A STUDY ON CUSTOMER PERCEPTION IN BANKING INDUSTRY USING GAP ANALYSIS - Dr.

Hema Bhalakrishnan Background Our perception is an approximation of reality. Our brain attempts to make sense out of the stimuli to which we are exposed. This works well when we a re about to perceive familiar facts. However, our perception is sometimes off when we are not clear about concepts. Perception is a process by which an individual select, organize & Interpret stimuli in a meaningful picture of the world Also, we can describe as how we see the world around us Perception is the process of se lecting, organizing, & Interpreting or attaching meaning to events happening in environment The Concept of Perception Perception is one of the objects studied b y the science of consumer behaviour. Analyzing the works of scientists studying consumer behaviour, it is possible to make a conclusion that perception is prese nted as one of personal factors, determining consumer behaviour. Personal factor s mean the closest environment of a human, including everything what is inside t he person, his head and soul, characterizing him as a personality. Using his sen sory receptors and being influenced by external factors, the person receives inf ormation, accepts and adapts it, forms his personal attitude, opinion, and motiv e, which can be defined as factors that will influence his further activity and behaviour. Perception within this context is considered as one of the principal personal factors, conditioning the nature and direction of remaining variables. Authors J. C. Mowen (1987), D. L. Loudon and A. J. Della Bitta (1993) determine perception as a phase of information processing, while C. G. Walters and B. J. B ergiel (1989), F. G. Crane and T. K Klarke (1994), G. D. Harrell, G. L. Frazier (1998), M. R. Solomon (1999), B. Dubois (2000) define perception as a separate v ariable of consumer Assistant Professor, Park Global School of Business Excellen ce. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 1

behaviour having features of the process and including separate phases of the pr ocess. C. G. Walters and B. J. Bergiel (1989) characterize perception as a solid process during which an individual acquires knowledge about the environment and interprets the information according to his/her needs, requirements and attitud es. The works of F. G. Crane and T. K Klarke (1994), G. D. Harrell, G. L. Frazie r (1998), M. R. Solomon (1999), B. Dubois (2000) present perception as a more co mplicated process, during which sensory receptors of a consumer capture a messag e sent by external signals and the information received is interpreted, organize d and saved, providing a meaning for it and using it in a decision making proces s. Customer Perception Customer perception is an important component of our rela tionship with our customers. Customer satisfaction is a mental state which resul ts from the customers comparison of expectations prior to a purchase with perform ance perceptions after a purchase. A customer may make such comparisons for each part of an offer called domain-specific satisfaction or for the offer in total call ed global satisfaction. Moreover, this mental state, which we view as a cognitive ju dgment, is conceived of as falling somewhere on a bipolar continuum bounded at t he lower end by a low level of satisfaction where expectations exceed performanc e perceptions and at the higher end by a high level of satisfaction where perfor mance perceptions exceed expectations. Customer Perception on Service These char acteristics of service also make service unique and different from goods as desc ribed below 1. Intangibility. Unlike manufactured goods that are tangible, a ser vice is intangible. The products from service are purely a performance. The cons umer cannot see, taste, smell, hear, feel or touch the product before it purchas ed 2. Heterogeneity. A service is difficult to produce consistently and exactly over time. Service performance varies from producer to producer, from customer t o customer, Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 2

and from time to time. This characteristic of service makes it difficult to stan dardize the quality of the service 3. Inseparability. In service industries, usu ally the producer performs the service at the time the consumption of the servic e takes place. Therefore, it is difficult for the producer to hide mistakes or q uality shortfalls of the service. In comparison the goods producers, have a buff er between production and customers consumption 4. Perishability. Unlike manufact ured goods, services cannot be stored for later consumption. This makes it impos sible to have a quality check before the producers send it to the customers. The service providers then only have one path, to provide service right the first t ime and every time. 5. Non-returnable. A service is not returnable, unlike produ cts. On the other hand, in many services, customers maybe fully refunded if the service is not satisfactory. 6. Needs-match uncertainty. Service attributes are more uncertain than the product. This yield to higher variance of making a match between perceived needs and service is greater than perceived need and product match. 7. Interpersonal. Service tends to be more interpersonal than products. F or example, compare buying a vacuum cleaner to contracting for the cleaning of a carpet. While customers will judge the quality of the vacuum cleaner by how cle an the carpet is, customers will tend to judge the quality of the carpet cleanin g service on both the appearance of the carpet and the attitude of the technicia n. 8. Personal. Customers often view services to be more personal than products. For example, a customer may perceive the service of her car (balancing the tire s) as more personal than purchasing new tires. If the same customer has problems later with the tires, the defect in the tires would be less personal than if th e tires were never balanced. 9. Psychic. Even though the food at a restaurant mi ght not be as delicious as other famous restaurants., the customers will recogni ze the restaurant and tend to be satisfactions if the service of the restaurant is excellent. Another example is when a flight is delayed, and people tend to be upset with this poor service . However, if the gate agent is very helpful and f riendly, people tend to still be pleased with the service (Groth, & Dye, 1999). Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 3

Like other industries, banking and financial services companies have reached the conclusion that the relationship with the customer should not (metaphorically a nd literally) end at the bank door. Customer access after the transaction adds v alue to the transaction. Definition of Banking Banking means accepting for the p urpose of lending or investment, of deposits of money from the Public, repayable on demand or otherwise and withdraw able by cheques, draft, order or otherwise. Features of Banking: 1. Dealing in Money: The banks accept deposits from the pu blic and advancing them as loans to the needy people. The deposits may be of dif ferent types- Current, Fixed, Savings, etc. accounts. The deposits are accepted on various terms and conditions. 2. Deposits must be withdrawable: The deposits (other than fixed deposits) made by the public can be withdrawable by cheques, d raft or otherwise, i.e., the bank issue and pay cheque. The deposits are usually withdrawable on demand. 3. Dealing with Credit: The banks are the institutions that can create Credit i.e., creation of additional money for lending. Thus, Crea tion of Credit is the unique feature of banking. 4. Commercial in Nature: Since a ll the banking functions are carried on with the aim of making profit, it is reg arded as a commercial institution. 5. Nature of Agent: Besides the basic functio ns of accepting deposit and lending money as loans, banks possess the character of an agent because of its various agency services. Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 4

Measuring Customer Perception in the Banking Industry Banking operations are bec oming increasingly customer dictated. The demand for banking super malls offer ing one-stop integrated financial services is well on the rise. The ability of b anks to offer clients access to several markets for different classes of financi al instruments has become a valuable competitive edge. Convergence in the indust ry to cater to the changing demographic expectations is now more than evident. B ancassurance and other forms of cross selling and strategic alliances will soon alter the business dynamics of banks and fuel the process of consolidation for i ncreased scope of business and revenue. The thrust on farm sector, health sector and services offers several investment linkages. In short, the domestic economy is an increasing pie which offers extensive economies of scale that only large banks will be in a position to tap. With the phenomenal increase in the country s population and the increased demand for banking services; speed, service quali ty and customer satisfaction are going to be key differentiators for each bank s future success. Thus it is imperative for banks to get useful feedback on their actual response time and customer service quality aspects of retail banking, wh ich in turn will help them take positive steps to maintain a competitive edge. The working of the customer s mind is a mystery which is difficult to solve and understanding the nuances of what perception the customer has to attain satisfac tion is, a challenging task. This exercise in the context of the banking industr y will give us an insight into the parameters of customer satisfaction and their measurement. This vital information will help us to build satisfaction amongst the customers and customer loyalty in the long run which is an integral part of any business. The customer s requirements must be translated and quantified into measurable targets. This provides an easy way to monitor improvements, and deci ding upon the attributes that need to be concentrated on in order to improve cus tomer satisfaction. We can recognize where we need to make changes to create imp rovements and determine if these changes, after implemented, have led to increas ed customer satisfaction. Assistant Professor, Park Global School of Business Ex cellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 5

The Need to Measure Customer Perception: Satisfied customers are central to opti mal performance and financial returns. In many places in the world, business org anizations have been elevating the role of the customer to that of a key stakeho lder over the past twenty years. Customers are viewed as a group whose satisfact ion with the enterprise must be incorporated in strategic planning efforts. Forw ard-looking companies are finding value in directly measuring and tracking custo mer satisfaction as an important strategic success indicator. Evidence is mounti ng that placing a high priority on customer satisfaction is critical to improved organizational performance in a global marketplace. With better understanding o f customers perceptions, companies can determine the actions required to meet t he customers needs. They can identify their own strengths and weaknesses, where they stand in comparison to their competitors, chart out path future progress a nd improvement. Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the company. When buyers are powerful, the health and stre ngth of the company s relationship with its customers its most critical economic asset is its best predictor of the future. Assets on the balance sheet basicall y assets of production are good predictors only when buyers are weak. So it is n o wonder that the relationship between those assets and future income is becomin g more and more tenuous. As buyers become empowered, sellers have no choice but to adapt. Focusing on competition has its place, but with buyer power on the ris e, it is more important to pay attention to the customer. Customer satisfaction is quite a complex issue and there is a lot of debate and confusion about what e xactly is required and how to go about it. This article is an attempt to review the necessary requirements, and discuss the steps that need to be taken in order to measure and track customer satisfaction. Assistant Professor, Park Global Sc hool of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 6

Need and Importance of the Study One of the most important developments in banki ng sector has been the growth of the financial industry over the past two decade s. The benefits of financial industry can be seen in the form of large scale ind ustrial development, increased employment opportunities, higher turnover as well as revenue generation to the government and also increase in export of goods an d services. Banking industry in India has undergone a process of evolution with the package of time. To count or to depend on a bank merely by the function it i s supposed to perform would be insufficient in the world that we live today. Inv estments play a vital role on the part of the customers. A real investor does no t simply throw his or her money random investment; he or she performs through an alysis and commits capital only when there is a reasonable expectation of profit . Hence they both are interdependent i.e., it all depends upon the customer. Cust omer knows what to expect. Today banks have a relationship management approach wi th their clients. Banks are offering more customized solutions to their clients. The need of the hour is not only to introduce more value added products for whi ch the customers are willing to pay here but also to innovate & enter new segmen ts like small business & periodical finance. Everything resolves around the cust omer and banks via with their innovative and quality products to suit their clie nts. Today the bottom line for any customer is convenience understanding and eva luating the customers perception on the service & products of a bank has without doubt become a need, which propels the body to structure itself for better perf ormance and service. Thus delivering high quality service to clients is just as important as delivering performance that meets or exceeds their expectations. It is in this context that a study is necessary to know about awareness levels on the services provided by the public and Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 7

private sector banks namely, Public Sector Banks : State Bank of India, Indian B ank and Indian Overseas Bank and Private Sector Banks : ICICI, HDFC and IndusInd Bank and the customer perception towards the banks. Objectives The objectives o f the study are: To evaluate the different factors considered by the investors w hile making investments. To study the services provided by Private Sector and Pu blic Sector banks and the performance of it. To analyze the service facilities t hose are being effectively utilized by the customers. To ascertain suggestions f rom the investors for further improvement of the institutions. Methodology The d ata required for this study has been collected from the primary sources. Initial ly a Pilot Study will be conducted for testing the questionnaires. The pilot surve y will help in making certain improvement in the final questionnaire. A structur ed questionnaire shall then be prepared for the respondents in order to collect primary data. The questionnaire is designed based on the objectives. Source of D ata The researcher proposed to gather the required data through primary data and secondary data. Primary data are those which are collected afresh and for the f irst time, and thus happen to be original in character. It will be collected thr ough questionnaires method. Secondary data is collected from the possible record s like books, magazines, periodicals and websites. Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 8

Universe The proposed study is to find out the services rendered by the Public a nd Private Sector Banks to their Customers. The population is uncountable and is considered as infinite. However, the proposed sample for the study from Private Sector Banks and Public Sector Banks are 300 respectively. Sampling Method The universe of the study is the account holders of Public and Private Sector banks and the sampling technique adopted will be convenient sampling method. Statistic al Tools and Techniques The collected data have been analyzed with the help of t ools like Gap Analysis and Factor Analysis Limitations of the Study The time spe nt for canvassing the bankers and customers to get the questionnaire filled was considerable. Further, there was reluctance on the part of customers to respond the questionnaire. The cost and time factors are the other limitations. However adequate care was taken to collect unbiased data. Gap Analysis The gap analysis is carried out between the expected level and derived level of satisfaction on t he various aspects such as Loan Flexibility; Easy Access; Security; Customer fri endly Latest Facilities (Phone banking, Net banking, etc); Reasonable Interest r ate for Credit card transaction. Assistant Professor, Park Global School of Busi ness Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 9

This analysis is carried out using t-test based on the average score of the valu es obtained for each factors. The significance is assessed using 5% level. The r esults are presented in the following tables with suitable interpretations. Gap Analysis on Expected and Derived Level of Satisfaction State Bank of India The t able provides mean difference between expected level of satisfaction and the der ived level of satisfaction on the various aspects of customer perception, its tvalue and p-value. The aspects considered are Loan Flexibility, Easy Access, Sec urity, Customer friendly, Latest Facilities (Phone banking, Net banking, etc), R easonable Interest rate for Credit card transaction. Table 1: Gap Analysis- Expe cted and derived level of satisfaction - SBI Aspects Loan Flexibility Easy Acces s Security Temperature Customer friendly Latest Facilities (Phone banking, Net b anking, etc) Reasonable Interest rate Mean Difference Expected-Derived 0.9 0.9 0 .78 0.91 0.46 0.63 0.6 t-value 59.059 57.559 37.566 45.525 16.389 23.912 22.551 p- value 0.004 0.009 0.001 0.000 0.002 0.001 0.000 S/NS S S S S S S S for Credit card transaction S-significant(pvalue <= 0.05); NS- Not significant ( p value >0.005) It is found from the table 1 that all the mean difference values are positive indicating that the expected level of satisfaction is more than th e derived level of satisfaction. Further it is implied that all the aspects are found significant resulting that the expected level of satisfaction is significa ntly more than the derived level of satisfaction of the respondents on the vario us facilities in SBI. It is concluded that the respondents expectation are signif icantly more than they derive on the various aspects relating to facilities in S BI. Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hem a @ hema_bhalan@yahoo.co.in[Type text] Page 10

Gap Analysis: Expected and derived level of Satisfaction - SBI Loan Flexibility 4 3 Reasonable Interest Rates 2 1 0 Expected Derived Security E asy Access Latest Facilities Customer Friendly Gap Analysis on Expected and Derived Level of Satisfaction IOB The table provide s mean difference of IOB between expected level of satisfaction and the derived level of satisfaction on the various aspects of customer perception, its tvalue and p-value. The aspects considered are loan Flexibility, easy access, security, customer friendly, latest Facilities (Phone banking, Net banking, etc), reasona ble interest rate for credit card transaction. Table 2: Gap Analysis- Expected a nd derived level of satisfaction - IOB Aspects Loan Flexibility Easy Access Secu rity Customer friendly Latest Facilities (Phone banking, Net banking, etc) Reaso nable Interest rate Mean Difference (E-D) 0.9 0.9 0.9 0.93 0.96 0.2 t-value 62.9 5 46.123 55.687 46.165 54.311 9.703 p- value 0.002 0.000 0.003 0.000 0.000 0.005 S/NS S S S S S S for Credit card transaction S-significant(pvalue <= 0.05); NS- Not significant ( p value >0.005) It is found from the table 2 that all the mean difference values are positive indicating that the expected level of satisfaction is more than th e derived level of satisfaction. Further it is implied that all the aspects are found significant resulting that Assistant Professor, Park Global School of Busi ness Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 11

the expected level of satisfaction is significantly more than the derived level of satisfaction of the respondents on the various aspects of Indian Overseas ban k. It is concluded that the respondents expectation are significantly more than t hey derive on the various aspects of Indian Overseas bank. Gap Analysis: Expected and Derived level of Satisfaction - IOB Loan Flexibility 4 3 2 1 0 Security Expected Derived Easy Access Reasonable Interest Rates Latest Facilities Customer Friendly Gap Analysis on Expected and Derived Level of Satisfaction Indian Bank The table provides mean difference of Indian Bank between expected level of satisfaction and the derived level of satisfaction on the various aspects of customer percept ion, its t-value and p-value. The aspects considered are loan Flexibility, easy access, security, customer friendly, latest Facilities (Phone banking, Net banki ng, etc), reasonable interest rate for credit card transaction. Table 3: Gap Analysis- Expected and derived level of satisfaction - IB Aspects Loan Flexibility Mean Difference Expected-Derived 0.62 t-value 24.097 p- value 0.003 S/NS S Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 12

Easy Access Security Customer friendly Latest Facilities (Phone banking, Net ban king, etc) Reasonable Interest rate 0.65 0.87 0.86 0.94 0.92 25.474 29.992 36.987 40.098 50.028 0.009 0.001 0.007 0.006 0.004 S S S S S for Credit card transaction It is found from the table 3 that all the mean diffe rence values are positive indicating that the expected level of satisfaction is more than the derived level of satisfaction. Further it is implied that all the aspects are found significant resulting that the expected level of satisfaction is significantly more than the derived level of satisfaction of the respondents on the various aspects of Indian bank. It is concluded that the respondents expec tation are significantly more than they derive on the various aspects of Indian bank. Gap Analysis: Expected and Derived Level of Satisfaction- IB Loan Flexibility 4 3 Reasonable Interest Rates 2 1 0 Expected Derived Security E asy Access Latest Facilities Customer Friendly Gap Analysis on Expected and Derived Level of Satisfaction ICICI Bank The table provides mean difference between expected level of satisfaction and the derived level of satisfaction on the various aspects of customer perception, its t-value and p-value. The aspects considered are loan Flexibility, easy access, security , customer Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 13

friendly, latest Facilities (Phone banking, Net banking, etc), reasonable intere st rate for credit card transaction. Table 4: Gap Analysis- Expected and derived level of satisfaction - ICICI Aspects Loan Flexibility Easy Access Security Cus tomer friendly Latest Facilities (Phone banking, Net banking, etc) Reasonable In terest rate Mean Difference Expected-Derived 0.61 0.61 0.61 0.61 0.72 0.75 t-val ue 24.637 25.066 23.922 21.494 28.127 29.045 p- value 0.005 0.001 0.001 0.000 0. 004 0.001 S/NS S S S S S S for Credit card transaction S-significant(pvalue <= 0.05); NS- Not significant ( p value >0.005) It is found from the table 4 that all the mean difference values are positive indicating that the expected level of satisfaction is more than th e derived level of satisfaction. Further it is implied that all the aspects are found significant resulting that the expected level of satisfaction is significa ntly more than the derived level of satisfaction of the respondents on the vario us facilities in ICICI bank. It is concluded that the respondents expectation are significantly more than they derive on the various aspects relating to faciliti es in ICICI bank. Gap Analysis; Expected and Derived Level of Satisfaction ICICI Loan Flexibility 4 3 Reasonable Interest Rates 2 1 0 Easy Access Expected Derive d Security Latest Facilities Customer Friendly Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 14

Gap Analysis on Expected and Derived Level of Satisfaction HDFC Bank The table p rovides mean difference of HDFC between expected level of satisfaction and the d erived level of satisfaction on the various aspects of customer perception, its t-value and p-value. The aspects considered are loan Flexibility, easy access, s ecurity, customer friendly, latest Facilities (Phone banking, Net banking, etc), reasonable interest rate for credit card transaction. Table 5: Gap Analysis- Expected and derived level of satisfaction - HDFC Aspects Loan Flexibility Easy Access Security Customer friendly Latest Facilitie s (Phone banking, Net banking, etc) Reasonable Interest rate Mean Difference Expected-Derived 0.6 1.01 0.66 1.02 0.56 0.16 t-value 24.373 38.813 25.678 39.331 21.336 8.131 p- value 0.002 0.002 0.004 0.009 0.008 0.000 S/NS S S S S S S for Credit card transaction S-significant(pvalue <= 0.05); NS- Not significant ( p value >0.005) It is found from the table 5 that all the mean difference values are positive indicating that the expected level of satisfaction is more than th e derived level of satisfaction. Further it is implied that all the aspects are found significant resulting that the expected level of satisfaction is significa ntly more than the derived level of satisfaction of the respondents on the vario us facilities in HDFC bank. It is concluded that the respondents expectation are significantly more than they derive on the various aspects relating to facilitie s in HDFC bank. Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 15

Gap Analysis: Expected and Derived Level of SatisfactionHDFC Loan Flexibility 4 3 Reasonable Interest Rates 2 1 0 Easy Access Expected Derive d Security Latest Facilities Customer Friendly Gap Analysis on Expected and Derived Level of Satisfaction IndusInd Bank The tab le provides mean difference of IndusInd bank between expected level of satisfact ion and the derived level of satisfaction on the various aspects of customer per ception, its t-value and p-value. The aspects considered are loan Flexibility, e asy access, security, customer friendly, latest Facilities (Phone banking, Net b anking, etc), reasonable interest rate for credit card transaction. Table 6: Gap Analysis- Expected and derived level of satisfaction - Indusind Aspects Loan Fl exibility Easy Access Security Customer friendly Latest Facilities (Phone bankin g, Net banking, etc) Reasonable Interest rate for Credit card transaction It is found from the table 6 that all the mean difference values are positive indicati ng that the expected level of satisfaction is more than the derived level of sat isfaction. Further it is implied that all the aspects are found significant resu lting that the expected level of satisfaction is significantly more than the der ived level of satisfaction of the respondents on the reasonable interest rates. Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 16 Mean Difference Expected-Derived 0.75 0.72 0.33 0.3 1 1.03 t-value 28.686 29.609 13.971 12.166 26.055 27.061 p- value 0.002 0.001 0.003 0.009 0.008 0.003 S/NS S S S S S S

It is concluded that the respondents expectation are significantly more than they derive on the various aspects relating to various facilities in Indusind bank. Gap Analysis: Expected and Derived level of Satisfaction Indusind Loan Flexibility 4 3 Reasonable Interest Rates 2 1 0 Easy Access Expected Derive d Security Latest Facilities Customer Friendly Factor Analysis The factor analysis is mainly employed for 2 purposes 1. For dat a reduction 2. For identifying the factor which influences most. In this section the factor analysis under extraction method of principal component analysis is employed to identify the important aspects relating to customer perception on pu blic sector and private sector banks. Important factors are identified with extr action value more than 0.7. The results are presented in table 7. Table 7 descri bes the extraction values for each aspect relating to customer perception on pub lic sector and private sector banks. through principal component analysis. Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 17

Table 7: Extraction Values- Aspects relating to customer perception on service o f banks Aspects Customer Friendly Easy Access Can Relax Stress Reduction Securit y Safe Go to bank with a trobled mind and ther sort it out for you Sleep in nigh t without worrying whats going on Facilities are too good Come away with a aprop ortion of what you want Got what you went down for Everything went according to plan Met expectations as you went before Happy with results Content with whats b een done for you Awareness about net banking Not frustrated Everything goes smoo th No hassle Straight forward Extraction values 0.888 0.910 0.795 0.771 0.836 0. 720 0.816 0.640 0.657 0.764 0.743 0.762 0.767 To be unsatisfied when you come and you are still in the same level 0.409 0.551 0.574 0.534 0.462 0.710 0.787 0.409 It is found from the table 7 that among the 21 aspects relating to customer perc eption towards public and private sector banks 14 aspects are considered as more important than other aspects because of their expectation value more than 0.7. Further it Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 18

can be deduced that easy access is considered as very important because of its hi gh extraction value 0.910 followed by customer friendly (0.888); security (0.836); Go to bank with a troubled mind and there sort it out for you (0.816); can relax (0.7 95) and so on. It is concluded that among the various aspects relating to percep tion of customers easy access is considered as more important than the other facto rs. Factors Influencing Customer Perception 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Achieving Got what you Happy with Happy with Go to bank Everything Secure Met Walked out Can Relax Straight Series1 Findings based on GAP Analysis It is concluded that the respondents expectation a re significantly more than they derive on the various aspects relating to facili ties in SBI. It is concluded that the respondents expectation are significantly m ore than they derive on the various aspects of Indian Overseas bank. It is concl uded that the respondents expectation are significantly more than they derive on the various aspects of Indian bank. Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 19

It is concluded that the respondents expectation are significantly more than they derive on the various aspects relating to facilities in ICICI bank. It is concl uded that the respondents expectation are significantly more than they derive on the various aspects relating to facilities in HDFC bank. It is concluded that th e respondents expectation are significantly more than they derive on the various aspects relating to various facilities in Indusind bank. Findings from Factor An alysis It is concluded that among the various aspects relating to perception of customers easy access is considered as more important than the other factors. SUGG ESTIONS, DISCUSSIONS AND CONCLUSIONS Suggestions The following suggestions are t he outcome of the research and applications of these Every bank should take prec autions to keep customers experience safe. It should take continued efforts to s afeguard online banking transactions. All internet banks should provide close in teraction between bank service and web based e-commerce and even service through direct electronic payments. The bank should provide more convenient internation al transactions which means internet along with general trends. Elimination of g eographical boundaries will help free access of internet banking. The bank shoul d provide more customer awareness and need of transparency in their dealings. Al l banks should provide digital certification procedure as it helps the customers data that they receive from the correct system. The banks should come up with i nnovative ways of service at their door steps this may be a costly affair but wi ll surely give positive results in the long run. The banks should take the initi ative of training the advisors about the new schemes from time to time which als o makes the advisors connected to the bank. Assistant Professor, Park Global Sch ool of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] P age 20

The banks should also emphasis on the monitoring of EMI which directly relates t o the returns of a loan amount. The company should come up with proper fixed dep osit plans at this point of time where the market is highly volatile and the inv estors become very cautious at this level. The banks should use brand ambassador s for example the CEOs of major companies where the company allocate the funds. T his will probably ensure proper results. The banks should focus on the advertisi ng strategy and also the marketing of the bank product. The bank doesnt have enou gh tax saving plans or appropriate plans for tax so which they should come up wi th. Managerial Implications and Discussions Good Performance, Questionable Healt h Indian banks have compared favourably on growth, asset quality and profitabili ty with other regional banks over the last few years. The banking index has grow n at a compounded annual rate of over 51 per cent since April 2001 as compared t o a 27 per cent growth in the market index for the same period. Policy makers ha ve made some notable changes in policy and regulation to help strengthen the sec tor. These changes include strengthening prudential norms, enhancing the payment s system and integrating regulations between commercial and co-operative banks. However, the cost of intermediation remains high and bank penetration is limited to only a few customer segments and geographies. While bank lending has been a significant driver of GDP growth and employment, periodic instances of the failur e of some weak banks have often threatened the stability of the system. Structura l weaknesses such as a fragmented industry structure, restrictions on capital av ailability and deployment, lack of institutional support infrastructure, restric tive labour laws, weak corporate governance and ineffective regulations beyond S cheduled Commercial Banks (SCBs), unless addressed, could Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 21

seriously weaken the health of the sector. Further, the inability of bank manage ments (with some notable exceptions) to improve capital allocation, increase the productivity of their service platforms and improve the performance ethic in th eir organisations could seriously affect future performance. Opportunities and C hallenges for Players The bar for what it means to be a successful player in the sector has been raised. Four challenges must be addressed before success can be achieved. First, the market is seeing discontinuous growth driven by new produc ts and services that include opportunities in credit cards, consumer finance and wealth management on the retail side, and in fee-based income and investment ba nking on the wholesale banking side. These require new skills in sales & marketi ng, credit and operations. Second, banks will no longer enjoy windfall treasury gains that the decade-long secular decline in interest rates provided. This will expose the weaker banks. Third, with increased interest in India, competition f rom foreign banks will only intensify. Fourth, given the demographic shifts resu lting from changes in age profile and household income, consumers will increasin gly demand enhanced institutional capabilities and service levels from banks. Ne ed to Create a Market-Driven Banking Sector with Adequate Focus on Social Develo pment The term policy makers used in this thesis, refers to the Ministry of Financ e and the RBI and includes the other relevant government and regulatory entities for the banking sector. We believe a co-ordinated effort between the various en tities is required to enable positive action. This will spur on the performance of the sector. The policy makers need to make co-ordinated efforts on six fronts : Help shape a superior industry structure in a phased manner through managed con solidation and by enabling capital availability. Focus on Social Development Focu s strongly on social development by moving away from universal directed norms to a n explicit incentive-driven framework by introducing credit guarantees and Assis tant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_ bhalan@yahoo.co.in[Type text] Page 22

market subsidies to encourage leading public sector, private and foreign players to leverage technology to innovate and profitably provide banking services to l ower income and rural markets. Create a unified regulator, distinct from the cen tral bank of the country, in a phased manner to overcome supervisory difficultie s and reduce compliance costs. Improve corporate governance primarily by increas ing board independence and accountability. Accelerate the creation of world clas s supporting infrastructure (e.g., payments, asset reconstruction companies (ARC s), credit bureaus, back-office utilities) to help the banking sector focus on c ore activities. Enable labour reforms, focusing on enriching human capital, to h elp public sector and old private banks become competitive. Need For Decisive Ac tion by Bank Managements Management imperatives will differ by bank. However, th ere will be common themes across classes of banks: PSBs need to fundamentally st rengthen institutional skill levels especially in sales and marketing, service o perations, risk management and the overall organisational performance ethic. The last, i.e., strengthening human capital will be the single biggest challenge. O ld private sector banks also have the need to fundamentally strengthen skill lev els. However, even more imperative is their need to examine their participation in the Indian banking sector and their ability to remain independent in the ligh t of the discontinuities in the sector. New private banks could reach the next l evel of their growth in the Indian banking sector by continuing to innovate and develop differentiated business models to profitably serve segments like the rur al/low income segments; actively adopting acquisitions as a means to grow and re aching the next level of performance in their service platforms. Attracting, dev eloping and retaining more leadership capacity would be key to achieving this an d would pose the biggest challenge. Foreign banks committed to making a play in India will need to adopt alternative approaches to win the race for the customer a nd build a value-creating customer franchise in advance of regulations potential ly. At the same time, they should stay in the game for potential acquisition opp ortunities as and when they appear in the near term. Maintaining a fundamentally long-term value-creation mindset will be their greatest challenge. The extent t o which Assistant Professor, Park Global School of Business Excellence. Reach Dr .Hema @ hema_bhalan@yahoo.co.in[Type text] Page 23

Indian policy makers and bank managements develop and execute such a clear and c omplementary agenda to tackle emerging discontinuities will lay the foundations for a high-performing sector in the near future Scope for Future Research There is a wide scope to extend this study in the future. Future researchers may conti nue the same study or they can study by taking all the private sector banks or p ublic sector banks. The study may be done as a world wide study to bring about t he potential of the bank industry. Conclusion The last decade has seen many posi tive developments in the Indian banking sector. The policy makers, which compris e the Reserve Bank of India (RBI), Ministry of Finance and related government an d financial sector regulatory entities, have made several notable efforts to imp rove regulation in the sector. The sector now compares favourably with banking s ectors in the region on metrics like growth, profitability and non-performing as sets (NPAs). A few banks have established an outstanding track record of innovat ion, growth and value creation. This is reflected in their market valuation. How ever, improved regulations, innovation, growth and value creation in the sector remain limited to a small part of it. The cost of banking intermediation in Indi a is higher and bank penetration is far lower than in other markets. Indias banki ng industry must strengthen itself significantly if it has to support the modern and vibrant economy which India aspires to be. While the onus for this change l ies mainly with bank managements, an enabling policy and regulatory framework wi ll also be critical to their success. The failure to respond to changing market realities has stunted the development of the financial sector in many developing countries. A weak banking structure has been unable to fuel continued growth, w hich has harmed the long-term health of their economies. In this white paper, we e mphasise the need to act both decisively and quickly to build an enabling, rathe r than a limiting, banking sector in India. Assistant Professor, Park Global School of Business Excellence. Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 24

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