Professional Documents
Culture Documents
Marketing Strategies of Banks (4 Office 2007)
Marketing Strategies of Banks (4 Office 2007)
BY :
KARAN MODI
ROLL NO .32
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Background of the Banking Industry
Performance of the banking sector is considered as a proxy for the economy as a whole, due to
banks' wide spectrum of exposure across industries. Unfortunately for India, the banking sector
has historically remained under the impact of non-competitiveness, poor technology
integration, high NPAs and grossly under productive manpower.
Banking sector in India has a wide mix, comprising of joint sector (scheduled and non-scheduled
banks), nationalized sector (Reserve Bank of India, State Bank of India and all other nationalized
commercial banks and post office savings bank), specialized corporate financial institutions
(specific industrial finance corporations and state finance corporations), co-operative sector (co-
operative banks and land development banks) and foreign sector (foreign commercial banks
and exchange banks).
The first in 1969 and the second in 1980. Subsequently, quantitative loan targets were imposed
on these banks to expand their networks in rural areas and they were directed to extend credit
to priority sectors. These nationalized banks were then increasingly used to finance fiscal
deficits. Although non-nationalized private banks and foreign banks were allowed to coexist
with public-sector banks at that time, their activities were highly restricted through entry
regulations and strict branch licensing policies. Thus, their activities remained negligible.
During mid-1969, 14 major Indian commercial banks were nationalized. One of the major
criticism against nationalization of commercial banks was with respect to efficiency. And the
critics were right.
Since nationalization, the operational efficiency of the commercial banks have come down,
thanks to the ‘public-sector working’ attitude of the bank work force. Since, their pay is not
linked to performance, there is no inducement for the banking staff to perform well. This has
been further, deteriorated by the poor quality to manpower planning which is linked to
selection of inefficient staff on the basis of social reservations .
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In the period 1969-1991, the number of banks increased slightly, but savings were successfully
mobilized in part because relatively low inflation kept negative real interest rates at a mild level
and in part because the number of branches was encouraged to expand rapidly. Nevertheless,
many banks remained unprofitable, inefficient, and unsound owing to their poor lending
strategy and lack of internal risk management under government ownership. Joshi and Little
(1996) have reported that the average return on assets in the second half of the 1980s was only
about 0.15 per cent, while capital and reserves averaged about 1.5 per cent of assets. Given that
global accounting standards were not applied, even these indicators are likely to have
exaggerated the banks’ true performance. Further, in 1992/93, non-performing assets (NPAs) of
27 public-sector banks amounted to 24 per cent of total credit, only 15 public-sector banks
achieved a net profit, and half of the public-sector banks faced negative net worth.
(a) To stringent regulatory requirements (i.e., a cash reserve requirement [CRR] and
statutory liquidity requirement [SLR] that required banks to hold a certain amount of
government and eligible securities);
(b) low interest rates charged on government bonds(as compared with those on
commercial advances);
(c) directed and concessional lending;
(d) administered interest rates; and
(e) lack of competition.
These factors not only reduced incentives to operate properly, but also undermined regulators’
incentives to prevent banks from taking risks via incentive-compatible prudential regulations
and protect depositors with a well-designed deposit insurance system. While government
involvement in the financial sector can be justified at the initial stage of economic development,
the prolonged presence of excessively large public-sector banks often results in inefficient
resource allocation and concentration of power in a few banks.
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Further, once entry deregulation takes place, it will put newly established private banks as well
as foreign banks in an extremely disadvantageous position.
Against this background, the first wave of financial liberalization took place in the second half of
the 1980s, mainly taking the form of interest rate deregulation. Prior to this period, almost all
interest rates were administered and influenced by budgetary concerns and the degree of
concessionality of directed loans. To preserve some profitability, interest rate margins were kept
sufficiently large by keeping deposit rates low and non-concessional lending rates high. Based on
the 1985 report of the Chakravarty Committee, coupon rates on government bonds were
gradually increased to reflect demand and supply conditions.
Following the 1991 report of the Narasimham Committee, more comprehensive reforms took
place that same year. The reforms consisted of (a) a shift of banking sector supervision from
intrusive micro-level intervention over credit decisions toward prudential regulations and
supervision; (b) a reduction of the CRR and SLR; (c) interest rate and entry deregulation; and (d)
adoption of prudential norms. Further, in 1992, the Reserve Bank of India issued guidelines for
income recognition, asset classification and provisioning, and also adopted the Basle Accord
capital adequacy standards. The government also established the Board of Financial Supervision
in the Reserve Bank of India and recapitalized public-sector banks in order to give banks
sufficient financial strength and to enable them to gain access to capital markets. In 1993, the
Reserve
Bank of India permitted private entry into the banking sector, provided that new banks were
well capitalized and technologically advanced, and at the same time prohibited cross-holding
practices with industrial groups. The Reserve Bank of India also imposed some restrictions on
new banks with respect to opening branches, with a view to maintaining the franchise value of
existing banks.
As a result of the reforms, the number of banks increased rapidly. In 1991, there were 27 public-
sector banks and 26 domestic private banks with 60,000 branches, 24 foreign banks with 140
branches, and 20 foreign banks with a representative office.
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Between January 1993 and March 1998, 24 new private banks (nine domestic and 15 foreign)
entered the market; the total number of scheduled commercial banks, excluding specialized
banks such as the Regional Rural Banks rose from 75 in 1991/92 to 99 in 1997/98. Entry
deregulation was accompanied by progressive deregulation of interest rates on deposits and
advances. From October 1994, interest rates were deregulated in a phased manner and by
October 1997, banks were allowed to set interest rates on all term deposits of maturity of more
than 30 days and on all advances exceeding Rs 200,000. While the CRR and SLR, interest rate
policy, and prudential norms have always been applied uniformly to all commercial banks, the
Reserve Bank of India treated foreign banks differently with respect to the regulation that
requires a portion of credit to be allocated to priority sectors.
Since 1991, India has been engaged in banking sector reforms aimed at increasing the
profitability and efficiency of the then 27 public-sector banks that controlled about 90 per cent
of all deposits, assets and credit. Prior to the reforms, India’s financial sector had long been
characterized as highly regulated and financially repressed. The prevalence of reserve
requirements, interest rate controls, and allocation of financial resources to priority sectors
increased the degree of financial repression and adversely affected the country’s financial
resource mobilization and allocation.
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Functions Of Banks
Banking Regulation Act of India, 1949 defines Banking as "accepting, for the purpose of
lending or investment of deposits of money from the public, repayable on demand or
otherwise and withdrawal by cheques , draft, order or otherwise."
Deriving from this definition and viewed solely from the point of view of the customers,
banks essentially perform the following functions :
4) Acting as trustees
6) Government business
But do these functions constitute banking? The answer must be a no. There are so many
intricacies involved in the activities that a bank performs today, that the above list must
sound very simple to a seasoned banker.
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Banks are organized in a linear structure to perform these activities at the base of which
lies a Branch. The corporate office of a bank is normally called a head office
Accepting deposits
Banks are also called custodians of public money. Basically, the money is accepted as
deposit for safe keeping. But since the banks use this money to earn interest from people
who need money, Banks share a part of this interest with the depositors. However,
accepting deposits and keeping track of the money involves a lot of book-keeping and
other operations. Let us see what the Banks must maintain to provide this service
A system of Intra branch accounting with separate account(s) for each customer
Lending money is one of the two major activities of any bank. In a way, the bank acts as
an intermediary between the people who have the money to lend and those who have
the need for money to carry out business transactions.
This activity places its own requirements on the resources of the bank. For effective
functioning of this, a bank must possess:
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Sufficient deposits.
Transfer of money
Apart from accepting deposits and lending money, banks also carry out, on behalf of
their customers the act of transfer of money - both domestic and foreign.- from one
place to another. This activity is known as "remittance business" . Banks issue Demand
Drafts, Banker's Cheques, and Money Orders etc. for transferring the money. Banks also
have the facility of quick transfer of money also know as Telegraphic Transfer or Tele
Cash Orders.
Trustee Business
Banks also act as trustees for various purposes. For example, whenever a company
wishes to issue secured debentures, it has to appoint a financial intermediary as trustee
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who takes charge of the security for the debenture and looks after the interests of the
debenture holders. Such entity necessarily has to have expertise in financial matters and
also be of sufficient standing in the market/society to generate confidence in the minds
of potential subscribers to the debenture. While Banks are the natural choice for the
customers, Banks must possess the following to be effective and retain that:
Bankers are in the business of providing security to the money and valuables of the
general public. While security of money is taken care of through offering various type of
deposit schemes, security of valuables is provided through making secured space
available to general public for keeping these valuables. These spaces are available in the
shape of LOCKERS. The latter are small compartments with dual locking facility built into
strong cupboards. These are stored in the Bank's Strong Room and are fully secure.
Lockers can neither be opened by the hirer or the Bank individually. Both must come
together and use their respective keys to open the locker. To make this facility available
to its customers, the Bank must provide:
Locker cabinets
Security arrangements
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Government Business
MARKETING APPROACH
Banking industry is essentially a service industry which provides various types of banking and
allied services to its clients. Bank customers are such persons and organizations that have
surplus or shortage of funds and those who need various types of financial and related services
provided by the banking sector. These customers belong to different strata of economy,
different geographical locations and different professions and businesses. Naturally, the need of
each individual group of customers is distinct from the needs of other groups. It is, therefore,
necessary to identify different homogenous groups and even sub-groups of customers, and then
with utmost precision determine their needs, design schemes to suit their exact needs, and
deliver them most efficiently.
Banks, generally, have been working out various services and products at the level of the Head
Office and these are traded through their retail outlets (branches) to different customers at the
grass-roots level. This is the so called 'Top to Bottom' approach. However, bank marketing
requires a change in this traditional outlook. It should be 'bottom to top' approach with
customers at the grass-roots level as the focal point for working out various products / schemes
to suit the needs of different homogenous groups of customers. Thus, bank marketing approach,
in general, is a group or "Collective" approach.
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Customers Relationship Management, on the other hand, is an individualistic approach which
concentrates on certain select customers from the homogeneous groups, and develops
sustainable relationships with them for adding value to the bank. This may be termed as a
"Selective" approach.
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PRINCIPAL ASPECTS OF BANK MARKETING
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1 CUSTOMER ORIENTED SERVICES - Services offered by the banks are to be worked out in such
a manner that they fulfil the needs of the customers.
Traditionally, bankers have been accustomed to think in terms of what banks can offer and not
what customers want. However, bank marketing concept requires them to change this
orientation, and start working out schemes and services by keeping changing customer needs as
the focus of their new and novel products. In order to design and deliver customer needed
services, the banks must learn to seek information about the existing and potential customers,
and their perceived and latent needs on a regular and systematic basis.
2 DESIGN AND DELIVERY OF SUCH SERVICES - The word design implies that good marketing
services need to be properly designed and painstakingly crafted so as to suit a particular well-
defined group of clients. They do not just emerge effortlessly. Moreover, such properly designed
services must be properly traded. In fact, poor delivery of smartly designed services is just as
bad as smart delivery of poorly designed services. The quality of delivery is to be ensured not
only through focussed advertisement, but also through proper customer services offered at the
bank's retail outlets. Customer satisfaction is a dynamic process and it is necessary to keep pace
with rising expectations of the customers. Further, the development of IT and spread of Internet
are opening up newer mechanisms of customer contact and services.
3 CORPORATE OBJECIVES OF BANK - The corporate objectives of the bank are to be worked out
within the broad framework of the national policy. The corporate objectives are of two types,
Short Term and Long Term.
b) To become the universal bank over the period of next 3 years, etc.
Once the corporate objectives are clearly spelt out, various schemes can be designed to
fulfill the needs of the customers within the framework of the chosen corporate objectives.
Further, the resources made available for systematic marketing efforts are also constrained
by policies, vision and attitudes of the management.
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A thorough understanding of local and national economy is essential for taking effective
decisions about what product to be offered, where it is to be offered, at what price it is to be
offered, and how it is to be offered?
Banking schemes which are suitable for a developed economy might not be suitable for a
developing economy. It is essential to have intimate knowledge of income pattern of potential
customers, population growth, nature of industrial and trading activities, extent of agricultural
development, employment levels, wage structures, and other relevant factors, in order to make
decisions about services to be offered.
The cultural environment in which the bank operates also has a bearing on bank marketing
decisions. This includes attitude of local people about saving, borrowing and spending, and also
their traditions and values. The schemes suited for urban sector would be different from those
suited for rural sector.
Legal and political environment mainly constrains the decisions about the price of product to be
offered and the place for offering the product. For example, price of deposits and various types
of advances is constrained by the interest rate policies of the regulator
MARKETING STRATEGY
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The marketing strategy consists of a very clear definition of prospective customers and their
needs and the creation of marketing mix to satisfy them. A recent development in
This regard is Customer Relationship Management (CRM). It is a business strategy to learn more
and more about customer behavior in order to create long term and sustainable relationship
with them. It is a comprehensive process of acquiring and retaining selective customers to
generate value for the bank and its customers.
Under CRM, acquisition of customers is done through personal visits, media advertisement or
word of mouth from existing customers. Customer retention is carried out through data
warehousing and mining tools, customer service and call services, and improved customer value
is obtained through cross-selling and up selling to the retained customers.
This is an important area in formulation of a marketing strategy. Unless the bank has clear idea
about the customers it wants to serve, it is not possible to work out products to satisfy their
needs. This identification process involves: -
> Finding out profile of present customers in terms of their education, occupation, income,
geographical location, population group, age, sex, marital status, products and services they
purchase, their habits, tastes and preferences, their businesses and future prospects, etc.
> Finding out opinions of existing customers about the services provided by the bank and their
suggestions for improvement in present services and introduction of new services.
> collecting such information from the persons who are not currently customers of the bank.
All this can be done by conducting a survey of customers and non-customers of the bank.
Moreover, this process of seeking information about the market must form an integral part of
the system and must be done on a regular basis. The survey would give valuable information
about profiles and opinions of customers and non-customers of the bank, and it can be analysed
to find out the target group of the customers and their felt and latent needs.
The concept of data warehousing and data mining used in CRM helps in seeking information
about individual customers and their needs on a regular and systematic basis. Data warehousing
builds customer wise data by mapping it from various services.
And products used by the customers such as deposits, credits, foreign exchange, e-business,
safe custody, lockers, bill collection, etc.
Data mining carries out various types of analysis on collected data to determine customer
behaviour with respect to product, price and distribution channels, and offers a holistic view of
every customer at a given point of time. The customer information gathered by the bank in their
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day-to-day banking operations is often sufficient for effective data storage. However, many
times, it needs to be supported by data collected from outside sources and agencies.
Decisions about place should answer questions about location of the prospective customers
and, therefore, location for offering such services.
Decisions about price should answer questions about right price for services offered, worked out
by taking into consideration the cost of such services, competitor's charges and other factors.
Decision about promotion answers questions about communication with the customer. After
getting information on needs and location of the prospective customer and after designing
schemes to suit their needs, it is necessary to take decisions on making
Schemes known to the prospective customers through proper communication media and
through proper words, so as to bring out the salient features of the scheme. Actual delivery of
the schemes at the counters and at the manager's desk also plays a vital role in determining the
success of the scheme. Expectations of the customers in post-reforms period have been
changing very fast and customers have started shifting loyalty to better banks. It is, therefore, all
the more necessary to ensure that not only the felt needs but also the latent needs of the
customers are foreseen and satisfied.
A very good example of formulation of a market strategy under the "collective" approach is
development of the product, "Kisan Credit Cards". The target groups identified for this were
farmers with the purpose of dispensation of agricultural and rural credit to them. Agricultural
credit cards and cash credit facilities which were niche-marketed and were exclusively preserved
for the privileged class of farmers were, thus, extended to the small and marginal farmers since
1999
The 7 Ps of Marketing
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Once you've developed your marketing strategy, there is a "Seven P Formula" you should use to
continually evaluate and reevaluate your business activities. These seven are: product, price,
promotion, place, packaging, positioning and people. As products, markets, customers and
needs change rapidly, you must continually revisit these seven Ps to make sure you're on track
and achieving the maximum results possible for you in today's marketplace.
Product
To begin with, develop the habit of looking at your product as though you were an
outside marketing consultant brought in to help your company decide whether or not it's in the
right business at this time. Ask critical questions such as, "Is your current product or service, or
mix of products and services, appropriate and suitable for the market and the customers of
today?"
Whenever you're having difficulty selling as much of your products or services as you'd like, you
need to develop the habit of assessing your business honestly and asking, "Are these the right
products or services for our customers today?"
Is there any product or service you're offering today that, knowing what you now know, you
would not bring out again today? Compared to your competitors, is your product or service
superior in some significant way to anything else available? If so, what is it? If not, could you
develop an area of superiority? Should you be offering this product or service at all in the
current marketplace?
Prices
The second P in the formula is price. Develop the habit of continually examining and
reexamining the prices of the products and services you sell to make sure they're still
appropriate to the realities of the current market. Sometimes you need to lower your prices. At
other times, it may be appropriate to raise your prices. Many companies have found that the
profitability of certain products or services doesn't justify the amount of effort and resources
that go into producing them. By raising their prices, they may lose a percentage of their
customers, but the remaining percentage generates a profit on every sale. Could this be
appropriate for you?
Sometimes you need to change your terms and conditions of sale. Sometimes, by spreading
your price over a series of months or years, you can sell far more than you are today, and the
interest you can charge will more than make up for the delay in cash receipts. Sometimes you
can combine products and services together with special offers and special promotions.
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Sometimes you can include free additional items that cost you very little to produce but make
your prices appear far more attractive to your customers.
In business, as in nature, whenever you experience resistance or frustration in any part of
your sales or marketing activities, be open to revisiting that area. Be open to the possibility that
your current pricing structure is not ideal for the current market. Be open to the need to revise
your prices, if necessary, to remain competitive, to survive and thrive in a fast-changing
marketplace.
Promotion
The third habit in marketing and sales is to think in terms of promotion all the time. Promotion
includes all the ways you tell your customers about your products or services and how you then
market and sell to them.
Small changes in the way you promote and sell your products can lead to dramatic changes in
your results. Even small changes in your advertising can lead immediately to higher sales.
Experienced copywriters can often increase the response rate from advertising by 500 percent
by simply changing the headline on an advertisement.
Large and small companies in every industry continually experiment with different ways of
advertising, promoting, and selling their products and services. And here is the rule: Whatever
method of marketing and sales you're using today will, sooner or later, stop working. Sometimes
it will stop working for reasons you know, and sometimes it will be for reasons you don't know.
In either case, your methods of marketing and sales will eventually stop working, and you'll have
to develop new sales, marketing and advertising approaches, offerings, and strategies.
Place
The fourth P in the marketing mix is the place where your product or service is actually sold.
Develop the habit of reviewing and reflecting upon the exact location where
the customer meets the salesperson. Sometimes a change in place can lead to a rapid increase
in sales.
You can sell your product in many different places. Some companies use direct selling, sending
their salespeople out to personally meet and talk with the prospect. Some sell by telemarketing.
Some sell through catalogs or mail order. Some sell at trade shows or in retail establishments.
Some sell in joint ventures with other similar products or services. Some companies use
manufacturers' representatives or distributors. Many companies use a combination of one or
more of these methods.
In each case, the entrepreneur must make the right choice about the very best location or place
for the customer to receive essential buying information on the product or service needed to
make a buying decision. What is yours? In what way should you change it? Where else could you
offer your products or services?
Packaging
The fifth element in the marketing mix is the packaging. Develop the habit of standing back and
looking at every visual element in the packaging of your product or service through the eyes of a
critical prospect. Remember, people form their first impression about you within the first 30
seconds of seeing you or some element of your company. Small improvements in the packaging
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or external appearance of your product or service can often lead to completely different
reactions from your customers.
With regard to the packaging of your company, your product or service, you should think in
terms of everything that the customer sees from the first moment of contact with your
company all the way through the purchasing process.
Packaging refers to the way your product or service appears from the outside. Packaging also
refers to your people and how they dress and groom. It refers to your offices, your waiting
rooms, your brochures, your correspondence and every single visual element about your
company. Everything counts. Everything helps or hurts. Everything affects your customer's
confidence about dealing with you.
When IBM started under the guidance of Thomas J. Watson, Sr., he very early concluded that
fully 99 percent of the visual contact a customer would have with his company, at least initially,
would be represented by IBM salespeople. Because IBM was selling relatively sophisticated
high-tech equipment, Watson knew customers would have to have a high level of confidence in
the credibility of the salesperson. He therefore instituted a dress and grooming code that
became an inflexible set of rules and regulations within IBM.
As a result, every salesperson was required to look like a professional in every respect. Every
element of their clothing-including dark suits, dark ties, white shirts, conservative hairstyles,
shined shoes, clean fingernails-and every other feature gave off the message of professionalism
and competence. One of the highest compliments a person could receive was, "You look like
someone from IBM."
Positioning
The next P is positioning. You should develop the habit of thinking continually about how you
are positioned in the hearts and minds of your customers. How do people think and talk about
you when you're not present? How do people think and talk about your company? What
positioning do you have in your market, in terms of the specific words people use when they
describe you and your offerings to others?
In the famous book by Al Reis and Jack Trout, Positioning, the authors point out that how you
are seen and thought about by your customers is the critical determinant of your success in a
competitive marketplace. Attribution theory says that most customers think of you in terms of a
single attribute, either positive or negative. Sometimes it's "service." Sometimes it's
"excellence." Sometimes it's "quality engineering," as with Mercedes Benz. Sometimes it's "the
ultimate driving machine," as with BMW. In every case, how deeply entrenched that attribute is
in the minds of your customers and prospective customers determines how readily they'll buy
your product or service and how much they'll pay.
Develop the habit of thinking about how you could improve your positioning. Begin by
determining the position you'd like to have. If you could create the ideal impression in the
hearts and minds of your customers, what would it be? What would you have to do in every
customer interaction to get your customers to think and talk about in that specific way? What
changes do you need to make in the way interact with customers today in order to be seen as
the very best choice for your customers of tomorrow?
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People
The final P of the marketing mix is people. Develop the habit of thinking in terms of the people
inside and outside of your business who are responsible for every element of your sales and
marketing strategy and activities.
It's amazing how many entrepreneurs and businesspeople will work extremely hard to think
through every element of the marketing strategy and the marketing mix, and then pay little
attention to the fact that every single decision and policy has to be carried out by a specific
person, in a specific way. Your ability to select, recruit, hire and retain the proper people, with
the skills and abilities to do the job you need to have done, is more important than everything
else put together.
In his best-selling book, Good to Great, Jim Collins discovered the most important factor applied
by the best companies was that they first of all "got the right people on the bus, and the wrong
people off the bus." Once these companies had hired the right people, the second step was to
"get the right people in the right seats on the bus."
To be successful in business, you must develop the habit of thinking in terms of exactly
who is going to carry out each task and responsibility. In many cases, it's not possible to
move forward until you can attract and put the right person into the right position. Many
of the best business plans ever developed sit on shelves today because the [people who
created them] could not find the key people who could execute those plans.
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PROMOTIONAL STRATEGY OF BANK MARKETING
Even if a scheme is properly developed and designed to suit customer needs, it will not pick up,
unless it is properly marketed at all levels. Some of the strategies which would help banks in
their promotional efforts are given below: -
To promote "Personal Selling", whether performed by counter clerk, bank officer or customer
service representatives of the bank.
To ensure "Proper Knowledge and Awareness" of various schemes of the bank among the
employees of the bank.
To impart "Sales and Product Training" including tele-banking and net-banking concepts to
employees of the bank. One of the ways of doing this is to organise periodical in-branch
departmental meetings of the employees addressed by Branch Managers / Departmental
Heads.
To develop incentive programmes which reward good-customer oriented selling behavior. The
incentives need not be necessarily in terms of a cash payment but several other alternatives can
also be thought of, e.g., if a particular employee brings certain minimum amount of business to
the bank, he/she should be eligible for certain special leave or they can be made members of a
special club called "Chairman's Club" for a particular period. Several other such ways giving
cashless incentives to the employees can be worked out.
To ensure conversion of the entire employee’s organization of the bank into a well-informed,
disciplined and professional force committed to the corporate values and objectives.
To make effective use of the large network of the retail outlets of the bank visited by a large
number of customers every day. A typical bank customer visits his/her branch two or more
times a month so one can imagine how many customer visits each branch will have per year.
The use of "In-bank Advertising" would, therefore, help a lot in marketing bank services e
worked out.
In this connection the bank may have to think of retail shopkeepers' strategy of exhibiting their
products in an attractive manner. This would include: -
(b) Exhibition windows as found in many departmental stores displaying various products of the
bank in an attractive manner.
(c) Attractive table with glass box on top exhibiting literature on various products offered by the
bank to be kept at an appropriate location on the branch floor.
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(d) Creative ideas to exhibit "intangible products" in "tangible manner", e.g., visual images, small
models / photographs of life style, customer could achieve with the help of proper financial
planning done through bank schemes.
(e) Creation and updating of literature on various schemes and services offered by the bank and
ensuring its availability at each branch.
(f) Specially designed in-branch video visuals exhibiting various products and services of the
bank.
Public sector banks with a large network of branches have an excellent opportunity to expand
customer relationships and provide them with additional complementary services. Personal
contacts in any case are much better as compared to contacts through phones or Internet.
In Customer Relationship Management (CRM), results of data warehousing and mining must be
made available to all the concerned employees so that they have complete knowledge about
the value / profit each individual customer adds to the bank, their future needs and ways and
means to satisfy them.
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New Trends In Banking
Internet banking:
Internet technology has invaded the portals of our banking institutions and as the cliché goes
everything will just be a click away. With net banking the customer will be able to transact with
the help of a mouse and his visits to the neighbourhood bank will become a thing of the past.
Though a modest start has been made in India, net banking has still a long way to go. This
development has been acknowledged by the latest Online Banking Report, which features a
listing for ICICI Bank. Some others like Citibank, HDFC Bank and Global Trust Bank also have
also endeavoured to make real time banking a reality before this century closes. Net banking
makes it easy to transfer one’s money from one branch in a particular city to any other branch in
another city.
Currently, there are three basic kinds of Internet banking that are being employed in the marketplace:
Information
This is the most basic level of Internet banking.The bank has marketing information about its products and
services on a stand-alone server.This level of Internet banking service can be provided by the bank itself or
by sourcing it out.Since the server or Web site may be vulnerable to alteration, appropriate controls must
therefore be in place to prevent unauthorized alterations to data in the server or web site.
Communication
This type of Internet banking allows interaction between the bank’s systems and the customer. It may be
limited to electronic mail, account inquiry, loan applications, or static file updates. The risk is higher with this
configuration than with the earlier system and therefore appropriate controls need to be in place to
prevent, monitor, and alert management of any unauthorized attempt to access bank’s internal network and
computer systems. Under this system the client makes a request to which the bank subsequently responds.
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Transaction
Under this system of Internet banking customers are allowed to execute transactions. Relative to the
information and communication types of Internet banking, this system possesses the highest level of risk
architecture and must have the strongest controls. Customer transactions can include accessing accounts,
paying bills, transferring funds, etc. These possibilities demand very stringent security.
Various transactions that can be done by internet banking are:
Net banking makes it easy to transfer one’s money from one branch in a particular city
to any other branch in an another city
One can open a FD account via the net. One needs to provide data regarding the
amount and term of the deposit and also the branch in which the account is to be
opened.
One can order for an issue of a demand draft or a banker’s cheque. However, the draft
can be delivered only to the customer’s address and not to any other third party.
One can inquire on the balance in one’s savings, current and FD account and also on the
tax deducted at source on one’s FD account for the current and previous financial year.
One can give instructions over the net for stopping payment on a cheques/s.
You can request for a cheque book via the internet, which will take three days to come.
One can view all the transactions completed on an account for a specified period and
get a copy via e-mail.
ICICI Bank with its net banking service called ‘Infinity’ goes a step forward by allowing the
account holder to transfer funds into another person’s account within the bank. Also one can
intimate about the loss of an ATM Card over the net when using Infinity. Moreover, corporate
can issue of letters of credit and make enquiry’s regarding bills sent for collection via this
service. A special feature on Infinity is the facility for nicknaming all accounts to avoid
remembering lengthy account numbers. In terms of safety, HDFC Bank allows one to have three
login attempts after which a new password is given while ICICI Bank will disable the password
after five login attempts. Considering the fact that these services are offered without charging a
24
fee, the effort is commendable. The potential for net banking in India is immense considering
the rising penetration levels of the World Wide Web in Indian homes and offices.
The reasons why Internet banking has not taken off in India at a very fast pace are:
2) Lack of a strong trust environment prevents rapid move of corporate into adopting Internet,
3) Lack of a critical mass of early adopters of security and trust technology among bankers
operating in India to drive the transition from bricks and mortar to e-banking
Original setup for bill paying time is time-consuming but will ultimately be a time-saver
25
Mobile banking:
Mobile Banking is a service that allows you to do banking transactions on your mobile phone
without making a call, using the SMS facility. Mobile Banking works on the 'Text Messaging
Facility' also called the SMS that is available on mobile phones. This facility allows you to send a
short text message from your mobile phone instead of making a phone call.
All you need to do is type out a short text message on your mobile phone and send it out to a
pre-designated number. The response is sent to you as an SMS message, all in the matter of a
few seconds. This message travels from your mobile phone to the SMS Centre of the Cellular
Service Provider, and from there it travels to the Bank's systems. The information is retrieved
and sent back to your mobile phone via the SMS Centre, all in a matter of a few seconds.
You can access your bank account and conduct a host of banking transactions and inquiries
through the Mobile Banking services. You can check your balance, stop a cheque payment, or
even pay your utility bills. The Mobile Banking service gives you account information and real-
time transaction capabilities from the mobile phones at a true "anywhere, anytime, anyhow"
convenience. All this is through SMS or WAP.
Get your balance details, obtain your last 3 transaction details, request a cheque book ,stop a
cheque payment ,enquire cheque status ,request an account statement ,get Fixed Deposit
details ,Bill payment details for electricity, mobile phone and telephone services
Automated Teller Machines are a means of convenience for customers. So much so that most
of the people have changed the acronym to Any Time Money. HSBC Bank was the first bank to
introduce the ATM concept in India way back in 1987. Now, most of the banks have their ATM
outlets in India. Private sector banks have taken the lead in this regard. ICICI, UTI, HDFC and IDBI
together account for more than 50% of the total ATMs in India. ICICI Bank was the first bank to
cross the 1,000 mark in India.
26
The system works as follows: a switch routes all information and transactions among member
institutions. It transmits the information and/or data to the card-issuing bank or its processor,
which approves or declines the transaction request and notifies the switch. The card-issuing
bank's decision is then routed by the switch to the processor of the ATM, which completes the
transaction. At the end of each day, accounts among members are settled and account balances
are transmitted to each member institution
The cost of setting up an ATM center is around Rs1mn. The maintenance cost per annum works
out to around Rs1.2-1.4mn per annum. To reach the break-even point within a year, there
should be around 250-300 transactions per day per ATM. The companies are telling customers
to use the ATMs more rather than visit the branches.
Phone banking
Your bank account is now just a phone call away. The advantages of phone banking are as
follows:
Security
When you use the Phone Banking facilities, your transactions are completely secure. When you
open an account with us, you are given a unique Telephone Identification Number (TIN), which
is completely confidential
27
Cheque status inquiries
You can use Phone Banking to check on the status of cheques issued or deposited from
anywhere in India.
Fixed Deposits
You can easily open a Fixed Deposit over the phone, by simply authorizing a transfer of funds
from your Savings Account. The deposits can be opened in the names of the account holders in
the funding account. You may also book the Fixed Deposit in your name alone and maintain a
sweep-in facility. You can also enquire about the details of your Fixed Deposit, or Tax Deducted
at Source, if any using the Phone Banking service.
This facility is available only during Phone Banking hours (i.e. when phone bankers are
available).
Demand Drafts
You can now place a request for a Demand Draft or Manager's Cheque worth up to Rs. 50,000/-
per Customer ID per day, on the phone. For Preferred clients the limit is above that amount per
day. The draft or cheque will be sent to the address on our records by courier on the next
working day.
28
Fund transfers
If you hold multiple accounts with us, all you have to do is call in to transfer funds between
accounts, provided the same are linked to the same Cust ID number. There is no fund transfer
limit.
This facility is available only during Phone Banking hours (i.e. when Phone Bankers are
available).
Bill Pay
Pay your Utility and Bank Credit Card bills through Phone Banking
When you dial in to Phone Banking, a voice prompt will guide you through your
transactions. Also, for those who prefer the human touch, some Phone Banking service
comes with the option of talking to a Phone Banker, who will provide you with the
required assistance
29
Reserve Bank of India- Regulatory Authority
India's Central Bank - the RBI - was established on 1 April 1935 and was nationalized on 1
January 1949.
Functions of RBI
Monetary Authority:
Objective: maintaining price stability and ensuring adequate flow of credit to productive
sectors.
Prescribes broad parameters of banking operations within which the country’s banking
and financial system functions.
Objective: maintain public confidence in the system, protect depositors’ interest and
provide cost-effective banking services to the public.
Objective: to facilitate external trade and payment and promote orderly development
and maintenance of foreign exchange market in India.
30
Issuer of currency:
Issues and exchanges or destroys currency and coins not fit for circulation.
Objective: to give the public adequate quantity of supplies of currency notes and coins
and in good quality.
Developmental role
Related Functions
Banker to the Government: performs merchant banking function for the central and the
state governments; also acts as their banker.
31
State Bank Of India
The State Bank of India is the largest commercial bank in India in terms of profits, assets,
deposits, branches and employees.
The origins of State Bank of India date back to 1806, when the Bank of Calcutta (later called the
Bank of Bengal) was established. In 1921, the Bank of Bengal and two other banks (Bank of
Madras and Bank of Bombay) were amalgamated to form the Imperial Bank of India. In 1955,
the controlling interests of the Imperial Bank of India were acquired by the Reserve Bank of
India and the State Bank of India was created by an act of Parliament to succeed the Imperial
Bank of India.
It has Rs. 318619 crore in deposits and average working funds of Rs. 375804 crore, the State
bank of India stands tall in the industry. The closest competitors are not a third as big as SBI.
Punjab National bank ranks # 2 in deposits, but has deposits of just Rs. 87816 crore. ICICI is the
second biggest as far as average working funds are concerned, but that stacks up to just Rs.
106593 crore. SBI , which accounts for 18% of all deposits with commercial banks in India , is
able to mop up such large amounts in low cost deposits because of its sheer reach ; it has 13635
branches spread all over the country. Last year, while SBI’s deposits grew 7%, those of new
private banks swelled at 29.6%. Add to it the coming mergers and acquisitions, and SBI’s
position will come under threat. SBI has a good size and excellent geography in India and are
interested in exploring acquisitions overseas .To keep its lead , the banking elephant will have to
learn to dance .
32
SBI’s Time Line
1955: Branch expansion
ATMs
Total ATMs of State Bank Group – 5500 +; all networked -largest network in the country
6000+ ATMs for the Group by March 2007
Card base of the Group – 5.7 mn – largest in the country (debit +credit cards)
Customers have access over 34,000 POS through debit-cum-ATM card
Internet Banking
3, 50,000 + retail customers and value added services extended to all multi-distribution channel
33
Challenges
SBI strategy
Technology
34
Business process re engineering
People
Training
Lateral Recruitment
Specialist recruitment for Agriculture Sector
FY 05-06 FY 06-07
35
Operating Profit 2.63 3.38 3.52 3.82
ICICI bank
In 2006 the bank added 13,000 retail customers every single day of the year, or a mind boggling
3.4 million customers, taking the tally of its customers to 10 million. When the year began it had
presence in 600 cities across the country; before the year is rung out , it will be present in
1000.ICICI leads in every single retail segment it is present in , be it mortgages, auto loans ,
personal loans or credit cards. In mortgages it has a 28% share in auto loans it has 37%, in
personal and consumer 29% and so on. In the case of auto finance, it is growing faster than the
industry average, and in the credit cards it currently has 26 lakh customers and Citibank the
erstwhile market leader, is likely to drop way behind ICICI bank. Its share of total deposits grew
by 18.82 % last year. And with Rs. 106593 crore in average working funds, it is second only to
the public behemoth, the State bank of India. Earlier when a customer applied to open an
account, a three week waiting period was involved .In that time, his cheque book , ATM card
and pin number would arrive in separate envelopes, because the process was manual. Starting a
few months ago . Customers are now given a pre- printed welcome kit when they open an
account and the cards are activated the next day.
However it is yet to score significant improvement in areas such as quality of earnings and non –
performing assets (NPA’s) , a large part of which is historical and includes lending to the ill-
starred Dabhol power project. These are the reasons why despite its dazzling growth , it ranks a
distant #24 on the BT-KPMG survey of India’s best banks in 2006.The bank’s retail net NPA is
0.75 %.
36
Going forward , the bank’s strategy is to consolidate its presence in existing markets , accelerate
growth, sustain profitability and build a business model to withstand the pressures of a global
rollout
ICICI Bank currently has subsidiaries in the United Kingdom and Canada, branches in Singapore
and Bahrain and representative offices in the United States, China, United Arab Emirates and
Bangladesh.ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai and the
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed
on the New York Stock Exchange (NYSE).
Customer Focus
Cross sell
Contain risk
Cost control
Centralized processes
Internet Banking
37
First Bank in India to launch website - 1996
First Bank in India to launch Internet Banking - 1997
First Bank in India to launch online bill payment-1999
Only Bank in India with million online customers
Monthly average transactions per online customer- 7
Parasuraman Zeithaml and Berry (1985) list ten determinants of service quality that can be
generalized to any type of service. The ten dimensions include:
Tangibles - the physical evidence of the service, physical facilities, appearance of personnel,
tools or equipment used to provide the service, other customers in the service facility;
Reliability - consistency of performance and dependability;
Responsiveness - willingness or readiness of staff to provide service;
Competence - possession of the required skills and knowledge to perform the service by the
contact personnel as well as operational support personnel;
Access - approachability and ease of contact;
Communication - keeping customers informed in language they can understand;
Credibility - trustworthiness, believability, and honesty;
Security - the freedom from danger, risk, or doubt. (e.g. physical safety and confidentiality);
Understanding - making the effort to understand the customer’s needs.
These nine dimensions were regrouped in the well known five dimensions in the SERVQUAL
model (Parasuraman, Zeithaml and Berry 1990) which include “tangible”, “reliability”,
“responsiveness”, “assurance”, and “empathy”:
38
Tangible - appearance of physical facilities, equipment, personnel, and communication
materials;
Reliability - ability to perform the promised service dependably and accurately;
Responsiveness - willingness to help customers and provide prompt service;
Assurance - knowledge and courtesy of staff and their ability to convey trust and
confidence;
Empathy – caring and individualized attention to the customer.
Parasuraman, Zeithaml and Berry (1990) proposed to subjectively measure service quality by
finding out the extent of discrepancy between customers’ expectations or desires and their
perceptions of the actual quality of performed service. Good service quality exists when
customer expectations are met or exceeded and is studied in five dimensions as mentioned in
the last section: tangible, reliability, responsiveness, assurance, empathy. The methodology of
comparing customer’s expectation and perception in five dimensions is the popular SERVQUAL
(Danuta Ann Nitecki, 1996).
The discrepancy between customers’ expectations or desires and their perceptions of the actual
service performance was elaborated in the Discomfirmation of Expectations Paradigm
(Patterson 1993) which related satisfaction to customer’s pre-purchase expectations and
perceptions of service performance and identified any difference as Disconfirmation.
The comparison which forms the basis of the model are as follows:
39
The publication of the first results of the SERVQUAL instrument provoked a debate on how best
to measure service quality and in the subsequent decade there have been many attempts to
demonstrate the efficacy of the SERVQUAL instrument. It is generally agreed, however, that
SERVQUAL instrument is suitable for measurement of service quality because it measures key
aspects of service quality. Asubonteng (1996), moreover, claims that SERVQUAL is popular with
managers because it combines ease of application and flexibility. Managers know that results
obtained using the model are probably not objective truth but that they help identify the
direction in which the firm should move.
The methodology of comparing the gap between expectation and perception has also attracted
criticism. Cronin and Taylor (1992; 1994) argued that SERVQUAL is paradigmatically flawed
because of its ill-judged adoption of the disconfirmation model. Babakus and Boller (1992) found
that the use of a “gap” approach to service quality measurement is “intuitively appealing”, they
suspected that the “difference in scores does not provide any additional information beyond
that already contained in the perception component of the SERVQUAL scale”. They found that
the dominant contributor to the gap score is the perception score.
Lewis (1993) criticized the use of a seven-point Likert scale for its lack of verbal labelling
for points two to six which may cause respondents to overuse the extreme ends of the scale.
Babakus and Mangold (1992) suggested using five- point Likert scale on the grounds that it
would reduce the “frustration level” of respondents and increase response rate and quality
The Servqual -model is a tool that measures quality along 5 service quality dimensions in a
survey-format. Each of the dimensions have several statements, which have to be answered on
a 7-point scale (strongly disagree=1 until strongly agree=7).
The advantages of the SQ-model are that it is easy and quick to use for respondents, its useful in
several service situations, its an accepted and valid standard. Furthermore its reliable because
respondents interpret the statements in the same way.
The Servqual model has been used by many different companies in many different industries
including:
Libraries
Telephone companies
40
Restaurants
Hotels
Hospitals
IS providers
Gap1:
The difference between the perceptions of management and the real customers’ needs
Gap2:
Gap 3:
The discrepancy between service quality specifications and the service delivered to the
customer
Gap 4:
41
The discrepancy between the service provided and the quality of service promised in
advertisements and other external ways of communication
Gap 5:
42
Servqual Calculations
SBI
ICICI
ICICI
E8 6.9 P8 5.9 -1
E9 6.9 P9 6.9 0
EXPECTATIONS
8
6
SBI
ICI
4 CI
2
0
E1 E3 E5 E7 E9 E1
1
E1
3
E1
5
E1
7
E1
9
E2
1
Fig.1
PERCEPTIONS
8
6
4 SBI
2
0
P1 P3 P5 P7 P9 P11 P13 P15 P17 P19 P21
Fig .2
5
Expectation
4
Perception
3
Fig. 3
ICICI SERVICE GAP
5
Expectation
4
Perception
3
Fig.4
-1
-2
ICICI
-3 SBI
-4
-5
-6
Fig.5
PSU bank- SBI
Total 31.9
35
30
25
20 Expectation
15 Perception
10
5
0
y s y
ilit lity es ce th
ib bi n an pa
ng lia
si ve su
r
Ta Re Em
pon As
s
Re
Fig.6
Table 3:
Listed below are five features pertaining to banks and services they offer . We would like to
know how much each of these features is important to the customers . please allocate 100
points among the five features according to how important it is to you. Make sure the points
add up to 100.
The banks ability to perform the promised service dependably and accurately- 29
Reliability
The knowledge and courtesy of the banks employees and their ability to convey 17
trust and confidence – Assurance
The caring, individual attention the bank provides its customers - Empathy 19
100
Tangibility
Reliability
Empathy
As surance Reliability
17% 29%
Responsiveness
23%
Fig.7
Private bank-ICICI
Total -19.2
40
35
30
25
Expectation
20
Perception
15
10
5
0
lit y
lity ss ce th
y
i bi bi ene ran pa
ng lia v
si su Em
Ta Re on As
sp
Re
Fig .8
Table 6.
Listed below are five features pertaining to banks and services they offer. We would like to
know how much of these features is important to the customers. Please allocate 100
points among the five features according to how important it is to you.make sure the
points add up to 100.
2. The banks ability to perform the promised service dependably and accurately 30
4. The knowledge and courtesy of the banks employees and their ability to convey 17
trust and confidence
100
SERVQUAL IMPORTANCE WEIGHTS(PRIVATE BANKS-
ICICI)
Empathy Tangibility
16% 14%
Servqual importance weights
Tangibility
Assurance Reliability
17% Reliability Responsiveness
30% Assurance
Empathy
Responsiveness
23%
Fig.9
Findings/ Analysis
Expectation (SBI Vs ICICI)
The gap between the expectations of the SBI and ICICI customers can be seen in:
We can see a clear difference in perception of customers of SBI and ICICI banks.
Here we can clearly see the differences between the expectations and perceptions of the SBI
customers in most of the concerned areas.
The service gap is highest in Question 10 (employees will tell customers exactly when the
service will be performed ), Question 11 ( employees give prompt service) and high gap in
Question 13 ( employees are never too busy to respond to customers request ) –
Responsiveness.
The gap is low in Question 14 (behavior of employees instills confidence in them ) – Assurance.
The gap is highest in Question 21 ( bank has your best interest at heart ) – Empathy
ICICI has no gap in Question 9 (maintaining error free records) whereas SBI has a gap of -1.1
ICICI customers are more than satisfied with the operating hours of the bank (Question 19)
with the score of + 0.1 as compared to SBI customers who are also satisfied but with a score of
0 . Here , ICICI is delivering more than the customer’s expectations
ICICI bank employees are consistently courteous with customers (Question 16). The gap is a
minimal -0.1 as compared to 0.8 of SBI.
In individual attention ( Question 18) SBI has scored over ICICI bank with a score of -0.7 as
compared to -1.3 of ICICI
The SBI service gap is maximum in Question 13 ( employees are never too busy to respond to
customers request ) with a score of -3.1 as compared to -1.6 of ICICI
The SBI customers are more satisfied with (Question 4 ) the materials associated with the
service and find them visually appealing. They scored over ICICI bank customers with a score of
-0.8 as compared to -1.1
The SBI employees instill confidence in customers . They score over ICICI bank with a score of
-0.4 as compared to -0.7
The SBI customers are also more satisfied than ICICI bank customers with employees giving
them personal attention ( Question 20 ) . SBI received a score of -1 in comparison to ICICI
getting a score of -1.3
Findings through the 5 parameters assigned to the Servqual questionnaire:
The service gap in public banks – SBI is almost consistent through all 5 parameters . The expectation
and perception gap can be seen to be the highest in responsiveness factor . ( Table 1 of SBI)
But after assigning the importance weights to the parameters given by the customers , the scenario
changes for some service gap factors . The customers have given reliability the highest weightage.
The importance weights given by SBI ( PSU bank) customers to the 5 parameters are as follows:
1. Reliability 29%
2. Responsiveness 23%
3. Empathy 19%
4. Assurance 17%
5. Tangibility 12%
The service gap before assigning importance weights was in the following order:
1. Responsiveness
2. Reliability
3. Empathy
4. Tangibility
5. Assurance
The service gap after assigning importance weights was in the following order:
1. Responsiveness
2. Reliability
3. Empathy
4. Assurance
5. Tangibility
Assurance went up to the fourth place and tangibility went down to the last position
The service gap in private banks represented by ICICU bank is more or less consistent I all the 5
parameters but is the highest in reliability factor.( Table 1 of ICICI).The expectation and perception
gap can be seen to be the highest in the Empathy factor . Although the customers of ICICI bank have
given highest importance weightage to reliability, the gap after assigning importance weights is the
highest in responsiveness since the gap score was much higher than reliability factor.
The importance weights given by ICICI (private bank) customers to the 5 parameters areas follows:
1.Reliability 30%
2.Responsiveness 23%
3. Assurance 17%
4. Empathy 16%
5.Tangibility 14%
The service gap before assigning importance weights was in the following order:
1. Empathy
2. Responsiveness
3. Tangibility
4. Assurance
5. Reliability
The service gap after assigning importance weights was in the following order:
1. Responsiveness
2. Empathy
3. Reliability
4. Tangibility
5. Assurance
Here also we see a change in position of service gap in the 5 parameters . Responsiveness has
taken the first position in the service gap and other parameters also change places as shown
above.
Recommendations
1. Employees should give a true picture to the customers of when the services will be
performed and also give prompt service
2. The employees should not seem to be too busy to respond to customer requests . the
problem may even be understaffing or careless attitude. The organization should look
into the matter and increase the work force if required or train employees in customer
relationship management.
3. The employees should follow corporate ethics , which would help to instill confidence in
the customers.
4. The bank should have the best interest of the customer at heart . They should not have
hidden charges for services and should offer added services to the customer
5. The bank should work towards maintaining error free records and employ trained staff
for technical jobs
6. The maximum weightage was given to reliability. They should have regular training for
the employees for the latest advances in technology apart from CRM. Response rate
should be improved upon by reducing idle time for each customer. They should identify
where the idle time is the maximum.
7. The bank should take on the latest equipment and technologies being used by the
competition.
For ICICI bank( Private bank)
1. They should also have the best interest of the customer at heart .They should not have
hidden charges for services and should offer added services to the customer.
2. They should make an effort not to seem too busy to the customer to respond to their
requests. They may also look at the work force in place and train employees in CRM.
3. The service gap is highest in Empathy factor but highest weightage is given to reliability.
They should provide individual attention to customers and also keep this in mind while
recruiting and training employees.
Annexure
Tangibles Tangibles
E1 Excellent banks will have modern looking P1 Your bank has modern looking
equipment equipment
E2 The physical facilities at excellent banks will P2 Your bank’s physical facilities are
be visually appealing visually appealing
E3 Employees at excellent banks will be neat P3 Your bank’s employees are neat
in appearance. appearing
E4 Materials associated with the service P4 Materials associated with the
( pamphlets or statements ) will be visually service( Pamphlets or statements
appealing at an excellent bank ) are visually appealing
Reliability Reliability
E6 When a customer has a problem , excellent P6 When you have a problem your
banks will show a sincere interest in solving bank shows a sincere interest in
it solving it
E7 Excellent banks will perform the service P7 Your bank performs the service
right the first time right the first time.
E8 Excellent banks will provide their services P8 Your bank provides the service as
at the time they promise to do so . they have promised
E9 Excellent banks will insist on error free P9 Your bank insists on error free
records records
Responsiveness Responsiveness
E10 Employees of excellent banks will tell P10 Employees of your bank tell you
customers exactly when the services will be exactly when services will be
performed performed
E11 Employees of excellent banks will give P11 Employees of your bank give you
prompt service to customers prompt service
E12 Employees of excellent banks will always be P12 Employees in your bank are
willing to help customers always willing to help you
E13 Employees of excellent banks will never be P13 Employees in your bank are
too busy to respond to customers request never too busy to respond to
your request
Assurance
E15 Customers of excellent banks will feel safe P15 You feel safe in the transactions
in transaction with your bank
E16 Employees of excellent banks will be P16 Employees of your bank are
consistently courteous with customers consistently courteous with you
E17 Employees of excellent banks will have P17 Employees in your bank have the
knowledge to answer customers questions knowledge to answer your
questions
Empathy
E18 Excellent banks will give customers P18 Your bank gives you individual
individual attention attention
E19 Excellent banks will have operating hours P19 Your bank has operating hours
convenient to all their customers convenient to all its customers
E20 Excellent banks will have employees who P20 Your bank has employees who
give customers personal attention give you personal attention
E21 Excellent banks will have their customers P21 Your bank has your best interest
best interests at heart at heart
E22 The employees of excellent banks will P22 The employees of your bank
understand the specific needs of their understands your specific needs.
customers
Listed below are five features pertaining to banks and services they offer. We would like to know how
much of each of these features is important to the customers.Please allocate 100 points among the five
features according to how important it is to you. Make sure the points add upto 100.
1 The appearance of the banks physical facilities, equipment, personnel and communication
materials
2 The banks ability to perform the promised service dependably and accurately
4 The knowledge and courtesy of the banks employees and their ability to convey trust and
confidence
As with most service organizations , not excluding banks , consumers expectations and perceptions
differ , and gaps are caused during the service encounter. Quality control of the service offering may
be the main problem causing gaps to occur. Referring to this study , both state bank of India and
ICICI bank customers are not fully satisfied with their banking services. Their ideal and actual bank
services have differences . Interms of quality dimensions , they seem to put proportionate emphasis
on tangibility , reliability, responsiveness, assurance and empathy. More importance is put in
reliability:performing the promised service dependably and accurately, but less importance on
empathy: caring, individualized attention to customers. Both banks customers have given highest
importance to reliability but the area of concern varies since the weights are attached to the 5
parameters and the areas of concern change for both. The service gap is to be seen after the weights
are attached to the 5 parameters . The responsiveness parameter is an issue of concern for both the
banks.
BIBLIOGRAPHY
Christopher Lovelock and Jochen Wirtz -Services marketing: People , technology , strategy
Webliography
www.sbi .com
www.icici.com