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12/14/2009

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TABLE OF CONTENTS

1. Introduction
2. 7Ps

And IMPACT COMPONENTS

OF

TECHNOLOGY

ON

SERVICE

3. Model for Continuous Measurement and Improvement of Service Quality 4. Technology Acceptance Model 5. Target Group 6. Shortcomings 7. Future 8. References

Introduction Electronic banking (or net banking) refers to an application of the Internet that allows customers to can dial into bank networks or their websites, using their own telephones and computers, and to get a host of banking services directly on their home or office PCs. This is an excellent Service Innovation where customers are given power to access Service they need without having to visit the Bank. Touch Point/Moment of Truth is where they access the service-Home, office, cybercafe, on road or anywhere.

Past and Present

In the past, people needed to take out a lot of time for doing their banking work. On average it took them 30 minutes- 1 hour for completing basic banking work like updating account ,passbook, funds transfer etc but now with net banking, average time has come down to 5-10 mins.

Bank as a Service Organization-Impact of Technology

Banks can be considered as a Service Organization Where its financial products are the tangibles and its services are intangibles Every Bank is seen as a service hub From opening an account to funds transfer, from Credit to debit everything requires Service A Service Based Organization always require constant innovation Technology is the medium for these innovations Net Banking is revolutionary innovation in terms of Service Quality and Perception It not only improves the Service Quality for its existing customers but also helps attracting new customers Improves the brand of the organization

7Ps And IMPACT OF TECHNOLOGY ON SERVICE COMPONENTS Taking 7Ps Model of service as the components of analysis for service and its delivery, this section of the report delves into the impact of technology implementation on each of these components, namely product, price, promotion, place, people, process and physical evidence.

Product: Technology essentially has impacted the way service is produced and delivered.
Although the core functions of ICICI remains Personal banking, business banking, Credit cards, Investments and Demat services and Loans, but incremental use of technology with respect to each of these functions has augmented the value customers associate with them and intrinsically in a few case the products have been modified as per the technological requirements. One such example of change is the indemnity or security clearance forms that one has to submit in case of loans.

Price/Value: To understand the impact on price or value of the services offered, the
report takes the following two as the units of understanding:

1. Costs: There are following types of costs that a firm needs to understand while
designing a service delivery system:

a) Effort Cost: The cost that a customer would act as barrier for a customer
to every time visit a branch for doing transactions or wait in a queue and take out time from his busy schedule.

b) Delivery Cost: The cost that ICICI would have to bear while delivering the
service vis-a-vis the benefit that delivery system promises to the customer.

c) Adoption Cost: This is the cost that ICICI will have to bear or invest in if it
wants more and more customers adopt its service delivery system. It refers to the investments ICICI has to make to educate and build trust among its customers in its services and its related processes.

d) Psychological costs: This cost is on the customers in terms of inertia and

reluctance to adopt the new technological innovation.

2. Benefits: The benefits that occur to the customers are the essential in making the
service creation, acceptance and delivery effective. These benefits from introduction of net banking and related technologies can be saving in time and effort of the customer, transparency and ready availability of information, better problem detection and troubleshooting etc.

Place: The aim of technology implementation in services like internet and phone banking
etc. is to bring the banking services as near and together with the customer as possible. In addition to the basic Branch and ATM networks the transition has been to Internet banking from where it is going towards mobile phone banking and now to interactive ICICIACTIV i.e. accessing and transacting through Dish TV networks. The emphasis of each interaction mode is on cost of delivery, quality of service and security of transaction.

Promotion: The promotion aims at creating customer awareness about ICICI and build
preference towards it. The promotional mix consists of following mediums:

1. Internet: ICICI websites, Blogs (Paid and unpaid), Advertisements on Commercial

websites etc. 2. Telemarketing: Tele-calling, Permission marketing, Cross selling etc. 3. Mails and news letters

4. Direct to home through tie ups with Dish TV People: Technological interface has relegated human interface and its frequency to the
back front and the critically has shifted the importance from direct customer handling to the maintenance of key technology interface.

Process: It refers to all the processes involved in the creation and delivery of the service.
The impacts of technology on processes are: 1. Transparency and cooperation 2. Reduction in the number of steps in service creation and delivery 3. Customization 4. Standardization of the service processes.

Physical evidence: It refers to the material part of the services that provide material
cues to the customer while interacting with the interface or using the services. These cues provide the customer with experiences that augment and establish ICICI as a preferred brand. These physical evidence can be the branded emails or stationery used as communication with the customers. It could also be sinage, financial report and timely communication of ICICI activities and performance etc.

Customer Experience
When we talk about the consumers of Net Banking facilities of any bank, they look forward to the bank for ease of navigation, flexibility, reliability, security and privacy,

responsiveness, assurance and site aesthetics. In case of ICICI Net banking, we figure out that it has performed very well on almost all the parameters of SERVQUAL model that qualify for the assessment of E-Service quality. In the initial days of providing the facilities, the feedbacks from the consumers were not good about the facility but, the bank continuously innovated and improved on the areas where there were gaps between the perceived and expected service and hence ensured customer satisfaction.

Model for Continuous Measurement and Improvement of Service Quality

Do your customers perceive your offerings as meeting or exceeding their expectations?

NO

YES

Continue to monitor customers expectations and perceptions

Do you have an accurate understanding of customers expectations?

YES

NO

Take corrective action

Are there specific standards in place to meet customers expectations?

YES

NO

Take corrective action

Do your offerings meet or exceed the standards?

YES

NO

Take corrective action

Is the information communicated to customers about your offerings accurate?

YES A. Parasuraman , University of Miami

NO

Take corrective action

Gaps Bridged
ICICI Net Banking came up with banking services that gained popularity in the business and corporate circles because of features like the online fund transfer, smart money order and demand draft or pay order requests with Cheque book request facility online. For the service community, the ICICI Bank Internet Banking has given them the advantage of accessing all their banking transactions online without worrying about going to the bank. The customers can now pay their utility bills and get prepaid mobile recharge through their ICICI Bank account directly. They can initiate the opening of a variety of accounts online through ICICI Net banking by submitting

an online request with the details. ICICI Net banking now offers online customization of the alerts up to the minutest details. For e.g., customer can configure the threshold amounts above which he needs an alert for, and also specify whether he needs the alert by an SMS or email.

The ICICI Net banking interfaces though quite appealing aesthetically, requires
some practice by a nave user to master the usage. Moreover it constantly upgrades and is offering more and more to their customers every few months. It currently offers new services like smsNCash, Bank@Home and Receive Funds, and seems to work hard to retain and grow its customer base. of all the options available on ICICI Net banking ICICI debit cards now come with a Grid feature for increased online transaction security. The Debit cards have a table of 16 numbers at the back, and the online user is asked to enter 3 random numbers from this grid before the funds transfer can complete. Technology Acceptance Model

The Technology Acceptance Model (TAM) is an information systems theory that models how users come to accept and use a technology. The model suggests that when users are presented with a new technology, a number of factors influence their decision about how and when they will use it, notably:

Perceived usefulness (PU) - This is defined as "the degree to which a person believes that using a particular system would enhance his or her job performance". Perceived ease-of-use (PEOU) This is defined as "the degree to which a person believes that using a particular system would be free from effort"

Perceived Ease of Use Behavior al Intention to Use Actual System Use

External Variables

Attitude towards Use

Perceived Usefulne ss

Because new technologies such as personal computers are complex and an element of uncertainty exists in the minds of decision makers with respect to the successful adoption of them, people form attitudes and intentions toward trying to learn to use the new technology prior to initiating efforts directed at using. Attitudes towards usage and intentions to use may be ill-formed or lacking in conviction or else may occur only after preliminary strivings to learn to use the technology evolve. Thus, actual usage may not be a direct or immediate consequence of such attitudes and intentions. ICICI Bank introduced Internet Banking in 1997. Being the first bank to do so, it surely created a buzz and over a period established itself as a leader in the e-commerce space in banking industry per se. Serving a majority of the countrys populace, state-owned banks had a large branch network, with minimal or no automation and had little focus on service. Foreign banks, on the other hand, deployed high-end technology, had innovative product offerings, but had a very small branch network that serviced only corporate and individuals with high net-worth. Sensing an untapped opportunity, ICICI Bank decided to target Indias burgeoning middle class and corporate segment by offering a high level of customer service and efficiency that rivaled the foreign banks, on a much larger scale, at a lower cost. A crucial aspect of this strategy was the emphasis on technology. ICICI Bank positioned itself as technology-savvy, customerfriendly bank. Some of the major challenges in front of ICICI Bank offering net banking can be identified as:

1. Internet penetration too low When ICICI bank started offering this service, the number of internet users in India were too low. Also the major users of internet were the younger generation who at that time were either not having a bank account or used banking services very less frequently.

2. Technology adoption For every new technology, its adoption is a complex, inherently
social, developmental process; individuals construct unique yet malleable perceptions of technology that influence their adoption decisions. Thus, successfully facilitating technology adoption must address cognitive, emotional, and contextual concerns. In India especially, executing transactions online, where people cant see or feel the real money, had a taboo attached to it. And thus it took quite some time and strategic marketing activities to overcome this roadblock.

3. Technological competence of foreign banks Though ICICI Bank was the first Indian
bank to introduce net banking; it was still quite far behind in terms of service offering from the foreign banks. ICICI was trying to capture the affluent middle class which was tech savvy but here the challenge was that this class of customers did prefer the foreign banks. But here ICICI capitalized on it vast retail branch network which was strategically deep as compared to the foreign banks.

Target Group In India, there are 45 million internet users. There are 46 major banks operating in India,

around 50% offer Internet banking. Only 1% of internet users utilized the Internet banking services in 1998, the Internet banking user base increased to 16.7% by 2007. Target Customers: Internet users: individuals and corporates Young SEC A

Online banking is becoming much more common. You can pay your bills online and access a record of your checking account transactions online. Online banking is a great feature, and most banks do offer it. Online banking makes everything you do with your finances a bit easier. You can access the information anywhere that you have access to the Internet. It makes your financial life much easier to manage. The target group customers can be the ones interested in:

Pay Bills Online: You can use online banking to pay your bills. This will eliminate the need for stamps and protect yourself from the check being lost in the mail. Most banks will have a section in which you set up payees. You will need to fill out the information once, and then you can simply choose that profile every time you pay a bill online. If your bank will not pay bills online you may consider paying online through the company. Be careful since some of these companies may charge a convenience fee. Viewing Transactions: Online banking allows you to access your account history and transactions from anywhere. This is the quickest way to check and see if a transaction has cleared your account. This can help you to find out the amount of a transaction after you have lost your receipt. It also allows you to find out about unauthorized transactions more quickly. This can help you to resolve the issues more quickly. Transfer Money to Accounts: Online banking also allows you to transfer money between accounts much more quickly. It is more convenient than using the automated phone service, and can save you a trip to the bank. When you apply or set up your online banking, be sure that all of the accounts you have at the bank are listed. This will make it easier to transfer money and make loan payments online.

Shortcomings 1) ICICI bank needs to improve their service on transactions with Third part banks and third party merchants 2) Better Customer support in issues related to Net Banking 3) Better information regarding usage and customization Future The future would be more technology oriented for better ROI. Glimpse of future can be seen from two initiatives by ICICI.

1) ICICIACTIV : Banking through DTH

2) I-Zone : Virtual Bank on website through Animations and video

References 1) www.icicibank.com 2) Marketing management by Kotler (12th edition) 3) Service marketing by Lovelock 4) Journal of Internet Banking (www.arraydev.com/commerce/jibc/2008-08/Yazan_1.pdf) pdf and Commerce

5) http://www.mckinsey.com/locations/india/mckinseyonindia/pdf/india_banking_2010. 6) http://www.domain-b.com/finance/banks/20000103net_banking.html 7) www.wikipedia.com

8) www.mouthshut.com