The Financial Service Organizations like Banks generate a lot of financial products and services which in turn are beneficial to a large number of customers. The banks in order to create enhanced customer satisfaction and loyalty must focus on maintaining a strong and efficient distribution system through which the banking products and services can be effectively distributed. The two main channels of distribution available to the banks for effective distribution of goods and services are ‘personal selling’ and ‘electronic and telecommunication’ networks. Out of these the channel of distribution based on ‘personal selling’ works on a conventional note while ‘electronic and telecommunication’ on a modern note.
The process of ‘personal selling’ conducted by banks is executed through the activities of banking and financial executives working within the bank. Thus, banks in order to reach to a wide range of customers must locate their offices in accessible regions so that the process of personal selling gets executed on a happy note. Proximity to the customers helps the banks to render convenience to customers and thus gains a loyal base of potential customers on which the bank can easily depend for profitable business.
The second set of distribution channels based on modern approaches is found to go beyond the existing nature of banking operations depending on an office. Modern channels of distribution of banking services and products depend on a wider array of ‘electronic and telecommunication’ networks which can help the customers to avail such services in a lightning speed. Host of electronic and telecommunication devices, products and processes like telephones, Automated Teller Machines, Internet and Plastic Money have transformed the face of the banking industry and made it stand the test of times.
(Pezzullo & American Bankers Association, 1998, p. 196, 201) Challenges faced by a Bank in distributing financial products through Personal Selling The banks distribute the host of financial products through the process of Personal Selling, which is made possible through the set up of banks in the vicinity of localities. Banks and other commercial institutions in order to occupy a place for setting up of branches and thus catering to business expansion have to depend on the laws of the land.
However, in later periods the government of different countries has allowed banks to set up branches in different states, which have helped them to enter newer and different localities quite easily. The realm of distributing banking products through the process of personal selling excites many competitors in the banking cycle. Thus, banks in order to enhance their market base to counter growing competition must go on expanding their branches to acquire newer areas and thereby newer customers. Personal Selling channels are also made lucrative to draw customers from competitive banks.
Moreover, the growth of the urban sphere also demands the growth of banking units. Thus, banks in order to set up newer branches must first endeavor to evaluate the general features of the zone and secondly must divulge to conduct a more refined analysis of the particular site concerned where the branch would be located. The banks need to procure first hand information about the income scenario of the several household groups present in the area. Further, the banks must also endeavor to assess the number of owned and rented property in the newer zones and also the employment status of the different household groups.
The above assessment helps a bank to rightly estimate the deposit potential of the different householders in the particular region. It would also help to understand the amount of loan on an approximate basis that would be demanded by the households to build residences. In addition, to the above facts the banking institutions must also take into consideration the range of activities carried out by the commercial and industrial zones in the area and revenue generated thereof to understand the level of current deposits and loans.
Specific consideration would also include the right assessment of property costs in the region to conduct a feasible analysis. The bank should also be properly visible and accessible to the people in that zone. (Pezzullo & American Bankers Association, 1998. pp. 197-198). Challenges faced by a Bank in distributing financial products through Electronic and Telecommunication The effectiveness of the banking system in distributing financial products through electronic and telecommunication modes depends on various factors, which imply to be the challenges in such activities.
Firstly, the bank must identify all possible banking services that can be rendered through the modern channels. Secondly, the technology in use must be reliable enough to carry the load of different activities. Thirdly, the human factor related to the distribution channels, the Customer Service Representatives must be adequately trained to impart trust and efficiency to the customers. Fourthly, the banks must set a proper feedback system to rightly acquire effective feedbacks, which can help modernize their service delivery systems. Fifthly, banks must cater to generate provisions, which would help them to address regulatory changes in such telecommunication modes.
(S. C.N. Education B. V., 2001, p. 94) In addition to the stated challenges the banks need to identify the potential service provider, which would render uninterrupted service in Internet communications. The banks must also focus in rightly training their staffs to cater effectively to customer queries and problems while conducting service via Internet. Further, the banks must also lend an eye to the training of customers to rightly adapt to the changing banking service systems. Customers must be made acquainted by the banks about the facilities of Internet and mobile banking so as to eliminate fear from their minds.
This would henceforth increase the level of interaction with the banks. However, in the modern Internet age the banks must also focus in creating a safer Internet environment where the customers can easily function. Banks need to be alert about hacking activities, which would continually endeavor to derive passwords and other essential information of the customers. Finally, banks need to be open to understand the level of operations of potential competitors and their way of countering problems.
This would help the bank to make their services more effective. (Milutinovic & Patricelli, 2002. pp. 104-107). References 1. Milutinovic, V. & F. Patricelli. (2002). E-business and e-challenges. IOS Press. 2. Pezzullo, M. & American Bankers Association. (1998). Marketing financial services. Kogan Page Publishers. 3. SCN. Education B. V. (2001). Electronic banking: the ultimate guide to business and technology of online banking. Birkhäuser.