Adopting modern and innovative ways for marketing will help Nepali banks to strengthen their brand presence.
There is no doubt that banking and financial institutions (BFIs) are an integral mechanism for growth in any economy. With 28 commercial banks, each having a paid-up capital of above Rs 8 billion, the intensity of competition in the banking sector in Nepal is at its peak. In recent years, the issue of interest rate wars has also affected the business ecosystem of the country negatively. Commercial banks are offering as high as 13 percentinterest on fixed deposit and seven percent on savings accounts.
In order to understand the advertising effectiveness of the commercial banks in Nepal, we at Kalithia conducted a research. The research especially focused on brand and tagline recall followed by the customer’s preference of commercial banks. The research was exploratory where a set of questionnaireswas developed and posted on various social media platforms for response. Within a period of one week, more than 90 responses were received. It is presumed that the respondents regularly used banking services and were from age groups varying from 18 years and above. We conducted a comparative study of the first quarterly reports from FY2073/74 and FY2075/76 and marketing expenses from FY2072/73 and FY2073/74 for commercial banks except Civil Bank, Global IME, Kumari Bank, NCC Bank and Rastriya Banijya Bank due to the lack of published annual reports (FY2073/74).
It was found that the top three banks the respondents could instantly recall were Nepal Investment Bank (26.3 percent), Nabil Bank (20 percent) and Himalayan Bank (11.58 percent). Similarly, preference for using the services was topped by Nepal Investment Bank followed by Himalayan Bank and NMB Bank. When it came to the demographic trends impacting the use of financial services, it was observed that the younger generation, especially those aged between 25- 40, prefer to use the services of new banks like NMB, Mega and NIC Asia.
Whereas, the respondents above the age of 40 prefer banks that have been established over the years. This shows that heavy spending on marketing and advertising can increase exposure to the younger generation. New and emerging banks seem to be struggling to win the trust and loyalty of the older generation as most of them tend to associate the credibility and reliability of banks with their years of establishment.
Taglines may not be considered important by banks, but they are just as important as the rest of the marketing strategies because they are an integral part of branding. A bank’s tagline helps to differentiate it from the competitors and represents its vision and mission that it wishes to convey. When it comes to recalling the taglines, a majority of the respondents could recall NIC Asia’s “Bank pani, Sathipani”. This validates the marketing and advertising expense effectiveness of NIC Asia which has grown by 400 percent in a period of just one year from FY72/73 to FY 73/74.
Easy recall of taglines may not determine the top market position of NIC Asia Bank, but the fact that the bank has the highest deposit (50. 28 percent) and lending (51.36 percent) growth rates (source: first quarterly report) shows that a tagline indirectly has had a great influence on how the customers perceived its image and competence. Moreover, this has further helped to prove that effective marketing practices play a vital role in increasing the portfolio.
With the increasing marketing efforts of the banks, it can be seen that the deposits and loans of all the commercial banks have been steadily growing every quarter. Out of the 28 commercial banks, Janata Bank on both aspects has a higher growth rate followed by NIC Asia, Century Bank and Mega Bank. However, the recent mergers and acquisitions can be seen as one of the major reasons for these banks being on the top except for NIC Asia.
In order to become and remain profitable, three factors - branding, marketing and competitive advantage - are vital. The commercial banks in Nepal still appear to be using the traditional practices to attract potential customers. Which form of marketing is the most efficient depends highly on the target audience - where they are, and how they interact with the business.
The report is prepared by Kalithia Investment and Research Pvt Ltd, a Kathmandu-based market research company.