Research Paper
Management
E-ISSN No : 2454-9916 | Volume : 2 | Issue : 8 | August 2016
FACTORS THAT DETERMINE CUSTOMER SATISFACTION IN BANKING INSTITUTIONS: EVIDENCE FROM INDIAN BANKING INDUSTRY Amina I. Nakhuda Asst.Prof.,UCCC, SPBCBA & UACCAIT, Surat. ABSTRACT The banking industry like many other financial service industries is facing a rapidly changing market, new technologies, economic uncertainties, fierce competition and more demanding customers and the changing climate has presented an unprecedented set of challenges. Banking is a customer oriented services industry, therefore, the customer is the focus and customer service is the differentiating factors. In the backdrop of all these developments the investigator makes an attempt to study the determinants of customer satisfaction in Indian banks. For this study, descriptive research design is used where the data is collected through the questionnaire. The information is gathered from the different customers of the two public sector banks, viz., State Bank of India and Bank of Baroda and two private sector banks viz. ICICI & HDFC banks of India located at four metro city viz. Mumbai, Calcutta, Delhi & Chennai. 100 bank respondents from each bank were contacted personally in order to seek fair responses. The collected data were analysed by SPSS package. Introduction The Financial Services is the backbone of service sector. This is important not only for the banking sector but for the Indian economy as a whole. This is so because banking is a catalyst and life of modern trade and commerce. It is an integral part of all the businesses and social activities. This rapid transformation of services in the banking system has led to the evolution of a highly competitive and complex market where there is a continuous refinement of services. Hence the increased role of banking in India's economic development on the one hand and the changes in the business climate on the other has put increased pressure on them. These changes are compelling the banks to reorganize themselves in order to cope with the present conditions. Now, the Financial Institutions are trying to provide all the services at the customer's doorstep. The customer has become the focal point either to develop or maintain stability in the business. Every engagement with the customer is an opportunity to either develop or destroy a customer's faith in the Bank. The expectations of the customers have also increased many folds. Intense competition among the banks has redefined the concept of the entire banking system. The banks are looking for new ways not only to attract but also to retain the customers and gain competitive advantage over their competitors. The banks like other business organizations are deploying innovative sales techniques and advanced marketing tools to gain supremacy. The main driver of this change is changing customer needs and expectations. Satisfaction is an overall customer attitude or behavior towards a service provider, or an emotional reaction towards the difference between what customers expect and what they receive, regarding the fulfillment of some desire, need or goal. In this paper, the main contention of the researcher is to highlight the factors determining customer satisfaction through factor analysis. Research Methodology Objectives of the study: The main objective of this study is to study the factors that underline customers' satisfaction of the banks operating in India. Sample Selection Out of 22 public sector banks & 19 private sector bank listed on BSE in India, The researcher has selected top 2 banks each from public and private sector banks on the basis of market capitalization as on 29/09/2014. Nature of Data Used and Sources of Data: Primary data are used for the study. The data are collected through a structured questionnaire, which was distributed to the customers of respective banks of four cities. These questionnaires were filled up directly from respondents visiting bank. Sample Design: Convenient sampling method is used to collect the data. A sample size of total four hundred customers (200 each from public sector & private sector) are taken from four metro cities (Viz. Delhi, Chennai, Calcutta and Mumbai) of India. Area of Study: The area of study is limited to four metro cities of India and top two public sector & private sector banks of India. The study can be extended for customers across India & Foreign banks.
Review of Literature: Customer satisfaction has been gaining increasing attention from the researchers and practitioners as a recognized field of scholarly study and is a fundamental tool used by financial institutions for enhancing customer loyalty and ultimately organizational performance and profitability. The importance of customer satisfaction cannot be dismissed because happy customers are like free advertising. Many of us have heard of the current trend for businesses to become highly customer-centric, which is to put the customer at the centre of business in terms of strategies, actions and processes. S.Vijay Anand and Dr. M. Selvaraj (2010) found that there is no significant relationship between the demographic variables and customer satisfaction except the choice of the bank and the status of residential area. Mesay Sata Shanka(2012) and Dr. Snehalkumar H Mistry(2013) studied bank service quality, customer satisfaction and loyalty. The research proves that empathy and Responsiveness plays the most important role in customer satisfaction level followed by tangibility, assurance, and finally the bank reliability. Sunayna (2013) studied Service quality versus customer satisfaction in Banking Sector. The findings suggest that improved service quality should be adopted to give maximum satisfaction to the customer. Akanksha Verma (2013) found that the public banks were ahead of the private banks in attracting customers because of good personal relationship with customers. Discussion: Table 1 Classification of Respondents according to Gender Gender of the Respondent
Type of Bank Public
Private
Frequency Percentage Frequency Percentage Male Female
145 55
72.50% 27.50%
161 39
80.50% 19.50%
Total
200
100%
200
100%
From the above table we can clearly say that out of 200 respondents of Public bank, 72.5% are male, and 27.5% are female. Same way we can see that of 200 respondents of Private bank, 80.5% are male, and 19.5% are female. Table 2 Classification of Respondents according to Age Age of the Respondent
Below 30 years 30 to 60 years
Type of Bank Public
Private
Frequency
Percentage
Frequency
Percentage
75 99
37.50% 49.50%
52 122
26.00% 61.00%
Above 60 years
26
13%
26
13%
Total
200
100%
200
100%
From the above table we can say that out of 200 respondents of Public bank, age of 49.5% of respondents is between 30 to 60, age of 37.5% of respondents is less than 30, and age of 13% of respondents is more than 60. Same way in private
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