02-01-2013, 03:06 PM
A PROJECT REPORT ON Customer satisfaction and locality In public and private Banks
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INTRODUCTION
The Purpose of this study to investigates relationship dimensions and studies the differences in perception of customers with respect to services provided by five Indian banks. The relationship dimensions which lead to customer satisfaction have been identified. This study reports on the different satisfaction levels of customers of private and public sector banks with respect to the services provided by their banks
HISTORY OF THE BANKING SECTOR
Banking in India originated in the last decades of the 18th century. The first banks were
The General Bank of India which started in 1786, and the Bank of Hindustan, both of
which are now defunct. The oldest bank in existence in India is the State Bank of India,
which originated in the Bank of Calcutta in June 1806, which almost immediately
became the Bank of Bengal. This was one of the three presidency banks, the other two
being the Bank of Bombay and the Bank of Madras, all three of which were established
under charters from the British East India Company. For many years the Presidency
banks acted as quasi-central banks, as did their successors. The three banks merged in
1921 to form the Imperial Bank of India, which, upon India's independence, became the
State Bank of India.
Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as
a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in
1865 and still functioning today, is the oldest Joint Stock bank in India. It was not the
first though. That honor belongs to the Bank of Upper India, which was established in
1863, and which survived until 1913, when it failed, with some of its assets and liabilities
being transferred to the Alliance Bank of Smile.
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire
d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in
1862; branches in Madras and Pondichery, then a French colony, followed. HSBC
established itself in Bengal in 1869. Calcutta was the most active trading port in India,
mainly due to the trade of the British Empire, and so became a banking center.
EMERGING TRENDS IN BANKING SECTOR
The liberalization process initiated by the government about a decade ago has changed
the landscape of several sectors of the Indian economy. The financial sector like other
sectors is also going through major changes as a consequence of economic reforms. The
consumption-led boom in India has fuelled robust demand for financial products
especially in the banking domain. Emerging competition has generated new expectations
from existing and new customers. There is an urgent need to introduce new and more
attractive customer-friendly products and services. The banking sector presently is at an
inflexion point. Existing products need to be delivered in an innovative and cost-effective
manner by taking full advantage of emerging technologies. Technology has swiftly
become a business driver rather than a business enabler. This sector has seen phenomenal
growth in terms of technology infusion and adoption in the recent past such as: Internet
and Mobile Banking, CRM, etc. With increasing competition and tightening of prudential
norms by the Reserve Bank, the players in the banking industry, both Indian and global
are taking turns towards mergers and acquisitions. Only banks having adequate
infrastructure, technology, economies of scale and well connected network of branches
will be able to survive and meet the challenges of ever increasing competition and
customer expectations. The book is divided into two sections. Section-I extensively
covers the trends, issues and challenges related to the technology i.e. ATMs, e-banking,
data warehousing and data mining, CRM solutions, etc. Section-II covers other
contemporary issues in the banking sector such as Basel II, financial inclusion, service
quality, risk management, banc assurance, retail banking, universal banking etc. The
book shall serve as a rich reference resource for decision makers in the banking industry,
researchers, academicians and students.
CUSTOMER SATISFACTION
Customer satisfaction, a business term, is a measure of how products and services
supplied by a company meet or surpass customer expectation. It is seen as a key
performance indicator within business and is part of the four perspectives of a Balanced
Scorecard.
In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy.
Organizations need to retain existing customers while targeting non-customers; Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace.
Customer satisfaction is an abstract concept and the actual manifestation of the state of
satisfaction will vary from person to person and product/service to product/service. The
state of satisfaction depends on a number of both psychological and physical variables
which correlate with satisfaction behaviors such as return and recommend rate. The level
of satisfaction can also vary depending on other factors the customer, such as other
products against which the customer can compare the organization's products.
Satisfaction with banking services is an area of growing interest to researchers and managers. The commercial banking industry like many other financial service industries is facing rapidly changing market. New technologies, economic uncertainties, fierce competition and more demanding customers and the changing climate have presented an unprecedented set of challenges. Intangible assets, particularly brands and customers, are critical to any organization and in today’s competitive environment relationship marketing is critical to banking corporate success.
RURAL BANKING
Rural banking in India started since the establishment of banking sector in India. Rural
Banks in those days mainly focused upon the agro sector. The Haryana State Cooperative
Apex Bank Ltd. commonly called as HARCOBANK plays a vital role in rural banking in
the economy of Haryana State and has been providing aids and financing farmers, rural
artisans, agricultural laborers, entrepreneurs, etc. in the state and giving service to its
depositors. National Bank for Agriculture and Rural Development (NABARD) is a
development bank in the sector of Regional Rural Banks in India. It provides and
regulates credit and gives service for the promotion and development of rural sectors
mainly agriculture, small scale industries, cottage and village industries, handicrafts.
FOREIGN BANKS IN INDIA
Foreign Banks in India always brought an explanation about the prompt services to
customers. After the set up foreign banks in India, the banking sector in India also
become competitive and accusative. New policies are introduced by RBI for them-The
policy conveys that foreign banks in India may not acquire Indian ones (except for weak
banks identified by the RBI, on its terms) and their Indian subsidiaries will not be able to
open branches freely, Main competitors for banking sector. Post offices, Mutual fund,
Share market, Insurance, Money lenders, Family and friends, Present scenario banking
industry has been undergoing a rapid transformation, Banks today are market driven and
market responsive. With the entry of new players and multiple channels, customers (both
corporate and retail) have become more discerning and less "loyal" to banks. This makes
it imperative that banks provide best possible products and services to ensure customer
satisfaction. They have been managing a world of information about customers - their
profiles, location, needs, requirements, cash positions, etc. Furthermore, banks have very
strong in-house research and market intelligence units in order to face the future
challenges of competition, especially customer retention.
NATIONALIZATION OF BANKING SECTOR-
The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then
prime minister. It nationalized 14 banks then. These banks were mostly owned by
businessmen and even managed by them. Central Bank of India, Bank of Maharashtra, Dena Bank Punjab National Bank Syndicate Bank, Canara Bank Indian Bank Indian Overseas Bank, bank of Baroda, Union Bank, Allahabad Bank United Bank of India UCO Bank.
After that Banks have introduced many more products and facilities in the banking sector
in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee
was set up by his name which worked for the liberalization of banking practices. The
country is flooded with foreign banks and their ATM stations. Efforts are being put to
give a satisfactory service to customers. Phone banking and Net banking is introduced.
The entire system became more convenient and swift. Time is given more importance
than money.
NEED FOR RESEARCH
While relationships have been extensively studied in marketing channels ,industrial
settings, and some consumer setting in western cultural contexts such as Europe ,US, the
UK ,and even Australia ,few studies have examined the paradigm in an eastern cultural
context such as India. The maturing of services marketing, the increased recognition of potential benefits for customer and technological developments are the main factors driving the developments of relationship marketing33.the presence of these factors in the Indian banking sector motivated this research. With banks losing 8% of their clients every year 34.relationship marketing strategy to satisfy customers and improve their profitability has moved to the forefront.
For centuries banks have played an important role in financial system of the country. The vital role continues even today although the form of banking has changed today with changing need of the economy and individuals.
The Banking system in India has three tiers. There are scheduled commercial banks; the regional rural banks; and the cooperative banks. The scheduled commercial banks constitute those banks which are included in the second schedule of RBI Act 1934.In the organized segment; banking system occupies an important place in nation’s economy. It plays a pivotal role in the economic development of a country and forms the core of the money market in an advanced country. The commercial banks in India comprise of both Public sector as well as private sector banks. There are total 28 Public sector and 27 private sector banks are functioning in the country presently. Banks have to deal with many customers everyday and render various types of services to its customer. It’s a well known fact that no business can exist without customers.
The Need to Measure Customer Satisfaction:
Satisfied customers are central to optimal performance and financial returns. In many
places in the world, business organizations have been elevating the role of the customer
to that of a key stakeholder over the past twenty years. Customers are viewed as a group
whose satisfaction with the enterprise must be incorporated in strategic planning efforts.
Forward-looking companies are finding value in directly measuring and tracking
customer satisfaction (CS) as an important strategic success indicator. Evidence is
mounting that placing a high priority on CS is critical to improved organizational
performance in a global marketplace. With better understanding of customers'
perceptions, companies can determine the actions required to meet the customers' needs.