Banking Services

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 Banking Services
Banks provide financial services to the customers.
Due to the rising competition and liberalization, the banking industry has
become the buyers market.
Banks need to create and develop the services which can satisfy the consumer
needs.
 Customer satisfaction is a very important construct in today’s market and it is
directly influenced by service quality as per earliest studies. Therefore, the
present research work has been carried out to analyse the rural customers’
attitude towards public sector banks.
Banking in India is so convenient and hassle free that one (individual, groups or
whatever the case may be) can easily process transactions as and when required.

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 Common Services offered by Banks
Bank Accounts
Loans
Money Transfer
Credit and Debit Cards
Lockers

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 Importance of Customer Service
 Changing Customer Expectations: Today the customer is more
demanding and more sophisticated than he or she was forty years ago.

 The Increased Importance of Customer Service: With changing

customer expectations, competitors are seeing customer service as a
competitive weapon with which they differentiate their products and
services.

 The need for a Relationship Strategy: To ensure that a customer

service strategy that will create a value preposition for customers
should be formulated, implemented and controlled. It is necessary to
give it a central role and not one that is subsumed in the various
elements of the marketing mix.

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 Importance of Customer Service
 The customer is the kingpin in growth organizations like
commercial banks.
 Only those institutions which work according to his
dictates will flourish. Quality, Consistency and Durability
at low price are the final expectations of a customer.
 Quality will have to be unambiguous and of world class
quality. Quality cannot be of minimum acceptable
standards. Customer responsiveness must be quick and
also competent. Speed, performance and cost will be the
new values “mantra” for success.

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 Key Areas of Customer Service
 Submission of statement of A/Cs to customers
 Updating of savings pass books.
 Teller system efficiency.
 Cleanliness and Upkeep of premises.
 Intermediate Credit for institution cheques/land bills.
 Advance intimation to customers for rewards of Term
Deposits Receipts on maturity.
 Advance for Debit/credit to accounts.
 Punctuality of staff.
 Handling of complaint register.
 Maintain a complaint register.

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 Improvement in Customer Service
Customer’s dissatisfaction in the banking industry is neither recent nor
unknown. This is mainly due to delays in handling transactions across the
counter in collections, update of passbooks, supply of statements of accounts,
etc.
 Failure to provide prompt and efficient customer service is likely to lead to
reduction in the number of customers and they may have to face closure. To
event such situation the following improvements in the customer services may
be carried out:
Personal relations of the bank employee with customers will improve customer
satisfaction. Service with smile should be the motto of every bank employee.
Rapid customer services should be provided through automation of work and
simplification of procedures.

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 Improvement in Customer Service
 Credit Cards Services, Debit Card Services, which should be provided to
the customers, must have a link service with all the banks and branches if
possible to facilitate the customer and the business organizations.
 E-mail service made freely available at all banking centres.
 Foreign Exchange transactions are to be extended to all the branches to
facilitate trade and industries.
 All the customers are not homogenous in their needs. Hence need based
schemes may be introduced.
Totally deregulated interest rate structure should be there.
The banking staff must be trained to understand the customer’s psychology,
so they may provide customer service in a qualified manner.
Educating the customers will increases better utilisation of banking services.

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 Customer Service Strategies
Today, banking sector is seen as a catalyst in economic growth of a country and, lot is
expected from the banking fraternity. The recognition of banking, as a tool for all inclusive
growth by economists, financial planners, reformist etc has made it an important sector in
the Government’s planning of economic growth. The banking sector in India is therefore
witnessing tremendous changes because of political, social and economic changes that are
taking place domestically and internationally.
The concept of banking, which was earlier restricted to accepting of deposits from public for
the purpose of, has also undergone sea change. Today the banking sector is seen as a vehicle
for all inclusive economic growth, social responsibility and equal distribution of national
resources
Today banks are wooing existing customers, prospective customers by offering new
facilities, products, and services in order to retain/increase their base in market. The way the
banking has changed, so has the customer changed. The customer of today is not what he
was yesterday. Today the customer is more knowledgeable, demanding, analytical and aware
of his rights. It is therefore a challenging task before the banking sector to revisit their entire
working modules, up gradation of skills, technology, and policies so that they are competent
to withstand the international competitive environment in future.

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 Factors impacting Customer Service
Human Resources
Products/Services
Deposits
Advances
Other Products/Services
Processes
Delivery Channels
Customer Feedback & Complaints
Grievance Redressed Mechanism
Market Studies

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 Human Resources
Any organization’s success or failure is the result of success or failure of its employees
collectively. Here the employee doesn’t mean only the staff working down the ladder,
but also includes people right up to the top. All the functions in an organization are
undertaken by humans, whether it is selection of staff, development of product,
making software, formulating policies, devising systems, procedures, defining
processes, delivery channels, undertaking market studies etc. Humans may be assisted
by the technology for arriving at the decisions. In all the functions enumerated above,
different departments do the work separately but the same are ultimately linked to
each other to achieve the corporate goal. It is just like gears though rotating
independently, move the entire structure in the desired direction. If any gear
malfunctions, it brings the entire process to halt. Thus the human beings working in an
organization are very important. Handling of humans by humans is a very complex job
also.
The job requirements of HRD are to select, train, develop, deploy, and motivate the
human resources in the organization so as to get optimum results for the organization.

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 Products/Services
Banks do not provide physical goods to its customers.
The products which a bank offers are mostly financial
products and along with these products also provide
other services which are not financial in nature, like safe
deposit vaults, Locker facilities etc. In financial products
there are basically two types of activities, namely deposit
procurement and its deployment profitably. These two
activities constitute more than 80% of banking business
in all the banks.

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 Deposits
 Basic structure of deposit is to attract the customer by offering interest on
funds or some facility in lieu of interest. However depending upon the
needs of different set of customers various types of deposit schemes are
formulated. For example, savings bank accounts are for those who want
short term savings with liquidity and to make regular deposits and
withdrawals etc. Term deposits are for those who want to invest for longer
duration having surplus funds not needed immediately. Some may want
savings to grow gradually by contributing smaller amounts at set
intervals. The ultimate goal of depositor is to keep his money safely in the
bank and be able to use when needed. Likewise there are various
combinations of deposit schemes based on liquidity, returns and safety.

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 Advances
 Banks, in a similar way deploy deposits by lending to
those who need it at a cost in the shape of interest. Here
again the products differ depending upon the need of the
customer. It may be overdraft facility, working capital
finance, term loan, etc for business or personal needs

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 Other Products/Services
 Apart from deposit and advances, banks offer various other
facilities/services to their clients, like remittances, investment
services, fund management, financial advisory services, tax
collections, bill payment services etc. to earn fee based incomes.
The flexibility of banks to adopt changing needs and expectation
of customers and bring out products/ services to suit customers is
an important area in banking services. A robust Research and
Development department which can effectively and efficiently
bring out newer products/ services based on market feel and
futurist visualization of customer preferences is an important
aspect in banking services.

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 Processes
Today’s customer is short of time and feels uncomfortable when the
process involved in getting the product or service is lengthy and
cumbersome. The customer wants very simple processes to get his work
done. The processes for any product or service should be at the
minimum and at one go. Frequent back references and repeated
information and excessive documentation dissatisfy the customer. The
processes devised for getting the services should be very customer
friendly, easy to understand and complete. The forms, applications,
documents should be simple, easy to understand with proper column and
space to write. Sometimes it is observed that the space provided for
writing is very small. The quality of paper, the font size and the language
should be proper.

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 Delivery Channel
Customer satisfaction is also dependent upon the delivery channels
used by banks in providing the services. Today’s customer wants
effortless, efficient, secure, simple and dependable channels of delivery,
whether it is through humans or technology driven channels. To quote
an example, suppose a customer uses internet banking and made a third
party payment. He would like to know what happened to his payment
instructions. He should be able to track the payment on line till it
reaches the beneficiaries account. If this facility is not available, he may
not be comfortable with the internet banking. Another thing mostly
observed in Public sector banks is that their websites are not updated
regularly and navigation is very tardy. The forms/ applications are
scanned and cannot be filled online. The information/ forms etc. are
outdated and not properly tagged

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 Customer Feedback & Complaints
 Feedback from customers is of immense help in formulating products, fine tune services and plug the
loopholes. However most of the time, feed backs are generally not available and public sector banks are
normally not enthused about taking feedback on their services. Rather wherever a customer gives his
feedback (read complaint), it is not taken in right spirit by the bank/ concerned staff. Instead of looking into
the real cause an effort is made to provide alibis or blame the staff. It may be possible that that the procedure
itself is the cause of complaint or it is because of reasons which are not under control of the branch.
 Customers may be of three types. One type of customer never complains and continues the relationship.
Second type of customer does not complain but changes the bank silently and third type of customer
complains. First and second type of customers does not give an opportunity to bank to improve upon its
services. Third type of customer however gives opportunity to the bank to improve the service though he may
not be preferred over the other two types of customers.
 Today no bank is willing to accept complaints from the customers and normally effort is made to somehow
get the complaint withdrawn or resolved without analyzing why the complaint has originated. It becomes very
difficult for field level staff to get the complaint redressed when the cause or reason of complaint is not
because of them. However they are made to beg the customer to give satisfaction letter.
 Each complaint when made may be because of so many factors, not necessarily the fault of the person or
branch against which it is made. It may be due to system lapse, procedural deficiency, inapt technology, poor
in-house work allocation, work flow module etc. Sometimes the complaints are frivolous and made to harass
the person concerned. Though in customer oriented markets, customer is always right but care should be
taken that the staff is also protected from frivolous complainants. Each complaint of the customer should be
properly analyzed, assessed. It may be possible that route cause may be somewhere else which should be
rectified rather than the concerned staff or branch made the scapegoat .
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 Grievance Redressed Mechanism
Improving upon the services is an ongoing process. The essential inputs are
customer feedback, market surveys and the complaints received by an
organization. No organization can say that they have zero customer
complaints. However an organization which has robust mechanism to
redress the complaints and resolve problem of the customer gets
recognition as a customer friendly organization. Accepting the mistake and
offering compensation goes a long way in retaining the customer. Most of
the banks have come out with their compensation policies and customer
grievances cells. However they are mostly on paper and seldom followed
in the spirit in which they are framed. Even where the compensation policy
provides automatic payment of compensation, interest in case of delays
etc., it is seldom paid unless the customer demands it.

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 Market Studies
Market studies are effective tools to study the behavior of
customers and their response to present standard of
services. It also helps to understand future trends and
requirements as needs of the customer’s keeps on
changing with change of times. Market research gives
way to innovations in products and services. Market
studies may be done in-house, or assigned to outside
expert agencies or both depending upon the vision of the
bank.

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 Challenges to Indian Banking
The banking industry in India is undergoing a major
change due to the advancement in Indian economy and
continuous deregulation. These multiple changes
happening in series has a ripple effect on banking
industry which is trying to be organized completely.

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 Types of Challenges
 Deregulation: This continuous deregulation has given
rise to extreme competition with greater autonomy,
operational flexibility, and decontrolled interest rate and
liberalized norms and policies for foreign exchange in
banking market. The deregulation of the industry
coupled with decontrol in the interest rates has led to
entry of a number of players in the banking industry.
Thereby reduced corporate credit off which has resulted
in large number of competitors battling for the same pie.

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 Types of Challenges
 Modified New rules: As a result, the market place has been redefined with new
rules of the game. Banks are transforming to universal banking, adding new
channels with lucrative pricing and freebees to offer. New channels squeezed
spreads, demanding customers’ better service, marketing skills heightened
competition, defined new rules of the game pressure on efficiency. Need for
new orientation diffused customer loyalty. Bank has led to a series of innovative
product offerings catering to various customer segments, specifically retail
credit.
 Efficiency: Excellent efficiencies are required at banker's end to establish a
balance between the commercial and social considerations Bank need to access
low cost funds and simultaneously improve the efficiency and efficacy. Owing
to cut-throat competition in the industry, banks are facing pricing pressure; have
to give thrust on retail assets.

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 Types of Challenges
 Diffused customer loyalty: Attractive offers by MNC
and other nationalized banks, customers have become
more demanding and the loyalties are diffused. Value
added offerings bound customers to change their
preferences and perspective. These are multiple
choices; the wallet share is reduced per bank with
demand on flexibility and customization. Given the
relatively low switching costs; customer retention calls
for customized service and hassle free, flawless service
delivery.

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 Types of Challenges
 Misaligned mindset: These changes are creating challenges, as
employees are made to adapt to changing conditions. The
employees are resisting to change and the seller market mindset is
yet to be changed. These problems coupled with fear of
uncertainty and control orientation. Moreover banking industry is
accepting the latest technology but utilization is far below from
satisfactory level
Competency gap: The competency gap needs to be addressed
simultaneously otherwise there will be missed opportunities.
Placing the right skill at the right place will determine success.
The focus of people will be doing work but not providing
solutions, on escalating problems rather than solving them and on
disposing customers instead of using the opportunity to cross sell.

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 Strategic Options to cope with the challenge
Dominant players in the industry have embarked on a series of strategic and tactical
initiatives to sustain leadership. The major initiatives incorporate:

Focus on ensuring reliable service delivery through Investing on and implementing

right technology.
Leveraging the branch networks and sales structure to mobilize low cost current
and savings deposits.
Making aggressive forays in the retail advances segments of home and personal
loans.
Implementing initiatives involving people, process and technology to reduce the
fixed costs and the cost per transaction.
Focusing on fee based income to compensate foe squeezed spread.
Innovating products to capture customer 'mind share' to begin with and later the
wallet share.
Improving the asset quality.

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