A RESEARCH REPORT On BANK SELECTION CRITERIA

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE SUBJECT Research design for management first semester division-A OF MASTER OF BUSINESS ADMINISTRATION

SUBMITED TO: - Prof. Jayesh Patel

SUBMITED BY: - Krunal H. Kakadiya (31)

DATE: 15th, October,2013

V. M. Patel Institute of Management

Preface
The key for achievement your goals in life is to work with enthusiasm and you should have burning desire to learn, to explore, to experience and face challenge in life with positive attitude. I am the student of MBA. As a part of curriculum of subject marketing research methodology I have read many books and search from the internet and get many resources to prepare our report. Also filled up questionnaire for analysis of Bank Choice Behavior: Factor Considered for a selecting a bank. In writing this report we have drawn vast amount of the information, data from the various senior persons and simultaneously support by various other people. It gave us an edge for improving our management knowledge and writing skills and to learn various aspects.

Acknowledgement
It was indeed an opportunity for us prepared report on the same during our MBA program, first sem. Research design management subject. Preparation such kind of report, requires lots of searching and collecting of data from many sources like internet, books, and other people. I also thankful to outside support like to questionnaire and given me their valuable time. During the preparation of this report have read many books and search from the internet. Also I have taken help from our senior students. We are very glade to prepare this kind of report. I would like to thank Mr. Deepak sir, Liberian , who took adequate care & effort in searching books, magazines, journals, etc. so that we could complete our project smoothly and well in stipulated timeframe. Last but not the least: I would like to cite our beloved parents and all my friends for their and encouragement, support and blessings. These pages could scarcely have been written without their help. I express our gratitude to the staff members of V.M. Patel Institute of Management, who directly or indirectly helped us.

Executive Summary
The study of bank selection criteria has received attention from many bank marketing researchers. However, from its inception in three decades ago, this kind of study is still scanty for various banking industry. The purpose of this study was to investigate various-bank selection criteria, particularly in Country. To accomplish this purpose, information collected from 279 respondents within the such area was incorporated in the analysis. The Analytic Hierarchy Process was used to rank the criteria based on the respondents preferences. The result has shown that sharia-compliant attribute is the highest priority before an individual decides to patronize various bank. The next priorities are given to profitability, banks reputation, banks status, facilities and services, and friendly personnel respectively. Thus, one of the implications of this study is that various banks cannot be too liberal by following all the footprints of conventional bank without giving attention to principles and objectives of bank.

Index

Sr no 1 2 3 4 5 6

Tittle Introduction Review Literature Research methodology Conclusion Bibliography Annexure

Page no 5 6 8 30 31 32

INTRODUCTION
For the past two decades, both the global and Indian banking industries have been undergoing rapid changes, reflecting a number of underlying developments. The most significant change has been advances in communication and information technology, which have accelerated and broadened the dissemination of financial information while lowering the costs of many financial activities. A lot of structural changes were introduced in 1991 in the Indian banking industry, which coincided with the Information Technology Revolution of the 1990s. Reserve Bank of India (RBI) appointed a committee under DrRangarajan in 1980s to implement computerization in phases to improve customer service, productivity and enhance management control. A new class of banks "New Private Sector Banks (NPSBs)" came into existence as a result of liberalization of Indian economy, which competed with both foreign banks and Indian banks for market share. The domination of Public Sector Banks has declined over the years with the entry and aggressive expansion of the Private Banks. NPSBs perceived future competition among banks would be essentially based on the technology and developed state of the art technology infrastructure, comparable to that of banks in developed countries. The government owned commercial banks today have a market share of around 75% (down from the earlier 95%), the private sector banks about 20% and the foreign banks about 5% (Kannabiran and Narayan (2005)). NPSBs also stress that importance of branch banking will diminish by Information Technology based channels like ATMs, Internet/Mobile/Phone banking etc. Tech-savvy foreign banks and NPSBs have progressed a long way in offering a wide range of innovative services to their clients while other banks (both PSBs and Old Private Sector Banks (OPSBs)) are racing to catch-up. All the banks are moving towards core banking solutions and are investing heavily on Technology. As almost a decade is over since the arrival of NPSBs, it will be in the fitness of things to study in the Indian context the banking habits and preferences of Indian customers. A survey was conducted and the responses received from 292 respondents were analyzed to understand the perception on technology based services and preferences in banking. The study listed the factors of importance in choosing a bank by customers and also measured the performances in a five-point scale

Review of literature
The business literature is flooded with vast array of information on the customer preferences of customers various countries, while such data is limited in the Indian context. Even though customer preferences vary from country to country based on the culture, demography, affordability, IT penetration etc., study of the scenario in the other countries may throw some light to us on the subject.

Profitability of banks and growth of client base are interlinked. With intensifying competition in the market, it is very important for the banks to understand "How customers choose their banks?" Then only banks can take proper marketing efforts to increase client base. Improper identification of true determinants of consumers' bank selection decision may result in poor results for marketing efforts. Management's failure to identify customers' desire is one kind of quality gap(Zeithmal et al., 1990).

It was found that Bank customers tend to be loyal provided they are satisfied with its service and stick on to the same bank for five to seven years on an average and they change over only when they move to a new home in an area outside their bank's network. (Huber et al., 1998)

Khazeh and Decker (1992) analyzed the determinants of consumers' bank selection decision thro a survey conducted among 1198 of business school alumni of Salisbury state university in Maryland using a questionnaire containing 22 factors that were identified to influence the banking decision. Service charges, the reputation of the bank, interest rates on loans, time required for loan approval and friendly tellers were identified as the top 5 determinants of bank selection decision. Effective advertising was considered as least important (Rank 22) while ATM availability, closeness to work, closeness to home were ranked 12, 16 & 17 respectively. Focusing customer attention on low ranking factors may do little to attract new customers and on retaining the existing one.

Thwaites and Vere (1995) studied the student buying behavior of banking services and concluded that students are not convinced about the concept of financial supermarket and were more inclined to shop around for the best offer. They were also found conducting business with
7

more than one institution and were not particularly loyal.

A survey of customer perceptions of competing banks and their attributes are essential in providing the bank manager with usual representation of customers' view on banks attributes and position in market place. A study conducted by Zineldin (1996) in Sweden highlights the importance of effective market positioning and has examined the concept of bank positioning and different approaches that a bank can use to occupy competitive position in competitive market place. The study highlights the fact that a well integrated application of technology and staff helps to build customer loyalties by creating deeper and fuller customer relationships. The study lead to the conclusions that from the bank's customers point of view, factors relating to the functional quality such as friendliness and helpfulness of personnel, accuracy in account transaction management, efficiency in correcting mistakes and speed of service and decision making, are the most important determinants of bank selection. Results implied that convenience of location, price and advertising had a minor effect on bank selection. The results also indicated that the performance of the contact personnel, word-of-mouth and technological based services might also compensate for an overall low score of factors such as full service provider.

Research methodology
1. Problem definition Indian banking industry is undergoing metamorphosis in terms on adoption on technology and automation. New generation private sector banks which came into existence in the last ten years have gained a substantial market share and government owned banks are losing market share to these new banks. It is very important for the banks to understand the preferences of the customers to offer the services required both to attract new clients and protect existing clientbase from migrating to other banks. Objective To determine the factor that consumer consider important when selecting a bank And how these criteria are prioritized according to their importance. 2. Hypotheses of study The service level of the banks has become more important for consumers before selecting a bank. The level of convenience has become more important for consumer before selecting a bank. The reputation of a bank has become more important for consumer before selecting a bank. Significant differences exist between consumers profile influence on bank choice.

3. Research plan

1.

Research design

After the formulation of research objectives, the next step was to identify the tools and procedures to collect and analyze data relevant to the research problem. A descriptive research design was used since the data required was objective in nature. Descriptive research is the most widely used in similar act finding approaches to a study of the present situation. Moreover, the constraints of time did not permit the use of an exploratory method. This Research is more related to descriptive type because the consumers knowledge, beliefs, and satisfaction of services can be judged through this type of research. Descriptive study may be necessary in other cases when a study could be taken up or when researcher is interested in knowing the proportion of the people in a given population who have behaved in a particular manner, making projections of a certain thing, or more variables.

2. Data sources In this data sources we will used secondary data as well as primary data 3. Research instrument The main instrument used for this research study was the questionnaire/survey designed by us based on the factors which were selected from various empirical research works covered in the literature survey and were finalized after several rounds of discussions with selected bankers, customers using banking services and an academician. 4. Sampling plan i. Target population :Target population is it seems that convenience

related factors like the location of the bank and opening hours of the bank are important in the decision making process of the consumer ii. iii. iv. Sampling units Sampling size Sampling procedure : people who visited the above mentioned place : 150 : Convenience sampling : Questionnaire
10

5. Contact method

Measure of the study

1 Demographic characteristics of sample Gender Male Female Age 20-30 30-40 40-50 50-60 60-70 Education level Primary education Secondary education University education Post graduatedegrees Employment status Employee Unemployed Not working for personal reason N/A Sector of employment Public sector Privet sector Self employed 30 50 6 34.88 58.14 6.98
11

frequency 92 58

Percentage 61.34 38.66

42 56 30 12 10

28 37.34 20 8 6.66

29 38 56 27

19.33 25.33 37.33 18

86 45 19 0

57.34 30 12.66 0

Income group belong to (rs) 8000 8001-15000 15001-25000 Above 25000 36 40 56 18 24 26.66 37.34 12

12

2 Analysis of criteria which is mentioned in the questionnaire.

1. Safety of fund Very important Important Moderately important No of respondent Percentage 91.33 6.67 2 0 0 137 10 3 Of little important 0 0 Un important

safety of fund

very important important moderately important of little important un important

13

2 ATM availability Very important Important Moderately important No of respondent Percentage 80 8 8.66 2.67 .67 120 12 13 Of little important 4 1 Un important

ATM AVAILABILITY

very important important moderately important of little important un important

14

3 Secured ATM

Very important

Important

Moderately important

Of little important 2

Un important

No of respondent Percentage

118

20

10

78.67

13.33

6.67

1.33

Secured ATMs

very important important moderately important of little important unimportant

15

4 Reputations

Very important

Important

Moderately important

Of little important 0

Un important

No of respondent Percentage

118

30

78.67

20

1.33

Reputation

very important important moderately important of little important unimportant

16

5Personal attentions

Very important

Important

Moderately important

Of little important 2

Un important

No of respondent Percentage

113

27

75.33

18

5.33

1.33

Personal attention

very important important moderately important of little important unimportant

17

6 Pleasing manners

Very important

Important

Moderately important

Of little important 5

Un important

No of respondent Percentage

109

30

72.67

20

3.33

Pleasing manners

very important important moderately important of little importaant unimportant

18

7 Confidentiality

Very important

Important

Moderately important

Of little important 2

Un important

No of respondent Percentage

109

35

72.67

23.33

2.67

1.33

Confidentiality

very important impotant moderately important of little important unimportant

19

8 Closeness to work

Very important

Important

Moderately important

Of little important 7

Un important

No of respondent Percentage

100

29

12

66.67

10.33

4.66

1.33

Closeness to work

very important important moderately important of little importaant unimportant

20

9 Timely services

Very important

Important

Moderately important

Of little important 5

Un important

No of respondent Percentage

103

20

20

68.67

13.33

13.33

3.33

1.33

Timely services

very imporrtant important moderatel important of little important unimportant

21

10 Higher rate of Int- deposits

Very important

Important

Moderately important

Of little important 3

Un important

No of respondent Percentage

100

30

17

66.67

20

11.33

Higher rate of int-deposits

very important important moderately important of little important unimportaant

Above mentioned are the top 10 factors that consumer prefer more.

22

11 Friendly staff willing to help

Very important

Important

Moderately important

Of little important

Un important

No of respondent

90

37

12

Percentage

60

24.67

3.33

12 Clear communication.

Very important

Important

Moderately important

Of little important 7

Un important

No of respondent Percentage

87

34

20

58

22.67

13.33

4.67

1.33

23

13 Size of the bank

Very important

Important

Moderately important

Of little important 0

Un important

No of respondent Percentage

88

40

22

58.67

26.67

14.66

14 More no of branches.

Very important

Important

Moderately important

Of little important 8

Un important

No of respondent Percentage

83

50

55.33

33.33

5.33

5.33

.67

24

15 Good complaint handling

Very important

Important

Moderately important

Of little important 6

Un important

No of respondent Percentage

79

60

52.67

40

3.33

16 Any branch banking

Very important

Important

Moderately important

Of little important 6

Un important

No of respondent Percentage

74

40

30

49.33

26.67

20

25

17 Modern looking

Very important

Important

Moderately important

Of little important

Un important

No of respondent

71

39

33

Percentage

47.33

26

22

1.33

3.33

18 Connectivity to other banks ATMs.

Very important

Important

Moderately important

Of little important

Un important

No of respondent

69

47

30

Percentage

46

31.33

20

2.67

26

19 Accuracy/ absence of errors

Very important

Important

Moderately important

Of little important

Un important

No of respondent

67

54

29

Percentage

44.67

36

19.33

20 Delivering what is promised.

Very important

Important

Moderately important

Of little important

Un important

No of respondent

64

60

25

Percentage

42.67

40

16.66

.67

27

21 Secured internet banking

Very important

Important

Moderately important

Of little important 2

Un important

No of respondent Percentage

57

61

23

38

40.67

15.33

1.33

4.67

22 Advertisement Very important Important Moderately important Of little important Un important

No of respondent

64

66

20

Percentage

42.67

44

13.33

28

23 Staff knowledge

Very important

Important

Moderately important

Of little important

Un important

No of respondent

70

80

Percentage

46.67

53.33

24 Phone banking

Very important

Important

Moderately important

Of little important

Un important

No of respondent

34

45

30

24

17

29

Percentage

22.67

30

20

16

11.33

25 Other IT based services.

Very important

Important

Moderately important

Of little important

Un important

No of respondent

57

39

33

13

Percentage

38

26

22

8.67

5.33

26 Friends referral.

Very important

Important

Moderately important

Of little important

Un important

No of respondent

79

36

12

19

30

Percentage

52.67

24

12.67

2.67

Conclusion and Recommendation

The top 10 factors of importance influencing the respondents to choose the bank are Safety of funds, Secured ATMs, ATMs availability, Reputation of the bank, personal attention, pleasing manners of the staff, confidentiality, closeness to work, timely service and friendly higher rate of int-deposits. It is understandable that safety of the funds is ranked number one in making the bank selection decisions. The factor "reputation of the bank" also has the perception about "safety of funds" built in it. At the same time "advertisements" is ranked only at 22, which lead to the opinion that "advertisements" on standalone basis do not rank anywhere on the top of the customers in making bank selection decisions. This factor has to be studied in detail to understand the role of advertisements in bank selection decisions.

It is found that availability of ATMs finds a top priority in customer bank selection. Hence banks' have to give due importance in establishing a wide ATM network or entering into alliances with various banks. While studying the switching behavior or bank clients, availability of Technology based services is found to be a major reason for clients to switch banks. Hence banks have to work on that area to understand the needs of the client and have to implement strategies to satisfy the needs in order to retain their existing clients and attract new clients.

Similarly the soft skills of the counter staff members has a significant role to play in influencing bank selection decisions of the customers, which is evident from the fact that five out of top ten factors are found to be the factors linked with the performance of the staff members. Hence banks have to take significant efforts in selecting, training and motivating the staff members to
31

perform to the satisfaction of customers.

While rate of interest on deposits (rank 10) has a significant influence in bank selection decisions, clients are ready to pay reasonable service charges.

Bibliography
BOOKS : Marketing research by Naresh K Malhotra ,Satyabhushan Dash.
www.executivelibrary.com

WEB SITES :

www.studymode.com

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Annexure
QUATIONNAIR

We are the student of mba from V.M.patel institute of management. Ganapatuniversity. For our partial fulfillment of internal evaluation of research design for management, we are conducting the research on BANK CHOICE BEHAVIOUR : FACTORE CONSIDERED BEFORE SELECTING A BANK. So please give your valuable feedback for completing our work. We are ensure that all the information provided by will be kept confidential. NAME ADDRESS PHONE NO 1 GANDER

o MALE o FEMALE
2 AGE

o 20-30 o 30-40 o 40-50 o 50-60 o 60-70

33

3 Education level

o Primary education o Secondary education o University education o Post graduate degree

4 Employment status

o Employee o Unemployed o Not working for personal reasons

5 Sector of employment

o Public sector o Privet sector o Self employed

6 Income group belonging to

o 8000 o 8001-15000 o 15001-25000 o Over 25000

34

7 Put tick mark on the following criteria. FACTOR VERY IMPORTANT Safety of fund Secured ATMs Reputation IMPORTANT MODERATELY OF LITTLE IMPORTANT IMPORANT UNIMPORTANT

Personal attention Pleasing manners Confidentiality

Closeness to work Timely services Higher rate of intdeposits ATM availability Friendly staff willing to help Clear communication Size of the bank More no of branches

Good complain handling Any branch banking Modern looking

35

Connectivity to other banks ATMs Accuracy/absence of errors Delivering what is promising Secured internet banking

Advertisement

Staff knowledge Phone banking

Other it based services Friends referral

36