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A Dissertation submitted in partial requirements for the award of MBA Degree of Bangalore University By Ms Darshana Patel (Reg no: 04XQCM6021) Under the guidance of Dr. K V Prabhakar Senior Professor, MPBIM, Bangalore
M.P. Birla Institute of Management,
Associate Bharatiya Vidya Bhavan, No 53, Race Course Road, Bangalore-560001 2006.
The most important objective of this study is to reduce the turnaround time taken for a simple account opening. The tools used to determine the main reasons for such delays are identified in the Pareto Charts, Service Switching Diagram and surveys through questionnaires. The major findings of this research highlight customer expectation from the banks services, actual and expected turnaround time for account opening and how they rate their bank in terms of service provided. It was however found that change in RBI guidelines was the main cause of such delays with other minor causes. To eliminate the reasons for delays, separate instruction forms are recommended titled “Help us to serve You better” that brings about clarity while filling a form. Also the application forms can be simplified to make it easy for a lay man to fill in. The following pages give a detailed study on “Account Opening Delays” or AOD with suitable recommendations.
M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan
I hereby declare that this dissertation entitled, “TOTAL QUALITY MANAGEMENT at HDFC Bank” is a bonafide study, completed under the guidance and supervision of Dr. K V Prabhakar, Senior Professor, M.P.Birla Institute of Management, Bangalore, (Internal Guide) and Mr. Baban Balan, HDFC Bank, Bangalore (External Guide). I further declare that this dissertation is the result of my own efforts and that it has not been submitted to any other University or Institute for the award of a degree or diploma or any degree or other similar title of recognition.
Place: Bangalore Date:
M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan
(Internal Guide) and Mr. Baban Balan. Senior Professor. Bangalore (External Guide) Place: Bangalore Date: (Dr.P.Certificate I hereby certify that this dissertation entitled “TOTAL QUALITY MANAGEMENT at HDFC Bank” has been prepared by Ms. Bangalore.Nagesh S Malavalli) Principal M.P. K V Prabhakar. M. HDFC Bank.Birla Institute of Management Associate Bharatiya Vidya Bhavan 4 .Darshana.Patel under the guidance and supervision of Dr.Birla Institute of Management.
P.Patel under my guidance and supervision. K V Prabhakar) Internal Guide M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 5 .Certificate I hereby certify that this dissertation entitled “TOTAL QUALITY MANAGEMENT at HDFC Bank” is the result of research work carried out by Ms.Darshana. Place: Bangalore Date: (Dr.
Birla Institute of Management Associate Bharatiya Vidya Bhavan 6 .P.External Guides Certificate M.
Quality Initiatives Group.Prabhakar. M. Credit also goes to my parents. this report would have been incomplete. for his guidance and support.P. Manager. where his influence stops. he can never tell. Personal Banker.Acknowledgement It is said “A teacher affects eternity. THANK YOU ONE AND ALL. for highlighting certain aspects that I needed to cover and also in framing the final report.” I would like to take this opportunity to thank my project guide. Shanmugam for his guidance in the area of Quality Management. My sincere gratitude to Ms. Dr.V.Birla Institute of Management Associate Bharatiya Vidya Bhavan 7 . HDFC Bank.HDFC for helping me to choose this organisation for a detailed study. I would also like to thank Prof. Kasturba Road branch. without whose moral support and inspiration. I am also grateful to Mr. Baban Balan. Mona Mitter.K.
Birla Institute of Management Associate Bharatiya Vidya Bhavan 8 .Contents Particulars Introduction Industry Profile Company Profile HDFC and Competitors Area of study Problem Statement Research Objective Research Methodology Research Gap Analysis and Data Interpretation Recommendations Annexure Glossary Bibliography Directions for further research Page Number 10 13 17 21 24 29 32 34 38 40 60 66 71 73 76 M.P.
P.List of tables and charts Particulars Indian Banking Structure Account Opening Procedure Pareto Chart Root Cause Diagram Service Switching Behaviour Table 1 Chart 1 Graph 1 Table 2 Graph 2 Table 3 Graph 3 Quality Function Deployment M.Birla Institute of Management Associate Bharatiya Vidya Bhavan Page Number 15 27 41-46 47 49 52 52 53 54 54 55 56 58 9 .
Birla Institute of Management Associate Bharatiya Vidya Bhavan 10 .CHAPTER 1: INTRODUCTION M.P.
A process is defines as a systematic series of actions directed to the achievement of a goal. the performance deviates from the expected standard. the entire process can go haywire. They are Output of service processes are not well defined as manufactured products. reinforcing technology. Most service processes involve greater interaction with customer. risk management.Banking sector faces lot of challenges. Lot of care needs to be taken while monitoring them. The process therefore has to be: Goal oriented Systematic Capable Legitimate TQM also involves Services Process Design and is different from manufacturing process design. if at the initial steps. It varies from improving profitability. customer orientation to meeting international standards. M. However.P. Each challenge faces a set of steps and procedures. HDFC wants to implement the concept the Total Quality Management (TQM) in the process of account openings.Birla Institute of Management Associate Bharatiya Vidya Bhavan 11 . Customers cannot define their needs for services until after they have some reference or comparison.
even though perceived simple.P. Customer Relationship Management is leveraged to Account Opening Delays at HDFC Bank to gain an insight into the banks problem. it results in accumulation of delays and brings down the efficiency of the bank and finally fails to meet the customer's expectation. M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 12 . we will see how a primary function of the bank like account opening. This detailed report relates the issue of account opening delays to the customer’s perception of the bank. If this procedure is not carried out effectively initially.In the following pages. In the pages to come. undergoes certain procedures.
P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 13 .INDUSTRY PROFILE M.
non-scheduled banks and scheduled banks. The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass banking. The structure and M. For a financial system to mobilize and allocate savings of the country successfully and positively and productively there must be a class of financial institutions.000 branches spread across the country. They are also the most important depositories of public savings and most important disbursers of finance. 1949 can be broadly classified into two major categories. This in turn resulted in a significant growth in the geographical coverage of banks.P. Scheduled banks comprise commercial banks and the co-operative banks. In terms of ownership. Commercial banks are the oldest and fastest growing intermediaries in India. These banks have over 67. commercial banks can be further grouped into nationalized banks. regional rural banks and private sector banks (the old/ new domestic and foreign). Every bank had to earmark a minimum percentage of their loan portfolio to sectors identified as “priority sectors”. which is governed by the Banking Regulation Act of India.Birla Institute of Management Associate Bharatiya Vidya Bhavan 14 .The Indian Banking Industry. the State Bank of India and its group banks.
2.working of the banking system are integral to a country’s financial stability and economic growth. M. Increase in banking habit. Banks Indian Public Sector Banks State Bank of India & its subsidiaries Commercial Bank Foreign Private Sector Banks (Old & New) Other Nationalised Banks Non-scheduled Banks Central Coop. Banks & Primary Credit Societies Commercial Bank Regional Rural Banks IndustryThe factors that influence the growth of banks are the following1. Expansion in banking facilities. Increase in national income.P. The following chart gives the structure of the Indian Banking Indian Banking System Reserve Bank of India Scheduled Banks State Coop. 3. Inflows of deposits from Non Resident Indians.Birla Institute of Management Associate Bharatiya Vidya Bhavan 15 . 4.
V.K. State Bank of India – headed by A. Canara Bank.Kamath (MD & CEO) 3. use traditional ways of banking.headed by Mr.Even though Public Sector Banking accounts for 78% of total banking industry.Purwar (Chairman) 4. HDFC Bank – headed by Aditya Puri 2. its main competitors and what problems the bank is facing with respect to account opening delays. M.headed by Walter Wriston (CEO) 5. phone banking. M B N Rao (CMD) The following pages will give a detailed insight in to HDFC Bank..Birla Institute of Management Associate Bharatiya Vidya Bhavan 16 . Private sector banks have pioneered internet banking . ATM’s and so on. The banking industry is currently dominated by the following five top players- 1. ICICI Bank – headed by K. Citibank.P.
Birla Institute of Management Associate Bharatiya Vidya Bhavan 17 .CHAPTER 2: PROFILE OF HDFC BANK M.P.
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. M. Its awards and accolades for the year 2005 include the following- Asiamoney Awards Asiamoney Awards Best Domestic Commercial Bank Best Cash Management Bank India . with its registered office in Mumbai. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian Bank". as part of the RBI's liberalisation of the Indian Banking Industry in 1994.Birla Institute of Management Associate Bharatiya Vidya Bhavan 18 . The Business Today-KPMG Survey published in the leading Indian business magazine Business Today has named HDFC Bank "Best Bank in India" for the third consecutive year in 2005.P. Hong Kong-based Finance Asia magazine Economic Times Awards "Best Bank in India" "Company of the Year" Award for Corporate Excellence 2004-05. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited'. India.
8 Cr.The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best Trade Finance Bank" in India. in 2006. Currently they have a net profit for the year quarter ended 31st March 2006 of Rs.2000. 100 million. HDFC was promoted with an initial share capital of Rs. and to promote home ownership. for commitment to TQM. It has also received a CII-EXIM Bank Commendation Cert. M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 19 . Business Objectives The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner.870. HDFC Bank named the "Most Customer Responsive Company Banking and Financial Services in The Economic Times .Avaya Global Connect Customer Responsiveness Awards 2005" HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A Country Awards 2005. Background HDFC was incorporated in 1977 with the primary objective of meeting a social need – that of promoting home ownership by providing long-term finance to households for their housing needs.
Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets. and e) to grow through diversification by leveraging off the existing client base.. Credit Information Bureau (India) Limited Other Companies Co-Promoted by HDFC M. Organisational Goals HDFC’s main goals are to a) develop close relationships with individual households. c) maintain its position as the premier housing finance institution in the country d) provide consistently high returns to shareholders. b) maintain its position as the premier housing finance institution in the country. SUBSIDIARIES AND ASSOCIATE COMPANIES HDFC Bank HDFC Mutual Fund HDFC Standard Life Insurance Company HDFC Realty HDFC Chubb General Insurance Company Ltd. VISION STATEMENTTo build a world class Indian bank.Birla Institute of Management Associate Bharatiya Vidya Bhavan 20 .P. MISSION STATEMENT – Use enabling technologies to provide value added products and services to customers at value for money price.
P.HDFC AND ITS COMPETITORS M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 21 .
SBI is the largest bank in India with deposits of Rs M.5 billion) at March 31. Bangladesh and South Africa.Birla Institute of Management Associate Bharatiya Vidya Bhavan 22 .05 billion(US$ 461 million) for the year ended March 31. ICICI Bank's equity shares are listed in India on the Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE) The next competitor bank is State Bank Of India or SBI. ICICI Bank is India's second-largest bank with total assets of about Rs. life and non-life insurance.000 ATMs. China.1.The immediate competitor of HDFC Bank is ICICI Bank. 20.P. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. 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 specialised subsidiaries and affiliates in the areas of investment banking.676. ICICI Bank currently has subsidiaries in the United Kingdom. 2005 (Rs. United Arab Emirates. 2005 and profit after tax of Rs. ICICI Bank has a network of about 573 branches and extension counters and over 2. Canada and Russia.59 billion(US$ 38. branches in Singapore and Bahrain and representative offices in the United States.37 billion(US$ 376 million) in fiscal 2004). venture capital and asset management. 16.
improve service levels. it will cover over 10. M. 2005. and improve operating efficiency to counter the threat of competition effectively. and emerge as the strongest technology enabled distribution network in India.000 branches and ATMs of the State Bank group. provide new delivery platforms.P. It dominates the Indian banking sector with a market share of around 20% in terms of total banking sector deposits.3. Both these banks apply TQM to the services they provide. as the auditing bodies are neutral and not connected with the vendor in any way.000 crore as on March 31. The increasing focus on upgrading the technology back-bone of the bank will enable it to leverage its reach better. The increasing integration of SBI with its associate banks (associates) and subsidiaries will further strengthen its dominant position in the banking sector and position it as the country’s largest universal bank. Second. they establish credibility with clients. the certification process is quite rigorous and adept at identifying problem areas.67. External certifications have two basic advantages.Birla Institute of Management Associate Bharatiya Vidya Bhavan 23 . independent third parties that measure on specific operational parameters. First. Once the core banking solution (CBS) is fully implemented. because they are objective evaluations by credible. such as Customer Operations Performance Center (COPC) and the eServices Capability Model (eSCM). Also there are independent audits.
CHAPTER 3:CRITICAL ISSUE INVOLVED IN THE STUDY A/C Opening delays at various branches of the bank (South region) M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 24 .
It is expected that this document will impart greater transparency in dealing with the individual customers and create awareness among customers of their rights.Birla Institute of Management Associate Bharatiya Vidya Bhavan 25 . payment of interest on various deposit accounts. method of disposal of deposits of deceased depositors. 1949. etc. With liberalization in the financial system and deregulation of interest rates. This policy document on deposits outlines the guiding principles in respect of formulation of various deposit products offered by the Bank and terms and conditions governing the conduct of the account.P. for the benefit of customers. The depositors and their interests form the key area of the regulatory framework for banking in India and this has been enshrined in the Banking Regulation Act. The document recognises the rights of depositors and aims at dissemination of information with regard to various aspects of acceptance of deposits from the members of the public. banks are now free to formulate deposit products within the broad guidelines issued by the RBI. closure of deposit accounts.. The ultimate M. depositors are the major stakeholders of the Banking System. conduct and operations of various deposits accounts. In fact.One of the important functions of the Bank is to accept deposits from the public for the purpose of lending. The Reserve Bank of India is empowered to issue directives / advices on interest rates on deposits and other aspects regarding conduct of deposit accounts from time to time.
Detailed operational instructions on various deposit schemes and related services will be issued from time to time. the bank reiterates its commitments to individual customers outlined in Bankers' Fair Practice Code of Indian Banks' Association. However.Birla Institute of Management Associate Bharatiya Vidya Bhavan 26 . M. for a bank the processing of the application form involves a set of procedures with costs incurred at every stage. which the bank has to necessarily follow while opening an account. An account opening for a customer is easy as it involves just filling in a form and submitting it with proper id proofs. The RBI prescribes certain guidelines. The following flowchart gives the various procedures involved in opening an account with the HDFC Bank.objective is that the customer will get services they are rightfully entitled to receive without demand. As we all know. the primary function of a bank is to accept funds from public and henceforth. While adopting this policy. an account needs to be created.P. This document is a broad framework under which the rights of common depositors are recognized.
P.igx Start Customer walks into branch Sales Pitch made Customer decides to open account No Application form given to customer Yes A Customer requires A/c number immediately Yes Insta Account features explained to customer Customer consents for Insta Acount Yes Insta Account Kit Processed No No Customer fills in Account Opening Form B ID Proof Address proof Photograph PB contacts customer for addnl docs Yes Satisfactory Satisfactory Yes Satisfac tory Yes A Manager Excepti on Yes Manager Excepti on No Yes Customer able to produce addnl Docs No Customer submits form Ac not opened. Customer able to clear exception No Send docs to CPU Yes No PB Auth Checks Application form for completeness Courier Control Sheet prepared Approved Yes Send forms to CPU Forms received at CPU Forms sent to DVU DVU Identifies exception No Yes Puts form Returns form to branch No C Form sent to Imaging Dept on hold M.Birla Institute of Management Associate Bharatiya Vidya Bhavan Branch seeks exception approval Yes No Addnl Docs Reqd Yes B Doc satisfactory for DVU Yes No 27 . MC issued to cust for IP funds Yes No No Existing customer Yes No No Valid customer id provided No A Funds parked in Dummy A/c Addnl Doc Verified by PB Yes No Satisfac tory Yes C Clear Funds available No Form returned to PB PB contacts customer to clear exception.AOProcess.
Here.At the presale stage. it is seen if the application and documents comply with the rules of the RBI and depending on the outcome either the account is opened or the form is sent bank to the branch (can even be put on hold) for additional documents to be sent in. photographs and address proof. DVU is Data Verification Unit that is located in Chennai for south region (for north and west being Mumbai). In the “Fulfill” step. Once these are satisfactory.Birla Institute of Management Associate Bharatiya Vidya Bhavan 28 . the customer has a choice of getting an Insta Account for an immediate account number or can fill in the form for a normal one. The PB requires all documents relating to ID proof. Once the form is filled in by the customer. the funds to open the account are deposited in a Dummy account and the form is sent to Chennai for further verification. M. The main branches wherein such issues reached an alarming rate were the following Sarjapur Jaynagar Indiranagar M G Road The following pages will contain a detailed study on the branches and solutions will be recommended. it is verified by the PB (Personal Banker) and is sent to Chennai for verification.P.
P.CHAPTER 4 : PROBLEM STATEMENT M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 29 .
It is for the individual banks to determine list of acceptable documents. Its size is now comparable to some of the smaller public sector banks which dominate India's landscape. with its net profit growing at an annualised average rate of 104 per cent. RBI has lately mandated that certain information pertaining to the applicant (individual/corporate) need to necessarily be captured at the time of account opening.325 crore in 2004. banks have followed know your customer norms (KYC). the recent changes in the RBI rules with respect to account opening have reduced the efficiency of the bank thereby causing delays. For ensuring this.Birla Institute of Management Associate Bharatiya Vidya Bhavan 30 .P. Account opening involves various steps and hence processing expenses and delays occur if the documents do not suffice. It has grown at a blistering pace since 1995. Its retail loans have risen from Rs 845 crore in 2001 to Rs 7. The bank opens. M. The RBI does not specify the documents to be obtained. on an average atleast 25-30 accounts per week for its customers compared to its competitors who have an average of just 15-25 (for ICICI) and 10-12 (for SBI). source or destination of money is not revealed to the bank).HDFC Bank has 379 branches and 900 ATMs in 183 cities. However. This is called the AML/KYC form (AML-Anti Money Laundering i.e.
P. The bank has a comprehensive list of those documents which are acceptable for various account types on the basis of type of entity. M. These recent changes brought in by the RBI with respect to account opening have brought in a problem of delay in account opening. utility of accounts and facilities provided.The list of documents acceptable is dependent on the type of accounts being opened.Birla Institute of Management Associate Bharatiya Vidya Bhavan 31 .
Birla Institute of Management Associate Bharatiya Vidya Bhavan 32 .P.CHAPTER 5 : RESEARCH OBJECTIVE M.
Customer expectations about their bank through a survey with the help of a questionnaire. ii.P. M. iv.The project is undertaken with the following objective- i. Application of various statistical models to minimize the delays. Identifying the branches that are a victim to the RBI’s new rules.Birla Institute of Management Associate Bharatiya Vidya Bhavan 33 . Identifying the main reasons for the delays in account opening. iii.
Birla Institute of Management Associate Bharatiya Vidya Bhavan 34 .P.CHAPTER 6:RESEARCH METHODOLOGY M.
It is also called the 80-20 rule. Root-Cause analysis.Birla Institute of Management Associate Bharatiya Vidya Bhavan 35 . Study the database of the bank to get an insight into the working of the bank and its policies.P. The methodology used to conduct the research for the purpose of this dissertation includes: Sample survey of bank customers to gauge an idea on Customer Satisfaction Explore reasons for delays in account opening. Some of these branches have a really high rate of delays in account opening. It is a technique based on Pareto principle of “the vital few and trivial many”.The bank has divided the south region as S1 and S2 with branches under it. It is M.It is a diagram that gives the relationship between quality characteristic and its factors. To make the above observations. the following tools of Total Quality Management were used- Pareto analysis.is a bar chart that illustrates the frequency recurrence of a set of items.
A questionnaire titled “SERVICE QUALITY LEVERAGED EXISTING TO ACQUIRING NEW CUSTOMERS. SBI.a pictorial representation and is also called Fish Bone Diagram or Ishikawa diagram. Each cause is analysed thoroughly to find the most influential cause resulting in poor quality of service delivery. RETAINING CUSTOMERS AND REGAINING THE LOST CUSTOMERS” The questionnaire aims at getting a perception about the services provided by the bank to the customers and leverage it to the efficiency of in account opening.It refers to that concept that integrates a firms TQM efforts by unifying the four functional strategies1. This will vary from place to place and environment to environment. Marketing 2. Citibank. ICICI. Sales 3. Quality Function Deployment. Canara M. Sample Survey. Operations management The main quality characteristic is chosen and the major causes for the same are listed.Birla Institute of Management Associate Bharatiya Vidya Bhavan 36 . The respondents included customers from HDFC. Product design 4.P.
Birla Institute of Management Associate Bharatiya Vidya Bhavan 37 . All the data was fed into an excel sheet and necessary calculations for Z were done. The Z test was used to find any significant differences between the sample mean and a population mean. That is. Then. (The sample size taken was 50. a Z test is applied to verify the hypothesisH0: There is no difference between sample values and the population values. M. The in built statistical functions for a Z test was used to determine the values and conclusions were drawn based on the same.96. A sample questionnaire is enclosed at the end in Annexure. and the difference is statistically significant. z is greater than 1.P. The confidence level taken in this study is 95% i.bank.96 or less than -1. H1: There is a difference between sample values and the population values.e. it is so unlikely that the sample came from this population (5% chance or less) that we reject the null hypothesis and say that the sample is different from the population. mode and standard deviation.) It indicates how likely it is that a sample with a certain mean and standard deviation came from the population being studied—that it has a population mean. median. It included average.
Birla Institute of Management Associate Bharatiya Vidya Bhavan 38 .RESEARCH GAP M.P.
Hence. This had been leveraged to the concept of Customer Relationship Management.Birla Institute of Management Associate Bharatiya Vidya Bhavan 39 . the size of the sample is not very large and hence any predictions made on the population. the study is focused mainly on problems at Bangalore and the problems faced in Chennai remain undiscovered.The research includes analyzing the process of account opening. Also.P. an effort has been made to throw light on the process of account opening and the defects related to it. This procedure itself is divided into separate functions and is distribute in two places (Bangalore and Chennai). M. However. the survey was used to gauge customers’ perceptions about their banks. may at times be inaccurate. despite the gaps.
CHAPTER 7: ANALYSIS AND DATA INTERPRETATION M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 40 .
Birla Institute of Management Associate Bharatiya Vidya Bhavan 41 .00 0. South 1 25 20 15 10 5 0 Salem Sanjeeva Reddy Nagar Mehdipatnam Gaddianaram Jagadamba Centre Nungambakkam Secunderabad Hitec City Hyderabad Begumpet EC Nacharam Himayat Nagar Chanda Nagar RA Puram Guntur 120.00 20.00 60.00 Values In numbers Cumalative Branches Source-Field Investigation M.00 100.00 80. The Pareto charts are given below related to S1 and S2. On a detailed study it was found that the following branches in S1 and S2 were the main branches with high AOD’s.00 40.Pareto analysis It was identified that certain branches in S1 and S2 were reaching a high AOD Rate (Account Opening Delay).P.
00 20.P.00 80. from which relevant information had to be extracted from their database.00 100. (The data is ranges from 4th February to 2nd May).South 2 140 120 100 80 60 40 20 0 d ri on la m al d P ch ad ro m tto va c SB ni tta S ro t ha W c g B r le E ne an B EC ity C d oa R d a k ut gl ar ic oa n l P R a a t C IT or am p r or i K A 120. Major reasons were identified and tabulated to give the following Pareto charts for each branch- M. Jaynagar and Indiranagar.00 In numbers Cumalative i R Branches Source-Field Investigation The study in depth is divided into 4 branches wherein delays had reached an alarming rate compared to its competitors.Birla Institute of Management Associate Bharatiya Vidya Bhavan 42 . The branches visited were that of Sarjapur.00 0.00 40. M G Road.00 60.
HDFC Bank. 30 25 20 15 10 5 0 120. It was also found that the bank was understaffed.00 40. the signature of a senior level management is required. due to change in the company policies.00 60.00 20. This causes a delay in the bank procedure of account opening. M.At Sarjapur Branch. On speaking to the official there.P.00 in numbers cumalative d h d d d d c ed ed er s ed a/ u g la te late r ifie uire r ifie id at elat h o v l g t e e o q n r v re O en h re e r e t v pr re di ot o ss tur e ot o p ol g m f n n e n a h n r in y dr Na als ost i nd s fo tog na nt in ad A d S ig in e o P i e o r Fu rig C f ic Ph f Al O u s In Source-Field Investigation Observation At this branch. most of the account holders were employees of Wipro.00 80. Presently.00 0.00 100. it was found that the introduction letter to the bank was signed by the team lead. A bank official from this branch sits at the Wipro office and handles all queries of the account holders through e mails.Birla Institute of Management Associate Bharatiya Vidya Bhavan 43 .
Either the company information was inadequate or there was a signature mismatch. M.At M G Road Branch. HDFC Bank 30 25 20 15 10 5 0 Introduction letter/ID Reqd Co Info not given Signature Related Adress related Name related Others 120.00 80. Due to this it was found that most of the delays were caused by no proper introduction letter or ID proof (Refer graph).00 40.00 20.00 In numbers Cumalative Source-Field Investigation Observation This branch has a lot of corporate accounts and the value of transactions is also huge.00 0.00 100.Birla Institute of Management Associate Bharatiya Vidya Bhavan 44 .00 60.P.
00 20. the wok load seemed to be very heavy on all working days of the bank.00 60.00 Source-Field Investigation Observation This branch even though was well managed. The increase of work load seemed to be the major cause of reducing the efficiency of the bank.At Jaynagar branch.00 80.00 0.00 In numbers Cumalative 6 4 2 0 Board resolution is self attested Code differs(product and LC code) Permanent add reqd in AML form Address related(142 &143) Introduction letter not given/ID Signature related Name related FD related Branch code not indicated 40. M. the new concept of AML form seemed to cause a lot of inconvenience to the customers (refer Glossary for the meaning of AML).Birla Institute of Management Associate Bharatiya Vidya Bhavan 45 . The highest rate of delays was caused by signature mismatch.P. HDFC Bank.00 100. 14 12 10 8 120. Also.
00 40.At Indiranagar branch.00 60. The work load was very high and the staff was unable to cope up to the work pressure. M. There was no proper co ordination between the employees and customers kept coming back with complaints that irked the staff as well as the customers.Birla Institute of Management Associate Bharatiya Vidya Bhavan 46 . The above Pareto charts represent the reasons for which the application forms were rejected with the contributions of each reason indicated in the dotted lines.00 In numbers cumalative Source-Field Investigation Observation This branch was the most unorganized of all the above.00 80.00 20.00 100. HDFC Bank 30 25 20 15 10 5 0 un ds co .00 0.P. The meaning of certain banking terms are indicated in the glossary at the end.r el at re ed la te d A dd to re FD ss re la te d ot h si g n ers re la te co d de d i N am ffer s e re no no la te p pr d op ost in er g (8 id 3) su bm itt P ed an /fo ex rm is 60 tin g sa la ry in su ffi ci en tf 120.
Customers Employees Training 1 2 3 10 11 12 4 5 8 RECOMMENDATIONS 6 9 7 13 14 Account Opening Delays (AOD) External Factors Management Policies M. in detail.P. the following Fish Bone Diagram was formed.Root Cause Analysis This approach was used to analyse. the reasons that contribute to the delays in account opening.Birla Institute of Management Associate Bharatiya Vidya Bhavan 47 . On observing the customer database and working of the banks.
The numbers in the Root Cause Diagram indicated the following sub causes. These sub causes are a result of observations and analysis of database at the Sub reason Number 1 2 3 Reason Customers are in hurry Customers are illiterate Customer needs to be educated on bank needs and requirements 4 5 Increase of work load Reduction in efficiency due to miscommunications 6 7 8 9 10 11 12 13 14 Multi tasking Communication gaps Orientation Fundamentals not clear Change in RBI guidelines Break down of support systems Other uncontrollable factors Lengthy procedures for just a verification Application form is labourious to fill The sub reasons identified are a result of observing the process the bank follows to open an account. The main reasons are the parties involved in account opening.Birla Institute of Management Associate Bharatiya Vidya Bhavan 48 . M.P.
The following diagram gives another aspect to AOD that may result in service switching behaviour that needs to be avoided in any organisation.Birla Institute of Management Associate Bharatiya Vidya Bhavan 49 . SERVICE SWITCHING DIAGRAM Inconvenience Response to Service Failure Service Switching Behaviour Service Encounter Failures Core Service Failures Competition M.P.
M.P. Also.The head Inconvenience includes Location or time slots allotted Waiting for service The head Service Encounter Failure includes Uncaring Impolite Unknowledgeable The head Responsive Service Failure includes Negative response Reluctant response The head Competition includes Found better service elsewhere The head Core Service Failure includes Service mistakes Processing errors Service catastrophe The survey conducted will reveal if the bank’s services suffer from any of the above traits. it will aim at measuring the level of satisfaction the customers have when it comes to transacting with their bank.Birla Institute of Management Associate Bharatiya Vidya Bhavan 50 .
M. revealed the following findings. The survey done. The banks were HDFC Bank ICICI Bank SBI Citibank Canara Bank The hypothesis is framed as follows- H0: There is no difference between sample values and the population values. H1: There is a difference between sample values and the population values. The questionnaire was filled in by customers of the following banks to facilitate a comparative study of their efficiencies and leveraging it to account opening.Birla Institute of Management Associate Bharatiya Vidya Bhavan 51 .Survey with questionnaire The survey done with the help of questionnaire was aimed at knowing the customers perception about their bank. The following findings show that H0 is accepted. The aim was also to find out the effect of the sub causes (mentioned in the Root Cause Diagram) on account opening and to what extent it affected the banks mentioned.P.
Bank name HDFC ICICI SBI Citibank Canara bank Total Chart1 Name of bank Instantly Within Within More one hour one than day two days 1 0 7 1 3 0 2 4 1 1 2 3 1 3 2 1 1 1 6 7 Average 2.81 .73 Source-Field Investigation M.Table 1 The table will correlate the time taken by the three banks (HDFC.5 1.25 1 2. ICICI and SBI) to open an account.Birla Institute of Management Associate Bharatiya Vidya Bhavan 52 .50 .P.68 .25 2 Median 1 2.20 2 2 2 Total 9 9 9 9 9 45 Z value .50 Source-Field Investigation HDFC 2. This will show the efficiency of the banks and will indicate which bank has a competitive advantage.5 3 15 16 Standard Deviation 3.25 SBI 3 Citibank Canara Bank 2.25 ICICI 2.79 .
96 to -1. and hence it the null hypothesis can be accepted and it can be said that the sample does not differ from the population. Inspite of this. However it faces close competition with ICICI and SBI bank in the “within one day” category. it is seen that most of the banks open accounts of their customers in more than two days.Birla Institute of Management Associate Bharatiya Vidya Bhavan 53 .P. all the values lie between +1.Graph 1 Time taken by banks to open accounts 8 7 6 5 4 3 2 1 0 HDFC ICICI SBI Bank Citibank Canara Bank Instantly Within one hour Within one day More than 2 days Source-Field Investigation Interpretation From the above tabulated data. HDFC Bank has the highest reading of “within one day” category.96. it faces problems in certain branches that have been identified before. M. From the z test done for the sample.
78 ICICI 6. Statements Prompt service Courteous employees Caring employees Services at promised time Visually appealing Willingness to help Instills confidence HDFC 6 6.167 7 Canara Citibank Bank 7.16 5.56 7.33 8.33 6.67 6.11 Source-Field Investigation Graph 2 Perceived service levels of customers from their banks 10 8 6 4 2 0 Prompt service Courteous Caring Services at Visually Willingness Instills employees employees promised appealing to help confidence time Characteristics Made to feel safe while transacting HDFC ICICI SBI Citibank Canara Bank Source-Field Investigation M.167 6.5 7.67 5.167 5.7 6.P.83 7.67 6.Birla Institute of Management Associate Bharatiya Vidya Bhavan 54 .83 6.5 6.83 4.17 5.167 SBI 5.5 6.22 6.87 5.5 7.Table 2 :Perceived levels of services by customers at their banks (out of 9).64 Feel safe while transacting 8.89 6.83 6.11 6.167 5.11 5.167 6.5 7.67 6.83 5.67 6.89 7 6.33 4.
it was found in the survey that the traits of “courteous employees” and “caring for customers” were deteriorating.73 7 6 Source-Field Investigation M. ICICI though is a close competitor of HDFC. Table 3 Name of bank HDFC ICICI SBI Citibank Canara Bank Overall rating of the bank (out of 9) 6.P.78 5. This is because Citibank encourages net banking and imposes a fine on the customer if he enters the branch for a simple query. SBI is not perceived to be visually appealing. Old customers are used to the banks ways and are satisfied.Birla Institute of Management Associate Bharatiya Vidya Bhavan 55 .5 6. However. the new customers expect more from the bank. However.Interpretation We see that HDFC is perceived to be the safest bank while Citibank is perceived to be the most prompt bank.
P. Citibank.78 5. Hence it has the highest rating.5 6. M. ICICI Bank and finally Punjab National Bank.73 7 6 Source-Field Investigation Interpretation According to a recent survey. it was revealed that the top most respected bank in India today is SBI after which ranks HDFC.Graph 3 Overall Rating of the banks 8 7 6 5 4 3 2 1 0 HDFC ICICI SBI Citibank Canara Bank 6. when it comes to customer satisfaction in this survey. Citibank customers were the most satisfied as Net banking saved them lot of time and money. However.Birla Institute of Management Associate Bharatiya Vidya Bhavan 56 .
It refers to both determining what will satisfy the customer and secondly. In the manufacturing industry.Birla Institute of Management Associate Bharatiya Vidya Bhavan 57 . Exciting quality refers to traits that a customer does not expect and enhances the value of the product or process. The QFD process is linked by the following matrices- M. The two terms essential here are Expected quality and Exciting quality.P. Expected quality in this research refers to the fact that customers expect their account to be opened in a day or two.Quality Function Deployment QFD is an excellent way of capturing “voice of customers”. translating those customer desires into the target design. it is used early in the production process to determine what will satisfy the customer and also where to deploy quality efforts.
The Quality Function Deployment Process 4 Operating Instructions 1 Customer Requirement Planning Matrix 3 Process Plan and Quality Control Charts 2 Technical Features Deployment Matrix M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 58 .
In the first matrix of Customer Requirements and Planning identification of expected and exciting quality is done. Technical features deployment translates the features of the service to customer requirements. Technical features deployment controls the critical processes with the help of quality control charts and process plans.Birla Institute of Management Associate Bharatiya Vidya Bhavan 59 . M. Here.P. The final step of operating instructions ensures that the bankers contribute to the firm’s efforts to meet the requirements set down in the processes and services parameters. To provide for exciting quality. In the survey it was revealed that customers wanted their accounts to be opened instantly or hardly in a day. HDFC has offered schemes to account opening to add value to its services. services can be efficient to reduce turn around time in account opening delays.
Birla Institute of Management Associate Bharatiya Vidya Bhavan 60 .P.CHAPTER 8: RECOMMENDATIONS M.
Hence. Also. If the very initial step of “filling in” the application form is taken care of.P. In such cases.” Hence the following suggestions are recommended- Separate time slots can be allotted initially for accepting application forms. This assistance provided to the customer will make sure that the form will be defect free. the bank can explain their inability to the customer to process the application form if his signature differs from the documents presented for id proof. the rate of delays will reduce.Birla Institute of Management Associate Bharatiya Vidya Bhavan 61 . All details regarding the id proof can be explained to him. M. It resembles the proverb “A battle well begun is half won.The main causes of delays are identified now. a fresh form is filled that irks the customer too. a counterfoil can be given to the customer that contains his signature that he can refer to in future if he forgets the way he has signed. It was found in the survey that many of them forget how they have signed in the application form. or even a separate counter can be maintained at the beginning to facilitate individual attention.
Separate application forms can be designed for existing customers and the processing of these can be diverted to a separate department so that the Data Verification Unit and Imaging departments can concentrate on the forms of new customers. then when the application form is handed over to the customer.P. a separate instruction titled “Help us serve You better” can be given that contains all the requirements of the bank with respect to types of id proofs needed and other requirements based on customer type (i. joint. If the bank is not able to do the above. M. it has to be found out if he is an existing or a new customer. (yet it is sent Chennai) he may ask the customer to keep additional documents ready as id proof rather than wait till the form is sent back to the respective branch. individual.Birla Institute of Management Associate Bharatiya Vidya Bhavan 62 . Existing customers’ details are already keyed into the system and hence the bank can take advantage of this and reduce the time taken to process the account opening. company accounts etc.e. This will also reduce the work load of the departments and increase efficiency and accuracy. If he is doubtful about the form being accepted.) The Personal Banker needs to verify the documents before it is sent to the head office at Chennai. When the customer is asked to fill in the application form.
the bank can think of setting up a separate branch in Bangalore itself so that the turnaround time (presently 4 working days) can be reduced. HDFC bank can apply the same procedure to reduce their costs and at the same time get back valuable feedback. It was found in the survey that Citibank had a very innovative idea to receive feedback from its customers. Hence the bank can encourage net banking or simplify the application form to reduce the customers’ apprehensions. If this does not work out.. they were apprehensive about filling in the form by themselves and preferred to fill in. in the presence of a bank official to avoid mistakes. desk calendars etc. Inspite. Aspects like time and cost can be reduced and thereby the bank’s efficiency can be leveraged. In the survey.Birla Institute of Management Associate Bharatiya Vidya Bhavan 63 . Also. Customer M. The bank needs to courier the application forms to Chennai. it can fax it or scan it to the head office. customers revealed that they found the filling in of application forms a labourious job. diaries. They send out a periodic questionnaire to its customers and every filled and submitted form would receive an incentive in the form of small gift like pens. Also.P. it can discourage customers to come to branch for any queries as it will cost the bank to attend a customer just for a simple issue.
) A customer enters into a bank with a decision to open an account only if he feels it is safe to transact with it and if he feels that the bank will live up to his expectations.friendly websites can be designed to facilitate easy net banking to allow the bank to concentrate on other important issues. World class services. account opening procedures can be simplified by the above suggestions and points to ponder on are highlighted in the Root Cause diagram and the Service Switching Diagram.Birla Institute of Management Associate Bharatiya Vidya Bhavan 64 . It can be said that HDFC Bank is one of the most popular banks when it comes to customer satisfaction despite its conventional method of banking. Macro-level recommendations: Provide the bank employees first-hand best corporate practices Expose the bank employees to the environment in which the bank customers use the bank's services M. It is India’s leading private sector bank. If this is not feasible for all customers.P. (An established brand in itself. Hence. It lives up to its punch lineUnmatched features . this can be encouraged among senior citizens and working officials.
Team purpose analysis 12. Asking why (five times) 5. The process improvement can be brought about by.Birla Institute of Management Associate Bharatiya Vidya Bhavan 65 .Time-cost analysis M. Process mapping 3. Consensus building 9. (b) process stabilization. Cause and effect diagrams 4. Brainstorming 2. Pareto analysis 7.Priorities grid 14. (a) Breakthrough thinking. Check sheets 6. Paired comparisons/emphasis on curve ranking 10.Force field analysis 11. and (c) Incremental improvement.Cost/benefit analysis 13. The following tools for continuous improvement in the quality of service in the Bank are quite helpful: 1. Constantly retrain the bank staff in the theory and practice of TQM Showcase the customer quality Establish a continuous improvement culture in the Bank Initiate vigorously continuous process improvement in the Bank. Matrix analysis 8.P.
enclosed. I have taken up a research project on “Service Quality Leveraged to acquiring new customers. In this connection I need some information from you. I sincerely assure you that your responses will be kept strictly confidential and shall only be used for academic purpose.ANNEXURE A sample questionnaire is given below that was used in the survey. retaining existing customers and regaining the lost customers”. Ms Darshana Patel M. Kindly give your responses to the questions. pursuing my MBA program.P. I shall greatly appreciate your cooperation. M P Birla Institute of Management Bangalore (Associate Bharatiya Vidya Bhavan) I am a student of M P Birla Institute of Management. herewith.Birla Institute of Management Associate Bharatiya Vidya Bhavan 66 . Bangalore. The questionnaire is. As a part of the MBA curriculum.
Bangalore) Name: Gender: Age: Occupation: Name of your Bank: Type of account held: Savings Bank Current account Term Deposit Recurring Deposit M.SERVICE QUALITY LEVERAGED TO ACQUIRING NEW CUSTOMERS.P. RETAINING EXISTING CUSTOMERS AND REGAINING THE LOST CUSTOMERS (A research project for HDFC Bank.Birla Institute of Management Associate Bharatiya Vidya Bhavan 67 .
Please think about the 2 levels of expectations defined below: Minimum Service Level: The minimum level of service you consider adequate.Birla Institute of Management Associate Bharatiya Vidya Bhavan 68 . M. For each of the following statements please indicate – (a) your minimum service level by encircling one of the numbers in the first column.Time taken by your bank to open your account: Instantly Within one hour Within one day More than two days How long have you been a customer: Less than a year One to two years Two to five years More than five years PART-I I would like to know your impression about how well your bank provides services relative to your expectations. Desired Service Level: The level of service performance you desire. (b)your desired service level by encircling one of the numbers in the second column (c) your perception of service by encircling one of the numbers in the third column.P.
Employees deal with customers in caring fashion 4.in-bank signs) 6.P.Employees who are consistently courteous 3.Birla Institute of Management Associate Bharatiya Vidya Bhavan 69 . Prompt service to customers 2.Willingness to help customers 7.When it comes to 1.Making customers feel safe in transactions 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 M.Provides service at promised time My minimum level of My Desired level service is: of service is: My Perception of performance is: 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 5. Visually appealing materials associated with services (eg.Employees instill confidence in customers 8.
Listed below are 5 general features pertaining to the bank and services it offers. Fixtures.P.PART-II 1. The appearance of the bank’s physical facilities. I would like to know how important each of these features are to you. individualized attention the bank provides to you __________ points Total Points allocated 100 Points THANK YOU FOR SPARING YOUR VALUABLE TIME IN GIVING YOUR RESPONSES M. Please allocate a total of 100 points among the following 5 featuresPlease be sure that the points you give add up to 100 1. How would you rate the overall quality of services provided by the bank? (Circle one number below) Extremely poor Extremely good 1 2 3 4 5 6 7 8 9 2. The caring. The knowledge and courtesy of the bank’s employees and their ability to convey thrust and confidence __________ points 5.Birla Institute of Management Associate Bharatiya Vidya Bhavan 70 . The bank’s ability to perform the promised services dependably and accurately __________ points 3. The bank’s willingness to help the customers and provide prompt services __________ points 4. personnel and communications material __________ points 2.
GLOSSARY M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 71 .
The General Index Register Number is a number given an Assessing Officer to the assessees in the General Index Register maintained by him which also contains the designation and the particulars of the Assessing Officer M. Pan form 60. not posted. Presently the Income Tax Department is allotting PAN under the New Series to all assessees which consists of ten alphanumeric characters and is issued in the form of a laminated card. Their meanings are given below No Posting.Funds that need to be parked in dummy account are not yet done i.The study includes few banking terminologies. AML.P. In most cases money launderers hide their actions through a series of steps that make it look like money coming from illegal or unethical sources was earned legitimately. laws or regulations designed to stop the practice of generating income through illegal actions.Permanent Account Number is a number by which the Assessing Officer can identify any person. A set of procedures.Birla Institute of Management Associate Bharatiya Vidya Bhavan 72 .e.Anti Money Laundering.
M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan
This research project is well supported by facts from the following journals and websites-
Books: "Total Quality Management" by Mr. Sridhar Bhatt (7th Edition)
"Banks and Financial Institutions" by Mr. L M Bhole , Tata McGraw -Hill Publications, 4th Edition
"Total Quality Management" by Oakland John S, Heinemann publications, 1980
"How to Lead Your Business Beyond TQM" by Michel E Joyce, Pitman Publications, 1995
"Quality Improvement through Standards" by Dale Barrie G and Oakland John S, Stanley Thornes Publishers Ltd., London 2000
"What is Total Quality Control" by Ishikawa Kaoru (Translated by David J Luj), Prentice Hall Publications NJ, 2004
"Quality, Productivity and Competitive Position" by Deming Walter F, MIT Cambridge, Mass Publications, 20
M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 74
Business Magazines: Business World Business Standard Economic Times Financial Express Business India Fortune
M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan
DIRECTIONS FOR FURTHER RESEARCH M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 76 .P.
Based on our research findings. I give below fertile areas for future research: Energizing the Customer Care through TQM Making World Class Performance a Reality through TQM Bench marking the Best Corporate Practices in the Application of TQM in the Banking Sector Cascading Effects of TQM on the Performance of Banks Using Banking Resources Effectively through Total Quality Management Total Quality Control-The Japanese Way in the Banking Sector Appropriate Tools of TQM in Banking Operations Flow Charting the Customer Service Operations through TQM in Banking Sector In our view. Perhaps the line of thinking. the aforesaid areas constitute 'green pasture' for future research in this vital segment of the Banking Sector. on which our research investigation is based.P. is quite helpful. M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 77 .
P.M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 78 .
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