Summer Final Project

8/3/2019 Summer Final Project

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AN INTRODUCTION TO THE BANKING SECTOR IN

INDIA

Banks are the most significant players in the Indian financial

market. They are the biggest purveyors of credit, and they also attract

most of the savings from the population. Dominated by public sector,

the banking industry has so far acted as an efficient partner in the

growth and the development of the country. Driven by the socialist

ideologies and the welfare state concept, public sector banks have

long been the supporters of agriculture and other priority sectors. They

act as crucial channels of the government in its efforts to ensure

equitable economic development.

The Indian banking can be broadly categorized into nationalized

(government owned), private banks and specialized banking

institutions. The Reserve Bank of India acts a centralized body

monitoring any discrepancies and shortcoming in the system. Since

the nationalization of banks in 1969, the public sector banks or the

nationalized banks have acquired a place of prominence and hassince then seen tremendous progress. The need to become highly

customer focused has forced the slow-moving public sector banks to

adopt a fast track approach. The unleashing of products and services

through the net has galvanized players at all levels of the banking

and financial institutions market grid to look anew at their existing

portfolio offering. Conservative banking practices allowed Indian

banks to be insulated partially from the Asian currency crisis. Indian

banks are now quoting al higher valuation when compared to banks in

other Asian countries (viz. Hong Kong, Singapore, Philippines etc.)

that have major problems linked to huge Non Performing Assets

(NPAs) and payment defaults. Co-operative banks are nimble footed


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in approach and armed with efficient branch networks focus primarily

on the high revenue niche retail segments.

The Indian banking has finally worked up to the competitive

dynamics of the new Indian market and is addressing the relevant

issues to take on the multifarious challenges of globalization. Banks

that employ IT solution are perceived to be futuristic and proactive

players capable of meeting the multifarious requirements of the large

customers base. Private Banks have been fast on the uptake and are

reorienting their strategies using the internet as a medium The

Internet has emerged as the new and challenging frontier of

marketing with the conventional physical world tenets being just as

applicable like in any other marketing medium.

The Indian banking has come from a long way from being a

sleepy business institutions to a highly proactive and dynamic entity.

This transformation has been largely brought about by the large dose

of liberalization and economic reforms that allowed banks to explore

new business opportunities rather than generating revenues from

conventional streams (i.e. borrowing and lending). The banking in

India is highly fragmented with 30 banking units contributions to

almost 50% of deposits and 60% of advances. Indian nationalized

banks (banks owned by the government) continue to be the major

lenders in the economy due to their sheer size and penetrative

networks which assures them high deposit mobilization. The Indian

banking can be broadly categorized into nationalized, private banks

and specialized banking institutions.

The Reserve Bank of India acts as a centralized body monitoring

any discrepancies and shortcoming in the system. It is the foremost


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monitoring body in the Indian financial sector. The nationalized banks

(i.e. government-owned banks) continue to dominate the Indian

banking arena. Industry estimates indicate that out of 274

commercial banks operating in India, 223 banks are in the public

sector and 51 are in the private sector. The private sector bank grid

also includes 24 foreign banks that have started their operations

here.

The liberalize policy of Government of India permitted entry to

private sector in the banking, the industry has witnessed the entry of

nine new generation private banks. The major differentiating

parameter that distinguishes these banks from all the other

banks in the Indian banking is the level of service that is

offered to the customer. Their focus has always centered

around the customer understanding his needs, preempting

him and consequently delighting him with various

configurations of benefits and a wide portfolio of products and

services. These banks have generally been established by promoters

of repute or by high value domestic financial institAXISons.

The popularity of these banks can be gauged by the fact that in

a short span of time, these banks have gained considerable customer

confidence and consequently have shown impressive growth rates.

Today, the private banks corner almost four per cent share of the

total share of deposits. Most of the banks in this category are

concentrated in the high-growth urban areas in metros (that account

for approximately 70% of the total banking business). With efficiency

being the major focus, these banks have leveraged on their strengths

and competencies viz. Management, operational efficiency and


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flexibility, superior product positioning and higher employee

productivity skills.

The private banks with their focused business and serviceportfolio have a reputation of being niche players in the industry. A

strategy that has allowed these banks to concentrate on few reliable

high net worth companies and individuals rather than cater to the

mass market. These well-chalked out integrates strategy plans have

allowed most of these banks to deliver superlative levels of

personalized services. With the Reserve Bank of India allowing these

banks to operate 70% of their businesses in urban areas, this

statutory requirement has translated into lower deposit mobilization

costs and higher margins relative to public sector banks.

PEST ANALYSIS

TECHNOLOGICAL ENVIROMENT

Technology plays a very important role in banks internal control

mechanisms as well as services offered by them. It has in fact given

new dimensions to the banks as well as services that they cater to and

the banks are enthusiastically adopting new technological innovations

for devising new products and services.

The latest developments in terms of technology in computer and

telecommunication have encouraged the bankers to change theconcept of branch banking to anywhere banking. The use of ATM and

Internet banking has allowed anytime, anywhere banking facilities.

Automatic voice recorders now answer simple queries, currency

accounting machines makes the job easier and self-service counters

are now encouraged. Credit card facility has encouraged an era of


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cashless society. Today MasterCard and Visa card are the two most

popular cards used world over. The banks have now started issuing

smartcards or debit cards to be used for making payments. These are

also called as electronic purse. Some of the banks have also started

home banking through telecommunication facilities and computer

technology by using terminals installed at customers home and they

can make the balance inquiry, get the statement of accounts, give

instructions for fund transfers, etc. Through ECS we can receive the

dividends and interest directly to our account avoiding the delay or

chance of loosing the post.

Today banks are also using SMS and Internet as major tool ofpromotions and giving great AXISlity to its customers. For example

SMS functions through simple text messages sent from your mobile.

The messages are then recognized by the bank to provide you with the

required information.

All these technological changes have forced the bankers to adopt

customer-based approach instead of product-based approach.

ECONOMICAL ENVIROMENT

Banking is as old as authentic history and the modern

commercial banking are traceable to ancient times. In India, banking

has existed in one form or the other from time to time. The present era

in banking may be taken to have commenced with establishment of

bank of Bengal in 1809 under the government charter and with

government participation in share capital. Allahabad bank was started

in the year 1865 and Punjab national bank in 1895, and thus, others

followed

Every year RBI declares its 6 monthly policy and accordingly the

various measures and rates are implemented which has an impact on


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the banking sector. Also the Union budget affects the banking sector to

boost the economy by giving certain concessions or facilities. If in the

Budget savings are encouraged, then more deposits will be attracted

towards the banks and in turn they can lend more money to the

agricultural sector and industrial sector, therefore, booming the

economy. If the FDI limits are relaxed, then more FDI are brought in

India through banking channels.

POLITICAL/ LEGAL ENVIROMENT

Government and RBI policies affect the banking sector.

Sometimes looking into the political advantage of a particular party,

the Government declares some measures to their benefits like waiver

of short-term agricultural loans, to attract the farmers votes. By doing

so the profits of the bank get affected. Various banks in the

cooperative sector are open and run by the politicians. They exploit

these banks for their benefits. Sometimes the government appoints

various chairmen of the banks.

Various policies are framed by the RBI looking at the present

situation of the country for better control over the banks.

SOCIAL ENVIROMENT

Before nationalization of the banks, their control was in the

hands of the private parties and only big business houses and the

effluent sections of the society were getting benefits of banking in

India. In 1969 government nationalized 14 banks. To adopt the social

development in the banking sector it was necessary for speedy


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economic progress, consistent with social justice, in democratic

political system, which is free from domination of law, and in which

opportunities are open to all. Accordingly, keeping in mind both the

national and social objectives, bankers were given direction to help

economically weaker section of the society and also provide need-

based finance to all the sectors of the economy with flexible and liberal

attitude. Now the banks provide various types of loans to farmers,

working women, professionals, and traders. They also provide

education loan to the students and housing loans, consumer loans, etc.

Banks having big clients or big companies have to provide

services like personalized banking to their clients because thesecustomers do not believe in running about and waiting in queues for

getting their work done. The bankers also have to provide these

customers with special provisions and at times with benefits like food

and parties. But the banks do not mind incurring these costs because

of the kind of business these clients bring for the bank.

Banks have changed the culture of human life in India and have

made life much easier for the people.


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7 PS of BANKING SECTOR

It is very important for any bank to identify the 7 Ps of services so

was understands their customers better and provide them with best of

service. The 7 Ps are:

1. PRODUCT MIX

2. PRICE MIX

3. PLACE

4. PROMOTION

5. PEOPLE

6. PROCESS7. PHYSICAL EVIDENCE

PRODUCT MIX

The product mix of a company includes all different product lines

a company offers to its customers. The product line of a bank might

easily include more than 100 different services. In todays competitive

scenario it has become very necessary for a bank to provide its

customers with a wide variety of services and the best technology in

order to attract them. Here is an example of some of the products

offered by AXIS Bank to its customers.
http://images.google.co.in/imgres?imgurl=http://www.topnews.in/files/axisbank-logo.jpg&imgrefurl=http://www.topnews.in/analyst-views/hitendra-vasudeo&h=265&w=778&sz=18&hl=en&start=1&usg=__PuWHBIsUBpKL2lSwgh1TXXWAn_0=&tbnid=UGNIVzyLRitjlM:&tbnh=48&tbnw=142&prev=/images%3Fq%3Daxis%2Bbank%2Blogo%26gbv%3D2%26hl%3Den


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Offering

AXIS Bank's Savings Account is just the right product for everyone,

salaried, employees or businessmen, high net worth individuals and

NRI's. The unmatched package of AXIS Bank Savings Bank account

given below brings the benefits of better, efficient and hassle free

banking.

ATM Network

A Savings Bank Account with AXIS Bank entitles you to a free ATM

card, which enables you to access your account anytime and at any

ATM centre across the country. You can withdraw and deposit money

and cheques with your ATM card. Unlike most other ATMs, a AXIS Bank

ATM allows you to withdraw up to Rs. 20,000 a day. In addition, cash

can be withdrawn from any of the ATMs against your MasterCard

(domestic/international).

7-Day Banking

At select branches spread over the country, you can bank on all the 7

days of the week (except for public holidays), over extended working

hours.

Telebanking

Telebanking service provides you instant access to your account. It

offers you a wide range of services over the phone such as account

information, Balance Enquiry, Transaction Details, Statement ofAccount, Status of your Cheque , etc.
http://www.utibank.com/atm/atmlocate.asphttp://www.utibank.com/telebank/telebanking.htmlhttp://www.utibank.com/atm/atmlocate.asphttp://www.utibank.com/telebank/telebanking.html


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iConnect-Internet Banking

This is the concept of "the Bank on your desk-top". You can look-up thestatus of your account, query and undertake a range of financial

transactions, simply by clicking the mouse. Now don't you think you

have a great opportunity to see yourself laughing your way to the

bank?

Offering

AXIS Bank has joined hands with Citibank, to give rise to a new kind of

card power - unique and unmatched benefits and international AXISlity

at the most competitive rates. The AXIS Bank Citibank International

Silver Card, the MasterCard and 'Unique' Card offers quite a few

benefits.

Rewards

AXIS Bank Citibank Card combines dual conveniences of high purchase

power and flexible payment facility. Purchase of high-value items is

now convenient and when it comes to payback time, your bill can be

paid in installments, depending on your financial liquidity at a given

moment. The Revolving Credit Facility lets you pay as little as 5% of

your total outstanding every month. Giving you the power to buy now

and pay later in parts!

Dial-A-Draft

One can use your AXIS Bank Citibank Card to pay for your personal
https://www.utibank.co.in/BANKAWAY?IWQRYTASKOBJNAME=bay_sign_on&BAY_BANKID=211https://www.utibank.co.in/BANKAWAY?IWQRYTASKOBJNAME=bay_sign_on&BAY_BANKID=211


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expenses at places where credit cards are not accepted yet. Like

paying for investments, telephone and electricity bills, school fees and

much more. Just call CitiPhone and the draft you need will be delivered

to you!

Credit Limit Increase

You can call CitiPhone and ask for a Credit Limit Increase in the event

that you have to make a large purchase on your card urgently. It's

especially handy for paying off vehicle repairs, telephone bills and

electricity bills. And for anniversaries, weddings, birthdays, or business

trips or when a holiday goes beyond budget

24-Hour ATMs

One can withdraw emergency cash up to 60% of your credit limit from

24-Hour ATMs in Ahmedabad, Bangalore, Calcutta, Chennai, Delhi,

Hyderabad, Mumbai and Pune. While traveling overseas you can draw

cash from MasterCard ATMs spread across the globe. The same is

applicable for any Citibank branch. Also the cash you withdraw is

insured against theft for a period of 12 hours after withdrawal. A neverbefore facility is brought to you with the AXIS Bank Citibank Card at a

transaction fee of 2.5% or Rs.50 whichever is higher. All cash advances

also carry a service charge from the date of the transaction. The cash

withdrawal limit for the first year is Rs. 5,000.

Photo card

One may choose to have your photograph and signature digitally

imprinted on the front of your Card in color. So that you get the extra

recognition and security you expect as a AXIS Bank Citibank card

member

Concession on Personal Remittances


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PRODUCT WIDTH AND DEPTH

Width

Width of the product mix is the number of product lines a

company is offering. The product width could be a narrow one or a

wide one depending from bank to bank. A wide mix encourages more

sales since the banks are able to diversify and provide more to theircustomers and they also appeal to a larger target market.

Depth

Depth of the product mix is the number of product items in each

product line. Banks with more schemes and services have more depths

than those offering only a few.

Here is table giving an example of Width and Depth in the Product Mix:

Similarly, different banks plan out their product portfolios and

based on that, the depth and width of their product mix can be

determined.


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In todays scenario, where there is cutthroat competition and

new foreign banks entering the Indian markets, it has became more or

less like a law to have very wide product lines with more and more

number of products in each line.

PRODUCT LEVELS

Core Benefit:

It is the main or core reason why the customer will buy the

service of the bank. More like the basic purpose or necessity.

Basic Product:

The core benefit is converted into a basic product. That is the

service can used by the customer in order to fulfill his/her needs.

Expected Product:

It refers to the set of attributes and conditions expected by the

customers when they purchase the service.

Augmented Product:

It is the additional feature that the banks provide which exceeds

the customers expectations.

Potential Product:

Innovations and product differential is the bases of a Potential

Product. If the banks alter its services according to the requirements ofthe individual customers it reaches this level.

Core

Product

Basic

Product

Expected

Product

Augmented

Product

Potential

Product

The basic Safety of Timely service Goods waiting Mobile and


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necessity to use

bankingservices in

order to handle

finance more

efficiently

deposits

Loanable fundsetc.

Long banking

hoursLow interest

rates

rooms

Extensive ATMnetwork

Promotional

Discounts

internet

BankingNew Schemes

tailored for

specific

customers

Thus it can be seen how a particular product passes through

different levels. In todays competitive scenario most banks try offering

services at the Augmented and Potential level.

PRICE MIX

The price mix in the banking sector is nothing but the interest

rates charged by the different banks. In todays competitive scenario

where customer is the king, the banks have to charge them interest at

a rate in accordance with the RBI directives. Banks also compete in

terms of annual fees for services like credit cards, DMAT etc. Another

important aspect of the banks pricing policy today is the interest

charged on the Home Loans and Car Loans. With Indias economy

progressing, there are more and more buyers seeking these loans but

at a very competitive interest rate.

Lets understand this with an example. A particular buyer

approaches a bank for a car loan for a period of 3 years. He is charged

Rs. 20,000 as interest. However, if a sale representative of another

bank comes to know of this deal, he will try to attract the customer by

giving him a better deal i.e. a loan at a lower rate on interest. In this

way, it is the customer that ultimately benefits.Here is an example of some of the prices charged by ICICI bank

for their services


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ATM Card Issue Free 2 ATM cards issued free if it

joint accountAdd on Card RS. 100 Beyond 2 cards

Duplicate Card Rs. 100

Other General Charges

Current Account Savings Account

Transaction Charges NIL NIL

Charges for issue of

Cheques book

NIL NIL

Issue of duplicate statement Rs. 25 per page Rs. 25 per page

Account closure Rs.100 Rs.100

This example evinces some of the charges that the customer has

to pay for the services provided by the bank.

The pricing factor is very important because of the kind of

competition that is prevailing today in the Indian market. However it is

very important to understand that in the banking sector, the main

pricing policy is concerned with the interest rate charged. This interest

rate is however regulated by the RESERVE BANK OF INDIA and THE

INDIAN BANKING ASSOCAITION. Any one particular bank or a group of

banks does not regulate it. The interest rate charged cannot be higher

than that decide by the RBI and the INDIAN BANKING ASSOCIATION.

Thus, inspite of the constraints in the pricing policy due to the

RBI directives there are mainly three types of pricing methods adopted

by banks. They are:

Value pricing:


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Banks having unique or different products or schemes mainly do

this type of pricing. They usually charge a combination of high and low

prices depending on the customer loyalty as well as the products. This

type of pricing strategy is usually coupled with promotion programmes.


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Going Rate pricing:

The most commonly used pricing technique is the going rate

pricing. In going rate pricing, the bank bases its price largely

depending on the competitors prices. The banks however have to staywithin the RBI directives and compete. The banks may charge higher

or lower than their competitors. After 1991 when the foreign banks

entered the Indian market this method of pricing has gained increasing

importance.

Mark up pricing:

This is a pricing technique wherein the cost of the service is

determined and a small margin is added to it and then the final price is

offered to the customers. This type of pricing is the not very popular

since in the banking sector it is not very easy to arrive at the cost of

the service. Thus most banks use a combination of mark up pricing

and going rate pricing.


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THE MOST FAVORABLE PRICING STRATEGY

This model shows a pricing strategy, which should be adopted in

order to ensure maximum satisfaction to both the bank as well as the

customers.

The price should be set in such a manner that the customer is

assured that he is not being cheated or overcharged by the bank and

at the same time the bank is able to reap maximum profits. Such a

pricing stand helps the bank get maximum sales as well as profits

since the customer feels that by entering such a transaction he is

winning.

PLACE MIX

Place mix is the location analysis for banks branches. There are

number a factors affecting the determination of the location of the


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branch of bank. It is very necessary a bank to situated at a location

where most of its target population is located.

Some of the important factors affecting the location analysis of a

bank are:

1. The trade area

2. Population characteristics

3. Commercial structure

4. Industrial structure

5. Banking structure

6. Proximity to other convenient outlets7. Real estate rates

8. Proximity to public transportation

9. Drawing time

10. Location of competition

11. Visibility

12. Access

It is not necessary that all the above conditions have to be satisfied

while selecting the location but it should be tried to satisfy as many of

them as possible.

1. The Trade Area:

The trade area is a very important factor determining the place

where a bank branch should be set up. For e.g. a particular location

maybe a huge trading place for textiles, diamonds or for that caseeven the stock market. Such locations are ideal for setting up of bank

branches.


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2. Population Characteristics:

The demography of a place is a very important factor. This

includes:

The income level of the population

The average age

The average male female population

The caste, religion, culture and customs

The average spending and saving habit of the people.

These factors are very important for a bank as the help them

decide the kind of business the branch will get.

3. Commercial Structure:

The commercial structure refers to the level of commerce i.e.

business activities taking place at a particular location. The higher the

level of business activities taking place in a particular location the

more preferable it is for setting up a bank branch.

4. Industrial Structure:

This is nothing but a combination of the trade area analysis and

the commercial structure. However the industrial structure focuses

more on the kind of industries operating in a particular location. For

example, an area like SEEPZ is marked with a lot of electronic

manufacturing units. Thus the industrial stricture determines the kind

of financial transactions that could take place in a particular location.

5. Banking Structure:

The Banking structure refers to the existence of other banks in

the area. Whether there is already an efficient network of other bank


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branches operating at that particular area. Thus the overall

infrastructure needed for the working of a bank.

6. Proximity of other convenient outlets:

This refers to the other branches of the same bank as well other

commercial, entertainment and industrial outlets.

7. Real Estate Rates:

This is mainly dealing with the cost factor involved in opening up

a bank branch at a particular location. The real estate rate is a very

strong factor influencing the location decision for a bank branch.

8. Proximity to public transportation:

The location should be proximate to public transportation

facilities. This means it should have bus stops close by as well as it

should be proximate to railway stations so as to make it convenient for

the common man.

9. Drawing Time:

Drawing time refers to the time period during which a customer

can draw money from the banks. It should be convenient to the

customer and somewhat flexible to accommodate the customers

needs. No bank has more than a certain amount with them and in case

a customer wants to withdraw an amount more than that available

with the bank, the bank needs to draw that amount from other banks.

Hence, a location must be such that it facilitates minimum drawing

time.

10. Location of Competition:


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The existence of other banks also means competition. If the level

of competition is very high in a particular location, it is necessary that

a bank does a lot of market research before opening a branch so as to

estimate the kind of business it would get.

10. Visibility:

The location of a branch should be such that it is visible and

easily noticed by the customers as well other people.

10. Access:

The bank branch should be very easily accessible to the

customers. If this is not the case, the customer might switch to some

other bank, which is more convenient to him and very easily

accessible. The location should be such that it is very convenient for

the customer to reach.


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Promotion Mix

Promotion is nothing but making the customer more and more

aware of the services and benefits provided by the bank. The banks

today can use a lot of new technology to communicate to their

customers. Two of the fastest growing modern tools of communicating

with the customers are:

1. Internet Banking

2. Mobile Banking

This can be better explained with the example of ICICI bank.

SMS services

SMS functions through simple text messages sent from your

cellular phone. These messages are recognized by ICICI bank to

provide you with the required information.

For example, when you enter IBAL your cellular phone screen

will display the current balance in your primary account. Thus with the

help of SMS a wide range of query based transactions can be

performed without even making a call.

ICICI was the first organization in India to provide Wireless

Application Protocol (WAP) based services. Mobile commerce using


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WAP technology, allows secure online access of the web using mobile

devices. With WAP one can directly access the ICICI WAP server, check

ones account details and use other value added services.

Thus different methods are used by different banks to promoter

its services.

A bank may have very attractive schemes and services to offer

to their customers but they are of no use if they are not communicated

properly to the customers. Promotion is o inform and remind the

individuals and persuade them to accept, recommend or use of

product, service or idea. However there some very important points

that is to be considered before the promotion strategy is made. These

points are:

Finalizing the Budget

Before the bank decides the kind of promotion that should be

done, it very important to finalize the budget for it. The formulation of

a sound budget is essential to remove the financial constraints in the

process. The budget is determined on the basis of volume of business

of the bank. In addition to this the intensity of competition also plays a

decisive role.

Selecting a suitable vehicle

Another very important task is to select a suitable vehicle for

driving the message. There are a number of devices to advertise such

as broadcast media, telecast media and the print media. The selecting

of the mode of advertising is strongly influenced by the kind of budget

decided. Usually for promoting banks the most effective and

economical form of advertising has been the print media.


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Making possible creativity

Making possible creativity is nothing but the kind of slogans,

punch lines etc. that are supporting the message. They should be very

creative but yet simple to be understood by the common man. Itshould appeal to the customers. It should be distinct from that of the

competitors and should be successful in informing and sensing the

customers.

Testing the Effectiveness

It should be borne in mind that the advertisement is first tested

for its effectiveness. This should be done with the help of varioustechniques like testing effectiveness on a sample group. This helps

determine the success of the advertisement and in case of any

problem the advertisement can be altered and remedied.

Instrumentality of Branch Managers

At a micro level, it is the responsibility of the branch managers to

promote and drive the message to the people in the local area. They

should organize small programs in order to attract people and crate

awareness in the local area about the new schemes of the bank.

Different Ways of Promotion

Public Relations:

In todays competitive scenario developing strong public

relations is very important for any bank to be successful. Most bankstoday have a separate Public Relations department. However primarily

it is considered as a responsibility of the various bank managers to

develop a steady and strong relationship with their present customers


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as well as potential customers. This can be done by a constant follow

up, small programmes etc.

Personal Selling:

Personal selling is found to be one of the most effective and

popular forms of promoting bank business. The main reason for this is

that banking is a service in which trust plays a very important role. In

personal selling, a bank representative goes to the customers and

explains the scheme to the customers. Also he gives the customers

any kind consultation he might need. He provides the customers all the

information sought by him. The representative tries to persuade the

customers to go for the scheme provided by the bank by telling him all

the benefits. Here are some of the important features of personal

selling

It is a direct relation between the buyers and the seller

It is oral presentation in conversation

It is personal and social behavior

It is found to be more effective in service oriented organizations

It is based on the professional excellence or expertise of an

individual

Sales Promotion:

Sales promotions are basically giving the customers some

additional benefits, maybe at times just some small gifts, in order to

promote the schemes. The more innovative the sales promotions the

more positive are the results. Some of the most popular sales

promotions techniques are gifts, contests, fairs and shows, discounts

and commission, entertainment and traveling plans for bankers,

additional allowance, low interest financing etc. It is very important


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that the sales promotions benefits are designed in such a manner that

they are better than those of the competitors.


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Word of mouth Promotion:

This form of promotions is not only very effective in banking

services but in any kind of service. However it is more important in

banking for the only reason that this is a service where trust plays avery important role. If a particular banks services are recommended

by friends, relatives, or other well wishers the person is more

influenced and inclined towards that bank. It is very important to note

that the internal employees of the bank play a very important role in

word of mouth promotion technique. This is because they can start

the process by recommending the bank to their friends and relatives

and after that it is like a chain, which spreads like a wild fire.

Telemarketing:

In recent times telemarketing has gained increasing importance

as an effective tool for promotion. The telemarketing is a process of

making use of sophisticated communication network for promoting the

banks. This includes promoting through television, telephone, and

radio. Nowadays, cell phones are used extensively for the same. This is

the most popular form of promotion. Banks today have started using

SMS and many other services supported by cell phones to provide

benefits to their customers and thus have tried to increase their sales.

In todays competitive and modern scenario it very important that

banks makes use of telemarketing techniques very efficiently to have

desirable results.

Internet:

The use of Internet as a promotional tool is increasing. More and

more banks are using Internet to promote their services. The online

banking has made it even easier for the customers to avail the banks

services. No longer do people have to go to their bank branches for


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small petty matters like checking their balance etc. All this can be

done with the help of a few clicks.

Thus, these were the numerous ways in which a bank can

promote its services and create more awareness amongst the people.

People

People are the employees that are the service providers. In a

banking sector, the service provider plays a very important and

determinant role in rendering the customers a satisfactory and a goodservice. It is extremely essential that the service provider understand

what his customers expect from him. In the banking sector, the

customer needs to be guided in a lot of matters, which is possible only

with the help of the service provider.

The position in the eyes of the customer will be perceived by

appearance, attitude and behavior of the customer contact employees.

Not only does the customer contact employee influence the customers

perception but also the customer base of the organization does so.

Process Mix

The process mix constitutes the overall procedure involved in

using the services offered by the bank. It is very necessary that the

process is very customer friendly. In other words a process should be

such that the customer is easily able to understand and easy to follow.

Today if particular banks formalities are long and the procedure very

complicated the overall process fails and the customer may not be

inclined towards using that banks services.


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Lets take for example the process for application for a car loan.

Now this mainly involves 3 things.

1. Producing of proper documents

2. Filling up of application form

3. Paying for the initial down payment.

Here the process may fail in the following cases:

1. If the customer is asked to produce a number of forms out of

which some may not be necessary at all. Thus it is very

necessary that the customer be asked for the minimum but most

necessary document and not the other unnecessary documents.

2. In case of application form, the application form must be in a

language best understood by the customers and it should not be

very lengthy one or demanding a lot of unnecessary information.

3. Finally the payment of initial amount. The customer should be

given options as to how he would like to pay by cheques or by

credit card. Once again the amount should be very competitive

not very high above the regular rates prevailing in the markets.

The smaller and simpler the procedure, the better the process, and

the customer will be more satisfied.


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PHYSICAL EVIDENCE

Physical evidence is the overall layout of the place i.e. how the

entire bank has been designed. Physical evidence refers to all those

factors that help make the process much easier and smoother. For

example, in case of a bank, the physical evidence would be the

placement of the customer service execAXISves desk, or the location

of the place for depositing cheques. It is very necessary that the place

be designed in such a manner so as to ensure maximum convenience

to the customer and cause no confusion to him.

Let us see an example as to how banks try to make little changesso as to make the service better for their customers.

The Hong Kong Shanghai Banking Corporation (HSBC) has

decided in introducing a common uniform for all the employees in all

its branches all over India. The plan is possibly in line with the

aggressive retail banking adopted by HSBC. A common uniform its

nothing like a revolAXISonary change but however this little change

makes it very easy for the customer to identify with his service

provider and makes the entire process very easy for him. The more the

bank does to make the service easier and better the more satisfied will

be the customer.

Thus, these are the 7 Ps of services. Each of them plays a very

important and a pivotal role in determining the quality of the service

provided to the customer.


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THE 4 Is OF BANK MARKETING

There are four distinctive characteristics of service, which create

challenges and opportunities. They are commonly known as the four Is

namely:

1. Intangibility

2. Inconsistency

3. Inseparability

4. Inventory.

1.)Intangibility

It is that characteristics of a service indicating that it has no

physical attributes that a person may feel, hear, taste before they buy

it.

For example, a person who is new to a bank and wants to open up

an account in the bank cannot feel or taste it and ascertain whether

the bank is good or bad before opening an account. He has to

experience it, feel how the service is, how humbly do people or the

staff members behave with him, is his money invested or put in a safe

account or not. It is only then he would come to know about the

services. This could be done only from the trust that he would have

built up, as these things cannot be inspected before the use.

Therefore, most banks now a days, indulge in tangibilizing the

intangibles i.e. they provide tangible clues to the prospective

customers like the different awards that they have received for their

superior services, their annual records, etc. this helps the customers in

selecting the banks more easily.


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2.)Inconsistency

It refers to variability or heterogeneity. In case of a bank, a new

customer or a rarely going customer may not get the same type of

service as a regular customer may get. This may be the case because

the staff members know the person well as he comes often but they

dont know that person who does not come in again and again.

Also another point for inconsistency is that there is variability in

the service delivered by different people, that is services delivereddiffers from people to people. Like in case of a bank, different staff

members would provide different services. In the bank, a person may

have lot of work and may not attend to a customer .On the other hand,

some other person with the same work may attend him with great

enthusiasm. In order to tackle this inconsistency aspect, adequate

training and motivation must be provided to the employees. This will

result in higher number of customers for the bank, higher profits and

subsequently lower retention rate.

Eg. PUNJAB NATIONAL BANK prides itself for providing crown of

quality for customer who is the king and is an ISO 9002 certified bank.

Thus, they will have to ensure that their service quality level is always

consistent and up to the mark to meet the tall expectations of their

customers.

3.) Inseparability

Inseparability is that characteristics of a service indicating that it

cannot be separated from creator-seller of the product. Many services


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are created, delivered and consumed simultaneously through

interaction between customers and service producers. This is a source

of major limitation for the bank. But technology has in a big way

helped the banks to cope with this problem.

Production of services, when it comes to banks can be performed in

the following 3 ways:

(i) Co- production: In this case both the service provider and the customer

work together to produce services. When a customer wants to

withdraw cash from the banking premises, then both the customer and

the service provider needs to be present.

(ii)Isolated production: It is that part of service that is done outside to an

organization. Eg. Tele-Banking.

(iii) Self Service production: In this case, the customer uses the equipments

of the service providers and self serves it. Eg. ATM.

4.)Inventory

Inventory relates to the perishable characteristics of the service

marketing. If a customer starts his day at eight in the morning and

ends it at four, but if bank is open only from 9:00 a.m. to 1:00 p.m. in

the afternoon, then one might not be able to attend it. The demand for

banking services also fluctuates by day and hour. The day before the

holiday, weekend, most Mondays and Saturdays, pension and salary

days are heavier than normal banking hours. So service faces a lot of

problem from inventory as it cannot be stored, saved and then used

later.


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RATER Analysis For Indian Overseas Bank

There are many reasons why a customer should be given QUALITY

SERVICES. The most of them are:

1. Industry being so competitive that a customer should be given

the best services as they have many competitors (the company)

and if even a single customer is lost in todays JLT world then it

very difficult to win back the customer.

2. Most of the customers do not complain as they just opt out and

do get satisfied with better services elsewhere.

When it comes to services, there are 10 quality dimensions. Each of

the dimensions is of utmost importance since human element is

involved and it relates to services.

But Zeithaml, Bitner and Parsuraman have developed a new and

concise model by clubbing some points. This model consists of the

following dimensions:

Reliability

Assurance

Tangibility

Empathy

Responsiveness


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RELIABILITY

RESPONSIVENESS ASSURANCE

EMPATHY TANGIBILITY

RELIABILITY

It is defined as the ability to perform the promised service

dependably and accurately. In its broadest sense, reliability means

that the company delivers on its promisespromises about delivery,

service provision, problem resolAXISon, and pricing. It is also known as

the No Excuses service delivery.

Indian Overseas Bank faces stiff competition from many other

banks within its vicinity and some of these banks are foreign banks.

But the existing customers have faith, loyalty and trust in this bank.

The customers are well aware that the bank will provide them back the

best and reliable services. For e.g., no person likes to wait to withdraw

his/her money. In order to correct this problem, Indian Overseas Bank


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has ensured that whoever comes in for cash withdrawal will receive

his/her cash within five to ten minutes.

ASSURANCE

Assurance is defined as employees knowledge and courtesy and

the ability of the firm and its employees to inspire trust and

confidence. It includes the ability, knowledge, genuineness, and

honesty to provide the best services to the customer from the frontline

staff. In this dimension the front line staff is more important rather

than the owner.

At Indian Overseas Bank, every customer who comes is treated with

utmost care and any problem that takes place is solved with great

enthusiasm. It assures the customers coming up to the bank that the

money they invest is secure; the interest rate that is being provided to

them is at par or sometimes even higher as compared to other banks.

Also, it assures the customers that the money they have invested will

be returned to them as and when required with proper interest. It tries

to empower their customer contact people and regularly train them in

skills to build trust and loyalty between employess and the customers.

They have assigned some of their staff members to build relationships

with the customers by getting to know them personally.

TANGIBLITY

Tangibles are defined as the appearances of physical facilities,

equipments, personnel and communication materials. All of these

provide physical representations or images of the service that

customers, particularly new customers, will use to evaluate quality.


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At Indian Overseas Bank, the entire premise is air-conditioned.

They have computerized systems in place and therefore quick,

accurate and efficient service can be provided to the customers. The

tables and chairs are conveniently located for the customers. The

personnel always have a cheerful and helping veneer and are always

ready to help out the customers. The entire place is done up in bright

colours and thus the customer can immediately feel the warmth and

the radiance of the place.

EMPATHY

Empathy is defined as the caring, individualized attention the firmprovides its customers. The essence of empathy is conveying, through

personalized or customized service, the customers are unique and

unique special.

The empathy shown by the employees of the Indian Overseas Bank

is good as they are always polite humble and helpful. There was a case

where once a customer misplaced Rs. 1,00,000 within the premises of

the bank. He panicked but the bank personnel put him at rest andassured him that they would locate the same for him. Since he was a

regular customer, they knew him very well and took the situation

under control. They quickly located the cash and thus, the customer

was placated. The bank personnel went out of their way to help this

customer and thus understood his predicament. This bank regularly

holds seminars and training workshops so that they can understand

the consumer better and thus serve him better.

RESPONSIVENESS

Responsiveness is the willingness to help the customer and

provide him with immediate and fast service.


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The Indian Overseas Bank is prompt at providing its customers

with the information and services that they seek. It is extremely

prompt when it comes to resolving the complaints of the customers.

The customers, in their feedback form, mentioned this as one of the

most important factor that has prompted them to continue with this

bank.

All the five dimensions basically aim at serving the customers to

the best of their ability, giving them quality services and if things are

followed as they are demanded, (i.e., according to the customers

demand) then there would be no problems in facing any type of

people. The successful service organizations set up speeds for service

standards.


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MARKET SEGMENTATION

An organization is supposed to cater to the changing needs of

customers; it is only natural that all customers have their own likes and

dislikes. They have some uniqueness, which throws a big imprint on

their lifestyles. This makes the task of understanding a bit difficult. It

has the context that we go through the problem of market

segmentation in the banking service.

The study of the needs of customers invites a plethora of

problems since in addition to other aspects; the regional

considerations also influence the hierarchy of needs. To be more

specific in the banking services, the banking organizations are

supposed to satisfy different types of customers living in different

segments. The segmentation of market makes the task of bank

professionals easier. If the market segmentation is done in a right

fashion, the task of satisfying the customers is simplified considerably.

The modern marketing theories advocate the formulation of marketing

policies and strategies for each segment, which an organization plans

to solicit.

The marketing segmentation is based in the principle of divide

and rule. If we divide the market into different segments, the size of

market is made small and the process of study is found convenient. We

find market segmentation division and subdivision of a market based


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on considerations. The bank professionals have to segment the market

in such a way that the expectations of all potential customers are

studied in a right perspective and the marketing resources are

developed to fulfill the same. The marketing efforts can be made more

proactive if the process and bases of segmentation are right.

It is essential that the bank professionals assign due weightage

to the difference that we find in the market behavior due to

geographical, age, sex, nationality, educational background, income

classes, occupation, social and other considerations. If they overlook or

underestimate key bases while segmenting, the study results cant be

proactive to the formulation of creative marketing decisions. This

makes it essential that the bank professionals are well aware of the

criteria for market segmentation. The agriculture sector, industrial

sector, services sector, household sector are found important in the

very context. The gender segment is found important no doubt but we

cant underestimate institAXISonal and professional segments. Since

the banking organizations serve different sectors and segments, the

segmentation should be done carefully.


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IMPORTANCE OF SEGMENTATION

Instrumental in exploring opportunities: We find market

segmentation very much effective in exploring the profitable

opportunities. It is well known to us that while segmenting,

the market is divided into different groups and sub-groupsand this simplifies the process of studying and understanding

the customers in a right perspective. If we know about the

rural segment, the opportunities are explored to the rural

areas. If we know about the women segment, the

opportunities are identified in that area. If we know about the

low- income group, the opportunities are identified in that

group. Thus the segmentation helps the bank professionals in

exploring the profitable opportunities.

Instrumental in designing a sound marketing strategy: We cant deny

that market segmentation makes it easier to formulate a

sound strategy. Since the banking professionals are aware of

the changing needs and requirements of a segment, the

marketing resources can be developed in tune with the needs

and requirements of a segment. The formulation of a packageis found significant and the bank professionals can do it

successfully on the basis of market segmentation. The

promotional measures can be satisfied in the face of receiving

capacity of a particular segment. The pricing strategy can be


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made operational and the sales promotion measures can be

made productive.

Helpful to the policy planners: In addition, the policy makers alsofind segmentation since they are well aware of the emerging

trends in the business environment. They get detailed

information about the changing needs and requirements of a

segment. The planning is an on going process. The banking

professionals transmit necessary information to the policy

planners, which simplifies the process of making a sound

policy.

Enriching the market resources: In addition to other aspects, we

find segmentation instrumental in enriching the marketing

potentials. If we know about the preference, needs,

requirements, attitudes, lifestyles it is found easier for us to

develop the marketing resources accordingly. This in a natural

way makes it convenient to develop marketing resources. The

process of innovation can be activated. The services, the

promotional measures, the pricing tool and the process of

offering can be made more competitive. The development of

world-class marketing resources thus makes it convenient to

influence the impulse of prospects. The bank professionals

find it easier to get the positive results for their productive

marketing efforts.


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CRITERIA FOR SEGMENTATION

Segmentation in a right fashion makes the way for profitable

marketing. This helps policy planners in formulating and innovating the

policies and at the same time also simplifies the task of banking

professionals while formulating and innovating the strategic decision.

The following criterion makes the segmentation right.

ECONOMIC SYSTEM

An important criterion for market segmentation is the economic

system in which we find agricultural sector, industrial sector, services

sector, household sector, and rural sector requiring the weight age

while segmenting.

A). AGRICULTURAL SECTOR: In the agricultural sector, there are four

categories since the needs of all categories cant be identical.


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The mechanization of agriculture, the improved or scientific

system of cultivation, the help of nature, the magnitude of risk, the

availability of infrastructural facilities influence the level of

expectations vis--vis the needs and requirements. The banking

organizations are supposed to know and understand the changing

requirements of different categories of farmers.

B). INDUSTRIAL SECTOR:The banking organizations are supposed to

have an in-depth knowledge of the changing needs and requirements

of the industrial sector. The large sized, small- sized co-operative and

tiny industries use the services of the banks. The expectation of all the

categories cant be uniform.

The banking organizations are supposed to have an in-depth

knowledge of the changing needs and requirements of the industrial

segment. The emerging tends in competition, the pressure of inflation,

the use of sophisticated technologies, and the business regulations are

some of the important aspects influencing the hierarchy of needs.

C).SERVICES SECTOR:It is an important sector to the economy where

the banking organizations get profitable business. The two categories

of organizations such as profit-making and non- profit making are

found important in the very context.


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The banking organizations need to identify the changing needs

and requirements of the services sector with the frequent use of IT and

with the mounting pressure of inflation and competition, we find a

change in the hierarchy of needs.

HOUSEHOLD SEGMENT

This also constitutes an important sector where different income

groups have different needs and requirements. In the below figure we

can see the different segments of household sector.

A). HOUSEHOLD SEGMENT:The high income group, middle income

group, subsistence level group and marginal income group havedifferent hierarchy of needs which influence the level of their

expectations.

B). GENDER SEGMENT: In the gender segment we find males and

females having different needs and requirements. The banking

PROFIT MAKING ORG.

BANK INSURANCE,

TRANSPORT HOTEL,TOURISM, PERSONAL

CARE, CONSULTANCY

ELECTRICITYPERSONAL

MULTIPLE

SEGMENTS

SERVICE

SEGMENT

NON PROFIT MAKING ORG.

EDUCATION, HHHOSPITAL,

RELIGIOUS

POLITICAL AND SOCIAL

WELFARE.


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organizations are supposed to identify the level of expectations of both

sexes as shown in the below figure.

Housewives

Some of the women are housewives and therefore they have

different needs and requirements whereas some of them are working

ladies having different needs and requirements.

PROFESSION SEGMENT

In the profession segment, we find different categories of professions

and therefore we find a change in their needs and requirements. As

shown in the figure below:

Profession Segment

Public/ Private Formal/Informal

Gender SegmentSub- Segment

Working Ladies

Technocrats

Bureaucrats

CorporateExecAXISves

Intellects

White - Collar

Employees

Blue Collar

Employees


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The technocrats, bureaucrats, corporate execAXISves, intellects,

white-collar and blue collar employees have different needs and

requirements and therefore the banking organizations should know

their expectations.

INSTITUTIONSAL SECTOR

In this sector we find different categories of organizations. Some

of the organizations are known as charitable organizations, some of

them are cultural/ social organizations, some of them are industrial andmany of them are profit making and many are philanthropic and many

of them are related to trade and commerce. It is natural that the needs

and requirements vis--vis the level of expectations cant be identical in

all cases. To satisfy and to increase the market share it is imperative

that the banking organizations are familiar with changing needs and

requirements. The emerging trends in the social transformation

process determine the hierarchy of needs.

InstitAXISonal

Segment

Sub- Segment

Charitable Trusts

IndividualOriginations

Chamber of

Commerce

Trade and

CommerceHealth/Education

Sports Org

PhilanthropicOrganizations


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Complaint Handling-HDFC Bank

Whatever a service firm may do for customer, even the best

firms are going to find themselves facing complaints from customers

who feel that they are not being treated fairly. In dealing with these

situations, it is important to know how to diffuse them and then turn

them into positive experiences for all involved.

However, when it came to complaint handling, HDFC Bank turned

to the airline industry for inspiration. Impressed by the way an airline

takes care of its customers from the time they enter the airport till

they collect their luggage after landing, the bank maps the customer

flow at its branch. The first change it brought to its branches was the


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'May I help you' desk at the reception to guide the customer to the

right counter. Next, it laid down efficiency parameters for each sub-

process carried out at the branch. "We are constantly fine-tuning our

processes to reduce time taken, especially on roAXISne tasks. We

monitor how long it takes for customer transactions as well as

complaints to get processed".

The bank's 'moments of truth' surveys too are modeled after the

airline industry's satisfaction surveys. These are given to customers

just before they exit a branch after a transaction.

HDFC Bank introduced changes for consumer convenience,

starting with the reception area and with good reason. A traditional

branch has always been an infrequent user's nightmare: cryptic boards

are placed on counters leaving one as confused as ever, bank officials

sit behind wire-meshes making it impossible to seek any guidance, and

the long queues are frustrating, all the more so when you realize you

stood in the wrong long line. But HDFC branch models are trying to

address this confusion, as well as the jail-like counters.

HDFC believes that unless they change to create convenience for

that customer, and add to his brand experience, they will fail to

capture the loyalty they're trying so hard to earn. And unless they

achieve this loyalty and increase their share of the customer's wallet

substantially, the majority of their retail customers will continue to be

unprofitable for them.


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COMPLAINT RESOLAXISON MODEL (CRM)

HDFC bank takes complaint not as a mere complaint but as an

issue. They have got this unique CRM technique where in if there is

any complaint either by an employee or a customer in any branch; it

will be looked into and resolved in 24 hours. Within 24 hrs, if the

branch manager does not handle the complaint it goes to the higher

authority. And then again if the same complaint is not handled in 12

hours by the higher authority it goes to the Managing Director. Once if

it reaches the MD, either the branch manager is sacked or necessary

action is taken against him.


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CASE STUDY-I

Phase I

The reason why the customer decided to open an account with

ABC Bank was their constant boasting of being the best online trading

bank in India. So one day the customer called their customer center to

open an account. The lady was very polite and after talking with her for

some 5 minutes, she told the customer that one of their

representatives will visit her soon. She gave the lady her office address

and asked her to send the person to her office. The next day the

customer gathered all the necessary documents to open an account. It


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took exactly a week for their representative to turn up and on her

inquiring about the delay, he gave her a silly reason, like he was busy

with many more clients and so could not come on the promised date.

She felt that the employees attitude towards the customers depend

upon their mood on that particular day.

Phase II

Within a month the customer got a letter from the bank saying

that her account has been activated. So the next day she went to her

nearest branch to deposit a cheque. As she entered inside, it was over

crowded with people in each and every corner; most of them were theemployees themselves. In most of the branches that she had visited in

last 5 months, she had got the feeling that the branches were over

employed.

Phase III

After going through all this she decided to use their Phone

banking facilities, and its did not turn out any better than CentralRailway Inquiry. Every hour you find some different people to answer

your query, and most of the time you are put on HOLD.

Phase IV

They used to claim that their trump card was the ATM. To some

extent it was ok but what the customer noticed is that most of the

ATMs are located in a very isolated place and its down during evening

time.

The Finale


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Here is something that made the customer to finally say

GOODBYE to ABC. Initially they told her that their share trading service

is free, so she did most of her trading through ABC direct. The service

was not of much help. Just a week from then, she got a mail asking her

to pay for using share-trading service. Again she got in touch with the

concerned person and informed them about the mail and also that she

was no more interested in continuing her account in ABC. Then they

informed her that this mail is not for current year its the advance

payment for the coming year. In the end she had to pay them for the

service, which she never AXISlized. She stopped using ABC Bank and

asked all her colleagues never to have an account with the bank after

her experience.

ANALYSIS OF THE CASE

As can be seen in this case, there is a definite failure in the

service delivery. Now apply the different dimensions of service quality

to this particular case and find out reasons for the failure.

RATER

Reliability:The lady assured the customer that the representative would

visit her the next day. Instead he took a week to turn up. Also instead

of apologizing to the customer, he gave the excuse that he was busy

with other clients and so he could not attend to him. In a serviceindustry the customer is the king and you should make each customer

feel special. As can be seen, the attitude of the employees in the bank

is indifferent. In fact, the customer concludes his review by saying that


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the employees attitude towards the customer depends on their mood.

This shows tremendous inconsistency in service delivery.

Assurance: Here the staff has failed to live up to its promise. Instead of

coming in a day as promised, the representative came after a week.

He didnt even apologize for his mistake. As a result the customer was

inconvenienced. The customer was angry that the bank made false

promise just to woo customers. Also she was told that the share

trading service was free. Afterwards she was made to pay for the

service, which she had hardly used.

Tangible:The tangible cues here will be the facilities that they provide,

like the phone banking and the ATM. The customer here describes the

ATM service as okay. She says that it works only sometimes. She

compares their phone banking facility to the central railway enquiry,

where every hour different people come to answer his query and most

of the time he was put on hold.

Empathy: From the case, it seems that they are not understanding

towards the customer grievances. All the branches this customer hasgone to have been very crowded. There was no effort on the part of

the employees to help this customer. Also in the case of their phone

banking, they make the customer wait for long periods of time without

answering their query.

Responsiveness:In the case of this customer, the bank and its staff were

not able to respond quickly. When the particular representative was

not able to reach the next day, the bank should have sent another

representative in his place. Also they should not have charged this

customer for using the share trading service, especially since it was a

mistake on their part.


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Service Recovery

Service recovery pertains to the actions taken by an organization

In response to a service failure. When a customer complains he

expects 3 types of fairness.

Outcome fairness: In this case the customer decided to use the share

trading service as she was told it was free. She did not find the service

of much help. In the end she had to pay for a service, which she hardly

used. The bank should not have charged the customer for this service

especially since it was a mistake on their part.

Procedural fairness: When the customer entered the bank to deposit a

cheque, she found it overcrowded. There was no effort made by any of

the employees to help this customer. Using the phone banking facility

was also not of much help.

Interaction fairness: After promising the customer that the representative

would come the next day, he came after a week. After committing this

mistake, he made no effort to apologize for it. Instead he gave theexcuse that he was too busy with other clients to attend to him.

Fish-Bone

CUSTOMER EQUIPMENT FRONT PROCEDURE

DELAY INSERVICE


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OTHERS MATERIAL SUPPORTING INFORMATION

Equipment: -Phone banking system of ABC Bank was really bad. Every

hour there was a new person on the phone and most of the time the

customer had to wait as the phone was kept on hold. The customer

had some difficulty using the ATM machines, as they were located on

isolated places, which was very inconvenient for the customer to

access. Secondly, during the evening time they were not working. The

customer had been told about that the share trading facility was free

but later on they charged for the next years trading in advance. So,

there was certainly a failure in equipments.

Material: The material aspect of HDFC bank would be its ATM and

Phone Banking services that are described by the customer as a total

flop and a waste of time. This shows a complete material failure, as

the services are not up to the extent of the customers perception and

expectations.

Front line staff: The customer has rated employees attitude towards

him as depends upon the mood. In a service industry this is not

acceptable, whatever might be the mood his attitude towards the

customers should be good. The front line staffs job is to make the

work easier for the customer and not to complicate further which is not

the case in this particular case study.

Supporting Activities:The supporting staff in this case would include thefront desk receptionist who fails to act in haste and inform the same to

the concerned representative. Also, the customer is not informed

about the different service charges, which the back office should have

notified by sending some mails or notifications


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Procedure: In the second phase the customer went to the bank to

deposit cheque, she found out that the place was very crowded and

there were no proper signboards for the counters to guide her.

Information: In phase 1, the customer was told that the bank

representative would be coming to his place in a days time. But these

representatives came after a week. So there was wrong information

given on the part of the customer. Again in the final phase, the

customer was not given any information about the next years share

trading charges and charged her in advance.

Company Profile

ICICI Bank is India's second-largest bank with total assets of overRs. 1 trillion and a network of about 540 branches and offices and over

1,000 ATMs. ICICI Bank 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 and


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affiliates in the areas of investment banking, life and non-life

insurance, venture capital, asset management and information

technology. ICICI Bank's equity shares are listed in India on stock

exchanges at Chennai, Delhi, Kolkata and Vadodara, the Stock

Exchange, Mumbai and the National Stock Exchange of India Limited

and its American Depositary Receipts (ADRs) are listed on the New

York Stock Exchange (NYSE).

ICICI Bank was originally promoted in 1994 by ICICI Limited, an

Indian financial institAXISon, and was its wholly owned subsidiary.

ICICI's shareholding in ICICI Bank was reduced to 46% through a public

offering of shares in India in fiscal 1998, an equity offering in the formof ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of

Bank of Madura Limited in an all-stock amalgamation in fiscal 2001,

and secondary market sales by ICICI to institAXISonal investors in fiscal

2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the

World Bank, the Government of India and representatives of Indian

industry. The principal objective was to create a development financial

institAXISon for providing medium-term and long-term project

financing to Indian businesses. In the 1990s, ICICI transformed its

business from a development financial institAXISon 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 institAXISon from

non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives

in the context of the emerging competitive scenario in the Indian

banking industry, and the move towards universal banking, the

managements of ICICI and ICICI Bank formed the view that the merger


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of ICICI with ICICI Bank would be the optimal strategic alternative for

both entities, and would create the optimal legal structure for the ICICI

group's universal banking strategy. The merger would enhance value

for ICICI shareholders through the merged entity's access to low-cost

deposits, greater opportunities for earning fee-based income and the

ability to participate in the payments system and provide transaction-

banking services. The merger would enhance value for ICICI Bank

shareholders through a large capital base and scale of operations,

seamless access to ICICI's strong corporate relationships built up over

five decades, entry into new business segments, higher market share

in various business segments, particularly fee-based services, and

access to the vast talent pool of ICICI and its subsidiaries. In October

2001, the Boards of Directors of ICICI and ICICI Bank approved the

merger of ICICI and two of its wholly owned retail finance subsidiaries,

ICICI Personal Financial Services Limited and ICICI Capital Services

Limited, with ICICI Bank. Shareholders of ICICI and ICICI BANK

approved the merger in January 2002, by the High Court of at

Ahmedabad in March 2002, and by the High Court of Judicature at

Bombay and the Reserve Bank of India in April 2002. Consequent tothe merger, the ICICI group's financing and banking operations, both

wholesale and retail, have been integrated in a singularly.

CASE STUDY-II

The Customers Association with the Bank

The customer became an ICICI bank customer in 1998 when he

became an NRI customer. Things were rather mundane and normal.

Compared to the other big nationalized banks and Citibank, the

customer felt ICICI Bank was the best and got some great feedback

from friends and relatives alike. His initial relationship was excellent.


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This continued till 2001. All the facilities were of the highest grade.

Their email follow-ups, request resolAXISon, customer service and

everything they served were of the highest grade. They also baffled

him by calling him overseas with regard to certain transactions and

request. So, he would have given a 5 star rating in 1998. But it did not

continue for long.

What has changed since then?

This bank grew leaps and bounds ever since the IPO in 1998 as

well as the NYSE listing in 2000. The numbers of customers were huge

and the merger with Bank of Madura added to the woes of the service.As there is a saying Quality is inversely proportional to Quantity,

ICICI bank yielded to this very true philosophy. The customer sent a

letter to their NRI center regarding a change of address for his NRI

account. This took considerable amount of time since ICICI misplaced

the letter twice and he head o mail the letter again. This frustrated and

infuriated the customer. Then, they sent a courier to the customer but

at the wrong address. They sent one to the wrong address, and other

one to the right address but with the wrong password for the bank

account.

Snippets from mail correspondence that took place between the

customer and the banking personnel are provided as follows providing

us with an insight:

If doing an address change should take such a long time and if your processes

are so sterner and baseless with a mediocre customer-care follow-up, I definitely need to

reconsider my options. I had opened an account in ICICI though I had quite a few

options for an NRI account, in hope of having an excellent customer service.

Ill have to rethink if my decision was correct. I have received similar complaints from


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my friends as well stating that the Quality of ICICI has gone down with Quantity, I

would definitely like to talk to some manager for NRI Services, for the same

matter. Revert to me, if you still have any queries.

Mr. XYZ

The Reply

NRI Cell wrote:

Dear Mr. XYZ,

We apologize for the delay in our response.With reference to your mail we would like to inform

you that we have not received your letter for address change.

Blah Blah Blah

In this letter instead of requesting the customer for sending the

letter again and apologizing to him, the bank authority says that the

customer hasnt send any letter at all thus making it a CRITICAL

INCIDENCE for the customer.

Customers Final Conclusion of the Bank

All things considered, the ICICI bank is far ahead of many of the

nationalized banks. As an NRI customer and a person used to excellent

banking for quite sometime, I feel that this bank has some mediocre

facilities and service. I will be reevaluating the opinion at a later point. I

am just having an account after many unpleasant services and

incidents.

Will the customer recommend ICICI Bank to anyone? A big NO at least

for the time being until the bank makes efforts to upgrade their

services.

Case Study Analysis: RATER

R: Reliability


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The Case Study shows that the bank was extremely reliable and

trustworthy initially. But after the surge and swelling of customers,

inefficiency has crept in r to the bank. The bank is unreliable only on

the basis of the service that it provides, but when the question of

financial reliability arises the bank seems to be in very sound and

secure.

A: Assurance

The customer Mr. XYZ was rest assured about the fact that the

bank was very professional in its approach. But after the bank

conducted the mistakes of sending the password at the wrong address

and then sending the wrong password at the right address made sure

that the bank lost the dignity of being a financial institAXISon that

provides assurance. This had a deep impact on the customer.

T: Tangibility

As we can see when the customer Mr. XYZ wanted to change the

address for his NRI account he had to send 3 mails to the bank out of

which 2 of them were lost by the company, later on the first

confirmation was sent at the wrong address and the second

confirmation was sent at the right address with the wrong password.

The whole process took around 2 months, which is a very long time to

take by any standards.

E: Empathy


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The bank was very co-operative and sympathetic towards

customers before the phase of their IPO, the best example of this

would be that the company also called its NRI customers overseas for

certain transactions this showed that the bank was indeed very good

towards its customers, but after the IPO, the bank just lost all loyalty it

earned, it took the bank almost 2 months to change the address and

when the customer Mr. XYZ wrote a mail to the bank for its mediocre

service provided the bank in reply blamed the customer for its mistake.

Thus, ICICI Bank performs miserably on this count too and thus loses

the customer.

R: Responsiveness

The company lost this quality after the IPO. The company took

almost 2 months to change the address and only after sending 3 mails

was the job done, the bank management was also very unresponsive

in apologizing to its customers.

BIBLIOGRAPHY


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SERVICES MARKETING M.K.RAMPAL & S.L.GUPTA

SERVICES MARKETINGVALARIE.A.ZEITHAML & MARY JO BITNER

SERVICES MARKETINGCHRISTOPHER LOVELOCK

MARKETING MANAGEMENTPHILIP KOTLER

BUSINESS TODAY

ANALYST

www.icici.com

www.hdfc.com

www.indianoverseasbank.com

THE TIMES OF INDIA

BUSINESSWORLD
http://www.icici.com/http://www.hdfc.com/http://www.indianoverseasbank.com/http://www.icici.com/http://www.hdfc.com/http://www.indianoverseasbank.com/


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CONTENTS

AN INTRODUCTION TO BANKING SECTOR IN INDIA

PEST ANALYSIS

7Ps OF BANKING SECTOR

4Is OF BANKING

RATER ANALYSIS FOR INDIAN OVERSEAS BANK

MARKET SEGMENTATION

COMPLAINT HANDLINGHDFC BANK

CASE STUDY-I

RATER

SERVICE RECOVERY

FISH BONE

CASE STUDY-II (ICICI BANK)

RATER

BIBLIOGRAPHY


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SERVICE SECTOR

MARKETING

A PROJECT ON

BANKING SECTOR
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Summer Final Project

Documents

Transcript of Summer Final Project