Puneet Sachdeva,2k72a40; Winter Project

8/8/2019 Puneet Sachdeva,2k72a40; Winter Project

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Winter Project Asia Pacific Institute of Management 2K72A40 1

COMPARATIVE STUDY OF CUSTOMER PERCEPTIOAD

EXPECTATIO OF SERVICE QUALITY OF BAKS

A project submitted towards the partial fulfillment of the

requirement of the two years full time Post-graduate Diploma in

Management

Under the guidance of:

PROF. S. GOSWAMI

Submitted By:PUEET SACHDEVA

2K72A40(PGDM, 2007-2009)

Asia Pacific Institute of Management

3 & 4 Institutional Area, Jasola, ew Delhi-110025


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DECLARATIO

I hereby declare that the project entitled Comparative study of

customer perception and expectation of service quality of banks

submitted by me in partial fulfillment towards the requirement of the

award of PGDM (full time), is my original work and the project has not

been previously used for the award of any degree, associate -ship,

fellowship or any other similar titles.

(Puneet Sachdeva)

Signature:

Place: Delhi

Date:


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CERTIFICATE

This is to certify that the project entitled Comparative study

of customer perception and expectation of service quality of

banks is the bonafide work carried out by Puneet Sachdeva,

student of PGDM (full time), Asia Pacific Institute of

Management, Delhi, during the year 2007-2009, in partial

fulfillment of the requirements for the award of the PGDM, and

that the project has not formed the basis for the award

previously of any degree, diploma, associateship, fellowship or

any other similar title.

Signature of the Guide:

Place: Delhi

Date:


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ACKOWLEDGEMET

In todays competitive and corporate world, imparting of practical knowledge is of

immense importance and therefore it becomes the essence of our MBA curriculum.

The aspiring student gets a chance to be associated with the organizations that are

making the mark in their respective fields.

In the quest of learning and to get exposure of corporate world, I opt for ICICI Bank

and SBI Bank for seeking the customers expectation and perception of the service

quality of the banks.

I would like to acknowledge and extend my heartfelt gratitude to the following

persons who have made the completion of the project possible:

Our Director, Dr. D.K. Banerjee for his vital encouragement and support.

Prof. Subrata Goswami, Professor & Area Chairperson Marketing, Asia-Pacific

Institute of Management. I am grateful to my mentor as he supported, guided and

gave me valuable time in coordinating my project.

All other associated persons whose benign attitude made me to strive for the best. The

ambience during the entire training was very professional. I learnt a lot.

Last but not the least I thank almighty for his kindness, my parents, family members

and friends for their unconditional love and support.

PUEET SACHDEVA2K72A40PGDM (2007-09)Asia Pacific Institute of Management


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LIMITATIOS

Time & money constraints as all regions could not be covered.

Samples were obtained from few selected ATMs across South Delhi as

such whole consumer preferences could not be taken into account.

Relying on secondary data.

Information or Details related to research, revealed by customers, may be

biased or not trustworthy.

The results are generalized up to regional basis.


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EXECUTIVE SUMMARY

Without a sound and effective banking system in India it cannot have a healthy

economy. The banking system of India should not only be hassle free but it should be

able to meet new challenges posed by the technology and any other external and

internal factors.

Not long ago, an account holder had to wait for hours at the bank counters for getting

a draft or for withdrawing his own money. Today, he has a choice. Gone are days

when the most efficient bank transferred money from one branch to other in two days.

Now it is simple as instant messaging or dial a pizza. Money has become the order of

the day.

Delivering quality service consistently gives a competitive edge to service

organizations. It requires an understanding of customer expectations and the types of

expectations.

While evaluating service offered by a bank, customers compare perceived quality of

service with the expected quality of service. Therefore, banks should have knowledge

about customer perceptions and the influence of factors such as service encounter,

service evidence, image of the service organization, and price of the service on

customer perceptions.

Excellent customer service starts by first taking the time to get to know the customer,

his situation, his vision, his frustrations and his goals.Once you have a good handle

on what is on his heart and mind, then you will know how to offer the customer

helpful solutions that are attractive to him because they have value to him.


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Banks should also attempt to understand the various types of service encounters like

remote, face-to-face, and phone encounters to be able to understand customer

perceptions. They should examine the factors that influence customer

satisfaction/dissatisfaction, like recovery, adaptability, spontaneity, and innovate

strategies to influence customer perceptions.

In the present situation of world crisis it becomes more important for the banks to

make sure that the customers hold on to them and they have confidence in the present

workings of the bank. Any deviation from the quality service experienced by a

customer can have a very large impact on the working of the bank.

In this project, I have basically focused on the various customer expectations and

perceptions of two banks. ICICI bank, the largest bank in the private sector and SBI,

the largest in the public sector. I have chosen these banks to come up with an

unbiased output.

Both the banks are the leaders in their respective segments. And the project output

will help the banks to stay in the industry & outperform its competitors. It would also

help me to understand the latest & emerging trends in the customer tastes and

expectations.

I have analyzed the banks service with the help of structured questionnaire and

applied hypothesis testing to describe relation between the various variables.

The banks, if work on the output of the project might come up with the best possible

services. This will certainly help the banks to meet customer level of service and

retain them. This further shall help the banks to win Goodwill by word of mouth

because a satisfied customer will spread the good quality service received from banks

to his/her known ones.


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COTETS

S.o. Particulars Pageno.1

Acknowledgement 4

2Limitations 5

3

Executive Summary 6

4 Chapter 1:Introduction 9

5 Chapter 2:Literature Review 21

6 Chapter 3:

Objective of the study 40

7 Chapter 4:Methodology 42

8 Chapter 5:Observation, Analysis and Discussion 46

9 Chapter 6:

Summary/Conclusion/Recommendations 61

10References 67

11Appendices 69


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The issue of quality management within banking services has drawn considerable

attention over the past few years. The move to managed service has increased

demands for outcome-based accountability, cost containment, and attention to

customer-focused quality in order to remain competitive in a rapidly changing

environment. This dual focus on driving down costs while increasing quality has

intensified pressures to understand, measure, and manage quality from a customer

perspective.

Commercial banks form the largest and are the countrys most important group of

financial institutions. With stiffer competition among domestic and foreign banks,

therefore it is important for the commercial banks in India to improve the quality of

their services. Further, increased in consumer preferences toward banking products

choosing the banks that give them the best service quality is a priority. As

globalisation and liberalisation of financial institutions accelerate, competition among

banks in offering products and services becomes more intense. Customers in India

become more educated better informed, more internalized, and as Indian economy

becomes more and more knowledge based, the demand for high quality services

expands with increases in customers buying power.

Hence, commercial banking industry in India has to think strategically by providing

high quality products and services to satisfy their customers. In order for these banks

to provide high quality products and services, they need firstly to investigate the level

of customers perceptions and expectations to their service quality from their

customers perspective. Through that information, they could then strategically adjust

their service quality to fit the local and global markets.


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Without a sound and effective banking system in India it cannot have a healthy

economy. The banking system of India should not only be hassle free but it should be

able to meet new challenges posed by the technology and any other external and

internal factors.

For the past three decades India's banking system has several outstanding

achievements to its credit. The most striking is its extensive reach. It is no longer

confined to only metropolitans or cosmopolitans in India. In fact, Indian banking

system has reached even to the remote corners of the country. This is one of the main

reasons of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends

with the nationalization of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting

a draft or for withdrawing his own money. Today, he has a choice. Gone are days

when the most efficient bank transferred money from one branch to other in two days.

Now it is simple as instant messaging or dial a pizza. Money has become the order of

the day.

The first bank in India, though conservative, was established in 1786. From 1786 till

today, the journey of Indian Banking System can be segregated into three distinct

phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalization of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.


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New phase of Indian Banking System with the advent of Indian Financial &

Banking Sector Reforms after 1991.

Phase I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan

and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank

of Bombay (1840) and Bank of Madras (1843) as independent units and called it

Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank

of India was established which started as private shareholders banks, mostly

Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab

National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906

and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian

Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic

failures between 1913 and 1948. There were approximately 1100 banks, mostly small.

To streamline the functioning and activities of commercial banks, the Government of

India came up with The Banking Companies Act, 1949 which was later changed to

Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).

Reserve Bank of India was vested with extensive powers for the supervision of

banking in India as the Central Banking Authority.

During those days public has lesser confidence in the banks. As an aftermath deposit

mobilization was slow. Abreast of it the savings bank facility provided by the Postal

department was comparatively safer. Moreover, funds were largely given to traders.


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Phase II

Government took major steps in this Indian Banking Sector Reform after

independence. In 1955, it nationalized Imperial Bank of India with extensive banking

facilities on a large scale especially in rural and semi-urban areas. It formed State

Bank of India to act as the principal agent of RBI and to handle banking transactions

of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on

19th July, 1969, major process of nationalisation was carried out. It was the effort of

the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in

the country were nationalised.

Second phase of nationalisation Indian Banking Sector Reform was carried out in

1980 with seven more banks. This step brought 80% of the banking segment in India

under Government ownership.

The following are the steps taken by the Government of India to Regulate Banking

Institutions in the Country:

1949: Enactment of Banking Regulation Act.

1955: Nationalisation of State Bank of India.

1959: Nationalisation of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalisation of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalisation of seven banks with deposits over 200 crores.


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After the nationalisation of banks, the branches of the public sector bank India rose to

approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and

immense confidence about the sustainability of these institutions.

Phase III

This phase has 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 liberalisation 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.

The financial system of India has shown a great deal of resilience. It is sheltered from

any crisis triggered by any external macroeconomics shock as other East Asian

Countries suffered. This is all due to a flexible exchange rate regime, the foreign

reserves are high, the capital account is not yet fully convertible, and banks and their

customers have limited foreign exchange exposure.


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ICICI BAK PROFILE

ICICI Bank is India's second-largest bank with total assets of Rs. 3,446.58 billion

(US$ 100 billion) at March 31, 2008 and profit after tax of Rs. 31.10 billion for fiscal

2007. ICICI Bank is the most valuable bank in India in terms of market capitalization.

The Bank has a network of about 955 branches and 3687 ATMs in India and presence

in 18 countries. 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 specialized subsidiaries and affiliates in the areas of investment banking,

life and non-life insurance, venture capital and asset management. The Bank currently

has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore,

Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and

representative offices in the United States, United Arab Emirates, China, South

Africa, Bangladesh, Thailand, Malaysia and Indonesia.

ICICI Bank's equity shares are listed in India on 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).

Recent developments of the Bank

ICICI Bank Board appoints K. V. Kamath as non-executive Chairman and Chanda

Kochhar as Managing Director & CEO effective May 1, 2009

Mr. N. Vaghul, non-executive Chairman of the Board of Directors of ICICI

Bank Limited (NYSE: IBN) would retire from the Board on completion of his

current term on April 30, 2009. The Board has, subject to the approval of Reserve

Bank of India (RBI) and the shareholders, decided to appoint Mr. K. V.


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Kamath, presently Managing Director & CEO, as non-executive Chairman of the

Board for a period of five years effective May 1, 2009. Mr. Kamaths current term

as Managing Director & CEO would end on April 30, 2009 and he has

expressed his desire to lay down his executive responsibilities from that date.

The Board of Directors has, subject to the approval of RBI and the

shareholders, decided to appoint Ms. Chanda D. Kochhar, presently Joint Managing

Director & Chief Financial Officer, as Managing Director & CEO of ICICI

Bank from May 1, 2009 to March 31, 2014. Ms. Chanda Kochhar joined

erstwhile ICICI Limited (ICICI) in 1984 and was elevated to the Board of

Directors of ICICI Bank in 2001. During her career prior to becoming a

member of the Board, she worked and held leadership positions across all key

businesses, including corporate banking, project finance and retail banking. She

was instrumental in establishing ICICI Bank during the 1990s, and subsequently

headed the infrastructure finance and major clients groups in ICICI. In 2000, she

took on the challenge of building the nascent retail business, with strong focus

on technology, innovation, process reengineering and expansion of

distribution and scale. The Bank achieved a leadership position in this business.

She successfully managed the integration of the retail franchises of ICICI and

ICICI Bank, as well as of other acquisitions. During 2006-2007, she

successfully led the Banks wholesale and international banking businesses

during a period of heightened activity and global expansion by Indian

companies. Since 2007, she has been heading the Corporate Centre, responsible

for ensuring strategic consistency across the Group.

The Board expressed the view that Mr. Kamaths experience and expertise

would prove invaluable to the Board in maintaining continuity in strategic


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leadership and governance and providing guidance to the executive

management. The Board expressed the view that Ms. Kochhar deep

experience across the Banks businesses and functions would be invaluable in

providing stability while at the same time charting the Banks future strategic course

in the emerging global environment.

Some of the services provided by the bank are as under:

Personal Banking

DepositsLoansCardsInsuranceDemat ServicesWealth ManagementOnline services

RI Banking

Money TransferBank Accounts

InvestmentsProperty SolutionsInsuranceLoans

Reach Us

EmailFind ATM/Branch

Mobile Banking

Internet Banking

Insta Banking

Personal Banking

DepositsLoansCardsInvestments/InsuranceDemat ServicesOnline servicesWealth Management

Business Banking

Corporate Net BankingCash ManagementTrade ServicesFXOnlineSME ServicesOnline TaxesCustodial Services


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STATE BAK OF IDIA

State Bank of India (SBI) is the largest public sector bank in India. It is also,

measured by the number of branch offices and employees, the second largest bank in

the world. The bank was established in 1806 as Bank of Calcutta. It is the oldest

commercial bank in the Indian Subcontinent. The Government of India nationalised

SBI in 1955 with the Reserve Bank of India having a 60% stake.

SBI provides a range of banking products through its vast network in India and

overseas, including products aimed at NRIs. With an asset base of $126 billion and

its reach, it is a regional banking behemoth. SBI has laid emphasis on reducing the

huge manpower through Golden handshake schemes and computerizing its

operations. The Bank has also been unsuccessfully trying to improve service quality

through a programme called 'Parivartan' or 'Change'.

Recent developments of the Bank

Inauguration of Sonapur, 11,111th Branch In North Eastern Circle.Sonapur Branch

in Assam, identified as the 11,111th branch of the bank, was inaugurated by Shri

P.Chidambaram, Honble Home Minister Government of India in the presence

of our Chairman. The date of inauguration was scheduled for 2nd January 2009.

State Bank of India was adjudged the Best Bank of the Year 2008 by London

based The Banker magazine of Financial Times Group. This award is decided on

the basis of intensive research and analysis of financials and performance of

prominent Banks, and clearly SBI emerged as the winner & Best Bank in the

country. This years Annual Bank of the year 2008 awards presentation was held

at the Ballroom of The Dorchester Hotel, London on 26 th of November 2008 in an

impressive ceremony attended by CEOs & Heads of commercial Banks from over

116 countries.


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Mr. O. P. Bhatt, Chairman, State Bank of India, received the award from Mr.

Stephen Timewell, Editor-in-Chief of The Banker. The event was hosted by Mr.

Michael Buerk, eminent journalist & newsreader, BBC.

Some of the services provided by the bank are as under:

State Bank of India offers a wide range of services in the Personal Banking Segment

which are indexed here.

SBI Term Deposits SBI Loan For PensionersSBI RecurringDeposits

Loan Against Mortgage OfProperty

SBI Housing Loan Loan Against Shares & DebenturesSBI Car Loan Rent Plus SchemeSBI Educational Loan Medi-Plus SchemeSBI Personal Loan

CORPORATE BAKIG

SBI is a one shop providing financial products / services of a wide range for large,

medium and small customers both domestic and international.

Working Capital Financing

Assistance extended both as Fund based and Non-Fund based facilities to

Corporates, Partnership firms, Proprietary concerns

Working Capital finance extended to all segments of industries and services

sector such as IT

Term Loans

To support capital expenditures for setting up new ventures as also for

expansion, renovation etc.


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Deferred Payment Guarantees

To support purchase of capital equipments.

Corporate Loans

For a variety of business related purposes to corporates.

Export Credit

To Corporates / Non Corporates

SERVICES

Listed below are Services, SBI offers to its customers.

DOMESTIC TREASURY

SBI VISHWA YATRA FOREIGN TRAVEL CARD

BROKING SERVICES

REVISED SERVICE CHARGES

ATM SERVICES

INTERNET BANKING

E-PAY

E-RAIL

RBIEFT

SAFE DEPOSIT LOCKER

GIFT CHEQUES

MICR CODES

FOREIGN INWARD REMITTANCES


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Delivering quality service consistently gives a competitive edge to service

organizations. It requires an understanding of customer expectations and the types of

expectations.

In banking industry, banking systems provide the same types of services, but they do

not provide the same quality of services. Furthermore, customers today are more

aware of alternatives and their expectations of service have increased. Service quality

can, therefore, be used as a strategic tool to build a distinctive advantage over

competitors. Banks are striving for zero defection and retaining every customer that

the company can profitably serve in order to achieve service excellence (Reichheld

and Sasser). The achievements of zero defections require continuous efforts to

improve the quality of the service delivery system. Although quality can not be

improved unless it is measured, it can be defined from several perspectives, e.g., the

ability to satisfy the needs and expectations of the customer (Bergman and Klefsjo),

or the totality of features and characteristics of a product or service that bears on its

ability to satisfy given needs (Evans and Lindsay). While there is an increasing

recognition of the importance of quality in banking services, its conceptualization and

empirical assessment have remained limited. Quality is still an elusive construct for

many human services organizations. This is due to the difficulty in shifting a

customer-oriented viewpoint (Selber). Since the central tenet of the quality paradigmis the importance of understanding and utilizing customer data to drive operational

and strategic decisions, defining quality from the outside-in based on customer

information is critical. This shift in defining quality often necessitates a fundamental

change in the way professionals, managers, staff, and policy makers think about and

identify those who "buy" or "use" products and services (Brannen and Streeter). The

"customer" label is not typically associated with those who use banking services.


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Instead, organizations in this sector have traditionally referred to service users as

"clients" or "customers." This client vs. customer difference is more than semantic.

The client label suggests a passive voice in the service delivery process, which is

reflected by professionals in the field who question the credibility of client evaluation

of services. On the other hand, customer carries an image of an active participant with

more input in determining choices and decisions.

Clients of human service organizations who follow directions from professionals and

make few demands on the system are labeled as "cooperative." In contrast, customers

in the business sector who are loyal to the service, interact with the staff, and are

willing to show their preferences are viewed as "desirable customer" (Walsh). As

customers do not easily articulate banking service quality, the recipient of the service

can only really assess it, thereby making its measurement more subjective than exact.

Hence, the measurement of banking service quality has to be based on perceived

quality rather than objective quality because services are intangible, heterogeneous

and their consumption and production occur simultaneously. Lewis and Booms

believed that service quality is a measure of how well the service level matches

customers expectations. Gronroos perceived service quality as a result of what

customers receive it. Parasuraman et al. defined service quality as perceived by

customers and items from a comparison on their expectations of the services they willreceive with their perceptions of the performance of the service provider.

Expectations are the wants of customers, i.e., what they feel a service provider should

offer, while perceptions refer to the customers evaluation of the service provider.


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Definition of service quality

Since the 1930s quality has been identified as a factor for competitive advantage, but

it was not until after the Second World War that it became important. In advising

Japanese companies on restructuring after the war North American managers devised

new concepts of quality which began to be accepted as being of universal application.

The important pioneers in this field were W. Edwards Deming, Joseph M. Juran and

Kaoru Ishikawa (Hofman and Worsfold, 1997). Early quality models concentrated on

goods. Defining and modelling the quality of services is generally acknowledged to

be more difficult than modelling the quality of goods due to the intangible nature of

services themselves (Bergman & Klefsj, 1994). Service quality is a concept that has

aroused considerable interest and debate in the research literature because of the

difficulties in both defining and measuring it with a consensus for both is still missing

(Parasuraman et al., 1985; Lewis and Mitchell, 1990; Dotchin and Oakland, 1994a,

1994b; Gaster, 1995; Asubonteng et al., 1996).

There are a number of different "definitions" as to what is meant by service quality. In

its simplest form service quality is a product of the effort that every member of the

organisation invests in satisfying customers. In its broadest sense service quality is

defined as superiority or excellence as perceived by the customer (Peters and Austin,

1985). More specifically service quality has been defined as:

The delivery of excellent or superior service relative to customer expectations

(Zeithaml and Bitner, 1996).

Quality is behaviour - an attitude - that says you will never settle for anything less

that the best in service for your stakeholders, whether they are customers, the


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community, your stockholders or colleagues with whom you work every day

(Harvey, 1995).

When we want to be effective - delivering good quality to the customer - we must

produce services that meet as much as possible the needs of the consumer

(Boomsma, 1991).

(Quality is) providing a better service than the customer expects (Lewis, 1989).

Juran (1988) suggested that quality should be seen as "fitness for use".

Another short definition views quality as "conformance to requirements" rather than

"goodness, or luxury, or shininess, or weight" (Crosby, 1979). One that is commonly

used defines service quality as the extent to which a service meets customers' needs or

expectations (Lewis and Mitchell, 1990; Dotchin and Oakland, 1994a; Asubonteng et

al., 1996; Wisniewski and Donnelly, 1996).

While evaluating service offered by a bank, customers compare perceived quality ofservice with the expected quality of service. Therefore, banks should have knowledge

about customer perceptions and the influence of factors such as service encounter,

service evidence, image of the service organization, and price of the service on

customer perceptions.

One of the most important customer service skills you can develop is the ability to

understand and effectively respond to the customers needs and concerns. For a long

time, sales have been perceived to be mostly about trying to convince the customer

that he needs the product. Excellent customer service starts by first taking the time to

get to know the customer, his situation, his vision, his frustrations and his goals. Once

you have a good handle on what is on his heart and mind, then you will know how to


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offer the customer helpful solutions that are attractive to him because they have value

to him.

Thomas J. Peters, an American writer on business management practices, says that

70% of customers hit the road not because of price or product quality issues, but

because they did not like the human side of doing business with the provider of the

product or service. 45% of these customers said they switched to another company

because the attention they did receive was poor in quality.

Customers today are often treated like a nuisance, instead of the reason that a

company is in business at all. Products and services continue to increase in cost.

Customer service, on the other hand, continues to decline. Dealing with surly cashiers

who seem to have more important things to do than ring up your sale are the rule

rather than the exception. Having a product delivered to your home means giving up

hours out of your day to wait. It seems that businesses today have forgotten how

valuable customers actually are. Without customers, no one earns a pay check.

Banks should also attempt to understand the various types of service encounters like

remote, face-to-face, and phone encounters to be able to understand customer

perceptions. They should examine the factors that influence customer

satisfaction/dissatisfaction, like recovery, adaptability, spontaneity, and innovatestrategies to influence customer perceptions.

The Indian banking industry is going through turbulent times. With the lowering of

entry barriers and blurring product lines of banks and non-banks since the financial

sector reforms, banks are functioning increasingly under competitive pressures

emanating from within the banking system, from non-banking institutions, and from


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the domestic and international capital markets. In this era of mature and intense

competitive pressures, it is imperative that banks maintain a loyal customer base. In

order to achieve this and improve their market and profit positions, many retail banks

are directing their strategies towards increasing customer satisfaction and loyalty

through improved service quality.

In the present competitive Indian banking context, characterised by rapid change and

increasingly sophisticated customers, it has become very important that banks in India

determine the service quality factors, which are pertinent to the customers selection

process. With the advent of international banking, the trend towards larger bank

holding companies, and innovations in the marketplace, the customers have greater

and greater difficulty in selecting one institution from another. Therefore the current

problem for the banking industry in India is to determine the dimensionality of

customer-perceived service quality. This is because if service quality dimensions can

be identified, service managers should be able to improve the delivery of customer

perceived quality during the service process and have greater control over the overall

outcome. Moreover, investigating the influence of the dimensions of service quality

on customers behavioural intentions should provide a better understanding of the

drivers of customer satisfaction and also help to specify, measure, control and

improve customer perceived service quality. Hence, to gain and sustain competitiveadvantages in the fast changing retail banking industry in India, it is crucial for banks

to understand in-depth what customers perceive to be the key dimensions of service

quality and what impacts the identified dimensions have on customers behavioural

intentions.


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The statistical analyses of survey responses in studies done before reveal interesting

findings. The studies suggest that customers distinguish four dimensions of service

quality in the case of the retail banking industry in India. These four dimensions of

customer-perceived service quality are: customer-orientedness, competence, tangibles

and convenience. The first factor, customer-orientedness is primarily related to the

attitude and skills of the employees providing the service. The second factor,

competence, is primarily associated with the concept of providing reliable services to

customers. The third factor, tangibles, is primarily associated with the visual appeal of

the banks physical facilities and communication materials to the customers. Finally,

the fourth factor, convenience, encompasses items related to the convenience of the

banks branch locations and the spread of the banks ATM networks. Identifying the

underlying dimensions of the service quality construct in the Indian retail banking

industry is the first step in the definition and hence provision of quality service. The

results of this study also offer strong support for the intuitive notion that improving

service quality can increase favourable behavioural intentions, namely, WOM (Word-

of-Mouth) communications and purchase intentions and decrease unfavourable

intentions, namely, complaining behaviour. Furthermore, the results yielded an

intricate pattern of service quality-behavioural intentions relationship at the level of

the individual dimensions. The service quality factor customer-orientedness was

found to be the most important for influencing WOM about the bank and customers

complaining behaviour, followed by competence, tangibles and convenience, whereas

in the case of purchase intentions, competence emerged as the most important factor

followed by customer-orientedness, tangibles, and convenience. The results thus

provide evidence of the usefulness of service quality research, since WOM

communications and purchase intentions have been suggested as important


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dimensions of the concept of service loyalty. Investigating the influence of the

dimensions of service quality on customers behavioural intentions should help to

measure, control and improve customer perceived service quality. Hence, these issues

should be a central concern for retail bank managers as well as service management

academics and practitioners.

In the present situation of world crisis it becomes more important for the banks to

make sure that the customers hold on to them and they have confidence in the present

workings of the bank. Any deviation from the quality service experienced by a

customer can have a very large impact on the working of the bank.

In this project, I have focused on the various customer expectations and perceptions of

two banks. ICICI bank, the largest bank in the private sector and SBI, the largest in

the public sector. I have chosen these banks to come up with an unbiased output.

Both the banks are the leaders in their respective segments. And the project output

will help the banks to stay in the industry & outperform its competitors. It would also

help me to understand the latest & emerging trends in the customer tastes and

expectations.


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WHAT COTRIBUTIO WOULD THE PROJECT MAKE?

Quality services always give a competitive advantage to every organization. Further,

the customers expect a certain level of service from the banks which might not be

perceived by the banks at all. The banks might think something different and the

services provided by them might not be liked by the customers. So what this project

shall do is that, it will provide the banks an insight into customer expectations and

perceptions.

Further, knowledge of factors influencing the desired service level, adequate service

level, and zone of tolerance will help the banks consistently meet and exceed service

expectations of customers.

The banks, if work on the output of the project might come up with the best possible

services. This will certainly help the banks to meet customer level of service and

retain them. This further shall help the banks to win Goodwill by word of mouth

because a satisfied customer will spread the good quality service received from banksto his/her known ones.


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In such a type of project, the study of the customer expectation and perception is

generally done with the help of the SERVQUAL model. This model, as the name

suggests deals with quality in services and tells that what the ingredients of a quality

service are. SERVQUAL or RATER is a service quality framework. SERVQUAL

was developed in the mid eighties by Zeithaml, Parasuraman & Berry.

This model has not been used in the project but as the project makes use of the

parameters of this model so it becomes necessary to know as to what is the

importance of the model.

SERVQUAL was originally measured on 10 aspects of service quality: reliability,

responsiveness, competence, access, courtesy, communication, credibility, security,

understanding or knowing the customer and tangibles. It measures the gap between

customer expectations and experience.

By the early nineties the authors had refined the model to the useful acronym

RATER:

Reliability

Assurance

Tangibles

Empathy, and

Responsiveness

Further we need to understand as to what are the customers expectations and

perceptions and the gap that arises between the perceived service and the actual

service.


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A GAPS MODEL OF SERVICE QUALITY

GAP 1

CustomerExpectations

Key Factors:

Insufficient marketing research Inadequate use of marketing research Lack of interaction between

Management and customers

Insufficient communication betweenEmployees and managers

Lack ofUpward

Communication

ManagementPerceptions of

Customer Expectations

CustomersService

Expectations

CUSTOMER SERVICE ORGANIZATION

ServiceQuality

Gap

CustomersService

Perceptions

GAP 5

Organizations

Understanding ofExpectations

OrganizationsService Standards

OrganizationsService

Performance

OrganizationsCommunications

to Customers

MarketInformation

Gap

ServicePerformance

Gap

InternalCommunication

Gap

ServiceStandards

Gap

GAP 1

GAP 2

GAP 3

GAP 4


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GAP 2

Key Factors:

Inadequate management commitmentto service quality

Absence of formal process for settingservice quality goals

Inadequate standardization of tasks Perception of infeasibility -- thatcustomer expectations cannot be met

ManagementPerceptions of

Customer Expectations

ServiceQuality

Specifications


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GAP 3

Key Factors:

Lack of teamwork Poor employee - job fit Poor technology - job fit

Lack of perceived control (contact personnel) Inappropriate evaluation/compensation system Role conflict among contact employees Role ambiguity among contact employees

ServiceQuality

Specifications

ServiceDelivery


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GAP 4

Key Factors:

Inadequate communication betweensalespeople and operations

Inadequate communication betweenadvertising and operations

Differences in policies and proceduresacross branches or departments

Puffery in advertising & personal selling

ServiceDelivery

ExternalCommunications

to Customers

Lack ofHorizontal

Communication


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Gaps 1 to 4 affect the way in which service is delivered and these four gaps lead to

Gap 5. Therefore, the extent of Gap 5 depends on the size and direction of these four

gaps (Gap 1, Gap 2, Gap 3 and Gap 4).

In the banking industry, the study on service quality has been undertaken for example

by Yavas et. al. (1997), Bahia and Nantel 2000; Lassaret. al., 2000; Duncan and

Elliott, 2002; Jabnoun and Al-Tamimi, 2002; and Arasli et. al., 2005.

In the study of service quality in the banking sector in Turkish banking, Yavas et. al.

(1997), focused on the relationship between service quality on consumer satisfaction,

complaint behaviour and commitment. Their study found that overall service quality

was a significant determinant customer satisfaction, complaint behaviour and

commitment.

Bahia and Nantel (2000) suggested alternative scale for the measurement of perceived

service quality in retail banking. Their study found that when comparing BSQ

(banking service quality) dimensions and SERVQUAL, it seemed that BSQ

dimensions were more reliable than SERVQUAL. On the other hand, Lassar et. al.

(2000) studied service quality using two major service quality constructs,

SERVQUAL and Technical/Functional Quality models to the private banking

industry. They found that Technical/Functional Quality-based model of servicequality is better suited compared to SERVQUAL-based model. Duncan and Elliot

(2002) however explored the relationship between customer service quality and

financial performance in Australian banks and credit unions. They found that there

was significant relationship between financial performance and customer service

quality scores.


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Jabnoun and Al-Tamimi (2002) examined service quality at UAE commercial banks

using SERVQUAL model and included thirty items in the five dimensions of

SERVQUAL. When they tested the developed instrument for reliability and validity,

they found that the instrument had only three dimensions.

Finally, Arasli et. al. (2005) studied service quality perceptions of Greek Cypriot bank

customers using SERVQUAL model. They however, extend the study by looking at

the relationship between service quality, customer satisfaction and positive word of

mouth. They found that the expectations of bank customers were not met where the

largest gap was obtained in the responsiveness-empathy dimension. In addition, the

reliability items had the highest effect on customer satisfaction, which in turn had a

statistically significant impact on the positive word of mouth. Tahir & Bakar 330

Contrary to the large number of studies of service quality in the banking industry in

the west, studies are still considered scarce. In India, for example, studies on service

quality were conducted but are very few in number. It is hoped that this study will be

the platform for discussing the issues on service quality and customer satisfaction in

the Indian banking industry.

One of the studies that was devoted to assess the quality in Saudi service industry is

the one by Jannadi and Al-Saqqaf [1]. Their study was applied to the Saudi ElectricCompany (SEC). They have concluded that SEC scored high in tangibles dimension

but low in features of responsiveness and reliability. In addition, while the

performance of SEC was acceptable to all customer categories, service quality was

perceived differently by various types of customers, with reinforcement and

commercial customers awarding SEC even lower ratings than other customers did.


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A study upon the same has also been undertaken and a brief abstract from that study is

shown below:

Website address: http://www.asiapacific.edu/vol.3_no.2/r_amudha.html

Service Quality in Banking with Special Reference to ICICI Bank Ltd.,

Tiruchirappalli District. A study by R. Amudha and C.Vijaya Banu.

As per the Economic association of Indonesia and India, India has been one of the

fastest growing economies in the world since the early 90s and India is fourth largest

economy of the world after US in terms of purchasing power parity. This is because

of the important role played by the financial sector comprising a large number of well

managed banking services both in public and private sectors. Indias second largest

bank is the ICICI Bank offering a wide range of financial services to its customers

through its delivery channels. To attain this sustainable competitive advantage,

service industries face a unique challenge of meeting the needs of the customers

regularly and continuously. Though mechanized form of activity has its own impact

on service delivery performance, many service industries still remain to be manual

because there exits no equivalent substitute for personal interaction between the

employees of service industry and customers. The optimum mix of technology and

people in the service delivery process decides the competitive advantage of anorganization. Customer satisfaction is taken as a yardstick for measuring the quality

of service and providing excellent customer service decides the effectiveness of

service delivery process. Only through excellent customer service, an organization

can consistently exceed customer expectations. In order to achieve customer

satisfaction, every service organization must understand and improve service delivery

process and implement valid and reliable service performance measures to measure


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the same. To assess the degree of customer satisfaction, a SERVQUAL instrument is

administered to study the quality of service and the gaps were identified in the

services offered by ICICI Bank, Tiruchirapalli District in all five dimensions of

service quality, the overall weighted SERVQUAL score being 1.92. The ICICI Bank

Ltd. has to take steps to close the gaps by establishing a service quality information

system.


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OBJECTIVES OF STUDY:

PRIMARY OBJECTIVE

To identify the elements that affects the customer expectation and perception

of service quality of public and private sector banks.

To understand the relation between time spent with the bank and the

expectation of services.

Under this objective I tried to identify all the elements that affect customer

expectations and perceptions of service quality of ICICI Bank and SBI Bank. Doing

such a thing shall provide us with an idea as to the gaps that are present in the service

being delivered to public and private sector banks as both the banks are the first in

private sector and public sector respectively.

SECODARY OBJECTIVE

To assess gaps between customer expectations and perceptions of service

quality.


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Type of Research design:

The type of research design to be followed is exploratory research design.

Secondary data:The secondary data collection was done with the help of various websites and journals

and guidelines by my respectable guide.

The data thus collected went through the process of rigorous analysis through the use

of research tools like SPSS (Statistical Package for Social Sciences).

The sample comprised of consumers of different age groups and income categories

who are using banking services.

Primary Data:

100 questionnaires were filled for the information required for this project. The

questionnaires were filled by the people who are the existing customers of

banks. Two Banks were selected. ICICI Bank, Indias largest private sector bank

and SBI Bank, Indias largest public sector bank. These banks are the best in

their respective areas and that is the reason I have chosen these banks as they

shall represent an entire category i.e. private and public sector banks

respectively.

50 questionnaires were filled by customers of ICICI Bank and 50 questionnaireswere filled by customers of SBI Bank. The location selected was the ATM

across various markets in South Delhi and also some branches of both the banks

in the nearby area.


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Following is some important information provided:

Non-probability judgmental sampling technique was used since the chance of

selecting the customer was based on my judgment and was taken without any

probability.

The data collected was analyzed using charts and distribution tables and

further conclusions were made.

Personal interviewing as a data collection device had been used.

This device was appropriate because we can be more personalized with the

persons & also able to communicate them what we are trying to ask.

QUESTIOAIRE DESIGIG

A good questionnaire must be concise, focus, easy to understand language.

Questionnaire should be designed as per the objective to get right feedback. A

questionnaire has a mix of following 4 major scales which help us in analyzing the

attitude of the people. The scales are Nominal, Ordinal, Interval and ratio scale.

1. OMIAL SCALE:

This type of scale is mostly used in the opening so that respondents feel easy in

answering. This scale helps in mutually exclusive classification of units i.e. there is no

case of may be in this.

2. ORDIAL SCALE

This type of scale is used for knowing a relativity of a unit as this includes ranking

and it is a type of comparative scale as respondents mainly compare the parameters

and then rank accordingly.


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3. ITERVAL SCALE

This type of scale is of non-comparative in nature here respondents mainly rate the

parameters by their individuality and not comparing it with others.

4. COSTAT SUM SCALE

This scale tells us about the degree of preference of one aspect over the other. The

customer is told to give a specific number to all the options that amount to a total and

with the help of this the customer does not give same preference to all options and

thus we are able to find the preference of the customers over different options.


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Following are some findings on the basis of survey conducted:

1. WHICH ACCOUT DO YOU MOSTLY USE I BAK?

SBI BAK

ICICI BAK

This question tells us about the accounts offered by the bank which is a core service

provided by any bank and thus is very essential for us to know the perception of

customers. We can clearly see that in both the banks most of the customers prefer

savings account but in ICICI bank there is a preference to current account also.


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2. TIME SPET WITH THE BAK

SBI BAK

ICICI BAK

This question tells us about the time spent by the customers with the banks. The more

the time spent, the less is the biasness of the responses and it gives more

authentications to the report. We can clearly see that most of the customers have been

dealing with the bank for over 6 months. So we can say that the responses by the

customers in this report are proper and can be taken for further study, if required.


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3. QUALITY SERVICE FROM BAK

SBI BAK

ICICI BAK

This question clearly tells us the perception of quality service from the banks. We can

clearly see that ICICI bank is way ahead of SBI bank when it comes to services. Most

people have given 15 points to SBI bank whereas the average for ICICI bank is 40.

SBI bank has to improve its image in the eyes of its customers as quality service is

one major aspect when it comes to survive in this era of competition.


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4. MATCHIG OF SERVICES WITH EXPECTATIOS

When asked about the expectations of service from the banks, all the customers

agreed unanimously that they expected some services from the banks before being

attached to their respective banks. But the expectations are not met as always.SBI BAK

ICICI BAK

We can clearly see that when it comes to SBI bank, only 38% people feel that the

services match their expectations and this number for ICICI bank is 46%. The

difference is huge for both the banks as majority of the people do not get the expected

level of service from their respective banks. So the banks should go in for an

extensive research that what more can be done by them so that they can provide the

adequate level of services as expected by the customers and reduce this percentage of

dissatisfied customers.


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5. ATM SERVICESBI BAK

How do you rate the 'ATM Service' provided by the bank?

ICICI BAKHow do you rate the 'ATM Service' provided by the bank?

We can clearly see that when it comes to ATM service, ICICI bank is way ahead of

SBI bank. SBI bank has the largest number of ATMs in India but it still faces thisproblem. This happens because most of the ATM machines installed are not working

properly and most of the times the machines are out of money and people have to wait

in long queues for taking out their own money. Most of the people feel frustrated

when they have to wait for so long for their own money. This result tells us that you

need not have your presence to be felt everywhere but whatever you do, do it in such

a way that your positive experience stays with the customer forever. And this brings

in a positive word of mouth for the bank.


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6. TELEPHOE BAKIG SERVICE

SBI BAK

ICICI BAK

From the above graphs we can see that the telephone banking service of SBI bank is

very poor. Whereas the same service provided by ICICI bank is perceived as very

good by the customers of the bank. Such a service is very important for the customers.

There are many times when the customers call the banks and do not get the desired

responses. They are not welcomed properly and after that their queries are not

answered properly. So the entire interaction becomes a very bad experience for the

customers and hence their expectations get hurt.


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7. OVERALL SATISFIED WITH QUALITY OF SERVICES PROVIDED

SBI BAK

ICICI BAK

The graph clearly shows that the number of dissatisfied customers for SBI bank are

way ahead than ICICI bank. The customers of SBI bank are very much dissatisfied

with the overall services provided by the bank. So a lot is needed to be done by the

bank for improving its image in the eyes of the customers and making the customers

satisfied with the services provided by the bank.


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8. AGE GROUP

SBI BAK

ICICI BAK

This graph tells about the age group of the customers surveyed for this project. We

can clearly see that most of the customers for SBI bank fall in the age group of 20-25while the same for ICICI bank is 25-30. This difference comes in as most of the

customers for SBI bank were students and young businessman who prefer opening

savings account. Most of the customers for ICICI bank were working professionals

who have been in the market for around 3 to 4 years and that is the reason they open

current account also as they have to manage their daily business.


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9. OCCUPATIO

SBI BAK

ICICI BAK

As said in the above question, the number of savings account for SBI bank are more

because most of the customers for them were students and there is a rise in current

account for ICICI bank as most of the customers for them were from the business

class and from the service class.


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HYPOTHESES TESTIG

The test that I applied to my research is the test ofCHI-SQUARE.

I applied CHI-SQUARE between customers expectation for fulfillment of services

and time spent with the bank.

H0: Customers expectation for fulfillment of services is not dependent with the

time spent with the bank.

H1: Customers expectation for fulfillment of services is dependent with the time

spent with the bank.

ICICI BANK

Did the servicesprovided match your

expectations?

yes no Total

< 6 months12 0 12

6mth - 1yr 11 3 14

1 yr - 2 yr 0 19 19

For how longhave you beendealing with thebank?

2 yrs and above 0 5 5

Total 23 27 50

Value dfAsymp. Sig.

(2-sided)

Pearson Chi-Square 40.511(a) 3 .000

Likelihood Ratio 54.446 3 .000

Linear-by-LinearAssociation

34.273 1 .000

N of Valid Cases50

Now the value of Chi-Square that we got is 40.511 at 5% level of significance and

with a degree of freedom of 3.


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The value in the table at 5% level of significance and with a degree of freedom of 3 is

7.815. So plotting these values in the normal distribution curve, we get:

So we can see that the value calculated falls in the rejection region and therefore H1 is

accepted and H0 is rejected.

SBI BANK

For how long have you been dealing with the bank? * Did the services provided match

your expectations? Crosstabulation

Count

Did the services provided match

your expectations?

yes no Total

< 6 months 11 0 11

6mth - 1yr 8 13 21

1 yr - 2 yr 0 12 12

For how long have you been

dealing with the bank?

2 yrs and above 0 6 6

Total 19 31 50

Criticalregion

7.815

40.511

H0rejected


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Value dfAsymp. Sig.

(2-sided)

Pearson Chi-Square 28.980(a) 3 .000

Likelihood Ratio 38.496 3 .000Linear-by-LinearAssociation 24.229 1 .000

N of Valid Cases50

Now the value of Chi-Square that we got is 28.980 at 5% level of significance and

with a degree of freedom of 3.

The value in the table at 5% level of significance and with a degree of freedom of 3 is

7.815. So plotting these values in the normal distribution curve, we get:

So we can see that the value calculated falls in the rejection region and therefore H1 is

accepted and H0 is rejected.

So we can say that the customers expectation for fulfillment of services is dependent

with the time spent with the bank. This means that the more the customer spends time

with the bank, the better his/her fulfillment of the services.

Criticalregion

7.815

28.980

H0rejected


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The elements that the customers expect and perceive are most important for them with

regards to the service quality of public and private sector banks are as under:

Reliability1. Providing services as promised

2. Performing services right the first time

3. Providing services at the promised time

4. Keeping customers informed about when services will be performed

SBI ICICI

X

X X

X

X

X

X

X

X

X

X

X

X

Responsiveness

5. Prompt service to customers

6. Willingness to help customers7. Readiness to respond to customers' requests

Assurance

8. Employees who instill confidence in customers

9. Making customers feel safe in their transactions

10. Employees who are consistently courteous

11. Employees who have the knowledge to answer customer questions

Empathy

12. Giving customers individual attention

13. Employees who deal with customers in a caring fashion

14. Having the customer's best interest at heart

15.Employees who understand the needs of their customers

Tangibles

16. Modern equipment

17. Visually appealing facilities

18. Employees who have a neat, professional appearance

19. Visually appealing materials associated with the service

20. Convenient business hours

1.

2.

3.

4.

5.

6.7.

8.

9.

10.

11.

12.14.15.

17.

13.

16.

20.

19.

18.


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SCOPE FOR FUTURE RESEARCH

The main limitation of this study, although it may be overcome in future research,

is that all the data were gathered from a single region. It would be interesting to

replicate the study on a national sample. This would provide a better

generalization for the banking sector. Additionally, since India aspires to become

globally competent financial centre, it would be appropriate and relevant to

replicate the study using international samples. This is because when banks in this

country provide services to international customers such as business travellers,

tourists, students and expatriates, in a way, it is just like exporting services to

foreign markets while staying at home. Therefore, the quality and customer

satisfaction issues attached to services are subject to international domains.

Also there is a scope to do a research to find out the degree of satisfaction or

dissatisfaction as a result of high or low service quality level.


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COCLUSIOS

From the research conducted, we can conclude that ICICI Bank and SBI Bank

both need to work more on their marketing strategies and make the customers

more satisfied with their services.

The result of Gap 5 analyses showed that customers perceptions for banking industry

in India were consistently lower than their expectations. These negative gaps

especially pertaining to staff giving customers best interest at heart, staff

performing services right the first time, and staff willingness to help were

important to consider in terms of making improvement efforts. The bigger the gap,

the serious the level of service quality that need to be improved, from the customers

point of view.

The customers expectation of services depends directly on the time spent with the

bank. We were also able to conclude that the banks need to improve their services

if they have to improve their competitiveness. They have the opportunity of taking

the market share of their competitors if they improve their level of services. The

banks so far have not been able to keep the customers happy as the customers

have not been able to meet their expectations and the perceived quality that they

had from the banks. The following reasons can sum up the causes for the

dissatisfaction level of the customers expectations of services:

There is lack of marketing research by the banks for the expectations and

services that their customers have from them.

There is insufficient communication between employees and the managers

working at the bank.

There is a perception of infeasibility from the bank employees towards the

customers expectations.


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There is absence of formal process for setting service quality goals.

There is role ambiguity among the contact employees.


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RECOMMEDATIOS

Quality is not an event, it is an ongoing process. As far as Banks are concerned,

quality is not the responsibility of the quality control department only; rather it is a

matter to be taken care of by the entire banking system.

Given todays competitive environment, and in response to the quality push and the

aspiration of the country to become a globally competent, at this juncture, I believe it

is appropriate for the management of the banks to seriously examine their corporate

quality programs and customer service system. In addition, they must also consider

that their performance measures now have to place a value on better responsiveness to

customer needs. These measures and changes can be expensive in terms of employee

time and effort, but the management of these banks needs to find ways to overcome

these hurdles, otherwise the increasing competition from international banks can

shrink their market shares.

The following are the recommendations for achieving service quality:

Make specific programs and schemes for the customers on the basis of time spent

with the banks on yearly basis. This means that the customers who have spent

more time with the bank should be given certain special privileges such as loyalty

schemes and accounts.

Around 55% customers expectation did not match: There has to be a proper

standardization of tasks. Blueprint of services across all branches and


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departments. Whatever is the procedure for any process, it should be clearly put

out across all branches so that the customers find it easy to do their transactions.

As there is role ambiguity among employees: Organize Employee Training

Programs after 6 months. The time period is kept 6 months as such a time period

will make sure that the employees are able to perform according to the desired

manner and also there is regular up gradation of employees behaviour as

customers expectations change very quickly.

Make senior managers perform customer-contact roles every month. This will

certainly make the senior managers know as to what is required to add on to the

services provided at present. They will understand the need to improve the

services once they themselves get to interact with the customers and listen to the

problems faced by them.

Time chart with details of time to be taken for resolving a query to be set up at

every branch. The maximum and the minimum time to be taken for a problem that

occurs to the customer should be put up at every branch so that the customer will

know that by what time will his problem get solved and he does not have to

complaint again and again.

A visionary quality head setting high standards and emphasizing 100% quality to

be present at every branch. Presence of a Visionary leader at the top is a necessary

element for achieving quality. The vision of the leader guides the organizational

effort into achieving high standard of service quality. A visionary leader through


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his verbal and symbolic communication shows where the future lies and of-course

his vision has to be shared by each and every employee of the organization.

70% in SBI Bank and 38% in ICICI Bank not satisfied: System for monitoring-

Internal performance analysis; customer satisfaction analysis; market research

every year. For such a thing, I recommend the bank to follow the model given

below every year as by doing such a thing, the banks will certainly be able to

locate any loop holes in the services that they provide and satisfy the customers in

a much better way:

Do your customers perceive

your offerings as meeting

or exceeding their expectations?

Do you have an accurate

understanding of

customers expectations?

Are there specific

standards in place to meet


Do your offerings meet or

exceed the standards?

Is the information

communicated to customers

about your offerings accurate?

Continue to monitor

customers expectations

and perceptions

YES

NO

YES

YES

YES

YES

Take corrective action




NO

NO

NO

NO

Do your customers perceive

your offerings as meeting

or exceeding their expectations?

Do you have an accurate

understanding of


Are there specific

standards in place to meet


Do your offerings meet or

exceed the standards?

Is the information

communicated to customers

about your offerings accurate?

Continue to monitor

customers expectations

and perceptions

YES

NO

YES

YES

YES

YES





NO

NO

NO

NO


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REFERECES

1. Bahia K & Nantel J (2000). A reliable and valid measurement scale for the

perceived service quality of banks. The International Journal of Bank

Marketing, 18 (2), 84-91.

2. Brown S & Swartz T (1989).A gap analysis of professional service quality.

Journal of Marketing, 53, 92-108.

3. Kotler P (1984). Marketing Management: Analysis, Planning and Control.

Prentice-Hall, Englewood Cliffs, NJ.

4. O. V. afakli: Testing Servqual Dimensions on the Commercial Bank Sector

of Northern Cyprus Financial Theory and Practice 31 (2) 185-201 (2007)

5. Hseyin ARASLI - Salih KATIRCIOLU - Salime Mehtap SMADI

Eastern Mediterranean University, TRNC: Customer Perceptions of Bank

Service Quality in a Developing Country: Some Evidence from the Turkish

Republic of Northern Cyprus

6. Christopher Lovelock, Jochen Writz, Jayanta Chatterjee:Services Marketing:

Pages 384-403.

7. Arasli H., Mehtap-Smadi S., and Katircioglu S. T.,, 2005, Customer Service

Quality in the Greek Cypriot Banking Industry. Managing Service Quality.

Vol. 15 No. 1. pp 41-576

8. Anderson E. W. and Fornell C., 1994. A Customer Satisfaction Research

Prospectus. In R. T. Rust & R. L. Oliver (Eds.) Service Quality: New Direction

in Theory and Practice, pp. 241-268.


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9. Bahia K. and Nantel J. ,2000, A Reliable and Valid Measurement Scale for the

Perceived Service Quality of Banks, International Journal of Bank Marketing,

pp. 84-91

10. Lassar W. M., Manolis C., and Winsor R. D., 2000, Service Quality

Perspectives and Satisfaction in Private Banking, Journal of Services

Marketing, vol. 14. No. 3 pp. 244-271

11. Yavas U., Bilgin Z. and Shemwell D. J. ,1997, Service Quality in the

Banking Sector in an Emerging Economy: A Consumer Survey, International

Journal of Bank Marketing, vol. 15. no. 6 pp. 217-223


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Appendix 1: Questionnaire

Dear sir/madam,I am Puneet Sachdeva doing a brief research to find the factors affecting expectation

and perception of customers towards service quality provided by ICICI /SBI Bank.

The study is being carried out for academic purposes and all information provided

would be treated confidential. I would be grateful if you couldplease answer the

following questions:

1. Which account do mostly use in the bank?

a) Current a/c b) Savings a/c c) Any other a/c

2. For how long have you been dealing with the bank?

a) Less than 6 months b) 6 months 1 year

c) 1 year 2 years d) 2 years and above

3. Divide 100 points to the following reasons that made you to be associated with the

Bank:

a) Less cost __________ b) Safety __________

c) Quality Service__________ d) Less Documentation__________

4. Before opening an account with the bank, did you expect some services from it?

a) Yes b) No

5. Were the services provided by the Bank and matched your expectations?

a) Yes b) No


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6. Keeping in mind the services provided by your bank, please rate the followingfactors as your preferences on the scale of (1 to 5):

5 = extremely important

4 = very important3 = somewhat important2 = not very important1 = not at all important

Factors to be considered Your Preference

1. Modern looking equipment

2. Visually appealing physical facilities

3. Neat appearing employees

4. Abiding by the time limit

5. Interest in solving your problems/queries

6. Performing correct service 1st time

7. Error free records

8. Telling exactly what service will be performed

9. Behaviour of employees

10. Safety in transactions11. Employee having knowledge to solve problems

12. Individual attention

13. Convenient operating hours

14. Employers giving prompt service

15. Willingness of employees to help

16. Bank has your best interest at heart

7. How do you rate the following services provided by the bank on a scale of 1 to 5,where:

5 = Very good, 1= Very Poor.

1 2 3 4 5ATM service |-----|-----|-----|-----|-----|

Internet Banking Service |-----|-----|-----|-----|-----|

Telephone Banking Service |-----|-----|-----|-----|-----|


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8. Are you overall satisfied with the quality of services provided by your bank?

a) Yes b) No

9. Any comments or recommendations?

____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

PERSOAL DETAILS

Name (optional): _______________________________________

Gender: MALE : FEMALE

Age Group: 1. < 20 ( ) 2. 20-25 ( ) 3. 25-30 ( ) 4. 30 > ( )

Contact number (optional): _______________________

Thank you for sparing your valuable time for filling the

questionnaire.


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Appendix 2: The Service Profit Chain

InternalServiceQuality

EmployeeSatisfaction

Profit &Growth

CustomerLoyalty

CustomerSatisfaction

EmployeeRetention &Productivity

PerceivedValue

of Service

The Service Profit Chain

Heskett, J.L., Sasser E.W., Schlesinger, L.A. (1997), The Service Profit Chain:

How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value, Free Press


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Appendix 3: Additional Gaps

Source: Auty, S., Long, G. (1999), Tribal warfare and gaps affecting internalservice quality, International Journal of Service Industry Management, 10, 1, pp. 7-22


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Appendix 4:Relationship between determinants of internal gap 1

and internal gap 3

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