28-08-2014, 03:41 PM
COMPARISON OF CURRENT MARKET SHARE OF SBI AND ICICI BANKS IN 2012-2013
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Introduction
Comparison is all about identifying your and evaluating their strategies to determine their strength and weaknesses relative to those of your own product or service.
GENESIS OF THE STATEMENT
The word “Bank” is derived from the word “Banque” which means bench.
The Jews, who were considered to be the early bankers, transacted their business
on benches in the market. In India Banking can be traced bank to Vedic period.
This can be confirmed by the fact that the great Jurist Manu has written about
deposits advances and interest. During Moghul period, the indigenous bankers
contributed significantly in the development of trade and commerce by lending
money. Later during the days of East India company the banking business was
taken over by the agency houses, The history of Indian banking can be classified
in the flowing three distinct phases;
1.1.1 First phase from the year 1786 to 1947
The pre independent period was traditional and conventional. The banking
system started with the formation of a Joint stock bank in the year 1786. Later
Bank of Hindustan and Bengal Bank were established, during the days of East
India Company it formed three presidency banks, the bank of Bengal 1806, the
Bank of Bombay in 1840 and the bank of Madras in 1846. Soon after in 1920 a
new bank Imperial bank of India was established after amalgamation of all three –
presidency banks; most of them were Europeans.
1.1.2 Second Phase form 1947 to 1969, from independence to the
nationalization of Banks:-
The post independence period was essentially a period of consolidation.
The banking sector, in India at the time of Independence of the country in 1947,
was small and particularly weak. The banks were limited to urban areas, lending to
trading community dealing with agricultural commodities. The lending was not
available to the small industries, professional, entrepreneur‟s traders, artisans, etc.
there were 584 Joint Stock banks, 531 co-operative banks and there was Imperial
Bank of India, which was formed by amalgamation of three presidency banks.
1.1.3 Third phase of Indian banking, is from nationalization (1969)
till the beginning of financial & banking sector reforms in
1990:- Owning to the growing dissatisfaction and imposing criticism over the
functioning of private sector banks the government of India tool a bold step to
nationalize a major segment of the banking system. Accordingly, the banking
company‟s acquisition and transfer of undertaking was promulgated on July 1969 5
and the government acquired the undertakings of the 14 major schedule
commercial banks having deposit of over 50crores each. In 1980 six more banks
were taken over by the government and the number of public sector bank account
for 28, excluding regional and rural banks. In the post liberalization era after
1990s banking shifted from “Class banking” to Mass banking. India‟s banking
system has several outstanding achievements to its credit, the most striking of
which is its reach. An extensive banking network has been established in the last
thirty years and India‟s banking system is no longer confined to metropolitan cities
and late towns; in fact Indian banks are now spread out into the remote corners of
our country. In terms of the number of branches, India‟s banking system is one of
the largest, if not the largest in the world today. An even more significant
achievement is the close association of India‟s banking system with India‟s
development efforts. The diversification and development of our economy, and the
acceleration of the growth process, are in no small measure due to the active role
that banks have played in financing economic activities in different sectors. The
Indian money market consists of both organized and unorganized sectors and in
between these two sectors there exists a co-operative sector which has to work
under strict control and supervision so it can be comfortably included in organized
sector. Organized sector consists of RBI oat the helm of affair, public sector
banks, private sector banks other financial institutions and DHFI Ltd (The
Discount and Finance House of India was set up jointly with public sector banks
and financial institutions by RBI. It was incorporated under the Indian companies
Act 1956. It started its operations in April 1988) the unorganized sector consists of
indigenous banker, moneylenders. The unorganized sector even today remains out
of RBI‟s control and supervision.
Roughly a decade ago Indian government initiated the economic reforms,
which has changes the face of many sectors of economy including Indian banking
sector. It was seen that the banking sector is going through major shake-up in the
areas of ownership patterns, availability of funds, range of services and most of all
it has also generated powerful customers. The changes brought with it new mix of
players in the form of public sector banks, private sector banks and foreign banks.
The competition among these players has increased the expectations of customers who new want new products with faster delivery at cheaper and affordable cost.
These expectations are more with the private sector and foreign banks because
they are the new entrants on the banking scène with better technology, faster
delivery, and customer centric polices. The private sector banks have advantage
over public sector units in terms of technology, innovation of services. But these
banks also need to prove in terms of service charges and understanding of
customers‟ needs.
The banking system in India has played an important role in Indian
economy. It was instrumental in social and economic charges since nationalization
of major banks in 1969. Network of branches increased from 8262 in 1969 to
67118 in June 2004, reducing the population covered per branch of commercial
bank from 66,000 to 16,000. At present 290 banks are operating in the country,
consisting of 27 public sector banks, 30 private sector banks and 32 foreign banks,
196 regional banks and 5 non-scheduled local area banks. Private sector banks
have share of 8.5 percent in branch network with 5,737 branches of which 50
percent are in urban and metro cities. Over 90 percent branches operating in the
country are owned by Public sector banks, of which 70 percent are located in rural
and semi-rural areas. Asset base of scheduled commercial banks was Rs.19,75,020
crores as on 31st
March 2004. Their aggregate deposit was Rs.15,75,143 crores
and aggregate advances were Rs.8,64,000 crores.
1.2 PROFILE OF SBI
The evolution of State Bank of India can be traced back to the first decade of
the 19th century. It began with the establishment of the Bank of Calcutta in
Calcutta, on 2 June 1806. The bank was redesigned as the Bank of Bengal, three
years later, on 2 January 1809. It was the first ever joint-stock bank of the British
India, established under the sponsorship of the Government of Bengal.
Subsequently, the Bank of Bombay (established on 15 April 1840) and the Bank
of Madras (established on 1 July 1843) followed the Bank of Bengal. These three banks dominated the modern banking scenario in India, until when they were
amalgamated to form the Imperial Bank of India, on 27 January 1921.
An important turning point in the history of State Bank of India is the launch of
the first Five Year Plan of independent India, in 1951. The Plan aimed at serving
the Indian economy in general and the rural sector of the country, in particular.
Until the Plan, the commercial banks of the country, including the Imperial Bank
of India, confined their services to the urban sector. Moreover, they were not
equipped to respond to the growing needs of the economic revival taking shape in
the rural areas of the country. Therefore, in order to serve the economy as a whole
and rural sector in particular, the All India Rural Credit Survey Committee
recommended the formation of a state-partnered and state-sponsored bank
The All India Rural Credit Survey Committee proposed the takeover of the
Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. Subsequently,an Act was passed in the Parliament of India in May 1955. As a result, the State Bank of India (SBI) was established on 1 July
1955. This resulted in making the State Bank of India more powerful, because as
much as a quarter of the resources of the Indian banking system were controlled
directly by the State. Later on, the State Bank of India (Subsidiary Banks) Act was
passed in 1959. The Act enabled the State Bank of India to make the eight former
State-associated banks as its subsidiaries.
The State Bank of India emerged as a pacesetter, with its operations carried out by
the 480 offices comprising branches, sub offices and three Local Head Offices,
inherited from the Imperial Bank. Instead of serving as mere repositories of the
community's savings and lending to creditworthy parties, the State Bank of India
catered to the needs of the customers, by banking purposefully. The bank served
the heterogeneous financial needs of the planned economic development.
Branches
The corporate center of SBI is located in Mumbai. In order to cater to different unctions, there are several other establishments in and outside Mumbai, apart
from the corporate center. The bank boasts of having as many as 14 local head
offices and 57 Zonal Offices, located at major cities throughout India. It is
recorded that SBI has about 10000 branches, well networked to cater to its
customers throughout India.
ATM Services
SBI provides easy access to money to its customers through more than 8500
ATMs in India. The Bank also facilitates the free transaction of money at the
ATMs of State Bank Group, which includes the ATMs of State Bank of India as
well as the Associate Banks – State Bank of Bikaner & Jaipur, State Bank of
Hyderabad, State Bank of Indore, etc. You may also transact money through SBI
Commercial and International Bank Ltd by using the State Bank ATM-cum-Debit
(Cash Plus) card.
Subsidiaries
The State Bank Group includes a network of eight banking groups and several
non-banking subsidiaries. Through the establishments, it offers various services
including merchant banking services, fund management, factoring services,
primary dealership in government securities, credit cards and insurance.
The eight banking groups are:
• State Bank of Bikaner and Jaipur (SBBJ)
• State Bank of Hyderabad (SBH)
• State Bank of India (SBI)
• State Bank of Indore (SBIR)
• State Bank of Mysore (SBM)
• State Bank of Patiala (SBP)
• State Bank of Saurashtra (SBS)
• State Bank of Travancore (SBT)
Products and Services
Personal Banking
• SBI Term Deposits SBI Loan For Pensioners
• SBI Recurring Deposits Loan Against Mortgage Of Property
• SBI Housing Loan Loan Against Shares & Debentures
• SBI Car Loan Rent Plus Scheme
• SBI Educational Loan Medi-Plus Scheme
Other Services
• Agriculture/Rural Banking
• NRI Services
• ATM Services
• Demat Services
• Corporate Banking
• Internet Banking
• Mobile Banking
• International Banking
• Safe Deposit Locker
• RBIEFT
• E-Pay
• E-Rail
• SBI Vishwa Yatra Foreign Travel Card
• Broking Services
• Gift Cheques
1.3 PROFILE OF ICICI
ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian
financial institution, in 1994. Four years later, when the company offered ICICI
Bank's shares to the public, ICICI's shareholding was reduced to 46%. In the year
2000, ICICI Bank offered made an equity offering in the form of ADRs on the
New York Stock Exchange (NYSE), thereby becoming the first Indian company
and the first bank or financial institution from non-Japan Asia to be listed on the
NYSE. In the next year, it acquired the Bank of Madura Limited in an all-stock
amalgamation. Later in the year and the next fiscal year, the bank made secondary
market sales to institutional investors.
With a change in the corporate structure and the budding competition in the
Indian Banking industry, the management of both ICICI and ICICI Bank were of
the opinion that a merger between the two entities would prove to be an essential
step. It was in 2001 that the Boards of Directors of ICICI and ICICI Bank
sanctioned the amalgamation of ICICI and two of its wholly-owned retail finance
subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital
Services Limited, with ICICI Bank. In the following year, the merger was
approved by its shareholders, the High Court of Gujarat at Ahmedabad as well as
the High Court of Judicature at Mumbai and the Reserve Bank of India.
Present Scenario
ICICI Bank has its equity shares listed in India on Bombay Stock Exchange
and the National Stock Exchange of India Limited. Overseas, its American
Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
As of December 31, 2008, ICICI is India's second-largest bank, boasting an asset
value of Rs. 3,744.10 billion and profit after tax Rs. 30.14 billion, for the nine
months, that ended on December 31, 2008.
Branches & ATMs
ICICI Bank has a wide network both in Indian and abroad. In India alone,
the bank has 1,420 branches and about 4,644 ATMs. Talking about foreign
countries, ICICI Bank has made its presence felt in 18 countries - United States,
Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance
Centre and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia. The Bank proudly holds its
subsidiaries in the United Kingdom, Russia and Canada out of which, the UK
subsidiary has established branches in Belgium and Germany.
Products & Services
Table 1.1 Personal Banking
• Deposits
• Loans
• Cards
• Investments
• Insurance
• Demat Services
• Wealth Management
Table 1.2 NRI Banking
• Money Transfer
• Bank Accounts
• Investment
• Property Solution
• Insurance
• Loans
Table 1.3 Business Banking
• Corporate Net Banking
• Cash Management
• Trade services
• FX Online
• SME Services
• Online Taxes
• Custodial Services
In order to find out the gaps in the studies it is pertinent to review the
available literature on the related aspects of the present study. The study is on the
marketing of banking services in India –Private v/s Public sector is a wide area,
each and every sector can be studied in brief. Thus, there is a pressing need to
study the significance of this Sector with a view to finding out Customer
satisfaction in both sectors and problems faced by both private as well as public
sector banks in marketing their services. 1.4 OBJECTIVES OF THE STUDY
To make a Critical analysis of marketing of banking services in India
particularly in the period of economic liberalization.
To evaluate innovative, dynamic and competitive nature of banking
services, particularly the difference between Private sector v/s Public
sector banks.
To assess customer satisfaction with banking services.
To highlight the problems involved in marketing of banking services.
To offer suggestions and measures to solve the problems faced by
banks in marketing their services. 13
1.5 SIGNIFICANCE OF THE STUDY
The proposed study provides the much needed information about the
customer satisfaction, which is collected by the researcher by way of primary data
from the source itself i.e. the customers. The study will highlight the application of
marketing principles to the marketing of banking services. The study can be useful
to private sector banks as well as to public sector banks. Due to time constraint it
is not possible to cover over all public and private sector so it is prudent that one
example based on convenience will be taken for e.g. from Private sector-ICICI
bank will be taken and from Public sector-SBI may be taken as these two banks
are most dominant banks in their respective sector. The study will be useful more
specifically to ICICI Bank and SBI to understand the reasons for the
dissatisfaction among the customers and thus to take corrective steps in improving
their services further. This study will become a source of information for future
researchers to collect the data and information on the marketing of banks services,
and customer satisfaction. The study also gives clear-cut idea of the methodology
required to collect and analyze the data.
1.6 RATIONALE OF THE STUDY Banks play important role in the development of trade, commerce and it has
vital role in the economic development of nation‟s economy. We can‟t think
modern society without banking system.
The banking services marketing is not very old concept, it is in the growth
phase of its life cycle. ICICI Bank and SBI are the two most dominant banks in
private sector and public sector respectively. Each one tries to eat away each
others shares through their technological up gradation and customer centric 14
policies. The banking services provided by ICICI Bank and SBI are innovative.
These two banks have shown remarkable performance within a short period of
time with their innovative range of products, customer centric policies and use of
technology. Therefore, an attempt will be made in this study to analyze the
various marketing techniques adopted by these two banks and how these
techniques has helped these banks to have such a large customer base. The
competition among the players in banking sector has increased the expectations of
customers who now want new products with faster delivery at cheaper and
affordable cost. These expectations are more with the new generation private
sector banks because they are the new entrants on the banking scene with better
technology, faster delivery, and customer centric policies.
1.7 SCOPE OF THE STUDY
The topic of the current research relates to the critical analysis of marketing
of banking services in India after post liberalized period with special reference to
Private sector v/s Public sector Banks.
The geographical scope of the study will be restricted to the operations of
the banks in Mumbai. The geographical area of study is Mumbai city-
Mumbai city is divided into 2 parts; Mumbai City district (The area from
Colaba to Mahim and Sion is called City area.) and Mumbai City
Suburban (The area from Mahim to Dahisar and from Sion to Mulund
comprises of suburbs of Mumbai)
The topical Scope focuses on the identification of the problems regarding
marketing of bank services and problems of customer‟s satisfaction and critical
analysis of bank services provided by public v/s private sector banks. The
functional scope is restrained to offering a set of meaningful suggestions aimed at improving the customer satisfaction and effective marketing of bank services,
finding out the reasons for dissatisfaction of customers and provide them with the
solution.
The specific period for study selected by the researcher is from year 1999
to 2012 for Private sector and Public sector banks, as this is the most important
period for both the banks since both the private & public sector banks had
successful mergers to their credit in the year 2000 and year 2001 respectively. This
period has importance for both the banks because of merger and amalgamation as
well most important Sub-prime crisis has added the significant value to bank in
terms of increased branch network, expanded geographic reach, enhanced
customer base, skilled manpower.
The period of the study in general is post liberalized period as this was the
time when India has been growing through a process of economic reform and
liberalization. During post liberalized period economy was opened up, more
liberalized financial policies were adopted. After 1990 we have seen a change in
the approach of the policy makers. This change in the outlook of the policy
makers have made it necessary for almost all the organization, whether
manufacturing or service oriented to change their policy decisions to make it
dynamic and innovative. In the first phase of reforms extending over 5 years from
1991 to 1996 bank‟s operational efficiency is sought to be toned up through a
series of reforms involving adoption of various norms aimed at making the banks
more transparent, realistic and internationally competitive. As a part of the reform
process greater competition has been introduced in the banking system by
permitting entry of private sector banks, and liberal licensing of more branches by
foreign banks. Non – bank intermediation has also increased over the same
period. But most important change that has overtaken the nation‟s banking
industry relates to the fact that the competitive forces are sought to be introduced
consciously in the financial services sector in general and banking industry in
particular through the policies of interest rate deregulation and more particularly
through a new liberal policy move to open doors wider to facilitate the entry of
foreign banks and new private sector banks. 16
The specific period for study selected by the researcher is from year 1998
year 2006 for ICICI Bank and SBI as this is the most important period for both the
banks since both the private & public sector banks had successful mergers to their
credit in the year 2000 and year 2001 respectively. This period has importance for
both the banks because merger and amalgamation added the significant value to
bank in terms of increased branch network, expanded geographic reach, enhanced
customer base, skilled manpower. The scope of the study covers the following
three important components, which are necessary for the success of any banking
sector.
Customers (customers of ICICI bank and SBI)
Marketing staff of banks (Marketing executives, Direct Sales Associates,
Sales Executives)
Officials of both banks (the policy makers)
The opinion of the customers, marketing personnel and bank officials are
incorporated in the thesis at appropriate places.
1.8 HYPOTHESIS OF THE STUDY
In the light of the above cited objective the researcher has set up the
following hypothesis, for the present study.
“ICICI Bank and SBI are provides innovative, dynamic and competitive
services in terms of customer satisfaction in comparison to each other.
However these banks are facing problems while marketing their services.”
Based on the views and factual opinion emerging from the questionnaires, this is
tested by application of test of significance (Z - test) in the thesis.
1.9 METHODOLOGY OF THE STUDY
Honest efforts are made to focus on the objectives under taken through
collection of both primary and secondary data. Primary data is collected mainly to
get factual response from the policy makers as well as marketing personnel of the
banks under study, which has helped to have in depth analysis of the problem.
Secondary data is collected from ICICI bank and SBI‟s offices, libraries,
magazines, newspapers, earlier related studies, etc. Various reports published by
RBI related to banking have been considered for understanding the problems of
marketing of services by the bank. For understanding the customer‟s satisfaction
in the above two banks, along with structured questionnaire their personal
interviews have been conducted.
The designing of the conceptual framework for study of marketing of
banking services and the customer satisfaction of ICICI Bank and SBI is done by
adopting the methodology in the following order:
(a) Scanning the literature on the subject.
(b) Interviewing marketing executives.
© Interviewing the customer‟s of respective banks.
(d) Discussing the issue with the customers.
(e) Having discussion with managerial staff
(f) Observation of facts and figures.
(g) Analyzing the data collected from the relevant sources.
With a view to supplement and support the findings emerged during the
analysis of secondary data, field studies were conducted at two levels, discussion
with 500 customers, about the banks under study and their services. (250 for ICICI
bank and 250 for SBI) data is collected through structured and pre – tested
schedules to collect information about reasons for dissatisfaction, innovative
nature of services satisfaction, etc. Before the commencement of the survey of the 18
customers a pilot study was conducted with sample of 20 customers each bank to
find any missing gaps in the questionnaire and after considering the responses of
the pilot study changes, modification were made to reduce any complexity and
ambiguities of the questionnaires.
Since the study focuses on the marketing by ICICI Bank and SBI it was
felt necessary to have the opinion of the marketing persons who market the
banking services to customers and who are in direct contact with customers.
Around 150 (each bank) marketing executive, Marketing Managers, Direct Sales
associates were contacted for discussion on the marketing of banking services,
problems faced by them in marketing, customers responses towards their banks
etc. .250 questionnaires was given for their customers responses , out of which 200
each filled in questionnaire was collected with complete responses and opinions.
Before conducting the survey, the schedules were pre tested with 15 marketing
personnel of ICICI bank and 20 marketing personnel of SBI. Accordingly the
changes were incorporated in the final schedule. The data collected from the
marketing staff relates to the various marketing strategies adopted by banks
innovative nature of bank product etc.
Research design:
The design of the present research is explorative
research.
Selection of Banks: Out of 30 Private sector banks, two banks were
selected for the purpose of the study. They are ICICI bank and SBI. ICICI bank is
selected for the study purpose because it is India‟s Universal bank and it is India‟s
second largest private sector bank providing nationwide network of branches and
1650 plus ATM‟s. it has large customer base. It has also created history by being
the first Indian bank to be listed on the New York Stock Exchange. It also offers
widest range of products and services.
SBI is selected for the study because it is India premier nationalized bank.
It is largest bank operating in India. It has its own subsidiaries & Joint ventures.
SBI administrative structure is well equipped to oversee the large network of
branches in India & abroad. The SBI 14 local Head Offices & 57 Zonal offices are
located at important cities spread throughout the country. SBI has 52 foreign
offices in 34 countries across the globe. The corporate accounts group is a
strategic business unit of the bank set up exclusively to fulfill the specialized
banking needs of top corporate in the country.
Quota sampling:
(a) Quota sampling technique is chosen for selecting 250 banks customers as
respondents for ICICI bank.
(b) Quota sampling technique is chosen for selecting 250 customers as
respondents for from SBI
For investigation, the following three criteria‟s were developed;
Sample size was selected as 250 respondents for SBI, who have educational
qualification 12th
plus.
Sample size of 200 respondents for marketing staff of ICICI bank (200structured
scheduled were given to marketing staff of ICICI bank but could manage to get
100 schedule completed.)
Sample size of 200 respondents for marketing staff of SBI (200 structured
scheduled were given to marketing staff of ICICI bank but could manage to get
100 scheduled completed.)
Geographical area:
The geographical area of study is Mumbai city – Mumbai city is divided
into two parts:
Mumbai City District – the area from Colaba to Mahim and Sion is
called City area.
Mumbai City Suburban – The area from Mahim to Dahisar and from
Sion to Mulund comprises the suburbs of Mumbai.
Personnel Chosen:
While selecting customers it was kept in mind to select the customers from
each category of banking services. The respondents were selected on the basis of
their educational qualification. The basic criterion for selecting customers is their
educational background. It was kept in mind to select a person who has minimum
12th
plus education. This criterion was developed so as to find out the customers
who are familiar with customer satisfaction and services of private sector bank.
While analyzing the data, statistical test of significance has been used
wherever needed. The data tabulated are systematically edited, summarized and
graphically presented.
1.10 EXPECTED CONTRIBUTION OF THE STUDY
The study is expected to be valuable to ICICI bank and SBI as it is based
on the opinion of customers and bank employees (marketing staff). It will be
useful for other private sector and public sector banks also in formulating their
policies regarding launch of new banking product, in order to reach the level of
success achieved by these two banks. It also aims to find out reasons for
dissatisfaction among bank customers and provide meaningful solution to their
problems. The study conducted by the researcher will help the private sector banks
and public sector banks in addressing the marketing problems and difficulties
faced by these banks while marketing their services to customers. This study can
be helpful in solving the problems faced by the customers and the effective
implementation of marketing strategies of private sector banks and public sector
banks.