A STUDY ON CUSTOMER SATISFACTION TOWARDS RETAIL BANKING

SERVICES OFFERED BY ICICI BANK IN BHOPAL

Neeraj Patharkar
Assistant Professor,
Department of Management
BSSS, Bhopal
E-mail neeraj_patharkar@yahoo.co.in

ABSTRACT

Indian banking system is among the largest in the world. There has been a great surge in retail
banking which has occurred due to shift in commercial banks from traditional banking activities
to a broad-based lending portfolio and increasingly viewing retail banking as an attractive market
segment with opportunities for growth. The Indian banking industry has undergone radical
changes since 1991. Liberalization and globalization of the Indian economy, together with the
increasing entry of private and foreign banks have opened new vistas for the development of
banking organization in the Indian perspective. Today the private banks like the ICICI, HDFC
and Axis Bank are giving tough competition to the public sector banks in India.

Customers’ satisfaction is an ambiguous and abstract concept and the actual manifestation of the
state of satisfaction will vary from person to person and product/service to product/service. The
state of satisfaction depends on a number of both psychological and physical variables which
correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction
can also vary depending on other options the customer may have and other products against
which the customer can compare the organization's products. With the phenomenal increase in
the country's population and the increased demand for banking services; speed, service quality
and customer satisfaction are going to be key differentiators for each bank's future success.
Nevertheless, there has remained a gap between the services offered by banks in the retail area
and the customer expectations. This paper is an attempt to understand the expectations of
customers with private sector banking and measure the satisfaction of customers with retail
banking services of ICICI Bank in Bhopal.

Keywords: Customer Satisfaction, Customer Expectations, ICICI Bank, Retail Banking Services.

INTRODUCTION

In a competitive market place where businesses compete for customers, customer satisfaction is
seen as a key differentiator and increasingly has become a key element of business strategy.
Schiffman and Kanuk (2004) defines customer satisfaction as “The individual’s perception
of the performance of the product or service in relation to his or her expectations”. The modern
concepts of marketing realized that measuring consumer needs or behavior was not enough.
Consumer satisfaction should be the core and the centre of all the marketing policies of our
organization. Management must think of itself not as a producer of products and creator of the
services but as provider of satisfaction and creator of value to the customers. ‘Customer
satisfaction has a vital role in sustaining and improving hold on the market. Today’s customer
has a high and raising expectation of quality and service. In the face of their vast choices, the
customer will gravitate to the offering that best meet their individual needs and expectations.
Therefore it is not surprising that today’s winning companies are those succeed best in satisfying
indeed delighting their target customer. They pay paramount attention to quality and service to
meeting and even exceeding customer expectation.

Retail Banking refers to consumer banking catering to the needs of individuals and small and
average size companies. Here the relationship size of each account is small but the number of
relationships is huge. The banks develop products based on customer segments like salaried
individuals and students etc. and make them available through their branches. The products are
standardized and the service provided is through alternate channels like phone banking, internet
banking, sms banking etc. Products like car loans, housing loans and personal loans are part of
retail asset loans and accounts like saving accounts, current accounts and fixed deposits are retail
liability products. Since the value of each relationship is small, the impact of one customer
defaulting on a loan is low. So, the retail banking business is said to have diversified their risks.
In the process they extend banking facilities to a large set of people. One can even call this mass
banking or consumer banking.

ICICI BANK AT A GLANCE

ICICI Bank Ltd. is an Indian financial services company headquartered in Mumbai, Maharashtra.
It is the second largest bank in India by assets and third largest by market capitalization. It offers
a wide range of banking products and financial services to corporate and retail customers through
a variety of delivery channels and through its specialized subsidiaries in the areas of investment
banking, life and non-life insurance, venture capital and asset management. The Bank has a
network of 2,883 branches and 10021 ATM's in India, and has a presence in 19 countries,
including India. The bank has subsidiaries in the United Kingdom, Russia, and Canada; branches
in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International
Finance Centre; and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia. The company's UK subsidiary has established
branches in Belgium and Germany. ICICI Bank is one of the Big Four banks of India, along with
State Bank of India, Punjab National Bank and Canara Bank.

ICICI Bank was established by the Industrial Credit and Investment Corporation of India, an
Indian financial institution, as a wholly owned subsidiary in 1994. The parent company was
formed in 1955 as a joint-venture of the World Bank, India's public-sector banks and public-
sector insurance companies to provide project financing to Indian industry. The bank was
initially known as the Industrial Credit and Investment Corporation of India Bank, before it
changed its name to the abbreviated ICICI Bank. The parent company was later merged with the
bank. ICICI Bank launched internet banking operations in 1998. ICICI's shareholding in ICICI
Bank was reduced to 46 percent, through a public offering of shares in India in 1998, followed
by an equity offering in the form of American Depositary Receipts on the NYSE in 2000. ICICI
Bank acquired the Bank of Madura Limited in an all-stock deal in 2001 and sold additional
stakes to institutional investors during 2001-02.In the 1990s, ICICI transformed its business from
a development financial institution offering only project finance to a diversified financial
services group, offering a wide variety of products and services, both directly and through a
number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian
company and the first bank or financial institution from non-Japan Asia to be listed on the
NYSE. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger
of ICICI and its domestic and international subsidiaries.

STATEMENT OF THE PROBLEM

Presently, the Indian Retail Banking industry is experiencing testing time of mature and acute
competitive pressures. Research suggests that customer dissatisfaction is still the major reason of
bank customers switching to other banks. This dissatisfaction could be on account of the gap
between consumer expectations and the offerings of the retail banking institutions. Probably the
public sector banks are not able to deliver the services as per the expectations of the customers
which have paved way to the growth and acceptance of private sector banking in India. A
comprehensive analysis of the customers need and wants is the prerequisite for gaining
acceptance and subsequent competitive edge. There can be variances in the expectation levels of
customers due to the impact of their demographic profile. This can have a significant bearing on
the level of customer satisfaction. This has resulted in the identification of the problem of
customer satisfaction in Indian retail banking sector.

REVIEW OF LITERATURE

Armstrong Robert W & Tan Boon Seng (2000) concluded that relationship marketing and
Guanxi (Chinese business relationships) are significant in our comprehensive model of
corporate-customer satisfaction. Relationship marketing was found to have both a direct and an
indirect impact (through disconfirmation) on corporate-customer satisfaction. Guanxi was found
to exert an indirect impact on satisfaction as opposed to the initial hypothesized direct impact on
satisfaction. This work extends the current understanding of customer satisfaction at the
business-to-business level in the Asian banking industry. The essence of the research highlighted
the importance of relational constructs, in addition to the disconfirmation paradigm, in impacting
customer satisfaction at the business-to-business level in the Singapore banking industry.

Shastri (2001) analyzed the effect and challenges of new technology on banks. He found that
technology has brought a sea change in the functioning of banks and use of ATMs has increased
with the passage of time. The concept of ATM is quite old and has been developing throughout.
No doubt, a fair number of theoretical and empirical researches have been undertaken throughout
the world. In another article James J. Mcandrew (2003) talked about the various utilities of
ATMs which has given world wide popularity. The utilities include withdrawal of cash as per
convenience of the customers than during the banking hours at branches. Besides providing off
time and off shore services, there is reduction of cost of servicing.
Das Manoj Kumar (2006) concluded that 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 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.

Vimi Jham and Kaleem Mohd. Khan (2008) in Singapore Management Review concluded that
satisfaction with banking services is an area of growing interest to researchers and managers.
Building on the synthesis of existing literature on satisfaction and relationship marketing, this
study explores the satisfaction variables within the banking industry. The key findings of an
empirical research are based on the data collected from 555 customers. Systematic methodology,
including design and validation of questionnaire, factor analysis and regression analysis were
utilized to enhance reliability of the findings. The study reinforces that customer satisfaction is
linked with performance of the banks. The authors demonstrate how adaptation of satisfaction
variables can lead to better performance.

OBJECTIVES OF THE STUDY

The major objectives of the study are as under

1. To measure the overall level of satisfaction of customers with the retail banking
services of ICICI Bank.
2. To identify the major factors of customer satisfaction and dissatisfaction in retail
banking.
3. To give the appropriate suggestions for the improvement in the service quality.

RESEARCH METHODOLOGY

DATA COLLECTION

The primary data in this study is collected by using questionnaire method. For this a well-
structured questionnaire based on Likert’s 5-point rating scale has been designed covering all the
important aspects related with retail banking services. The secondary data has been collected
from research papers and articles in journals and various websites from internet.
HYPOTHESIS OF THE STUDY

The following hypothesis has been framed for the study:-

1Ho : There is statistically no significant difference in the level of satisfaction amongst the male
and female customers pertaining to retail banking services of ICICI Bank at 5% level of
significance.

1Ha : There is statistically significant difference in the level of satisfaction amongst the male and
female customers pertaining to retail banking services of ICICI Bank at 5% level of significance.

SAMPLING PROCEDURE

The proposed study was conducted by using random sampling technique. The sampling unit will
be the customers of various branches of ICICI bank randomly selected for the study from Bhopal
city. The prerequisite for a legitimate respondent was to have a saving account in any local
branch.

SAMPLE SIZE

For this study, the sample size is 100 respondents consisting of 50 male and 50 female retail
banking customers of various branches of ICICI bank in Bhopal.

LIMITATIONS OF THE STUDY

1. The study is confined to only Bhopal, the capital city of M.P. in India.
2. The sample size is 100 hence findings cannot be generalized.
3. The respondents may be biased sometimes.
4. Customer preferences and opinions are bound to change from time to time.

ANALYSIS & INTERPRETATION

The data collected was analyzed by using percentage method and hypothesis testing was done by
applying Chi-Square test using MS Excel.

1Ho : There is statistically no significant difference in the level of satisfaction amongst the male
and female customers pertaining to retail banking services of ICICI Bank at 5% level of
significance.
1Ha : There is statistically significant difference in the level of satisfaction amongst the male and
female customers pertaining to retail banking services of ICICI Bank at 5% level of significance.

Observed Frequency

Variable Male Female Total

Satisfied 24 30 54
Neutral 6 7 13
Dissatisfied 20 13 33
Total 50 50 100

Expected Frequency

Variable Male Female Total

Satisfied 27 27 54
Neutral 6.5 6.5 13
Dissatisfied 16.5 16.5 33
Total 50 50 100

Interpretation

Chi Square Statistics (P-value= 0.328171),

If P-value > 0.05, Null Hypothesis is accepted

Since 0.328171> 0.05, therefore Null Hypothesis is accepted and Alternate Hypothesis is
rejected.

MAJOR FINDINGS

1. There is no significant difference in the level of satisfaction amongst the male and female
customers pertaining to retail banking services.
2. Majority of the customers are satisfied with the convenient location, nice and comfortable
ambience and layout of their bank’s branch.
3. Majority of the customers are satisfied with the smartness, promptness, professionalism,
transparent and fair dealing of their bank’s employees.
4. Majority of the customers are satisfied with the safe and secure environment while doing
transactions with the bank.
5. Majority of the customers are satisfied with the efficiency of customer help desk facility
in resolving their queries.
 6. A significant percentage of the customers are not satisfied with credit card services,
internet and mobile banking services of the bank.

7. Majority of the customers are not satisfied with the competitiveness of the interest rate
offered by their bank on various deposits.
8. Majority of the customers are not satisfied with the competitiveness of the rate of interest
charged by their bank on the loans.

9. Majority of the customers are satisfied with the overall service quality of retail banking
services offered by their bank.
10. There is a balance view amongst the customers regarding recommending their bank to
their friends, relatives and associates.

SUGGESTIONS

On the basis of findings of the study the following are the steps suggested for improving the
retail banking services of ICICI bank:

1. ICICI bank should take precautions to keep customers experience safe. It should take
continued efforts to safeguard the interest of customers.
2. Bank should focus on the marketing of their services through proper segmentation,
targeting and positioning.
3. Bank should focus on developing customized products or services to cater the need of the
different segments of customers in the market.
4. The bank should promote more online transactions through E-banking to reduce long
queues.
5. The bank should come up with innovative ways of services at the door step of customers,
this may be a costly affair, but will surely give positive results in the long run.
6. Bank should provide adequate parking facilities to their customers.
7. The complex documentation procedure followed in banks should be simplified to enable
fast processing of loans.
8. There should not be any charge on ATM transactions and customers should be allowed
unlimited transactions.
9. There should be proper security arrangements at the ATMs.
10. The sms alert service needs improvement as several customers are not getting timely
message of their transactions.

CONCLUSION

Today customers are more aware, quality conscious and demanding. Due to change in the life
style and time constraints the expectations of the customers from their retail banking
organizations are increasing day by day. This has posed greater challenges for the retail banking
sector and simultaneously it has provide them an opportunity to deliver their services in an
innovative and customer friendly manner. The private banks need to recognize the benefits that
customer satisfaction provides and accordingly frame customer friendly and appealing marketing
strategies for the retention of existing bank customers and to attract new customers to expand
their market base as they are not backed up by the Government. In the present competitive era of
globalization, banks can’t afford to lose customer loyalty. Therefore they are come up with
teasing, innovative and lucrative offers. On analyzing the data several factors leading to
satisfaction as well as dissatisfaction amongst the customers were identified. The study has given
various fruitful suggestions to the banking organizations to enable them to redesign their market
segmentation, targeting and positioning strategies to cater the needs of the customers of different
demographic profiles more effectively.

REFERENCES
Armstrong, Robert W. and Tan Boon Seng.(2000), “Corporate-Customer Satisfaction in the
Banking Industry of Singapore”   International Journal of Bank Marketing; 18(3):97-111.

Dash Manoj Kumar (2006), “Measuring Customer Satisfaction in the Banking Industry” March
2006 www.researchersworld.com/vol2/issue4/Paper_20.pdf.

Leon G. Schiffman and Leslie Lazar Kanuk , ‘Consumer Behavior’6/e Prentice Hall, 2004.  

McAndrews, J. J. (2003), “Automated Teller Machine Network Pricing – A Review of the

Literature,” available at http://www.rnejournal.com/articles/

Shastri R. V. (2001), “Technology for Banks in India – Challenges”, IBA Bulletin, Vol.XXIII,
No. 3 (March), pp 23-45.

Vimi Jham and Kaleem Mohd. Khan (2005), “Insights into Customer Interactions in the Banking
Industry: A Qualitative Relationship Marketing Study”, Review of Professional Management,
Vol. 3, No. 1, pp. 10-17.

http:/ / www.icicibank.com
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