A PROJECT REPORT ON

Customer satisfaction
In the Indian Banking Sector

SUBMITTED FOR

The partial fulfillment of

Post graduate programme in management

BY
REETESH KUMAR SINGH

GUIDED BY
MS. MANITA MATHARU

K.R. Mangalam Institute of Management,

Kailash Colony,
Near Summerfield School,
Greater Kailash-I,
New Delhi-110019

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 ACKNOWLEDGEMENT

This project would not have been possible without the guidance, help and
cooperation of a number of people. I extend my gratitude to all those people who
helped me in some or other way to complete my project.

Also I would like express my deepest sense of gratitude to Ms Manita Matharu, my

faculty guide in providing a sense of direction and continuous support in my report
and his inputs regarding the conduct and execution of this report.

I wish to express my heart felt gratitude to all friends who have been associated with
this study in many small and big ways.

Reetesh Kumar Singh

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 DECLARATION

I, REETESH KUMAR SINGH student of PGPMS from K R MANGALAM

INSTITUTE OF MANAGEMENT, GREATER KAILASH - 1, NEW
DELHI, hereby declare that I have completed Dissertation on “Customer
satisfaction in the Indian Banking Sector” as part of the course
requirement.

I further declare that the information presented in this project is true and
original to the best of my knowledge.

(Reetesh Kumar Singh)

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 CONTENTS

Acknowledgment

Declaration

1. INTRODUCTION……………………………………………………….

1.1 History of banking sector

1.2 Emerging trends in banking sector
1.3 Customer satisfaction
1.4 Rural banking
1.5 Foreign banks in India
1.6 Nationalization of banking sector
1.7 Upcoming foreign banks in India

2. LITERATURE REVIEW……………………………………………….

3. NEED FOR RESEARCH………………………………………………..

3.1 Need for measuring Customer satisfaction

3.2 Expectations and customer satisfaction
3.3 Factors Affecting customers towards particular Banks

4. RESEARCH METHODOLOGY…………………………………….

4.1 Objectives of research

4.2 Research design
4.3 Sources of data
4.4 Research instrument.

5. PUBLIC SECTOR BANKS AND PRIVATE SECTOR BANKS……

5.1 Public sector banks
5.2 Private sector banks

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 5.3 Difference between public sector banks and private sector banks
5.4 Difference between public sector banks and private sector banks in terms of
Customer satisfaction.
5.5 Reasons of dissatisfaction in public sector banks.
5.6 Recommendations for public sector banks.

6. STRATEGIES OF BANKS TO SATISFY THEIR CUSTOMERS…….

6.1 Relationship marketing (CRM) in banking sector
6.2 Ten ways to help you improve your customer service
6.3 Service quality development
6.4 Improving customer satisfaction
6.5 Dimensions of service quality in the Indian retail Banking Environment
6.6 Marketing strategies
6.7 Measuring Customer satisfaction in the Indian Banking sector

7. IMPACT OF ATM ON CUSTOMER SATISFACTION………………..

8. ANALYSIS & INTERPRETATION ………………………………………

9. CONCLUSION & SUMMARY ……………………………………………

10. LIMITATIONS……………………………………………………………….

References

Questionnaire

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 LIST OF TABLES

TABLE NO. TITLE PAGE NO.

Table 4.4(a) Demographics(Gender) 25
Table 4.4(b) Marital status 26
Table 4.4(c) Monthly family income 26
Table 4.4(d) Age 27
Table 4.4(e) Education 28
Table 4.4(f) Occupation 29
Table 8(a) Customer satisfaction level in SBI 54
Table 8(b) Customer satisfaction level in PNB 55
Table 8(c) Customer satisfaction level in IDBI 56
Table 8(d) Customer satisfaction level in ICICI 56
Table 8(e) Customer satisfaction level in HDFC 57
Table 9(a) Ranking score sheet of customer perception 61

LIST OF GRAPHS

GRAPH TITLE PAGE NO.

NO.

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Graph 4.4(a) Demographics(Gender) 25
Graph 4.4(b)
4.4(b) Marital status 26
Graph 4.4(c)
4.4(c) Monthly family income 27
Graph 4.4(d)
4.4(d) Age 28
Graph 4.4(e)
4.4(e) Education 29
Graph 4.4(f)
4.4(f) Occupation 30
Graph 8(a) Customer satisfaction level in SBI 55
Graph 8(b) Customer satisfaction level in PNB 55
Graph 8(c) Customer satisfaction level in IDBI 56
Graph 8(d) Customer satisfaction level in ICICI 56
Graph 8(e) Customer satisfaction level in HDFC 57
Graph 9(a) Ranking score sheet of customer perception 62

1. INTRODUCTION

The Purpose of this study to investigates relationship dimensions and studies the
differences in perception of customers with respect to services provided by five Indian
banks. The relationship dimensions which lead to customer satisfaction have been
identified. This study reports on the different satisfaction levels of customers of private
and public sector banks with respect to the services provided by their banks

1.1 HISTORY OF THE BANKING SECTOR

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Banking in India originated in the last decades of the 18th century. The first banks were
The General Bank of India which started in 1786, and the Bank of Hindustan, both of
which are now defunct. The oldest bank in existence in India is the State Bank of India,
which originated in the Bank of Calcutta in June 1806, which almost immediately
became the Bank of Bengal. This was one of the three presidency banks, the other two
being the Bank of Bombay and the Bank of Madras, all three of which were established
under charters from the British East India Company. For many years the Presidency
banks acted as quasi-central banks, as did their successors. The three banks merged in
1921 to form the Imperial Bank of India, which, upon India's independence, became the
State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as
a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in
1865 and still functioning today, is the oldest Joint Stock bank in India. It was not the
first though. That honor belongs to the Bank of Upper India, which was established in
1863, and which survived until 1913, when it failed, with some of its assets and liabilities
being transferred to the Alliance Bank of Simla.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire
d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in
1862; branches in Madras and Pondichery, then a French colony, followed. HSBC
established itself in Bengal in 1869. Calcutta was the most active trading port in India,
mainly due to the trade of the British Empire, and so became a banking center.

The Bank of Bengal, which later became the State Bank of India.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in
1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established
in Lahore in 1895, which has survived to the present and is now one of the largest banks
in India.

The period between 1906 and 1911, saw the establishment of banks inspired by the
Swadeshi movement. The Swadeshi movement inspired local businessmen and political

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figures to found banks of and for the Indian community. A number of banks established
then have survived to the present such as Bank of India, Corporation Bank, Indian Bank,
Bank of Baroda, Canara Bank and Central Bank of India.

The favour of Swadeshi movement lead to establishing of many private banks in

Dakshina Kannada and Udupi district which were unified earlier and known by the name
South Canara ( South Kanara ) district. Four nationalized banks started in this district
and also a leading private sector bank. Hence undivided Dakshina Kannada district is
known as "Cradle of Indian Banking".

The State Bank of India (SBI) is the oldest and largest bank in the country. Its origins
go back to the first decade of the 19th century, when the Bank of Calcutta was
established on 2 June 1806. The bank got its present name after an Act of Parliament in
May 1955 and the State Bank of India was constituted on 1 July 1955. Today, SBI has a
phenomenal 9,559 branches and its ATM network is spread across 6,473 of its own
locations& total 8,000ATMs including of those of its associate banks.
State Bank of India is a successor to Imperial • Bank of India, which was established in
1921.The bank, came into being on 1.7.1955 through • the State Bank of India Act, 1955.
States of India joined the State Bank Group, as subsidiaries under the State Bank of India
(Subsidiaries Banks) Act, 1959.

1.2 EMERGING TRENDS IN BANKING SECTOR

The liberalization process initiated by the government about a decade ago has changed
the landscape of several sectors of the Indian economy. The financial sector like other
sectors is also going through major changes as a consequence of economic reforms. The
consumption-led boom in India has fuelled robust demand for financial products
especially in the banking domain. Emerging competition has generated new expectations
from existing and new customers. There is an urgent need to introduce new and more

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attractive customer-friendly products and services. The banking sector presently is at an
inflexion point. Existing products need to be delivered in an innovative and cost-effective
manner by taking full advantage of emerging technologies. Technology has swiftly
become a business driver rather than a business enabler. This sector has seen phenomenal
growth in terms of technology infusion and adoption in the recent past such as: Internet
and Mobile Banking, CRM, etc. With increasing competition and tightening of prudential
norms by the Reserve Bank, the players in the banking industry, both Indian and global
are taking turns towards mergers and acquisitions. Only banks having adequate
infrastructure, technology, economies of scale and well connected network of branches
will be able to survive and meet the challenges of ever increasing competition and
customer expectations. The book is divided into two sections. Section-I extensively
covers the trends, issues and challenges related to the technology i.e. ATMs, e-banking,
data warehousing and data mining, CRM solutions, etc. Section-II covers other
contemporary issues in the banking sector such as Basel II, financial inclusion, service
quality, risk management, banc assurance, retail banking, universal banking etc. The
book shall serve as a rich reference resource for decision makers in the banking industry,
researchers, academicians and students.

The traditional distinctions between banking and other financial services like insurance
on one side; and between commercial banking, developmental banking and investment
banking are getting blurred. The emergence of universal banking and banc assurance are
clearly pointers. This global convergence of financial services may gather further
momentum in the years to come. The banking and insurance sector reforms have
encouraged private sector players to make forays into the business in collaboration with
major international companies.

This new scenario will witness financially sound and experienced players transforming
the industry with best practices in product development, operational efficiency, marketing
capability, service focus, and tech savy orientation. Thus there is a need for intensive,
futuristic and career oriented programs in these two areas: Banking and Insurance. These

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developments in Banking and Insurance industry call for competent and professionally
trained managers",

Increasing competition, thinner spreads and introduction of new technology driven

products are some of the trends that the Indian banking system is experiencing. "Recent
trends in Indian banking have reflected the efforts of the major players to adapt to a
rapidly liberalizing and globalizing environment.

While the impact of these changes is possibly a subject of debate, there is one group
which is not complaining the customers, the beneficiaries of the process of
liberalization," observed Amitabh Guha, State Bank of Travancore.

Further, the technology oriented banking has become one of the latest mantras of success
in the market, especially to win over the customers.

To this, says SBI Chairman AK Purwar, "Indian banks need to fuel the market by
bringing new products at par with the international standards, extending ATM facility to
rural areas and vibrant networking countrywide to compete with the new generation and
the MNC banks in India"

As T.S. Anantharaman, Financial Analyst, mentioned, "The savings and investments

scenario in our country has undergone total change in the past decade, since the country
embarked on a course of liberalization and globalization of its economy

With the increasing sophistication of our economy, the variety and type of investments
options available to us today have multiplied. Also, with the economy getting more and
more integrated with the world economy, rapid changes in the options, instruments, rate
of return etc. have become the order of the day." Such a change is visible in respect of
shares, mutual funds, fixed income, bank deposits, life insurance, pension plans etc. since
change and innovation is involved in this process, and one can legitimately expect an
exciting and lucrative career scenario in the banking, finance and insurance sector.

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1.3 CUSTOMER SATISFACTION

Customer satisfaction, a business term, is a measure of how products and services

supplied by a company meet or surpass customer expectation. It is seen as a key
performance indicator within business and is part of the four perspectives of a Balanced
Scorecard.

In a competitive marketplace where businesses compete for customers, customer

satisfaction is seen as a key differentiator and increasingly has become a key element of
business strategy.

Organizations need to retain existing customers while targeting non-customers;

Measuring customer satisfaction provides an indication of how successful the
organization is at providing products and/or services to the marketplace.

Customer satisfaction is an abstract concept and the actual manifestation of the state of
satisfaction will vary from person to person and product/service to product/service. The
state of satisfaction depends on a number of both psychological and physical variables
which correlate with satisfaction behaviors such as return and recommend rate. The level
of satisfaction can also vary depending on other factors the customer, such as other
products against which the customer can compare the organization's products.

Satisfaction with banking services is an area of growing interest to researchers and

managers. The commercial banking industry like many other financial service industries
is facing rapidly changing market. New technologies, economic uncertainties, fierce
competition and more demanding customers and the changing climate have presented an
unprecedented set of challenges. Intangible assets, particularly brands and customers, are
critical to any organization and in today’s competitive environment relationship
marketing is critical to banking corporate success.

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Banking is a customer oriented services industry. As we know that customer is the king
therefore customer is the main focus and customer service is the differentiating factor.
Banks have also started realizing that business depends on client service and the
satisfaction of the customer and this is compelling them to improve customer service and
build relationship with customers. With the current change in the functional orientation of
banks, the purpose of banking being redefined. The main driver of this change is
changing customer needs and expectations. Customers look for a relationship with bank
when they receive benefits from its services.

The banking industry like many other financial service industries is facing a rapidly
changing market, new technologies, economic uncertainties, fierce competition and more
demanding customers and the changing climate has presented an unprecedented set of
challenges .

The banking industry in India has undergone dramatic change post independence. Banks
have also starts realizing that business depends on client service and the satisfaction of
the customer and this is compelling them to improve customer service and build
relationship with customers.

With the current changes in the functional orientation of banks, the purpose of banking is
being redefined. The main driver of this change is changing customer needs and
expectations. Customers In urban India no longer want to wait in long queues and spend
hours in banking transactions. This change in customer attitude has gone hand in hand
with the developments of ATMs, phone and net banking along with availability of service
right at the customer doorstep. Further the world class banking experience provided by
private and multinational banks with their ever evolving products and services has raised
the bar of customer expectations. With the emergence of universal banking, banks aim to
provide all banking products and service offering under one roof and their Endeavour is
to be customer centric. The Indian banking industry is also embracing technology rapidly.
Big players among the private and public sector banks are reengineering and automating
their core banking processes.

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1.4 RURAL BANKING

Rural banking in India started since the establishment of banking sector in India. Rural
Banks in those days mainly focused upon the agro sector. The Haryana State Cooperative
Apex Bank Ltd. commonly called as HARCOBANK plays a vital role in rural banking in
the economy of Haryana State and has been providing aids and financing farmers, rural
artisans, agricultural laborers, entrepreneurs, etc. in the state and giving service to its
depositors. National Bank for Agriculture and Rural Development (NABARD) is a
development bank in the sector of Regional Rural Banks in India. It provides and
regulates credit and gives service for the promotion and development of rural sectors
mainly agriculture, small scale industries, cottage and village industries, handicrafts.

1.5 FOREIGN BANKS IN INDIA

Foreign Banks in India always brought an explanation about the prompt services to
customers. After the set up foreign banks in India, the banking sector in India also
become competitive and accusative. New policies are introduced by RBI for them–The
policy conveys that foreign banks in India may not acquire Indian ones (except for weak
banks identified by the RBI, on its terms) and their Indian subsidiaries will not be able to
open branches freely, Main competitors for banking sector. Post offices, Mutual fund,
Share market, Insurance, Money lenders, Family and friends, Present scenario banking
industry has been undergoing a rapid transformation, Banks today are market driven and
market responsive. With the entry of new players and multiple channels, customers (both
corporate and retail) have become more discerning and less "loyal" to banks. This makes
it imperative that banks provide best possible products and services to ensure customer
satisfaction. They have been managing a world of information about customers - their
profiles, location, needs, requirements, cash positions, etc. Furthermore, banks have very
strong in-house research and market intelligence units in order to face the future
challenges of competition, especially customer retention.

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They are focusing on region-specific campaigns rather than national media campaigns as
effective strategy for a diverse country like India. Customer-centricity also implies
increasing investment in technology. Apart from the Mobile Banking, including of SMS
Banking, Net Banking and ATMs are the major steps taken by the banks in India towards
modernization. Services given by banks D-mat account, Lockers, Cash management
Insurance product, Mutual fund product, Loans, ECS (Electronic clearance system)
Taxes.

1.6 NATIONALIZATION OF BANKING SECTOR-

The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then
prime minister. It nationalized 14 banks then. These banks were mostly owned by
businessmen and even managed by them. Central Bank of India, Bank of Maharashtra,
Dena Bank Punjab National Bank Syndicate Bank, Canara Bank Indian Bank Indian
Overseas Bank, bank of Baroda, Union Bank, Allahabad Bank United Bank of India
UCO Bank.
After that Banks have introduced many more products and facilities in the banking sector
in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee
was set up by his name which worked for the liberalization of banking practices. The
country is flooded with foreign banks and their ATM stations. Efforts are being put to
give a satisfactory service to customers. Phone banking and Net banking is introduced.
The entire system became more convenient and swift. Time is given more importance
than money.

1.7 UPCOMING FOREIGN BANKS IN INDIA

By 2009 few more names is going to be added in the list of foreign banks in India. This
is as an aftermath of the sudden interest shown by Reserve Bank of India paving
roadmap for foreign banks in India greater freedom in India. Among them is the world's

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best private bank by Euro Money magazine, Switzerland's UBS. The following are the
list of foreign banks going to set up business in India:-
•Royal Bank of Scotland
•Switzerland's UBS
•US-based GE Capital
•Credit Suisse Group
•Industrial and Commercial Bank of China

2. LITERATURE REVIEW-

Customer satisfaction is an important theoretical as well as practical issue for most

marketers and consumer researchers (10). Customer satisfaction can be considered the
essence of success in today’s highly competitive world of business. Thus the significance
of customer satisfaction and customer retention in strategy development for a market

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oriented and customer focused firm can not be overstated. Consequently, customer
satisfaction is increasingly becoming a corporate goal as more and more companies strive
for quality in their product and services (11). Customer satisfaction is the feeling or
attitude of a customer towards a product or services after it has been used and is generally
described as a full meeting of one’s expectations (12). Customer satisfaction is a major
outcome of marketing activity whereby it serves as a link between the various stages of
consumer buying behavior. For instance, if customers are satisfied with particular service
offering after its use, then they are likely to engage in repeat purchase and try line
extensions (13).A study conducted by Levesque and McDougall (14) confirmed and
reinforced the idea that unsatisfactory customer service leads to a drop in customer
satisfaction and willingness to recommend the service to a friend. This would in turn lead
to an increase in the rate of switching by customers.

There can be potentially many antecedents of customer satisfaction as the dimensions

underlying satisfaction judgment are global rather than specific (15). However, some
argue that customers develop norms for product performance based on general product
experiences, and these, rather than expectations from a brand’s performance, determine
the confirmation /disconfirmation process (16). More recent work has argued that in
addition to the cognitive components, satisfaction judgments are also dependent upon
affective components as both coexist and make independent contributions to the
satisfaction judgments (17).

Researchers have established some of the key antecedents of customer satisfaction in

retail banking with respect to customer satisfaction in the competitive world of business
as well as the key antecedents to the formation of overall customer satisfaction (18). The
bottom line is that organizations will always be attentive to maximizing profits and their
success will be determined by how they manage customer relationships. Marketing has
taken some initial steps to place the customer at the center of its efforts, such as
information sharing in customer service channels, sales force automation and target
market segmentation. Customer profitability management requires a multi-level
marketing return on investment analysis covering a series of marketing activities that can
be integrated and optimized for a customer or customer segment (19).

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Customer satisfaction, a business term, is a measure of how products and services
supplied by a company meet or surpass customer expectation. It is seen as a key
performance indicator within business and is part of the four perspectives of a Balanced
Scorecard.

In a competitive marketplace where businesses compete for customers, customer

satisfaction is seen as a key differentiator and increasingly has become a key element of
business strategy.

There is a substantial body of empirical literature that establishes the benefits of customer
satisfaction for firms.

Organizations need to retain existing customers while targeting non-customer. Measuring

customer satisfaction provides an indication of how successful the organization is at
providing products and/or services to the marketplace.

Customer satisfaction is an abstract concept and the actual manifestation of the state of
satisfaction will vary from person to person and product/service to product/service. The
state of satisfaction depends on a number of both psychological and physical variables
which correlate with satisfaction behaviors such as return and recommend rate. The level
of satisfaction can also vary depending on other factors the customer, such as other
products against which the customer can compare the organization's products.

Work done by Parasuraman, Zeithaml and Berry (Leonard L) between 1985 and 1988
delivered SERVQUAL which provides the basis for the measurement of customer
satisfaction with a service by using the gap between the customer's expectation of
performance and their perceived experience of performance. This provides the researcher
with a satisfaction "gap" which is semi-quantitative in nature. Cronin and Taylor
extended the disconfirmation theory by combining the "gap" described by Parasuraman,
Zeithaml and Berry as two different measures (perception and expectation) into a single
measurement of performance relative to expectation.

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The usual measures of customer satisfaction involve a survey with a set of statements
using a Likert Technique or scale. The customer is asked to evaluate each statement in
terms of their perception and expectation of performance of the service being measured.

Because the concept of customer satisfaction is new to many companies, it's important to
be clear on exactly what's meant by the term.

Customer satisfaction is the state of mind that customers have about a company when
their expectations have been met or exceeded over the lifetime of the product or service.
The achievement of customer satisfaction leads to company loyalty and product
repurchase. There are some important implications of this definition:

Because customer satisfaction is a subjective, no quantitative state, measurement won't

be exact and will require sampling and statistical analysis.

Customer satisfaction measurement must be undertaken with an understanding of the

gap between customer expectations and attribute performance perceptions.

There should be some connection between customer satisfaction measurement and

bottom-line results.

"Satisfaction" itself can refer to a number of different facts of the relationship with a
customer. For example, it can refer to any or all of the following:

Satisfaction with the quality of a particular product or service

Satisfaction with an ongoing business relationship

Satisfaction with the price-performance ratio of a product or service

Satisfaction because a product/service met or exceeded the customer's expectations

Each industry could add to this list according to the nature of the business and the
specific relationship with the customer. Customer satisfaction measurement variables will
differ depending on what type of satisfaction is being researched. For example,

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manufacturers typically desire on-time delivery and adherence to specifications, so
measures of satisfaction taken by suppliers should include these critical variables.

Clearly defining and understanding customer satisfaction can help any company identify
opportunities for product and service innovation and serve as the basis for performance
appraisal and reward systems. It can also serve as the basis for a customer satisfaction
surveying program that can ensure that quality improvement efforts are properly focused
on issues that are most important to the customer.

3. NEED FOR RESEARCH

While relationships have been extensively studied in marketing channels ,industrial

settings, and some consumer setting in western cultural contexts such as Europe ,US, the
UK ,and even Australia ,few studies have examined the paradigm in an eastern cultural
context such as India. The maturing of services marketing, the increased recognition of

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potential benefits for customer and technological developments are the main factors
driving the developments of relationship marketing33.the presence of these factors in the
Indian banking sector motivated this research. With banks losing 8% of their clients
every year 34.relationship marketing strategy to satisfy customers and improve their
profitability has moved to the forefront.

For centuries banks have played an important role in financial system of the country. The
vital role continues even today although the form of banking has changed today with
changing need of the economy and individuals.
The Banking system in India has three tiers. There are scheduled commercial banks; the
regional rural banks; and the cooperative banks. The scheduled commercial banks
constitute those banks which are included in the second schedule of RBI Act 1934.In the
organized segment; banking system occupies an important place in nation’s economy. It
plays a pivotal role in the economic development of a country and forms the core of the
money market in an advanced country. The commercial banks in India comprise of both
Public sector as well as private sector banks. There are total 28 Public sector and 27
private sector banks are functioning in the country presently. Banks have to deal with
many customers everyday and render various types of services to its customer. It’s a well
known fact that no business can exist without customers.

3.1 The Need to Measure Customer Satisfaction:

Satisfied customers are central to optimal performance and financial returns. In many
places in the world, business organizations have been elevating the role of the customer
to that of a key stakeholder over the past twenty years. Customers are viewed as a group
whose satisfaction with the enterprise must be incorporated in strategic planning efforts.
Forward-looking companies are finding value in directly measuring and tracking
customer satisfaction (CS) as an important strategic success indicator. Evidence is
mounting that placing a high priority on CS is critical to improved organizational
performance in a global marketplace. With better understanding of customers'
perceptions, companies can determine the actions required to meet the customers' needs.

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They can identify their own strengths and weaknesses, where they stand in comparison to
their competitors, chart out path future progress and improvement. Customer satisfaction
measurement helps to promote an increased focus on customer outcomes and stimulate
improvements in the work practices and processes used within the company.
Customer satisfaction is quite a complex issue and there is a lot of debate and confusion
about what exactly is required and how to go about it. This article is an attempt to review
the necessary requirements, and discuss the steps that need to be taken in order to
measure and track customer satisfaction.

3.2 Expectations and Customer Satisfaction:

Expectations have a central role in influencing satisfaction with services, and these in
turn are determined by a very wide range of factors lower expectations will result in
higher satisfaction ratings for any given level of service quality. This would seem
sensible; for example, poor previous experience with the service or other similar services
is likely to result in it being easier to pleasantly surprise customers. However, there are
clearly circumstances where negative preconceptions of a service provider will lead to
lower expectations, but will also make it harder to achieve high satisfaction ratings - and
where positive preconceptions and high expectations make positive ratings more likely.

3.3 Factors affecting customers towards particular bank

• Relationship marketing; financial performance;

• electronic commerce; e-commerce; online banking; electronic banking;;
internet banking; information technology; privacy;
• business research; customer research; business innovation;

4. RESEARCH METHODOLOGY
4.1 OBJECTIVE OF THE RESEARCH

The main objective of this study are-

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  To identify customer satisfaction variables which lead to building relationship
with customers in the Indian banking sector
 To study the difference in perception of the customers of the bank towards
various services provided by bank.
 To analyze the satisfaction level of customers with respect to the various service
provided by the banks
 To identify the strategies of banks to satisfy their customers.

4.2 RESEARCH DESIGN: Exploratory design

This study is exploratory in nature. It provides a description of contemporary satisfaction

parameter in the Indian banking sector. Exploratory research provides insights into and
comprehension of an issue or situation. Exploratory research helps to determine the best
research design, data collection method and selection of subjects.

4.3 SOURCES OF DATA-

There are many sources of data collection, such as secondary data collection and Primary
data collection.

Primary data--
There are various ways to undertake the gathering of primary data, including conducting
surveys to create market data or using other research instruments such as questionnaire.
Sample size- 100
Sample techniques- Convenience sampling
Secondary data
This involves information that already exists somewhere, such as in studies already
undertaken on this area as well as published books, articles in journals, articles on the
internet and other sources.

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Relationship marketing dimensions were identified by conducting a customer satisfaction
survey of five banks in India. The research process involved the following steps.
First, a literature review was undertaken to identify what parameters to consider in
research. It outlines the previous research with respect to customer satisfaction in the
banking industry.
Second, in-depth interview were held with customers to establish the evaluation criteria
and factors which results in customer satisfaction.
Third, a questionnaire was constructed and piloted.
Last, the population and sampling procedure were established and methods of data
collection and analysis determined.
The present research is exploratory in nature and aims to develop hypothesis which can
be tested later. It provides description of contemporary satisfaction parameters in the
banking industry. It is not explanatory as it does not test any casual relationships.

4.4 RESEARCH INSTRUMENT

The questionnaire was designed from the literature review as well as from the results of
in-depth interviews. It included sixteen variables which determined the satisfaction of the
customers of the five banks chosen for the study. Two of these banks were national banks
namely ,state Bank of India(SBI) and Punjab National Bank(PNB) and three were Private
sector Banks namely, Housing Development Finance corporation(HDFC),Industrial
Credit and Investment Corporation of India(ICICI),and Industrial Development Bank of
India(IDBI). SBI and PNB were chosen because they have the largest network of
branches in India. ICICI, HDFC and IDBI were the first private banks to introduce
“intelligent” banking in India. These banks have a strong retail presence and offer a
comprehensive range of information to the customer. They have taken initiatives to
satisfy customers and provide value added services.
Data from 100 customers were collected. The five banks were contacted individually to
obtain the contact addresses of the customers and the questionnaire was administered to
customers who had been with the bank for three years. The questionnaire is divided in to
five sections. The second part of questionnaire dealt with respondent satisfaction with

24
respect to services and the third part dealt with variables which involve transactions.
Customer satisfaction was recorded on a 7 point semantic differential scale ranging from
extremely good/satisfied to extremely bad/dissatisfied. The other parts of the
questionnaire recorded information about customers experience with their respective
banks, their banking habits and demographic information.
Demographic profile of the customers
Table 4.4(a) Demographics
1. Gender
Male 69.9%
Female 30.1%

70.00%
60.00%
50.00%

40.00%
Male
30.00% Female
20.00%
10.00%

0.00%

Graph 4.4(a)
INTERPRETATION-There are 69.9% male and 30.1% female respondent in my study.

Table 4.4(b) - Marital status

Married 50.8%
Unmarried 48.5%
Other 0.7%

25
 60.00%

50.00%

40.00% Married
30.00% Unmarried
Other
20.00%

10.00%
0.00%

Graph 4.4(b)

INTERPRETATION- There are 50.8% married and 48.5% unmarried respondent in my

study.

Table 4.4(c)-Monthly Family income

Less than Rs10000 19.6%
Rs10000-20000 28.6%
Rs20000-30000 27.0%
Rs30000-40000 16.2%
More than 40000 8.5%

26
 30.00%

25.00%

20.00% Rs10000-20000
Rs20000-30000
15.00%
Rs30000-40000
10.00% More than 40000

5.00%

0.00%

Graph 4.4(c)

INTERPRETATION- There are 19.6% ,28.6%,27.0%,16.2%,8.5% respondent whose

monthly family income is less than Rs10000,Rs10000-20000,Rs20000-30000,Rs30000-
40000,more than 40000 respectively in my study.
.
Table 4.4(d)-Age
Below 25 years 32.8%
25-35 years 27.0%
35-45 years 23.8%
45-55 years 11.9%
Above 55 years 4.5%

27
 35.00%
30.00%
25.00% Below 25 years
25-35 years
20.00%
35-45 years
15.00%
45-55 years
10.00% Above 55 years
5.00%
0.00%

Graph 4.4(d)

INTERPRETATION- There is 32.8%, 27.0%, 23.8%,11.9%,4.5% respondent whose age

are below 25 years,25-35 years,35-45 years,45-55 years and above 55 years respectively.

Table 4.4(e)-Education
Secondary 1.3%
Higher secondary 2.7%
Undergraduate 3.4%
Graduate 40.9%
Post Graduate 51.7%

60.00%

50.00%
Secondary
40.00%
Higher secondary
30.00% Undergraduate
20.00% Graduate
Post Graduate
10.00%

0.00%

28
 Graph 4.4(e)

INTERPRETATION- There is 1.3%,2.7%,3.4%,40.9% and 51.7% respondent whose

education are secondary, higher secondary, Undergraduate ,Graduate, Post graduate
respectively in my study.

Table 4.4(f)-Occupation

Home maker 4.9%

Service 45.6%
Self employed 25.2%
Retired 1.6%
Students 22.7%

50.00%
45.00%
40.00%
35.00% Home maker
30.00% Service
25.00% Self employed
20.00% Retired
15.00% Students
10.00%
5.00%
0.00%

Graph 4.4(f)

29
INTERPRETATION- There are 4.9%, 45.6%, 25.2%, 1.6%, 22.7% respondent whose
occupation is Home maker, service self employed, retired and student respectively in my
study.

5. PUBLIC SECTOR AND PRIVATE SECTOR BANKS

5.1 PUBLIC SECTOR BANKS

Among the Public Sector Banks in India, United Bank of India is one of the 14 major
banks which were nationalized on July 19, 1969. Its predecessor, in the Public Sector
Banks, the United Bank of India Ltd., was formed in 1950 with the amalgamation of four
banks viz. Comilla Banking Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918),
Comilla Union Bank Ltd. (1922) and Hooghly Bank Ltd. (1932).This Public Sector Bank
India has implemented 14 point action plan for strengthening of credit delivery to women
and has designated 5 branches as specialized branches for women entrepreneurs.

5.2 PRIVATE SECTOR BANKS-

30
The first Private bank in India to be set up in Private Sector Banks in India was IndusInd
Bank. It is one of the fastest growing Banks in India. IDBI ranks the tenth largest
development bank in the world as Private Banks in India and has promoted world class
institutions in India. The first Private Bank in India to receive an in principle approval
from the Reserve Bank of India was Housing Development Finance Corporation Limited,
to set up a bank in the private sector banks in India as part of the RBI's liberalization of
the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited
with registered office in Mumbai and commenced operations as Scheduled Commercial
Bank in January 1995.Co operative banks in India.

5.3 Difference between private sector and public sector banks

A private sector is an economy is made up of all businesses and firms owned by ordinary
members of the general public. It also consist of all the private households in which
people live..,whereas, public sector is an economy is owned and controlled by a
government . It consist of government businesses and firms ,and goods and services
provided by the government, such as the national health service, state
education,jobs,roads,public parks and law and order.

5.4 Comparison of private sector banks with public sector banks in

terms of customer satisfaction-

The objective of this study is to compare the public sector banks and private sector banks
in terms of customer satisfaction and to find out the various reasons of customer
dissatisfaction in these banks.

The scope of the study is confined in comparing the Public sector and private sector
banks in terms of customer satisfaction. The study will be undertaken on the basis of
sample survey.
FINDINGS

31
Customer satisfaction level is higher in Private sector banks as compared with the Public
Sector Banks.

5.5 REASONS OF DISSATISFACTION IN PUBLIC SECTOR BANKS

Behavior and attitude of the staff in public sector banks is the first reason of Customer
dissatisfaction.
Time taken to process the transaction is the second reason of customer
dissatisfaction.
Many of the services are not provided by the Public sector banks when compared with
the Private sector banks e.g. ATM Banking is not provided by Union Bank of India.
Internet Banking and Mobile banking is also not provided by many of the Public sector
banks.

5.6 RECOMMENDATIONS
• The staff should be adequately trained to deal with the customer on one to one
basis.
• Many public sector banks need to revive their infrastructure to have pace with the
competing environment.
• Many of the services needs improvement in public sector banks e.g. ATM
facilities.
• Staff should be adequately trained to encourage face to face dealing.
• Staff should be friendly and approachable.
• Clearly defined customer policy should be adopted by the banks.
• Customer’s needs should be anticipated in advance so that they can be helped out
in a better way.
• Honor your promises.

32
6. Strategies of banks to satisfy their customers-

A main strategy of banks to satisfy their customer is CRM.

6.1 CRM in banking sector-CRM: A Competitive Tool for Indian Banking Sector-

In today’s competitive environment relationship marketing is critical to banking

corporate success. Banking is a customer oriented services industry and Indian banks
have started realizing that business depends on client service and the satisfaction of the
customer. This is compelling them to improve customer service and build relationships
with customers.

33
This study, conducted among five Indian banks, aimed at identifying customer
satisfaction variables which lead to relationship building, and developing a conceptual
framework of relationship marketing practices in Indian banks by capturing the
perspectives of customers with respect to their satisfaction with various services. It also
sought to identify whether demographics have a role to play in customer satisfaction. A
questionnaire designed from a literature review and in-depth interviews were utilized to
arrive at the 16 variables which determined the satisfaction of 555 customers of the five
banks..

The three relationship dimensions, namely, traditional services, multi channel banking
and internal marketing, which lead to customer satisfaction, were identified through
factor analysis. A repeated measure of ANOVA was run on the relationship dimensions
to assess significant difference in the level of satisfaction of the customer. A perceptual
map was created using the factor scores of each of the five banks which helped identify
how each bank was positioned in the customers’ minds.

Reporting on the different satisfaction levels of the customers, the findings suggest that
while private banks have been able to attract the younger customers with higher
educational levels, who are comfortable with multi channel banking, the customers of the
national bank are older and more satisfied with the traditional facilities. The results from
this study could provide managerial lessons on assessment of strengths and improvement
of services and in evolving a research strategy that will benefit the management of banks

Customer Relationship Management has emerged as a popular business strategy in

today’s competitive environment. It is a discipline which enables the companies to
identify and target their most profitable customers. CRM involves new and advance
marketing strategies which not only retain the existing customers but also acquire new
customers. It has been invented as a unique technique capable of remarkable changes in
total output of companies. While the concept of relationship marketing was formally
introduced in early 90s when financial services, airlines and other service institutions
stated to ‘reward to retain’ the existing customers by introducing loyalty programs, CRM
is only a product of the late nineties. The purpose of this paper is to find the differences

34
in an organization’s services employing CRM Vis a Vis others, as perceived by the
customer. It also tries to find out the relationship between perception and satisfaction,
commitment and loyalty which underlines the significance of CRM in Indian banking
sector.
CRM has developed into a major corporate strategy for many organizations. It is
concerned with the creation, development and enhancement of individualized customer
relationships with carefully targeted customers and customer groups resulting in
maximizing their total customer life time value.
It is said that CRM is not a product or service; it is an overall business strategy that
enables companies to effectively manage relationships with their customers. It provides
an integrated view of a company’s customers to everyone in the organization. With the
intensified competition, companies realized that they have to treat their customers with
respect. Customers have a lot more choices and they do not have to be loyal to any
company. Companies are now trying to figure out ways to manage customer relationships
effectively, not only to acquire new customers but also to retain their existing
customers.Shani and Chalasani (1992) define relationship marketing as an integrated
effort to identify, maintain and build up a network with individual customers and to
continuously strengthen the network for the mutual benefit of both sides through
interactive, individualized and value added contacts over a long period. Narrow
functionally based traditional marketing is being replaced by CRM. A narrow perspective
of CRM is database marketing emphasizing the promotional aspects of marketing linked
to database efforts (Bickert 1992).Berry (1995) stresses that attracting new customers
should be viewed only as an intermediate step in the marketing process.
Developing close relationships with these customers and turning them into loyal ones are
equal aspects of marketing. Thus he proposed relationship marketing as attracting,
maintaining and in multi service organizations- enhancing customer relationships.
Berry’s notion of customer relationship management resembles that of Gronroos (1990),
Gummesson and Levitt (1981). Another important facet of CRM is customer selectivity.
As several research studies have shown not all customers are equally profitable for an
individual company (Storbacka2000).

35
While ample literature is available on CRM today, hardly any information is forthcoming
on the gains from CRM, whether for the organization or the customer, in concrete terms.
No study has yet reported in precise form and figure, as to what and how much an
organization, employing the CRM philosophy has benefited out of it, while the claims are
many. Still more scarce is literature on what is in it for the customer. Is the customer
gaining anything out of the exercise (CRM)? Does he feel that the services handed out to
him by a business corporation using CRM as a strategy is any better than others in the
industry? In order to seek an answer to this question a survey on customer perceptions of
service quality was carried out. The paper reports findings of the said survey.

6.2 Ten Ways to Help You Improve Your Customer Service-

By: Catherine Franz

1. Stay in contact with customers on a regular basis. Just as it is bad news to send
out too many emails to customers, it is just as bad to not stay in contact with
them. Customers don't want to feel abandoned. So don't. Here are three things to
help you stay in touch: Offer them your ezine subscription. Ask customers if they
want to be updated by e-mail. Follow-up after each sale to see if they are satisfied
with their purchase. Send an e-mail out a few days after their purchase, another in
a week or two, and then another in a month.
2. Create a customer focus group by inviting 10 to 20 loyal customers to meet
regularly. Alternatively, send out a monthly survey to this group asking for ideas
and input on how to improve your customer service. Give them a reward. Pay
them; give them a gift certificate, or send them free product.
3. Have a web site that is easy to navigate. Add a frequently asked question's "FAQ"
page and explain anything that might confuse your customers or visitors. Follow-
up with an electronic survey with questions on how to increase your site's user-
friendliness.
4. Resolve customer complaints quickly and completely. Answer all e-mail and
phone calls within a few hours. This will show your customers you really care
about them.

36
 5. Don't make your customers or visitors hunt for your contact information. Make it
easy for them to contact you. Offer as many contact methods as possible.
Hyperlink all your e-mail addresses so they don't have to find or type it. Offer a
toll free number.
6. If you have strategic alliances or employees, make sure they are familiar with
your customer service policy. Give your employees bonuses or incentives to
practice excellent customer service. Tell employees to be flexible with each
individual customer, each one has different concerns, needs and wants.

7. Give your customers more than they expect. Send thank you gifts to long time
customers. E-mail them greeting cards on holidays or birthdays if you have their
address or online cards if you only have their e-mail address and name. Give
bonuses to your customers who make a big purchase or multiple purchases.
8. U-welcome, pleases, and thanks you and can never be over used. Be polite no
matter what. Admit and apologize for mistakes quickly and make it up to them in
BIG ways if you want them to continue being a customer.
8. Reward in points -- give customers a point for every dollar they spend. Set up a
points-earned sheet. E-mail the customer an update monthly. If they send you a
referral they get 10 points, if they buy something add 10 more points.
9. 10. If your business is local, invite customers to your office for lunches, parties,
barbecues, dances, seminars or other special events.

It isn't what you perceive as valuable but what customers see from their eyes. Yet,
sometimes, you just can't please some folks. If that occurs, do you best and then let it go.
You don't want them for clients anyway. About the Author: Catherine Franz, a Certified
Professional Marketing & Writing Coach, specializes in product development, Internet
writing and marketing, nonfiction, and training.

6.3 Service Quality Development -

Before 1983, the definition of quality was defined primarily based on the concept of
quality control with corresponding standards focused completely on achieving quality.

37
Juran (1974) defined quality as "suitable use". Moreover, Crosby (1979) defined quality
as "consistent with needs", and assumed the existence of correspondence between quality
and operational standards. Cornell (1984) considered that the service industry required a
broader definition of quality than that used by the manufacturing industry; Zimmerman
(1985) took the quality control concept of the manufacturing industry and applied it to
service quality. Zimmerman considered the components of service quality, including:
practicality, replication of manufacturing ability, immediacy, ultimate user satisfaction,
and corresponding standards. Based on the concept of PZB (1985) and Zeithaml (1988),
consumers see the process of service quality formation as employing both interior and
exterior attributes of low-level production quality or service quality, passing through an
internal united comparison, and proceeding to establish a higher level of perceived
service quality.

Banks in India have succeeded in promoting new services to its customers. The
likelihood of current customers is tempted to do business online. Based on extant
literature on bank marketing, a questionnaire was designed. Then, in a large-scale
survey by means of personal and telephone interviews, data was obtained from bank
customers. This paper focuses on the adoption of internet banking by existing banks
customers through an investigation of the factors that influence customer's
acceptance of internet banking service. The questionnaire was designed from the
literature review. It included 29 variables which will help in enhancing the
satisfaction of the customer with usage of internet banking in India. Six Indian banks
were chosen where the questionnaire was randomly administered to 210 respondents
who were also customers of the bank. Out of 210 questionnaires, 196 were
completed questionnaires. The banks chosen for the purpose of the study were the
ones who have strong retail presence and offer comprehensive range of information
to the customer. An exploratory study of the Indian customers in six banks is
conducted to identify the factors which lead to adoption of internet banking services
with the help of data reduction technique called factor analysis.

The banking industry in India has undergone sea change since post independence. More
recently, liberalization, the opening up of the economy in the 90s and the government's

38
decision to privatize banks by reduction in state ownership culminated in the banking
reforms based on the recommendations of Narasimha Committee (3). The prime mover
for banks today is profit, with clear indications from the government to 'perform or
perish'. Banks have also started realizing that business depends on client service and the
satisfaction of the customer (4) and this is compelling them to improve customer service
and build up relationship with customers.

With the current change in the functional orientation of banks, the purpose of banking is
redefined. The main driver of this change is changing customer needs and expectations.
Customers in urban India no longer want to wait in long queues and spend hours in
banking transactions. This change in customer attitude has gone hand in hand with the
development of ATMs, phone and net banking along with availability of service right at
the customer's doorstep. With the emergence of universal banking, banks aim to provide
all banking product and service offering under one roof and their endeavor is to be
customer centric (5). With the emergence of economic reforms in world in general and in
India in particular, private banks have come up in a big way with prime emphasis on
technical and customer focused issues.

In this paper, the main contention of the author is to highlight the customer satisfaction
through service quality provided by the banks-SBI from the public sector banking and
ICICI from the private sector banking. Another contention is to demonstrate the
performance of the two banks SBI & ICICI in terms of customer satisfaction.

The paper is organized in to six sections: Section- 1: starts with a brief profile of the
banking industry, especially the SBI and ICICI. Section- 2: covers Research
Methodology comprising objectives, Hypothesis, research design and scope of the study
including nature of data collection. Section-3: lays out the measurement of customer
satisfaction with service quality and review of literature. Section-4: puts forward the core
strategies to address service quality gaps. Section-5: deals with Analysis and
Interpretation in line with the objective of the study. Section-6: briefly summarizes the
conclusion and policy implementation of the study.

39
Profile of the Banking Industry-SBI and ICICI

State Bank of India

State Bank of India (SBI) is the largest bank in India. It is measured by the number of
branch offices and employees as the largest bank in the world. Established in 1806 as
Bank of Bengal, it remains the oldest commercial bank in the Indian Subcontinent and
also the most successful one providing various domestic, international and NRI products
and services, through its network of 13,908 branches, including 4,731 associate banks'
branches in India and overseas. It also provides financial services, such as life insurance,
merchant banking, mutual funds, credit card, factoring, security trading and primary
dealership in the money market. With an asset base of $126 billion and its reach, it is a
regional banking behemoth. The bank was nationalized in 1955 with the Reserve Bank of
India having a 60 percent stake. It has laid emphasis on reducing the huge manpower
through Golden handshake schemes and computerizing its operations.

It also has non-banking subsidiaries and joint ventures, such as SBI Capital Markets Ltd.,
SBI DFHI Ltd., SBI Funds Management Pvt Ltd., SBI Factors & Commercial Services
Pvt Ltd. and SBI Life Insurance Company Ltd. Effective from April 20, 2005; it acquired
a 51 percent stake in Indian Ocean International Bank Ltd.

This study examines whether there are economic benefits to be gained from improving
service quality in the Taiwanese banking industry. Service quality is perceived quality;
and different from objective or actual quality; being a judgment usually made within a
customer evoked set. Service quality resembles an attitude in many ways, and service
quality is distinct from customer satisfaction. Traditional financial ratios are not
appropriate for measuring the economic benefits of service quality improvement. The
main single factor influence on business unit performance is goods and service quality.
The author develops a framework for this paper based on service quality and profitability
theoretical background. Relationships are also established among service quality,
customer satisfaction, and profitability. The main conclusion of this study is that the
performance scale developed in the SERVPERF model and customer satisfaction in the

40
profitability model are confirmed in the Taiwanese banking industry. The author finds
that perception quality is an antecedent of attitude, service quality is an antecedent of
customer satisfaction, customer satisfaction directly affects purchase intention, and
customer satisfaction is an antecedent of profitability. Finally, the author finds gap
between customers and service providers and thus demonstrates that Profitability is
positively affected by service quality improvement.

Previously, service quality was not been explicitly linked to profit. Zeithaml (2000) has
found evidence about the influences of service quality on profits. Rust, Zahorik, and
Keiningham (1995) provided a model of service quality improvement and profitability
and the submodels, which together constitute the ROQ approach. The service profit chain
of Heskett et al. (1997) stipulates that "direct and strong" relationships exist among
service quality, customer satisfaction and profitability. As documented above, this study
will develop a framework that combines service quality, customer satisfaction, and
profitability into a chain of effects

6.4 IMPROVING CUSTOMER SATISFACTION-

Published standards exist to help organizations develop their current levels of customer
satisfaction. The International Customer Service Institute (TICSI) has released The
International Customer Service Standard (TICSS). TICSS enables organizations to focus
their attention on delivering excellence in the management of customer service, whilst at
the same time providing recognition of success through a 3rd Party registration scheme.
TICSS focuses an organization’s attention on delivering increased customer satisfaction
by helping the organization through a Service Quality Model.

TICSS Service Quality Model uses the 5 P's - Policy, Processes, People, Premises,
Product/Services, as well as performance measurement. The implementation of a
customer service standard should lead to higher levels of customer satisfaction, which in
turn influences customer retention and customer loyalty.

41
6.5 THE DIMENSIONS OF SERVICE QUALITY: A STUDY OF THE
INDIAN RETAIL BANKING ENVIRONMENT-

Regulatory, structural and technological factors are significantly changing the banking
environment throughout the world. One factor that is spurring the growth of the service
economy in India is the liberalization that has been ushered in by the government in the
banking sector.
The financial sector reform in India was designed to infuse “greater competitive vitality
in the system”. To achieve this objective, the “Narasimhan Committee” was formed. The
Narasimhan Committee report suggested wide ranging reforms for the Indian banking
sector in 1992 to introduce internationally accepted banking practices and enable Indian
banks (which were hitherto resisting liberalization and opening of their markets) to
achieve service excellence. The “Narasimhan Committee”, recommended the
liberalization of entry norms and suggested that new banks be permitted in the private
sector provided they conformed to the minimum start up capital and other requirements.
The committee recommended too, a liberal policy towards allowing foreign banks to
open offices in India. Since the reforms started, the interest rate structure has been
deregulated to a great extent and banks have been given a great degree of freedom in
determining their rate structure for deposits and advances, as well as their product range.
Banking has also become more competitive in respect of the location of points of sale,
that is, the branch network. The end result is that market power is getting shifted from
banks to their customers. With the lowering of entry barriers and blurring product lines of
banks and non-banks, the oligopolistic nature of Indian banking is fast changing and
giving way to a relatively freer market place. The freedom of choice which bank
customers did not have earlier because of standardized products and regimented interest
rates has been given to the customers as a result of the changes taking place
(Subramanian &Velayudham, 1997).
In other words, financial liberalization has led to intense competitive pressures and retail
banks are consequently directing their strategies towards increasing customer satisfaction
and loyalty through improved service quality. Retail banks are pursuing this strategy, in
part, because of the difficulty in differentiating based on the service offering. Typically,

42
customers perceive very little difference in the banking products offered by retail banks
as any new offering is quickly matched by competitors.
However, much of the research on service quality has been in the developed countries
(Herbig & Genestre, 1996), even though services are among the fastest growing sectors
in emerging countries (Malhotra et al., 1993). In fact, the bulk of the research on service
quality in banks has been in the context of US and European banking institutions. At this
juncture, it is important to also study banking institutions based in developing economies
like India, which has recently liberalized its banking sector. As banks in such countries as
India mature, lessons may be learned from their experiences by banks in developed
economies as well as in other developing countries, as banking becomes more and more
globally integrated. In fact, there exists a significant gap in the service marketing
literature on how consumers evaluate service quality in contexts and cultures very
different from the developed countries, even though research has begun to explore this
area (Bolton and Myers, 2003).
In light of this paucity of research on service quality issues in developing countries like
India, it has become very important that banks in India determine the service quality
factors, which are pertinent to the customer’s selection process, as with increased
competition, with the advent of international banking, the trend towards larger bank
holding companies, and innovations in the marketplace, customers are now having
greater difficulty in selecting one institution from another. In order to provide excellent
service quality, identifying the underlying dimensions of the service quality construct is
the first step in the definition and hence provision of quality service and hence should be
a central concern for retail bank managers as well as service management academics and
practitioners.
This paper endeavors to fill the gap in the service quality literature by exploring the
dimensions of customer perceived service quality in the context of the Indian retail
banking industry. A set of service quality parameters, drawn from customers’ perceptions
about service quality as well as the bank marketing and service quality literature have
been drawn up. These parameters have been used in the context of four of the largest
banks in India to identify the underlying dimensions of service quality. Finally, the paper
has drawn upon the findings of the service quality dimensions to contend the initiatives

43
that banks’ managers can take to enhance employees’ skills and attitudes and instill a
customer-service culture.
The Dimensions of Service Quality
Underpinning our understanding of service quality is an array of factors or determinants.
A number of researchers have provided lists of quality determinants, but the best known
determinants emanate from Parasuraman and colleagues from the USA, who found five
dimensions of service quality, namely, tangibles, reliability, responsiveness, assurance
and empathy and used these as the basis for their service quality measurement instrument,
SERVQUAL (Parasuraman et al., 1988; Zeithaml et al., 1990).
The result was the development of the SERVQUAL instrument, based on the gap model.
The central idea in this model is that service quality is a function of the difference scores
or gaps between expectations and perceptions. An important advantage of the
SERVQUAL instrument is that it has been proven valid and reliable across a large range
of service contexts. However, while the SERVQUAL instrument has been widely used, it
has been subjected to certain criticisms as well. The contention that service quality
consists of five basic dimensions (Parasuraman et al., 1988) is according to some
researchers questionable and they have suggested that SERVQUAL’s dimensions are
contextual and not universally applicable (Ekinci & Riley, 1999; Brown et al., 1993;
Cronin & Taylor, 1992; Teas, 1993; Bouman & Vander Wiele, 1992; Gagliano &
Hathcote, 1994, Kang and James, 2004; Lee, 2005; Fowdar, 2007). Instead, the number
and composition of the service quality dimensions are probably dependant on the service
setting (Brown et al., 1993; Carman, 1990). It has been suggested that for some services
the SERVQUAL instrument needs considerable adaptation (Dabholkar et al., 1996) and
that items used to measure service quality should reflect the specific service setting under
investigation, and that it is necessary in this regard to modify some of the items and add
or delete items as required (Carman, 1990). Moreover, research suggests that culture may
play a fundamental role in determining how consumers perceive what constitutes service
quality.
In a nutshell, there are still issues and varying opinions about the dimensionality of
service quality and the universality of the five dimensions, (Rust and Oliver, 1994).

44
These are of interest to and significant for users of SERVQUAL and for all those who
wish to understand better the concept of service quality.
Hence there is still a need for fundamental research into the dimensionality of service
quality bearing in mind the contextual circumstances, the specific industry and the
specific service setting.

6.6 MARKETING STRATEGIES

Financing rapid industrial growth–With the Indian economy growing at a blistering pace
on the back of strong industrial and services growth, the Indian companies are looking to
build up capacity to meet future demand.–Banks play a pivotal role in financing this
industrial growth. Technological innovations & challenges–Banks are aggressively
adopting the latest technology in order to improve product offerings, customer service,
and operational efficiency and risk management systems.

Financial inclusion & Rural – Microfinance–In the quest for new markets and customer
segments, as well as with the RBI directives in this area, banks are looking at the rural
and unbanked segments in a new light as a huge business opportunity.

Convergence to a single solution provider–With pressures on the spreads and the

competition in the urban markets increasing rapidly, banks need to develop new ways to
sustain profitability.–Banks led to a plethora of new products, hence becoming a one stop
shop for all financial solutions.

Roadmap by RBI for foreign banks–The RBI has laid out a two phased roadmap for
giving greater freedom to the foreign banks in India.–This has spurred the entry of
several other foreign banks in India, along with acting as a signal to the domestic players
to pull up their socks to face the new competitors.
Growth in retail lending–The under banked Indian population as well as the high margin
on retail products makes this a very attractive market for the banks.–The all-inclusive

45
nature of this growth in terms of sectors covers all consumer segments as well as product
segments.
Demand for derivatives & other risk management products–The increasingly dynamic
business scenario and financial sophistication also increase the need for customized
exotic financial products.–The complex and peculiar nature of risks faced by the
companies are passed onto the banks.–Innovative financial tools and advanced risk
management methods are required by the banks to capitalize on this business opportunity.

6.7 MEASURING CUSTOMER SATISFACTION IN THE INDIAN

BANKING SECTOR -

Banking operations are becoming increasingly customer dictated. The demand for
banking super malls' offering one-stop integrated financial services is well on the rise.
The ability of banks to offer clients access to several markets for different classes of
financial instruments has become a valuable competitive edge. Convergence in the
industry to cater to the changing demographic expectations is now more than evident.
Banc assurance and other forms of cross selling and strategic alliances will soon alter the
business dynamics of banks and fuel the process of consolidation for increased scope of
business and revenue. The thrust on farm sector, health sector and services offers several
investment linkages. In short, the domestic economy is an increasing pie which offers
extensive economies of scale that only large banks will be in a position to tap. With the
phenomenal increase in the country's population and the increased demand for key
differentiators for each bank's future success. Thus it is imperative for banks to get useful
feedback on their actual response time and customer service quality aspects of retail
banking, which in turn will help them take positive steps to maintain a competitive edge.

The working of the customer's mind is a mystery which is difficult to solve and
understanding the nuances of what customer satisfaction is, a challenging task. This
exercise in the context of the banking industry will give us an insight into the parameters
of customer satisfaction and their measurement. This vital information will help us to
build satisfaction amongst the customers and customer loyalty in the long run which is an

46
integral part of any business. The customer's requirements must be translated and
quantified into measurable targets. This provides an easy way to monitor improvements,
and deciding upon the attributes that need to be concentrated on in order to improve
customer satisfaction. We can recognize where we need to make changes to create
improvements and determine if these changes, after implemented, have led to increased
customer satisfaction. "If you cannot measure it, you cannot improve it." - Lord William
Thomson Kelvin (1824-1907).

7. IMPACT OF ATM ON CUSTOMER SATISFACTION -

This presents the impact of ATM on customer satisfaction. This is a comparative study of
three major banks i.e. State Bank of India, ICICI bank and HDFC bank. This paper has
been divided into two sections. First section presents the introduction of ATM, brief
history of three Banks compiled through the literature available in the field. It also
includes the review of the various services provided by the three banks under study.
Second section presents the result obtained on the basis of the data collected for the three
banks. A sample of 360 respondents equally representing each bank has been taken

47
through questionnaire. Data has also been collected through interview also. Then various
statistical tools have been used accordingly to compile the result.
KEY WORDS: ATM, Customer satisfaction, Fees, Problems, ATM services, Banks.
ATM means neither “avoids traveling with money” nor “any time money,” but
certainly implies both. Slim ATM cards are fast replacing confounding withdrawal forms
as a convenient way of getting your money from banks. In a way, they are rewriting the
rules of financial transaction. A smart person no longer needs to carry a wallet-full of
paper money on his person. All he needs to do is fish out an ATM (automated teller
machine) card, insert it in the slot, punch in a few details and go home with hard cash.
Automated teller machines (ATMs) were the first well-known machines to provide
electronic access to customers. With advent of Automatic Teller Machines (ATM), banks
are able to serve customers outside the banking hall. ATM is designed to perform the
most important function of bank. It is operated by plastic card with its special features.
The plastic card is replacing cheque, personal attendance of the customer, banking hour’s
restrictions and paper based verification. ATMs have made hard cash just seconds away
all throughout the day at every corner of the globe. ATMs allow you to do a number of
banking functions – such as withdrawing cash from one’s account, making balance
inquiries and transferring money from one account to another – using a plastic, magnetic-
strip card and personal identification number issued by the financial institution.

The Indian ATM industry has seen explosive growth in recent times. ATMs represent
the single largest investment in the electronic channel services for the Banks. In India,
HSBC set the trend and set up the first ATM machine here in 1987. Since then, they have
become a common sight in many of our metros. Automated Teller Machines (ATMs)
have gained prominence as a delivery channel for banking transactions in India. Banks
have been deploying ATMs to increase their reach. While ATMs facilitate a variety of
banking transactions for customers, their main utility has been for cash withdrawal and
balance enquiry. As at the end of October 2007, the number of ATMs deployed in India
was 31,078. According to some estimates the total cash movement through ATMs across
India was around Rs. 70,000 crore in FY 06. Clearly, industry watchers forecast a bright
future for ATMs in India. While the ATM is a great service for customers, for the banks

48
it means immense savings on the cost of operations. While a typical cash transaction
carried out in a banks branch premise would cost Rs 40 that in an ATM will only cost
Rs18translating into a cost saving of Rs 22 per transaction.

ATM Networks

The ATMs of a bank are connected to the accounting platform of the bank through ATM
switches. Inter-bank ATM networks are created by setting up apex level switches to
communicate between the ATM switches of different banks. The inter-bank ATM
networks facilitate the use of ATM cards of one bank at the ATM(s) of other banks for
basic services like cash withdrawal and balance enquiry. Banks owning the ATMs charge
a fee for providing the ATM facility to the customers of other banks. The ATM
deploying bank from the card issuing banks recovers this fee referred to as ‘interchange
fee’. However the interchange fee is not fixed across banks and depends on the terms of
bilateral / multilateral arrangements. Banks with larger ATM network treat interchange
fee as an important stream of revenue. (Sultan Singh, Ms. Komal, (Ph.D.)

8. ANALYSIS & INTERPRETATION-

It takes continuous effort to maintain high customer satisfaction levels (by Kevin
Cacioppo)

As markets shrink, companies are scrambling to boost customer satisfaction and keep
their current customers rather than devoting additional resources to chase potential new
customers. The claim that it costs five to eight times as much to get new customers than
to hold on to old ones is key to understanding the drive toward benchmarking and
tracking customer satisfaction.

49
Measuring customer satisfaction is a relatively new concept to many companies that
have been focused exclusively on income statements and balance sheets. Companies now
recognize that the new global economy has changed things forever. Increased
competition, crowded markets with little product differentiation and years of continual
sales growth followed by two decades of flattened sales curves have indicated to today's
sharp competitors that their focus must change.

Competitors that are prospering in the new global economy recognize that measuring
customer satisfaction is key. Only by doing so can they hold on to the customers they
have and understand how to better attract new customers. The competitors who will be
successful recognize that customer satisfaction is a critical strategic weapon that can
bring increased market share and increased profits.

The problem companies face, however, is exactly how to do all of this and do it well.
They need to understand how to quantify measure and track customer satisfaction.
Without a clear and accurate sense of what needs to be measured and how to collect,
analyze and use the data as a strategic weapon to drive the business, no firm can be
effective in this new business climate. Plans constructed using customer satisfaction
research results can be designed to target customers and processes that are most able to
extend profits.

Too many companies rely on outdated and unreliable measures of customer satisfaction.
They watch sales volume. They listen to sales reps describing their customers' states of
mind. They track and count the frequency of complaints. And they watch aging accounts
receivable reports, recognizing that unhappy customers pay as late as possible--if at all.
While these approaches are not completely without value, they are no substitute for a
valid, well-designed customer satisfaction surveying program.

It's no surprise to find that market leaders differ from the rest of the industry in that
they're designed to hear the voice of the customer and achieve customer satisfaction. In
these companies:

50
 Marketing and sales employees are primarily responsible for designing (with customer
input) customer satisfaction surveying programs, questionnaires and focus groups.

Top management and marketing divisions champion the programs.

Corporate evaluations include not only their own customer satisfaction ratings but also
those of their competitors.

Satisfaction results are made available to all employees.

Customers are informed about changes brought about as the direct result of listening to
their needs.

Internal and external quality measures are often tied together.

Customer satisfaction is incorporated into the strategic focus of the company via the
mission statement.

Stakeholder compensation is tied directly to the customer satisfaction surveying

program.

A concentrated effort is made to relate the customer satisfaction measurement results

to internal process metrics.

To be successful, companies need a customer satisfaction surveying system that meets

the following criteria:

The system must be relatively easy to design and understand.

It must be credible enough that employee performance and compensation can be

attached to the final results.

It must generate actionable reports for management.

51
Increasing competition (whether for-profit or nonprofit) is forcing businesses to pay
much more attention to satisfying customers. (It may help the reader to notice the role of
customer satisfaction in the overall context of product or service development and
management. See Product/Service Management. Also notice the Related Info (including
customer service) in the library.)

Retail banking has undergone rapid changes with the introduction of new technology
based channels and its interesting to note how people have adapted to different ways of
deriving their banking needs. This study uses psychographics to study the banking
channel adaptation and the trends in the retail banking scenario in Karnataka, India. It has
been found that people clearly want convenience and security in their choice of banking
channels.
Technological advances has witnessed the application of technology in increasing the
number of banking channels namely ATM, Internet Banking, Tele Banking and
branch banking.
In retail banking scenario, it is also implicit that many banks are competing for the same
customer segment and the combined resources being spent in terms of channel
development and other efforts may exceed the profitability of the segment targeted at, by
the banks put together. It has been observed that one of the challenges being faced by
retail banking sectors have been in the usage of proper segmentation techniques based on
the customer psychographics with respect to the banking channels. For e.g. who would be
willing to use Telebanking and what may be the underlying reason to do so? Inspite of
introduction of internet banking why would a youth still visit the nearest branch for his
banking needs? The answers to these questions would result in the mindset and lifestyle
of banking consumers which would help the bank to effectively target the consumers
based on their channel preference, strengthen the weak aspects of channels in demand
and augment the service provided by the channels thereby retaining the customer and
ultimately enhancement of profits. Customer segmentation takes place at demographic
level and at psychographic level.
Psychographics in essence tries to study and profile people based on their attitudes,
Interests, lifestyles and values.

52
In India psychographic profiling of consumers is still in its stage of infancy. Many
corporates are conducting such studies, but most of results are not available for the
academic community.
Furthermore, the psychographic variables of consumers are always changing and it
becomes even more imperative for a continuous longitudinal study to keep track of
changes and incorporate them in the art of marketing.
Further, the entry of multinational banks that are armed with techniques to profile the
customers based on psychographic attitudes are posing a tough competition for the Indian
banks.
Some of the advertisements from a large Nationalized public sector act more or less like
reminders to customers about their large and widespread networks, many products in
their portfolio that are clearly a pure quantitative translation of banks strength rather than
the real competitive advantage that can be derived out of strategic marketing techniques
based on effective segmentation.
Hence it is imperative that psychographic study be conducted on banking customers in
India for strategic marketing purposes.
The conceptual relationship between effective profiling and Strategic marketing can be
best described in the diagram.
The total number of respondents in this research was 100. of them 30 were customers of
HDFC bank ,13 from IDBI, 17 from ICICI ,20 from PNB and 20 from SBI .the customer
of the five banks were divided into savings (65) and current (35) accounts. The overall
experience of customers ranged from good to satisfactory while opening an account in
any of the five banks. The mean for experience while account opening was 2.5 in the
scale 1 to 7. Most of the customers operated their account on their own. A majority
referred the bank to others and made their purchase paying by cash.

The customers of PNB and SBI were above 35 years age; those of ICICI and IDBI were
in age group of 25-35 years. HDFC customers were below 25 years. The customers of
ICICI, IDBI and HDFC were graduates and post graduates whereas those of PNB and
SBI were mainly graduates.

53
Customer looked for information about the bank from sources such as the television, the
newspaper, magazines, hoardings, the bank and others. The overall mean value for the
customer’s hunt for information shows that’s/he gained information through hoardings
and the radio. HDFC customers gained information through advertisements on hoardings;
IDBI, PNB and SBI bank customer gained information from advertisement on the radio,
and ICICI customers gained information through relatives and friends.

The satisfaction of the customers with the services provided by the banks was judged on
the following 16 variables; service scale; parking place ;attitudes of the bank staff;
dissemination of information; promptness in query handling ;networking of the bank
(branches);ATM facility; debit card ;credit card ;demand draft facility; fixed deposit
schemes ; money transfer; locker facility ;D-mat facility ;tele banking .and net banking.

Table 8(a)-Customer satisfaction level in SBI

Satisfaction levels Number of customer in percentage

Dissatisfied 25%
Satisfied 50%
Mixed 25%

50%

40%

30% Dissatisfied
Satisfied
20%
Mixed
10%

0%
Num ber of custom er in percentage

Graph 8(a)

INTERPRETATION- There are 25%, 50% and 25% respondent who is Dissatisfied,
satisfied and mixed respectively in SBI.

54
Table 8(b)-Customer satisfaction level in PNB
Satisfaction levels Number of customer in percentage
Dissatisfied 35%
Satisfied 40%
Mixed 25%

40%

30%
Dissatisfied
20% Satisfied
Mixed
10%

0%
Num ber of custom er in percentage

Graph 8(b)
INTERPRETATION- There are 35%, 40%, 25% customers who is Dissatisfied, Satisfied
and mixed respectively from the service of Punjab National Bank.

Table 8(c)-Customer Satisfaction level in IDBI

Satisfaction levels Number of customer in percentage
Dissatisfied 30.7%
Satisfied 69.2%
Mixed 0%

70.00%
60.00%
50.00%
Dissatisfied
40.00%
30.00% Satisfied
20.00% Mixed
10.00%
0.00%
Num ber of custom er in percentage

Graph 8(c)
INTERPRETATION- There are 30.7%, 69.2% and 0% Customers of IDBI who is
Dissatisfied, Satisfied and mixed respectively by the service of the bank.

55
Table 8(d)-Customer Satisfaction level in ICICI
Satisfaction levels Number of customer in percentage
Dissatisfied 5.8%
Satisfied 76.4%
Mixed 17.6%

80.00%

60.00%
Dissatisfied
40.00% Satisfied
Mixed
20.00%

0.00%
Number of custom er in percentage

Graph 8(d)
INTERPRETATION- There are 5.8%, 76.4% and 17.6% customers of ICICI bank who is
Dissatisfied, Satisfied and mixed respectively by the service provided by the bank. We
can say that the customer satisfaction in the ICICI bank is much.

Table 8(e)-Customer Satisfaction level in HDFC

Satisfaction levels Number of customer in percentage
Dissatisfied 16.6%
Satisfied 63.3%
Mixed 20.0%

70.00%
60.00%
50.00%
Dissatisfied
40.00%
30.00% Satisfied

20.00% Mixed
10.00%
0.00%
Number of custom er in percentage

Graph 8(e)
INTERPRETATION- There are 16.6%, 63.3%, and 20.0% customers from HDFC bank
who is Dissatisfied, Satisfied and mixed respectively by the service of the bank.

56
Table 8(f)-All over Customer satisfaction level in Indian Banking sector.
Satisfaction levels Number of customer in percentage
Dissatisfied 23.0%
Satisfied 59.0%
Mixed 18.0%

60.00%
50.00%
40.00% Dissatisfied
30.00% Satisfied
20.00% Mixed
10.00%
0.00%
Num ber of custom er in percentage

Graph 8(f)
INTERPRETATION- There is all over 23.0%, 59.0% and 18.0% customers from the
Indian banks who are dissatisfied, satisfied and mixed respectively by the service of
banks.
The above interpretation shows that the customer satisfaction level in Private sector
banks is much compared to Public sector banks.

57
9. CONCLUSION & SUMMARY-

The Banking sector in India is undergoing major changes due to competition and the
advent of technology. The customer is looking for better quality and services which can
provide him/her with satisfaction. This study reveals the different levels of satisfaction
that customer had with their banks and helps identify the factors (or relationship
dimensions) responsible for satisfying the customer. This would help in enhancing the
relationship between the two, and thus aid decision makers in banks to identify the major
factors that determine satisfaction. Many service firms, including retail banks have been
measuring customer satisfaction and quality to determine how well they are meeting
customer needs. This study derives its basic findings and is also in line with empirical
findings with respect to customer satisfaction by other researchers.

Looking at the demographics of the customer and satisfaction with the services,64
percent customers of IDBI ,ICICI and HDFC are in age group of 25-35 years ,are post
graduates and their satisfaction is highest with multi channel banking.71 percent of the
customers of SBI are above 35 years, are graduates and their satisfaction is highest with
traditional facilities. These findings propose that the private banks namely ICICI, IDBI,
and HDFC have been able to attract the younger customers, with higher educational

58
levels, who are comfortable with the usage of multi channel banking. On the other hand
the customer of national bank, SBI are older in age and are satisfied with the traditional
facilities.SBI with the largest network of branches in India, has given competition to the
private banks and has retained its older customers by satisfying them with the traditional
facilities.

Perceptual mapping has been extensively used in marketing for various applications
where a manager wants to know the cognitive dimensions that consumers use to evaluate
products and services. Perceptual mapping can also assess the relative positions of
various products and services. This study has created a perceptual map using factors
scores of each of five banks under study. These maps will help identify how each bank is
positioned in the customer’s mind. We can see from exhibit 6 that customers find most
satisfaction with the traditional facilities of state bank of India and least satisfaction with
HDFC bank. Customers have maximum satisfaction with multi channel banking facilities
of ICICI bank and least satisfaction with Punjab national bank. Internal marketing
provides maximum satisfaction to customers of ICICI bank and least to those of state
bank of India. Though SBI has a largest network of branches its focus on customer
satisfaction with respect to any time anywhere could do with improvement.

Perceptual mapping is an important marketing research tool used in many areas of

marketing. Strategies based on perceptual maps have led to increased profits, better
market control and more stable growth. a ranking score sheet of the customer perception
based on perceptual mapping .the result from this study could provide managerial lessons
on assessment of strengths, improvement of services and in evolving a research strategy
that will benefit the management of banks.

Another finding from this study emerges with regard to information seeking. While most
of the customers of the other banks in the study acquired information about the banks
through the radio or hoardings. The customers of ICICI Bank got information from their
friends and relatives. This implies that the bank is able to satisfy its customer who acts as
a referral market for the bank. This helps the bank to acquire new customers at low cost.
Thus banks must be actively involved in acquiring, satisfying and retaining customers.

59
Also the results suggest that satisfaction of the customer is different across the five banks
under the study.

Traditional facilities- Multi channel Banking Internal Marketing

Debit card Tele banking Service scale

Credit card Net banking Parking space

Demand draft facility D-mat Attitude of bank staff

Fixed deposits Dissemination of information

Money transfer Query Handling

Locker facility

ATM

Networking

Table 9(a)-Ranking score sheet of customer perception-

Service State Punjab IDBI ICICI HDFC

Dimension bank of National
India Bank

Traditional 1 4 2 3 5
facilities

60
 Multi 4 5 2 1 3
channel
banking

Internal 5 3 4 1 2
marketing

3 Traditional facilities
Multi channel banking
2
Internal marketing
1

SBI PNB IDBI ICICI HDFC

Graph 9(a)

INTERPRETATION- This is the graph showing Traditional facilities, Multi channel

banking and internal marketing in five Indian banks SBI, PNB, IDBI, ICICI and HDFC.
According to traditional facilities SBI is in number one position and HDFC comes in
number five position. And IDBI, ICICI and PNB come under the second, third and fourth
position respectively.

In terms of Multi channel banking ICICI is in first position and PNB is in Number five
position. And IDBI, HDFC and SBI come second, third and fourth position respectively.

61
In terms of Internal marketing ICICI is in first position and SBI comes under the fifth
position. And HDFC, PNB, IDBI comes under the position of second, third and fourth
respectively.

3
Traditional facilities
2

SBI PNB IDBI ICICI HDFC

INTERPRETATION- According to traditional facilities SBI is in number one position

and HDFC comes in number five position. And IDBI, ICICI and PNB come under the
second, third and fourth position respectively.

3
Internal m arketing
2

SBI PNB IDBI ICICI HDFC

INTERPRETATION- In terms of internal marketing ICICI is in first position and SBI

comes under the fifth position. And HDFC, PNB, IDBI comes under the position of
second, third and fourth respectively.

62
 5

3
Multi channel banking
2

SBI PNB IDBI ICICI HDFC

INTERPRETATION- In terms of Multi channel banking ICICI is in first position and

PNB is in Number five position. And IDBI, HDFC and SBI come second, third and
fourth position respectively.

Our findings imply that bank should take care of the needs of customers when
introducing various services to them. Customers of ICICI, IDBI, HDFC, PNB, and SBI
are either in services or are self employed. Many customers of SBI and PNB are retired.
Thus banks could envisage a strategy to serve customers with different occupations and
educational backgrounds. Bank must advance their customer-centric strategies by
providing satisfaction through their services which will lead to better relationship
building and profits for the banks. The satisfaction of the customer with the services of
Indian banks is linked with the performance of the banks .thus it is important for banks to
look into satisfaction of the customer as relationship marketing strategy.

63
10. LIMITATIONS

There are certain limitations of this study.

• Sample size is small so there may be possible that the desired level of accuracy
not exist.

• This study is conducted only in small area so there may be chance of Inaccuracy
of the result.

• In selecting the Sample, there are chances of sampling errors.

• Sometimes some respondent do not give right answers, that’s why variations may
be possible.

• This study is applicable in Delhi only not in whole India.

64
REFERENCES-

Lovelock, Christopher, 2001, services marketing; people, Technology, strategy, 4th

edition, prentice Hall.

Lev, B, 2001, Intangible management, measurement and reporting Washington DC;

Brookings Institute press.

C R Kothari – Research methodology

P N Varshney – Banking law and Practice

Customer satisfaction in Indian banking: a case study of Yamuna Nagar District in
Haryana. Political Economy Journal of India, Jan-June, 2008 by Raj Kumar.
Customer Satisfaction Key Growth to Banks: An article from The Hindu Article on
customer relationship management in banking sector by Dr.FB Singh. Article on
Measuring Customer Satisfaction in the Banking Industry by Dr. Manoj Kumar Das.

Gitman, Lawrence J.; Carl D. McDaniel (2005). The Future of Business: The
Essentials. Mason, Ohio: South-Western. ISBN 0324320280.

John, Joby (2003). Fundamentals of Customer-Focused Management: Competing

Through Service. Westport, Conn.: Praeger. ISBN 9781567205640.

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 Berry, Leonard L.; A. Parasuraman (1991). Marketing Services: Competing Through
Quality. New York: Free Press. ISBN 9780029030790.

Kessler, Sheila (2003). Customer satisfaction toolkit for ISO 9001:2000. Milwaukee,
Wis.: ASQ Quality Press. ISBN 0873895592.

Johnson, Michael D.; Anders Gustafssonb, Tor Wallin Andreassenc, Line Lervikc and
Jaesung Cha (2001). "The evolution and future of national customer satisfaction index
models". Journal of Economic Psychology 22 (2): 217–245. ISSN 0167-4870.

Bluestein, Abram; Michael Moriarty; Ronald J Sanderson (2003). The Customer

Satisfaction Audit. Axminster: Cambridge Strategy Publications. ISBN 9781902433981.

.Rexha N, kingshott RPJ and AW ASS (2003) “The impact of Relational plan on
Adoption of electronic Banking” Journal of service marketing, Vol.17 No.1,

Levesque, and MC Dougall (1996) “Determinants of customer Satisfaction in Banking”

International Journal of Bank Marketing, 14(7),

Taylor and Baker (1994) “An Assessment of the relationship between service quality and
customer satisfaction in the formation of consumer Purchase intentions. Journal of
Retailing 70(2) PP. 163-178.4.Bitner, M.J. and A.R. Hubbert 1994 “Encounter
satisfaction versus overall satisfaction versus quality”. In R.T. Rust and R.L Oilver (eds)
“Service quality”: New Directions in Theory and practice London: sage publication.

Cronin, J.Joseph, Jr., and S.A. Taylor. 1992 Measuring Service quality; a re-examination
and extension. Journal of Marketing 56pp 55-68.6.MC Dougall, Levesque (1994) “A
revised review of service quality dimensions: An empirical investigation” Journal of
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Singh S (2004) “A Appraisal of Customer service of Public Sector Banks,” IBA Bulletin,
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Technology, New Century Publications, New Delhi.9.Singh and Amphora (1993),

66
“Customer Satisfaction in Banking services; A study of Amristar”, ed., Radha
Publication, New Delhi.

Internet websites:
www.google.com
http://en.wikipedia.org/wiki/Customer_satisfaction
Categories: Business terms | Consumer behavior.
www.scribd.com

QUESTIONNAIRE
Dear Respondent,
I am a student of K R Mangalam Institute of Management. And doing MBA. I have
undertaken a project for which I intend to pose a questionnaire aimed at comparing the
customer satisfaction in the Indian banking sector. Your cooperation is deeply solicited to
provide the relevant information. I assure that information will be kept confidential.
Name of Customer _______________ Mobile No.______________
Name of the bank and type of account_______________________________________
Please answer the questions and tick at the place that matches your opinion.
Mobile/Tele Banking.
How would you describe your views about Customer Service Representatives? Please
tick in
The appropriate column.
(1: Very Dissatisfied/2: Dissatisfied/3: Satisfied/4: Very satisfied/5: Highly Satisfied),
specify the Reason if not using the service
12345
Call answering time
Flawless/correct operations.
Understanding and replying queries correctly
Communication skills/positive approach
General assessment about the service
Branch Banking

67
How would you describe your views about Branch Banking? Please tick in the
appropriate column.
(1: Very Dissatisfied/2: Dissatisfied/3: Satisfied/4: Very satisfied/5: Highly Satisfied)
12345
Behavior of the staff
Time taken to process the transaction
Working Hours
General assessment about the services provided by the branch
Internet Banking
How would you describe your views about Internet Banking services? Please tick in the
appropriate column.
(1: Very Dissatisfied/2: Dissatisfied/3: Satisfied/4: Very satisfied/5: Highly Satisfied),
specify the reason if not using the service.
12345
Page setup/Menu flow
Ease of use/navigation
Speed of page loading
Variety of transactions
General assessment about the service
ATM Banking
How would you describe your views about ATM Banking services? Please tick in the
appropriate column.
(1: Very Dissatisfied/2: Dissatisfied/3: Satisfied/4: Very satisfied/5: Highly Satisfied.
Reason if not using the service
12345
ATM network distribution
Continuous service
Variety of transactions
Easy of screen use
General assessment about the service

68
The overall experience of customer ranged from good to satisfactory while opening
an account in any of five banks
Scale 1-7
Demographic profile of the customers
Demographics
1. Gender
Male
Female
2. Marital status
Married
Unmarried
Other
3. Monthly Family income
Less than Rs10000
Rs10000-20000
Rs20000-30000
Rs30000-40000
More than 40000
4. Age
Below 25 years
25-35 years
35-45 years
45-55 years
Above 55 years
5. Education
Secondary
Higher secondary
Undergraduate
Graduate
Post Graduate
6. Occupation

69
Home maker
Service
Self employed
Retired
Students

70