[BANKS, BRANDS AND

2009
ADVERTISMENTS ]
Analyze the market penetration of Top 10 Banks in India for retail products. Has
brand played a significant role in this? With banking products being increasingly
treated as commodities, it is said that advertising is critical for selling bank
Goa Institute
products. Has advertising expenditure of been able to produce desired
incurred
Management
results? Is it possible for you to develop a model which co-relates the success on
the ground with AD spending?
Lynn Bouselly (2008020)
 TABLE OF CONTENTS
BRAND MANAGEMENT IN THE BANKING SECTOR.......................................................2
BRAND AND RETAIL BANKING.....................................................................................2
RETAIL BANKING IN INDIA........................................................................................2
ADVERTISING IN THE BANKING INDUSTRY...............................................................2
Advertising in the Print Media..............................................................................2
Advertising in Television Media............................................................................2
Summary of Findings...........................................................................................2
BRAND AND ADVERTISEMENTS – A MODEL................................................................2
BRAND POWER........................................................................................................2
BRAND MOMENTUM.................................................................................................2
REFERENCES..............................................................................................................2
REFERENCES
 BRAND MANAGEMENT IN THE BANKING SECTOR
Brand management has become very important in banking. One reason is the
general slide toward commoditization, or competing solely on price. Research shows
that there is little recognition in the marketplace (on the part of both consumers
and business customers) of competitive differentiation among medium sized and
large banks. When there is, it is generally centered on pricing. Branding is the best
hope against sliding into the commodity trap.

Another reason is the extension into new products and services and the ongoing
breakdown of the walls that have traditionally separated banking from the
insurance and money management/investment sectors. As banks expand their
product offerings into new areas, they need to find ways to manage the
marketplace's perception of their abilities and value compared to the other options.

Finally banks have recognized how important brands are to customers. In the days
when banks were institutions, having a large, solid building was sufficient to
convince customers they were in good hands. Today's customers are more
sophisticated, but they still make decisions based on their perception of a brand's
value.

In the banking sector, brand value is the most relevant to the retail banking
segment. Consumer banks have higher market capitalization to brand value ratio
than investment banks, reflecting the need to connect with the high-street
consumer.

In the following sections we will compare the advertisement expenditure of the top
10 retail banks in India and try and reach a conclusion on how important advertising
and ‘brand’ play in their success.

BRAND AND RETAIL BANKING

RETAIL BANKING IN INDIA

All around the world retail lending has been an established market; however its rise
in emerging economies like India has been of recent origin. If recent statistics on
consumer finance are any indication, the last few years have been trend setting.
The traditional debt-averse, middle-class Indians who lived within their thrifty
means, never to venture beyond their means, seem to have given way to a new
middle-class that is free from all inhibitions regarding conspicuous consumption.
Unlike its predecessors, the middle-class of today has donned a new attitude; it
attaches no social-stigma in taking loans for spending.
Indian retail banking is up and kicking. During 2004-05 retail contributed 42% of
overall credit growth. Growing at the CAGR of 35% over last 5 years the retail asset
touched Rs 1, 89,000 crores. Major product segments of retail credit include
housing finance, auto finance, personal loans, consumer durable loan and credit
cards to name a few. Housing constitutes the biggest segment of 48% of the entire
retail credit; followed by the auto loans segment which constitutes almost 27.8%.
While the balance retail credit is used by consumer durables at 7.2%, educational
and other personal loans take the remaining 16%.

In India, all the retail banking segments are expected to witness a tremendous
growth owing to the low cost of borrowing, changing customer attitudes towards
borrowing and optimism regarding economic growth. Retail lending constitutes just
12.36% of the Indian banking system. Given this macroeconomic scenario, the
share of retail banking will grow dramatically and it is expected that about 35% of
the incremental growth in net credit will come from retail banking. In the next five
years, retail banking is expected to grow by a CAGR of 25% to touch the figure of Rs
575,000 crores. This requires expansion and diversification of retail banking product
portfolio, better penetration and faster service mechanism. Hitherto, the growth had
come from metros and tier I cities. While the loan requirement from larger cities will
continue to grow, explosive growth in credit is expected to register in tier II cities,
semi-urban and rural areas.

In India, the main players in the retail banking segment are:

1. State Bank of India - SBI is the oldest bank of India and also India's largest
commercial bank. This government owned bank was established in the year
1806.It is also the second largest bank in the globe. The bank provides a
wide array of banking products through their effective network not only on
India but also overseas. The bank has about 16,000 branches and is also
accountable for one-fifth of the loans of India. It has about 8500 ATMs across
the nation.

2. ICICI - This is the second largest bank in India with about 1,419 branches and
4,644 ATMs spread countrywide. It is among the top commercial banks of
India providing a wide range of banking services through varied delivery
channels. Besides offering high-end banking facilities like Internet banking,
Phone Banking and Mobile Banking, ICICI also plays a pivotal role in the
domains of investment banking, venture capital and asset management and
life and non-life insurance. It has its presence in 18 countries across the
world including UK, Canada, Russia and others.

3. Punjab National Bank - Has been in operation since 1895, PNB is a trusted
name in the banking segment of India. It is among the few other public
sector banks of India that runs special schemes for senior citizens, army
personnel, students and women. Despite the recessive tendency in Indian
economy, PNB has managed to eke out profit on a sustained manner.
4. HDFC - It is also among the top banks of India offering various banking
services for the customers like Personal Banking, NRI Services, Net Banking,
Online Remittances and others. The year 2008 has been very prosperous for
HDFC as it won a host of awards for being the best retail bank and also the
best among other Indian banks to adopt Information Technology. With a total
income of more than Rs. 5,400 crores, it demands a significant position in
Indian banking industry. The bank has about 1,500 branches and 2,890 ATMs
in 530 Indian cities.

5. Bank of Baroda – Bank of Baroda (BoB) is the third largest Public Sector bank
in India, after State Bank of India and Punjab National Bank. BoB has total
assets in excess of Rs. 2.27 lakh crores, or Rs. 2,274 bn., a network of over
3000 branches and offices, and about 1100+ ATMs. It offers a wide range of
banking products and financial services to corporate and retail customers
through a variety of delivery channels and through its specialized
subsidiaries and affiliates in the areas of investment banking, credit cards
and asset management.

6. Canara Bank – Canara Bank is a major commercial bank. It was established

in India in 1906, which makes it among the older Indian banks. As of 2008,
the bank had a network of 2641 branches, spread across India and other
countries. Its head office is located in Bangalore, India. The bank also has
international presence in several centers, including London, Hong Kong,
Moscow, Shanghai, Doha, and Dubai. In terms of business it is one of the
largest nationalized commercial banks in India, with a total business of about
Rs.2 trillion.

7. Bank of India – The Bank was founded in September 1906 and has all along
maintained a position of pride among the top 5 commercial banks in the
country. In July 1969, Bank of India was nationalized along with 13 other
large Indian commercial banks. Since then, the Bank has made enormous
contribution to India's efforts towards agricultural and rural development,
industrial diversification and modernization and export development.
Keeping pace with financial sector reforms in India, the bank has ventured
into Merchant Today the Bank has over 2884 branches spread all over India
and 27 branches/representative offices/subsidiaries/joint ventures etc.
spread in 13 countries, spanning all time zones. The International business
accounts for over 20% of Bank's total business.

8. AXIS - One of the top private banks in India, it was earlier known as the Unit
Trust of India (UTI) since it was promoted by the same organization. It was
first among the new private banks to have started its operations in the year
1994. AXIS has its significant presence in about 4509 districts of India with a
wide network of over 729 branch offices and Extension Counters. With
around 3171 ATMs, the bank provides round the clock banking convenience.
 This Indian bank has amassed a capital of more than Rs. 350 crores and
enjoys equal sway over retail and corporate banking.

9. Union Bank of India - This PSU unit has convinced the customers that they
are 'Good people to bank with'. More than 50% of share capital of Union Bank
of India is held by Indian government. Around 27,000 employees work
together to fulfill the bank's mission to reduce the gap between expectations
and deliverables.

10.Central Bank of India - This is one of the largest and oldest commercial banks
in India. The bank has its office in about 27 states in India with 270 extension
counters and 3,168 branches. Founded in the year 1911, this is India's first
commercial bank that was completely managed and owned by Indians. With
an average business of around 2,000 crores, Central Bank of India has a
significant presence in India's financial orbit.
 ADVERTISING IN THE BANKING INDUSTRY

The retail banking sector was heavily affected by the sub-prime crisis in 2007 and
subsequent liquidity crisis. Continued turmoil within the global banking industry has
further affected retail brand value as consumers have lost trust in their banks. The
Brand Finance – Global Banking 500 report indicates a fall of brand value by 16%
within the retail sector. This represents a drop of US$22.5bn from 2007 to 2008.

In India, 2008-09 has witnessed a lot of investment in adverting and similar brand
building exercises both through print and television media. In the following section, I
will use the data collected by AdEx India – a media research firm to provide an
overview of the Banking advertisement in the last year.

Advertising in the Print Media

• Print advertising of 'Banking & Financial Services' has seen a rise of 6%

during the FY 2008-09 compared to FY 2004-05.
• 'Banking -Services & Products' was the top category under 'Banking &
Financial Services' sector advertised in Print during FY 2008-09.
• State Bank of India was the number one advertisers of 'Banking & Financial
Services' sector in Print during current fiscal year

Table 1: Volumes Growth of ‘Banking & Financial Services’ in Print during

FY 2008-09

Source: AdEx Media.

 Table 2: Contribution by the Categories of ‘Banking & Financial
Services’ in Print during FY 2008-09

Source: AdEx Media.

• Top 10 categories contributed for 83% of overall ‘Banking & Financial

Services’ advertising share in print
• During FY 2008-09, 'Banking-Services & Products', 'Fixed Deposits' and
'Mutual Funds' were the Top 3 categories of 'Banking & Financial Services'
sector together accounted for 59% share in Print.

Table 3: Top Advertisers of ‘Banking & Financial Services’ in Print during

FY 2008-09
Source: AdEx Media.
 • The top 10 advertisers share aggregates to 52% of overall ‘Banking and
Financial Services’ Print ad pie in 2008-09
• State Bank Of India' with 22% leads in advertising of 'Banking & Financial
Services' sector in Print, followed by 'Union Bank Of India' and 'ICICI Bank Ltd'
with 7% and 6% share respectively during FY 2008-09.

Table 4: Top Brands of ‘Banking & Financial Services’ in Print during FY

2008-09

Source: AdEx Media.

• State Bank of India), Union Bank of India and ICICI Bank were the Top 3
brands of 'Banking & Financial Services' advertised in Print during the current
fiscal year.
• Top 10 brands contributed for 36% share of overall 'Banking & Financial
Services' advertising in Print during FY 2008-09.

Advertising in Television Media

• 'Banking & financial services' sector has seen rise of 42 per cent during FY
2008-09 compared to FY 2005-06.
• 'Banking-services & products' was the top category under 'banking &
financial services' sector advertising on TV during the current fiscal year.
• 'Union Bank of India' was the number one advertiser of 'banking & financial
services' on TV during FY 2008-09.
• 'The Royal Bank of Scotland' topped the top 10 list of new brands advertised
under 'banking & financial services' sector on TV during the current fiscal
year.
Table 5: Volume growth of 'Banking & Financial Services' on TV during FY
2008-09

Source: AdEx Media.

• TV advertising of 'banking & financial services' decreased by 9 per cent during

FY 2008-09 compared to FY 2007-08.

Table 6: Share of 'banking & financial services' categories on TV during FY

2008-09
 Source: AdEx Media.

• 'Banking - services & products' was the top category under 'banking & financial
services' sector advertising on TV followed by 'corporate image-NBFCs' and
'securities/share broking organisation' with 8 per cent and 7 per cent
respectively during FY 2008-09.

Table 7: Top advertisers of 'banking & financial services' on TV during FY

2008-09

Source: AdEx Media.

 • The top 10 advertisers share aggregates to 54% of overall ‘Banking and
Financial Services’ television ad pie in 2008-09
• Top three advertisers of 'banking & financial services' sectors on TV were
'Union Bank of India', 'ICICI Bank Ltd' and 'IDBI Bank' during FY 2008-09.

Table 8: Top advertisers of 'banking & financial services' on TV during

FY 2008-09

Source: AdEx Media.

• 'The Royal Bank of Scotland', 'Tata Capital' and 'Visa Prepaid Travel Card'
were the top three new brand of 'banking & financial services' sector
advertised on TV during FY 2008-09.

Summary of Findings

SBI was the biggest advertisers in print among all the other retail banks, followed by
Union Bank of India and ICICI Bank. In television advertisement the top three
advertisers were Union Bank of India, ICICI Bank Ltd and IDBI Bank. If we were to
map the success of the retail banks to the amount of advertisements that they
undertake, we can see that SBI and ICICI both have good return rates. Union Bank
of India however, despite its considerable advertisement investments does not
seem to be doing a good job as far as penetration is concerned.

Does advertisement spending really help then? Why should banks advertise? What
role does advertisements have as far as brand value is concerned?

BRAND AND ADVERTISEMENTS – A MODEL

To establish the relation between brand and advertisements, I draw from the model
developed by James R Gregory, CEO of Corporate Branding LLC:

BRAND POWER

The term brand power reflects the relative strengths of a corporate brand, which
measures the brand familiarity and favorability among decision makers. Familiarity
defines respondent’s levels of awareness and knowledge about the company.
Favorability lets us know how people feel about the company – how highly they
judge its overall reputation, its management and importantly its potential as a good
investment.

Table 9: Brand Power by Classification

The model identifies four categories of brands:

1. Tier One or the Elite Brands: Flagship brands or even icons in the world of
marketing. These brands appear stable over time, suggesting an efficiency
gained through superiority
2. Tier Two or Above Average Brands: Though not icons, these brands are
very powerful. Nonetheless these brands must work the hardest, they must
contend with the downward pressure from Tier One brands
3. Tier Three or Average Brands: Strong, established but not high profile
brands. These brands are neither declining nor growing; neither very
powerful not particularly weak.
 4. Tier Four or Below Average Brands: Because they have little room to
decline and enormous room for improvement, these have a natural tendency
to rise.

BRAND MOMENTUM

Momentum is defined classically as impetus gained by movement. Companies strive

to create brands with the potential for tremendous momentum, gather speed as
they operate, never fully come to rest.

So how do brands build and ensure momentum – the biggest factor is consistency.
Consistent spending on advertisements can greatly help with brand momentum.
The following graphs represent the effect of well spent advertisement money on
brand momentum. Each represents graphically the correlation that exists between
consistent spending on advertisement and building of powerful brands.

Table 10: Average annual brand spending and Average Brand Power
 Table 11: Average Brand per Sales ratio and Average Brand Power

Table 12: Consistency in Ad/Sales ratio and Consistency in Brand Power

Growth
The research concludes:

• There is a high correlation between advertising spending and Brand Power

with Tier 1 companies displaying the strongest growth
• Higher advertisement spending relative to sales drives strong Brand Power
• There is a link between consistent advertising to sales ratio and consistent
growth of Brand Power – consistent advertising leads to consistent Brand
Power over time
 REFERENCES
• Ad Ex India. Newsletter – TV. http://www.tamindia.com/tamindia/Adex_News_TV.htm
• Ad Ex India. Newsletter – Print
http://www.tamindia.com/tamindia/Adex_News_Print.htm
• Greg Harris in ‘The Journal of Financial Transformation’. Brand strategy in the U.K.
retail banking sector: Adapting to the financial services revolution.
• McKinsey& Company. India Banking 2010 - Towards a High-performing Sector.
• Brand Finance - Global Banking 500. February 2009.
• Peter York, in ‘The Independent’. Advertising: Banks get personal. April 28, 2002.
http://license.icopyright.net/3.7463?icx_id=news/media/advertising-banks-get-personal-
658398.html?service=PrintIC
• Laura Petrecca, in ‘USA Today’. Ads for banks roll out during these
trying times.
• James R Gregory, in Business Week. The Impact of Advertising on Brand Momentum.
1998
• Schreuer, Richard in ‘Hoosier Banker’. Building brand value in a changing banking
industry. January 1, 2000. http://www.allbusiness.com/hoosier-
banker/20000101/3034065-1.html