Customer Satisfaction

Comparative Study of customer satisfaction in public sector and private sectors banks Table of Contents Acknowledgment…………………………………………………1 Executive Summary………………………………. ……………… 3 Introduction……………………………………………………….. 4 Literature Review…………………………………………………6 Banking Industry: An Overview…………………………………. 12 Objective of Study………………………………………………. 12 Research Methodology………………………………………….. 13 Data Analysis……………………………………………………14 Findings……………………………………………………. …… 16 Recommendations………………………………………………. 17 Limitations of Study…………………………………………….. 8 Bibliography…………………………………………………….. 18 Questionnaire……………………………………………………19 “COMPARATIVE STUDY OF CUSTOMER SATISFACTION INPUBLIC SECTOR AND PRIVATE SECTOR BANKS” EXECUTIVE SUMMARY The working of the customer’s mind is a mystery which is difficult to solve andunderstanding the nuances of what customer satisfaction is, a challenging task. This exercise in the context of the banking industry will give us an insight into the parameters of customer satisfaction and their measurement. In the organized segment, banking system occupies an important place in nation’s economy.

It plays a pivotal role in the economic development of a country and forms the core of the money market in an advanced country. The commercial banks in India comprise of both Public sector as well as private sector banks. There are total 28 Public sector and 27 private sector banks are functioning in the country presently. Banks have to deal with many customers everyday and render various types of services to its customer. It’s a well known fact that no business can exist without customers.

Not so long ago, accessing our own money was about setting aside a couple of hours, getting to the bank before closing time, standing in one queue to get a token and then in another to collect the cash. Those were the pre-economic reforms days, when the banking sector primarily consisted of public sector banks. The banking industry like many other financial service industries is facing a rapidly changing market, new technologies, economic uncertainties, fierce competition and more demanding customers and the changing climate has presented an unprecedented set of challenges .

Banking is a customer oriented services industry, therefore, the customer is the focus and customer service is the differentiating factors . The banking industry in India has undergone sea change since post independence. More recently, liberalization, the opening up of the economy in the 90s and the government ‘decision to privatize banks by reduction in state ownership culminated in the banking reforms based on the recommendations of Narasimha Committee. The prime mover for banks today is profit, with clear indications from the government to ‘perform or perish’.

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Banks have also started realizing that business depends on client service and the satisfaction of the customer and this is compelling them to improve customer service and build up relationship with customers. The main driver of this change is changing customer needs and expectations. Customersin urban India no longer want to wait in long queues and spend hours in bankingtransactions. This change in customer attitude has gone hand in hand with thedevelopment of ATMs, phone and net banking along with availability of service right atthe customer’s doorstep.

With the emergence of universal banking, banks aim to provideall banking product and service offering under one roof and their endeavor is to becustomer centric. With the emergence of economic reforms in world in general and inIndia in particular, private banks have come up in a big way with prime emphasis ontechnical and customer focused issues. The purpose of this paper is to compare the public sector banks and private sector banksin terms of customer satisfaction and to find out the various reasons of customer dissatisfaction in these banks.

The data was collected by getting the questionnaire filled by the respondents who were using the banking services.. INTRODUCTION In the organised segment, banking system occupies an important place in nation’seconomy. It plays a pivotal role in the economic development of a country and forms the core of the money market in an advanced country. The commercial banks in India comprise of both Public sector as well as private sector banks. There are total 28 Public sector and 27 private sector banks are functioning in the country presently.

Banks have to deal with many customers everyday and render various types of services to itscustomer. It a well known fact that no business can exist without customers. Customer satisfaction , a business term, is a measure of how products and servicessupplied by a company meet or surpass customer expectation. It is seen as a key performance indicator within business. In a competitive marketplace where businessescompete for customers, customer satisfaction is seen as a key differentiator andincreasingly has become a key element of business strategy.

Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and service to service. The state of satisfaction depends on a number of both psychological and physical variables. The banking industry like many other financial service industries is facing a rapidly changing market, new technologies, economic uncertainties, fierce competition and more demanding customers and the changing climate has presented an unprecedented set of challenges .

Banking is a customer oriented services industry, therefore, the customer isthe focus and customer service is the differentiating factors The banking industry in India has undergone sea change since post independence. More recently, liberalization, the opening up of the economy in the 90s and the government’s decision to privatize banks by reduction in state ownership culminated in the banking reforms based on the recommendations of Narasimha Committee. The prime mover for banks today is profit, with clear indications from the government to ‘perform or perish’.

Banks have also started realizing that business depends on client service and the satisfaction of the customer and this is compelling them to improve customer service and build up relationship with customers. With the current change in the functional orientation of banks, the purpose of banking is redefined. The main driver of this change is changing customer needs and expectations. Customers in urban India no longer want to wait in long queues and spend hours in banking transactions.

This change in customer attitude has gone hand in hand with the development of ATMs, phone and net banking along with availability of service right at the customer’s doorstep. With the emergence of universal banking, banks aim to provide all banking product and service offering under one roof and their endeavor is to be c ustomer centric. With the emergence of economic reforms in world in general and in India in particular, private banks have come up in a big way with prime emphasis on technical and customer focused issues.

LITERATURE REVIEW Not so long ago, accessing our own money was about setting aside a couple of hours, getting to the bank before closing time, standing in one queue to get a token and then in another to collect the cash. Those were the pre-economic reforms days, when the banking sector primarily consisted of public sector banks. Cut to the present day and the nature of banking has changed beyond recognition. With ATM cards, simple banking transactions like withdrawing and depositing money are easier than ever before.

For the tech-savvy, there is the option of banking online. Then next medium may just be your mobile. Even when it comes to products, the changes have been many. Graduating from simplesavings accounts and fixed and recurring deposits, banks now offer a host of productslike special savings account and sweep-in-account, no frills accounts and easy receiveaccount. Private sector banks may have taken the lead, but public sector banks, with their vast client base and unparalleled treasury of trust, are evolving their own brand of customer-friendliness.

Because satisfaction is basically a psychological state, care should be taken in the effortof quantitative measurement, although a large quantity of research in this area hasrecently been developed. Work done by Berry (Bart Allen) and Brodeur between 1990and 1998 defined ten ‘Quality Values’ which influence satisfaction behavior, further expanded by Berry in 2002 and known as the ten domains of satisfaction. These tendomains of satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access ,Environment, Inter-departmental Teamwork, Front line Service Behaviors, Commitmentto the Customer and Innovation.

These factors are emphasized for continuousimprovement and organizational change measurement and are most often utilized todevelop the architecture for satisfaction measurement as an integrated model. Work done by Parasuraman, Zeithaml and Berry (Leonard L) between 1985 and 1988 provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer’s expectation of performance and their perceived experience of performance. This provides the measurer with a satisfaction “gap” which is objective andquantitative in nature.

Work done by Cronin and Taylor propose the”confirmation/disconfirmation” theory of combining the “gap” described byParasuraman, Zeithaml and Berry as two different measures (perception and expectation of performance) into a single measurement of performance according to expectation. According to Garbrand, customer satisfaction equals perception of performance divided by expectation of performance. The usual measures of customer satisfaction involve a survey with a set of statements using a Likert Technique or scale.

The customer is asked to evaluate each statement and in term of their perception and expectation of performance of the organization being measured. The working of the customer’s mind is a mystery which is difficult to solve andunderstanding the nuances of what customer satisfaction is, a challenging task. This exercise in the context of the banking industry will give us an insight into the parameters of customer satisfaction and their measurement. This vital information will help us to build satisfaction amongst the customers and customer loyalty in the long run which is anintegral part of any business.

The customer’s requirements must be translated andquantified into measurable targets. This provides an easy way to monitor improvements, and deciding upon the attributes that need to be concentrated on in order to improve customer satisfaction. We can recognize where we need to make changes to create improvements and determine if these changes, after implemented, have led to increased customer satisfaction. “If you cannot measure it, you cannot improve it. ” – Lord William Thomson Kelvin (1824-1907). MEASURING CUSTOMER SATISFACTION IN THE BANKING INDUSTRY Introduction:

Banking operations are becoming increasingly customer dictated. The demand for ‘banking supermalls’ offering one-stop integrated financial services is well on the rise. The ability of banks to offer clients access to several markets for different classes of financial instruments has become a valuable competitive edge. Convergence in theindustry to cater to the changing demographic expectations is now more than evident. Bancassurance and other forms of cross selling and strategic alliances will soon alter the business dynamics of banks and fuel the process of consolidation for increased scope of business and revenue.

The thrust on farm sector, health sector and services offers severalinvestment linkages. In short, the domestic economy is an increasing pie which offers extensive economies of scale that only large banks will be in a position to tap. With the phenomenal increase in the country’s population and the increased demand for banking services; speed, service quality and customer satisfaction are going to bekey differentiators for each bank’s future success.

Thus it is imperative for banks toget useful feedback on their actual response time and customer service quality aspects of retail banking, which in turn will help them take positive steps to maintain a competitive edge. The working of the customer’s mind is a mystery which is difficult to solve andunderstanding the nuances of what customer satisfaction is, a challenging task. This exercise in the context of the banking industry will give us an insight into the parameters of customer satisfaction and their measurement. This vital information will help us to build satisfaction amongst the ustomers and customer loyalty in the long run which is anintegral part of any business. The customer’s requirements must be translated andquantified into measurable targets. This provides an easy way to monitor improvements, and deciding upon the attributes that need to be concentrated on in order to improve customer satisfaction. We can recognize where we need to make changes to create improvements and determine if these changes, after implemented, have led to increased customer satisfaction. “If you cannot measure it, you cannot improve it. ” – Lord William Thomson Kelvin (1824-1907). The Need to Measure Customer Satisfaction:

Satisfied customers are central to optimal performance and financial returns. In many places in the world, business organizations have been elevating the role of the customer to that of a key stakeholder over the past twenty years. Customers are viewed as a groupwhose satisfaction with the enterprise must be incorporated in strategic planning efforts. Forward-looking companies are finding value in directly measuring and trackingcustomer satisfaction (CS) as an important strategic success indicator. Evidence ismounting that placing a high priority on CS is critical to improved organizational performance in a global marketplace.

With better understanding of customers’ perceptions, companies can determine theactions required to meet the customers’ needs. They can identify their own strengths andweaknesses, where they stand in comparison to their competitors, chart out path future progress and improvement. Customer satisfaction measurement helps to promote anincreased focus on customer outcomes and stimulate improvements in the work practicesand processes used within the company. When buyers are powerful, the health and strength of the company’s relationship with itscustomers – its most critical economic asset – is its best predictor of the future.

Assets onthe balance sheet – basically assets of production – are good predictors only when buyersare weak. So it is no wonder that the relationship between those assets and future incomeis becoming more and more tenuous. As buyers become empowered, sellers have nochoice but to adapt. Focusing on competition has its place, but with buyer power on therise, it is more important to pay attention to the customer. Customer satisfaction is quite a complex issue and there is a lot of debate and confusionabout what exactly is required and how to go about it.

This article is an attempt to reviewthe necessary requirements, and discuss the steps that need to be taken in order tomeasure and track customer satisfaction. What constitutes Satisfaction? The meaning of satisfaction:”Satisfied” has a range of meanings to individuals, but itgenerally seems to be a positive assessment of the service. The word “satisfied” itself had a number of different meanings for respondents,which can be split into the broad themes of contentment/happiness, relief, achieving aims, achieving aims and happy with outcome and the fact that they did not encounter any hassle: Happy – Content Happy, pretty happy, quite happy – Pleased – Walked out of there feeling good – Walk out of there chuffed – Grateful the service has been OK Relieved – Thank God for that – Phew – At ease – Can relax – Stress reduction – Secure – Safe – Go to the bank with a troubled mind and they sort it out for you – Sleep at night without worrying what’s going to go on – Everything is sorted out in your mind and you’re happy – Secure, you know the money has been sorted out – Knowing the money’s going to be there Achieving aims – Achieving your aim or goal – Getting what you went in for – Achieve whatever it is you wanted to achieve Come away with a proportion of what you want – Got what wanted in the end- Got what you went down for – Everything went according to plan, the way it should have done – Met expectations – To be unsatisfied is when you come out and you are still on the same level as you were before Achieving aims, and happy with outcome – Happy with the results – Happy with what you’ve got – When you walk out you’re happy they’ve sorted everything out and quickly – Happy with outcome – Pleased with what’s happened – Content with what’s been done for you – A feeling of happiness having achieved your goal You go in there feeling down and the only way you are going to come out satisfied is if they have been good to you No hassle – Not frustrated – Everything goes smooth – No hassle- No problems – No hassle getting there – Straightforward Clearly then there is some variation in understanding of the term. Some of theinterpretations fit with the definitions used in much of the service quality and satisfaction literature, where Satisfaction is viewed as a zero state, merely an assessment that theservice is adequate, as opposed to “delight” which reflects a service that exceedsexpectations.

However, most respondents have more positive interpretations of the term. These questions allow us to identify priorities for improvement by comparing satisfaction with stated (overt) importance, comparing satisfaction with modeled (covert) importance(from identifying key drivers of overall satisfaction), as well as respondents’ own stated priorities. Service Quality and Customer Satisfaction: There is a great deal of discussion and disagreement in the literature about the distinction between service quality and satisfaction.

The service quality school view satisfaction as an antecedent of service quality – satisfaction with a number of individual transactions “decay” into an overall attitude towards service quality. The satisfaction school holds the opposite view that assessments of service quality lead to an overall attitude towards the service that they call satisfaction. There is obviously a strong link between customer satisfaction and customer retention. Customer’s perception of Service and Quality of product will determine the success of the product or service in the market.

If experience of the service greatly exceeds the expectations clients had of the service then satisfaction will be high, and vice versa.. In the service quality literature, perceptions of service delivery are measured separately from customer expectations, and the gap between the two provides a measure of service quality. Expectations and Customer Satisfaction: Expectations have a central role in influencing satisfaction with services, and these inturn are determined by a very wide range of factors lower expectations will result in higher satisfaction ratings for any given level of service quality.

This would seem sensible; for example, poor previous experience with the service or other similar services is likely to result in it being easier to pleasantly surprise customers. However, there are clearly circumstances where negative preconceptions of a service provider will lead to lower expectations, but will also make it harder to achieve high satisfaction ratings – and where positive preconceptions and high expectations make positive ratings more likely. The expectations theory in much of the literature therefore seems to be an over-simplification.

BANKING INDUSTRY : AN OVERVIEW For centuries banks have played an important role in in fnancial system of the country. The vital role continues even today although the form of banking have changed todaywith changing need of the economy and individuals. With expansion of trade andcommerce, the concept of banking gained importance. The of banking transcended fromindividuals to groups and later to companies. During the Moghul period the indigenous bankers played a very important role in lending money and financing foreign trade inIndia.

During British rule the agency houses carried on the banking business. TheBanking system in India has three tiers. There are scheduled commercial banks; theregional rural banks; and the cooperative banks. The scheduled commercial banksconstitute those banks which are included in the second schedule of RBI Act 1934. In the organised segment, banking system occupies an important place in nation’seconomy. It plays a pivotal role in the economic development of a country and forms thecore of the money market in an advanced country.

The commercial banks in Indiacomprise of both Public sector as well as private sector banks. There are total 28 Publicsector and 27 private sector banks are functioning in the country presently. Banks have todeal with many customers everyday and render various types of services to itscustomer. It’s a well known fact that no business can exist without customers. OBJECTIVE OF THE STUDY The objective of this study is to compare the public sector banks and private sector banksin terms of customer satisfaction and to find out the various reasons of customer dissatisfaction in these banks

SCOPE OF THE STUDY The scope of the study is confined in comparing the Public sector and private sector banks in terms of customer satisfaction. The study will be undertaken on the basis of sample survey. Research Methodology Sample and data collection This survey was conducted in the context of banking services. 50 percent of the datawere collected in face-to-face interviews of customers coming to banks. For theremaining 50 percent, the data were collected by visiting the customer’s homes. Thestudy provides a representative sample of various banks customers in Delhi only.

Research design The research design would be descriptive and cross sectional Data collection The data would be collected from primary source through questionnaires and interviews. Sample size The sample would be selected on random basis. A sample of 50 respondents would beUsed in the research. Data Sources Both Secondary and Primary Sources of data will be used. The major type of information used is primary data. This is done thru primary survey. The literature review is a secondary data type. The sources include books, periodicals,websites, printed literature etc.

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