2. IntroductionIntroduction
Banks are the most significant Bodies in the Indian financial market.Banks are the most significant Bodies in the Indian financial market.
Dominated by public sector Banks, the Industry has so far acted as anDominated by public sector Banks, the Industry has so far acted as an
efficient partner in the growth and the development of the country.efficient partner in the growth and the development of the country.
Size of the banking sector has gone up over six times from Rs.5,984 bnSize of the banking sector has gone up over six times from Rs.5,984 bn
in 1995 to over RS.36,105 bn in 2006.in 1995 to over RS.36,105 bn in 2006.
This transformation has been largely brought aboutThis transformation has been largely brought about
by:by:
liberalization and economic reforms.liberalization and economic reforms.
Increased Competition from Domestic & foreign Banks.Increased Competition from Domestic & foreign Banks.
More Services Offered e.g. Credit cards, Insurance, ForeignMore Services Offered e.g. Credit cards, Insurance, Foreign
Currency loans and Investment Banking.Currency loans and Investment Banking.
Increase in FDI from 49% to 74% for Private banks.Increase in FDI from 49% to 74% for Private banks.
Increase in Retail Finance – Consumer CreditIncrease in Retail Finance – Consumer Credit
3. Banking Industry : OverviewBanking Industry : Overview
• First bank established in 1786 named As ‘General Bank OfFirst bank established in 1786 named As ‘General Bank Of
India’.India’.
• In 1920 ,three Presidency banks merged to form ‘ImperialIn 1920 ,three Presidency banks merged to form ‘Imperial
Bank of India’. Post Independence this bank was named asBank of India’. Post Independence this bank was named as
SBI in year 1955.SBI in year 1955.
• Post liberalization reforms, we have approximately:Post liberalization reforms, we have approximately:
- 222 Commercial Banks- 222 Commercial Banks
- 28 Public sector banks- 28 Public sector banks
- 29 Private Banks- 29 Private Banks
- 31 Foreign banks- 31 Foreign banks
With a combined network of more than 60,000With a combined network of more than 60,000
branches and 17,000 ATMs across the Country.branches and 17,000 ATMs across the Country.
4. Major Players in Banking sectorMajor Players in Banking sector
Indian BanksIndian Banks
• ICICI BANKICICI BANK
• HDFCHDFC
• State Bank of IndiaState Bank of India
• Punjab NationalPunjab National
BankBank
• AXIS bankAXIS bank
• Corporation bankCorporation bank
• IDBIIDBI
• Bank Of BarodaBank Of Baroda
Foreign Banks
HSBC
Standard Chartered
Bank
Barclays Bank
Deutsche Bank
CitiBank
Bank of AmericaBank of America
5. 4 I’4 I’ss of BANKINGof BANKING
• IntangibilityIntangibility
-- No physical Attribute to touch, feel or sense any service.No physical Attribute to touch, feel or sense any service.
• InseparabilityInseparability
- Cannot be separated from Creator-Seller of the Services.- Cannot be separated from Creator-Seller of the Services.
• Inventory/PerishabilityInventory/Perishability
-- Cannot be stored, saved and then used later.Cannot be stored, saved and then used later.
• Inconsistency/VariabilityInconsistency/Variability
- Different customers may get different levels of services- Different customers may get different levels of services
7. Political/legal environmentPolitical/legal environment
Government and RBI policiesGovernment and RBI policies
Declaration of measures like waiver of short-termDeclaration of measures like waiver of short-term
agricultural loans, to attract the farmer’s votes.agricultural loans, to attract the farmer’s votes.
Exploitation of various banks in the cooperativeExploitation of various banks in the cooperative
sector, open and run by the politicians.sector, open and run by the politicians.
Chairmen of the various banks appointed by the govt.Chairmen of the various banks appointed by the govt.
Various policies are framed by the RBI forVarious policies are framed by the RBI for
better control over the banks.better control over the banks.
8. Economic environmentEconomic environment
Existence of banking in one form or the other from timeExistence of banking in one form or the other from time
to time.to time.
Commencement of the present era in banking withCommencement of the present era in banking with
establishment of bank of Bengal in 1809 under theestablishment of bank of Bengal in 1809 under the
government charter and with government participation ingovernment charter and with government participation in
share capital.share capital.
Every year RBI declares its 6 monthly policy andEvery year RBI declares its 6 monthly policy and
accordingly the various measures and rates areaccordingly the various measures and rates are
implemented which has an impact on the banking sector.implemented which has an impact on the banking sector.
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Union budget affects the banking sector to boost theUnion budget affects the banking sector to boost the
economy by giving certain concessions or facilities. Foreconomy by giving certain concessions or facilities. For
e.g. encouragement of the savings in the Budget,e.g. encouragement of the savings in the Budget,
relaxation of the FDI limits.relaxation of the FDI limits.
9. Social environmentSocial environment
• Nationalization of the banks in 1969 –Nationalization of the banks in 1969 –
Only big business houses and the effluent sections of the societyOnly big business houses and the effluent sections of the society
getting benefits of banking in Indiagetting benefits of banking in India
• To adopt the social development in the banking sector and speedyTo adopt the social development in the banking sector and speedy
economic progress, consistent with social justice.economic progress, consistent with social justice.
• Help economically weaker section of the society and provide need-Help economically weaker section of the society and provide need-
based finance to all the sectors of the economy with flexible andbased finance to all the sectors of the economy with flexible and
liberal attitude.liberal attitude.
e.g. various types of loans to farmers, working women,e.g. various types of loans to farmers, working women,
professionals, traders, education loans, housing loans, consumerprofessionals, traders, education loans, housing loans, consumer
loans etc.loans etc.
• Banks having big clients or big companies have to provide servicesBanks having big clients or big companies have to provide services
like personalized banking to their clients.like personalized banking to their clients.
Banks have changed the culture of human life in India and haveBanks have changed the culture of human life in India and have
made life much easier for the people.made life much easier for the people.
10. Technological environmentTechnological environment
• Much important and wider role of technology in bank’s internalMuch important and wider role of technology in bank’s internal
control mechanisms and services offered by them.control mechanisms and services offered by them.
• Change of the concept of ‘branch banking’ to ‘anywhere banking’.Change of the concept of ‘branch banking’ to ‘anywhere banking’.
• An era of ‘cashless society’ with ‘electronic-purse’.An era of ‘cashless society’ with ‘electronic-purse’.
• Use of SMS and Internet as major tool of promotions and utility toUse of SMS and Internet as major tool of promotions and utility to
customers.customers.
• Simplified operations and customer handling.Simplified operations and customer handling.
• Home banking and Internet banking.Home banking and Internet banking.
All these technological changes have forced the bankersAll these technological changes have forced the bankers
to adopt Customer-Based Approach instead of Product-to adopt Customer-Based Approach instead of Product-
Based Approach.Based Approach.
12. PRODUCT MIXPRODUCT MIX
ATM Network
7-Day Banking
Telebanking
iConnect-Internet Banking
It includes all different product lines a company offers to
its customers.
Savings Account
14. PRICE MIXPRICE MIX
It is nothing but the interest rates charged by the different
banks.
ATM Card Issue Free – 2 ATM cards issued
free if it joint account
Add – on Card RS. 100 – Beyond 2 cards
Duplicate Card Rs. 100
15. Other General ChargesOther 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
17. PLACE MIXPLACE MIX
It is the location analysis for banks branches. Some of the
factors affecting the location analysis are :-
The Trade Area
Population Characteristics
Commercial Structure
Proximity to other convenient Outlets
Real Estate Rates
Proximity to Public Transportation
Location of Competition
Visibility
Access
18. PROMOTION MIXPROMOTION MIX
It is making the customer more and more aware of the
services and benefits provided by the banks.
Different ways of promotion are :-
Public Relations
Personal Selling
Sales Promotion
Word-of-mouth Promotion
Telemarketing
Internet
19. PEOPLEPEOPLE
• An essential ingredient to any serviceAn essential ingredient to any service
provision is the use of appropriateprovision is the use of appropriate
staff and people.staff and people. RecruitingRecruiting the rightthe right
staff andstaff and trainingtraining them appropriatelythem appropriately
in the delivery of their service isin the delivery of their service is
essential if the organisation wants toessential if the organisation wants to
obtain a form of competitiveobtain a form of competitive
advantage. Consumers makeadvantage. Consumers make
judgements and deliver perceptions ofjudgements and deliver perceptions of
the service based on the employeesthe service based on the employees
they interact with. Staff should havethey interact with. Staff should have
the appropriate interpersonal skills,the appropriate interpersonal skills,
aptititude, and service knowledge toaptititude, and service knowledge to
provide the service that consumers areprovide the service that consumers are
paying for.paying for.
20. PROCESSPROCESS
• The process mix constitutes the overall procedureThe process mix constitutes the overall procedure
involved in using the services offered by the bank. Ainvolved in using the services offered by the bank. A
process should be such that the customer is easilyprocess should be such that the customer is easily
able to understand and easy to follow.able to understand and easy to follow.
• Let’s take for example the process for application forLet’s take for example the process for application for
a car loan.a car loan.
Now this mainly involves 3 things.Now this mainly involves 3 things.
1.1. Producing of proper documentsProducing of proper documents
2.2. Filling up of application formFilling up of application form
3.3. Paying for the initial down payment.Paying for the initial down payment.
The smaller and simpler the procedure, the betterThe smaller and simpler the procedure, the better
the process, and the customer will be more satisfied.
21. PROCESS CONT…..PROCESS CONT…..
• It Refers to the systems used to assist the organisationIt Refers to the systems used to assist the organisation
in delivering the service.in delivering the service.
For example:- Banks that send out Credit CardsFor example:- Banks that send out Credit Cards
automatically when their customers old one has expiredautomatically when their customers old one has expired
again require an efficient process to identify expiry datesagain require an efficient process to identify expiry dates
and renewal. An efficient service that replaces old creditand renewal. An efficient service that replaces old credit
cards will foster consumer loyalty and confidence in thecards will foster consumer loyalty and confidence in the
company.company.
22. PHYSICAL EVIDENCEPHYSICAL EVIDENCE
• Physical evidence is the overall layout of thePhysical evidence is the overall layout of the
place i.e. how the entire bank has beenplace i.e. how the entire bank has been
designed. Physical evidence refers to alldesigned. Physical evidence refers to all
those factors that help make the processthose factors that help make the process
much easier and smoother.much easier and smoother.
• For example, in case of a bank, the physicalFor example, in case of a bank, the physical
evidence would be the placement of theevidence would be the placement of the
customer service executive’s desk, or thecustomer service executive’s desk, or the
location of the place for depositing cheques.location of the place for depositing cheques.
The more the bank does to make the serviceThe more the bank does to make the service
easiereasier
and better the more satisfied will be theand better the more satisfied will be the
customer.customer.
23. Service QualityService Quality
Reasons why a customer should be givenReasons why a customer should be given
QUALITY SERVICESQUALITY SERVICES --
– Industry is competitiveIndustry is competitive
– Difficult to win back a lost customerDifficult to win back a lost customer
– Most customers don’t complain but just optMost customers don’t complain but just opt
outout
24. RATER AnalysisRATER Analysis - Indian Overseas- Indian Overseas
BankBank
Zeithaml, Bitner and ParsuramanZeithaml, Bitner and Parsuraman
RELIABILITY
ASSURANCE
TANGIBILITYEMPATHY
RESPONSIVENESS
25. ReliabilityReliability
• Ability to perform the promised service dependably andAbility to perform the promised service dependably and
accurately.accurately.
• ““No Excuses” service delivery.No Excuses” service delivery.
• Indian Overseas BankIndian Overseas Bank
• Faces stiff competitionFaces stiff competition
• Existing customers have faith, loyalty and trust in thisExisting customers have faith, loyalty and trust in this
bank.bank.
• Provide them best and reliable servicesProvide them best and reliable services
• For e.g., no person likes to wait to withdraw his/herFor e.g., no person likes to wait to withdraw his/her
money. Indian Overseas Bank has ensured that whoevermoney. Indian Overseas Bank has ensured that whoever
comes in for cash withdrawal will receive his/her cashcomes in for cash withdrawal will receive his/her cash
within five to ten minutes.within five to ten minutes.
26. AssuranceAssurance
• Employee’s knowledge and courtesy and the ability of the firmEmployee’s knowledge and courtesy and the ability of the firm
and its employees to inspire trust and confidence.and its employees to inspire trust and confidence.
• Indian Overseas BankIndian Overseas Bank
• Every customer treated with utmost careEvery customer treated with utmost care
• Problem solved with great enthusiasm.Problem solved with great enthusiasm.
• Customers are assuredCustomers are assured
– the money they invest is securethe money they invest is secure
– the interest rate that is being provided to them is at par orthe interest rate that is being provided to them is at par or
higher.higher.
– the money they have invested will be returned to them asthe money they have invested will be returned to them as
and when required with proper interest.and when required with proper interest.
• Empower their customer contact peopleEmpower their customer contact people
• Regularly train them in skills to build trust and loyalty betweenRegularly train them in skills to build trust and loyalty between
employees and customers.employees and customers.
• Assigned some of their staff members to build relationshipsAssigned some of their staff members to build relationships
with the customers by getting to know them personally.with the customers by getting to know them personally.
27. TangibilityTangibility
• The appearances of physical facilities, equipments,The appearances of physical facilities, equipments,
personnel and communication materials.personnel and communication materials.
• Indian Overseas BankIndian Overseas Bank
• Entire premise is air-conditioned.Entire premise is air-conditioned.
• Computerized systems in place - quick, accurate andComputerized systems in place - quick, accurate and
efficient service can be provided to the customers.efficient service can be provided to the customers.
• Tables and chairs are conveniently located.Tables and chairs are conveniently located.
• Personnel always have a cheerful and helpingPersonnel always have a cheerful and helping
behaviour.behaviour.
• Entire place done up in bright colours - customer canEntire place done up in bright colours - customer can
immediately feel the warmth and the radiance of theimmediately feel the warmth and the radiance of the
place.place.
28. EmpathyEmpathy
• The caring, individualized attention the firmThe caring, individualized attention the firm
provides its customers.provides its customers.
• Indian Overseas BankIndian Overseas Bank
• Employees are always polite humble andEmployees are always polite humble and
helpful.helpful.
• Ready to go out of the way.Ready to go out of the way.
• Regularly holds seminars and trainingRegularly holds seminars and training
workshops for employees so that they canworkshops for employees so that they can
understand the consumer better and thus serveunderstand the consumer better and thus serve
them better.them better.
29. ResponsivenessResponsiveness
• The willingness to help the customer andThe willingness to help the customer and
provide him with immediate and fast service.provide him with immediate and fast service.
• Indian Overseas BankIndian Overseas Bank
• Prompt at providing customers with informationPrompt at providing customers with information
and services they seek.and services they seek.
• Prompt when it comes to resolving complaints ofPrompt when it comes to resolving complaints of
customers.customers.
• The customers, in their feedback form,The customers, in their feedback form,
mentioned this as one of the most importantmentioned this as one of the most important
factor that has prompted them to continue withfactor that has prompted them to continue with
this bank.this bank.
30. SERVICE RECOVERYSERVICE RECOVERY
Service recovery pertains to the actions taken by an organizationService recovery pertains to the actions taken by an organization
in response to a service failure. When a customer complains, hein response to a service failure. When a customer complains, he
expects 3 types of fairness-expects 3 types of fairness-
• Outcome FairnessOutcome Fairness :: Charging the customer for a service whichCharging the customer for a service which
was a result of a mistake on bank’s part.was a result of a mistake on bank’s part.
• Procedural FairnessProcedural Fairness :: No efforts made by any of theNo efforts made by any of the
employees to help the customer.employees to help the customer.
• Interaction fairnessInteraction fairness : Non-fulfillment of the promises to the: Non-fulfillment of the promises to the
customer, lack of apologizing act.customer, lack of apologizing act.
31. Complaint Handling-HDFC BankComplaint Handling-HDFC Bank
• Even the best firms are going to find themselves facing complaintsEven the best firms are going to find themselves facing complaints
from customers.from customers.
• How to diffuse them and then turn them into positive experiences forHow to diffuse them and then turn them into positive experiences for
all involved.all involved.
• Turned to the airline industry for inspiration.Turned to the airline industry for inspiration.
• Maps the customer flow at its branch.Maps the customer flow at its branch.
'May I help you' desk at the reception.'May I help you' desk at the reception.
Efficiency parameters for each sub-process.Efficiency parameters for each sub-process.
• Monitors how long it takes for customer transactions as well asMonitors how long it takes for customer transactions as well as
complaints to get processed.complaints to get processed.
• ‘‘Moments of truth' surveys modeled after the airline industry'sMoments of truth' surveys modeled after the airline industry's
Satisfaction surveys.Satisfaction surveys.
• Believes that unless they change to create convenience for theirBelieves that unless they change to create convenience for their
customer and add to his brand experience, they will fail to capture thecustomer and add to his brand experience, they will fail to capture the
loyalty.loyalty.
32. COMPLAINT RESOLUTION MODELCOMPLAINT RESOLUTION MODEL
(CRM) of HDFC Bank(CRM) of HDFC Bank
• Not as a mere complaintNot as a mere complaint
but as an issue.but as an issue.
• If there is any complaintIf there is any complaint
either by an employee oreither by an employee or
a customer in any branch;a customer in any branch;
it will be looked into andit will be looked into and
resolved in 24 hours.resolved in 24 hours.