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An Empirical Study on Effective ways to Improve Customer Service in Karur

Vysya Bank

Introduction

The banking industry in India has witnesses several changes over the last decade. The
expectations of the customer have increased after the entry of private sector banks and foreign
banks to the banking industry by the recommendations of the Narasimhan committee. As the
banking industry is facing stiff competition, banks must deliver a good customer service in order
to attain a competitive advantage in today’s competitive banking environment. Delivering a good
Customer service is must for success and survival in today’s environment.
In the evaluation of services of banking industry there is no much difference in service product
and price. The only differentiator for a bank would be the way in which services are being
delivered by bank and in what way it is different from other banks. If proper service is not
delivered there are chances for customers to switch to competitor banks.
If customers are happy with the service rendered by the bank, they will stay with the bank and
create a bond with the bank. They will help the bank in attracting new customers through word
of mouth advertising. A good customer service also increases productivity, improves employee
morale, financial performance and profitability and leads to higher market shares.
Numerous technological products have been introduced over the last decade. It has an impact on
the way in which bank works and. Traditional purpose of the bank was to mobilize the savings of
the customer and provide loans to other customers from the savings made. But now the purpose
of the bank has changed widely. Today’s banks even provide insurance and mutual fund
services.
Many studies have been done with regard to service quality, customer satisfaction. But no
research has been done in particular on customer service. This study has been done to measure
customer service on various aspects in Karur Vysya Bank which is one of the growing private
sector banks in today’s banking industry and also try to provide some suggestions to improve
customer service being delivered by them.
Objectives

 To know whether the bank has been able to meet the expectations of the customers with

regard to the tangible factors

 To find out the customer awareness and usage of technology products

 To identify the reasons to choose a particular bank by the customers.

 To know about the responsiveness of the staff members in rendering service to customers

 To analyze the customer expectations from bank towards improving the quality of service

Research Methodology

Type of Research: The type of research that was used for this study is Descriptive research.
Descriptive studies are those studies which are concerned with describing the characteristics
of a particular individual (or) group.

Sampling Technique: The sampling technique used for this study is Stratified Random sampling
which is a Probability Sampling.

Sample Size: The sample size of this study is 250. The information was collected from 50
respondents of different KVB branches – Karur, Verrarakium, Namakkal, Erode, and
Vellore.

Sources of data: Primary data required for the study has been collected through Questionnaire.
Secondary information was collected from the journals, magazines and website resources.

Statistical Tools used for Data Analysis:


• Chi-square test
• ANOVA test
• Correlation
• Regression analysis
• Discriminant analysis
• Conjoint analysis
• Weighted average method

Data Analysis and Interpretation:

CHI-SQUARE TEST:
Association between occupation and type of account from KVB

Null hypothesis: There is no significant association between occupation of the respondent and
type of account from KVB.

Table 1
Count
OCCUP Total
business employee student others
TYPE savings 38 56 1 50 145
current 8 8 1 1 18
others 1 1 0 0 2
savings and 29 5 0 1 35
current
savings and 3 10 0 3 16
rd
savings/curre 5 6 0 4 15
nt and others
savings,curre 14 4 0 0 18
nt and others
current and rd 1 0 0 0 1
Total 99 90 2 59 250

Chi-Square Tests

Value df Asymp. Sig.


(2-sided)
Pearson Chi-Square 69.665(a) 21 .000
Likelihood Ratio 73.381 21 .000
Linear-by-Linear 23.106 1 .000
Association
N of Valid Cases 250
Directional Measures

Value Asymp. Approx. Approx. Sig.


Std. T(b)
Error(a)
Nominal by Lambda Symmetric .102 .040 2.421 .015
Nominal TYPE .000 .000 .(c) .(c)
Dependent
OCCUP .172 .065 2.421 .015
Dependent
Goodman and TYPE .089 .022 .000(d)
Kruskal tau Dependent
OCCUP .131 .027 .000(d)
Dependent

Symmetric Measures

Value Approx.
Sig.
Nominal by Phi .528 .000
Nominal
Cramer’s V .305 .000
N of Valid Cases 250

INFERENCE:

In the cross tabulation, the relationship between occupation (independent variable) and type of
account (dependent variable) is being narrated

The chi-square test reveals that there is association between level of income and type of loan. At
95% confidence level, the significance level is 0.05, the output is giving a significance level of .
000 which is lesser than 0.05. Thus, the null hypothesis is rejected. So, there is association
between the variables.

The Cramer’s V value is .305. So, there is moderate level of association between occupation and
type of account. The lambda value is .000. The lambda value tells us that there is 0% error
reduction in predicting the type of loan if the income level is known Thus, we can conclude that
occupation help in predicting the type of account.

ANOVA

Variance between the Number of years being customer of kvb and secured to deal with the
staff members

Null Hypothesis: There is no significant association between the mean ratings number of years
being customer of kvb and secured to deal with the staff members.

Table 2

SECURE
Sum of
Squares df Mean Square F Sig.
Between Groups .942 3 .314 1.222 .302
Within Groups 63.234 246 .257
Total 64.176 249

Inference:

At 95% confidence level, the significance level is 0.05; the output is giving a significance level
of .302 which is less than 0.05. Thus, the null hypothesis is rejected. So, there is significant
association between the mean ratings number of years being customer of kvb and secured to deal
with the staff members.

CORRELATION ANALYSIS

Relationship between age of the respondent and response towards space availability for
waiting in a bank

Table 3
Correlations

AGE SPACE
AGE Pearson Correlation 1 .081
Sig. (2-tailed) . .202
N 250 250
SPACE Pearson Correlation .081 1
Sig. (2-tailed) .202 .
N 250 250

Inference:

Since the correlation value 0.081 is between 0 and .25, there is low positive correlation between
age of the respondent and space availability for sitting.
REGRESSION ANALYSIS:
Table 4

Model Summary

Adjusted Std. Error of


Model R R Square R Square the Estimate
1 .301 .091 .071 1.06410

ANOVA

Sum of
Model Squares df Mean Square F Sig.
1 Regression 20.924 4 5.231 4.620 .001
Residual 209.476 185 1.132
Total 230.400 189

Coefficients

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 2.404 .325 7.398 .000
TYPE -.002 .038 -.004 -.048 .961
AGE -.167 .074 -.162 -2.242 .026
OCCUP -.130 .074 -.132 -1.747 .082
INCOME .294 .117 .186 2.514 .013

FORWARD STEPWISE REGRESSION


Model Summary

Adjusted Std. Error of


Model R R Square R Square the Estimate
1 .202 .041 .036 1.08410
2 .257 .066 .056 1.07273
3 .301 .091 .076 1.06124

ANOVA

Sum of
Model Squares df Mean Square F Sig.
1 Regression 9.448 1 9.448 8.039 .005
Residual 220.952 188 1.175
Total 230.400 189
2 Regression 15.209 2 7.604 6.608 .002
Residual 215.191 187 1.151
Total 230.400 189
3 Regression 20.921 3 6.974 6.192 .000
Residual 209.479 186 1.126
Total 230.400 189

Coefficients

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 2.607 .164 15.936 .000
OCCUP -.200 .071 -.202 -2.835 .005
2 (Constant) 2.083 .285 7.314 .000
OCCUP -.167 .071 -.169 -2.338 .020
INCOME .254 .114 .162 2.238 .026
3 (Constant) 2.400 .315 7.619 .000
OCCUP -.129 .073 -.131 -1.780 .077
INCOME .292 .114 .186 2.570 .011
AGE -.167 .074 -.163 -2.252 .025

Excluded Variables

Collinearity
Partial Statistics
Model Beta In t Sig. Correlation Tolerance
1 TYPE .026 .349 .728 .025 .941
AGE -.135 -1.865 .064 -.135 .958
INCOME .162 2.238 .026 .161 .957
2 TYPE -.011 -.148 .882 -.011 .894
AGE -.163 -2.252 .025 -.163 .937
3 TYPE -.004 -.048 .961 -.004 .892
BACKWARD STEPWISE REGRESSION

Model Summary

Adjusted Std. Error of


Model R R Square R Square the Estimate
1 .301 .091 .071 1.06410
2 .301 .091 .076 1.06124

ANOVA

Sum of
Model Squares df Mean Square F Sig.
1 Regression 20.924 4 5.231 4.620 .001
Residual 209.476 185 1.132
Total 230.400 189
2 Regression 20.921 3 6.974 6.192 .000
Residual 209.479 186 1.126
Total 230.400 189

Coefficients

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 2.404 .325 7.398 .000
TYPE -.002 .038 -.004 -.048 .961
AGE -.167 .074 -.162 -2.242 .026
OCCUP -.130 .074 -.132 -1.747 .082
INCOME .294 .117 .186 2.514 .013
2 (Constant) 2.400 .315 7.619 .000
AGE -.167 .074 -.163 -2.252 .025
OCCUP -.129 .073 -.131 -1.780 .077
INCOME .292 .114 .186 2.570 .011

Excluded Variables

Collinearity
Partial Statistics
Model Beta In t Sig. Correlation Tolerance
2 TYPE -.004 -.048 .961 -.004 .892
Inference:

The regression model of the following form has been used by entering four variables in the
model:
Y = a + b1x1 + b2x2 + b3x3 + b4x4

In the output of regression model the value of B gives all the coefficients of the model which are
as follows:
X1 = -0.167
X2 =- 0.130
X3 = 0.294
X4 = -0.02
a (constant) = 2.404

These values can be substituted in the above equation to get the value of Y(number of times
transacting in the ATM)

Y = 2.404 _ 0.167(age) - 0.130(occupation) – 0.394(qualification) +0.294(annual income) –


0.02(type of account)

From the above equation it can be inferred that, if the age decreases, no of times transacting the
atm increases. The best predictor variable is annual income with a higher coefficient of 0.294.
Only income is a positive coefficient. All the other variables are negative coefficients. Type of
account shows a t-value 0.961 which is not statistically significant.

The p-level is observed to be 0.001, indicating that the model is statistically significant. The R2
value is 0.066. The t-test for significance of individual dependent variable indicates that at the
significance level of 0.05(confidence level of 95%), only age, occupation and annual income are
statistically significant in the model.

Forward stepwise Regression

In the output of forward regression, the regression ends up with 3 out of 4 independent variables
remaining in the regression model. The three variables are age, occupation and annual income.
These variables are statistically significant at 95% confidence level. F-test of the model is also
highly significant and R2 value is 0.091.

Y = 2.400 -0.129(occupation) +0.292(annual income)-0.167(age)


Backward stepwise Regression

In the output of forward regression, the result show that only age, occupation and annual income
remain in the model. The independent variables are statistically significant at 95% confidence
level. F-test of the model is also highly significant and R2 value is 0.091.

Y = 2.400 -0.129(occupation) +0.292(annual income)-0.167(age)


DISCRIMINANT ANALYSIS

Table 5
Group Statistics

Valid N (listwise)
RTGS Unweighted Weighted
yes AGE 54 54.000
OCCUP 54 54.000
QUALIFY 54 54.000
INCOME 54 54.000
no AGE 196 196.000
OCCUP 196 196.000
QUALIFY 196 196.000
INCOME 196 196.000
Total AGE 250 250.000
OCCUP 250 250.000
QUALIFY 250 250.000
INCOME 250 250.000

Eigenvalues

Canonical
Function Eigenvalue % of Variance Cumulative % Correlation
1 .044 100.0 100.0 .205

Wilks' Lambda

Wilks'
Test of Function(s) Lambda Chi-square df Sig.
1 .958 10.610 4 .031

Standardized Canonical Discriminant Function Coefficients

Function
1
AGE .310
OCCUP .833
QUALIFY -.061
INCOME -.242
Structure Matrix

Function
1
OCCUP .918
AGE .507
INCOME -.306
QUALIFY -.068

Canonical Discriminant Function Coefficients

Function
1
AGE .280
QUALIFY -.037
OCCUP .730
INCOME -.305
(Constant) -1.653

Functions at Group Centroids

Function
RTGS 1
yes -.398
no .110

Prior Probabilities for Groups

Cases Used in Analysis


RTGS Prior Unweighted Weighted
yes .500 54 54.000
no .500 196 196.000
Total 1.000 250 250.000

Classification Results

Predicted Group
Membership
RTGS yes no Total
Original Count yes 34 20 54
no 97 99 196
% yes 63.0 37.0 100.0
no 49.5 50.5 100.0
Inference:

The discriminant function is able to classify 53.2% of the 250 objects correctly.

The value of Wilks’ lambda is 0.958 which is closer to 1 rather than 0. So, the discriminating
power of the model is not good.

The probability value of chi-square test indicates that discrimination between two groups is
highly significant because the significance value is 0.031 which is less than 0.05.

Among the four independent variables, the best predictor for RTGS awareness is occupation with
a higher coefficient of 0.730. Y is RTGS awareness.

The unstandardised discriminant function is

Y = -1.653 + 0.280(age) - 0.37(qualification) - 0.305(income) + 0.730 (occupation)

Where Y is RTGS awareness

WEIGHTED AVERAGE METHOD

Table 6

KVB SERVICE Rank1 Rank2 Rank3 Rank4 Rank5 Total Rank


weighte
d
average
prompt service 63 65 57 39 26 56.667 2
quality of service 52 59 63 54 22 54.33 3
3
Reliability 81 53 54 35 27 58.4 1
staff conduct 34 51 50 91 24 48.667 4
Communication 20 23 26 32 149 32.2 5

Inference:

The respondents felt the important KVB service is reliability and the last preferred service by the
respondents is communication. It indicates they are not happy with the communication service
provided by KVB.
CONJOINT ANALYSIS

Table 7

Model Summary

Adjusted Std. Error of


Model R R Square R Square the Estimate
1 .718 .515 .445 17.31299

ANOVA

Sum of
Model Squares df Mean Square F Sig.
1 Regression 21977.965 10 2197.796 7.332 .000
Residual 20682.035 69 299.740
Total 42660.000 79

Coefficients

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 39.526 2.054 19.247 .000
VAR00001 23.451 4.006 .632 5.854 .000
VAR00002 11.210 4.055 .302 2.765 .007
VAR00003 -.740 3.951 -.020 -.187 .852
VAR00004 -6.674 3.864 -.183 -1.727 .089
VAR00005 .687 3.442 .021 .200 .842
VAR00006 .733 3.355 .022 .219 .828
VAR00007 -3.868 3.388 -.118 -1.142 .258
VAR00008 -1.313 3.574 -.044 -.367 .715
VAR00009 5.198 3.626 .175 1.434 .156
VAR00010 -4.894 4.362 -.141 -1.122 .266

Inference:

Savings account is represented by variable 1 as per coding scheme. Its utility is equal to 23.41.
The utility for variable 2, representing current account is 11.210. The utility for variable 3,
representing fixed deposit account is -.740. The utility for variable 4, representing recurring
deposit is -6.674. The utility for others is -3.796.
The utilities of <1year, <5years, and <10years are given by numbers 0.687, 0.733 and -3.868 as
shown against variables 5, 6 and 7. The utility for >10 years is 2.488.Vehicle loan has the utility
-1.313, Housing loan has the utility 5.198 and Personal loan has the utility -4.894. Finally, the
utility for others is 1.009.

Attributes Levels Part Utility Range of Utility


(Max – Min)
Type of account Savings 23.41 = 23.41 – (-6.674)
Current 11.210 = 30.084
Fixed deposit -0.740
Recurring deposit -6.674
others -3.796
Number of years <1 year 0.687 = 2.488 – (-3.868)
<5 years 0.733 = 6.356
<10 years -3.868
>10 years 2.488
Type of loan Vehicle loan -1.313 = 5.198 – ( - 4.894)
Housing loan 5.198 = 10.092
Personal loan -4.894
Others 1.009

From the above table we can conclude that the type of account is the most important attribute for
the customer. There are two indicators for this:
1. The range of utility value is highest (30.084) for the type of account.
2. The highest individual utility value of this attribute is first level that is i.e., 23.41

Type of loan seems to be the second most important attribute as its range of utilities is 10.092.
The last attribute in relative importance is the number of years that customers having transaction
with the bank and the utility range is 6.356.

COMBINATION UTILITIES
The total utility of any combination can be calculated by picking the attribute levels of our
choice. For example, the possible combination is Type of account – Current (23.41), Number of
years - >10years (2.488) and Type of loan-Housing loan (5.198) i.e, 31.096
It also infers the customer who is having current account and number of years having transaction
with the bank preferred type of loan is Housing loan. The customers who will have recurring
deposit and number of transactions less than 10 years with the bank not preferred personal loan.
Findings:

Using Chi-square test the following can be inferred:


• There is no association between the income level of the respondent and the type of loan
• There is association between occupation of the respondent and type of account
• There is no association between age of the respondent and reasons for choosing kvb

Using ANOVA test the following can be inferred:


• There is no significant association between income level of the respondent and attitude
towards interest rate
• There is no significant association between the Occupation of the respondent and mobile
banking promptness of information
• There is no significant association between the type of account and availability for
enquiry & listening to problems
• There is significant association between the number of years being customer of kvb and
secured to deal with the staff members
• There is significant association between the qualification of the respondents and attitude
towards infrastructure facilities

Using Correlation analysis the following can be inferred:


• there is low negative correlation between occupation and number of times transacting in
ATM
• There is low positive correlation between age of the respondent and space availability for
sitting
• There is low positive correlation between type of loan availed by the respondent and
attitude towards procedure for procuring loan
Using Regression analysis, it is found that Number of times transacting in the ATM mainly
depends on the Occupation and Annual Income of the respondent.

Using Discriminant analysis, it is found that the discriminant function classified 60.4% of the
250 objects correctly. The best predictor for RTGS awareness was qualification of the
respondents than other variables which included occupation, income and number of earning
persons.

Using conjoint analysis, the following has been inferred:


• Type of account was found to be the most important attribute at given levels
of attributes.

• It was found that the combination utility comprising of type of account as Current
account, transacting with the bank for more than 10years and housing loan as the type of
loan would be the best combination

Using weighted average method, the following can be inferred:

The respondents felt the important KVB service is reliability and the last preferred service by the
respondents is communication. It indicates they are not happy with the communication service
provided by KVB.

Suggestions
• It is found that the income of the respondent does not help in predicting the type of loan,
48 respondents whose income is above 1lac have availed loan compared to 32
respondents whose income is below 1lac, who have availed loan. So the bank must try to
provide more loan facilities to the customers below 1lac.

• It is found that occupation helps in predicting the type of account. Majority of the
respondents are having savings account. It is suggested that bank must encourage attract
more business men to open current account and other type of accounts with the bank
• It is found that age is not helpful in predicting the reasons for choosing the bank. It is
found that 113 respondents have chosen kvb because of its quality of service. It is found
that KVB customers are not satisfied with the communication service if, they improve
they can attract more customers with different age groups.

• It is found that only 14 respondents have availed Internet Banking facility. It is suggested
that bank must create some awareness and benefits about Internet banking.

• It is found that the respondents between the income group of >3lacs and <5lacs have
better attitude about the interest rate. It is suggested that bank must try to meet the
expectations of the customers in other income groups.

• It is found that respondents who are business man have given a good rating about the
prompt information of the mobile banking. It is suggested that bank must try to meet the
expectations of customers with different occupation by providing prompt information.

• It is found that respondents who are having savings and current account felt that staff
member’s availability for enquiry and listening to problems as good. It is suggested that
bank must ensure the availability of staff members to meet the requirements of other
account holders.

• It is found that respondents who are transacting with the bank for less than one year felt
that they can have secured dealings with the staff members of the bank. It is suggested
that the bank must try to improve the credibility of the staff members

• It is found that respondents who have studied SSLC have given a good rating about the
infrastructure facilities of the bank. It is suggested that the bank must try to improve the
infrastructure facilities.

• It is found that respondents who are business man have higher number of transactions in
the ATM. It is suggested that the bank must encourage even other type of customers to
transact in the ATM because it will reduce the waiting time in the branch.
• It is found that respondents who are in the age group >60 have felt that space available
for sitting as not sufficient. It is suggested that bank must provide additional space for
sitting.

• It is found that respondents who availed vehicle loan felt that procedure for availing loan
as easy. It is suggested that bank has to make the procedure for availing all the types of
loans as easy.

• It is found that different age groups, occupation and qualification do not play an
important role in determining the number of times transacting in the ATM rather than
income of the respondent. Hence it is suggested that the KVB should try to encourage all
types of customers to transact in the ATM.

• It is found that occupation of the respondent was the best predictor in determining the
RTGS awareness when compared to other factors like age, income and qualification of
the respondent. It is suggested kvb must try to increase RTGS awareness by educating all
types of customers.

• It is found that a customer who is having current account and number of years having
transaction with the bank preferred type of loan is Housing loan. It is suggested that the
bank must try to encourage all types of customers to avail all types of loans.

• It has been found that the respondents are not satisfied with the service of
communication. It is suggested that KVB must try to improve its communication service.

Conclusion

In the current market scenario, especially in banking sector ‘customer service’ is regarded as the

nerve system. Each and every operation calls for skillful planning, control and execution of a

bank’s activities so that they don’t lose their customers. The Karur Vysya Bank Ltd (KVB) one

of the private sector banks, since its inception has come up on with very good achievements. If
the bank takes some steps to improve infrastructure facilities, increase the usage of technological

products it would be able to remove small pitfalls and defects. The bank must try to concentrate

on the promotion of bank’s products and services. The bank should provide some need based

training programme to the customers towards different transaction, it may facilitate to improve

customer satisfaction.

An Empirical Study on Effective ways to Improve Customer Service in Karur


Vysya Bank

A.Vasumathi i, R.Subashiniii, C.B.Shravanthiiii

Abstract

Customer service is the backbone for any bank. The main purpose of this study is to examine
various components of customer service being delivered by Karur Vysya Bank. An empirical
study was be done to understand customer service being delivered by Karur Vysya Bank. The
sample size was 250. The study was done in certain semi-urban and rural places in Tamilnadu.
The results show that KVB has to encourage more current accounts. This study also found that
the usage and awareness of technology products is very low. The main reason for choosing Karur
Vysya bank by most of the respondents was Quality of Service. In this study, the authors have
given suggestions towards the effective ways to improve customer service.

Key words: Customer, Service, Awareness, Quality and Technology


i
Assistant professor (SG), VITBS, VIT University, Vellore-14 E-mail Id: vaa72@yahoo.co.in
ii
Assistant professor (SG), VITBS, VIT University, Vellore-14 E-mail Id: varshinisuba@yahoo.com
iii
Student, VITBS, VIT University, Vellore-14 E-mail Id: cbshravanthi@yahoo.co.in