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Banking Sector

Banking Sector


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Banks are the most significant players in the Indian financial market. They are the biggest purveyors of credit, and they also attract most of the savings from the population. Dominated by public sector, the banking industry has so far acted as an efficient partner in the growth and the development of the country. Driven by the socialist ideologies and the welfare state concept, public sector banks have long been the supporters of agriculture and other priority sectors. They act as crucial channels of the government in its efforts to ensure equitable economic development. The Indian banking can be broadly categorized into nationalized (government owned), private banks and specialized banking institutions. The Reserve Bank of India acts a centralized body monitoring any discrepancies and shortcoming in the system. Since the nationalization of banks in 1969, the public sector banks or the nationalized banks have acquired a place of prominence and has since then seen tremendous progress. The need to become highly customer focused has forced the slowmoving public sector banks to adopt a fast track approach. The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering. Conservative banking practices allowed Indian banks to be insulated partially from the Asian currency crisis. Indian banks are now quoting al higher valuation when compared to banks in other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed in approach and armed with efficient branch networks focus primarily on the ‘high revenue’ niche retail segments.

The Indian banking has finally worked up to the competitive dynamics of the ‘new’ Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT solutions are perceived to be ‘futuristic’ and proactive players capable of meeting the multifarious requirements of the large customer’s base. Private Banks have been fast on the uptake and are reorienting their strategies using the internet as a medium The Internet has emerged as the new and challenging frontier of marketing with the conventional physical world tenets being just as applicable like in any other marketing medium.

The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamic entity. This transformation has been largely brought about by the large dose of liberalization and economic reforms that allowed banks to explore new business opportunities rather than generating revenues from conventional streams (i.e. borrowing and lending). and 60% of advances. The banking in India is highly fragmented with 30 banking units contributing to almost 50% of deposits Indian nationalized banks (banks owned by the government) continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization. The Indian banking can be broadly categorized into nationalized, private banks and specialized banking institutions.

The Reserve Bank of India acts as a centralized body monitoring any discrepancies and shortcoming in the system. It is the foremost monitoring body in the Indian financial sector. The nationalized banks (i.e. government-owned banks) continue to dominate the Indian banking arena. Industry estimates indicate that out of 274 commercial banks operating in India, 223 banks are in the public sector and 51 are in the private sector. The private sector bank grid also includes 24 foreign banks that have started their operations here.

The liberalize policy of Government of India permitted entry to private sector in the banking, the industry has witnessed the entry of nine new generation private banks. The major differentiating parameter that distinguishes these banks from all the other banks in the Indian banking is the level of service that is offered to the customer. Their focus has always centered around the customer – understanding his needs, preempting him and consequently delighting him with various configurations of benefits and a wide portfolio of products and services. These banks have generally been established by promoters of repute or by ‘high value’ domestic financial institutions.

The popularity of these banks can be gauged by the fact that in a short span of time, these banks have gained considerable customer confidence and consequently have shown impressive growth rates. Today, the private banks corner almost four per cent share of the total share of deposits. Most of the banks in this category are concentrated in the highgrowth urban areas in metros (that account for approximately 70% of the total banking business). banks have leveraged With efficiency being the major focus, these on their strengths and competencies viz.

Management, operational efficiency and flexibility, superior product positioning and higher employee productivity skills.

The private banks with their focused business and service portfolio have a reputation of being niche players in the industry. A strategy that has allowed these banks to concentrate on few reliable high net worth companies and individuals rather than cater to the mass market. These well-chalked out integrates strategy plans have allowed most of these banks to deliver superlative levels of personalized services. With the Reserve Bank of India allowing these banks to operate 70% of their businesses in urban areas, this statutory requirement has translated into lower deposit mobilization costs and higher margins relative to public sector banks.

Technology plays a very important role in bank’s internal control mechanisms as well as services offered by them. It has in fact given new dimensions to the banks as well as services that they cater to and the banks are enthusiastically adopting new technological innovations for devising new products and services. The latest developments in terms of technology in computer and telecommunication have encouraged the bankers to change the concept of branch banking to anywhere banking. The use of ATM and Internet banking has allowed ‘anytime, anywhere banking’ facilities. Automatic voice recorders now answer simple queries, currency accounting machines makes the job easier and self-service counters are now encouraged. Credit card facility has encouraged an era of cashless society. Today MasterCard and Visa card are the two most popular cards used world over. The banks have now started issuing smartcards or debit cards to be used for making payments. These are also called as electronic purse. Some of the banks have also started home banking through telecommunication facilities and computer technology by using terminals installed at customers home and they can make the balance inquiry, get the statement of accounts, give instructions for fund transfers, etc. Through ECS we can receive the dividends and interest directly to our account avoiding the delay or chance of loosing the post. Today banks are also using SMS and Internet as major tool of promotions and giving great utility to its customers. For example SMS functions through simple text messages sent from your mobile. The messages are then recognized by the bank to provide you with the required information.

All these technological changes have forced the bankers to adopt customer-based approach instead of product-based approach.

Banking is as old as authentic history and the modern commercial banking are traceable to ancient times. In India, banking has existed in one form or the other from time to time. The present era in banking may be taken to have commenced with establishment of bank of Bengal in 1809 under the government charter and with government participation in share capital. Allahabad bank was started in the year 1865 and Punjab national bank in 1895, and thus, others followed Every year RBI declares its 6 monthly policy and accordingly the various measures and rates are implemented which has an impact on the banking sector. Also the Union budget affects the banking sector to boost the economy by giving certain concessions or facilities. If in the Budget savings are encouraged, then more deposits will be attracted towards the banks and in turn they can lend more money to the agricultural sector and industrial sector, therefore, booming the economy. If the FDI limits are relaxed, then more FDI are brought in India through banking channels.

Government and RBI policies affect the banking sector. Sometimes looking into the political advantage of a particular party, the Government declares some measures to their benefits like waiver of short-term agricultural loans, to attract the farmer’s votes. By doing so the profits of the bank get affected. Various banks in the cooperative sector are open and run by the politicians. They exploit these banks for their benefits. Sometimes the government appoints various chairmen of the banks. Various policies are framed by the RBI looking at the present situation of the country for better control over the banks.

Before nationalization of the banks, their control was in the hands of the private parties and only big business houses and the effluent sections of the society were getting benefits of banking in India. In 1969 government nationalized 14 banks. To adopt the social development in the banking sector it was necessary for speedy economic progress, consistent with social justice, in democratic political system, which is free from domination of law, and in which opportunities are open to all. Accordingly, keeping in mind both the national and social objectives, bankers were given direction to help economically weaker section of the society and also provide need-based finance to all the sectors of the economy with flexible and liberal attitude. Now the banks provide various types of loans to farmers, working women, professionals, and traders. They also provide education loan to the students and housing loans, consumer loans, etc. Banks having big clients or big companies have to provide services like personalized banking to their clients because these customers do not believe in running about and waiting in queues for getting their work done. The bankers also have to provide these customers with special provisions and at times with benefits like food and parties. But the banks do not mind incurring these costs because of the kind of business these clients bring for the bank. Banks have changed the culture of human life in India and have made life much easier for the people.

It is very important for any bank to identify the 7 P’s of services so was understands their customers better and provide them with best of service. The 7 P’s are: 1. PRODUCT MIX 2. PRICE MIX 3. PLACE 4. PROMOTION 5. PEOPLE 6. PROCESS 7. PHYSICAL EVIDENCE

The product mix of a company includes all different product lines a company offers to its customers. The product line of a bank might easily include more than 100 different services. In today’s competitive scenario it has become very necessary for a bank to provide it’s customers with a wide variety of services and the best technology in order to attract them. Here is an example of some of the products offered by UTI Bank to its customers.

Offering UTI Bank's Savings Account is just the right product for everyone, salaried, employees or businessmen, high net worth individuals and NRI's. The

unmatched package of UTI Bank Savings Bank account given below brings the benefits of better, efficient and hassle free banking. • ATM Network

A Savings Bank Account with UTI Bank entitles you to a free ATM card, which enables you to access your account anytime and at any ATM centre across the country. You can withdraw and deposit money and cheques with your ATM card. Unlike most other ATMs, a UTI Bank ATM allows you to withdraw up to Rs. 20,000 a day. In addition, cash can be withdrawn from any of the ATMs against your MasterCard (domestic/international). • 7-Day Banking

At select branches spread over the country, you can bank on all the 7 days of the week (except for public holidays), over extended working hours. • Telebanking

Telebanking service provides you instant access to your account. It offers you a wide range of services over the phone such as account information, Balance Enquiry, Transaction Details, Statement of Account, Status of your Cheque , etc.

iConnect-Internet Banking

This is the concept of "the Bank on your desk-top". You can look-up the status of your account, query and undertake a range of financial transactions, simply by clicking the mouse. Now don't you think you have a great opportunity to see yourself laughing your way to the bank?


UTI Bank has joined hands with Citibank, to give rise to a new kind of card power - unique and unmatched benefits and international utility at the most competitive rates. The UTI Bank Citibank International Silver Card, the MasterCard and 'Unique' Card offers quite a few benefits. Rewards UTI Bank Citibank Card combines dual conveniences of high purchase power and flexible payment facility. Purchase of high-value items is now convenient and when it comes to payback time, your bill can be paid in installments, depending on your financial liquidity at a given moment. The Revolving Credit Facility lets you pay as little as 5% of your total outstanding every month. Giving you the power to buy now and pay later in parts! Dial-A-Draft One can use your UTI Bank Citibank Card to pay for your personal expenses at places where credit cards are not accepted yet. Like paying for investments, telephone and electricity bills, school fees and much more. Just call CitiPhone and the draft you need will be delivered to you! Credit Limit Increase You can call CitiPhone and ask for a Credit Limit Increase in the event that you have to make a large purchase on your card urgently. It's especially handy for paying off vehicle repairs, telephone bills and electricity bills. And for anniversaries, weddings, birthdays, or business trips or when a holiday goes beyond budget 24-Hour ATMs One can withdraw emergency cash up to 60% of your credit limit from 24Hour ATMs in Ahmedabad, Bangalore, Calcutta, Chennai, Delhi, Hyderabad, Mumbai and Pune. While traveling overseas you can draw cash from MasterCard ATMs spread across the globe. The same is applicable for any

Citibank branch. Also the cash you withdraw is insured against theft for a period of 12 hours after withdrawal. A never before facility is brought to you with the UTI Bank Citibank Card at a transaction fee of 2.5% or Rs.50 whichever is higher. All cash advances also carry a service charge from the date of the transaction. The cash withdrawal limit for the first year is Rs. 5,000. Photo card One may choose to have your photograph and signature digitally imprinted on the front of your Card in color. So that you get the extra recognition and security you expect as a UTI Bank Citibank card member Concession on Personal Remittances Do you often need to remit funds to other cities using facilities such as Drafts/Telegraphic Transfers, etc.? Here's a benefit you would most appreciate. A 25% rebate on standard commission is offered on personal remittances at UTI Bank branches. Overdraft facility UTI Bank Citibank credit card provides you with an overdraft facility to the extent of 75% of the value of your holdings of Demat Shares and Units! Moreover, you get a waiver of 0.5% on interest rate chargeable under the scheme. All you need to avail yourself of these benefits is a Demat A/c with UTI Bank. Free ATM Card The UTI Bank Citibank Credit Card offers you a free ATM Card, which can be used at over 250 UTI Bank ATM centers all over India. All you have to do is open a saving bank/current Account with UTI Bank. Other features UTI Bank Citibank Card has the widest possible reach - welcomed by 1,10,000 Merchant Partners across India and Nepal and yet another 160

lakh Merchant Establishments worldwide. The card can be used both for major occasions, and also for everyday purchases like groceries, cosmetics, and petrol and auto accessories. It can also be used to buy high-value items like consumer durables (refrigerators, washing machines, microwave ovens, etc.). And even paying customs duty and hospital bills becomes convenient with the Card.

Width of the product mix is the number of product lines a company is offering. The product width could be a narrow one or a wide one depending from bank to bank. A wide mix encourages more sales since the banks are able to diversify and provide more to their customers and they also appeal to a larger target market.

Depth of the product mix is the number of product items in each product line. Banks with more schemes and services have more depths than those offering only a few. Here is table giving an example of Width and Depth in the Product Mix:

Similarly, different banks plan out their product portfolios and based on that, the depth and width of their product mix can be determined. In today’s scenario, where there is cutthroat competition and new foreign banks entering the Indian markets, it has became more or less like a law to have very wide product lines with more and more number of products in each line.

Core Benefit:
It is the main or core reason why the customer will buy the service of the bank. More like the basic purpose or necessity.

Basic Product:
The core benefit is converted into a basic product. That is the service can used by the customer in order to fulfill his/her needs.

Expected Product:
It refers to the set of attributes and conditions expected by the customers when they purchase the service.

Augmented Product:
It is the additional feature that the banks provide which exceeds the customer’s expectations.

Potential Product:
Innovations and product differential is the bases of a Potential Product. If the banks alter its services according to the requirements of the individual customers it reaches this level.

Core Product The basic necessity to use banking services in order to handle finance more efficiently

Basic Product Safety of deposits Loanable funds etc.

Expected Product Timely service Long banking hours Low interest rates

Augmented Product Goods waiting rooms Extensive ATM network Promotional Discounts

Potential Product Mobile and internet Banking New Schemes tailored for specific customers

Thus it can be seen how a particular product passes through different levels. In today’s competitive scenario most banks try offering services at the Augmented and Potential level.

The price mix in the banking sector is nothing but the interest rates charged by the different banks. In today’s competitive scenario where customer is the king, the banks have to charge them interest at a rate in accordance with the RBI directives. Banks also compete in terms of annual fees for services like credit cards, DMAT etc. Another important aspect of the bank’s pricing policy today is the interest charged on the Home Loans and Car Loans. With India’s economy progressing, there are more and more buyers seeking these loans but at a very competitive interest rate. Let’s understand this with an example. A particular buyer approaches a bank for a car loan for a period of 3 years. He is charged Rs. 20,000 as interest. However, if a sale representative of another bank comes to know of this deal, he will try to attract the customer by giving him a better deal i.e. a loan at a lower rate on interest. In this way, it is the customer that ultimately benefits. Here is an example of some of the prices charged by ICICI bank for their services

ATM Card Issue Add – on Card Duplicate Card Other General Charges

Free – 2 ATM cards issued free if it joint account RS. 100 – Beyond 2 cards Rs. 100

Current Account Transaction Charges NIL

Savings Account NIL

Charges for issue of Cheques book Issue of duplicate statement Account closure

NIL Rs. 25 per page Rs.100

NIL Rs. 25 per page Rs.100

This example evinces some of the charges that the customer has to pay for the services provided by the bank. The pricing factor is very important because of the kind of competition that is prevailing today in the Indian market. However it is very important to understand that in the banking sector, the main pricing policy is concerned with the interest rate charged. This interest rate is however regulated by the RESERVE BANK OF INDIA and THE INDIAN BANKING ASSOCAITION. Any one particular bank or a group of banks does not regulate it. The interest rate charged cannot be higher than that decide by the RBI and the INDIAN BANKING ASSOCIATION. Thus, inspite of the constraints in the pricing policy due to the RBI directives there are mainly three types of pricing methods adopted by banks. They are:

Value pricing:
Banks having unique or different products or schemes mainly do this type of pricing. They usually charge a combination of high and low prices depending on the customer loyalty as well as the products. This type of pricing strategy is usually coupled with promotion programmes.

Going Rate pricing:
The most commonly used pricing technique is the going rate pricing. In going rate pricing, the bank bases its price largely depending on the competitor’s prices. The banks however have to stay within the RBI directives and compete. The banks may charge higher or lower than their competitors. After 1991 when the foreign banks entered the Indian market this method of pricing has gained increasing importance.

Mark up pricing:
This is a pricing technique wherein the cost of the service is determined and a small margin is added to it and then the final price is offered to the customers. This type of pricing is the not very popular since in the banking sector it is not very easy to arrive at the cost of the service. Thus most banks use a combination of mark – up pricing and going rate pricing.


This model shows a pricing strategy, which should be adopted in order to ensure maximum satisfaction to both the bank as well as the customers. The price should be set in such a manner that the customer is assured that he is not being cheated or overcharged by the bank and at the

same time the bank is able to reap maximum profits. Such a pricing stand helps the bank get maximum sales as well as profits since the customer feels that by entering such a transaction he is winning.

Place mix is the location analysis for banks branches. There are number a factors affecting the determination of the location of the branch of bank. It is very necessary a bank to situated at a location where most of its target population is located. Some of the important factors affecting the location analysis of a bank are: 1. The trade area 2. Population characteristics 3. Commercial structure 4. Industrial structure 5. Banking structure 6. Proximity to other convenient outlets 7. Real estate rates 8. Proximity to public transportation 9. Drawing time 10. Location of competition 11. Visibility 12. Access It is not necessary that all the above conditions have to be satisfied while selecting the location but it should be tried to satisfy as many of them as possible.

1. The Trade Area:
The trade area is a very important factor determining the place where a bank branch should be set up. For e.g. a particular location maybe a huge

trading place for textiles, diamonds or for that case even the stock market. Such locations are ideal for setting up of bank branches.

2. Population Characteristics:
The demography of a place is a very important factor. This includes:  The income level of the population  The average age  The average male female population  The caste, religion, culture and customs  The average spending and saving habit of the people. These factors are very important for a bank as the help them decide the kind of business the branch will get.

3. Commercial Structure:
The commercial structure refers to the level of commerce i.e. business activities taking place at a particular location. The higher the level of business activities taking place in a particular location the more preferable it is for setting up a bank branch.

4. Industrial Structure:
This is nothing but a combination of the trade area analysis and the commercial structure. However the industrial structure focuses more on the kind of industries operating in a particular location. For example, an area like SEEPZ is marked with a lot of electronic manufacturing units. Thus the industrial stricture determines the kind of financial transactions that could take place in a particular location.

5. Banking Structure:
The Banking structure refers to the existence of other banks in the area. Whether there is already an efficient network of other bank branches

operating at that particular area. Thus the overall infrastructure needed for the working of a bank.

6. Proximity of other convenient outlets:
This refers to the other branches of the same bank as well other commercial, entertainment and industrial outlets.

7. Real Estate Rates:
This is mainly dealing with the cost factor involved in opening up a bank branch at a particular location. The real estate rate is a very strong factor influencing the location decision for a bank branch.

8. Proximity to public transportation:
The location should be proximate to public transportation facilities. This means it should have bus stops close by as well as it should be proximate to railway stations so as to make it convenient for the common man.

9. Drawing Time:
Drawing time refers to the time period during which a customer can draw money from the banks. It should be convenient to the customer and somewhat flexible to accommodate the customer’s needs. No bank has more than a certain amount with them and in case a customer wants to withdraw an amount more than that available with the bank, the bank needs to draw that amount from other banks. Hence, a location must be such that it facilitates minimum drawing time.

10. Location of Competition:
The existence of other banks also means competition. If the level of competition is very high in a particular location, it is necessary that a bank

does a lot of market research before opening a branch so as to estimate the kind of business it would get.

10. Visibility:
The location of a branch should be such that it is visible and easily noticed by the customers as well other people.

10. Access:
The bank branch should be very easily accessible to the customers. If this is not the case, the customer might switch to some other bank, which is more convenient to him and very easily accessible. The location should be such that it is very convenient for the customer to reach.

Promotion Mix
Promotion is nothing but making the customer more and more aware of the services and benefits provided by the bank. The banks today can use a lot of new technology to communicate to their customers. Two of the fastest growing modern tools of communicating with the customers are: 1. Internet Banking 2. Mobile Banking This can be better explained with the example of ICICI bank.

SMS services SMS functions through simple text messages sent from your cellular phone. These messages are recognized by ICICI bank to provide you with the required information. For example, when you enter ‘IBAL’ your cellular phone screen will display the current balance in your primary account. Thus with the help of SMS a wide range of query based transactions can be performed without even making a call. ICICI was the first organization in India to provide Wireless Application Protocol (WAP) based services. Mobile commerce using WAP technology, allows secure online access of the web using mobile devices.

With WAP one can directly access the ICICI WAP server, check one’s account details and use other value added services. Thus different methods are used by different banks to promoter its services. A bank may have very attractive schemes and services to offer to their customers but they are of no use if they are not communicated properly to the customers. Promotion is o inform and remind the individuals and persuade them to accept, recommend or use of product, service or idea. However there some very important points that is to be considered before the promotion strategy is made. These points are:

Finalizing the Budget
Before the bank decides the kind of promotion that should be done, it very important to finalize the budget for it. The formulation of a sound budget is essential to remove the financial constraints in the process. The budget is determined on the basis of volume of business of the bank. In addition to this the intensity of competition also plays a decisive role.

Selecting a suitable vehicle
Another very important task is to select a suitable vehicle for driving the message. There are a number of devices to advertise such as broadcast media, telecast media and the print media. The selecting of the mode of advertising is strongly influenced by the kind of budget decided. Usually for promoting banks the most effective and economical form of advertising has been the print media.

Making possible creativity
Making possible creativity is nothing but the kind of slogans, punch lines etc. that are supporting the message. They should be very creative but yet simple to be understood by the common man. It should appeal to the

customers. It should be distinct from that of the competitors and should be successful in informing and sensing the customers.

Testing the Effectiveness
It should be borne in mind that the advertisement is first tested for its effectiveness. This should be done with the help of various techniques like testing effectiveness on a sample group. This helps determine the success of the advertisement and in case of any problem the advertisement can be altered and remedied.

Instrumentality of Branch Managers
At a micro level, it is the responsibility of the branch managers to promote and drive the message to the people in the local area. They should organize small programs in order to attract people and crate awareness in the local area about the new schemes of the bank.

Different Ways of Promotion
Public Relations:
In today’s competitive scenario developing strong public relations is very important for any bank to be successful. Most banks today have a separate Public Relations department. However primarily it is considered as a responsibility of the various bank managers to develop a steady and strong relationship with their present customers as well as potential customers. This can be done by a constant follow up, small programmes etc.

Personal Selling:
Personal selling is found to be one of the most effective and popular forms of promoting bank business. The main reason for this is that banking is a service in which trust plays a very important role. In personal selling, a bank representative goes to the customers and explains the scheme to the customers. Also he gives the customers any kind consultation he might need. He provides the customers all the information sought by him. The

representative tries to persuade the customers to go for the scheme provided by the bank by telling him all the benefits. Here are some of the important features of personal selling  It is a direct relation between the buyers and the seller  It is oral presentation in conversation  It is personal and social behavior  It is found to be more effective in service oriented organizations  It is based on the professional excellence or expertise of an individual

Sales Promotion:
Sales promotions are basically giving the customers some additional benefits, maybe at times just some small gifts, in order to promote the schemes. The more innovative the sales promotions the more positive are the results. Some of the most popular sales promotions techniques are gifts, contests, fairs and shows, discounts and commission, entertainment and traveling plans for bankers, additional allowance, low interest financing etc. It is very important that the sales promotions benefits are designed in such a manner that they are better than those of the competitors.

Word – of – mouth Promotion:
This form of promotions is not only very effective in banking services but in any kind of service. However it is more important in banking for the only reason that this is a service where trust plays a very important role. If a particular bank’s services are recommended by friends, relatives, or other well wishers the person is more influenced and inclined towards that bank. It is very important to note that the internal employees of the bank play a very important role in word – of – mouth promotion technique. This is because they can start the process by recommending the bank to their friends and relatives and after that it is like a chain, which spreads like a wild fire.


In recent times telemarketing has gained increasing importance as an effective tool for promotion. The telemarketing is a process of making use of sophisticated communication network for promoting the banks. This includes promoting through television, telephone, and radio. Nowadays, cell phones are used extensively for the same. This is the most popular form of promotion. Banks today have started using ‘SMS’ and many other services supported by cell phones to provide benefits to their customers and thus have tried to increase their sales. In today’s competitive and modern scenario it very important that banks makes use of telemarketing techniques very efficiently to have desirable results.

The use of Internet as a promotional tool is increasing. More and more banks are using Internet to promote their services. The online banking has made it even easier for the customers to avail the bank’s services. No longer do people have to go to their bank branches for small petty matters like checking their balance etc. All this can be done with the help of a few clicks. Thus, these were the numerous ways in which a bank can promote its services and create more awareness amongst the people.

People are the employees that are the service providers. In a banking sector, the service provider plays a very important and determinant role in rendering the customers a satisfactory and a good service. It is extremely essential that the service provider understand what his customers expect from him. In the banking sector, the customer needs to be guided in a lot of matters, which is possible only with the help of the service provider. The position in the eyes of the customer will be perceived by appearance, attitude and behavior of the customer contact employees. Not only does the customer contact employee influence the customer’s perception but also the customer base of the organization does so.

Process Mix
The process mix constitutes the overall procedure involved in using the services offered by the bank. It is very necessary that the process is very customer friendly. In other words a process should be such that the customer is easily able to understand and easy to follow. Today if particular banks formalities are long and the procedure very complicated the overall process fails and the customer may not be inclined towards using that banks services. Let’s take for example the process for application for a car loan. Now this mainly involves 3 things. 1. Producing of proper documents 2. Filling up of application form 3. Paying for the initial down payment. Here the process may fail in the following cases: 1. If the customer is asked to produce a number of forms out of which some may not be necessary at all. Thus it is very necessary that the customer be asked for the minimum but most necessary document and not the other unnecessary documents.

2. In case of application form, the application form must be in a language best understood by the customers and it should not be very lengthy one or demanding a lot of unnecessary information. 3. Finally the payment of initial amount. The customer should be given options as to how he would like to pay by cheques or by credit card. Once again the amount should be very competitive not very high above the regular rates prevailing in the markets. The smaller and simpler the procedure, the better the process, and the customer will be more satisfied.

Physical evidence is the overall layout of the place i.e. how the entire bank has been designed. Physical evidence refers to all those factors that help make the process much easier and smoother. For example, in case of a bank, the physical evidence would be the placement of the customer service executive’s desk, or the location of the place for depositing cheques. It is very necessary that the place be designed in such a manner so as to ensure maximum convenience to the customer and cause no confusion to him. Let us see an example as to how banks try to make little changes so as to make the service better for their customers.

The Hong Kong Shanghai Banking Corporation (HSBC) has decided in introducing a common uniform for all the employees in all its branches all over India. The plan is possibly in line with the aggressive retail banking adopted by HSBC. A common uniform its nothing like a revolutionary change but however this little change makes it very easy for the customer to identify with his service provider and makes the entire process very easy for

him. The more the bank does to make the service easier and better the more satisfied will be the customer. Thus, these are the 7 P’s of services. Each of them plays a very important and a pivotal role in determining the quality of the service provided to the customer.

A service blueprint is a picture or a map that accurately portrays the service system so that different people involved in providing it can understand and deal with it objectively regardless of their roles or their individual points of view. Blueprints are particularly useful at the designing and redesigning stages of service development. A service blueprint visually displays the service by simultaneously depicting the process of service delivery, the points of customer contact, the roles of customers and employees, and the visible elements of the service. It provides a way to break the service down into its logical components and to depict the steps or tasks in the process, the means by which the tasks are executed and the evidence of the service as the customer experiences it.

Standard Beginning
Regardless of our mapping objective (to describe a new process or an existing process), type of map selected (flow chart, risk management, crossfunctional, time elapsed), and state (as-is, should be, could be) selected, all process maps will have the same common beginning steps.

1. Begin by defining the objective and the process boundaries. Our objective in this case is to document the existing savings-deposit process for the purpose of training new cashiers. The process boundaries will begin with the customer’s bringing a deposit into the bank (the input) and end with the last step in the cashier’s handling of the transaction: issuing a receipt to the customer (the output).
2. List the basic steps that produce the output, using as brief a description

as possible, such as a verb followed by a noun. These may include: complete deposit slip, greet customer, count cash, inspect deposit slip, post deposit, post passbook, authenticate passbook posting, store cash, store deposit slip, thank customer. Arrange these processes in the sequence in which they occur; this will help you construct your map logically and easily.
3. Record the map title and reference number at the top and centre of a

landscape-formatted sheet.

In the sample below, use “B1” as the

reference number, where “B” refers to a series of savings-related process maps and “1” is the first map in the series.
4. Record your name and the date prepared below the map title line, at the

left hand margin.

Constructing the Map: What Symbols Do I Use?
5. The starting point for this process is the customer. Use the “Start”

symbol and place this symbol in the upper left hand corner of your paper. 6. Symbols must be connected by arrows to show flow, which may either the sequence of the processes or the movement


(transportation) of the inputs from process to process. Automatically enter an arrow after posting a process, inspection, document/input, or decision symbol to your map. By convention, movement is from left to right, and from top to bottom; both directions are shown in the sample below. Alternating the vertical and horizontal flows can help you show activities

that occur almost simultaneously, and can also save space on your sheet. For example, a down arrow is used to connect the Start Process (customer) with the first two inputs (passbook and cash). You could have just as well used a horizontal arrow and placed the two inputs to the right of the Start Process symbol. The choice is yours. Just remember, our objective is to present as clear and understandable a map as possible. 7. The customer’s deposit has three component inputs: the cash, the

deposit slip (the bank’s voucher), and the passbook (the customer’s receipt). These three inputs have different processes performed on them, and are stored in different places at the end of the process, so they need to be identified by distinct symbols. Note that the passbook and deposit slip use the “Document” symbol, while the “Input” symbol is used to represent the cash. For the sake of clarity, insert the document name into the centre of the symbol. From this point forward assume that these documents flow with the arrows (transportation symbols) until otherwise indicated. At this point in the process, you have only two inputs: the passbook and the cash. Place these next to each other, with one arrow to the right, indicating that they flow together. 8. Your option for this step is to use either the “Process” or “Manual

Operation” symbol. Because the customer must hand-write the document (rather than it being computer-generated, for example), the better option is to select the “Manual Operation” symbol. 9. At this point, the cashier processes the deposit. The first step is to

ensure that the customer has submitted a valid deposit slip containing all required information (which is listed in the process description). Since this activity serves as a control point as well as a process point—the process cannot continue if the amount is not recorded, for example—you can select either a process or an inspection symbol to represent the action. Because this step is an important control for the further processing of the deposit, the better option is to select the Inspection symbol.


There is not sufficient space left on the sheet to post the next step, Since arrows

even though there is space below the existing line of symbols.

move from left to right and top to bottom, you cannot, by convention, draw a big arrow from the right side of the paper across to the left margin in order to continue the flow in the space remaining on the paper. This means you continue on another sheet of paper. Select the “On Map” connector symbol from the list. This symbol is used twice: first where you discontinue, or break, the process, and second, where you resume it. (If you have two breaks on a map, you will have four On Map symbols.) To let the reader know which connectors go together (form a pair), insert a letter or number, assigned sequentially, in each symbol. The first pair, for example, might be labeled “A,” while the second pair would be labeled “B.” The reader knows which one of the pair represents the break in the flow, because there are no more symbols below or to the right of the connector symbol. The reader knows which one of the pair represents the resumption of the flow, because symbols will appear below or to the right of the connector symbol. 11. In this step, the cashier counted the cash and found it to be either

correct or incorrect. This results in two possible courses of action that must be shown in the process. Use the decision symbol. Insert a word or two inside the symbol to reflect what condition is being decided; in this case, you are answering the question: “Amount correct?” The question has to be phrased so that it can be answered either “Yes” or “No.” Both courses of action are mapped. The decision symbol, therefore, has two arrows attached to it, one representing the “Yes” course of action, and the other, the “No” course of action.

a. NO: This course of action represents a rework loop. The customer has to either make the correction to the deposit slip and initial the change, or make up/receive the difference in the amount of cash deposited so that it will equal the amount shown on the deposit slip. After the correction process, the arrow points back to the decision diamond because the cashier now decides again whether the actual cash counted agrees with the amount reflected on the deposit slip. If it does, then the process resumes the flow from the “Yes” arrow leaving the decision diamond. b. YES: the cashier has answered “Yes” to the question, “Does the amount of cash received agree with the amount shown on the deposit slip?” The process continues to the next step. 12. Up to this point, the three inputs—the passbook, deposit slip, and

cash—have been flowing together. It is now time to separate their flow and to show storage of the cash. The deposit slip and the passbook will continue to flow together; redraw and label the document symbols for each of these inputs next to each other, followed by one arrow. (To emphasize that these documents flow together, you can overlap the documents as shown in the sample.) Redraw and label the cash symbol, followed by an arrow. Use the Storage symbol, and place it after the arrow leading from the Cash symbol to show that the cash has been dropped from the flow. If it adds clarity and not clutter, you can label the storage symbol (in this case, “Till”). Note that the act of the cashier placing the money in the till does not need a process box; it is sufficiently clear to show through the use of the cash symbol, arrows, and storage symbol that the cash is going into the till. This illustrates how the use of symbols can eliminate unnecessary and redundant process boxes. 13. The details of the inspection performed by the back office supervisor

can be described in the second tier of the map. Alternatively, you can shadow the inspection box (refer to the “Tier Your Maps” section) and create a sub process map that describes what the back office supervisor actually does.


This step demonstrates a teaching point discussed above.


point is represented here? Hint: Describe what is happening here. 15. The passbook/receipt, posted with the deposit (the output), is Use the End

returned to the customer. This is the end of the process.

Process symbol, (which is the same as the Start symbol) and label it to show that the Customer is the endpoint. This now completes the first tier of your Process Map. 16. In the second tier, record the description for each step. This task

serves a dual purpose, because it forces you to proofread your symbols to make sure that you have complied with the requirements described in the “Proofread Map” section above. You will also be able to see for yourself whether your process map makes sense. Alternatively, you can complete these descriptions as you draw your symbols; you may find, however, that keeping up with the text while also posting symbols on your map is cumbersome. 17. Lastly, since you have used a second page, carry forward the Process

Map title and number the map pages in the upper right hand corner.

Cashier Process of Savings Deposit-B1 (Ref-1) Prepared by: Your Name 18 August 2005



Deposit Slip (Ref-4) (Ref-2)

Cash (Ref-3)


Customer enters banking hall bearing passbook and cash.

Customer completes deposit slip.

Customer hands deposit slip, passbook, and cash to cashier.

Cashier greets customer, then checks deposit slip for name, account number, agreement of written and numerical amounts.

Cashier counts cash and ticks to amount on deposit slip.

Cashier Process of Savings Deposit-B1 A
Amount ?

Y es


Passbook Deposit Slip (Ref-7) Cash Deposit Slip



No: Customer corrects and initials correction on deposit slip or adjusts amount of cash tendered. Yes: Cashier posts transaction to bank’s books of account.



Cashier places cash in till.

Cashier posts deposit to customer’s passbook, calculates and posts new balance, initials passbook balance, then passes passbook and deposit slip.

Cashier thanks customer, placing the deposit slip on spindle for end of day balancing.

Cashier passes passbook to customer; thanks customer; customer leaves banking hall.

Process Mapping Symbols

This symbol is used to indicate both the beginning and the end of your program. Identifies an activity or task in the process that changes an output. Usually the name of the activity or task is written inside.

Operation, Process

Manual Operation

Manual Operation. If it is important to indicate that an operation is manually performed, you can use this instead of the square Operations Process symbol.


Document: indicates a physical paper on which information is recorded. The document symbol, superimposed on itself, indicates the presence of multiple copies of a document. At left, for example, a document in triplicate is shown. When a document is shown in this manner, usually the destination of each copy is traced. Input: The materials, equipment, information, people, money, or environmental conditions that are required to carry out the process. Identifies a decision or branching point in the process. Write the decision inside. Label each path emerging from the Decision Diamond with the appropriate options, usually “yes” or “no.” Decision diamonds must post a question. Questions should be worded as specifically and objectively as possible, so that everyone will interpret them in the same way.

Multi-part document



Inspection/ Measurement

Indicates that the flow has been stopped in order to evaluate the quality of the output or to obtain an approval to proceed.


Indicates when something must wait or is placed in temporary storage.


Indicates movement of the output between locations.

Storag e

Indicates that an output is in storage. Storage differs from delay based on the duration of the wait and the need for some type of authorization to retrieve the item.


An On-Map connector indicates that an output from this process is continued elsewhere on the process map. It is used to reduce awkward or confusing lines across a map. In order to help the reader follow the path, the same letter is used in a corresponding connector posted where the process resumes. Off-Page connector: This indicates that the flow continues on another process map. Record the page index (H) and the connector number (6) inside the symbol to show where the reader will pick up the flow. Conversely, on the continuation map, record the page index (C) for the previous map, but use the same connector number (6) so that the reader can follow the path.


Actual Time Target Time

Ref 1&2 2 mins 1 min

Ref 3&4 2 mins 1.5 mins

Ref 5 1 min 0.5 min

Ref 6 1.5 mins 1 min

Ref 7&8 Total 2 mins 8.5 mins 1 min 5 mins

Improvement Opportunity = 8.5 mins – 5 mins = 3.5 mins Is the incident critical Participants Visible Evidence N Customer Y Customer, Cashier N Customer, Cashier N Y

CustoCustomer, mer, Cashier Cashier Furnishings, Appearance, Behaviour, Simplicity of process of staff of staff

There are four distinctive characteristics of service, which create challenges and opportunities. They are commonly known as the four I’s namely: 1. Intangibility 2. Inconsistency 3. Inseparability 4. Inventory.

1.) Intangibility
It is that characteristics of a service indicating that it has no physical attributes that a person may feel, hear, taste before they buy it. For example, a person who is new to a bank and wants to open up an account in the bank cannot feel or taste it and ascertain whether the bank is good or bad before opening an account. He has to experience it, feel how the service is, how humbly do people or the staff members behave with him, is his money invested or put in a safe account or not. It is only then he would come to know about the services. This could be done only from the ‘trust’ that he would have built up, as these things cannot be inspected before the use. Therefore, most banks now a days, indulge in “tangibilizing the intangibles” i.e. they provide tangible clues to the prospective customers like the different awards that they have received for their superior services, their annual records, etc. this helps the customers in selecting the banks more easily.

2.) Inconsistency
It refers to variability or heterogeneity. In case of a bank, a new customer or a rarely going customer may not get the same type of service as a regular customer may get. This may be the case because the staff members know the person well as he comes often but they don’t know that person who does not come in again and again. Also another point for inconsistency is that there is variability in the service delivered by different people, that is services delivered differs from people to people. Like in case of a bank, different staff members would provide different services. In the bank, a person may have lot of work and may not attend to a customer .On the other hand, some other person with the same work may attend him with great enthusiasm. In order to tackle this inconsistency aspect, adequate training and motivation must be provided to the employees. This will result in higher number of customers for the bank, higher profits and subsequently lower retention rate.

Eg. “PUNJAB NATIONAL BANK” prides itself for providing “crown of quality for customer who is the king” and is an ISO 9002 certified bank. Thus, they will have to ensure that their service quality level is always consistent and up to the mark to meet the tall expectations of their customers.

3.) Inseparability Inseparability is that characteristics of a service indicating that it cannot be separated from creator-seller of the product. Many services are created, delivered and consumed simultaneously through interaction between customers and service producers. This is a source of major

limitation for the bank. But technology has in a big way helped the banks to cope with this problem.

Production of services, when it comes to banks can be performed in the following 3 ways:

(i) Co- production: In this case both the service provider and the customer work together to produce services. When a customer wants to withdraw cash from the banking premises, then both the customer and the service provider needs to be present.

(ii) Isolated production: It is that part of service that is done outside to an organization. Eg. Tele-Banking.

(iii) Self Service production: In this case, the customer uses the equipments of the service providers and self serves it. Eg. ATM.

4.) Inventory
Inventory relates to the perishable characteristics of the service marketing. If a customer starts his day at eight in the morning and ends it at four, but if bank is open only from 9:00 a.m. to 1:00 p.m. in the afternoon, then one might not be able to attend it. The demand for banking services also fluctuates by day and hour. The day before the holiday, weekend, most Mondays and Saturdays, pension and salary days are heavier than normal banking hours. So service faces a lot of problem from inventory as it cannot be stored, saved and then used later.

RATER Analysis For Indian Overseas Bank
There are many reasons why a customer should be given QUALITY SERVICES. The most of them are: 1. Industry being so competitive that a customer should be given the best services as they have many competitors (the company) and if even a single customer is lost in today’s JLT world then it very difficult to win back the customer. 2. Most of the customers do not complain as they just opt out and do get satisfied with better services elsewhere. When it comes to services, there are 10 quality dimensions. Each of the dimensions is of utmost importance since human element is involved and it relates to services. But Zeithaml, Bitner and Parsuraman have developed a new and concise model by clubbing some points. This model consists of the following dimensions:  Reliability  Assurance  Tangibility  Empathy  Responsiveness






It is defined as the ability to perform the promised service dependably and accurately. In its broadest sense, reliability means that the company delivers on its promises–promises about delivery, service provision, problem resolution, and pricing. It is also known as the “No Excuses” service delivery. Indian Overseas Bank faces stiff competition from many other banks within its vicinity and some of these banks are foreign banks. But the existing customers have faith, loyalty and trust in this bank. The customers are well aware that the bank will provide them back the best and reliable services. For e.g., no person likes to wait to withdraw his/her money. In order to correct this problem, Indian Overseas Bank has ensured that whoever comes in for cash withdrawal will receive his/her cash within five to ten minutes.

Assurance is defined as employee’s knowledge and courtesy and the ability of the firm and its employees to inspire trust and confidence. It includes the ability, knowledge, genuineness, and honesty to provide the best services to the customer from the frontline staff. In this dimension the front line staff is more important rather than the owner. At Indian Overseas Bank, every customer who comes is treated with utmost care and any problem that takes place is solved with great enthusiasm. It assures the customers coming up to the bank that the money they invest is secure; the interest rate that is being provided to them is at par or sometimes even higher as compared to other banks. Also, it assures the customers that the money they have invested will be returned to them as and when required with proper interest. It tries to empower their customer contact people and regularly train them in skills to build trust and loyalty between employess and the customers. They have assigned some of their staff members to build relationships with the customers by getting to know them personally.

Tangibles are defined as the appearances of physical facilities, equipments, personnel and communication materials. All of these provide physical representations or images of the service that customers, particularly new customers, will use to evaluate quality. At Indian Overseas Bank, the entire premise is air-conditioned. They have computerized systems in place and therefore quick, accurate and efficient service can be provided to the customers. The tables and

chairs are conveniently located for the customers. The personnel always have a cheerful and helping veneer and are always ready to help out the customers. The entire place is done up in bright colours and thus the customer can immediately feel the warmth and the radiance of the place.

Empathy is defined as the caring, individualized attention the firm provides its customers. The essence of empathy is conveying, through personalized or customized service, the customers are unique and unique special. The empathy shown by the employees of the Indian Overseas Bank is good as they are always polite humble and helpful. There was a case where once a customer misplaced Rs. 1,00,000 within the premises of the bank. He panicked but the bank personnel put him at rest and assured him that they would locate the same for him. Since he was a regular customer, they knew him very well and took the situation under control. They quickly located the cash and thus, the customer was placated. The bank personnel went out of their way to help this customer and thus understood his predicament. This bank regularly holds seminars and training workshops so that they can understand the consumer better and thus serve him better.

Responsiveness is the willingness to help the customer and provide him with immediate and fast service.

The Indian Overseas Bank is prompt at providing its customers with the information and services that they seek. It is extremely prompt

when it comes to resolving the complaints of the customers. The customers, in their feedback form, mentioned this as one of the most important factor that has prompted them to continue with this bank.

All the five dimensions basically aim at serving the customers to the best of their ability, giving them quality services and if things are followed as they are demanded, (i.e., according to the customers demand) then there would be no problems in facing any type of people. The successful service organizations set up speeds for service standards.

An organization is supposed to cater to the changing needs of customers; it is only natural that all customers have their own likes and dislikes. They have some uniqueness, which throws a big imprint on their lifestyles. This makes the task of understanding a bit difficult. It has the context that we go through the problem of market segmentation in the banking service. The study of the needs of customers invites a plethora of problems since in addition to other aspects; the regional considerations also influence the hierarchy of needs. To be more specific in the banking services, the banking organizations are supposed to satisfy different types of customers living in different segments. The segmentation of market makes the task of bank professionals easier. If the market segmentation is done in a right fashion, the task of satisfying the customers is simplified considerably. The modern marketing theories advocate the formulation of marketing policies and strategies for each segment, which an organization plans to solicit. The marketing segmentation is based in the principle of divide and rule. If we divide the market into different segments, the size of market is made small and the process of study is found convenient. We find market segmentation division and subdivision of a market based on considerations. The bank professionals have to segment the market in such a way that the expectations of all potential customers are studied in a right perspective and the marketing resources are developed to fulfill the same. The marketing efforts can be made more proactive if the process and bases of segmentation are right.

It is essential that the bank professionals assign due weightage to the difference that we find in the market behavior due to geographical, age, sex, nationality, educational background, income classes, occupation, social and other considerations. If they overlook or underestimate key bases while segmenting, the study results can’t be proactive to the formulation of creative marketing decisions. This makes it essential that the bank professionals are well aware of the criteria for market segmentation. The agriculture sector, industrial sector, services sector, household sector are found important in the very context. The gender segment is found important no doubt but we can’t underestimate institutional and professional segments. Since the banking organizations serve different sectors and segments, the segmentation should be done carefully.

 Instrumental in exploring opportunities: We find market segmentation very much effective in exploring the profitable opportunities. It is well known to us that while segmenting, the market is divided into different groups and sub-groups and this simplifies the process of studying and understanding the customers in a right perspective. If we know about the rural segment, the opportunities are explored to the rural areas. If we know about the women segment, the opportunities are identified in that area. If we know about the lowincome group, the opportunities are identified in that group. Thus the segmentation helps the bank professionals in exploring the profitable opportunities.  Instrumental in designing a sound marketing strategy: We can’t deny that market segmentation makes it easier to formulate a sound strategy. Since the banking professionals are aware of the changing needs and requirements of a segment, the marketing resources can be developed in tune with the needs and requirements of a segment. The formulation of a package is found significant and the bank professionals can do it successfully on the basis of market segmentation. The promotional measures can be satisfied in the face of receiving capacity of a particular segment. The pricing strategy can be made operational and the sales promotion measures can be made productive.

 Helpful to the policy planners: In addition, the policy makers also find segmentation since they are well aware of the emerging trends in the business environment. They get detailed information about the changing needs and requirements of a segment. The planning is an on going process. The banking professionals transmit necessary

information to the policy planners, which simplifies the process of making a sound policy.  Enriching the market resources: In addition to other aspects, we find segmentation instrumental in enriching the marketing potentials. If we know about the preference, needs, requirements, attitudes, lifestyles it is found easier for us to develop the marketing resources accordingly. This in a natural way makes it convenient to develop marketing resources. The process of innovation can be activated. The services, the promotional measures, the pricing tool and the process of offering can be made more competitive. The development of worldclass marketing resources thus makes it convenient to influence the impulse of prospects. The bank professionals find it easier to get the positive results for their productive marketing efforts.

Segmentation in a right fashion makes the way for profitable marketing. This helps policy planners in formulating and innovating the policies and at the same time also simplifies the task of banking professionals while formulating and innovating the strategic decision. The following criterion makes the segmentation right.

An important criterion for market segmentation is the economic system in which we find agricultural sector, industrial sector, services sector, household sector, and rural sector requiring the weight age while segmenting.

A). AGRICULTURAL SECTOR: In the agricultural sector, there are four categories since the needs of all categories can’t be identical.

The mechanization of agriculture, the improved or scientific system of cultivation, the help of nature, the magnitude of risk, the availability of infrastructural facilities influence the level of expectations vis-à-vis the needs and requirements. The banking organizations are supposed to

know and understand the changing requirements of different categories of farmers. B). INDUSTRIAL SECTOR: The banking organizations are supposed to have an in-depth knowledge of the changing needs and requirements of the industrial sector. The large –sized, small- sized co-operative and tiny industries use the services of the banks. The expectation of all the categories can’t be uniform. The banking organizations are supposed to have an in-depth knowledge of the changing needs and requirements of the industrial segment. The emerging tends in competition, the pressure of inflation, the use of sophisticated technologies, and the business regulations are some of the important aspects influencing the hierarchy of needs.

C). SERVICES SECTOR: It is an important sector to the economy where the banking organizations get profitable business. The two categories of organizations such as profit-making and non- profit making are found important in the very context.



The banking organizations need to identify the changing needs and requirements of the services sector with the frequent use of IT and with the mounting pressure of inflation and competition, we find a change in the hierarchy of needs.

This also constitutes an important sector where different income groups have different needs and requirements. In the below figure we can see the different segments of household sector. A). HOUSEHOLD SEGMENT: The high income group, middle income group, subsistence level group and marginal income group have different hierarchy of needs which influence the level of their expectations. B). GENDER SEGMENT: In the gender segment we find males and females having different needs and requirements. The banking organizations are

supposed to identify the level of expectations of both sexes as shown in the below figure.


Gender Segment

Sub- Segment

Working Ladies

Some of the women are housewives and therefore they have different needs and requirements whereas some of them are working ladies having different needs and requirements.

In the profession segment, we find different categories of professions and therefore we find a change in their needs and requirements. As shown in the figure below:

Technocrats Bureaucrats Corporate Executives Intellects White - Collar Employees Blue – Collar Employees

Profession Segment Public/ Private Formal/Informal

The technocrats, bureaucrats, corporate executives, intellects, white-collar and blue collar employees have different needs and requirements and therefore the banking organizations should know their expectations.

In this sector we find different categories of organizations. Some of the organizations are known as charitable organizations, some of them are cultural/ social organizations, some of them are industrial and many of them are profit making and many are philanthropic and many of them are related to trade and commerce. It is natural that the needs and requirements vis-à-vis the level of expectations cant be identical in all cases. To satisfy and to increase the market share it is imperative that the banking organizations are familiar with changing needs and requirements. The emerging trends in the social transformation process determine the hierarchy of needs.

Charitable Trusts Individual Originations Chamber of Commerce Trade and Commerce Health/Education Sports Org Philanthropic Organizations

Institutional Segment Sub- Segment

Complaint Handling-HDFC Bank

Whatever a service firm may do for customer, even the best firms are going to find themselves facing complaints from customers who feel that they are not being treated fairly. In dealing with these situations, it is important to know how to diffuse them and then turn them into positive experiences for all involved. However, when it came to complaint handling, HDFC Bank turned to the airline industry for inspiration. Impressed by the way an airline takes care of its customers from the time they enter the airport till they collect their luggage after landing, the bank maps the customer flow at its branch. The first change it brought to its branches was the 'May I help you' desk at the reception to guide the customer to the right

counter. Next, it laid down efficiency parameters for each sub-process carried out at the branch. "We are constantly fine-tuning our processes to reduce time taken, especially on routine tasks. We monitor how long it takes for customer transactions as well as complaints to get processed". The bank's 'moments of truth' surveys too are modeled after the airline industry's satisfaction surveys. These are given to customers just before they exit a branch after a transaction. HDFC Bank introduced changes for consumer convenience, starting with the reception area and with good reason. A traditional branch has always been an infrequent user's nightmare: cryptic boards are placed on counters leaving one as confused as ever, bank officials sit behind wire-meshes making it impossible to seek any guidance, and the long queues are frustrating, all the more so when you realize you stood in the wrong long line. But HDFC branch models are trying to address this confusion, as well as the jail-like counters. HDFC believes that unless they change to create convenience for that customer, and add to his brand experience, they will fail to capture the loyalty they're trying so hard to earn. And unless they achieve this loyalty and increase their share of the customer's wallet substantially, the majority of their retail customers will continue to be unprofitable for them.

HDFC bank takes complaint not as a mere complaint but as an issue. They have got this unique CRM technique where in if there is any complaint either by an employee or a customer in any branch; it will be looked into and resolved in 24 hours. Within 24 hrs, if the branch manager does not handle the complaint it goes to the higher authority. And then again if the same complaint is not handled in 12 hours by the higher authority it goes to the Managing Director. Once if it reaches the MD, either the branch manager is sacked or necessary action is taken against him.

Phase I The reason why the customer decided to open an account with ABC Bank was their constant boasting of being the best online trading bank in India. So one day the customer called their customer center to open an account. The lady was very polite and after talking with her for some 5 minutes, she told the customer that one of their representatives will visit her soon. She gave the lady her office address and asked her to send the person to her office. The next day the customer gathered all the necessary documents to open an account. It took exactly a week for their

representative to turn up and on her inquiring about the delay, he gave her a silly reason, like he was busy with many more clients and so could not come on the promised date. She felt that the employees attitude towards the customers depend upon their mood on that particular day. Phase II Within a month the customer got a letter from the bank saying that her account has been activated. So the next day she went to her nearest branch to deposit a cheque. As she entered inside, it was over crowded with people in each and every corner; most of them were the employees themselves. In most of the branches that she had visited in last 5 months, she had got the feeling that the branches were over employed. Phase III After going through all this she decided to use their Phone banking facilities, and it’s did not turn out any better than Central Railway Inquiry. Every hour you find some different people to answer your query, and most of the time you are put on HOLD. Phase IV They used to claim that their trump card was the ATM. To some extent it was ok but what the customer noticed is that most of the ATMs are located in a very isolated place and its down during evening time. The Finale Here is something that made the customer to finally say GOODBYE to ABC. Initially they told her that their share trading service is free, so she did most of her trading through ABC direct. The service

was not of much help. Just a week from then, she got a mail asking her to pay for using share-trading service. Again she got in touch with the concerned person and informed them about the mail and also that she was no more interested in continuing her account in ABC. Then they informed her that this mail is not for current year it’s the advance payment for the coming year. In the end she had to pay them for the service, which she never utilized. She stopped using ABC Bank and asked all her colleagues never to have an account with the bank after her experience.

As can be seen in this case, there is a definite failure in the service delivery. Now apply the different dimensions of service quality to this particular case and find out reasons for the failure.

Reliability: The lady assured the customer that the representative would visit her the next day. Instead he took a week to turn up. Also instead of apologizing to the customer, he gave the excuse that he was busy with other clients and so he could not attend to him. In a service industry the customer is the king and you should make each customer feel special. As can be seen, the attitude of the employees in the bank is indifferent. In fact, the customer concludes his review by saying that the employee’s attitude towards the customer depends on their mood. This shows tremendous inconsistency in service delivery. Assurance: Here the staff has failed to live up to its promise. Instead of coming in a day as promised, the representative came after a week. He

didn’t even apologize for his mistake. As a result the customer was inconvenienced. The customer was angry that the bank made false promise just to woo customers. Also she was told that the share trading service was free. Afterwards she was made to pay for the service, which she had hardly used. Tangible: The tangible cues here will be the facilities that they provide, like the phone banking and the ATM. The customer here describes the ATM service as okay. She says that it works only sometimes. She compares their phone banking facility to the central railway enquiry, where every hour different people come to answer his query and most of the time he was put on hold. Empathy: From the case, it seems that they are not understanding towards the customer grievances. All the branches this customer has gone to have been very crowded. There was no effort on the part of the employee’s to help this customer. Also in the case of their phone banking, they make the customer wait for long periods of time without answering their query. Responsiveness: In the case of this customer, the bank and its staff were not able to respond quickly. When the particular representative was not able to reach the next day, the bank should have sent another representative in his place. Also they should not have charged this customer for using the share trading service, especially since it was a mistake on their part.

Service Recovery
Service recovery pertains to the actions taken by an organization In response to a service failure. When a customer complains he expects 3 types of fairness.

Outcome fairness: In this case the customer decided to use the share trading service as she was told it was free. She did not find the service of much help. In the end she had to pay for a service, which she hardly used. The bank should not have charged the customer for this service especially since it was a mistake on their part. Procedural fairness: When the customer entered the bank to deposit a cheque, she found it overcrowded. There was no effort made by any of the employees to help this customer. Using the phone banking facility was also not of much help. Interaction fairness: After promising the customer that the representative would come the next day, he came after a week. After committing this mistake, he made no effort to apologize for it. Instead he gave the excuse that he was too busy with other clients to attend to him.











Equipment: - Phone banking system of ABC Bank was really bad. Every hour there was a new person on the phone and most of the time the

customer had to wait as the phone was kept on hold. The customer had some difficulty using the ATM machines, as they were located on isolated places, which was very inconvenient for the customer to access. Secondly, during the evening time they were not working. The customer had been told about that the share trading facility was free but later on they charged for the next year’s trading in advance. So, there was certainly a failure in equipments. Material: The material aspect of HDFC bank would be its ATM and Phone Banking services that are described by the customer as a “total flop” and a waste of time. This shows a complete material failure, as the services are not up to the extent of the customer’s perception and expectations. Front line staff: The customer has rated employee’s attitude towards him as ‘depends upon the mood’. In a service industry this is not acceptable, whatever might be the mood his attitude towards the customers should be good. The front line staff’s job is to make the work easier for the customer and not to complicate further which is not the case in this particular case study. Supporting Activities: The supporting staff in this case would include the front desk receptionist who fails to act in haste and inform the same to the concerned representative. Also, the customer is not informed about the different service charges, which the back office should have notified by sending some mails or notifications Procedure: In the second phase the customer went to the bank to deposit cheque, she found out that the place was very crowded and there were no proper signboards for the counters to guide her. Information: In phase 1, the customer was told that the bank representative would be coming to his place in a day’s time. But these

representatives came after a week. So there was wrong information given on the part of the customer. Again in the final phase, the customer was not given any information about the next year’s share trading charges and charged her in advance.

Company Profile
ICICI Bank is India's second-largest bank with total assets of over Rs. 1 trillion and a network of about 540 branches and offices and over 1,000 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital, asset management and information technology. ICICI Bank's equity shares are listed in India on stock exchanges at Chennai, Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to

ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. Shareholders of ICICI and ICICI BANK approved the merger in January 2002, by the High Court of at Ahmedabad in March 2002, and by the High Court of Judicature at Bombay and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a singularly.

CASE STUDY-II The Customer’s Association with the Bank
The customer became an ICICI bank customer in 1998 when he became an NRI customer. Things were rather mundane and normal. Compared to the other big nationalized banks and Citibank, the customer felt ICICI Bank was the best and got some great feedback from friends and relatives alike. His initial relationship was excellent. This continued till 2001. All the facilities were of the highest grade. Their email follow-ups, request resolution, customer service and everything they served were of the highest grade. They also baffled him by calling him overseas with regard to certain transactions and request. So, he would have given a 5 star rating in 1998. But it did not continue for long.

What has changed since then?

This bank grew leaps and bounds ever since the IPO in 1998 as well as the NYSE listing in 2000. The numbers of customers were huge and the merger with Bank of Madura added to the woes of the service. As there is a saying “Quality is inversely proportional to Quantity”, ICICI bank yielded to this very true philosophy. The customer sent a letter to their NRI center regarding a change of address for his NRI account. This took considerable amount of time since ICICI misplaced the letter twice and he head o mail the letter again. This frustrated and infuriated the customer. Then, they sent a courier to the customer but at the wrong address. They sent one to the wrong address, and other one to the right address but with the wrong password for the bank account. Snippets from mail correspondence that took place between the customer and the banking personnel are provided as follows providing us with an insight:

If doing an address change should take such a long time and if your processes are so sterner and baseless with a mediocre customer-care follow-up, I definitely need to reconsider my options. I had opened an account in ICICI though I had quite a few options for an NRI account, in hope of having an excellent customer service. I’ll have to rethink if my decision was correct. I have received similar complaints from my friends as well stating that the ’’Quality of ICICI has gone down with Quantity’’, I would definitely like to talk to some manager for NRI Services, for the same matter. Revert to me, if you still have any queries. Mr. XYZ The Reply NRI Cell <nri@icicibank.com> wrote: Dear Mr. XYZ, We apologize for the delay in our response. With reference to your mail we would like to inform you that we have not received your letter for address change. Blah Blah Blah………

In this letter instead of requesting the customer for sending the letter again and apologizing to him, the bank authority says that the customer hasn’t send any letter at all thus making it a CRITICAL INCIDENCE for the customer.

Customer’s Final Conclusion of the Bank
All things considered, the ICICI bank is far ahead of many of the nationalized banks. As an NRI customer and a person used to excellent banking for quite sometime, I feel that this bank has some mediocre facilities and service. I will be reevaluating the opinion at a later point. I am just having an account after many unpleasant services and incidents.

Will the customer recommend ICICI Bank to anyone? A big NO at least for the time being until the bank makes efforts to upgrade their services.

Case Study Analysis: RATER
R: Reliability The Case Study shows that the bank was extremely reliable and trustworthy initially. But after the surge and swelling of customers, inefficiency has crept in r to the bank. The bank is unreliable only on the basis of the service that it provides, but when the question of financial reliability arises the bank seems to be in very sound and secure.
A: Assurance

The customer Mr. XYZ was rest assured about the fact that the bank was very professional in its approach. But after the bank

conducted the mistakes of sending the password at the wrong address and then sending the wrong password at the right address made sure that the bank lost the dignity of being a financial institution that provides assurance. This had a deep impact on the customer. T: Tangibility As we can see when the customer Mr. XYZ wanted to change the address for his NRI account he had to send 3 mails to the bank out of which 2 of them were lost by the company, later on the first confirmation was sent at the wrong address and the second confirmation was sent at the right address with the wrong password. The whole process took around 2 months, which is a very long time to take by any standards.

E: Empathy The bank was very co-operative and sympathetic towards

customers before the phase of their IPO, the best example of this would be that the company also called its NRI customers overseas for certain transactions this showed that the bank was indeed very good towards its customers, but after the IPO, the bank just lost all loyalty it earned, it took the bank almost 2 months to change the address and when the customer Mr. XYZ wrote a mail to the bank for its mediocre service provided the bank in reply blamed the customer for its mistake. Thus, ICICI Bank performs miserably on this count too and thus loses the customer. R: Responsiveness

The company lost this quality after the IPO. The company took almost 2 months to change the address and only after sending 3 mails was the job done, the bank management was also very unresponsive in apologizing to its customers.


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