over 3.4 lac crores in Mar 2013 • Vision

– To be the preferred financial solutions provider excelling in customer delivery through insight, empowered employees and smart use of technology.

• Core Values – Customer Centricity, Ethics, Transparency, Teamwork, Ownership

• Business – Retails Banking: Personalized Banking services for individuals – Business Banking: Covering SME segment – Corporate Banking: For large corporate – Treasury operations – Agri Loans: Rural presence – Mutual fund and asset management – Financial consultancy

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Annual Results - 2013

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Snapshot (As on March 31, 2013)

Total Assets ₹3,40,561 crores

Net Advances ₹1,96,966 crores

Total Deposits ₹2,52,614 crores

Net Profit (Q4FY13) ₹1,555 crores

Net Profit (FY13) ₹5,179 crores

Shareholders’ Funds ₹33,108 crores

ROA (for FY13) 1.70%

ROE (for FY13) 20.51%

Net NPA Ratio 0.32%

Capital Adequacy Ratio 17.00%

Tier 1 CAR 12.23%

Saving Bank Accounts

(No.)

127 lac

Branches2 1,947

Foreign Offices 7

ATMs 11,245

Performance Highlights Q4 FY 2013 FY 2013

Net Profit 22% YOY 22% YOY

Net Interest Income 24% YOY 21% YOY

Fee Income 22% YOY 17% YOY

Operating Revenue 25% YOY 21% YOY

Operating Profit 37% YOY 25% YOY

Net Interest Margin 3.70% 3.53%

CASA1 23% YOY

CASA (Daily Average) 14% YOY

Performance Overview

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• Operating Revenue grew 25% YOY, stood at Rs. 4,672 crores

• Operating Profit rose to Rs. 2,800 crores, registered growth of 37% YOY

• Return on Assets stood at 1.94% and Return on Equity at 21.38%

• Well positioned for future growth with Tier I CAR of 12.23% and Total CAR of 17.00%.

Business Overview

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• Multiple channels drive business growth

• Extensive use of technology to provide services

• Expanding footprint across centres

• Largest ATM network in the private sector

SWOT analysis

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STRENGTHS • One of top three positions in terms of fastest

growth in private sector banks. • Has a network across India through Branches and

ATMs with its presence in 971 cities and towns. • Brand Name • Knowledge of Indian Market

WEAKNESSES • Majorly concentrated in corporate, wholesale

banking, treasury services, retail banking • Foreign branches constitute only 8% of total

assets • Customer service has to improve a lot in order to

be in race with other major players

THREATS • Growing competition from global players • Consolidation of public sector banks • Permission for new private sector players,

increase in competition: Customer retention will be a key

• ICICI and HDFC are imposing strong threats in terms of their expansion in customer base by their aggressive marketing strategies

OPPORTUNITIES • Acquisitions to fill gap • Multiple businesses synergies • Global foot print • Technology as a lever for differentiation and cost

reduction • Geographical expansion to rural market – 80% of

them have no access to formal lending • Concept of ETM (Everywhere teller machine) had

a good response in attracting new customers in personal banking segment

Marketing strategies: 7Ps analysis • Product

– Accounts: Easy Access Accounts, Prime Savings Account, Salary Account, Women’s Saving Account, Senior Privilege Account, Defense Salary Account, Trust & NGO Savings Account, Azzadi –No frills RFC (D) Account, Pension savings Account

– Deposits: Recurring deposits, Fixed Deposits, Encash 24,Tax Saver Fixed Deposits, Loans, Home loan

– Loans: Personal loan, Loan Against Property, Loan Against Security, Car Loans, Study Loans, Two Wheeler Loan, Consumer Loan

– Investments: Online Trading, Mutual Funds, Fixed Income, Depository Services

– Insurance: Health Insurance, Family Health, Health Guard

• Price – Axis bank has developed innovative strategies against its competitors

with respect to pricing by use of technology. – The creation of centralized processing system linking all its branches has

been a major strategic move in this regard.

• Promotion – Cross Selling exercises – Organizing school level painting competitions in order to create

awareness about the environmental concerns and the wild life to promote kids advantage account.

– Wheels of fortune - This promo are targeted at all those customers who avail a personal loan, car or a two wheeler loan. There will be lucky draw at the end of the promo and the winners would get exotic prizes.

– Personalized promos by sending mailers about various products on offer to all those who come in contact during the mass promotion strategies.

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Marketing strategies: 7Ps analysis ..contd.

• Place – Axis bank is widely spread in India – 947 branches and 11,245 ATMs – extension counters foreign offices

• Process – Developed a robust internal as well as external business process and sales practices – focused on the process development and bringing transparency to all the

transactions

• Positioning – Centralized phone banking centre – Centralized collection and payment hub

• People – constant endeavor to continuously develop its human resources by laying strong

emphasis on training development – possesses a highly motivated team of professionals and has the lowest employee

turnover rate in the industry

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Other strategies

• Segmentation Strategy – Demographic Variables - Demographic segmentation variables are amongst the most

popular bases for segmenting customer groups which include Location, Occupation, Age etc.,

– Psychographic Variables - Lifestyle, The people who believes in modern banking i.e. internet banking (I-contact, mobile recharge, e-payment, travel currency card etc.)

– Social class - Many Marketers believe that a consumers "perceived" social class influences their preferences for products & services

• Targeting strategy – Corporate banking market: this market target the industries – Capital market: this segmented is targeted on the long term needs of the individual

as well as of industries – Retail banking market: this segment is for the retail investor and provide them short

term financial credit for their personal, household needs

• Selective specialization strategy – axis bank have different set of credit cards, each targeted at different set of people

• Positioning Strategy – Customer centric – Service oriented – Product innovation

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Other strategies • Cross selling- Cost reduction strategy

– It launched Airtel money Super Account powered by Axis Bank’, a no-frills savings bank account of Axis Bank on Airtel’s mobile platform, in partnership with Infosys.

– Money transfer with cash-out now available across leading remittance corridors; customers can save money and earn interest too

– Resulted in • Almost all SME customers have Current Accounts with the Bank • Nearly 1/3rd of SME customers avail FOREX products • Integration with Wealth Management resulted in high fee based income

• Relationship marketing strategy – 78% of SME Customers have rated overall quality of RM highly – Key strengths of RM model as per the IMRB survey are Availability,

Knowledge level, Timely product and service delivery, Promptness in responding to queries

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• Internet Banking Strategy – offered a unique platform for all its customers

both the individual as well as corporate customers to complete transactions online

– presence on all the 4 major social media platforms – Facebook, Twitter, YouTube and Linkedin

Thanks

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• References • http://www.axisbank.com • http://www.rbi.org.in • http://business5.net/m/marketing-approach-to-promoting-banking-services-w321.pdf • http://www.jmijitm.com/papers/130082034035_42.pdf