UNIT I: INTRODUCTION TO BANKING MARKETING

1. Concept, Evolution, and Nature of Banking Marketing

1.1 Introduction to Marketing

Marketing: it is a total system of activities that includes a set of
processes by which the needs or desires of the
consumers or customers in order to satisfy them in the best possible way.
promote the exchange of valuable products and/or services with them, in exchange for
a utility or benefit for the company or organization.
Banking Marketing: it is responsible for studying, planning, controlling and
coordinate the different departments of a financial entity. It is based on its
strategies in current markets and in potential customers, satisfying,
at the same time, the requirements or needs of consumers.
Banking marketing is a specialized service resulting from intense
transformations that have occurred in the banking segment in recent decades,
generating a large volume of mergers and acquisitions, characterizing the
entry of several foreign banks.
Thus, with even fiercer competition, financial institutions in
they began to recognize the importance of customer relationships as
a form of loyalty. The banking segment was one of the first to notice the
importance of personalized treatment of customers, due to segmentation
intrinsic to its activity, based on income, clients, and other variables.
Banking marketing is a specialized service not only because it belongs to the sector
tertiary (tertiary or services), but also because it presents characteristics
peculiarities that are not found in other categories of services.
The marketing professional, who works in financial institutions, must be
aware of the distinctive characteristics present in banking activity,
such as:
The government regulation that limits or directs the money supply, as
the consequences of their actions have implications not only sectoral
but also political and social;

Level of knowledge about the individual customer, generally inadequate in

view of the abstract aspect of certain banking services;

Establishment of permanent and more lasting relationships between banks

and clients in relation to other markets.
The difference lies in the company's ability to differentiate itself from the
competition through other factors, besides price, which is only possible
when it becomes unique in something valuable for the consumer.

The differentiation strategy provides insulation against competitive rivalry,

due to consumer loyalty to the brand and lower price sensitivity. It is
it is possible for the company to increase its margins, create a barrier to entry for
the competitors, due to customer loyalty and supremacy in their offering. The
companies must focus on customer segments and know them individually
to understand and meet your requirements and demands.
1.2 Marketing as a system
By system, we understand 'a set of objects united by some interaction or
regular interdependence. In the specific case of marketing, this interaction and
interdependence occurs among the different variables we can consider,
how are the product, prices, advertising, etc.
Throughout the development of knowledge about the variables that intervene in
the decisions of marketing executives are increasingly being addressed
find relationships that link these variables to each other, and if possible explain
how things happen. With this, I am referring to the construction of
mathematical models to discover, quantify, and evaluate business strategies
alternatives.
Research is also being conducted on the formulation of information systems.
marketing direction, that allow for the most accurate decision making
possible, without forgetting the importance of systems in the implementation of the
marketing tactics, as well as in the development of new products.
For all that has been said, it is very important to review the established systems in the
company, check its effectiveness and in case of not being organized, make the
relevant recommendations for establishing and addressing this
situation.
Among the systems that are most commonly used in marketing are:
The Information System.
Its function is to organize the suitable methods to obtain the information.
necessary to plan, execute, and control marketing actions.
The Planning System.
Planning ensures that the company has projects that will define in
At every moment, what initiatives should be taken by the marketing department?
in front of any situation that arises.
 The Control System.
All marketing actions must undergo routine control that
allow to verify if decisions are being made at the right time and with
the expected results.
This system will be linked to the profitability project that the company hopes to achieve.
with the marketing plan and will therefore be studied jointly in our
We will do the specific case at the end of the work.

New Product Launch System.

A decisive part of the company's performance is the innovation of its lines.
of products. But this cannot be done in a disorganized way, but rather more
well on the contrary, following a system.
1. 3. Service marketing
Service Marketing is an area of Marketing that adapts some of its
practices to the peculiarities of the Services. In contrast to the traditional
marketing approach around products, service marketing is an area
of recent development, which has gained special importance due to its weight
economic of these services.
Components:
Due to these peculiarities, they take on special relevance as pointed out.
Kotler and Keller three components of the relationship:

The client: clients have numerous alternatives to choose from.

service providers, especially with the rise of technologies
digital and mobility. The service company needs to start from
understanding of their uses and needs. And it must provide its
services in a relevant way for the key customer segments to
those that serve, according to the processes established by the company.

The human team of the company: is of special importance in the

personal interactions the role of company staff, because
it makes the service tangible and creates it in the moment for the client. Furthermore,
customize the brand of the service company.

Physical and digital channels: the customer expects to access the service
offered by the company through the channels of your choice. Channels
digital platforms like the Internet or mobile allow customers to access the
company from anywhere in the world and at any time.
Marketing Tools Services:
Organizations have various tools to evolve the
creation and delivery of those services, highlighting Villaseca for its relevance:

Service design: in light of the importance of adapting proposals to the

customer needs, various design systems allow
offer solutions from the understanding of these clients. One of those
the systematic service design used is design thinking
design thinking). It assumes starting from the understanding of the customer, in order to
develop service solutions creatively, test them empirically and
finally implement them.

Customer experience: in a highly competitive environment, customers

They expect to receive authentic relevant experiences. Thus, systematic approaches emerge.
for its development as Customer Experience Management
Customer Experience or experiential marketing.

Customer management: in the face of the opportunity to develop stable relationships

with customers over time, companies adopt various programs
to enhance their loyalty, according to Peppers and Rogers. Among them, the
management of Customer Relationship Management (CRM)
the client) allows for the development of actions in this regard.

2. Particularities of Banking Marketing

2.1. Financial Intermediation and Credibility
Intermediation is an activity that consists of attracting money or other resources.
from the general public and lend it to third parties. It is the typical activity of
the banks, savings banks, and savings cooperatives. It involves two operations: the
passive, which are those for the capture of resources, and active operations, which
the delivery times of such resources to third parties (basically in the form of
loans).
As financial intermediaries, we have the central banks affiliated with the
governments, commercial banks, savings and loan associations, cooperatives
credit, insurance companies, pension fund institutions and funds
mutual etc. (Samaniego, 2008). Therefore, the economic phenomenon where
these institutions participate that interrelate savings fund and
Investors is what has come to be known as financial intermediation.
Well, banks also carry out other operations, basically
provision of services, such as custody of assets, investment advisory,
intermediation in foreign trade operations, certain types of insurance,
etc., which, although they are traditional banking functions, do not constitute
financial intermediation.
Everything related to banking systems is regulated by the general law of
the banks and financial and non-financial institutions, where the State regulates this
activity, to a greater or lesser extent, to ensure, as far as possible, that the money
the public is not squandered, and that the banking systems do not collapse, which
it would be a disaster for any nation. This control is exercised in our country by the
BCN, which also manages monetary policy. Every bank needs a
prior authorization from the State to operate, once it has confirmed that
the financial institution meets the conditions.
2.2. Risk Perception
The implementation of the Basel II Agreement in the year 2005 introduced changes
substantial in the management of risks of financial entities. The
implementation of internal rating models -still in process- as
measure of the credit quality of clients represented an important change in the
daily process of measurement, management and control of credit risk. The business
banking, based on the trust of depositors and investors, materializes
at high levels of leverage - the very essence of its activity - and in the
management of high-risk volumes. Given its importance to the economy,
it requires, despite being in private hands, a high level of regulation and supervision
by the competent public bodies that, although it allows some ratios
(Reasons or financial indicators) of leverage (Using debt)
to finance an operation) substantially greater than those of other sectors,
ensure its stability and operation.
Thus arises the concept of solvency: the measure that protects depositors and
remains of creditors of the losses that may arise as a consequence of
the inherent risks of the activity. It also ensures the stability of the system
in the long term, ensuring the continuity and strength of the financial business,
watching over the stability of the economy.
Financial solvency: the ability of financial entities to meet obligations.
his short-term debts with the current assets he possesses.
Although at first glance it may seem that concepts as arid as those that
Those involved in risk management are unrelated to a field like marketing.
these are determinants for the design and implementation of the systems of
marketing information of a financial entity.
As we have pointed out, the very existence of the company depends on the
appropriate management of that information, as the offer of active products
Banking - or loans - must be proactively directed to those clients
with appropriate risk profiles, to avoid future losses due to non-payment
of the same. The definition of the target audience we want to reach with
our marketing action will largely depend on the risk threshold at
that the entity faces, which distinguishes retail banking clients from
the investment bank.
Risk is a determining factor when setting the price of loans.
banking. The Risk-Adjusted Return (RAR) is one of the metrics
fundamentals used by financial entities, and measures the profitability of
business of a financial entity adjusted to the risk it assumes. Said in other
words, a company with a healthy balance sheet and high profits will have
access to cheaper bank financing than others that are in a worse situation
financial situation. The same situation occurs among individuals who go to
seeking funding: a client with high net worth and high income
You will obtain a loan from the bank with a lower interest rate, as your probability
the default is lower.
2.3. Technology and Banking

Banking and technology are two realities that, despite having developed
independent manner, they have managed to reconcile in many aspects. Today in
It is unthinkable to consider banking activity without an adequate level of
technology.
The banking sector has been one of the sectors that has undergone significant changes in the
last years, especially since the financial crisis of 2007. In this context,
Investment in information technology in banking has been notably
superior to that of most industries, such as those that may be
telecommunications, healthcare or insurance.
It is estimated that Spanish banking has invested an average of 4,000 in technology.
millions of euros per year. But can we consider this volume a lot or a little?
How much technology is needed to improve banking efficiency?
In recent years, banking entities have been focused on complying with a
increasingly demanding regulation, improve their efficiency and carry out processes
of mergers that would allow them to grow and gain critical mass, as well as to seek
new sources of income. All of this has been facilitated through a significant
technological investment that reaches its peak in the so-called "digital banking".

This has led us to a situation where, if before the financial crisis we

I used to see technology only as technical support for product design, today it forms
part of its core business and is present throughout its life cycle.
Technology also helps to increase the efficiency of processes.
banking, its mechanization and reducing the number of people in tasks that do not
they add added value, at a time when recurring revenues from the
bank loans are difficult to obtain.
According to various sources, 6% of the ROE - based on an estimated average ROE of
12% of the banks, in 2013, was obtained through improvements in IT.

Although the percentage of spending on information technology is very similar

among entities, a strong polarization has been observed in recent years between
those entities that reduce their IT costs (-11.6% on average) and the
entities that increase it (13.6%)
The efficiency ratios and information expenses have followed a trend
parallel also in recent years. This reaffirms how important it is the
technology to achieve efficiency levels around 40%, a ratio that
considered optimal for the banking industry.
3. Trends in Banking Marketing
3.1. The Bank of the Future

Banking has changed in recent years, but this change is even

small if we compare it with what the future of the sector points to: changes
truly important that will further modify the user's relationship
with financial entities... or rather with whoever provides them with products
financial.
And one of the most relevant issues to understand where it is headed
the banking sector in the future is to assume the presence of large firms not
financial within the offer of financial products. This is a factor
determinant that is already in the full heating phase of
engines and will have a lot to do with the future of banks.
The banking sector necessarily had to reinvent itself after the emergence of
Internet. This has been a difficult step and in many cases has been completed based
of trial and error, but, to some extent the evolution of the banking offer
conditioned by the Internet ran parallel to the evolution of the users themselves
with the medium; basing a large part of the demand on reproducing the Internet
the management models that could be done offline. Therefore, the main potential of
this change was based on the advantages that carrying out tasks online implied
regarding offline transactions.
How much does it cost to cancel a banking product?

However, the last decade has brought three elements that are changing it.
everything in this regard:

A digital native generation for whom the medium is no longer a possible alternative.
but a main channel.
An advance in the new communication technologies such as
it had never happened in history (due to the speed of evolution).
A spectacular growth of giant online retailers.
The combination of these three issues is undoubtedly behind.
about what the banking of the future will entail. Or rather, it would be more correct to say
talk about the future of the marketing of financial products as it will be
this is the one that will determine the configuration of who offers them.

They know what you like, they have all the data, with activity centers, your profile
professional, your expenses... it doesn't seem difficult to understand why the giants of
They want to start participating in the product business as soon as possible.
financial people with their eyes initially on bank accounts, possess
a privileged position to make the offer right as well as counting as a point
starting with the confidence of the digital native generation.
UNIT II: ANALYSIS OF EXTERNAL VARIABLES OF THE BANKING ENVIRONMENT
1. 1 Characteristics of the Banking Market
1.1.1. National Financial System composition
The financial system is the set of institutions (financial entities and ...
governments), means (financial assets) and markets that make it possible for
the savings (idle money) of some economic agents end up in the hands of
the credit applicants, thereby channeling savings and investment in order to
to get this assigned in the most efficient way possible. And, how
consequence, there is economic growth.
Therefore, the financial system serves to intermediaries between those who have excess
of money and they want to lend it, and those who need financing. That is to say, what
generate the financial system are credits. A very important actor within the
financial system are the banks, which act as intermediaries between those who
They have excess money and those who need it.
In addition, they facilitate the conditions for both parties. They adjust in time and
the amount of money they receive and lend, based on the needs of the agent
economic with excess money and the demander of money. It would be impossible the
direct loan by the savings provider and the borrower, because
probably your financial needs would not be the same in terms of
quantity and time.
From the perspective of someone with excess money, it would be an investment.
Well, this deposit in the bank would generate a return. And, from the perspective
of the one who wants financing, it would be a loan for a certain period, for the
He will have to pay some interest in addition to repaying the principal.
Therefore, the financial system plays a very important role within the
economy because it generates more income for those who lend and also encourages the
business creation, something essential for the economy.
There are different instruments to carry out this relationship: the products
banking products such as accounts, deposits, etc.; investment products such as
stocks, mutual funds, bonds, etc.; pension plans, and the products
such as life insurance.
There are people more interested in finance and turn to the markets to
to meet their financial needs. However, many other people see
In banks, the economic solution to their needs.
Banks take an intermediary position to carry out a task of
advising.
In Nicaragua, the Financial System is regulated by Law No. 316, Law of the
Superintendence of Banks and Other Financial Institutions (SIBOIF) and Law
No. 561, General Law on Banks, Non-Banking Financial Institutions, and Groups
Financial institutions, in addition to other entities.

1.1.2. Bank Profile

1.2. Definition of the Banking Environment

1.2.1. Competence
Competitiveness
1.2.3. Market Segmentation
2.1. Competitive analysis
2.1. 2. Financial fund providers
2.1.2. Technological Impact on Banking Services
2.1.3. Competitive rivalry
2.1.4. Banking Rank
2.2. Analysis of the Banking Customer
2.2.1. Construction of the banking customer profile
2.2.2. Needs and Motives of the Banking Customer
2.2.3. Decision-Making Process of the Bank Customer
2.2.4. Segmentation of the Banking Customer
2.2.5. Banking Customer Loyalty
3.1. Diagnostic Report
3.1. Power of the forces that intervene in the banking environment.
UNIT III: MARKETING MIX STRATEGIES
1.1 Definitions of Marketing Mix
1.1.1. Definition of products and services
1.1.2. Price Formation
1.1.3. Types of distribution channels
1.1.4. Advertising and promotion
 1.2. Strategic Formulation
1.2.1. Definition of Strategies
1.2.2. Strategy formulation process
1.2.3. Portfolio Strategy
1.2.4. Segmentation Strategies
1.2.5. Positioning Strategy
1.2.6. Functional Strategy (Marketing MIX)
1.3. Innovation and Marketing
1.3.1. Definition of Innovation
1.3.2. Creation of new products/services
1.3.3. Improvement of financial products and services
1.3.4. creative marketing
2.1. Offer of Financial Products and Services
2.1.1. Characteristics of Banking Products and Services
2.1.2. Quality indicators of banking products and services
2.1.3. Innovation in Banking Services and Products
2.2. Prices of Financial Services/Products
2.2.1. The interest rate as prices of services and products
financial
2.2.2. Commissions for banking services
2.2.3. Cost/Benefit Relationship in Interest Rate Formation
2.3. Corporate image and communication
2.3.1. Fundamentals of corporate banking communication
2.3.2. Elements of communication in Banks: Symbols, slogan,
images
2.3.3. Construction of advertising messages in Banks
2.3.4. Elements of Banking Corporate Identity
2.4. Multichannelity of financial products/services
2.4.1. Banking Business Model
2.4.2. trends in the Banking sector
2.4.3. Electronic Banking
2.4.4. Personal Banking - Relational
2.4.5. Telephone banking
2.4.6. ATMs
2.4.7. Banking Agents
3.1. Marketing Strategy in the Banks of Nicaragua
3.1.1. Positioning level of each Bank
3.1.2. Characteristics of the segments of each Bank