Service Promotion and its Impact on Building Customer Value
A Case Study of the Mobile Banking Service of the Nepal Investment Bank Ltd. in the Kathmandu Valley
Research Paper (postgraduate) 2018 26 Pages
For banks to attract new business and sustain the loyalty of existing customers, consumers must be able to reach financial institutions through multiple channels. With consumer interest that was historically focused on Branch Banking, currently fast changing towards Mobile & Internet banking - the level of popularity and number of possible services it carries has a great potential.
Through the use of wireless banking as a customer channel, as well as an internal tool within financial institutions, the combination of Mobile and wireless technologies with the wide variety of portable devices available today, enables new revenue opportunities for financial services organizations. This provides a new channel that can be used to refresh and expand the customer base, attract prime customers and enhance loyalty.
The research topic entitled Impact of Service Promotion in Building Customer Value has a greater importance in todays context in terms of customer retention. The mobile banking services provided by NIBL showed that the customers has a high degree of trust building factor and has made their financial transactions safe and easy to operate. Though a little consumer awareness is required at certain level to the first time users in order to boost their confidence to operate easily. The revolution in the field of technology has made a boon for the society and at the same time high risk factors are also associated with it. This research has made an extensive contribution in the area of promotional activities where personal interaction and advertisement program is a must for maintaining long term customer relationship. Moreover, providing better services with added value has made the customer to become more loyal towards their mobile banking services.
Keywords: Mobile Banking, Promotional Mix, Service Promotion, Customer Value
I. Background of the study
1.1 Introduction – Mobile Banking
Mobile and remote financial services solutions are revolutionizing the financial industry, empowering financial institutions to add more value to their products and services, gain competitive advantage, and increase customer loyalty while also attracting new clients. There is significant demand for new personalized mobile services - such as account and portfolio balances and history, fund transfers, bill payment, real-time stock quotes, and real-time one touch order entry. Secure applications that give "always available" access to critical business information embrace these new ways of doing business and create better service and more revenue opportunities, in other words, a serious return on investment.
1.1.1 What is Mobile Banking?
“Mobile Banking is a service that allows you to do banking transactions on your mobile phone without making a call, using the SMS facility or using Wireless Access Protocol (WAP).”
The Mobile Banking technologies allow access to one’s bank account and conduct a host of banking transactions and inquiries through the Mobile Banking service. One can check balance, stop a cheque payment, or even pay utility bills through the service. Mobile Banking provides account information and real-time transaction capabilities from the mobile phones at a true "anywhere, anytime, anyhow" convenience.
Some examples of financial services through Mobile Banking solutions include:
- Mobile Account Enquiries
- Mobile fund transfers, bill presentment and payment
- Personalized alerts and notifications on security prices
- Real-time stock quotes on a wireless device
- Extension of corporate applications to remote offices through advanced synchronization
Most popular among mobile activity is the use of mobile alerts between banks and customers. The bank implemented CashPro Freedom, which enables the bank to send Short Message Service (SMS) messages, e-mail and voice alerts to customers' mobile devices any time a transaction occurs. The tool allows customers to track their account activity without logging on to a Web site and searching its pages – giving them the flexibility and assurance of Anytime-Anywhere Banking.
With Current Technology, the message that is sent to any mobile device is tailored to that device, and is sent in real time, as soon as a transaction has occurred within the account.
Text messages from the Bank go directly to the mobile device, and are encrypted as SMS or e-mail messages.
More than 70 percent of Nepali households are unbanked, but with new, innovative services launched with support from USAID’s Nepal Economic Agriculture and Trade (NEAT) project, mobile financial services could be available nationwide within five years.
USAID NEAT played a catalytic role in launching mobile financial services in the marketplace. Today, a number of banks are gaining experience and refining their strategies, products and pricing to ensure the success and growth of this innovative service. There are now three technology platforms competing for banking partners with which to offer mobile financial services. As FinAccess founder and Nepali mobile financial services visionary Sanjay Shah notes, “Technology is not the innovation here in Nepal; the business model is the innovation.” FinAccess is the centerpiece of a consortium of six financial institutions using the same service, Hello Paisa. However, each bank brands its products to meet the needs of its customers. In Nepal, where banking is fragmented, this innovation—whereby banks collaborate to expand the customer base yet compete on services—has the potential to fuel a very rapid expansion of mobile financial services in the country.
Despite these challenges, Nepali private sector leaders estimate that not only will mobile financial services reach all 75 districts of Nepal in five years, but new products such as insurance, health services, and market information will also be available through this channel—benefiting Nepal’s rural population exponentially.
Mobile financial services are here to stay, and are transforming rural households and the economy in Nepal. 2
Currently, there are 28 Commercial Banks in Nepal, all of which are operating Mobile Banking services.
1.2 Statement of Problem
New market situations sharpen the competition, especially when Nepal Investment Bank Ltd. has been started Mobile Banking only two years. The number of competitor is also rising and the products and service being offered is becoming less and less differentiated at their core. This is resulting in decreasing of offered customer value and increasing cost. Effective Promotion has become a strategic imperative for Bank, to move closer to their customers, expanding more efforts in finding new ways to create value for their customers and transforming the customer relationship into one of solution finding and partnering rather than of selling and order taking. Effective Promotion can potentially impact customer satisfaction rating and can potentially lead to increase their customer values.
1.3 Objectives of the Project
The objective of the study is to explore the impact of service promotion in building customer value. Various issues related to Mobile Banking were studied in detail for this purpose which is as follows:
- To understanding the customers lifestyle with reference to their usage of mobile banking
- To study the level of consumer awareness about mobile banking
- To study the impacts of service promotion in building customer value
- To study how the bank’s marketing professional conduct their various promotion strategies to achieve marketing goals
- To know the level of customized service offering to the customers
- To study and analyze the present and future probable customer of mobile banking
- To study the growth of user of mobile banking among the Nepal Investment Bank Ltd.’s customer
1.4 Limitations of the Study
The study intends to explore the customer value and service promotion in Mobile Banking. It takes into consideration only the customers of Nepal Investment Bank Ltd. as the segments for the purpose of this study.
The study has adopted purposive sampling method for selection of NIBL branches and customers as per convenience of access and availability during the period of data collection.
With the improvement of mobile technologies and devices, banking users are able to conduct banking services at anyplace and at anytime. Recently, many banks in the world have provided mobile access to financial information. The reason to understand what factors contribute to users’ intention to use mobile banking is important issue of research.
Currently several banks in the country have introduced this service with the aim of making money transfer and payment of bills easier. Once you subscribe to this service all you have to do is send an SMS mentioning the amount and the account number of the recipient and the cash is transferred instantly.
Tips for safe mobile banking transaction
If you have subscribed to mobile banking service, it is essential you adopt various measures to protect your bank account from security threats. Here are five mobile security tips:
Verify authenticity of bank’s software
Before installing the bank’s software on mobile phone, it is essential to ensure that the software is authentic. It is advised you contact the bank before installing any applications on devices.
Ensure that your mobile phone is protected with a password, and that the maximum number of incorrect password submissions is set to no more than three. This security mechanism allows you to protect data in case you lose your phone.
Protect your personal information
Along with passwords, it is essential that you do not reveal or write down PIN numbers anywhere. You should not retain any email from your bank with regard to your password or other personal details. In addition, do not give your password, PIN or identification information over the phone or Internet.
Review account statements
While using mobile banking service, it is advised you review your account statements frequently. You should be sure there are no transactions that you did not make or authorize. If you do notice any unusual transaction, call your bank immediately.
Report lost phones immediately
If you lose your phone or if it is stolen, you should call your bank and ask them to deactivate the mobile banking service. This step will prevent anyone who finds your phone from accessing your bank account or making transaction on your behalf.
Mobile technology is changing the design and delivery of personal financial services (Luarn & Lin, 2005). The introduction of mobile banking services has compressed the spatial and temporal constraints associated with traditional banking (Wang & Liao, 2004). However, cognitive and economic barriers pose challenges to the uptake of innovations in financial intermediation technology (Carlsson, Walden, & Bouwman, 2006). For example, potential barriers to adoption of mobile banking relate to peoples’ perceptions of its usefulness (value), its ease of use, its credibility and efficiency, and costs associated with banking transactions (Lai & Li, 2005; Liao, Shao, Wang, & Chen, 1999; Liu, 2002; Luarn & Lin; Yang, 2005).
Due to the fast advancement of mobile technologies and devices, communication networks are more and more being tied with financial services, leveraging the importance of mobile banking (m-banking) for financial institutions, telecommunication and device manufacturers (Herzberg 2003; Laukkanen and Lauronen 2005; Laukkanen 2007b; KPMG 2011). From an information systems (IS) perspective there is no doubt that mobile banking is one of the major technological innovations for financial institutions (Lin 2010) offering additional benefits such as cost savings, convenience, efficiency, contextuality and ubiquity and supplementing traditional banking channels such as ATM (Kim et al. 2009). Mobile banking can be considered as a subset of e-banking or online-banking and refers to the shift of conducting financial transactions from wired networks to wireless networks (Clarke 2008). In fact, mobile banking has even changed consumers’ interaction with financial institutions and finally led to a change of buying and selling behavior (Suoranta and Mattila 2004).
The best part of mobile banking is the 24-7 service that it provides. So, no longer should one rush in huge traffic to bank simply to get details or carry out minor transactions, as it is possible all through the means of Mobile itself. However, from organizational point of view, mobile banking has reduced the burden of employee as well. When the customers don’t come to the work place for minor tasks as to check the balance, employees burden decrease as well. A son studying in Valley must not rush to the bank to ensure that the amount sent by his father has been added to his account. He can simply check it through his cell phone. Again, one can move without any risk of being robbed. He need not to take care of his ATM as well.
1.5 Promotional Mix
In marketing, the promotional mix describes a blend of promotional variables chosen by marketers to help a firm reach its goals. It has been identified as a subset of the marketing mix. It is believed that there is an optimal way of allocating budgets for the different elements within the promotional mix to achieve best marketing results, and the challenge for marketers is to find the right mix of them. Activities identified as elements of the promotional mix vary, but typically include the following:
- Advertising is the paid presentation and promotion of ideas, goods, or services by an identified sponsor in a mass medium. Examples include print ads, radio, television, billboard, direct mail, brochures and catalogs, signs, in-store displays, posters, mobile apps, motion pictures, web pages, banner ads, emails. The key difference between advertising and other promotional tools is that it is impersonal and communicates with large numbers of people through paid media channels. Meidan (1996) states that a financial services organization can use its advertising for either its short-term or its long-term objectives. Meidan (1996) suggests that there are two types of advertising channels appropriate for financial institution advertising. That is “above-the- line” and under-the-line” advertising. Above-the-line advertising contains different channels of communication such as television, radio, posters, magazines and newspapers. Under-the-line advertising constitutes a huge part of a financial service organization advertising activities. It is the invisible advertising of the banks services including leaflets, pamphlets, explanatory guides and manuals that can be used to support selling of a specific service.