Marketing in the activities of banks

This paper aims at analysing the utilisation and implementation of the rules of marketing within banking activities. It includes an analysis of the essence of the provision of services and that of the financial services market, the rules of bank marketing, and the shaping of marketing instruments in banks. In addition, it provides examples of the implementation and utilisation of marketing principles in selected banks. The necessity of applying the rules of marketing in the activities of banks is a result of the changes which have occurred during the last several-dozen years within the banking services market and inside the financial institutions’ environment. Financial markets constitute an inseparable element of each and every economy, along with the consumer goods, manufactured goods and resource markets. They engage in the process of fund and product flow.

: The characteristics of services, and their consequences for marketing practices.
The characteristics of services Consequences for marketing practices Immateriality A service cannot be measured, shown before the purchase, patented or transported. Impermanence A service does not exist beyond the process of its provision, nor can it be stored. The inseparability of the processes of production and consumption The production and consumption of services takes place at the same time and place, and the customer often takes part in the production process. Heterogeneity The quality of services depends on many uncontrollable factors, the quality of employees' work, the difficulties in standardisation The inability to purchase and own A service cannot be resold, and there is no used-services market Source: Own study based on: "Marketing usług ("The marketing of services"), red. A. Czubała, Oficyna Ekonomiczna, Kraków 2006, p. 13 Financial services cannot be compared. They differ in terms of the time and place of production as well as the abilities and individual predispositions of the people who provide them.
It is also worth mentioning that financial services are provided within financial markets. Financial markets constitute an inseparable element of each and every economy, along with the consumer goods, manufactured goods and resource markets. They take part in the process of fund and product flow. There are many definitions of financial markets offered by the literature on the subject. Let me quote some of these. Financial markets are: − places where purchase-sale transactions take place and the subject of trade comprises various financial instruments (currencies, securities, bank deposits, shares...) − a place where money fund transactions, aimed at levelling any lack of balance in the areas of financial liquidity and in the area of money capital, are conducted − a place where transactions using securities are conducted 5 . In the literature on the subject, one can find various classifications of financial markets. We should highlight, however, that these are conventional criteria, adopted in line with research needs.
Every market, from an economic perspective, has subjective and objective, as well as supply and demand sides. In this context, the financial services market can be defined as the totality of exchange ratios between its participants, in which the demand's subjective side is created by natural and legal persons, and organisations which wish to 5 W. Dębski, Rynek finansowy i jego mechanizmy. Podstawy teorii i praktyki (Financial market and its mechanisms. Theory and practice basics), Wydawnictwo PWN, Warszawa 2007, p. 16. Pobrane z czasopisma Wschód Europy http://journals.umcs.pl/we Data: 21/02/2021 06:29:23 U M C S be involved in financial instrument transactions and meet essential requirements. The demand's objective side, in turn, consists of the needs connected with capital or funds. 6 The supply side of the financial services market is created by institutions that are owners of financial products or agents between these owners and other economic entities. 7 The literature on the subject does not present a uniform classification of financial institutions. Depending on the needs, we can use different criteria of division. In the case of the financial services market, we can employ the division of financial institutions used in the activity approach of the Banking Law. This consists of depicting a list of banking services, highlighting: -banks, -para-banking institutions, -non-banking institutions, 8 .

The essence of bank marketing
The necessity to implement the rules of marketing in the activities of banks is a result of changes which have occurred during the last several-dozen years within the banking services market and the financial institutions' environment. The concept and intensification of marketing activities in banks was motivated by the following factors: − legislative changes promoting competitiveness in the sector of financial services, − the appearance of foreign competition, − the development of the money market, − the development of advanced techniques for the management of financial resources, − the extension of a customers' ability to choose a bank accompanied by a decrease in their loyalty 9 Faced with these phenomena, banks were forced to re-evaluate their operating methods and search for new customer groups. 10 Banking services marketing consists of the integrated activities of a bank aimed at identification, prediction and meeting the needs of people who purchase banking services, as well as those at enabling banks to make good profits. The marketing orientation of a bank states that a customer and his or her needs are at the focus of a bank's attention, whereas the bank's activities are founded on market identification, customer segmentation, as well as the skilful selection and implementation of the means of the marketing mix.
The key marketing rules applied by banks and attesting to their marketing orientation include: − market orientation, − running a business by an entity in such a way that the customer makes a profit in the long run, − customer segmentation, − profit-oriented activities. Banks are profit-oriented institutions and conduct their activities in a specific environment. This specificity consists mainly in greater restrictiveness of this environment, which means that banks are subject to greater restrictions in their operations. The basic objectives of a bank and the methods of their implementation are stipulated in the bank's strategy.

Shaping marketing instruments in a bank
The vast majority of Polish banks operating within the market of retail services, treat marketing as a set of tools which facilitate the achievement of economic objectives. As a result, marketing methods and tools are used summarily, and do not comprise coherent and comprehensive activities of a strategic nature.
Banks' existence has always been connected with money. Along with the evolution of money, the type and scale of banking services have been undergoing changes. The bank in its classic form as well as its services -commonly referred to as "traditional"provided for many years now and usually restricted to the bank's sole competence, have been in the process of formation for centuries.
Every service provided by a bank is a banking product. This is the basic element of the marketing mix around which the remaining instruments concentrate. Bank services currently have a highly-diversified nature and perform many functions at the same time. It is worth noting some of their levels (layers) and to group those of their characteristics which are perceived by customers as being of specific advantage: 11 − the essence (core) of a banking service -a basic service comprising fundamental advantages, e.g. a deposit enabling saving money for a particular goal, − a real service -a basic service, together with the objectives and elements customising it to the needs and expectations of customers, e.g. a well-secured and inexpensive payment card featuring easy usage procedures, − an extended service -additional benefits offered by banks, together with the real service, e.g. insurance for the owners of payment cards, 11 W. Grzegorczyk − a potential service -a set of potential features and benefits that a customer can achieve in the future, e.g. a credit offered on preferential terms to the owner of a personal account. From the marketing point of view, a product is goods or services able to satisfy somebody's needs. A product is a set of benefits offered to a consumer. Therefore, every marketing-oriented bank places its customers at the focus of its attention. 12 Furthermore, a banking product is every service provided by the bank. Around this product concentrate other instruments. Bank services are currently of a highly-diversified nature and perform many functions at the same time.
One of characteristics of these banking products is that, currently, these are basic services. Basic functions reflect the relations between a product and an objective, and they comprise the functionality of the product and its quality, which is a set of determinants of the service's ability to satisfy the customer's financial needs. For example, the basic function of a credit is to satisfy the financial needs of a customer. On the other hand, additional functions point at the relations between the product and the user, the ease of using the service, etc. For example, as regards bank deposits, this means a simple way of making payments, a quick access to information on deposits, service discretion, etc. In the case of some services, additional functions can be of more importance to the customer than the elements of the basic function, as they are the deciding factor in whether the service is used. 13 The process of devising a product strategy by banks involves three stages: (1) defining the function of a banking service, (2) introducing a new service to the market, and (3) an assortment policy. 14 Summing up, we should highlight that the bank's product policy plays a vital role in the development of this institution. The successful execution of the marketing strategy depends on the quality of a given service, as well as on the effectiveness of its implementation and maintenance on the market. It also has a substantial impact on the efficient utilisation of other marketing-mix elements.
Another instrument in marketing is the price. Financial services are characterised by substantial price sensitivity. Most customers, while choosing a bank, treat price as one of the more important criteria. What is more, the price is the only element in the marketing mix which yields profit. It is assumed that the price of a banking service is part of customer's resources, expressed in monetary units, which he or she is willing to resign from, in exchange for a potential benefit offered through this service. 15 The objective of a pricing strategy should be setting the prices at a level that is satisfactory for the customers, and which, at the same time, enables the bank to achieve its 12  established sales volume. Simultaneously, it is important to reduce the impact of the price in the decision-making process, and persuade the customer not to base his or her choice on the results of comparison between various banks' offers. 16 The price includes an interest rate, commissions and fees, in addition to a number of other elements accompanying a given service, e.g. credit due dates, the methods of accruing interest on deposits and charging interest on credits, credit grace periods, security-awarding costs, the terms of early credit pay-off, and the consequences of resigning from a banking service. 17 Unfortunately, the price of a banking service is perceived by the customers rather one-sidedly and is limited to standard categories, interest rate and the amount of commission.
Another marketing instrument is the method and forms of providing ("delivering" to the customer) banking services, i.e. the distribution of banking services. A unique feature of the banking sector brings about banks' difficulties in achieving a competitive advantage over competitors. This is due to the characteristics and nature of banking services, similar packages and the pricing conditions employed by the banks.
The channels of distribution which enable the sales of banking services, serve as a link between the customer and the bank. In literature, distribution channels are defined as a system of properly developed and co-dependent relations between the producer of a service, and its end user 18 . Thus, an important feature of these channels is finding such a relation between a customer and a bank's product that includes both the customer and bank's interests in terms of profitability.
The more important factors deciding on the distribution channel include: − the customer segment to which the given banking products are offered, − the product, its functions and its price, − the distribution system of competitive companies, − the bank's human and financial resources. Other factors influencing the method of distribution include the technological basis available to the bank, and also the number and educational background of its personnel. Financial institutions sell their products via two types of distribution channels: • direct, • indirect. In addition, the number of people and agents at respective levels of distribution decides on the width of this channel.
Another vital instrument in marketing is promotion. Promotion is rightly called a form of communication between a bank and a customer, and the whole market environment. It consists in informing, reminding and persuading consumers to accept, purchase, recommend or utilise a product, service or idea. The branding and gaining a prominent position on the market belong to the main tasks of a financial institution. The most 16 Ibidem,p. 51. 17 Ibidem,p. 52. 18 Kotler P., Marketing, Northwestern University, Warszawa 2012, p. 480.
Pobrane z czasopisma Wschód Europy http://journals.umcs.pl/we Data: 21/02/2021 06:29:23 U M C S popular forms of promotion include supporting the sales of services, personal selling by the bank's employees, and public relations.
The quality of banking services can be defined as "the set of characteristics deciding on the ability of a service to satisfy the financial needs; it is a relation between the characteristics of a given financial service and the requirements it has to meet. " 19 Marketing is present during the creation of informational foundations for the bank's quality policy, and also at the stage of communicating the principles of this policy to customers and other external entities. Marketing provides instruments to measure the degree of customer satisfaction with the quality that the bank provides. This information, in turn, serves as the basis for the introduction of potential changes to the quality policy. Quality can be the main distinguishing feature of a bank's competitiveness. Hence, there is a direct relation between bank marketing and the quality system applied in a given bank. 20 Providing high-quality services aims at satisfying the customer. According to Kotler, satisfaction should be understood as a state experienced by an individual, connected with the comparison of the perceived characteristics of a product and the expectations of this individual with regard to these characteristics. 21 The set of market-influence instruments called as a whole "the marketing mix" is an integral element of a marketing strategy implemented by a bank. Even though the majority of these is of rather traditional character, undoubtedly, their skilful utilisation has a considerable impact on the implementation of its own goals by a bank. 22 The complexity and diversity of service provision determines the need of expanding the traditional set of marketing instruments. The dominant role of human factors in the field of services has resulted in an addition to this set of another element -the personnel employed in a company along with the system of selection, training, motivation and assessment. Further research and studies have led as well, to the addition of physical evidence, i.e. the elements of surroundings and goods accompanying a service, and also the process of service provision, i.e. the organisation and technology of the provision process. 23 The evolution of opinions on the selection of marketing-mix elements in the field of services has resulted in its further expansion. Among other things, the 8P concept was created, which includes: product, place and time, process, performance and quality, people, promotion and education, physical evidence, price and other costs of a service. 24 While taking into account the specificity of banking services, we should consider which of the marketing-mix concepts fits them the most. In my opinion, the concept of a five-element set of marketing instruments will be suitable here.

The impact of the environment on the bank's marketing practices
The marketing activity of a bank is largely conditioned on its environment. The way a bank functions and the shape and efficiency of its marketing strategy is influenced by a number of both economic and social factors. From a general point of view, these are of macro-and microeconomic nature. The first group encompasses especially: − factors of economic nature, − demographic factors, − social and cultural aspects, − legal and political factors, − the development of IT and telecommunication. Microeconomic factors concern mostly the growth of competition in the financial services sector, and the functioning of so-called interest groups, and customers themselves. 25 The quality of service constitutes a very important factor in competition. This is particularly significant in the field of credits, and that is why many customers come to banks characterised by slightly higher credit costs, but offering better assistance. While entrepreneurs would surely like to pay less for a credit, the speed of a credit decision and the provision of clear requirements are of even greater value to them. The bank's flexibility regarding the terms of credit repayment and instalment opportunities is also a considerable factor.
In competitive conditions, leveraging customers by a bank is a serious challenge for those managing the sales of banking services. Customers' attachment to a bank, which means gaining their loyalty, is the objective of comprehensive marketing activities. The starting point to satisfying customers is to provide them with an expected standard of services.

Summary
The subject of this paper was analysing the utilisation and implementation of the rules of marketing in banks. I have demonstrated that marketing is present during the creation of informational bases for the bank's quality policy, and also at the stage of communicating this policy to customers and other external entities.
A financial service is the subject of marketing considerations in banks and financial institutions. The economic and technological development has brought about that, nowadays, the majority of financial services provided by banks should be regarded as services that fulfil the basic needs of their customers. In my opinion, the growing competition requires every modern bank to conduct bank marketing which is aimed at providing the bank with an appropriate image, trustworthiness, and new custom- 25 Grzywacz J.,Marketing…,op. cit.,p. 179. Pobrane z czasopisma Wschód Europy http://journals.umcs.pl/we Data: 21/02/2021 06:29:23 U M C S ers. Marketing based on a comprehensive depiction of all the factors impacting on the achievement of an objective through the influencing of the target market or its segment is called the "marketing mix". A bank, while formulating its strategy, has to know what products it wishes to offer to which customer groups, it has to specify its vision of the future and select an appropriate way of its realisation. The final choice of a given strategy should be the effect of taking into account both external factors and the internal conditions of a given bank. •