Financial products and services are a particular type of good that pose special challenges
to marketing (developed on the
basis of Meidan, 1996). These challenges include the
following:
a. Intangibility. Financial
services meet a general monetary rather than a specific tangible need.
Accordingly, financial service providers must get their message across effectively
and ensure an attractive image. A financial service cannot appeal to a depositor's
senses, but rather provides them with an intangible benefit.
b. Inseparability. Financial
services are produced and distributed at the same time. The main concern of the
marketer is therefore to provide the right service at the right place and time.
This requires close proximity to customers. In addition, the packaging of the
savings product is very important.
c. Limited Differentiation. Financial
services are very much alike. Reasons for choosing one provider over another
are often related to convenience. This is especially true for small depositors
whose demand for a savings product in often not excessively dependant on
interest rates.
d. Trust. Financial
service provision involves an intimate relationship between the producer and
the consumer. Thus, financial relationships are often built over a long period
of time and are very sensitive to changes in mutual trust.
e. Geographic Dispersion. Because
proximity is a key factor in financial service provision, large financial
institutions must offer a wide branch network, numerous sales points, or
doorstep services to ensure the satisfaction of regional and local needs. Except
in the case of recent high-tech developments such as internet banking,
financial institutions cannot hope to serve a large customer base if they only
distribute their products and services centrally.
f. Growth Balanced with Risk. Selling financial products,
particularly loan products, involves risk. Accordingly, organizational growth
must be well balanced with the capacity of a financial institution to manage
risk.
g. Fiduciary Responsibility. The
primary responsibility of a depository is to guard the interests of the
depositors. Systems and procedures, as well as financial services, must be
structured accordingly.
h. Labor Intensity. Financial
service provision is highly labor intensive. While automation, especially
computerization, can effectively make transaction management more efficient,
financial services, particularly savings services, remain dependent on the
personal relationship between customers and the front-line staff of the
institution.