a project report on “service quality of hdfc … quality of hdfc b… · retail banking services...

SERVICE QUALITY OF HDFC BANK

SK EDUCATION AND RESEARCH CENTRE www.skprojectwork.com 1

A PROJECT REPORT

ON

“SERVICE QUALITY OF HDFC BANK”



CONTENTS

1. INTRODUCTION

2. COMPANY PROFILE

3. SERVICE QUALITY IN BANKS

4. RESEARCH OBJECTIVE

5. RESEARCH METHODOLOGY

6. DATA ANALYSIS

7. FINDINGS OF THE REPORT

8. CONCLUSION

9. RECOMMENDATIONS

10. BIBLIOGRAPHY

11. ANNEXURE: QUESTIONNAIRE



INTRODUCTION

Today‟s finicky banking customers will settle for nothing less. The

customer has come to realize somewhat belatedly that he is the king. The

customer‟s choice of one entity over another as his principal bank is

determined by considerations of service quality rather than any other factor.

He wants competitive loan rates but at the same time also wants his loan or

credit card application processed in double quick time. He insists that he be

promptly informed of changes in deposit rates and service charges and he

bristles with „customary rage‟ if his bank is slow to redress any grievance

he may have. He cherishes the convenience of impersonal net banking but

during his occasional visits to the branch he also wants the comfort of

personalized human interactions and facilities that make his banking

experience pleasurable. In short he wants financial house that will more

than just clear his cheque and updates his passbook: he wants a bank that

cares and provides great services.

So does HDFC bank meet these heightened expectations? What are the

customers‟ perceptions of service quality of the banks? Which dimension

of service quality of HDFC bank is performing well? To find out answers to

these questions I undertook a survey of 2 branches of HDFC bank.

A lot of surveys have been done in the past to understand the aspect of

customer satisfaction and to find out the customer friendly banks. My

research is conducted to find out “SERVICE QUALITY OF HDFC BANK”.



HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was

amongst the first to receive an 'in principle' approval from the Reserve

Bank of India (RBI) to set up a bank in the private sector, as part of the

RBI's liberalisation of the Indian Banking Industry in 1994. The bank was

incorporated in August 1994 in the name of 'HDFC Bank Limited', with its

registered office in Mumbai, India. HDFC Bank commenced operations as

a Scheduled Commercial Bank in January 1995.

HDFC Bank comprises of a dynamic and enthusiastic team determined to

accomplish the vision of becoming a World-class Indian bank. HDFC

bank‟s business philosophy is based on our four core values - Customer

Focus, Operational Excellence, Product Leadership and People. They

believe that the ultimate identity and success of their bank will reside in the

exceptional quality of people and their extraordinary efforts. They are

committed to hiring, developing, motivating and retaining the best people in

the industry.

BUSINESS FOCUS

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is

to build sound customer franchises across distinct businesses so as to be

the preferred provider of banking services for target retail and wholesale

customer segments, and to achieve healthy growth in profitability,

consistent with the bank's risk appetite. The bank is committed to maintain

the highest level of ethical standards, professional integrity, corporate

governance and regulatory compliance. HDFC Bank's business philosophy



is based on four core values - Operational Excellence, Customer Focus,

Product Leadership and People.

MISSION STATEMENT OF HDFC BANK

World Class Indian Bank.

Benchmarking against international standards.

To build sound customer franchises across distinct businesses

Best practices in terms of product offerings, technology, service

levels, risk management and audit & compliance

VISION STATEMENT OF HDFC BANK

The HDFC Bank is committed to maintain the highest level of ethical

standards, professional integrity and regulatory compliance. HDFC Bank‟s

business philosophy is based on four core values such as:-

1. Operational excellence. 2. Customer Focus. 3. Product leadership. 4.

People.

The objective of the HDFC Bank is to provide its target market customers a

full range of financial products and banking services, giving the customer a

one-step window for all his/her requirements. The HDFC Bank plus and the

investment advisory services programs have been designed keeping in

mind needs of customers who seeks distinct financial solutions, information

and advice on various investment avenues.



BUSINESS STRATEGY

Increasing market share in India‟s expanding banking

Delivering high quality customer service

Maintaining current high standards for asset quality through

disciplined credit risk management

Develop innovative products and services that attract targeted

customers and address inefficiencies in the Indian financial sector.

DISTRIBUTION NETWORK

HDFC Bank is headquartered in Mumbai. The Bank at present has an

enviable network of over 1229 branches spread over 444 cities across

India. All branches are linked on an online real-time basis. Customers in

over 120 locations are also serviced through Telephone Banking. The

Bank's expansion plans take into account the need to have a presence in

all major industrial and commercial centers where its corporate customers

are located as well as the need to build a strong retail customer base for

both deposits and loan products. Being a clearing/settlement bank to

various leading stock exchanges, the Bank has branches in the centers

where the NSE/BSE has a strong and active member base.

The Bank also has a network of about over 2526 networked ATMs across

these cities. Moreover, HDFC Bank's ATM network can be accessed by all

domestic and international Visa/MasterCard, Visa Electron/Maestro,

Plus/Cirrus and American Express Credit/Charge cardholders.



PROMOTER

HDFC is India's premier housing finance company and enjoys an

impeccable track record in India as well as in international markets. Since

its inception in 1977, the Corporation has maintained a consistent and

healthy growth in its operations to remain a market leader in mortgages. Its

outstanding loan portfolio covers well over a million dwelling units. HDFC

has developed significant expertise in retail mortgage loans to different

market segments and also has a large corporate client base for its housing

related credit facilities. With its experience in the financial markets, a strong

market reputation, large shareholder base and unique consumer franchise,

HDFC was ideally positioned to promote a bank in the Indian environment.

MANAGEMENT

Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with

effect from 6th July 2010 subject to the approval of the Reserve Bank of

India and the shareholders. Mr. Vasudev has been a Director of the Bank

since October 2006. A retired IAS officer, Mr. Vasudev has had an

illustrious career in the civil services and has held several key positions in

India and overseas, including Finance Secretary, Government of India,

Executive Director, World Bank and Government nominee on the Boards of

many companies in the financial sector. The Managing Director, Mr. Aditya

Puri, has been a professional banker for over 25 years, and before joining

HDFC Bank in 1994 was heading Citibank's operations in Malaysia. The

Bank's Board of Directors is composed of eminent individuals with a wealth

of experience in public policy, administration, industry and commercial

banking. Senior executives representing HDFC are also on the Board.



Senior banking professionals with substantial experience in India and

abroad head various businesses and functions and report to the Managing

Director. Given the professional expertise of the management team and the

overall focus on recruiting and retaining the best talent in the industry, the

bank believes that its people are a significant competitive strength.

TECHNOLOGY

HDFC Bank operates in a highly automated environment in terms of

information technology and communication systems. All the bank's

branches have online connectivity, which enables the bank to offer speedy

funds transfer facilities to its customers. Multi-branch access is also

provided to retail customers through the branch network and Automated

Teller Machines (ATMs). The Bank has made substantial efforts and

investments in acquiring the best technology available internationally, to

build the infrastructure for a world class bank. The Bank's business is

supported by scalable and robust systems which ensure that our clients

always get the finest services we offer. The Bank has prioritised its

engagement in technology and the internet as one of its key goals and has

already made significant progress in web-enabling its core businesses. In

each of its businesses, the Bank has succeeded in leveraging its market

position, expertise and technology to create a competitive advantage and

build market share.

QUALITY POLICY SECURITY: The bank provides long term financial security to their policy.

The bank does this by offering life insurance and pension products.



TRUST: The bank appreciates the trust placed by their policy holders in the

bank. Hence, it will aim to manage their investments very carefully and live

up to this trust.

INNOVATION: Recognizing the different needs of our customers, the bank

offers a range of innovative products to meet these needs.

INTEGRITY

CUSTOMER CENTRIC

PEOPLE CARE “ONE FOR ALL AND ALL FOR ONE” TEAM WORK

JOY AND SIMPLICITY

BUSINESS

HDFC Bank offers a wide range of commercial and transactional banking

services and treasury products to wholesale and retail customers. The

bank has three key business segments:

Wholesale Banking Services The Bank's target market ranges from large,

blue-chip manufacturing companies in the Indian corporate to small & mid-

sized corporates and agri-based businesses. For these customers, the

Bank provides a wide range of commercial and transactional banking

services, including working capital finance, trade services, transactional



services, cash management, etc. The bank is also a leading provider of

structured solutions, which combine cash management services with

vendor and distributor finance for facilitating superior supply chain

management for its corporate customers. Based on its superior product

delivery / service levels and strong customer orientation, the Bank has

made significant inroads into the banking consortia of a number of leading

Indian corporates including multinationals, companies from the domestic

business houses and prime public sector companies. It is recognised as a

leading provider of cash management and transactional banking solutions

to corporate customers, mutual funds, stock exchange members and

banks.

Retail Banking Services The objective of the Retail Bank is to provide its

target market customers a full range of financial products and banking

services, giving the customer a one-stop window for all his/her banking

requirements. The products are backed by world-class service and

delivered to customers through the growing branch network, as well as

through alternative delivery channels like ATMs, Phone Banking, Net

Banking and Mobile Banking. The HDFC Bank Preferred program for high

net worth individuals, the HDFC Bank Plus and the Investment Advisory

Services programs have been designed keeping in mind needs of

customers who seek distinct financial solutions, information and advice on

various investment avenues. The Bank also has a wide array of retail loan

products including Auto Loans, Loans against marketable securities,

Personal Loans and Loans for Two-wheelers. It is also a leading provider of

Depository Participant (DP) services for retail customers, providing

customers the facility to hold their investments in electronic form. HDFC



Bank was the first bank in India to launch an International Debit Card in

association with VISA (VISA Electron) and issues the Mastercard Maestro

debit card as well. The Bank launched its credit card business in late 2001.

By March 2010, the bank had a total card base (debit and credit cards) of

over 14 million. The Bank is also one of the leading players in the

“merchant acquiring” business with over 90,000 Point-of-sale (POS)

terminals for debit / credit cards acceptance at merchant establishments.

The Bank is well positioned as a leader in various net based B2C

opportunities including a wide range of internet banking services for Fixed

Deposits, Loans, Bill Payments, etc.

Treasury

Within this business, the bank has three main product areas - Foreign

Exchange and Derivatives, Local Currency Money Market & Debt

Securities, and Equities. With the liberalisation of the financial markets in

India, corporates need more sophisticated risk management information,

advice and product structures. These and fine pricing on various treasury

products are provided through the bank's Treasury team. To comply with

statutory reserve requirements, the bank is required to hold 25% of its

deposits in government securities. The Treasury business is responsible for

managing the returns and market risk on this investment portfolio.



RESEARCH OBJECTIVE

The objective of the study is as follows:

To examine the essential dimensions of service quality i.e. RATER-

Reliability, assurance, tangibles, empathy and responsiveness of

HDFC bank and its effect on customer‟s satisfaction.

To find out the level of perception of the customers from the service

quality offered by the banks.

To know which service quality dimension of the bank is performing

well.

To identify which dimension of service quality needs improvement so

that the quality of service of HDFC banks is enhanced

IMPORTANCE AND SCOPE OF THE STUDY

The study would try to throw some insights into the existing services

provided by the banks, perceptions and the actual service quality of the

bank. The results of the study would be able to recognize the lacunae in

the system and thus provide key areas where improvement is required for

better performance and success ratio. In the days of intense competition,

superior service is the only differentiator left before the banks to attract,

retain and partner with the customers. Superior service quality enables a

firm to differentiate itself from its competition, gain a sustainable

competitive advantage, and enhance efficiency



SCOPE OF STUDY

The scope of this research is to identify the service quality of HDFC bank.

This research is based on primary data and secondary data. This study

only focuses on the dimensions of service quality i.e. RATER. It aims to

understand the skill of the company in the area of service quality that are

performing well and shows those areas which require improvement. The

study was done taking two branches of HDFC bank into consideration. The

survey was restricted to the bank customers in BBSR and Cuttack only.

RESEARCH METHODOLOGY

DATA SOURCE Primary Data:

The primary data was collected by means of a survey. Questionnaires were

prepared and customers of the banks at two branches were approached to

fill up the questionnaires. The questionnaire contains 20 questions which

reflect on the type and quality of services provided by the banks to the

customers. The response of the customer and the is recorded on a grade

scale of strongly disagree, disagree, uncertain, agree and strongly agree

for each question. The filled up information was later analyzed to obtain the

required interpretation and the findings.

Secondary Data:

In order to have a proper understanding of the service quality of bank a

depth study was done from the various sources such as books, a lot of data

is also collected from the official websites of the banks and the articles from

various search engines like Google, yahoo search and answers.com.



RESEARCH DESIGN

The research design is exploratory till identification of service quality

parameters. Later it becomes descriptive when it comes to evaluating

customer perception of service quality of the banks.

Descriptive research, also known as statistical research, describes data

and characteristics about the population or phenomenon being studied.

Descriptive research answers the questions who, what, where, when and

how.

Although the data description is factual, accurate and systematic, the

research cannot describe what caused a situation. Thus, descriptive

research cannot be used to create a causal relationship, where one

variable affects another. In other words, descriptive research can be said to

have a low requirement for internal validity.

The description is used for frequencies, averages and other statistical

calculations. Often the best approach, prior to writing descriptive research,

is to conduct a survey investigation. Qualitative research often has the aim

of description and researchers may follow-up with examinations of why the

observations exist and what the implications of the findings are.

RESEARCH SAMPLE

SAMPLING PLAN:

Since it is not possible to study whole universe, it becomes necessary to

take sample from the universe to know about its characteristics.

Sampling Units: Customers of HDFC bank

Sample Technique: Random Sampling.



Research Instrument: Structured Questionnaire.

Contact Method: Personal Interview.

SAMPLE SIZE:

The work is a case of HDFC Bank, one of the largest bank of Indian

banking industry together representing over 25 per cent of the market

share of Indian banking space. The survey was conducted in the city of

BBSR and Cuttack with two branches of HDFC Bank, with 50 customers as

respondent.

DATA COLLECTION TOOL Data was collected through a structured

questionnaire. Likert scale technique is used. The format of a typical five-

level Likert item is:

1. Strongly disagree

2. Disagree

3. Neither agree nor disagree

4. Agree

5. Strongly agree Likert scaling is a bipolar scaling method, measuring either positive or

negative response to a statement. The questionnaire consists of two parts.

The first part consists of three questions concerning the demographic

information of the respondent such as the name, age, educational

qualifications and income. The second part consisting of 18 questions



exploring the respondent‟s perception about the service quality of HDFC.

For evaluation of service quality of HDFC bank service quality dimension of

reliability, assurance, tangibility, empathy and responsiveness is used in

order to evaluate the actual service quality of HDFC bank.

RESEARCH LIMITATIONS

The study is only for the HDFC Bank confined to a particular location and a

very small sample of respondents. Hence the findings cannot be treated as

representative of the entire banking industry.

The study can also not be generalized for public and private sector banks

of the country.

Respondents may give biased answers for the required data. Some of the

respondents did not like to respond.

Respondents tried to escape some statements by simply answering

“neither agree nor disagree” to most of the statements. This was one of the

most important limitation faced, as it was difficult to analyse and come at a

right conclusion.

In our study we have included 50 customers of bank because of time limit.

FINDINGS OF THE REPORT

The Reliability dimension of service quality is better as compared to

empathy and tangibility. Still the score is low. For most services,

customer‟s perceptions of whether the service has been performed



correctly, and not provider-established criteria, are the major

determinants of reliability. Customers of the bank hesitate to rely on

the bank. Whenever they have a problem, the bank shows sincere

interest in solving it but the services are not performed by a certain

time as promised. The employees should take this problem seriously

and take steps to remove this.

As score for Assurance is at second place after responsiveness, so

the customers of HDFC bank are very confident and feel safe while

transacting with the bank. Moreover the employees of the bank have

proved to be trustworthy. Employees are also educated enough to

answer all the questions.

The score of Tangibility dimension of service quality of HDFC bank

is the lowest. The service quality factor tangible is defined by whether

the physical facilities and materials associated with the service are

visually appealing at the bank. These are all factors that customers

notice before or upon entering the bank. Customer expectations

regarding visual appealing of HDFC is very high. From my study I

found that Physical facilities and modern looking equipment are not

sufficient in HDFC bank. Respondents were uncertain about the neat

appearance of the reception desk employees. So they should work

on that and try to fulfill the gap.

According to my findings, the score of Empathy is not satisfactory but

not unsatisfactory also. HDFC bank is unable to give individual

attention to its customers and is unable to understand specific needs

of its customers. But still bank has taken steps to satisfy its



customers by keeping operating hours convenient to its customers

and keeping their interest best at heart.

In HDFC bank, the score of Responsiveness is highest so they are

focusing on prompt service, employees are willing to help the

customers and say the exact time when the services will be

performed. Employees at bank give their customers first preference

and are always ready to help them. Overall HDFC bank‟s

responsiveness dimension of service quality is the highest.

According to the customer perception, HDFC bank is highly

responsive. Customers are assured while transacting with the bank.

The reliability dimension is lower than the first to dimension. They feel

that the bank is unable to give them individual attention and its

equipments are not modern and sufficient for the bank.

There is not much gap between all the dimensions, this shows that

HDFC BANK is a better service provider in all the dimensions i.e.

reliability, assurance, tangibility, responsiveness and empathy. As a

result of which, the customers are satisfied with the service offered by

HDFC bank.

CONCLUSION

Based on the study conducted it can be concluded that responsiveness,

assurance and reliability are the critical dimensions of service quality of

HDFC bank and they are directly related to overall service quality. The

factors that may delight customers tend to be concerned more with the



intangible nature of the service, commitment, attentiveness, friendliness,

care, and courtesy.

The employees give prompt services, always are ready to answer the

questions and are trustworthy. The main sources of dissatisfaction appear

to be cleanliness, up to date technology modern equipments, and neatly

dressed up employees. The Tangibility dimension of service quality of

HDFC bank is highly disappointing and serious steps are needed to be

taken to enhance this dimension. Customers of the bank are dissatisfied

with the empathy dimension. To satisfy these customers, the management

can take some attempts, noted earlier as recommendations.

The study brings about the areas which require urgent attention of the

employees, the management, and the policy makers of the industry. These

are areas in which customers are hugely dissatisfied with the services of

the banks against their expectation. This high degree of dissatisfaction

resulting from the services received clearly questions the design of services

or subsequent response of the bank employees. These limitations are too

serious to be avoided as these question the front-line people dealing with

the customers and the approach of the management in taking customers

seriously.

The management should understand the benefits of service quality. It

include increased customer satisfaction, improved customer retention,

positive word of mouth, reduced staff turnover, decreased operating costs,

enlarged market share, increased profitability, and improved financial



performance. In the days of intense competition, superior service is the

only differentiator left before the banks to attract, retain and partner with the

customers. Superior service quality enables a firm to differentiate itself from

its competition, gain a sustainable competitive advantage, and enhance

efficiency. Thus, improving service quality leads to the customer

satisfaction and, ultimately, to customer loyalty.

BIBLIOGRAPHY

References

Kotler Philip, marketing management, (Pearson education, 12th edition)

Malhotra K. Naresh, marketing research (An applied orientation), Research

design,

(Prentice hall of India pvt. 5th edition)

Zeithmal V. A., Grembler D.D., Bitner M.j., and Pandit A.: Service

Marketing Integrated customer Focus across the Firm” (4th Edition)

M.K. Rampal : Service Marketing

Websites

www.google.com

www.hdfcbank.com

www.hdfcindia.com

www.wikipedia.org

www.marketresearch.com

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a project report on “service quality of hdfc … quality of hdfc b… · retail banking services...

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