You are on page 1of 81


A Dissertation submitted in partial requirements for the award of MBA Degree of Bangalore University By Ms Darshana Patel (Reg no: 04XQCM6021) Under the guidance of Dr. K V Prabhakar Senior Professor, MPBIM, Bangalore

M.P. Birla Institute of Management,
Associate Bharatiya Vidya Bhavan, No 53, Race Course Road, Bangalore-560001 2006.

The most important objective of this study is to reduce the turnaround time taken for a simple account opening. The tools used to determine the main reasons for such delays are identified in the Pareto Charts, Service Switching Diagram and surveys through questionnaires. The major findings of this research highlight customer expectation from the banks services, actual and expected turnaround time for account opening and how they rate their bank in terms of service provided. It was however found that change in RBI guidelines was the main cause of such delays with other minor causes. To eliminate the reasons for delays, separate instruction forms are recommended titled ìHelp us to serve You betterî that brings about clarity while filling a form. Also the application forms can be simplified to make it easy for a lay man to fill in. The following pages give a detailed study on ìAccount Opening Delaysî or AOD with suitable recommendations.

M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan


I hereby declare that this dissertation entitled, ìTOTAL QUALITY MANAGEMENT at HDFC Bankî is a bonafide study, completed under the guidance and supervision of Dr. K V Prabhakar, Senior Professor, M.P.Birla Institute of Management, Bangalore, (Internal Guide) and Mr. Baban Balan, HDFC Bank, Bangalore (External Guide). I further declare that this dissertation is the result of my own efforts and that it has not been submitted to any other University or Institute for the award of a degree or diploma or any degree or other similar title of recognition.


Place: Bangalore Date:
M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan



I hereby certify that this dissertation entitled ìTOTAL QUALITY MANAGEMENT at HDFC Bankî has been prepared by Ms.Darshana.Patel under the guidance and supervision of Dr. K V Prabhakar, Senior Professor, M.P.Birla Institute of Management, Bangalore. (Internal Guide) and Mr. Baban Balan, HDFC Bank, Bangalore (External Guide)

Place: Bangalore Date: (Dr.Nagesh S Malavalli) Principal

M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan


K V Prabhakar) Internal Guide M.Certificate I hereby certify that this dissertation entitled ìTOTAL QUALITY MANAGEMENT at HDFC Bankî is the result of research work carried out by Ms. Place: Bangalore Date: (Dr.Darshana.Birla Institute of Management Associate Bharatiya Vidya Bhavan 5 .P.Patel under my guidance and supervision.

External Guides Certificate M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 6 .

without whose moral support and inspiration. Manager. Baban Balan. this report would have been incomplete. I am also grateful to Mr. I would also like to thank Prof.V.Birla Institute of Management Associate Bharatiya Vidya Bhavan 7 .P. Mona Mitter.Prabhakar.Acknowledgement It is said ìA teacher affects eternity. My sincere gratitude to Ms. M.K. Personal Banker. Dr.HDFC for helping me to choose this organisation for a detailed study. Kasturba Road branch. Credit also goes to my parents. THANK YOU ONE AND ALL. Shanmugam for his guidance in the area of Quality Management. for highlighting certain aspects that I needed to cover and also in framing the final report. for his guidance and support. where his influence stops. Quality Initiatives Group. he can never tell.î I would like to take this opportunity to thank my project guide. HDFC Bank.

Birla Institute of Management Associate Bharatiya Vidya Bhavan 8 .Contents Particulars Introduction Industry Profile Company Profile HDFC and Competitors Area of study Problem Statement Research Objective Research Methodology Research Gap Analysis and Data Interpretation Recommendations Annexure Glossary Bibliography Directions for further research Page Number 10 13 17 21 24 29 32 34 38 40 60 66 71 73 76 M.P.

List of tables and charts Particulars Indian Banking Structure Account Opening Procedure Pareto Chart Root Cause Diagram Service Switching Behaviour Table 1 Chart 1 Graph 1 Table 2 Graph 2 Table 3 Graph 3 Quality Function Deployment M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan Page Number 15 27 41-46 47 49 52 52 53 54 54 55 56 58 9 .

CHAPTER 1: INTRODUCTION M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 10 .P.

risk management.  Customers cannot define their needs for services until after they have some reference or comparison. Each challenge faces a set of steps and procedures. It varies from improving profitability. M. Lot of care needs to be taken while monitoring them.P. the performance deviates from the expected standard. the entire process can go haywire. They are Output of service processes are not well defined as manufactured products. HDFC wants to implement the concept the Total Quality Management (TQM) in the process of account openings. A process is defines as a systematic series of actions directed to the achievement of a goal.  Most service processes involve greater interaction with customer. However.Birla Institute of Management Associate Bharatiya Vidya Bhavan 11 . reinforcing technology. if at the initial steps.Banking sector faces lot of challenges. The process therefore has to be:  Goal oriented  Systematic  Capable  Legitimate TQM also involves Services Process Design and is different from manufacturing process design. customer orientation to meeting international standards.

M. we will see how a primary function of the bank like account opening. it results in accumulation of delays and brings down the efficiency of the bank and finally fails to meet the customer's expectation.In the following pages. In the pages to come. If this procedure is not carried out effectively initially. even though perceived simple. Customer Relationship Management is leveraged to Account Opening Delays at HDFC Bank to gain an insight into the banks problem.Birla Institute of Management Associate Bharatiya Vidya Bhavan 12 . undergoes certain procedures. This detailed report relates the issue of account opening delays to the customerís perception of the bank.P.

INDUSTRY PROFILE M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 13 .P.

For a financial system to mobilize and allocate savings of the country successfully and positively and productively there must be a class of financial institutions. The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass banking.P. the State Bank of India and its group banks. Scheduled banks comprise commercial banks and the co-operative banks. 1949 can be broadly classified into two major categories. These banks have over 67.Birla Institute of Management Associate Bharatiya Vidya Bhavan 14 . They are also the most important depositories of public savings and most important disbursers of finance.The Indian Banking Industry. Commercial banks are the oldest and fastest growing intermediaries in India. commercial banks can be further grouped into nationalized banks. regional rural banks and private sector banks (the old/ new domestic and foreign). which is governed by the Banking Regulation Act of India. non-scheduled banks and scheduled banks.000 branches spread across the country. The structure and M. In terms of ownership. This in turn resulted in a significant growth in the geographical coverage of banks. Every bank had to earmark a minimum percentage of their loan portfolio to sectors identified as ìpriority sectorsî.

The following chart gives the structure of the Indian Banking Indian Banking System Reserve Bank of India Scheduled Banks State Coop. 4. 3. 2. Expansion in banking facilities. Increase in banking habit. Banks Commercial Bank Non-scheduled Banks Central Coop. Banks & Primary Credit Societies Commercial Bank Indian Public Sector Banks Foreign Private Sector Banks (Old & New) State Bank of India & its subsidiaries Other Nationalised Banks Regional Rural Banks IndustryThe factors that influence the growth of banks are the following1. Inflows of deposits from Non Resident Indians. Increase in national income.working of the banking system are integral to a countryís financial stability and economic growth. .

Birla Institute of Management Associate Bharatiya Vidya Bhavan 15 .M.P.

headed by Mr.. its main competitors and what problems the bank is facing with respect to account opening delays.V. ICICI Bank ñ headed by K. phone banking. State Bank of India ñ headed by A. The banking industry is currently dominated by the following five top players1.Kamath (MD & CEO) 3.P. use traditional ways of banking. Private sector banks have pioneered internet banking .Birla Institute of Management Associate Bharatiya Vidya Bhavan 16 .K. M.Purwar (Chairman) 4. Citibank.Even though Public Sector Banking accounts for 78% of total banking industry.headed by Walter Wriston (CEO) 5. ATMís and so on. HDFC Bank ñ headed by Aditya Puri 2. M B N Rao (CMD) The following pages will give a detailed insight in to HDFC Bank. Canara Bank.

Birla Institute of Management Associate Bharatiya Vidya Bhavan 17 .P.CHAPTER 2: PROFILE OF HDFC BANK M.

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. Its awards and accolades for the year 2005 include the followingAsiamoney Awards Asiamoney Awards Hong Kong-based Finance Asia magazine Economic Times Awards "Company of the Year" Award for Corporate Excellence 2004-05. with its registered office in Mumbai. as part of the RBI's liberalisation of the Indian Banking Industry in 1994.Birla Institute of Management Associate Bharatiya Vidya Bhavan 18 . M.P. "Best Bank in India" The Business Today-KPMG Survey published in the leading Indian business magazine Business Today has named HDFC Bank "Best Bank in India" for the third consecutive year in 2005. HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian Bank". India. Best Domestic Commercial Bank Best Cash Management Bank India . HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited'.

st Background HDFC was incorporated in 1977 with the primary objective of meeting a social need ñ that of promoting home ownership by providing long-term finance to households for their housing needs. It has also received a CII-EXIM Bank Commendation Cert. HDFC was promoted with an initial share capital of Rs.Birla Institute of Management Associate Bharatiya Vidya Bhavan 19 . Business Objectives The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner.The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best Trade Finance Bank" in India.2000. and to promote home ownership. in 2006. for commitment to TQM. 100 million.Avaya Global Connect Customer Responsiveness Awards 2005" HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A Country Awards 2005. HDFC Bank named the "Most Customer Responsive Company Banking and Financial Services in The Economic Times .8 Cr. M. Currently they have a net profit for the year quarter ended 31 March 2006 of Rs.P.870.

Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets. VISION STATEMENTTo build a world class Indian bank. b) maintain its position as the premier housing finance institution in the country. c) maintain its position as the premier housing finance institution in the country d) provide consistently high returns to shareholders. Organisational Goals HDFCís main goals are to a) develop close relationships with individual households. MISSION STATEMENT ñ Use enabling technologies to provide value added products and services to customers at value for money price.Birla Institute of Management Associate Bharatiya Vidya Bhavan 20 . Credit Information Bureau (India) Limited Other Companies Co-Promoted by HDFC M.P. and e) to grow through diversification by leveraging off the existing client base. SUBSIDIARIES AND ASSOCIATE COMPANIES • • • • • • • HDFC Bank HDFC Mutual Fund HDFC Standard Life Insurance Company HDFC Realty HDFC Chubb General Insurance Company Ltd..

P.HDFC AND ITS COMPETITORS M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 21 .

The immediate competitor of HDFC Bank is ICICI Bank. Canada and Russia.Birla Institute of Management Associate Bharatiya Vidya Bhavan 22 . 16. branches in Singapore and Bahrain and representative offices in the United States. ICICI Bank has a network of about 573 branches and extension counters and over 2.P. ICICI Bank's equity shares are listed in India on the Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE) The next competitor bank is State Bank Of India or SBI. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking. China.5 billion) at March 31.05 billion(US$ 461 million) for the year ended March 31. ICICI Bank currently has subsidiaries in the United Kingdom.000 ATMs. Bangladesh and South Africa.SBI is the largest bank in India with deposits of Rs M.676. 2005 (Rs. venture capital and asset management.59 billion(US$ 38. 2005 and profit after tax of Rs. life and non-life insurance. 20. ICICI Bank is India's second-largest bank with total assets of about Rs. United Arab Emirates.1.37 billion(US$ 376 million) in fiscal 2004).

000 crore as on March 31. and emerge as the strongest technology enabled distribution network in India. improve service levels. the certification process is quite rigorous and adept at identifying problem areas.P. independent third parties that measure on specific operational parameters. The increasing focus on upgrading the technology back-bone of the bank will enable it to leverage its reach better. Second. First. Both these banks apply TQM to the services they provide. such as Customer Operations Performance Center (COPC) and the eServices Capability Model (eSCM). they establish credibility with clients. as the auditing bodies are neutral and not connected with the vendor in any way.3.67. It dominates the Indian banking sector with a market share of around 20% in terms of total banking sector deposits. M. External certifications have two basic advantages.000 branches and ATMs of the State Bank group.Birla Institute of Management Associate Bharatiya Vidya Bhavan 23 . and improve operating efficiency to counter the threat of competition effectively. provide new delivery platforms. Also there are independent audits. it will cover over 10. because they are objective evaluations by credible. 2005. The increasing integration of SBI with its associate banks (associates) and subsidiaries will further strengthen its dominant position in the banking sector and position it as the countryís largest universal bank. Once the core banking solution (CBS) is fully implemented.

P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 24 .CHAPTER 3:CRITICAL ISSUE INVOLVED IN THE STUDY A/C Opening delays at various branches of the bank (South region) M.

The Reserve Bank of India is empowered to issue directives / advices on interest rates on deposits and other aspects regarding conduct of deposit accounts from time to time. In fact. The ultimate M. The document recognises the rights of depositors and aims at dissemination of information with regard to various aspects of acceptance of deposits from the members of the public. payment of interest on various deposit accounts. 1949. etc. depositors are the major stakeholders of the Banking System. conduct and operations of various deposits accounts.One of the important functions of the Bank is to accept deposits from the public for the purpose of lending. banks are now free to formulate deposit products within the broad guidelines issued by the RBI.P.. method of disposal of deposits of deceased depositors. With liberalization in the financial system and deregulation of interest rates. The depositors and their interests form the key area of the regulatory framework for banking in India and this has been enshrined in the Banking Regulation Act. This policy document on deposits outlines the guiding principles in respect of formulation of various deposit products offered by the Bank and terms and conditions governing the conduct of the account. for the benefit of customers.Birla Institute of Management Associate Bharatiya Vidya Bhavan 25 . It is expected that this document will impart greater transparency in dealing with the individual customers and create awareness among customers of their rights. closure of deposit accounts.

which the bank has to necessarily follow while opening an account. for a bank the processing of the application form involves a set of procedures with costs incurred at every stage.Birla Institute of Management Associate Bharatiya Vidya Bhavan 26 . As we all know.P. The following flowchart gives the various procedures involved in opening an account with the HDFC Bank. the primary function of a bank is to accept funds from public and henceforth. However. An account opening for a customer is easy as it involves just filling in a form and submitting it with proper id proofs. the bank reiterates its commitments to individual customers outlined in Bankers' Fair Practice Code of Indian Banks' Association.objective is that the customer will get services they are rightfully entitled to receive without demand. The RBI prescribes certain guidelines. While adopting this policy. an account needs to be created. This document is a broad framework under which the rights of common depositors are recognized. Detailed operational instructions on various deposit schemes and related services will be issued from time to time. M.

Cus tome r abl e to c lear exc epti on No Send doc s to CPU C Yes Yes No PB Auth Chec ks Appl i c ati on form for c omp l etenes s Couri er Control Sheet prepa red Approved Yes Send forms to CPU Forms rec ei ved at C PU . MC i s s ued to c us t for IP fund s A Fund s parked in Dummy A/c Yes No Sati s fac tory PB c ontac ts Cl ear Fund s avai lable No Form returned to PB c us tomer to c l ear exc epti on .igx Start Cus tomer walks i nto branc h Sales Pitc h made Cus tomer dec i des to ope n ac c oun t No Appl ic ation form gi ven to c us tomer Yes A Cus tome r requires A/c number i mmedi atel y Yes Ins ta Ac c oun t features explai ned to c us tomer Cus tome r c ons en ts for Ins ta Ac oun t Yes Ins ta Ac c ount Ki t Proc es s ed No No Cus tom er fi ll s i n Ac c oun t Open ing Form B ID Proof Addres s proof Pho tog raph No Exi s ti ng c us tomer Sati s fac tory Yes Satis fac tory Yes Satis fac tory No PB c ontac ts c us tomer for addnl doc s Yes No No Yes A Manage r Exc epti on Val id c us tomer i d provi ded No Yes Manage r Exc epti on No Yes Cus tomer able to produ c e addnl Doc s No Yes Cus tomer s ubmits form Addn l Doc Verified by PB Ac not opened .AOProc es s .

P.Forms s ent to DVU DVU Iden tifies exc epti on No Yes Puts form Returns form to branc h No C M.Birla Instituotneholfd Management Form s ent to Branc h s eeks exc eption Doc s atis fac tory for 27 Associate Bharatiya Vidya Bhavan Yes No DVU Yes Imag i ng Dept app roval Addn l Doc s Req d Yes B No .

the funds to open the account are deposited in a Dummy account and the form is sent to Chennai for further verification. Once these are satisfactory. Here. The main branches wherein such issues reached an alarming rate were the following Sarjapur  Jaynagar  Indiranagar  M G Road The following pages will contain a detailed study on the branches and solutions will be recommended.Birla Institute of Management Associate Bharatiya Vidya Bhavan 28 . Once the form is filled in by the customer. In the ìFulfillî step. M. The PB requires all documents relating to ID proof. DVU is Data Verification Unit that is located in Chennai for south region (for north and west being Mumbai). the customer has a choice of getting an Insta Account for an immediate account number or can fill in the form for a normal one. it is verified by the PB (Personal Banker) and is sent to Chennai for verification.P. photographs and address proof. it is seen if the application and documents comply with the rules of the RBI and depending on the outcome either the account is opened or the form is sent bank to the branch (can even be put on hold) for additional documents to be sent in.At the presale stage.

CHAPTER 4 : PROBLEM STATEMENT M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 29 .P.

The bank opens.P. source or destination of money is not revealed to the bank). However.Birla Institute of Management Associate Bharatiya Vidya Bhavan 30 . banks have followed know your customer norms (KYC). with its net profit growing at an annualised average rate of 104 per cent. on an average atleast 25-30 accounts per week for its customers compared to its competitors who have an average of just 15-25 (for ICICI) and 10-12 (for SBI). It has grown at a blistering pace since 1995. M. Account opening involves various steps and hence processing expenses and delays occur if the documents do not suffice. This is called the AML/KYC form (AML-Anti Money Laundering i. the recent changes in the RBI rules with respect to account opening have reduced the efficiency of the bank thereby causing delays.e. Its retail loans have risen from Rs 845 crore in 2001 to Rs 7.325 crore in 2004. It is for the individual banks to determine list of acceptable documents. RBI has lately mandated that certain information pertaining to the applicant (individual/corporate) need to necessarily be captured at the time of account opening. For ensuring this. The RBI does not specify the documents to be obtained. Its size is now comparable to some of the smaller public sector banks which dominate India's landscape.HDFC Bank has 379 branches and 900 ATMs in 183 cities.

The bank has a comprehensive list of those documents which are acceptable for various account types on the basis of type of entity.Birla Institute of Management Associate Bharatiya Vidya Bhavan 31 . These recent changes brought in by the RBI with respect to account opening have brought in a problem of delay in account opening. M. utility of accounts and facilities provided.P.The list of documents acceptable is dependent on the type of accounts being opened.

P.CHAPTER 5 : RESEARCH OBJECTIVE M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 32 .

Identifying the main reasons for the delays in account opening. Identifying the branches that are a victim to the RBIís new rules. M. Application of various statistical models to minimize the delays.P. Customer expectations about their bank through a survey with the help of a questionnaire.The project is undertaken with the following objective- i. ii. iv.Birla Institute of Management Associate Bharatiya Vidya Bhavan 33 . iii.

Birla Institute of Management Associate Bharatiya Vidya Bhavan 34 .CHAPTER 6:RESEARCH METHODOLOGY M.P.

It is a technique based on Pareto principle of ìthe vital few and trivial manyî. the following tools of Total Quality Management were usedPareto analysis. Some of these branches have a really high rate of delays in account opening.The bank has divided the south region as S1 and S2 with branches under it. The methodology used to conduct the research for the purpose of this dissertation includes:  Sample survey of bank customers to gauge an idea on Customer Satisfaction  Explore reasons for delays in account a bar chart that illustrates the frequency recurrence of a set of items. To make the above observations. Root-Cause analysis.It is a diagram that gives the relationship between quality characteristic and its factors.  Study the database of the bank to get an insight into the working of the bank and its policies.Birla Institute of Management Associate Bharatiya Vidya Bhavan 35 . It is M. It is also called the 80-20 rule.

It refers to that concept that integrates a firms TQM efforts by unifying the four functional strategies1. Canara M. This will vary from place to place and environment to environment. Marketing 2.a pictorial representation and is also called Fish Bone Diagram or Ishikawa diagram.Birla Institute of Management Associate Bharatiya Vidya Bhavan 36 . Sales 3. Product design 4. The respondents included customers from HDFC. ICICI. Quality Function Deployment. Sample Survey. Operations management The main quality characteristic is chosen and the major causes for the same are listed. Each cause is analysed thoroughly to find the most influential cause resulting in poor quality of service delivery. SBI. Citibank.A questionnaire titled ìSERVICE QUALITY LEVERAGED EXISTING CUSTOMERSî TO ACQUIRING NEW CUSTOMERS.P. RETAINING CUSTOMERS AND REGAINING THE LOST The questionnaire aims at getting a perception about the services provided by the bank to the customers and leverage it to the efficiency of in account opening.

P. it is so unlikely that the sample came from this population (5% chance or less) that we reject the null hypothesis and say that the sample is different from the population. mode and standard deviation. z is greater than 1. That The Z test was used to find any significant differences between the sample mean and a population mean. median. All the data was fed into an excel sheet and necessary calculations for Z were done. Then.e. a Z test is applied to verify the hypothesisH0: There is no difference between sample values and the population values. and the difference is statistically significant. H1: There is a difference between sample values and the population values. It included average. The confidence level taken in this study is 95% i.96.) It indicates how likely it is that a sample with a certain mean and standard deviation came from the population being studiedóthat it has a population mean.96 or less than -1. A sample questionnaire is enclosed at the end in Annexure. The in built statistical functions for a Z test was used to determine the values and conclusions were drawn based on the same. M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 37 . (The sample size taken was 50.

RESEARCH GAP M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 38 .P.

The research includes analyzing the process of account opening. However.P. the size of the sample is not very large and hence any predictions made on the population. an effort has been made to throw light on the process of account opening and the defects related to it. This had been leveraged to the concept of Customer Relationship Management. despite the gaps.Birla Institute of Management Associate Bharatiya Vidya Bhavan 39 . may at times be inaccurate. This procedure itself is divided into separate functions and is distribute in two places (Bangalore and Chennai). Hence. the survey was used to gauge customersí perceptions about their banks. the study is focused mainly on problems at Bangalore and the problems faced in Chennai remain undiscovered. Also. M.

Birla Institute of Management Associate Bharatiya Vidya Bhavan 40 .P.CHAPTER 7: ANALYSIS AND DATA INTERPRETATION M.

Birla Institute of Management Associate Bharatiya Vidya Bhavan 41 .00 40.00 100.P. South 1 25 20 15 10 5 0 Secunderaba d Hitec City Hyderabad Begumpet EC Guntu r Himayat Nagar Salem Sanjeeva Reddy Nagar Mehdipatna Chanda m Nagar Nacharam Gaddianara m Jagadamba Centre Nungambakka RA m Puram 120. On a detailed study it was found that the following branches in S1 and S2 were the main branches with high AODís.Pareto analysis It was identified that certain branches in S1 and S2 were reaching a high AOD Rate (Account Opening Delay).00 80. The Pareto charts are given below related to S1 and S2.00 Values In numbers Cumalative Bra nche s Source-Field Investigation M.00 0.00 20.00 60.

00 In numbers Cumalative Branche s Source-Field Investigation The study in depth is divided into 4 branches wherein delays had reached an alarming rate compared to its competitors. Jaynagar and Indiranagar.00 20.00 80. (The data is ranges from 4th February to 2nd May).00 40. The branches visited were that of Sarjapur.South 2 140 120 100 80 60 40 20 0 120.00 100. Major reasons were identified and tabulated to give the following Pareto charts for each branch- M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 42 . from which relevant information had to be extracted from their database. M G Road.00 0.00 60.

This causes a delay in the bank procedure of account opening. due to change in the company policies. On speaking to the official there.At Sarjapur Branch.00 in numbers cumalative Source-Field Investigation Observation At this branch. HDFC Bank. it was found that the introduction letter to the bank was signed by the team lead. A bank official from this branch sits at the Wipro office and handles all queries of the account holders through e mails. Presently. 30 25 20 15 10 5 0 120.P. M. most of the account holders were employees of Wipro. It was also found that the bank was understaffed.Birla Institute of Management Associate Bharatiya Vidya Bhavan 43 . the signature of a senior level management is required.

M. HDFC Bank 30 25 20 15 10 5 0 Introduction Co Info not given letter/ID Reqd Signature Related Adress related Name related Others In numbers Cumalative 120.00 Source-Field Investigation Observation This branch has a lot of corporate accounts and the value of transactions is also huge.Birla Institute of Management Associate Bharatiya Vidya Bhavan 44 . Due to this it was found that most of the delays were caused by no proper introduction letter or ID proof (Refer graph).At M G Road Branch.P. Either the company information was inadequate or there was a signature mismatch.

Also. The highest rate of delays was caused by signature mismatch. M.P. 14 12 10 8 6 4 2 differs(produc t and LC code) Permanent add reqd in AML form resolution is self attested Code FD related 0 &143) Introduction letter not given/ID Name related Signature related Address related(142 Board 120.At Jaynagar branch.00 60. the wok load seemed to be very heavy on all working days of the bank. The increase of work load seemed to be the major cause of reducing the efficiency of the bank.Birla Institute of Management Associate Bharatiya Vidya Bhavan 45 .00 40.00 Branch code not indicated In numbers Cumalative Source-Field Investigation Observation This branch even though was well managed. the new concept of AML form seemed to cause a lot of inconvenience to the customers (refer Glossary for the meaning of AML).00 100.00 0.00 20. HDFC Bank.00 80.

00 In numbers cumalative 0 0 Source-Field Investigation Observation This branch was the most unorganized of all the above. The work load was very high and the staff was unable to cope up to the work pressure. The meaning of certain banking terms are indicated in the glossary at the end.Birla Institute of Management Associate Bharatiya Vidya Bhavan 46 .P. HDFC Bank 30 25 20 15 10 5 120. The above Pareto charts represent the reasons for which the application forms were rejected with the contributions of each reason indicated in the dotted lines. There was no proper co ordination between the employees and customers kept coming back with complaints that irked the staff as well as the customers.At Indiranagar branch. M.

the following Fish Bone Diagram was formed. On observing the customer database and working of the banks. the reasons that contribute to the delays in account opening.Root Cause Analysis This approach was used to analyse.Birla Institute of Management 47 . Customers Employees Training 1 2 3 10 11 12 4 8 5 RECOMMENDATIONS N 6 7 9 Account Opening Delays (AOD) 13 14 External Factors Management Policies M. in detail.P.

Associate Bharatiya Vidya Bhavan .

These sub causes are a result of observations and analysis of database at the Sub reason Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Reason Customers are in hurry Customers are illiterate Customer needs to be educated on bank needs and requirements Increase of work load Reduction in efficiency due to miscommunications Multi tasking Communication gaps Orientation Fundamentals not clear Change in RBI guidelines Break down of support systems Other uncontrollable factors Lengthy procedures for just a verification Application form is labourious to fill The sub reasons identified are a result of observing the process the bank follows to open an account.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 48 .The numbers in the Root Cause Diagram indicated the following sub causes. The main reasons are the parties involved in account opening. M.

Birla Institute of Management Associate Bharatiya Vidya Bhavan 49 .The following diagram gives another aspect to AOD that may result in service switching behaviour that needs to be avoided in any organisation. SERVICE SWITCHING DIAGRAM Inconvenience Response to Service Failure Service Switching Behaviour Service Encounter Failures Core Service Failures Competition M.P.

M.P. it will aim at measuring the level of satisfaction the customers have when it comes to transacting with their bank. Also.The head Inconvenience includes Location or time slots allotted  Waiting for service The head Service Encounter Failure includes Uncaring  Impolite  Unknowledgeable The head Responsive Service Failure includes Negative response  Reluctant response The head Competition includes Found better service elsewhere The head Core Service Failure includes Service mistakes  Processing errors  Service catastrophe The survey conducted will reveal if the bankís services suffer from any of the above traits.Birla Institute of Management Associate Bharatiya Vidya Bhavan 50 .

revealed the following findings. M.P. The survey done. The questionnaire was filled in by customers of the following banks to facilitate a comparative study of their efficiencies and leveraging it to account opening. The aim was also to find out the effect of the sub causes (mentioned in the Root Cause Diagram) on account opening and to what extent it affected the banks mentioned. The following findings show that H0 is accepted.Survey with questionnaire The survey done with the help of questionnaire was aimed at knowing the customers perception about their bank.Birla Institute of Management Associate Bharatiya Vidya Bhavan 51 . H1: There is a difference between sample values and the population values. The banks were HDFC Bank  ICICI Bank  SBI  Citibank  Canara Bank The hypothesis is framed as followsH0: There is no difference between sample values and the population values.

Birla Institute of Management Associate Bharatiya Vidya Bhavan 52 .73 HDFC 2.5 3 1 Standard Deviation 3.25 ICICI 2.Table 1 The table will correlate the time taken by the three banks (HDFC. ICICI and SBI) to open an account.79 .5 1.25 SBI 3 Citibank Canara Bank 2.25 Median 1 2.P.25 Source-Field Investigation M. Bank name HDFC ICICI SBI Citibank Canara bank Total Chart1 Name of bank Instantly Within Within More one hour one than day two days 1 0 7 1 3 0 2 4 1 1 2 3 1 3 2 1 1 1 6 7 2 15 16 Source-Field Investigation Total 9 9 9 9 9 45 Average 2. This will show the efficiency of the banks and will indicate which bank has a competitive advantage.50 .20 2 2 2 2.68 .81 .50 Z value .

96 to -1.P. Inspite of this. However it faces close competition with ICICI and SBI bank in the ìwithin one dayî category.Graph 1 Time taken by banks to open accounts 8 7 6 5 4 3 2 1 0 HDFC ICICI SBI Citibank Canara Bank Instantly Within one hour Within one day More than 2 days Bank Source-Field Investigation Interpretation From the above tabulated data.96.Birla Institute of Management Associate Bharatiya Vidya Bhavan 53 . M. From the z test done for the sample. it faces problems in certain branches that have been identified before. and hence it the null hypothesis can be accepted and it can be said that the sample does not differ from the population. all the values lie between +1. HDFC Bank has the highest reading of ìwithin one dayî category. it is seen that most of the banks open accounts of their customers in more than two days.

89 6.5 7.33 4.Birla Institute of Management Associate Bharatiya Vidya Bhavan 54 .167 6.167 5.83 7.67 6.P.67 6.33 8.Table 2 :Perceived levels of services by customers at their banks (out of 9).16 5.83 6.167 7 Canara Citibank Bank 7.67 6.5 7.17 5.67 6.83 5.167 6.78 ICICI 6.22 6.87 5.11 Source-Field Investigation Graph 2 Perceived service levels of customers from their banks 10 8 6 4 2 0 Prompt service Courteous Caring Services at Visually Willingness Instills employees employe promised appealing to help confidenc es time e Made to feel safe while transacting HDFC ICICI SBI Citibank Canara Bank Characteristics Source-Field Investigation M.11 6.7 6.5 6.33 6.11 5.67 5.167 SBI 5.89 7 6.83 4. Statements Prompt service Courteous employees Caring employees Services at promised time Visually appealing Willingness to help Instills confidence HDFC 6 6.5 6.83 6.56 7.64 Feel safe while transacting 8.167 5.5 7.

the new customers expect more from the bank.Interpretation We see that HDFC is perceived to be the safest bank while Citibank is perceived to be the most prompt bank. Table 3 Name of bank HDFC ICICI SBI Citibank Canara Bank Overall rating of the bank (out of 9) 6. This is because Citibank encourages net banking and imposes a fine on the customer if he enters the branch for a simple query. appealing. it was found in the survey that the traits of ìcourteous employeesî were deteriorating. However.78 5.5 6. However.Birla Institute of Management Associate Bharatiya Vidya Bhavan 55 . ICICI though is a close competitor of HDFC. SBI is not and ìcaring for customersî perceived to be visually Old customers are used to the banks ways and are satisfied.P.73 7 6 Source-Field Investigation M.

Hence it has the highest rating. when it comes to customer satisfaction in this survey. it was revealed that the top most respected bank in India today is SBI after which ranks HDFC. Citibank. M.P.78 5. Citibank customers were the most satisfied as Net banking saved them lot of time and money. ICICI Bank and finally Punjab National Bank.73 Source-Field Investigation Interpretation According to a recent survey. However.Birla Institute of Management Associate Bharatiya Vidya Bhavan 56 .Graph 3 Overall Rating of the banks 8 7 6 5 4 3 2 1 0 HDFC ICICI SBI Citibank Canara Bank 6.5 7 6 6.

Expected quality in this research refers to the fact that customers expect their account to be opened in a day or two. it is used early in the production process to determine what will satisfy the customer and also where to deploy quality efforts. In the manufacturing industry.Quality Function Deployment QFD is an excellent way of capturing ìvoice of customersî.P. It refers to both determining what will satisfy the customer and secondly. The QFD process is linked by the following matrices- M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 57 . translating those customer desires into the target design. The two terms essential here are Expected quality and Exciting quality. Exciting quality refers to traits that a customer does not expect and enhances the value of the product or process.

P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 58 .The Quality Function Deployment Process 4 Operating Instructions 1 Customer Requirement Planning Matrix 3 Process Plan and Quality Control Charts 2 Technical Features Deployment Matrix M.

In the survey it was revealed that customers wanted their accounts to be opened instantly or hardly in a day. To provide for exciting quality. The final step of operating instructions ensures that the bankers contribute to the firmís efforts to meet the requirements set down in the processes and services parameters. Technical features deployment controls the critical processes with the help of quality control charts and process plans.In the first matrix of Customer Requirements and Planning identification of expected and exciting quality is done.Birla Institute of Management Associate Bharatiya Vidya Bhavan 59 . HDFC has offered schemes to account opening to add value to its services. Technical features deployment translates the features of the service to customer requirements. M.P. services can be efficient to reduce turn around time in account opening delays. Here.

Birla Institute of Management Associate Bharatiya Vidya Bhavan 60 .CHAPTER 8: RECOMMENDATIONS M.P.

In such cases. If the very initial step of ìfilling inî the application form is taken care of. Also.P. M.The main causes of delays are identified now. or even a separate counter can be maintained at the beginning to facilitate individual attention. It resembles the proverb ìA battle well begun is half won. Hence.  All details regarding the id proof can be explained to him. a fresh form is filled that irks the customer too.Birla Institute of Management Associate Bharatiya Vidya Bhavan 61 . a counterfoil can be given to the customer that contains his signature that he can refer to in future if he forgets the way he has signed. This assistance provided to the customer will make sure that the form will be defect free. It was found in the survey that many of them forget how they have signed in the application form. the bank can explain their inability to the customer to process the application form if his signature differs from the documents presented for id proof.î Hence the following suggestions are recommended Separate time slots can be allotted initially for accepting application forms. the rate of delays will reduce.

joint. If he is doubtful about the form being accepted.P. company accounts etc. If the bank is not able to do the above. individual. M. This will also reduce the work load of the departments and increase efficiency and accuracy. it has to be found out if he is an existing or a new customer. Separate application forms can be designed for existing customers and the processing of these can be diverted to a separate department so that the Data Verification Unit and Imaging departments can concentrate on the forms of new customers. then when the application form is handed over to the customer.)  The Personal Banker needs to verify the documents before it is sent to the head office at Chennai. (yet it is sent Chennai) he may ask the customer to keep additional documents ready as id proof rather than wait till the form is sent back to the respective branch.  When the customer is asked to fill in the application form. a separate instruction titled ìHelp us serve You betterî can be given that contains all the requirements of the bank with respect to types of id proofs needed and other requirements based on customer type (i. Existing customersí details are already keyed into the system and hence the bank can take advantage of this and reduce the time taken to process the account opening.e.Birla Institute of Management Associate Bharatiya Vidya Bhavan 62 .

Also. If this does not work out. Hence the bank can encourage net banking or simplify the application form to reduce the customersí apprehensions. the bank can think of setting up a separate branch in Bangalore itself so that the turnaround time (presently 4 working days) can be reduced.P. Aspects like time and cost can be reduced and thereby the bankís efficiency can be leveraged. it can discourage customers to come to branch for any queries as it will cost the bank to attend a customer just for a simple issue. diaries. in the presence of a bank official to avoid mistakes. They send out a periodic questionnaire to its customers and every filled and submitted form would receive an incentive in the form of small gift like pens.  The bank needs to courier the application forms to Chennai. it can fax it or scan it to the head office. Also. customers revealed that they found the filling in of application forms a labourious job. they were apprehensive about filling in the form by themselves and preferred to fill in. Inspite. desk calendars etc.Birla Institute of Management Associate Bharatiya Vidya Bhavan 63 . In the survey.. HDFC bank can apply the same procedure to reduce their costs and at the same time get back valuable feedback.  It was found in the survey that Citibank had a very innovative idea to receive feedback from its customers. Customer M.

account opening procedures can be simplified by the above suggestions and points to ponder on are highlighted in the Root Cause diagram and the Service Switching Diagram.) A customer enters into a bank with a decision to open an account only if he feels it is safe to transact with it and if he feels that the bank will live up to his expectations.Birla Institute of Management Associate Bharatiya Vidya Bhavan 64 . It lives up to its punch lineUnmatched features . It is Indiaís leading private sector bank. Hence.P. this can be encouraged among senior citizens and working officials.friendly websites can be designed to facilitate easy net banking to allow the bank to concentrate on other important issues. Macro-level recommendations:  Provide the bank employees first-hand best corporate practices  Expose the bank employees to the environment in which the bank customers use the bank's services M. It can be said that HDFC Bank is one of the most popular banks when it comes to customer satisfaction despite its conventional method of banking. If this is not feasible for all customers. (An established brand in itself. World class services.

Paired comparisons/emphasis on curve ranking 10.Priorities grid 14. and  (c) Incremental improvement.Team purpose analysis 12. Pareto analysis 7. The process improvement can be brought about by. Cause and effect diagrams 4. Matrix analysis 8. Consensus building 9.Cost/benefit analysis 13. Asking why (five times) 5.  The following tools for continuous improvement in the quality of service in the Bank are quite helpful: 1.  (b) process stabilization. Constantly retrain the bank staff in the theory and practice of TQM  Showcase the customer quality  Establish a continuous improvement culture in the Bank  Initiate vigorously continuous process improvement in the Bank.P. Process mapping 3.  (a) Breakthrough thinking.Force field analysis 11.Birla Institute of Management Associate Bharatiya Vidya Bhavan 65 . Check sheets 6.Time-cost analysis M. Brainstorming 2.

The questionnaire is. I have taken up a research project on ìService Quality Leveraged to acquiring new customers. Bangalore. M P Birla Institute of Management Bangalore (Associate Bharatiya Vidya Bhavan) I am a student of M P Birla Institute of Management. I sincerely assure you that your responses will be kept strictly confidential and shall only be used for academic purpose. As a part of the MBA curriculum. retaining existing customers and regaining the lost customersî. enclosed. Kindly give your responses to the questions. pursuing my MBA program. Ms Darshana Patel M.P.ANNEXURE A sample questionnaire is given below that was used in the survey. herewith. I shall greatly appreciate your cooperation. In this connection I need some information from you.Birla Institute of Management Associate Bharatiya Vidya Bhavan 66 .

Birla Institute of Management Associate Bharatiya Vidya Bhavan 67 .SERVICE QUALITY LEVERAGED TO ACQUIRING NEW CUSTOMERS.P. Bangalore) Name: Gender: Age: Occupation: Name of your Bank: Type of account held: • Savings Bank • Current account • Term Deposit • Recurring Deposit M. RETAINING EXISTING CUSTOMERS AND REGAINING THE LOST CUSTOMERS (A research project for HDFC Bank.

For each of the following statements please indicate ñ (a) your minimum service level by encircling one of the numbers in the first column.P. M. Please think about the 2 levels of expectations defined below: Minimum Service Level: The minimum level of service you consider adequate. Desired Service Level: The level of service performance you desire.Time taken by your bank to open your account: • Instantly • Within one hour • Within one day • More than two days How long have you been a customer: • Less than a year • One to two years • Two to five years • More than five years PART-I I would like to know your impression about how well your bank provides services relative to your expectations.Birla Institute of Management Associate Bharatiya Vidya Bhavan 68 . (b)your desired service level by encircling one of the numbers in the second column (c) your perception of service by encircling one of the numbers in the third column.

When it comes to 1. Prompt service to customers 2.Employees who are consistently courteous 3.Employees deal with customers in caring fashion 4.Provides service at promised time

My minimum level of My Desired level service is: of service is: 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9

My Perception of performance is: 1 2 3 4 5 6 7 89 1 2 3 4 5 6 7 89

1 2 3 4 5 6 7 8 9

1 2 3 4 5 6 7 8 9

1 2 3 4 5 6 7 89

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9

1 2 3 4 5 6 7 89 1 2 3 4 5 6 7 89

5. Visually appealing materials associated with services ( signs) 6.Willingness to help customers 7.Employees instill confidence in customers 8.Making customers feel safe in transactions

1 2 3 4 5 6 7 8 9

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9

1 2 3 4 5 6 7 89 1 2 3 4 5 6 7 89

1 2 3 4 5 6 7 8 9

1 2 3 4 5 6 7 8 9

1 2 3 4 5 6 7 8 9

1 2 3 4 5 6 7 89

M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan


1. How would you rate the overall quality of services provided by the bank? (Circle one number below) Extremely poor 1 2 3 4 5 6 7 Extremely good 8 9

2. Listed below are 5 general features pertaining to the bank and services it offers. I would like to know how important each of these features are to you. Please allocate a total of 100 points among the following 5 featuresPlease be sure that the points you give add up to 100 1. The appearance of the bankís physical facilities, Fixtures, personnel and communications material points 2. The bankís ability to perform the promised services dependably and accurately points

3. The bankís willingness to help the customers and provide prompt services points 4. The knowledge and courtesy of the bankís employees and their ability to convey thrust and confidence points 5. The caring, individualized attention the bank provides to you points Total Points allocated 100 Points
THANK YOU FOR SPARING YOUR VALUABLE TIME IN GIVING YOUR RESPONSES M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan 70


M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan


The study includes few banking terminologies. Their meanings are given below No Posting- Funds that need to be parked in dummy account are not yet done i.e. not posted.  AML- Anti Money Laundering. A set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions. In most cases money launderers hide their actions through a series of steps that make it look like money coming from illegal or unethical sources was earned legitimately.
 Pan form 60- Permanent Account Number is a number by

which the Assessing Officer can identify any person. Presently the Income Tax Department is allotting PAN under the New Series to all assessees which consists of ten alphanumeric characters and is issued in the form of a laminated card. The General Index Register Number is a number given an Assessing Officer to the assessees in the General Index Register maintained by him whichalso contains the designation and the particulars of the Assessing Officer

M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan


Birla Institute of Management Associate Bharatiya Vidya Bhavan 73 .BIBLIOGRAPHY M.P.

MIT Cambridge.. 20 M. Pitman Publications. L M Bhole . 4 Edition • "Total Quality Management" by Oakland John S.P.This research project is well supported by facts from the following journals and websitesBooks: • "Total Quality Management" by Mr. Mass Publications. 2004 • "Quality. Tata McGraw -Hill Publications. Prentice Hall Publications NJ. London 2000 • "What is Total Quality Control" by Ishikawa Kaoru (Translated by David J Luj). 1980 • "How to Lead Your Business Beyond TQM" by Michel E Joyce. Sridhar Bhatt (7 Edition) • "Banks and Financial Institutions" by Mr.Birla Institute of Management Associate Bharatiya Vidya Bhavan 74 th th . 1995 • "Quality Improvement through Standards" by Dale Barrie G and Oakland John S. Heinemann publications. Productivity and Competitive Position" by Deming Walter F. Stanley Thornes Publishers Ltd.   M.Business Magazines: • Business World • Business Standard • Economic Times • Financial Express • Business India • Fortune Websites Used:  www.Birla Institute of Management Associate Bharatiya Vidya Bhavan 75

Birla Institute of Management Associate Bharatiya Vidya Bhavan 76 .P.DIRECTIONS FOR FURTHER RESEARCH M.

Birla Institute of Management Associate Bharatiya Vidya Bhavan 77 . I give below fertile areas for future research: • Energizing the Customer Care through TQM • Making World Class Performance a Reality through TQM • Bench marking the Best Corporate Practices in the Application of TQM in the Banking Sector • Cascading Effects of TQM on the Performance of Banks • Using Banking Resources Effectively through Total Quality Management • Total Quality Control-The Japanese Way in the Banking Sector • Appropriate Tools of TQM in Banking Operations • Flow Charting the Customer Service Operations through TQM in Banking Sector In our view. the aforesaid areas constitute 'green pasture' for future research in this vital segment of the Banking Sector. Perhaps the line of thinking.Based on our research findings. on which our research investigation is based. is quite helpful.P. M.

P.M.Birla Institute of Management Associate Bharatiya Vidya Bhavan 78 .