Bank-customer relationship

Customer satisfaction
 1. Relationship of Debtor and
Creditor
When a customer opens an account with a bank and if the account has a
credit balance, then the relationship is that of debtor (banker / bank)
and creditor (customer). A customer remains a creditor until there is
credit balance in his account with the banker. A customer (creditor) does
not get any charge over the assets of the banker (debtor). The
customer's status is that of an unsecured creditor of the banker.
 2. Relationship of
Pledger and Pledgee
 3. Relationship of
Licensor and Licensee

This happens when the banker gives a sale deposit locker to the
customer. So, the banker will become the Licensor, and the customer
will become the Licensee.
 4. Relationship of
Bailor and Bailee

•Bailment is a contract for delivering goods by one party to another to be held in

trust for a specific period and returned when the purpose is ended.
•Bailor is the party that delivers property to another.
•Bailee is the party to whom the property is delivered.
 5. Relationship of
Hypothecator and Hypothecatee
 6.Relationship of
Trustee and Beneficiary
 7. Relationship of
Principal and Agent
The banker acts as an agent of the customer (principal) by providing the
following agency services:
•Buying and selling securities on his behalf;
•Collection of cheques, dividends, bills or promissory notes on his behalf;
•Acting as a trustee, attorney, executor, correspondent or representative of a
customer.
 Relationship of
Advisor and Client

When a customer invests in securities, the

banker acts as an advisor. The advice can be
given officially or unofficially. While giving
advice the banker has to take maximum
care and caution. Here, the banker is an
Advisor, and the customer is a Client.
 Other relationships:

1.Obligation to honor cheques

2.Secrecy of customer’s account
3.Law of limitation on bank deposits
 The creation of customer satisfaction and customer value is considered
undoubtedly a competitive advantage in today’s competitive banking
industry. In order to maintain and keep their customers satisfied with their
level of service banks need to ensure that the right product, service and
support are available at the right time for their customers.

According to research, a combination of two factors – an emotional

connection with the bank and economic benefits – appears to be an
unbreakable shield for the relationship with customers and should protect
the bank against competition.
 Customer loyalty

A satisfied customer is of great importance for the bank. Keeping a

current customer faithful requires five times less effort, time and money
than getting a new one. Such a customer is willing to pay higher prices,
is a free form of advertising for the bank, and is inclined to purchase
further products.
Service quality
Delivering high quality services enables
companies to respond to competition,
which in turn enables customer
satisfaction and this makes customer
satisfaction a stronger predictor for
customer retention. Price is another
element of customer satisfaction
because price satisfaction enables
actualization of customers’ expectations.
 Trust
Trust is foundation upon which banking relationship is built. Trust is also
recognized as an important construct which can moderate relationship
between satisfaction and loyalty in any relationship, especially if the parties
involved in the relationship are truthful and deliver their promises
according to transaction agreement. Since banking is essentially about trust
therefore, the likelihood that customers of the bank will be satisfied, for
instance if their banks perform banking transactions according to
agreement. Trust is considered to be a significant factor in the path of a
customer to become loyal, because research has shown that most of the
customers appealed to other providers since they have observed a lack of
trust.
Tailored products

It is very important for all the

banks to understand the needs of
the customer and provide
customize services based on their
needs.
 Communication
Free flow of communication is the base of any relation. Employees of banks
should establish an effective communication with the target customers at
every stage of transaction i.e. pre-selling, selling, availing service, and post-
availing stage. Effective communication includes quality information which is
actually suitable to the needs and interests of customers, so helps in
developing strong connections with the customers.
 Commitment

Commitment means keeping a touch with valued customers, providing

trustworthy information on service and service changes
andcommunicating proactively if a delivery problem occurs.
 Empathy
Empathy means the ability to understand and share the feelings of
another There is always a positive association between employee
empathy and customer satisfaction. Hence, employees should
understand the expectations and problems of the customers, should
value their opinions and feelings and react accordingly.
 Financial bonding

Financial bonding includes offering special discounts and special prices,

good and effective loan repayment terms, and effective free services. In
every transaction, customers exchange their hard-earned money for
getting some benefits. If derived value matches with the investment, the
financial bonding will be strong and consequence will be fruitful.
 Cooperation
Cooperation refers to a situation where both the parties work together
to achieve mutual goals. Cooperation helps in developing trust and
finally it gives satisfaction to both the parties.
Technology

Use of technology in banking sector has

enhanced the convenience of banking at
anytime, anywhere as well as reduce the
cost significantly. Hence, customers are
satisfied with usage of technology.
 Impact of
age, gender, level of income,
education, experience

It is further stated that age, gender, education and income levels are
key moderators that are associated with services of banks and
satisfaction in the banking sector.
 Conclusion
In a transaction when both the parties gain something, is called mutual
benefit. With the implementation of relationship marketing in banking sector
both the parties, the banks and the customers gain benefits. Customers get
trust and satisfaction with the fulfillment of their financial needs and finally get
financial stability in their lives. On the other side, database of loyal customers
who keep on cross- buy from the same bank, helps in increasing profitability
and thus helps in long term survival of the firm.