Case 3: Building Trust Where Financial Institutions Have Failed

New ProCredit branch in Banja Luka

Technique:
Aggressive marketing campaign, matched with significant improvements in the quality of the bank's physical presence and human resources.

Takeaway:
Aggressive marketing can signal an institution's strength, financial soundness, and stability in the market. The message can be reinforced through improvements in an institution's physical infrastructure and the quality of service it renders to its clients.

Results:
Deposit volume at ProCredit Bank, Bosnia and Herzegovina has more than doubled during the nine months since the campaign was launched.

Case:
In 2005, Procredit Bank of Bosnia and Herzegovina set out to inspire the trust of potential depositors in a market that was emerging from a long shadow of bank failures and was characterized by increasing competition in the supply of financial services. At that point, Procredit Bank management decided to strengthen the bank's image among potential clients. ProCredit Bank has been one of the most financially sound and stable institutions operating in the market since its establishment in 1998. However, despite this performance, the market remained unaware and unfamiliar with the bank.

Vital Savings Statistics: ProCredit Bank, BiH Type of institution Commercial bank Number of deposit accounts 42,292 Demand deposits 39,112 Term deposits 3,180 Average savings account (for individual savers) $ 2,619 Demand deposits 563 Term deposits 9,397 Total value of savings(€) € 51.9 million Demand (€) 22,015,756 Term(€) 29,883,295 Total number of borrowers 31,453 Loan portfolio($) 88,691,106 Percentage of rural/urban clients 46% Number of branches 20 Data as of March 2006.

Its image was influenced by the quality of its physical presence as an institution: its head office and other branch premises were in relatively poor condition, and its head office had a "backwater location," being situated in an area of low visibility. Thus, the bank's management decided to launch a campaign that would more clearly send out the message that ProCredit Bank was indeed a solid and secure financial institution.

ProCredit Bank launched a nationwide campaign in September 2005. They created a TV spot that was accompanied by billboards and newspaper ads. The campaign promoted the institution as being "fair, friendly, and safe." The advertisements featured service-oriented bank staff and employees who were willing to help anyone who walked into the bank. The campaign also emphasized the strength of ProCredit Bank as a financially stable institution, worthy of the clients' trust. To this end, some of the bank's printed ads and materials underscored the bank's past achievements.

Launching the promotional campaign was only part of the strategy to elicit trust among potential depositors. While the campaign was designed to spur interest in the market and to signal the bank's presence as a formidable institution, what happened after the campaign was crucial in order to prove and sustain the marketing message. In order to effectively generate trust and build its reputation, the bank needed to establish a stronger physical presence and build relationships between its staff and its clients.

Thus, the campaign was launched alongside major improvements in the bank's physical premises, the hiring of additional personnel, and the training of existing staff to improve customer service. To date, a total of four new bank branches have been opened and the refurbishment of old branches and offices has been carried out. The head office was relocated to a higher-transit area, and it was painted red in order to make it more visible to the public.

Since ProCredit Bank operates in a competitive environment, it was not viable to consider offering services through small, part-time offices. In order to be consistent with its marketing message, the bank continues to make its growing presence felt through the opening of full-service branches. Being a regulated institution meant that it was necessary for the branches to meet certain security requirements, which carried additional costs. But the bank's management saw this requirement as positive, because it enabled the institution to better establish a reputation of trust in the market, which allows it to also tap into larger institutional or individual depositors.

The bank considers its investment in human resources to have the greatest value, because the staff is entrusted with the responsibility of ensuring that the campaign's message is continuously articulated through the kind of service it renders. To date, the bank has hired more than 150 new personnel and has provided training in sales over an initial period of about eight weeks. Interestingly, the bank's management observed that while the training courses enabled staff members to learn the techniques for generating increased sales and better servicing clients, it was critical for the bank to identify--even during the hiring process--candidates who had the attitude and disposition of being able to render quality service to clients and who were able to personify an image of honesty, integrity and reliability.

Promotional campaign, winter 2006: ProCredit Bank tram- gift to citizens of Sarajevo

During the nine months since the campaign was launched, ProCredit Bank has already registered remarkable achievements: deposits have more than doubled since September 2005. The bank has also attracted large deposits from companies and organizations that have not considered ProCredit Bank beforehand. It is now widely recognized as a solid and trustworthy financial institution. While the bank maintains its orientation towards unbanked sectors of the economy, it is also gradually looking into an expansion of its services to cover the needs of the middle-income segment of the market. Currently, the average balance of demand deposits stands at € 560 (roughly US$660), which is well below the averages registered by other commercial banks operating in the country.

The entire effort has, of course, meant a considerable amount of investment on the part of the bank's owners. The media campaign alone is estimated to have cost roughly € 150,000. However, the bank's management is optimistic and considers the endeavor necessary in its long-term drive to generate increasing deposits. It is important to note, however, that a high level of market penetration is needed in order for such a huge investment to pay off. This is grounded on the need to build upon certain strengths the institution may already have. These strengths may be having a strong presence in and/or identification with certain market niches or a strong branch network that allows it to also transmit the message more effectively. In the case of ProCredit Bank, the presence of competitors in the market, both banks and NGOs, whose level of market penetration exceeded that of ProCredit Bank, also warranted the execution of a marketing strategy of this scope.

ProCredit Bank management, however, advises that in the case of other institutions, launching a marketing campaign of this magnitude may not necessarily be the answer. In some cases, restricting the campaign to a specific geographical area where the institution operates or has its concentration of branches or offices may be more meaningful and effective than spreading its resources too thinly over one that is national in scope. In other cases, choosing specific channels may also be helpful, depending on what kind of media its target market is attuned to.