Branchless Banking by Corporation Bank - A Branding Perspective
Nationalization of public sector banks left all Indian banks looking alike. With very less competition to contend with, this situation has lasted for around 2 decades. However, with the entry of private banks as well as foreign banks, public sector banks are feeling the need to differentiate their offerings. Branchless Banking has been used as a strategy by Corporation bank to enhance their brand image. This article analyzes the potential modes of implementation of Branchless Banking and elicits the overall effect of these models on brand Corp-Bank.
With surging competition in the Indian retail banking industry, all banks including behemoths like the State Bank of India (SBI) are vying for new customers by promising better services. At this juncture, a regional bank like Corporation Bank (Corp-Bank) with limited reach compared to other nationalized banks such as SBI needs to develop sound branding strategies to acquire new customers as well as to retain existing customers. One of the initiatives taken by Corp-Bank to achieve this is Branchless Banking. This article examines the various branchless options for Corp-Bank and the effect of the same on its parent brand.
Corporation Bank: Past and present
Corp-Bank has a history of 100 years of successful banking. The bank has a network of over 2000 service outlets across the nation and served by over 12,000 employees - ‘Corp-Bankers’ 1. The Bank has established itself as a techno-savvy bank in the industry, having taken a lead in implementing 100% core banking solutions in all its branches / extension counters.
Corporation Bank: The Brand
In order to understand the effect of Corp-Bank’s branchless banking initiative, it is imperative to understand the bank’s current brand image. The brand image of Corp-Bank can be analyzed in terms of its brand elements and different levels of brand meaning.
Corp-Bank is perceived as a very local bank and serving the Indian middle class. Corp-Bank has been a pioneer in many services like the Gold Coin Service, Branchless Banking, etc., but it has never been able to capitalize on these initiatives in a strategic sense. The bank is trying to develop an image of being a tech savvy bank but has not succeeded completely. The various symbols and imagery used by Corp-Bank like the usage of the green colour and trees in its logo give it a very rural image. However, the usage of “Corp” as a prefix while naming all its services results in a tech savvy perception, thereby confusing the customer.
Branchless Banking is a significantly cheaper alternative to conventional branch-based banking that allows financial institutions and other commercial actors to offer financial services outside traditional bank premises.
Branchless Banking (BB) represents a significantly cheaper alternative to conventional branch-based banking that allows financial institutions and other commercial actors to offer financial services outside traditional bank premises. There are different models of branchless banking, as listed in Exhibit 1. Corp-Bank has a varied presence in each of these. It pioneered the Business Correspondent model and has a good presence in some of the others as well. We will now look at the different models and discuss the brand image each of those invoke.
Different modes of Branchless Banking
ING Model (ING) 2
This model is based on the concept of pure branchless banking pioneered by ING. It has gained popularity in USA due to its hassle free banking service with higher rates of interests on deposits. Although this model lends a very tech savvy image to the bank, the concomitant lack of interaction between customers and bank officials makes it very impersonal.
HSBC Model (HSBC) 3
HSBC Direct services was launched by HSBC to expand its positioning from being just a premium player to one catering to the needs of the next rung customers as well. HSBC Direct services differed from the ING model in that it was backed by a brick-and-mortar framework that supported the bank’s online facilities. This model eliminates paper work significantly and hence caters to the need of those customers looking for a cheap and convenient bank. This model positions the bank as a convenience oriented and customer focussed player, thereby enhancing its brand image.
Mobile Banking (MB)
Mobile Banking is the term used to describe all banking services provided via mobile phones and SMS. Mobile Banking supports bill payments, money transfers, account balance enquiry, etc. Presently, the Mobile Banking space in India is dominated by private sector banks. Mobile Banking lends a tech savvy and contemporary image to the bank. Absence of Mobile Banking may foster an image of outdated banking.
Mobile ATMs/Vans (MV)
Mobile ATMs or Mobile Van Banking is an augmented service provided by the banks to have ATM & banking facilities reach parts which are not covered by the bank’s ATMs. This service has been gaining popularity as a means of extending banking facilities to the rural population. It is also being used as a pilot programme by Indian banks like HDFC and ICICI to estimate demand in new areas. This model serves to enhance trust due to its postman-like regular coverage of a few locations and thus lends a “part of the family” image to the bank.
In India, ATMs have a good presence in Tier I and Tier II cities. However, their reach in rural areas leaves a lot to be desired. By introducing more ATMs across the country, Corp-Bank can develop an image of being omnipresent. An ATM not only reduces withdrawal and deposit time, it also acts as a vestibule for providing other services like ticket booking, bill payment, etc. This gives the customer the desired level of convenience and enhances the image of the bank.
Business Correspondent Model (BC)
This model draws its distinction from the fact that every village has a bank representative called the business correspondent. The correspondent is authorized to offer small credit, and allow deposits and withdrawals from the accounts via communication systems like General Packet Radio Service (GPRS) and Public Switched Telephone Network (PSTN). This model augurs well with rural areas due to its simplicity and efficiency. It enables Corp-Bank to develop a very trustworthy image as it provides financial inclusion of remote places.
Each of the above models serve in lending a different brand image to the bank that uses them. Thus, it is essential to analyze the effect of their adoption on brand Corp-Bank. This analysis is performed by understanding the parent brand’s (Corp-Bank) effect on the child (Branchless Banking model) and vice versa.
Effect on Corporation Bank’s Brand Image
The ING model being a pure Branchless Banking model supports entirely online services. This enhances the tech savvy image of Corp-Bank. However, the highly traditional image developed by Corp-Bank over the 100 years of its existence tends to weigh this down heavily. The purely online system would cater to a very niche urban crowd. To provide a lean banking facility i.e. without cheque books, Demand Drafts, etc. in India is almost impossible. This might add to the negative effect on the parent brand. This negative effect is countered to a small extent in the HSBC model since Corp-Bank has an established infrastructure across the country, and the technology oriented initiative is based on this solid infrastructure. However, since Corp-Bank is not seen as a leader in the banking industry, this abatement in the negative effect is limited.
With the current level of advancement in the mobile phone industry, it is just a matter of time before banking facilities are also provided through the cell phone. Hence Corp-Bank adopting this model would not have any effect on the brand image as it would be seen as a basic necessity.
The image of Corp-Bank which is that of a traditional public sector organization would definitely be boosted positively if it adopts any of HSBC, Mobile Banking, Mobile ATMs, ATM, or Business Correspondent models.
Corp-Bank already has a well developed ATM system. Hence it would lend a positive image on the ATM model. Corp-Bank’s public sector image has a very positive effect on the child brand. As Corp-Bank is a nationalized bank and has been in existence for almost a century, the parent brand will provide credibility to the child brand. This advantage is exploited in the Mobile Van and Business Correspondent models. The Mobile Van model allows the customer to avail services at regular intervals, which is also a positive. Hence the overall effect is positive. Corp-Bank is well known for its agricultural loan schemes. Hence when the Business Correspondent model is taken to the rural masses the image of the bank will be highly positive.
The image of Corp-Bank which is that of a traditional public sector organization would definitely be boosted positively if it adopts any of HSBC, Mobile Banking, Mobile ATMs, ATM, or Business Correspondent models. Only in the case of the Business Correspondent model, the effect on the urban customers is minimal. People would rather see this as a duty of Corp-Bank being a PSU rather than a technological advancement.
The recommendation for Corp-Bank is shown in Exhibit 2. For the urban audience Corp-Bank should start an arm under the name Corp-Direct which will have features like online banking, mobile banking, ATM, and phone-banking. This will help improve the image of the bank amongst the urban audience. To cater to the rural audience, Corp-Bank could rely mainly on the Business Correspondents and Mobile ATMs. Corp-Grameen would be a viable model for financial inclusion. These two suggested methods will be good ways to reach the rural customers.
Graphical representation of the final recommendation
The HSBC model caters to a very premium convenience oriented segment. Corp-Bank can adopt this model in the major Tier 1 and Tier 2 cities. This model will also cover the mobile phone banking services where a margin can be charged per transaction. A new brand name like Corp-Direct can be used and all operations can be carried out under this new brand. The Business Correspondent model is very essential to provide financial inclusion and reach out to the rural areas. The current brand name for rural services, Corp-Grameen could be continued. This would sufficiently distinguish it from other Corp-Bank operations while still lending the credible name of Corp-Bank to it. The Business Correspondents can be referred to as Corp-Mitr meaning friends of the society. The Mobile Van model can be used initially as a pilot mechanism in small towns where the customer base is too large for the Business Correspondent model. This model should not be extensively used by Corp-Bank as a primary source of providing financial services. Corp-Vaahan is a befitting name for this model. Exhibit 3 shows the positioning of these branchless modes along the Rural-Urban continuum.
Positioning of various Branchless Modes in Rural-Urban Continuum
Inspite of being more than 100 years old, Corp-bank faces a challenging task to acquire and retain customers in the highly competitive India retail banking industry. An important aspect of this is to build a strong brand image that is tied to the services offered. The article set out to explain the effect of the Branchless Banking initiative of Corp-Bank on its brand image. In trying to achieve this objective, a thorough analysis of all existing models of Branchless Banking was carried out and it was found that the models that help take the bank to the rural areas are much more effective since they help Corp-Bank play to the strength of its brand. At the same time, it would serve the bank well to clearly demarcate offerings made to urban and rural customers and brand them accordingly to gain maximum mileage.
Y. L. R. Moorthy is a Professor in the Marketing Area at IIM Bangalore. He holds a Ph.D. in Brand Management. He is an M.Tech from Indian Institute of Technology, Madras and a post graduate in management from IIM Bangalore. He can be reached at email@example.com
Aarathy Arun (PGP 2007-09) holds a B.Tech in Electrical Engineering. She can be reached at firstname.lastname@example.org
Dilip R. S. (PGP 2007-09) holds a B.Tech in Telecommunications from PESIT Bangalore. She can be reached at email@example.com
Rajesh Ravindran (PGP 2007-09) holds a B.Tech in CS from National Institute of Technology (NIT) Calicut. He can be reached at firstname.lastname@example.org
Shyam Sanker P. S. (PGP 2007-09) holds a B.Tech in CS from National Institute of Technology (NIT) Calicut. He can be reached at email@example.com
Branding, Brand image, Marketing, Nationalized Banks, ATM, Corporation Bank, Corp-Bank
- Corporation Bank website, http://www.corpbank.com. Last accessed on October 27, 2008.
- Barbara Kiviat, 2007, 'ING Direct's Man on a Mission', TIME Magazine , Jun 14, 2007, http://www.time.com/time/magazine/article/0,9171,1633064,00.html. Last accessed on October 27, 2008.
- First Direct website, http://www.firstdirect.com/press/key_facts.shtml. Last accessed on October 27, 2008.
- Reserve Bank of India website, http://www.rbi.org.in. Last accessed on October 27, 2008.