RESEARCH PROJECT REPORT

ON

TO STUDY THE RETIAL BANKING IN PRESENT SCENARIO

SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF BUSINESS ADMINISTRATION BY GAUTAM BUDDH TECHNICAL UNIVERSITY, LUCKNOW ACADEMIC YEAR 2009-2011

Submitted To :
MS.VISHAKHA SRIVASTAVA

Submitted By:
AJAY KUMAR
Roll No. 1166970001 M.B.A 4TH SEMESTER

SETH VISHAMBHAR NATH INSTITUTES OF MANAGEMENT & STUDIES RESEARCH (2012-2013)

DICLARATION I, the undersigned, hereby declare that the Research Project Report entitled MARKETING STRATEGIES OF BHARTI AIRTEL in BHARTI AIRTEL LTD. written and submitted by me to the Gautam Buddha Technical University, Lucknow in partial fulfillment of the requirements for the award of degree of MASTER OF BUSINESS ADMINISTRATION under the guidance of

MS.VISHAKHA SRIVASTAVA Faculty is my original work and the conclusions drawn therein are based on the material collected by myself.

PREFACE The global economy of the day has endangered the survival of every organization and in particular those who want to have a competitive edge over the others. The competitive edge may be a distant dream in the absence of Superior Quality Products which otherwise is the function of well-trained employees. Today resources are scarce and have to be used carefully and trainers of all kinds are required to justify their position and account for their activities. Training activities, which are ill, directed and inadequately focused, do not serve the purpose of the trainers. The trainees or the organization hence identification of training needs becomes the top priority of every progressive organization. Identification of training needs, if done properly, provides the basis on which all other training activities can be considered and will lead to multi skilling, fitting people to take extra responsibilities increasing all round competence and preparing people to take on higher level responsibility in future.

ACKNOWLEDGEMENT I acknowledge the sincere assistance provided to me from several rather unexpected quarters during the course of execution of this study. It would be a mammoth task to place on record my gratitude to each and every one of them but a whole hearted attempt would be made nevertheless, least I be branded ungrateful.

I am extremely thankful for giving me an opportunity to go through BHARTI AIRTEL MARKETING and making my stay at AIRTEL MARKETING a memorable learning experience. Where the emotions are involved words cease to work. I am deeply in debt for her encouragement, affections, valuable advice and guidance that helped me to complete this project successfully.

EXECUTIVE SUMMARY
The project aims at understanding the Marketing strategies at Airtel and its impact on the perception of Airtel Cellular Services. Research has demonstrated conclusively that it is far more costly to win a new customer than it is to maintain an existing one. And there is no better way to retain a customer than to exceed his expectations. For this purpose it is essential to know the level of customer satisfaction. The focus of my research was the measurement of customer satisfaction level for the services provided by Bharti Airtel. The research was done for the corporate clients of Bharti Airtel. My job was not only to represent the Corporate Sales Dept. and collect the feedback from the clients but also to get the major complaints resolved through internal counselling. There can be no better opportunity to interact with the external as well as the internal customers of an organization. Finally the results of the research verify the fact that keeping the customer satisfied is the best strategy to not only retain the existing customers but also to expand the business to new horizons.

TABLE OF CONTENTS
Sr. TOPICS Page No.

1. 2. 3. 4. 5. 6. 7. 8. 9.

OBJECTIVE OF THE PROJECT INTRODUCTION SCOPE OF THE STUDY RESEARCH METHODOLOGY DATA ANALYSIS & INTERPRETATION CONCLUSION LIMITATIONS RECOMMENDATIONS BIBLIOGRAPHY

OBJECTIVE OF THE PROJECT

INTRODUCTION

RETAIL BANKING
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, do banks meet these heightened expectations? Is there a gap that exists between the management perception and the customer perception with reference to the services offered in Retail Banking? What is Retail Banking? Retail banking is, however, quite broad in nature - it refers to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and educational) on the assets side, are the more important of the products offered by banks. Related ancillary services include credit cards, or depository services. Todays retail banking sector is characterized by three basic characteristics:

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 multiple products (deposits, credit cards, insurance, investments and

securities);

multiple channels of distribution ( branch, internet); and multiple customer groups (consumer, small business, and corporate).

Retail Banking in India: Retail banking in India is not a new phenomenon. It has always been prevalent in India in various forms. For the last few years it has become synonymous with mainstream banking for many banks. The typical products offered in the Indian retail banking segment are housing loans, consumption loans for purchase of durables, auto loans, credit cards and educational loans. The loans are marketed under attractive brand names to differentiate the products offered by different banks. As the Report on Trend and Progress of India, 2003-04 has shown that the loan values of these retail lending typically range between Rs.20,000 to Rs.100 lakh. The loans are generally for duration of five to seven years with housing loans granted for a longer duration of 15 years. Credit card is another rapidly growing sub-segment of this product group. In recent past retail lending has turned out to be a key profit driver for banks with retail portfolio constituting 21.5 per cent of total outstanding advances as on March 2004. The overall impairment of the retail loan portfolio worked out much less then the Gross NPA ratio for the entire loan portfolio. Within the retail segment, the housing loans had the least gross asset impairment. In fact, retailing make ample business sense in the banking sector.

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While new generation private sector banks have been able to create a niche in this regard, the public sector banks have not lagged behind. Leveraging their vast branch network and outreach, public sector banks have aggressively forayed to garner a larger slice of the retail pie. By international standards, however, there is still much scope for retail banking in India. After all, retail loans constitute less than seven per cent of GDP in India vis--vis about 35 per cent for other Asian economies South Korea (55 per cent), Taiwan (52 per cent), Malaysia (33 per cent) and Thailand (18 per cent). As retail banking in India is still growing from modest base, there is a likelihood that the growth numbers seem to get somewhat exaggerated. One, thus, has to exercise caution in interpreting the growth of retail banking in India.

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Drivers of retail banking business in India Some of the basic reasons which led to the retail banking growth are as follows: First, economic prosperity and the consequent increase in purchasing power has given a fillip to a consumer boom. During the 10 years after 1992, India's economy grew at an average rate of 6.8 percent and continues to grow at almost the same rate not many countries in the world match this performance. Second, changing consumer demographics indicate vast potential for growth in consumption both qualitatively and quantitatively. India is one of the countries having highest proportion (70%) of the population below 35 years of age (young population). The BRIC report of the Goldman-Sachs, which predicted a bright future for Brazil, Russia, India and China, mentioned Indian demographic advantage as an important positive factor for India. Third, technological factors played a major role. Convenience banking in the form of debit cards, internet and phone-banking, anywhere and anytime banking has attracted many new customers into the banking field. Technological innovations relating to increasing use of credit / debit cards, ATMs, direct debits and phone banking has contributed to the growth of retail banking in India. Fourth, the treasury income of the banks, which had strengthened the bottom lines of banks for the past few years, has been on the decline during the last few years. In such a scenario, retail business provides a good vehicle of profit maximization. Considering the fact that retails share in impaired assets is far lower than the overall bank loans and advances, retail loans have put comparatively less provisioning burden on banks apart from diversifying their income streams.

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Opportunities and Challenges of Retail Banking in India Retail banking has immense opportunities in a growing economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver. How does the world view us? As already referred to the BRIC Report, talking India as an economic superpower; A. T. Kearney, a global management consulting firm, recently identified India as the "second most attractive retail destination" of 30 emergent markets. The rise of the Indian middle class is an important contributory factor in this regard. The percentage of middle to high income Indian households is expected to continue rising. The younger population not only wields increasing purchasing power, but as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations. Improving consumer purchasing power, coupled with more liberal attitudes toward personal debt, is contributing to India's retail banking segment. Global investors are attracted to India because of the growing number of welleducated, English-speaking workers who are comfortable working in information technology. India's IT work force will be augmented by a booming population of engineering students. Furthermore, India's labor pool also serves as an expanding customer base for retail bank products and services. The development of India's economy is boosting overall consumer purchasing power. The percentage of middle to high income Indian households is expected to continue rising. The younger, more educated population not only wields increasing purchasing power, but it is more comfortable than previous generations with acquiring personal debt.

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The combination of the above factors promises substantial growth in the retail sector, which at present is in the nascent stage. Due to bundling of services and delivery channels, the areas of potential conflicts of interest tend to increase in universal banks and financial conglomerates. Some of the key policy issues relevant to the retail banking sector are: financial inclusion, responSBIle lending, access to finance, longterm savings, financial capability, consumer protection, regulation and financial crime prevention. The challenges for the industry and its stakeholders are as follows: First, retention of customers is going to be a major challenge. According to a research by Reichheld and Sasser in the Harvard Business Review, 5 per cent increase in customer retention can increase profitability by 35 per cent in banking business, 50 per cent in insurance and brokerage, and 125 per cent in the consumer credit card market. Thus, banks need to emphasise on retaining customers and increasing market share. Second, rising indebtedness could turn out to be a cause for concern in the future. India's position, of course, is not comparable to that of the developed world where household debt as a proportion of disposable income is much higher. Such a scenario creates high uncertainty. Expressing concerns about the high growth witnessed in the consumer credit segments, the Reserve Bank has, as a temporary measure, put in place risk containment measures and increased the risk weight from 100 per cent to 125 per cent in the case of consumer credit including personal loans and credit cards (Mid-term Review of Annual Policy, 2004-05). Third, information technology poses both opportunities and challenges. Even with ATM machines and Internet Banking, many consumers still prefer the personal touch of their neighbourhood branch bank. Technology has made it posSBIle to deliver services throughout the branch bank network, providing instant updates to 15

checking accounts and rapid movement of money for stock transfers. However, this dependency on the network has brought IT departments additional responSBIilities and challenges in managing, maintaining and optimizing the performance of retail banking networks. Illustratively, ensuring that all bank products and services are available, at all times, and across the entire organization is essential for todays retails banks to generate revenues and remain competitive. Besides, there are network management challenges, whereby keeping these complex distributed networks and applications operating properly in support of business objectives becomes essential. Specific challenges include ensuring that account transaction applications run efficiently between the branch offices and data centres. Fourth, KYC Issues and money laundering risks in retail banking is yet another important issue. Retail lending is often regarded as a low risk area for money laundering because of the perception of the sums involved. However, competition for clients may also lead to KYC procedures being waived in the bid for new business. Banks must also consider seriously the type of identification documents they will accept and other processes to be completed. The Reserve Bank has issued detailed guidelines on application of KYC norms in November 2004. But how competitive are the players? The entry of new generation private sector banks has changed the entire scenario. Earlier the household savings went into banks and the banks then lent out money to corporates. Now they need to sell banking. The retail segment, which was earlier ignored, is now the most important of the lot, with the banks jumping over one another to give out loans. The consumer has never been so lucky with so many banks offering so many

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products to choose from. With supply far exceeding demand it has been a race to the bottom, with the banks undercutting one another. A lot of foreign banks have already burnt their fingers in the retail game and have now decided to get out of a few retail segments completely. The nimble footed new generation private sector banks have taken a lead on this front and the public sector banks are trying to play catch up. The PSBs have been losing business to the private sector banks in this segment. PSBs need to figure out the means to generate profitable business from this segment in the days to come. What about the foreign giants? The foreign banks have identified the wide opportunity but there are certain systematic risks involved in operating in the Retail market for them. These include regulatory restrictions that prevent them from expanding their branch network. So these banks often take the Direct Selling Agent (DSA) route whereby low-end jobs like sourcing or transaction processing are outsourced to small regional layers. However, as a McKinsey study points out actual write-offs on NPAs show a strong negative correlation with sharing of positive information. On top of this, the spendnow-pay-later credit culture in India is just not picking up. A swift legal procedure against consumers creating bad debt is virtually nonexistent. Finally, the vast geographical and cultural diversity of the country makes credit policy formulation a tough job All these add up to the unattractiveness too, of the Indian retail market to the foreign players. Yet Citibank, HSBC and Standard Charteredall in India for more than a century, and with relatively large retail networksseem to have no pressing need to acquire a local bank.

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Established foreign banks have preferred to take over customers or businesses from other foreign banks that want to leave. Thus HSBC, in recent years, has acquired customers from France's BNP, Germany's Deutsche Bank and Japan's Bank of TokyoMitsubishi. ABN Amro took over Bank of America's retail business.

Reasons for the change over from Corporate Banking to Retail Banking: The financial sector reforms undertaken by the Government since the year 1991 have accelerated the process of disintermediation which has encouraged blue chip corporate to access cheaper funds to meet their working capital requirements directly from investors in India and abroad through capital market instruments and external Commercial Borrowings route thus by-passing Banks in the process. The deregulation of markets and interest rates has lead to cut throat competition among Banks for corporate loans making them to lend even at PLR or sub PLR and offer other valued services at comparatively cheaper rates to big and high value corporates. In the process, most of the banks have experienced substantial reduction in interest spreads and drain on their profitability. The introduction of stringent Asset Classification, Income Recognition and provisioning norms has resulted in growing menace of NPAs in corporate loans which has affected the asset quality, profitability and capital adequacy of banks adversely. The risks involved in corporate loans are very high as corporates have to keep all their eggs in one basket. The risks involved in retail Banking advances are comparatively less and well diversified as loan amounts are relatively small ranging from Rs. 5000 to Rs. 100 lakh and repayable normally in short period of 3- years except housing

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loans (where repayment period is long up to 15 years in some cases) and from fixed source of income like salaries. Whereas corporate loans give average return of just 0.5 to 1.5 percent only, the retail advances offer attractive interest spread of 3to 4 percent, because retail borrowers are less interest rate sensitive than the Corporates. Another reason for large interest spreads on retail advances is that the retail customers are too fragmented to bargain effectively. While corporate loans are subject to ups and downs in trade frequently, retail loans are comparatively independent of recession and continue to deliver even during the sluggish phase of economy. Retail Banking gives a lot of stability and public image to banks as compared to corporate banking. The housing loans, which form the major chunk of retail lending and where NPAs are the least, carry risk weight of just 50% for capital adequacy purposes. This is likely to come down further as new Basel Capital Accord or (Basel II) norms are put in place from the year 2006. This offers added incentive to banks for lending to this retail segment as against corporate lending where capital consumption is higher. The greater amount of consumerism in the country with upswing in income levels of burgeoning middle class, which has propensity to consume to raise their standard of living, is enlarging the retail markets. This market is growing 2 50 percent per year and boosting the demand for credit from households. The potential is huge as present penetration level is just over 2 percent in the country. Given the easy liquidity

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scenario in the country the growth rate in this sector is likely to go up manifold in the years come. This offers great potential for banks to enlarge their loan books. The Indian mindset is also changing and consumers prefer to improve their quality of life even if it means borrowing for facilities like housing, consumer goods vehicles and vacationing etc. Borrowing and lending is no longer considered a taboo. The peer pressure and demonstration effect is further pushing up demand for housing loans, consumer products and automobiles. The profiles of customers are fast changing from conservative dodos to fashionable peacocks. All these developments give big push to Retail Banking activities. Retail Banking clients are generally loyal and tend not to change from one Bank to another very often. Large numbers of Retail clients facilitate marketing, mass selling and ability to categorize/select clients using scoring system and data mining. Banks can cut costs and achieve economies of scale and improve their bottom-line by robust growth in retail business volume. Through product innovations and competitive pricing strategies Banks can foster business relationship with customers to retain the existing clients and attract new ones. Innovative products like asset securitization can open new vistas in sustaining optimal capital adequacy and asset liability management for banks.

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 Retail Banking offers opportunities to banks to cross-sell other retail products like credit card, insurance, mutual fund products and demat facilities etc. to depositors and investors. Impact of Retail Banking: The major impact of retail Banking is that, the customers have become the Emperors the fulcrum of all Banking activities, both on the asset side and the liabilities front. The hitherto sellers market has transformed into buyers market the customers have multiple of choices before them now for cherry picking products and services, which suit their lifestyles and tastes and financial requirements as well. Banks now go to their customers more often than the customers go to their banks. Retail Banking is transforming banks into one stop financial super markets. The share of retail loans is fast increasing in the loan books of banks. Banks can foster lasting business relationship with customers and retain the existing customers and attract new ones. There is a rise in their service as well. Banks can cut costs and achieve economies of scale and improve their revenues and profits by robust growth in retail business. Reduction in costs offers a win win situation both for banks and the customers. It has affected the interface of banking system through different delivery mechanism It is not that banks are sharing the same pie of retail business, the pie itself is growing exponentially. Retail Banking has fuelled a considerable quantum of purchasing power through a slew of retail products.

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 Banks can diversify risks in their credit portfolio and contain the menace of NPAs. Retail banking allows bank to cross sell other products and services as it is far more easier to sell other products to the same customer rather than search for absolutely new ones. Cross selling is one of the best avenues for relationship Banking and retention of customers. Banks can thus increase their business volume and improve their bottom-line substantially. Re-engineering of business with sophisticated technology based products will lead to business creation, reduction in transaction costs and enhancement in efficiency of operations. Problems faced in Retail Banking: Retail Banking has all its attendant risks. It is highly sensitive .Banks got to move cautiously. It is easy to enter, but difficult to get out. A systematic and a calculated approach is the pre-requisite for success in the long run. Retail Banking is being introduced with the concept of serving customer with better and innovative products with the latest technology and easy availability. It becomes so popular and widely acceptable that more and more customers had started to use it. Now it becomes a mass product. Customer database have tremendously increased and it becomes difficult to manage them. To match the customer inflows and current customer requirements as well as service standards, banks have to set up more branches, distribution channels and new trained staff as well as improvement in back office operations also in very near future. This itself a time bounded problem and banks have to do it as early as posSBIle.

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 Todays competitive market customer has more than one options for his retail banking needs. Every bank is providing more or less similar kind of products. So an unsatisfied customer can easily switch over to another competitors bank. So banks need to be very careful in handling the customers. They have to continually improve their service standards. Retail Banking is so wide accepted by the customer as well as very aggressively promoted by the bankers that if the bankers do not take adequate care in distributing and recovering advances, there are chances of increasing in NPAs in coming feature. And that would be an alarming situation.

Retail Banking Products Portfolio A.Deposits: There are many products in retail banking like Fixed Deposit, Savings Account, Current Account, Recurring Account, NRI Account, Corporate Salary Account, Free Demat Account, Kids Account, Senior Citizen Scheme, Cheque Facilities, Overdraft Facilities, Free Demand Draft Facilities, Locker Facilities, Cash Credit Facilities, etc. They are listed and explained as follows: 1. Fixed Deposit: The deposit with the bank for a period, which is specified at the time of making the deposit is known as fixed deposit. Such deposits are also known as FD or term deposit .A FD is repayable on the expiry of a specified period. The rate of interest and other terms and conditions on which the banks accepted FD were regulated by the RBI, in 23

section 21 and 35A of the Banking Regulation Act 1949.Each bank has prescribed their own rate of interest and has also permitted higher rates on deposits above a specified amount. RBI has also permitted the banks to formulate FD schemes specially meant for senior citizen with higher interest than normal. 2. Savings Account: Saving bank account is meant for the people who wish to save a part of their current income to meet their future needs and they can also earn in interest on their savings. The rate of interest payable on by the banks on deposits maintained in savings account is prescribed by RBI. Now-a-days the fixed deposit is also linked with saving account. Whenever there is excess of balance in saving account it will automatically transfer into Fixed deposit and if there is shortfall of funds in savings account , by issuing cheque the money is transferred from fixed deposit to saving account. Different banks give different name to this product. 3. Current Account: A current account is an active and running account, which may be operated upon any number of times during a working day. There is no restriction on the number and the amount of withdrawals from a current account. Current account, suit the requirements of a big businessmen, joint stock companies, institutions, public authorities and public corporation etc.

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4. Recurring Deposit: A variant of the saving bank a/c is the recurring deposit or cumulative deposit a/c introduced by banks in recent years. Here, a depositor is required to deposit an amount chosen by him. The rate of interest on the recurring deposit account is higher than as compared to the interest on the saving account. Banks open such accounts for periods ranging from 1 to 10 years.. The recurring deposit account can be opened by any number of persons, more than one person jointly or severally, by a guardian in the name of a minor and even by a minor. 5. NRI Account: NRI accounts are maintained by banks in rupees as well as in foreign currency. Four types of Rupee account can be open in the names of NRI: a. Non Resident Rupee Ordinary Account (NRO) b. Non Resident External Account (NRE) c. Non Resident ( Non Repatriable Deposit Scheme ) ( NRNR) d. Non Resident ( special)Rupee Account Scheme ( NRSR) Apart from this, foreign currency account is the account in foreign currency. The account can be open normally in US Dollar, Pound Sterling, Euro. The accounts of NRIs are Indian millenium deposit, Resident foreign currency, housing finance scheme for NRI investment schemes. 6. Corporate Salary Account:

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Corporate Salary account is a new product by certain private sector banks, foreign banks and recently by some public sector banks also. Under this account salary is deposited in the account of the employees by debiting the account of employer. The only thing required is the account number of the employees and the amount to be paid them as salary. In certain cases the minimum balance required is zero. All other facilities available in savings a/c is also available in corporate salary account. 7. Demat Account: Dematerialization is a process by which physical share certificates / securities are taken back by the company or registrar and destroyed ultimately. An equivalent number of shares are credited electronically to customers depository account. Just like saving/current account with a bank one can open a securities account with the depository through a depository participant 8. Kids Account ( Minor Account ) : Children are invited as customer by certain banks. Under this, Account is opened in the name of kids by parents or guardians. The features of kids account are free personalized cheque book which can be used as a gift cheque , internet banking , investment services etc. 9. Senior Citizenship Scheme: Senior citizens can open an account and on that account they can get interest rate somewhat more than the normal rate of interest. This is due to some social responSBIilities of banks towards aged persons whose earnings are mainly on the interest rate.

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B. Loans and Advances: The main business of the banking company is lending of funds to the constituents, mainly traders, business and industrial enterprises. The major portion of a banks funds is employed by way of loans and advances, which is the most profitable employment of its funds. There are three main principles of bank lending that have been followed by the commercial banks and they are safety , liquidity, and profitability. Banks grant loans for different periods like short term, medium term, long term and also for different purpose. 1. Personal Loans: This is one of the major loans provided by the banks to the individuals. There the borrower can use for his/her personal purpose. This may be related to his/her business purpose. The amount of loan is depended on the income of the borrower and his/her capacity to repay the loan. 2. Housing Loans: NHB is the wholly own subsidiary of the RBI which control and regulate whole industry as per the guidance and information. The purpose of loan is mainly for purchase, extension, renovation, and land development. 3. Education Loans: Loans are given for education in country as well as abroad. 4. Vehicle Loans: Loans are given for purchase of scooter, auto-rickshaw, car, bikes etc. Low interest rates, increasing income levels of people are the factors for growth in this sector. Even for second hand car finance is available.

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5. Professional Loans: Loans are given to doctor, C.A, Architect, Engineer or Management Consultant. Here the loan repayment is normally done in the form of equated monthly. 6. Consumer Durable Loans: Under this, loans are given for acquisition of T.V, Cell phones, A.C, Washing Machines, Fridge and other items. 7. Loans against Shares and Securities: Finance against shares are given by banks for different uses. Now-a-days finance against shares are given mostly in demat shares. A margin of 50% is normally accepted by the bank on market value. For these loans the documents required are normally DP notes, letter of continuing security, pledge form, power of attorney. This loan can be used for business or personal purpose. Retail Banking Services 1. CREDIT CARDS: A credit card is an instrument, which provides immediate credit facilities to its holder to avail a variety of goods and services at the merchant outlets. It is made of plastic and hence popularly called as Plastic Money. Such cards are issued by bank to persons with minimum income ranging between RS 50000 and RS 100000 per annum and are accepted by a variety of business establishments which are notified by the card issuing bank. Some banks insist on the cardholder being their customers while others do not. Few banks do not charge any fee for issuing credit cards while others impose an initial enrollment fee and annual fee also. If the amount is not paid within the time duration the bank charges a flat interest of 2.5%. Leading Indian Banks such as : SBI, BOB, Canara Bank, ICICI, HDFC and a few foreign banks like CITIBANK, Standard Chartered etc are the important issuers of credit card in India. 28

2. DEBIT CARDS: It is a new product introduced in India by Citibank a few years ago in association with MasterCard. A debit card facilitates purchases or payments by the cardholder .It debits money from the account of the cardholder during a transaction. This implies that the cardholder can spend only if his account permits. 3. NET BANKING: This facilitates the customers to do all their banking operations from their home by using the internet facility. With Net Banking one can carry out all banking and shopping transactions safely and with total confidentiality. With Net Banking one can easily perform various functions: a. Check Account Balance b. Download Account Statement c. Request for a stop payment of a cheque. d. Request for a new cheque book. e. Access demat account f. Transfer funds. g. Facilitate bill Payments. h. Pay Credit Card dues instantly. 4. MOBILE BANKING: Using mobile banking facility one can

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a. Check Balance b. Check last three transactions. c. Request for a statement d. Request for a cheque book. e. Enquire on a cheque status. f. Instruct stock cheque payment. g. View FD details. h. Transfer funds. i. Pay Utility Bills. 5. PHONE BANKING: It helps to conduct a wide range of banking transactions from the comfort of ones home or office. Using phone banking facility one can: a. Check Balance b. Check last three transactions. c. Request for a cheque book. d. Transfer funds. e. Enquire on a cheque status, and much more.

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6. ANYWHERE BANKING: One can deposit or withdraw cash from any branch of a particular bank all over the country up to a prescribed limit. One can also transfer funds. 7. AUTOMATED TELLER MACHINES (ATM): ATMs features user-friendly graphic screens with easy to follow instructions. The ATMs interact with customers in their local language for increased convenience. ICICI Banks ATM network is one of the largest and most widespread ATM network in India. Following are the features available on ATMs which can be accessed from anywhere at anytime: a. Cash Withdrawal b. Cash Deposit c. Balance Enquiry d. Cheque Book Request e. Transaction at various merchant establishments. 8. SMART CARD: The smart card, a latest additional to the world of banking and information technology has emerged as the largest volume driven end-product in the world due to its data portability, security and convenience. Smart Card is similar in size to todays plastic payment card, it has a memory chip embedded in it. The chip stores electronic data

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and programmes that are protected by advanced security features. When coupled with a reader, the smart card has the processing power to serve many different applications. As an access-control device, smart cards make personal and business data available only to appropriate users. To ensure the confidentiality of all banking service, smart cards have mechanisms offering a high degree of security. These mechanisms are based on private and public key cryptography combined with a digital certificate, one of the most advanced security techniques currently available. Infact, it is posSBIle to connect to the web banking service without a smart card. WHAT IS CUSTOMER PERCEPTION? Customer Perception is an important component of an organizations relationship with their customers. Customer satisfaction is a mental state which results from the customers comparison of expectations prior to a purchase with performance perception after a purchase. Strong customer service helps an organization to reach upto customers expectations. Customer Perception on Service: Customer Service is the service provided in support of a companys core products. Customer Service most often includes answering questions, taking orders, dealing with billing issues, handling complaints, and perhaps scheduling maintenance or repairs. Customer Service can occur on site, or it can occur over the phone or via the internet. Many companies operate customer service call centers, often staffed around the clock. Typically there is no charge for customer service. Quality customer service is essential to building customer relationships. It should not, however, be confused with the services provided for sale by a company. 32

Services tend to be more intangible than manufactured products. There is a growing market for services and increasing dominance of services in economies worldwide. There are generally two types of customer expectations. The highest can be termed as desired service: the level of service the customer hopes to receive. The threshold level of acceptable service which the customers will accept is adequate service. Yet there is hard evidence that consumers perceive lower quality of service overall and are less satisfied. PosSBIle reasons may be:

With more companies offering tiered service based on the calculated profitability of different market segments, many customers are in fact getting less service than they have in past. Increasing use by companies of self-service and technology-based service is perceived as less service because no human interaction or human personalization is provided. Technology-based services (Automated Voice Systems, Internet-Based Services, Technology Kiosks) are hard to implement, and there are many failures and poorly designed systems in place. Customer expectations are higher because of the excellent service they receive from some companies. Thus they expect the same from all and are frequently disappointed. Organizations have cut costs to the extent that they are too lean and are too understaffed to provide quality service.

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 The intensely competitive job market results in less skilled people working in frontline service jobs; talented workers soon get promoted or leave for better opportunities. Many companies give lip service to customer focus and service quality; but they fail to provide the training , compensation, and support needed to actually deliver quality service. Delivering consistent, high-quality service is not easy, yet many companies promise it. The gaps model positions the key concepts, strategies, and decisions in services marketing in a manner that begins with the customer and builds the organizations tasks around what is needed to close the gap between customer expectations and perceptions. The central focus of the gaps model is the customer gap, the difference between customer expectations and perceptions. Firms need to close this gap- between what customers expect and receive in order to satisfy their customers and build long term relationships with them. To close this all important customer gap, the model suggests that four gaps- the provider gaps- need to be closed. The following four provider gaps, shown below are the underlying causes behind the customer gap: Gap 1: Not knowing what customers expect. Gap 2: Not selecting the right service designs and standards.

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INDUSTRY PROFILE The Banking Regulation Act 1949 defines banking as accepting the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise and wthdrawable by cheque, draft, order otherwise. The essential function of a bank is to provide services related to the storing of value and the extending credit. The evolution of banking dates back to the earliest writing, and continues in the present where a bank is a financial institution that provides banking and other financial services. Currently the term bank is generally understood an institution that holds a banking license. Banking licenses are granted by financial supervision authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. There are also financial institutions that provide certain banking services without meeting the legal definition of a bank, a so called non-bank. Banks are a subset of the financial services industry. The word Bank is derived from the Italian word banco signifying a bench, which was erected in the market place, where it was customary to exchange money; the first bench having been established in Italy a.d. 808. The basic functions of banks are to accept deposits, lend money and act as collecting and paying agents. The Bank of Barcelona in Spain (1401) was perhaps the first institution that could be called a bank in this sense. The terms bankrupt and "broke" are similarly derived from banca rotta , which refers to an out of business bank, having its bench physically broken. Money lenders in Northern Italy originally did business in open areas, or big open rooms, with each lender working from his own bench or table. Typically, a bank generates profits from transaction fees on financial services or the interest spread on resources it holds in trust for clients while paying them interest on the asset.

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HISTORY OF THE INDIAN BANKING SECTOR Banking in India has its origin as early as the Vedic period. It is believed that the transition from money lending to banking must have occurred even before Manu, the great Hindu Jurist, who has devoted a section of his work to deposits and advances and laid down rules relating to rates of interest. During the Mogul period, the indigenous bankers played a very important role in lending money and financing foreign trade and commerce. During the days of the East India Company, it was the turn of the agency houses to carry on the banking business. The General Bank of India was the first Joint Stock Bank to be established in the year 1786. The others which followed were the Bank of Hindustan and the Bengal Bank. The Bank of Hindustan is reported to have continued till 1906 while the other two failed in the meantime. In the first half of the 19 th century the East India Company established three banks; the Bank of Bengal in 1809, the Bank of Bombay in 1840 and the Bank of Madras in 1843. These three banks also known as Presidency Banks, were independent units and functioned well. These three banks were amalgamated in 1920 and a new bank, the Imperial Bank of India was established on 27 th January 1921. Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire dEscompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondicherry, then a French colony, followed. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center.

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The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara ( South Kanara ) district. Four nationalised banks started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking". With the passing of the State Bank of India Act in 1955 the undertaking of the Imperial Bank of India was taken over by the newly constituted State Bank of India. The Reserve Bank which is the Central Bank was created in 1935 by passing Reserve Bank of India Act 1934. In the wake of the Swadeshi Movement, a number of banks with Indian management were established in the country namely, Punjab National Bank Ltd, Bank of India Ltd, Canara Bank Ltd, Indian Bank Ltd, the Bank of Baroda Ltd, The Central Bank of India Ltd. On July 19, 1969, 14 major banks of the country were nationalized and in 15th April 1980, six more commercial private sector banks were also taken over by the government. Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

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From World War I to Independence: The period during the First World War (1914-1918) through the end of the Second World War (1939-1945), and two years thereafter until the independence of India were challenging for Indian banking. The years of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities. At least 94 banks in India failed between 1913 and 1918. Post-independence: The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.

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However, despite these provisions, control and regulations, banks in India except the State Bank o India, continued to be owned and operated by private persons. This changed with the nationalization of major banks in India on 19 July, 1969. Nationalization: By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the posSBIility to nationalize the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization." The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August, 1969. A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the GOI controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalized banks from 20 to 19. After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

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The nationalized banks were credited by some, including Home minister P. Chidambaram, to have helped the Indian economy withstand the global financial crisis of 2007-2009. Liberalization: In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, UTI Bank(now re-named as Axis Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. Currently, banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy,

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Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. INDIAN BANKING SYSTEM Introduction The Reserve Bank of India (RBI) is India's central bank. It is the sole authority for issuing bank notes and the supervisory body for banking operations in India. It supervises and administers exchange control and banking regulations, and administers the government's monetary policy. It is also responSBIle for granting licenses for new bank branches. Though the banking industry is currently dominated by public sector banks, numerous private and foreign banks exist. India's government-owned banks dominate the market. Their performance has been mixed, with a few being consistently profitable. Several public sector banks are being restructured, and in some the government either already has or will reduce its ownership. Private and foreign banks The RBI has granted operating approval to a few privately owned domestic banks; of these many commenced banking business. Foreign banks operate more than 150 41

branches in India. The entry of foreign banks is based on reciprocity, economic and political bilateral relations. An inter-departmental committee approves applications for entry and expansion. Capital adequacy norm Foreign banks were required to achieve an 8 percent capital adequacy norm by March 1993, while Indian banks with overseas branches had until March 1995 to meet that target. All other banks had to do so by March 1996. The banking sector is to be used as a model for opening up of India's insurance sector to private domestic and foreign participants, while keeping the national insurance companies in operation. The banking system has three tiers. These are the scheduled commercial banks; the regional rural banks which operate in rural areas not covered by the scheduled banks; and the cooperative and special purpose rural banks. Scheduled and non scheduled banks There are approximately 80 scheduled commercial banks, Indian and foreign; almost 200 regional rural banks; more than 350 central cooperative banks, 20 land development banks; and a number of primary agricultural credit societies. In terms of business, the public sector banks, namely the State Bank of India and the nationalized banks, dominate the banking sector. Local financing All sources of local financing are available to foreign-participation companies incorporated in India, regardless of the extent of foreign participation. Under foreign exchange regulations, foreigners and non-residents, including foreign companies, 42

require the permission of the Reserve Bank of India to borrow from a person or company resident in India Regulations on foreign banks Foreign banks in India are subject to the same regulations as scheduled banks. They are permitted to accept deposits and provide credit in accordance with the banking laws and RBI regulations. Currently about 25 foreign banks are licensed to operate in India. Foreign bank branches in India finance trade through their global networks.

RBI restrictions The Reserve Bank of India lays down restrictions on bank lending and other activities with large companies. These restrictions, popularly known as "consortium guidelines" seem to have outlived their usefulness, because they hinder the availability of credit to the non-food sector and at the same time do not foster competition between banks. Indian vs. foreign banks Most Indian banks are well behind foreign banks in the areas of customer funds transfer and clearing systems. They are hugely over-staffed and are unlikely to be able to compete with the new private banks that are now entering the market. While these new banks and foreign banks still face restrictions in their activities, they are wellcapitalized, use modern equipment and attract high-caliber employees.

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Government and RBI regulations All commercial banks face stiff restrictions on the use of both their assets and liabilities Forty percent of loans must be directed to "priority sectors" and the high liquidity ratio and cash reserve requirements severely limit the availability of deposits for lending. The RBI requires that domestic Indian banks make 40 percent of their loans at confessional rates to priority sectors' selected by the government. These sectors consist largely of agriculture, exporters, and small businesses. Since July 1993, foreign banks have been required to make 32 percent of their loans to these priority sector. Within the target of 32 percent, two sub- targets for loans to the small scale sector (minimum of 10 percent) and exports (minimum of 12 percent) have been fixed. Foreign banks, however, are not required to open branches in rural areas, or to make loans to the agricultural sector. The urge to merge: In the recent past there has been a lot of talk about Indian Banks lacking in scale and size. The State Bank of India is the only bank from India to make it to the list of Top 100 banks, globally. Most of the PSBs are either looking to pick up a smaller bank or waiting to be picked up by a larger bank. The central government also seems to be game about the issue and is seen to be encouraging PSBs to merge or acquire other banks. Global evidence seems to suggest that even though there is great enthusiasm when companies merge or get acquired, majority of the mergers/acquisitions do not really work. So in the zeal to merge with or acquire another bank the PSBs should not let their common sense take a back seat. Before a merger is carried out cultural issues should be looked into.

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

Concept of Retail Banking The retail banking encompasses deposit and assets linked products as well as other financial services offered to individual for personal consumption. Generally, the pure retail banking is conceived to be the provision of mass banking products and services to private individuals as opposed to wholesale banking which focuses on corporate clients. Over the years, the concept of retail banking has been expanded to include in many cases the services provided to small and medium sized businesses. Some banks in Europe even include their private banking business i.e. services to high net worth net worth individuals in their retail banking portfolio. The concept of Retail banking is not new to banks. It is only from past few years that it is being viewed as an attractive market segment, which offers opportunities for growth with profits. The diversified portfolio characteristic of retail banking gives better comfort and spreads the essence of retail banking in individual customers. Though the term retail banking and retail lending are often used synonymously, yet the later is lust one side of retail banking. In retail banking, all the banking needs of individual customers are taken care of in an integrated manner.

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Review of Literature Anil Dutta and Kirti Dutta in their paper reveal the expectations and perceptions of the consumers across the three banking sectors in India. The study revealed that gap varies across the banking sector with public sector banks showing the widest gap and foreign banks showing a narrow gap. It is important for the service providers to know the level of customer expectations so that they can meet and even exceed them to gain maximum customer satisfaction 1. In the study of Mark Durkin et al., customer satisfaction questionnaire was issued to over 2,000 retail customers. Twenty-five senior branch bank managers were then asked to rank the same set of issues to ascertain what they felt to be the key influencers to customer registration for internet banking. The three factors that the managers failed to identify, fell into two broad categories: relationship management status and comfort with new technology 2. Financial institutions are actively developing new electronic banking products for their retail customers. To date, the market leaders have drawn a disproportionably higher share of e-retail banking customers. In response, smaller institutions have become quite active in exploring ways to participate profitably in online banking. A major influence is from a customer relationship management (CRM) perspective, where institutions try to limit the outflow of current customers and direct high-value customers to potential products from a multi-product service offering array. These efforts can succeed only if retail bank marketers focus the promotion of the new products and services that can utilise this channel toward those customers who are most likely to find them attractive (Don Sciglimpagli). The first aim of this study was to examine the role that online and electronic banking play in defining the customer's primary financial relationship. The analysis of 701 retail customers of a financial

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institution presented in this study suggests that banks and other institutions are highly vulnerable to loss of customers to rivals with extensive online services. A second aim was to examine to what extent information on banking relationships is able to extend CRM analysis beyond that offered by typical demographic and income data. Current customer account relationships are found to be highly predictive of use of electronic services use in general. And, interest in the use of specific online services is related to differing customer relationships in addition to ordinary demographic and balance information. These findings can be useful for retail banking in identifying potential high-value users from a customer relationship management perspective 3. The purpose of the paper by Aurto Molina is to investigate the impact of relational benefits on customer satisfaction in retail banking. This paper presents a causal model that identifies a connection between the relational benefits achieved through a stable and long-term relationship with a given bank and customer satisfaction with retail banking. Based on a theoretical framework regarding the relationship between

relational benefits and customer satisfaction, an empirical study using a sample of 204 bank customers was conducted, and the theoretical model is tested. Multi-item indicators from prior studies were employed to measure the constructs of interest, and the proposed relationships were tested using structural equations modeling methods. The results show that confidence benefits have a direct, positive effect on the satisfaction of customers with their bank. However, special treatment benefits and social benefits did not have any significant effects on satisfaction in a retail banking environment. The findings suggest that banks can create customer satisfaction through relational strategies that focus on building customer confidence. Therefore, frontline employees should be committed to establishing and maintaining confidence benefits

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for customers. Thus the study provides useful information on the relationship between customer satisfaction and specific relational benefits in retail banking 4. The important change drivers in most European retail banking systems are found to be competition and IT developments. Two broad strategic themes are explored. The first is the evolution of retail banking in a strategic marketing context from a supply focus towards a much greater demand orientation. The second theme explored is the intensifying strategic imperative towards a shareholder value culture. The key features and strategic challenges of the `new' retail banking revolution are finally summarized in the study of Gardener Edwar and Howcroft Barry 5. Due to increasing competition in retail banking, understanding the customer perception about service quality is becoming indispensable. The private sector banks are posing a very stiff competition to the public sector banks through their initiatives for meeting customer expectations and gaining a cutting edge. This is reflected by the increasing market share and better profitability of private banks in comparison to that of public sector banks. At the same time, public sector banks have also responded to the challenges posed by the private sector banks through conscious efforts to enhance their service quality. This study (R.A.Ravi) compares public sector banks and private sector banks in terms of user perception of their retail banking services 6. In his article in Business Line T. B. Kapali, explains the perceived stability of the income stream from the retail business is probably the most important driver of the push into retail. Cross-country studies clearly point - increasing urbanisation, rising income levels; all indicating that the demand for retail finance will continue to be very strong well into the future. ICICI or HDFC over the past few years does show the stability which has been imparted to the overall revenue stream by the retail business
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With the growth of the Indian economy over the past few years, the retail banking sector in India has also witnessed phenomenal growth. It has faced up to the need of the hour and introduced anytime, anywhere banking, for its customers through ATMs, mobile and internet banking. It has also offered services like D-MAT, plastic money (credit and debit cards), online transfers, etc. The concept of CBS (Core Banking Solution), which allows a customer to fulfill a wide range of banking operation online, has come alive during the past few years. This has not only helped in reducing operational costs but facilitated greater conveniences to its customers and so the customer preferences have to be taken care of constantly in the retail banking business
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In the age of consumerism, the customer is king. And the banking sector is latching on to this mantra of sales and marketing. Although the sector is part of the service industry, only recently have individual banks woken up to the fact that offering products and services tailored to meet the customers' specific needs can actually bring in more business. Banks today do much more than lend and borrow money. The newage private sector banks can be said to be the forerunners in offering such customeroriented service. Banks are even taking loans to the customers. Banks have also become a one-stop shop for selling products such as mutual funds, insurance and RBI bonds and offer service such as payment of utility bills and equity trading. Crossselling also helps banks personalise products for their customers. For instance, banks give loans against insurance, or link deposit schemes to insurance, depending on customer needs. The banks are converting to the age of commoditised business i.e., Give the consumer a product and a reason to use it 9. The rapid and provocative changes facing the retail sector seems to vary somewhat from country to country, retail banks everywhere are working vigorously to address

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new technological, regulatory and competitive realities. Collectively, they are trying to determine strategies and tactics needed to secure their franchises and their futures. The bank of the future will not win by creating a single strategy. Rather, each of its activities within products, customer channels, and support services will be the subject of a discreet "business unit" strategy, which will be benchmarked against marketsegmented customer demand and profitability, and competitors' businesses in this area
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The above studies show that retail banking business will continue to be very strong, well into the future. The increasing competition is compelling the service providers to know the level of customer expectations and meet them. The studies also suggest that the bank of the future will not win by creating a single strategy but focus on building customer confidence and extensive online services. The present study looks into understanding the customers perception towards the retail banking and also their awareness regarding the various retail banking services.

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Strategies of banks to satisfy their customersA main strategy of banks to satisfy their customer is CRM.

CRM in banking sector-CRM: A Competitive Tool for Indian Banking SectorIn todays competitive environment relationship marketing is critical to banking corporate success. Banking is a customer oriented services industry and Indian banks have started realizing that business depends on client service and the satisfaction of the customer. This is compelling them to improve customer service and build relationships with customers. This study, conducted among five Indian banks, aimed at identifying customer satisfaction variables which lead to relationship building, and developing a conceptual framework of relationship marketing practices in Indian banks by capturing the perspectives of customers with respect to their satisfaction with various services. It also sought to identify whether demographics have a role to play in customer satisfaction. A questionnaire designed from a literature review and in-depth interviews were utilized to arrive at the 16 variables which determined the satisfaction of 555 customers of the five banks.. The three relationship dimensions, namely, traditional services, multi channel banking and internal marketing, which lead to customer satisfaction, were identified through factor analysis. A repeated measure of ANOVA was run on the relationship dimensions to assess significant difference in the level of satisfaction of the customer. A perceptual map was created using the factor scores of each of the five banks which helped identify how each bank was positioned in the customers minds.

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Reporting on the different satisfaction levels of the customers, the findings suggest that while private banks have been able to attract the younger customers with higher educational levels, who are comfortable with multi channel banking, the customers of the national bank are older and more satisfied with the traditional facilities. The results from this study could provide managerial lessons on assessment of strengths and improvement of services and in evolving a research strategy that will benefit the management of banks Customer Relationship Management has emerged as a popular business strategy in todays competitive environment. It is a discipline which enables the companies to identify and target their most profitable customers. CRM involves new and advance marketing strategies which not only retain the existing customers but also acquire new customers. It has been invented as a unique technique capable of remarkable changes in total output of companies. While the concept of relationship marketing was formally introduced in early 90s when financial services, airlines and other service institutions stated to reward to retain the existing customers by introducing loyalty programs, CRM is only a product of the late nineties. The purpose of this paper is to find the differences in an organizations services employing CRM Vis a Vis others, as perceived by the customer. It also tries to find out the relationship between perception and satisfaction, commitment and loyalty which underlines the significance of CRM in Indian banking sector. CRM has developed into a major corporate strategy for many organizations. It is concerned with the creation, development and enhancement of individualized customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life time value.

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

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

Ten Ways to Help You Improve Your Customer ServiceBy: Catherine Franz 1. Stay in contact with customers on a regular basis. Just as it is bad news to send out too many emails to customers, it is just as bad to not stay in contact with them. Customers don't want to feel abandoned. So don't. Here are three things to help you stay in touch: Offer them your ezine subscription. Ask customers if they want to be updated by e-mail. Follow-up after each sale to see if they are satisfied with their purchase. Send an e-mail out a few days after their purchase, another in a week or two, and then another in a month. 2. Create a customer focus group by inviting 10 to 20 loyal customers to meet regularly. Alternatively, send out a monthly survey to this group asking for

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ideas and input on how to improve your customer service. Give them a reward. Pay them; give them a gift certificate, or send them free product. 3. Have a web site that is easy to navigate. Add a frequently asked question's "FAQ" page and explain anything that might confuse your customers or visitors. Follow-up with an electronic survey with questions on how to increase your site's user-friendliness. 4. Resolve customer complaints quickly and completely. Answer all e-mail and phone calls within a few hours. This will show your customers you really care about them. 5. Don't make your customers or visitors hunt for your contact information. Make it easy for them to contact you. Offer as many contact methods as possible. Hyperlink all your e-mail addresses so they don't have to find or type it. Offer a toll free number. 6. If you have strategic alliances or employees, make sure they are familiar with your customer service policy. Give your employees bonuses or incentives to practice excellent customer service. Tell employees to be flexible with each individual customer, each one has different concerns, needs and wants.

7. Give your customers more than they expect. Send thank you gifts to long time customers. E-mail them greeting cards on holidays or birthdays if you have their address or online cards if you only have their e-mail address and name. Give bonuses to your customers who make a big purchase or multiple purchases. 8. U-welcome, pleases, and thanks you and can never be over used. Be polite

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no matter what. Admit and apologize for mistakes quickly and make it up to them in BIG ways if you want them to continue being a customer. 8. Reward in points -- give customers a point for every dollar they spend. Set up a points-earned sheet. E-mail the customer an update monthly. If they send you a referral they get 10 points, if they buy something add 10 more points. 9. 10. If your business is local, invite customers to your office for lunches, parties, barbecues, dances, seminars or other special events. It isn't what you perceive as valuable but what customers see from their eyes. Yet, sometimes, you just can't please some folks. If that occurs, do you best and then let it go. You don't want them for clients anyway. About the Author: Catherine Franz, a Certified Professional Marketing & Writing Coach, specializes in product development, Internet writing and marketing, nonfiction, and training.

Service Quality Development Before 1983, the definition of quality was defined primarily based on the concept of quality control with corresponding standards focused completely on achieving quality. Juran (1974) defined quality as "suitable use". Moreover, Crosby (1979) defined quality as "consistent with needs", and assumed the existence of correspondence between quality and operational standards. Cornell (1984) considered that the service industry required a broader definition of quality than that used by the manufacturing industry; Zimmerman (1985) took the quality control concept of the manufacturing industry and applied it to service quality. Zimmerman considered the components of service quality, including: practicality, replication of manufacturing ability, immediacy, ultimate user satisfaction, and corresponding standards. Based on the

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concept of PZB (1985) and Zeithaml (1988), consumers see the process of service quality formation as employing both interior and exterior attributes of low-level production quality or service quality, passing through an internal united comparison, and proceeding to establish a higher level of perceived service quality. Banks in India have succeeded in promoting new services to its customers. The likelihood of current customers is tempted to do business online. Based on extant literature on bank marketing, a questionnaire was designed. Then, in a large-scale survey by means of personal and telephone interviews, data was obtained from bank customers. This paper focuses on the adoption of internet banking by existing banks customers through an investigation of the factors that influence customer's acceptance of internet banking service. The questionnaire was designed from the literature review. It included 29 variables which will help in enhancing the satisfaction of the customer with usage of internet banking in India. Six Indian banks were chosen where the questionnaire was randomly administered to 210 respondents who were also customers of the bank. Out of 210 questionnaires, 196 were completed questionnaires. The banks chosen for the purpose of the study were the ones who have strong retail presence and offer comprehensive range of information to the customer. An exploratory study of the Indian customers in six banks is conducted to identify the factors which lead to adoption of internet banking services with the help of data reduction technique called factor analysis. The banking industry in India has undergone sea change since post independence. More recently, liberalization, the opening up of the economy in the 90s and the government's decision to privatize banks by reduction in state ownership culminated in the banking reforms based on the recommendations of Narasimha Committee (3). 57

The prime mover for banks today is profit, with clear indications from the government to 'perform or perish'. Banks have also started realizing that business depends on client service and the satisfaction of the customer (4) and this is compelling them to improve customer service and build up relationship with customers. With the current change in the functional orientation of banks, the purpose of banking is redefined. The main driver of this change is changing customer needs and expectations. Customers in urban India no longer want to wait in long queues and spend hours in banking transactions. This change in customer attitude has gone hand in hand with the development of ATMs, phone and net banking along with availability of service right at the customer's doorstep. With the emergence of universal banking, banks aim to provide all banking product and service offering under one roof and their endeavor is to be customer centric (5). With the emergence of economic reforms in world in general and in India in particular, private banks have come up in a big way with prime emphasis on technical and customer focused issues. In this paper, the main contention of the author is to highlight the customer satisfaction through service quality provided by the banks-SBI from the public sector banking and ICICI from the private sector banking. Another contention is to demonstrate the performance of the two banks SBI & ICICI in terms of customer satisfaction. The paper is organized in to six sections: Section- 1: starts with a brief profile of the banking industry, especially the SBI and ICICI. Section- 2: covers Research Methodology comprising objectives, Hypothesis, research design and scope of the study including nature of data collection. Section-3: lays out the measurement of customer satisfaction with service quality and review of literature. Section-4: puts

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forward the core strategies to address service quality gaps. Section-5: deals with Analysis and Interpretation in line with the objective of the study. Section-6: briefly summarizes the conclusion and policy implementation of the study. Profile of the Banking Industry-SBI and ICICI State Bank of India State Bank of India (SBI) is the largest bank in India. It is measured by the number of branch offices and employees as the largest bank in the world. Established in 1806 as Bank of Bengal, it remains the oldest commercial bank in the Indian Subcontinent and also the most successful one providing various domestic, international and NRI products and services, through its network of 13,908 branches, including 4,731 associate banks' branches in India and overseas. It also provides financial services, such as life insurance, merchant banking, mutual funds, credit card, factoring, security trading and primary dealership in the money market. With an asset base of $126 billion and its reach, it is a regional banking behemoth. The bank was nationalized in 1955 with the Reserve Bank of India having a 60 percent stake. It has laid emphasis on reducing the huge manpower through Golden handshake schemes and computerizing its operations. It also has non-banking subsidiaries and joint ventures, such as SBI Capital Markets Ltd., SBI DFHI Ltd., SBI Funds Management Pvt Ltd., SBI Factors & Commercial Services Pvt Ltd. and SBI Life Insurance Company Ltd. Effective from April 20, 2005; it acquired a 51 percent stake in Indian Ocean International Bank Ltd. This study examines whether there are economic benefits to be gained from improving service quality in the Taiwanese banking industry. Service quality is perceived quality; and different from objective or actual quality; being a judgment

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usually made within a customer evoked set. Service quality resembles an attitude in many ways, and service quality is distinct from customer satisfaction. Traditional financial ratios are not appropriate for measuring the economic benefits of service quality improvement. The main single factor influence on business unit performance is goods and service quality. The author develops a framework for this paper based on service quality and profitability theoretical background. Relationships are also established among service quality, customer satisfaction, and profitability. The main conclusion of this study is that the performance scale developed in the SERVPERF model and customer satisfaction in the profitability model are confirmed in the Taiwanese banking industry. The author finds that perception quality is an antecedent of attitude, service quality is an antecedent of customer satisfaction, customer satisfaction directly affects purchase intention, and customer satisfaction is an antecedent of profitability. Finally, the author finds gap between customers and service providers and thus demonstrates that Profitability is positively affected by service quality improvement. Previously, service quality was not been explicitly linked to profit. Zeithaml (2000) has found evidence about the influences of service quality on profits. Rust, Zahorik, and Keiningham (1995) provided a model of service quality improvement and profitability and the submodels, which together constitute the ROQ approach. The service profit chain of Heskett et al. (1997) stipulates that "direct and strong" relationships exist among service quality, customer satisfaction and profitability. As documented above, this study will develop a framework that combines service quality, customer satisfaction, and profitability into a chain of effects

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IMPROVING CUSTOMER SATISFACTIONPublished standards exist to help organizations develop their current levels of customer satisfaction. The International Customer Service Institute (TICSI) has released The International Customer Service Standard (TICSS). TICSS enables organizations to focus their attention on delivering excellence in the management of customer service, whilst at the same time providing recognition of success through a 3rd Party registration scheme. TICSS focuses an organizations attention on delivering increased customer satisfaction by helping the organization through a Service Quality Model. TICSS Service Quality Model uses the 5 P's - Policy, Processes, People, Premises, Product/Services, as well as performance measurement. The implementation of a customer service standard should lead to higher levels of customer satisfaction, which in turn influences customer retention and customer loyalty.

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

Regulatory, structural and technological factors are significantly changing the banking environment throughout the world. One factor that is spurring the growth of the service economy in India is the liberalization that has been ushered in by the government in the banking sector. The financial sector reform in India was designed to infuse greater competitive vitality in the system. To achieve this objective, the Narasimhan Committee was

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

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

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perceptions about service quality as well as the bank marketing and service quality literature have been drawn up. These parameters have been used in the context of four of the largest banks in India to identify the underlying dimensions of service quality. Finally, the paper has drawn upon the findings of the service quality dimensions to contend the initiatives that banks managers can take to enhance employees skills and attitudes and instill a customer-service culture. The Dimensions of Service Quality Underpinning our understanding of service quality is an array of factors or determinants. A number of researchers have provided lists of quality determinants, but the best known determinants emanate from Parasuraman and colleagues from the USA, who found five dimensions of service quality, namely, tangibles, reliability, responsiveness, assurance and empathy and used these as the basis for their service quality measurement instrument, SERVQUAL (Parasuraman et al., 1988; Zeithaml et al., 1990). The result was the development of the SERVQUAL instrument, based on the gap model. The central idea in this model is that service quality is a function of the difference scores or gaps between expectations and perceptions. An important advantage of the SERVQUAL instrument is that it has been proven valid and reliable across a large range of service contexts. However, while the SERVQUAL instrument has been widely used, it has been subjected to certain criticisms as well. The contention that service quality consists of five basic dimensions (Parasuraman et al., 1988) is according to some researchers questionable and they have suggested that SERVQUALs dimensions are contextual and not universally applicable (Ekinci & Riley, 1999; Brown et al., 1993; Cronin & Taylor, 1992; Teas, 1993; Bouman & Vander Wiele, 1992; Gagliano & Hathcote, 1994, Kang and James, 2004; Lee, 2005;

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Fowdar, 2007). Instead, the number and composition of the service quality dimensions are probably dependant on the service setting (Brown et al., 1993; Carman, 1990). It has been suggested that for some services the SERVQUAL instrument needs considerable adaptation (Dabholkar et al., 1996) and that items used to measure service quality should reflect the specific service setting under investigation, and that it is necessary in this regard to modify some of the items and add or delete items as required (Carman, 1990). Moreover, research suggests that culture may play a fundamental role in determining how consumers perceive what constitutes service quality. In a nutshell, there are still issues and varying opinions about the dimensionality of service quality and the universality of the five dimensions, (Rust and Oliver, 1994). These are of interest to and significant for users of SERVQUAL and for all those who wish to understand better the concept of service quality. Hence there is still a need for fundamental research into the dimensionality of service quality bearing in mind the contextual circumstances, the specific industry and the specific service setting.

MARKETING STRATEGIES

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

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

Convergence to a single solution providerWith pressures on the spreads and the competition in the urban markets increasing rapidly, banks need to develop new ways to sustain profitability.Banks led to a plethora of new products, hence becoming a one stop shop for all financial solutions.

Roadmap by RBI for foreign banksThe RBI has laid out a two phased roadmap for giving greater freedom to the foreign banks in India.This has spurred the entry of several other foreign banks in India, along with acting as a signal to the domestic players to pull up their socks to face the new competitors. Growth in retail lendingThe under banked Indian population as well as the high margin on retail products makes this a very attractive market for the banks.The allinclusive nature of this growth in terms of sectors covers all consumer segments as well as product segments. Demand for derivatives & other risk management productsThe increasingly dynamic business scenario and financial sophistication also increase the need for customized exotic financial products.The complex and peculiar nature of risks faced by the companies are passed onto the banks.Innovative financial tools and advanced risk management methods are required by the banks to capitalize on this business opportunity.

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MEASURING CUSTOMER SATISFACTION IN THE INDIAN BANKING SECTOR -

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

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

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

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IMPACT OF ATM ON CUSTOMER SATISFACTION This presents the impact of ATM on customer satisfaction. This is a comparative study of three major banks i.e. State Bank of India, ICICI bank and HDFC bank. This paper has been divided into two sections. First section presents the introduction of ATM, brief history of three Banks compiled through the literature available in the field. It also includes the review of the various services provided by the three banks under study. Second section presents the result obtained on the basis of the data collected for the three banks. A sample of 360 respondents equally representing each bank has been taken through questionnaire. Data has also been collected through interview also. Then various statistical tools have been used accordingly to compile the result. KEY WORDS: ATM, Customer satisfaction, Fees, Problems, ATM services, Banks. ATM means neither avoids traveling with money nor any time money, but certainly implies both. Slim ATM cards are fast replacing confounding withdrawal forms as a convenient way of getting your money from banks. In a way, they are rewriting the rules of financial transaction. A smart person no longer needs to carry a wallet-full of paper money on his person. All he needs to do is fish out an ATM (automated teller machine) card, insert it in the slot, punch in a few details and go home with hard cash. Automated teller machines (ATMs) were the first wellknown machines to provide electronic access to customers. With advent of Automatic Teller Machines (ATM), banks are able to serve customers outside the banking hall. ATM is designed to perform the most important function of bank. It is operated by plastic card with its special features. The plastic card is replacing cheque, personal attendance of the customer, banking hours restrictions and paper based verification.

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ATMs have made hard cash just seconds away all throughout the day at every corner of the globe. ATMs allow you to do a number of banking functions such as withdrawing cash from ones account, making balance inquiries and transferring money from one account to another using a plastic, magnetic-strip card and personal identification number issued by the financial institution.

The Indian ATM industry has seen explosive growth in recent times. ATMs represent the single largest investment in the electronic channel services for the Banks. In India, HSBC set the trend and set up the first ATM machine here in 1987. Since then, they have become a common sight in many of our metros. Automated Teller Machines (ATMs) have gained prominence as a delivery channel for banking transactions in India. Banks have been deploying ATMs to increase their reach. While ATMs facilitate a variety of banking transactions for customers, their main utility has been for cash withdrawal and balance enquiry. As at the end of October 2007, the number of ATMs deployed in India was 31,078. According to some estimates the total cash movement through ATMs across India was around Rs. 70,000 crore in FY 06. Clearly, industry watchers forecast a bright future for ATMs in India. While the ATM is a great service for customers, for the banks it means immense savings on the cost of operations. While a typical cash transaction carried out in a banks branch premise would cost Rs 40 that in an ATM will only cost Rs18translating into a cost saving of Rs 22 per transaction. ATM Networks The ATMs of a bank are connected to the accounting platform of the bank through ATM switches. Inter-bank ATM networks are created by setting up apex level switches to communicate between the ATM switches of different banks. The inter70

bank ATM networks facilitate the use of ATM cards of one bank at the ATM(s) of other banks for basic services like cash withdrawal and balance enquiry. Banks owning the ATMs charge a fee for providing the ATM facility to the customers of other banks. The ATM deploying bank from the card issuing banks recovers this fee referred to as interchange fee. However the interchange fee is not fixed across banks and depends on the terms of bilateral / multilateral arrangements. Banks with larger ATM network treat interchange fee as an important stream of revenue. ( Sultan Singh, Ms. Komal, (Ph.D.)

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY RESEARCH DESIGN: Exploratory design

This study is exploratory in nature. It provides a description of contemporary satisfaction parameter in the Indian banking sector. Exploratory research provides insights into and comprehension of an issue or situation. Exploratory research helps to determine the best research design, data collection method and selection of subjects.

SOURCES OF DATAThere are many sources of data collection, such as secondary data collection and Primary data collection.

Primary data-There are various ways to undertake the gathering of primary data, including conducting surveys to create market data or using other research instruments such as questionnaire.

Sample size- 100 Sample techniques- Convenience sampling

Secondary data
This involves information that already exists somewhere, such as in studies already undertaken on this area as well as published books, articles in journals, articles on the internet and other sources.

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

RESEARCH INSTRUMENT

The questionnaire was designed from the literature review as well as from the results of in-depth interviews. It included sixteen variables which determined the satisfaction of the customers of the five banks chosen for the study. Two of these banks were national banks namely ,state Bank of India(SBI) and Punjab National Bank(PNB) and three were Private sector Banks namely, Housing Development Finance corporation(HDFC),Industrial Credit and Investment Corporation of India(ICICI),and Industrial Development Bank of India(IDBI). SBI and PNB were chosen because they have the largest network of branches in India. ICICI, HDFC and IDBI were the first

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private banks to introduce intelligent banking in India. These banks have a strong retail presence and offer a comprehensive range of information to the customer. They have taken initiatives to satisfy customers and provide value added services. Data from 100 customers were collected. The five banks were contacted individually to obtain the contact addresses of the customers and the questionnaire was administered to customers who had been with the bank for three years. The questionnaire is divided in to five sections. The second part of questionnaire dealt with respondent satisfaction with respect to services and the third part dealt with variables which involve transactions. Customer satisfaction was recorded on a 7 point semantic differential scale ranging from extremely good/satisfied to extremely bad/dissatisfied. The other parts of the questionnaire recorded information about customers experience with their respective banks, their banking habits and demographic information.

3.4 Limitation of the Study The data from the sample may not reflect the universe; since it is restricted only to the only100 customers. There were also time limitations. As the topic is wide, all matters regarding the study could not be analyzed.

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ANALYSIS AND INTERPRETATION

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ANALYSIS AND INTERPRETATION

Table (a)-Customer satisfaction level in SBI

Satisfaction levels percentage Dissatisfied Satisfied Mixed

Number of customer in 25% 50% 25%

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

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

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

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Table -Customer Satisfaction level in IDBI Satisfaction levels Dissatisfied Satisfied Mixed Number of customer in percentage 30.7% 69.2% 0%

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

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

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

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Table 8(e)-Customer Satisfaction level in HDFC Satisfaction levels percentage Dissatisfied Satisfied Mixed 16.6% 63.3% 20.0% Number of customer in

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

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

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

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Ranking score sheet of customer perception-

Service

State

Punjab

IDBI

ICICI

HDFC

Dimension bank of National India Traditional 1 facilities Multi channel banking Internal marketing Bank

SBI

PNB

IDBI

ICICI

HDFC

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INTERPRETATION- This is the graph showing Traditional facilities, Multi channel banking and internal marketing in five Indian banks SBI, PNB, IDBI, ICICI and HDFC. According to traditional facilities SBI is in number one position and HDFC comes in number five position. And IDBI, ICICI and PNB come under the second, third and fourth position respectively. In terms of Multi channel banking ICICI is in first position and PNB is in Number five position. And IDBI, HDFC and SBI come second, third and fourth position respectively. In terms of Internal marketing ICICI is in first position and SBI comes under the fifth position. And HDFC, PNB, IDBI comes under the position of second, third and fourth respectively.

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5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Traditional facilities

SBI

PNB

IDBI

ICICI

HDFC

INTERPRETATION- According to traditional facilities SBI is in number one position and HDFC comes in number five position. And IDBI, ICICI and PNB come under the second, third and fourth position respectively.

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5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Internal marketing

SBI

PNB

IDBI

ICICI

HDFC

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

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5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Multi channel banking

SBI

PNB

IDBI

ICICI

HDFC

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

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RECOMMENDATION

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RECOMMENDATION

46% of the respondents felt that the interest rates on loan were high and hence the interest rates may be reduced to attract more customers. Only 28% of the respondents being female, the bank can look forward to design few more schemes to attract the female customers. Only 22.7% of the respondents having been invested in the third party products the bank can look for promoting the same. The bank also has a huge scope for this, with high income group NRI customers, in the area. Since a large number of the respondents are unaware of the services provided through internet(66%)/ mobile(56.7%) banking; initiatives, such as posting a list of services that are rendered to the customers inside the bank premises, demo of the services in the bank website; can be done to make the customers aware, and use the services provided through ATM, internet and mobile banking of the bank. As the cross tabulation reveal, except one out of the few customers who have been associated with the bank for the past 15-13 years have not been receiving any privilege. It is therefore suggested to give privilege to its long term customers so as to retain them.

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CONCLUSION

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CONCLUSION

The Banking sector in India is undergoing major changes due to competition and the advent of technology. The customer is looking for better quality and services which can provide him/her with satisfaction. This study reveals the different levels of satisfaction that customer had with their banks and helps identify the factors (or relationship dimensions) responsible for satisfying the customer. This would help in enhancing the relationship between the two, and thus aid decision makers in banks to identify the major factors that determine satisfaction. Many service firms, including retail banks have been measuring customer satisfaction and quality to determine how well they are meeting customer needs. This study derives its basic findings and is also in line with empirical findings with respect to customer satisfaction by other researchers. Looking at the demographics of the customer and satisfaction with the services,64 percent customers of IDBI ,ICICI and HDFC are in age group of 25-35 years ,are post graduates and their satisfaction is highest with multi channel banking.71 percent of the customers of SBI are above 35 years, are graduates and their satisfaction is highest with traditional facilities. These findings propose that the private banks namely ICICI, IDBI, and HDFC have been able to attract the younger customers, with higher educational levels, who are comfortable with the usage of multi channel banking. On the other hand the customer of national bank, SBI are older in age and are satisfied with the traditional facilities.SBI with the largest network of branches in India, has given competition to the private banks and has retained its older customers by satisfying them with the traditional facilities.

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BIBLIOGRAPHY

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BIBLIOGRAPHY

1. Dutta

Kirti,

Dutta

Anil;

CUSTOMER

EXPECTATIONS

AND

PERCEPTIONS ACROSS THE INDIAN BANKING INDUSTRY AND THE RESULTANT FINANCIAL IMPLICATIONS; Journal of Services Research, Volume 9, Number 1 (April-September 2009), p31-49. 2. Durkin Mark, O'Donnell Aodheen Mullholland Gwyneth, Crowe Joseph; EBANKING ADOPTION: FROM BANKER PERCEPTION TO CUSTOMER REALITY; Journal of Strategic Marketing, May2007, Vol. 15 Issue 2/3, p237.

Websites: 3. 4. www.southindianbank.com www.bls.gov

5. http://search.ebscohost.com 6. www.researchandmarkets.com 7. www.google.co.in

Books : 8. Katuri Nageswara Rao, IT IN BANKS- STRATEGIC ISSUES, Pg No: 34-42, 53-62. 9. A.N. Sarkar, STRATEGIC BUSINESS MANAGEMENT & BANKING, Pg No:301-311. 10. Jyotsana Sethi and Nishwan Bhatia, ELEMENTS OF BANKING AND INSURANCE, Pg No: 56-66.

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