Among these major sectors retail industry has undergone a spurt growth as a result of the emergence and mushrooming of departmental stores and malls in many cities. Many reasons can be attributed to this unprecedented growth and the insatiable appetite of the never satisfied consumers seems to the major reason. This paper examines the marketing issues and challenges of retail banking in the UK with special reference to HSBC in the banking sector. The paper attempts to dwell on the intricacies of service marketing that may arise in the efforts to sell financial services of the bank.
Retail banking is not a new buzzword in the banking industry as banks have been providing retail banking services since its inception. But, the retail spurt in banking industry has only a few years history. Retail banking means and includes all dealings and transactions of a bank with its individual customers. In the words of Shyamala Gopinath, Deputy Governor of Reserve Bank of India, "Retail banking is, however, quite broad in nature - it refers to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and educational) on the assets side, are the more important of the products offered by banks. Related ancillary services include credit cards or depository services" (Gopinath, 2005, 1). In her opinion, "Today's retail banking sector is characterized by three basic characteristics:
Multiple products (deposits, credit cards, insurance, investments and securities);
Multiple channels of distribution (call centre, branch, Internet and kiosk); and
Multiple customer groups (consumer, small business, and corporate)" (Gopinath, 2005, 1).
Over the last few years, retail banking in the country has been experiencing a tremendous innovation and spectacular growth owing to the rapid advances in information technology, financial sector reforms, growth of the country, increasing per capita income and several micro level demand- and supply-related factors. The retail loan segment shows an unprecedented growth in the country and there seems to have a boom in the housing sector, though badly affected by the US sub prime crisis. The official source of one of the successful retail bank (KPMG Bank) in the country states that "here are some exciting opportunities in emerging markets, driven by rapid GDP and population growth. In the mature markets branch banking is being revitalized and multi-channel delivery continues to evolve. Mobile payments and pre-paid cards are taking off and ageing populations are helping to drive demand for new and different products" (Retail Banking). All these can be attributed as the reasons for the sudden growth of retail banking in the UK. In terms of the economic benefits and its contribution to the populace, retail banking in the country assumes much significance. The British Bankers Association in its manifesto remarks "In 2002, UK financial services account for 5.3 % of the UK economy and it provided for 1 million jobs, which is around UK's 3.5% of total UK employment. The UK is one of the cheapest countries in the world to bank in, with free 'if in credit' banking being a unique national feature of UK bank accounts. The cost to