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International Manuscript ID : ISSN23194618-V2I1M12-012013

CUSTOMER SATISFACTION & RETAIL BANKING: A STUDY OF

CUSTOMER SATISFACTION IN RETAIL BANKING

DR. ANITA1

MAHAVIR SINGH2

ABSTRACT

________________________________________________________________________The banking sector in India was reguated to a certain e!tent in 1"#$ with reser%e

bank o& India being bestowed with the res'onsibiit( to act as a reguator) a&ter the

inde'endence o& the countr( in 1"*+. The go%ern,ent o& India reai-ed that assies &aire

'oic( can not be continued &or an i,'ortant sector ike banking. Nationai-ation o& banks)

thus) can be described as a ste''ing stone &or the de%eo',ent The Indian banking

industr( has undergone radica changes due to iberai-ation and gobai-ation ,easures

undertaken since 1""1. Toda() Indian banking industr( is one o& the argest in the word.

There has been a great surge in retai banking. Retai 'ort&oio) which ,ain( co,'rises

ending &or consu,er durabes) housing) 'ersona oans and educationa oans) etc.)

constitutes ,ore than one&i&th o& tota bank ad%ances. /anks are continuous( stri%ing to

i,'ro%e their ser%ices in di&&erent ,arket seg,ents. Ne%ertheess) there has re,ained a

ga' between the ser%ices o&&ered b( banks in the retai area and the e!'ectations o& their

custo,ers.

The 'resent stud() based on res'onses recei%ed &ro, #00 custo,ers o& S/I bank)

N/ bank) HD3 /ank) I3I3I /ank) ID/I bank) and so,e other 'ri%ate and nationai-ed

1Assistant ro&essor) Dronachar(a Institute o& Manage,ent and Technoog() 4urukshetra.

5,ai6 anitahar'a7g,ai.co,

2 Maha%ir Singh) Dronachar(a Institute o& Manage,ent and Technoog() 4urukshetra.

5,ai6 ,aha%ir,aik817g,ai.co,


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banks in kurukshetra cit() was undertaken to identi&( the %arious t('es o& ser%ices o&&ered

b( banks) the e%e o& satis&action about di&&erent t('es o& ser%ices) e!'ectation about these

ser%ices and the e%e o& seg,entation ga' a,ong the ser%ices o&&ered.

Key Words: Customer satisfaction, Retail banking, Perception, Market segments.

________________________________________________________________________

INTRODUCTION

I& 'ar &a the custo,ers had si,iar needs) wants) desires) cutura background)

education) and e!'erience) there woud not ha%e been an( need &or ,arket seg,entation

and ,ass 9undi&&erentiated: ,arketing woud ha%e been a ogica ,arketing strateg(.

Since ,an is not ,ere( a cog in the ,achine and is go%erned b( e,otions) %aues and

cutura background) his e!'ectations and e%e o& satis&action &ro, a 'roduct are di&&erent.

/etween 'anning and e!ecution) there e!ists a (awning ga' and this is increasing(

beco,ing a ,a;or 'robe, &or retai banking institutions. There&ore) seg,entation

strategies are designed to disco%er the needs and wants o& s'eci&ic grou's o& custo,ers so

that a''ro'riate goods and ser%ices can be de%eo'ed and 'ro,oted to satis&( their needs.

Man( new 'roducts are de%eo'ed to &i ga's in the ,arket 'ace) re%eaed through

seg,entation research. Such studies are aso used &or de%eo'ing strategies &or redesigning

or re'ositioning o& 'roducts and brands.

/asica( beonging to the area o& ,arketing) the conce't o& seg,entation has

e,bodied in its a,bit di&&erent areas o& ,anage,ent) incuding &inance) because 'resent

or 'ros'ecti%e custo,ers are the end target. Seg,entation is one o& the essentia toos

needed to ,ake a 'roduct and ser%ice a%aiabe to a heterogeneous ,arket which ,a(

either be de,ogra'hica() geogra'hica( or socia( seg,ent abe. There&ore) o%er the

ast decade) banks both arge and s,a ha%e e,'hasi-ed reationshi'based strategies to

increase their saes and 'ro&its. Seg,entation is de&ined as the 'rocess o& di%iding a


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'otentia ,arket into distinct subsets o& bu(ers with co,,on needs) wants) tastes or

characteristics and seecting one or ,ore seg,ents to target with distinct ,arketing ,i!.

Seg,entation &re


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and rogress o& /anking in India) 200#0*C '. $":. A'art &ro, di%ersi&ication ob;ecti%e

%arious other &actors ha%e in&uenced banks? ending to the retai sector in India. These

reate to ower interest rates) &isca incenti%es &ro, the go%ern,ent) %arious re&or,

,easures as brought about b( the Securiti-ation Act) ower de&aut rates) ow credit o&&

take &ro, the co,,ercia and cor'orate sector) ower costs o& housing) consu,er

durabes) etc.) due to>tab co,'etition and technoogica inno%ations resuting in

increased use o& creditEdebit cards) ATMs) direct debits) the Internet banking) ,obie

banking) 'hone banking) etc. Technoog( has enabed a signi&icant reduction in the cost o&

e!terna &inance &or borrowers and banks ha%e bene&ited &ro, 'roduct inno%ations and

ower transaction costs) associated with coection) 'rocessing and use o& in&or,ation.

Bhie the new generation 'ri%atesector banks 9es'ecia( the I3I3I /ank and the HD3

/ank: ha%e in%ested in creating and sustaining retai brand) their 'ubic sector counter'arts

too ha%e ke't 'ace with. 5&&orts were renewed in 200*0$ &or &aciitating i,'ro%e,ents in

custo,er ser%ice in banks b( constituting 3usto,er Ser%ice 3o,,ittees. /anks are aso

using data sharing as a ,eans o& i,'ro%ing the seection o& custo,ers. The use o&

ad%anced and user&riend( technoog( has been arge( success&u in bridging the ga'

between the ser%ices 'ro,ised and the ser%ices o&&ered in tune with the changing

e!'ectations o& custo,ers. Anaogous taioring o& ,arketing in'uts) in ine with the

changing business en%iron,ent) has aso been he'&u in increasing the ,arket share o&

%ar(ing sectora banks.

Ne%ertheess) there has re,ained a ga' between the ser%ices o&&ered b( retai banks

and the e!'ectations o& the custo,ers. The ,a;or 'robe, with the banks has been that

the( ha%e t('ica( gone &or standardi-ation o& 'roducts across a ,ass ,arket. In &act)

e%en in the ,ass ,arket there are di&&erent needs a&&ected b( custo,er i&est(e. Market

seg,entation) there&ore) re


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To check the e%e o& satis&action about the di&&erent t('es o& ser%ices o&&ered b(

the banks.

To ascertain the idea e%e o& ser%ices which the( e!'ect &ro, the bank.

To identi&( the e!tent o& seg,entation ga' a,ong the ser%ices o&&ered.

METODOLOGY

Rando, sa,'ing techni


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res'ondents were those who had an account with the HD3 /ank. Howe%er) this did not)

in our o'inion) in&uence or aters the resuts because the ,a;orit( o& such res'ondents aso

had accounts with other 'ri%atesector banks and nationai-ed banks. urther) the nu,ber

o& res'ondents seected was on( #00) whereas the tota nu,ber o& custo,ers o& di&&erent

banks runs into acs. There&ore) the resuts obtained woud gi%e on( the trend or o'inions

and it is di&&icut to ,ake an( generai-ation.

FINDINGS

In order to obtain &irsthand in&or,ation about the seg,entation ga' in retai

banking) a


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T$%e No# '

C(s)o*er!s "re+ere,-e o+ B$,.

Sr. No. T('e o& /ank re&erence o& Res'ondents

No. Age

1. ri%ate * 21.##

2. Nationai-ed 1+0 $.+

#. /oth 22

Tota #00 100

The abo%e tabe no. 1 re%eas that ,a;orit( o& res'ondents 9$+ 'er cent: 're&erred

to ha%e accounts in 'ubic sector banks) 'robab( to take ad%antage o& the ser%ices o&&ered

b( 'ubic sector banks. urther out o& the re,aining 1#0 res'ondents) ,a;orit( 9*# 'er

cent: 're&erred to both 'ubic and 'ri%ate sector bank. This ,ight be because o& the

%arious and newer 'roductsE ser%ices o&&ered b( 'ri%ate banks as we as nationai-ed

banks.

C(s)o*er!s "re+ere,-e +or B$,.s %y A/e0/ro(1

A &urther ana(sis o& custo,ers? 're&erence &or a t('e o& bank was done according

to their age grou'. The resuts are 'resented in Tabe no. 2.

The Tabe shows that (ounger 'ersons 're&er to ha%e an account either e!cusi%e(

with a 'ri%ate bank or both in the 'ri%ate and nationai-ed banks. As age ad%ances)

're&erence &or nationai-ed bank increases. In the age grou' o& *0$0 (ears) out o& *8

res'ondents) 1* had their account on( with nationai-ed banks and 10 had account with

both t('es o& the banks) whereas 2* custo,ers had account with 'ri%ate banks. urther)

be(ond $0 (ears o& age. ut o& #" custo,ers) 20 had accounts with nationai-ed banks) 12

custo,ers had accounts with both t('es o& banks and on( + had an account e!cusi%e(


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with 'ri%atesector bank. This 'heno,enon is ,ost 'robab( due to the ate entr( o&

'ri%atesector banks in the Indian banking industr( and the e!istence o& nationai-ed banks

&or a ong ti,e. This ,ight be due to the genera hu,an beha%ior o& not &re


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Se&

5,'o(ed

10 * 1*

thers 8 11 " 28

Tota +1 " 1## #00

It is e!a,ined &ro, the abo%e tabe no. # that 1*+ 'er cent o& the res'ondents

beonged to the ser%ice cass because in their cases saar( is genera( credited to the bank

account. urther) 'ri%ate sector e,'o(ers ha%e a 're&erence &or o'ening the saar(

account o& their e,'o(ees in 'ri%ate sector banks on account o& &aster and better ser%ices

o&&ered. ut o& #00 custo,ers) #1 beonged to business cass and 1* beonged to se&

e,'o(ed categor(.

C(s)o*ers "re+ere,-e +or B$,.s $--ord4,/ )o I,-o*e Gro(1s

In&or,ation through the


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T$%e No#

C(s)o*er!s "re+ere,-e +or B$,.s $--ord4,/ )o I,-o*e0Gro(1

O--(1$)4o, "r46$)e B$,. N$)4o,$47ed B$,. Bo)8 Ty1es o+ B$,. To)$

01$ #0 1 + 11#

1$#0 8 1" ** 8

Abo%e #0 2# #+ *1 101

Tota # 120 #00

SATISFACTION LEVEL FOR DIFFERENT SERVICES

In order to assess the e!tent o& satis&action which the custo,ers deri%ed &ro,

di&&erent ser%icesE 'roducts o&&ered b( the banks) res'ondents were asked about the actua

e%e o& satis&action &ro, di&&erent ser%ices) na,e( ,obie banking) net banking) 'hone

banking) ATM EDebit card) e%e o& docu,entation) a,bience) ser%ice dei%er()


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In res'ect o& Mobie /anking) on( #1 res'ondents e!'ressed their &u satis&action. 5ight(

nine ranked such ser%ices at the scae o& ) 2# at the scae o& $ and $0 at the scae o& * in

the se%en'oint scae. It can be in&erred that those who 'ro%ided the *th rank on the +

'oint scae deri%ed a%erage satis&action) those who ga%e the rank o& greater than * were

wesatis&ied and those who ga%e rank beow * were not satis&ied with these ser%ices.

T$%e No# ;

Le6e o+ C(s)o*er S$)4s+$-)4o, +ro* D4++ere,) B$,.4,/

Ser64-es Le6e o+ S$)4s+$-)4o,

Ser%ices 1 2 # * $ + Tota

Mobie /anking 2" #2 $# *2 #* + #* #00

Net /anking 22 * #" $0 2# 8" #1 #00

hone /anking 2 #" $1 $+ 8 #2 2+ #00

ATMEDebt in #* 1+ " #" *2 $2 10+ #00

@e%e o& Docu,entation 1$ #$ 2 ** 28 " $ #00

A,biance 0 0 #* *1 *$ " 111 #00

Ser%ice Dei%er( 2 1* 1+ #0 #" 10# "$ #00

uer( Handing 1* 2# 0 1" $2 10$ 8+ #00

Turn Around ti,e 11 1# 0 21 #* "8 12# #00

Note6 Scae 1 indicates high( unsatis&actor( and Scae + indicates high( satis&actor( e%e

o& ser%ices.


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ro, the res'onses recei%ed in res'ect o& e%e o& satis&action reating to Net

/anking) si,iar resuts can be in&erred. ut o& #00 res'ondents) 10+ res'ondents ga%e a

rating o& ess than * and 1*# res'ondents indicated a rating o& higher than *. This i,'ies

that near( # 'er cent custo,ers were not satis&ied with the e%e o& ser%ices) whereas *8

'er cent were wesatis&ied. n( $0 res'ondents 91+ 'er cent: deri%ed a%erage

satis&action.

Bith regard to hone /anking) the distribution o& res'ondents according to the

e%e o& satis&action was near( the sa,e as in res'ect o& net banking. 12+ 9*2 'er cent:

res'ondents ga%e a rating o& greater than * and 11 9#" 'er cent: a rating o& ess than * on

the + 'oint scaes. n( $+ res'ondents 91" 'er cent: 'ro%ided the a%erage rating o& *.

Howe%er) the resuts were signi&icant( di&&erent in res'ect o& other ser%ices o& the

banks. A rating o& greater than * was gi%en b( a arge ,a;orit( 9+ 'er cent: o&

res'ondents &or ATME Debit 3ard) b( 180 90 'er cent: res'ondents &or e%e o&

docu,entation) b( 22$ 9+$ 'er cent: res'ondents &or a,bience) b( 2#+ 9+" 'er cent:

res'ondents about ser%ice dei%er() b( 2** 981 'er cent: custo,ers in res'ect o&


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It woud be cear &ro, the tabe that the ,a;orit( o& custo,ers e!'ect


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,obie 'hones and %er( &ew o& the, ha%e co,'uters and the Internet connection. urther)

one needs to be we%ersed with co,'uter techni


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Go%ern,ent o& India) Ministr( o& inance) Annua Re'ort) 20020#) 200#0* and

200*0$) New Dehi.

Go%ern,ent o& India) Ministr( o& inance) New Dehi) 5cono,ic Sur%e() 200#0*

and 200*0$) New Dehi.

4oter) hii' 9200$:) Marketing Manage,ent) 12th ed. 9renticeHa o& India

ri%ate @td) New Dehi:

Miner) George R. and Mark A. McDonad. 91""":) S'ot Marketing6 Managing the

5!change rocess 9ones and /artett ubishers:.

ari,a V(as 92002:) JMeasure,ent o& 3usto,er Satis&action6 A stud( o& /anking

Ser%icesJ) /usiness ers'ecti%es) Vo. *) No. 1) ''. +#88.

Reser%e /ank o& India) Re'ort on Trend and rogress o& /anking in India) &or the

(ears 20012002) 20020# and 200#0*) R/I) Mu,bai.

Reser%e /ank o& India) Annua Re'orts) &or the (ears 20020#) 200#0* and 200*

0$) R/I) Mutribai.

Reser%e /ank o& India) Handbook o& Statistics on Indian 5cono,() 20020#) 200#

0* and 200*0$) R/I) Mu,bai. Schi&&,an) @.G.) and 4a,uk) @.@. 9200*:)

3onsu,er

/eha%iour) 8th ed.) renticeHa o& India ri%ate @td.) New Dehi.

Sugandhi) R.4. 9200#:) 3usto,er Reationshi' Manage,ent) New Age

Internationa ubishers) New Dehi.

Bede) Miche) and Bagner 4a,akura 91""8:) Market Seg,entation 6 conce'tua

and Methodoogica oundation 9/oston 6 4uwer Acade,ic:.

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