1.

1 INTRODUCTION TO RESEARCH TOPIC

Service quality (SQ) is a comparison of expectations (E) about a service with
performance (P) SQ=P-E
A business with high service quality will meet customer needs whilst remaining
economically competitive. Improved

service

quality

may

increase

economic

competitiveness.
This aim may be achieved by understanding and improving operational processes;
identifying problems quickly and systematically; establishing valid and reliable
service performance measures and measuring customer satisfaction and other
performance outcomes.

In the days of intense competition, the banks are no different from any other
consumer marketing company. It has become essential for the service firms in general
and banks in particular to identify what the customer's requirements are and how
those customer requirements can be met effectively. In the days where product and
price differences are blurred, superior service by the service provider is the only
differentiator left before the banks to attract, retain and partner with the customers.
Superior service quality enables a firm to differentiate itself from its competition, gain
a sustainable competitive advantage, and enhance efficiency .The benefits of service
quality include increased customer satisfaction, improved customer retention, positive
word of mouth, reduced staff turnover, decreased operating costs, enlarged market
share, increased profitability, and improved financial performance. The construct of
service quality has therefore been a subject of great interest to service marketing
researchers.
Service quality has been defined by various experts in various ways as: 'Service
Quality is the difference between customers' expectations for service performance
prior to the service encounter and their perceptions of the service received.' According
to Gefan Service quality is the subjective comparison that customers make between
the qualities of service that they want to receive and what they actually get.'
Parasuraman says, 'Service quality is determined by the differences between
customer's expectations of services provider's performance and their evaluation of the
services they received.
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Service quality is 'the delivery of excellent or superior service relative to customer

expectations. Service quality is recognized as a multidimensional construct. While
the number of dimensions often varies from researcher to researcher, there is some
consensus that service quality consists of three primary aspects: outcome quality,
interaction quality, and physical service environment quality. Outcome quality refers
to the customer's assessment of the core service which is the prime motivating factor
for obtaining the services (e.g. money received from ATM). Interaction quality refers
to the customer's assessment of the service delivery process, which is typically
rendered via a physical interface between the service provider, in person, or via
technical equipment, and the customer. It includes, for instance, the consumer's
evaluation of the attitude of the service providing staff. The physical service
environment quality dimension refers to the consumer's evaluation of any tangible
aspect associated with the facilities or equipment that the service is provided in/ with.
It includes, for example, the physical conditions of an ATM machine.
The most popular dimensions of service quality--features five dimensions: tangibles,
reliability, responsiveness, empathy, and assurance. The tangibles dimension
corresponds to the aforementioned physical environment aspect, the reliability
dimension corresponds to the service outcome aspect, and the remaining three
represent aspects of interaction quality. Both the costs and the revenue of firms are
affected by repeat purchases, positive word-of-mouth recommendation, and customer
feedback. Moreover, there is strong evidence that service quality has either a direct
influence on the behavioral intentions of customers and/or an indirect influence on
such intentions, mediated through customer satisfaction.
RATER is an instrument that might be used to define and measure banking service
quality and to create useful quality-assessment tools.
The RATER may finally provide the following benefits to the HDFC bank:
1. It is the first approach to add and mix the customers religious beliefs and cultural
values with other quality dimensions.

2. It provides for multi-faced analysis of customer satisfaction.

3. It links quality with customers satisfaction and service encounter.

4. It provides information at several levels, already organized into meaningful

groupings.
5. It is a proven approach, which results in usable answers to meet customers needs.

6. It is empirically grounded, systematic and well documented.

Banks managers can use the RATER model and its dimensions first to identify the
following issues:

Service with a smile:

Todays finicky banking customers will settle for nothing less. The customer has
come to realize somewhat belatedly that he is the king. The customers choice of one
entity over another as his principal bank is determined by considerations of service
quality rather than any other factor. He wants competitive loan rates but at the same
time also wants his loan or credit card application processed in double quick time. He
insists that he be promptly informed of changes in deposit rates and service charges
and he bristles with customary rage if his bank is slow to redress any grievance he
may have. He cherishes the convenience of impersonal net banking but during his
occasional visits to the branch he also wants the comfort of personalized human
interactions and facilities that make his banking experience pleasurable. In short he
wants financial house that will more than just clear his cheque and updates his
passbook: he wants a bank that cares and provides great services.
So does HDFC bank meet these heightened expectations? What are the customers
perceptions of service quality of the banks? Which dimension of service quality of
HDFC bank is performing well? To find out answers to these questions I undertook a
survey of 2 branches of HDFC bank.

1.2 Company Profile

HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector, as part of the RBI's liberalisation of the Indian
Banking Industry in 1994. The bank was incorporated in August 1994 in the name of
'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank
commenced operations as a Scheduled Commercial Bank in January 1995.
HDFC Bank comprises of a dynamic and enthusiastic team determined to accomplish
the vision of becoming a World-class Indian bank. HDFC banks business philosophy
is based on our four core values - Customer Focus, Operational Excellence, Product
Leadership and People. They believe that the ultimate identity and success of their
bank will reside in the exceptional quality of people and their extraordinary efforts.
They are committed to hiring, developing, motivating and retaining the best people in
the industry.
BUSINESS FOCUS
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build
sound customer franchises across distinct businesses so as to be the preferred provider
of banking services for target retail and wholesale customer segments, and to achieve
healthy growth in profitability, consistent with the bank's risk appetite. The bank is
committed to maintain the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance. HDFC Bank's business philosophy
is based on four core values - Operational Excellence, Customer Focus, Product
Leadership and People.

MISSION STATEMENT OF HDFC BANK

World Class Indian Bank.

Benchmarking against international standards.

To build sound customer franchises across distinct businesses

Best practices in terms of product offerings, technology, service levels, risk

management and audit & compliance.

DISTRIBUTION NETWORK
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable
network of over 1229 branches spread over 444 cities across India. All branches are
linked on an online real-time basis. Customers in over 120 locations are also serviced
through Telephone Banking. The Bank's expansion plans take into account the need to
have a presence in all major industrial and commercial centers where its corporate
customers are located as well as the need to build a strong retail customer base for
both deposits and loan products. Being a clearing/settlement bank to various leading
stock exchanges, the Bank has branches in the centers where the NSE/BSE has a
strong and active member base.

The Bank also has a network of about over 2526 networked ATMs across these cities.
Moreover, HDFC Bank's ATM network can be accessed by all domestic and
international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American
Express Credit/Charge cardholders.

PROMOTER
HDFC is India's premier housing finance company and enjoys an impeccable track
record in India as well as in international markets. Since its inception in 1977, the
Corporation has maintained a consistent and healthy growth in its operations to
remain a market leader in mortgages. Its outstanding loan portfolio covers well over a
million dwelling units. HDFC has developed significant expertise in retail mortgage
loans to different market segments and also has a large corporate client base for its
housing related credit facilities. With its experience in the financial markets, a strong
market reputation, large shareholder base and unique consumer franchise, HDFC was
ideally positioned to promote a bank in the Indian environment.

2.1 LITERATURE REVIEW

A lot of surveys have been done in the past to understand the aspect of service quality
provided by HDFC Bank. My research is conducted to find out SERVICE
QUALITY OF HDFC BANK.

Joshua A J, V Moli, P. Koshi (2005)- The study evaluated and compared service
quality in old and new banks using sample size of 480. The study found out that
customers were satisfied in reliability, empathy and price and for other parameters the
difference between expectations and perceptions were smaller than public sector
banks.

Mohammad et al(2005)- The study tries to develop a comprehensive model of

banking automated service quality taking into consideration unique attributes of each
delivery channel and other dimensions which influence service quality.

Raul and Ahmed(2005)-The study investigated customer service in public sector

banks in 3 districts in Assam and it was found that customers were dissatisfied with
the management, technology and interactive factors along with high service charges.
Communication gap was the root cause of poor service and service was different in
rural and urban sectors.

Joseph M. et al (1999)- The study investigates role of technology on Australian banking

sector and 300 customers were surveyed. The findings suggested that except from
convenience/accuracy and efficiency e banking services did not match with importance
rating specified by customers.
Lassar, et al (2000)- The study compared two models, that is , SERVQUAL and
technical/functional quality model of technology using 65 bank customers using
SERPERF SCALE. The findings revealed that technical/functional quality model was

better than SERVQUAL because latter was lacking technical dimensions. 2 models were
having distinct and unique strength for measuring service quality aspects.
Bahia, K and J Nantel (2000)- The paper suggested an alternative scale for measuring
service quality in retail banking. The study developed a scale called as Banking Service
Quality Scale which contained factors like effectiveness and assurance, access, price,
tangibles, service portfolio and reliability. This model was found to be more reliable than
SERVQUAL.

Gani A,Mushtaq Bhatt(2003)-The study is conducted to do a comparative study of

service quality of commercial banks and its dimensions in commercial banks.
SERVQUAL is used and sample size was 800 customers. The study found out that CITI
bank and Standard chartered bank are good in tangibility and in reliability also they are
good. In responsiveness parameter Indian banks are inferior to foreign banks. In
Assurance and empathy Indian banks are inferior.

Navdeep Aggarwal and Mohit Gupta (2003)- This study basically finds out the primary
dimensions and sub dimensions of service quality. Informal structured interviews are
conducted with branch managers and academicians to formulate a banking service quality
model. The study found out that service time and personal interactions are very important
along with ambience for service quality.

Arora S (2005)- This study analysed factors influencing customer satisfaction in public
sector, private sector and foreign banks in northern India. 300 customers were given
questionnaires which reveled that significant differences exist in customer satisfaction
level of customers in each group of banks regarding routine operation and situational and
interactive factors. Foreign banks were found to be the leaders in mechanization and
automation.

Debashis and Mishra(2005)-The study analysed and measured customer satisfaction in

branch services provided by nationalized banks in northern India . 1200 customers were
given questionnaires and it was found out that computerization, accuracy in transactions,
attitude of staff and availability of staff.

3.1 NEED OF THE STUDY

The study would try to throw some insights into the existing services provided by the
banks, perceptions and the actual service quality of the bank. The results of the study
would be able to recognize the lacunae in the system and thus provide key areas
where improvement is required for better performance and success ratio. In the days
of intense competition, superior service is the only differentiator left before the banks
to attract, retain and partner with the customers. Superior service quality enables a
firm to differentiate itself from its competition, gain a sustainable competitive
advantage, and enhance efficiency.

3.2 SCOPE OF STUDY

The scope of this research is to identify the service quality of HDFC bank. This
research is based on primary data and secondary data. This study only focuses on the
dimensions of service quality i.e. RATER. It aims to understand the skill of the
company in the area of service quality that are performing well and shows those areas
which require improvement. The study was done taking two branches of HDFC bank
into consideration. The survey was restricted to the bank customers in Delhi only.

3.3 OBJECTIVE OF STUDY

The objective of the study is as follows:
To examine the essential dimensions of service quality i.e. RATERReliability, assurance, tangibles, empathy and responsiveness of HDFC bank
and its effect on customers satisfaction.
To find out the level of perception of the customers from the service quality
offered by the banks.
To know which service quality dimension of the bank is performing well.
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 To identify which dimension of service quality needs improvement so that the

quality of service of HDFC banks is enhanced

4.1 RESEARCH METHODOLOGY

"Research comprises of defining & redefining hypothesis or suggested solutions,
collecting, organizing & evaluating data making deductions & reaching conclusion"Cliford Woody. The term research Methodology here comprises of all research
activities carried on in connection with the "Analysis of various schemes under
Saving, FD and Demit account provided by HDFC Bank".
The basic purpose of research methodology is to describe the research procedure. It
helps the researches to adopt the right way to move on for carrying the study.
STEP IN RESEARCH PROCEDURE

Defining and analyzing the problem.

Determining sources of information

Preparing data collection format

Collection of data

Analysis of data

Interpretation of data Preparation of report

DATA SOURCE
Primary Data:

The primary data should collect by means of a survey. Questionnaire is is prepared

through which customers views to be collected.

Secondary Data:

In order to have a proper understanding of the service quality of bank a depth study
was done from the various sources such as books, a lot of data is also collected from
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the official websites of the banks and the articles from various search engines like
Google, yahoo search, etc.

BIBLIOGRAPHY
P. Kotler , marketing management, (Pearson education, 12th edition).
Malhotra K. Naresh, marketing research (An applied orientation), Research design,
(Prentice hall of India pvt. 5th edition).
Zeithmal V. A., Grembler D.D., Bitner M.j., and Pandit A.: Service Marketing
Integrated customer Focus across the Firm (4th Edition).
M.K. Rampal : Service Marketing.

Websites
www.hdfcbank.com
www.hdfcindia.com
www.wikipedia.org
www.marketresearch.com
http://www.academia.edu/10861702/A_Study_on_Customer_s_Satisfaction_t
owards_Banking_Services_of_HDFC bank
https://en.wikipedia.org/wiki/Service_quality
https://en.wikipedia.org/wiki/Service_quality#Dimensions_of_service_quality
http://www.hdfcbank.com/aboutus/awards/default.htm
http://jaipuria.edu.in/pgdm/wp-content/uploads/2013/07/Paradigms-ofService-Quality-and-Customer-Loyalty.pdf
https://www.bankbazaar.com/showUserReviews-246660-hdfcALL_PRODUCTS.html
http://shodhganga.inflibnet.ac.in/bitstream/10603/8362/17/17_chapter%208%
20.pdf

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