“A STUDY ON CUSTOMER PERCEPTION ON RETAIL BANKING”

Submitted By N.SUNILKUMAR

(Enroll No: 8NBBP013)

Under the esteemed guidance ofUnder the esteemed guidance of

Mr.NARASAIAHMr.NARASAIAH

ADAM SMITH INSTITUTE OF MANAGEMENTHYDERABAD

TABLE OF CONTENTS

1. INTRODUCTION.

Brief overview of research planned Nature of research Objectives Expected outcome/results

2. LITERATURE REVIEW

Complete survey of previous work How guided in the present research The reliance, reliability and validity to the present study Identify gaps in the existing literature Justify how the present work adds value to the field of knowledge and

Research

3. PROGRESS REPORT

Research work done Accomplishment of objectives till date Evaluation of research objectives Deviations/Gaps Mid course correction

4. REFERENCE.

All references /Bibliography Should be in international standards Book references and web sites should be in Alphabetical order

ABOUT BANKING

Origin of Banking

Banks are among the main participants of the financial system in India. Banking offers

several facilities and opportunities. Banks in India were started on the British pattern in the

beginning of the 19thcentury. The first half of the 19thcentury, The East India Company

established 3 banks The Bank of Bengal, The Bank of Bombay and The Bank of Madras. These

three banks were known as Presidency Banks. In 1920 these three banks were amalgamated and

The Imperial Bank of India was formed. In those days, all the banks were joint stock banks and a

large number of them were small and weak.

At the time of the 2ndworld war about 1500 joint stock banks were operating in India out

of which 1400 were nonscheduled banks. Bad and dishonest management managed quiet a quiet

a few of them and there were a number of bank failures. Hence the government had to step in

and the Banking Company’s Act (subsequently named as the Banking Regulation Act) was

enacted which led to the elimination of the weak banks that were not in a position to fulfil the

various requirements of the Act. In order to strengthen their weak units and review public

confidence in the banking system, a new section 45 was enacted in the Banking Regulation Act

in the year 1960, empowering the Government of India to compulsory amalgamate weak units

with the stronger ones on the recommendation of the RBI. Today banks are broadly classified

into 2 groups namely— (a) Scheduled banks. (b) Non-Scheduled banks.

INTRODUCTION ABOUT RETAIL BANKING:

Retail banking is, however, quite broad in nature - it refers to the dealing of commercial

banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed,

current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing,

auto, and educational) on the assets side, are the more important of the products offered by

banks. Related ancillary services include credit cards, or depository services.

The issue of retail banking is extremely important and topical. Across the globe, retail

lending has been a spectacular innovation in the commercial banking sector in recent years. The

growth of retail lending, especially, in emerging economies, is attributable to the rapid advances

in information technology, the evolving macroeconomic environment, financial market reform,

and several micro-level demand and supply side factors.

India too experienced a surge in retail banking. There are various pointers towards this.

Retail loan is estimated to have accounted for nearly one-fifth of all bank credit. Housing sector

is experiencing a boom in its credit. The retail loan market has decisively got transformed from a

sellers’ market to a buyers’ market. All these emphasise the momentum that retail banking is

experiencing in the Indian economy in recent years.

Retail banking refers to provision of banking services to individuals and small business

where the financial institutions are dealing with large number of low value transactions. This is

in contrast to wholesale banking where the customers are large, often multinational companies,

governments and government enterprise, and the financial institution deal in small numbers of

high value transactions.

The concept is not new to banks but is now viewed as an important and attractive market

segment that offers opportunities for growth and profits. Today’s retail banking sector is

characterized by three basic characteristics:

Multiple products (deposits, credit cards, insurance, investments and securities)

Multiple channels of distribution (call center, branch, and internet)

Multiple customer groups (consumer, small business, and corporate).

OBJECTIVES

To study on the Customer Satisfaction level on retail banking

To know the technical advancement benefits for customers.

To understand the operations and modalities of Retail banking

To study on the Impact of the Banking Crisis and the Flight to Quality

To study and analyze the concept of Customer Relationship Management of

banks in general.

To predict the future position of Retail banking in India

NATURE OF THE STUDY

“Retail banking is typical mass-market banking where individual customers use local

branches of larger commercial banks. Services offered include: savings and checking accounts,

mortgages, personal loans, debit cards, credit cards, and so”

The Retail Banking environment today is changing fast .The changing customer

demographics demands to create a differentiated application based on scalable technology,

improved service and banking convenience. Higher penetration of technology and increase in

global literacy levels has set up the expectations of the customer higher than never before.

Increasing use of modern technology has further enhanced reach and accessibility.

The market today gives us a challenge to provide multiple and innovative contemporary

services to the customer through a consolidated window as so to ensure that the bank’s customer

gets “Uniformity and Consistency” of service delivery across time and at every touch point

across all channels. The pace of innovation is accelerating and security threat has become prime

of all electronic transactions. High cost structure rendering mass-market servicing is

prohibitively expensive.

Present day tech-savvy bankers are now more looking at reduction in their operating

costs by adopting scalable and secure technology thereby reducing the response time to their

customers so as to improve their client base and economies of scale.

The solution lies to market demands and challenges lies in innovation of new offering with

minimum dependence on branches ' a multi-channel bank and to eliminate the disadvantage of an

inadequate branch network. Generation of leads to cross sell and creating additional revenues

with outmost customer satisfaction has become focal point worldwide for the success of a Bank.

RESEARCH OBJECTIVE

Top of mind awareness of consumers for banks offering various retail products.

Factors influencing their purchase decision.

To study the comparative influence of various mediums of advertisements in creating

awareness amongst the consumers.

To find the immediate competitors in the minds of consumer for every retail product.

RESEARCH METHODOLOGY

An exploratory research was conducted in order the study the consumer perception about

various banks offering retail products and the banks they opt for.

Sample Size

A random sample of 100 were administered with the questionnaire and responses

collected.

Research Area

The research was carried out at Hyderabad.

Respondents’ profile

Data was collected from respondents across all age and income groups. Data relating to age

was collected. This segmentation helped us to gain insights into the perception and preferences

across all age groups. Based on the nature of retail banking products age groups were identified

and classified as follows:

Majority of the respondents

belonged to the age group of 25 –

40 years.

The reason associated with it is

that this group is the highest user

of retail offerings.

Respondents earning Rs. 8000-

15000 constitute the major chunk

of the respondents using retail

product.

This income group qualifies almost

all eligibility criteria of retail

offerings.

Age Profile

15%

45%

23%

17%18-25 yrs

25-40 yrs

40-55 yrs

55 yrs & above

Income Profile

15%

15%

27%

30%

13% Non- earning

< 5000

5000-80008000-15000

> 15000

Retail products being also designed

for students and retired people, they

were considered for the survey.

Salaried and businessmen being the

major users of retail users of retail

products.

Data Collection Tools

Data was collected using Questionnaires. The Questionnaire consisted of suitable

combination of Rating Scale, Ranking Scale and open ended Questions in the level of

importance.

An in depth interview was also conducted while administering the questionnaire.

Sources of Data

Questionnaires were administered to people with experience of any retail offering, currently

using or used in the past.

Secondary Sources: Data was collected from the various websites from the internet as well

as Journals of Marketing.

Brief overview of research planned:

Retail Banking In India 2008

Description: The annual growth in bank credit to the commercial sector is at 25.4% as on March

31, 2007 and was lower than 27.2% against previous year. Till 2010, retail banking is expected

to grow at a CAGR of 28% to touch a figure of INR9,700 billion. This requires expansion and

diversification of retail product portfolio, better penetration and faster service mechanism.

The report on Retail Banking Industry in India covers industry segments like housing

loan, auto loan, personal loan, education loan, consumer durable loan, credit card and regulatory

frame work for retail banks is also discussed. The report gives retail banking industry’s current

Proffessional Profile

7

29

15

9StudentsSalariedBusinessmenRetired

performance and future outlook. Total 22 major retail banks in India are covered in terms of their

performance, strategy and outlook.

Indian Retail Banking – 2006

Description: Indian Retail Banking continues to redefine the credit growth in the country. It grew

by a whopping 44.4% in 2005-06 to touch Rs3,538 billion. This leap was despite the increase in

risk weight by RBI for housing and real estate loans during August, 2005. Housing, which

constitutes more than 52% of all retail loans, grew at a robust rate of 44.35% during 2005-06. In

order to help banks in India to understand the market and competition and plan future strategies,

we have just come out with an Industry Insight on Indian Retail banking – 2006 edition. This

report analyses the retail banking market and its segments in India and presents the key trends,

along with issues and challenges. The report also paints a future outlook for the market. Besides

it profiles 21 major players in the retail banking space and their strategies. This report will be of

immense use to all banks in India to review and formulate their strategies in the retail space. It

primarily covers analysis of the present status, current trends, major issues & challenges in the

growth of the retail banking sector.

Key Highlights Covered

During 2006-07, gross credit extended by Indian commercial banks grew by 34.83% to

touch INR19, 495 billion.

Retail credit constitutes about 25% of the total credit and has grown by 28.0% to INR4,

218.3 Billion

The annual growth in bank credit to the commercial sector is at 25.4% as on March 31,

2007 and was lower than 27.2% against previous year.

Till 2010, retail banking is expected to grow at a CAGR of 28% to touch a figure of

INR9, 700 billion

Key Findings of the Report

Pension fund industry in India grew at a CAGR of 122.44% from 1999-00 to 2006-07.

In terms of ownership, debit cards are more in number than credit cards but in terms of

transactions, use of credit cards is more prevalent than debit cards.

The ATM outlets in India increased at a rate of 28.09% from March 2006 to March 2007.

Outstanding Education loan segment is expected to grow at 36.41% till March 2009 from

March 2007 onwards to cross Rs. 27000 Crore Mark.

Two-wheeler finance industry is projected to forge ahead at a CAGR of 14.21% till 2009-

10 from 2005-06.

Indian Mutual Fund industry witnessed a growth of 49.88% from May 2006 to May

2007, and a higher 215.61% growth was recorded in closed ended schemes.

Increasing number of millionaires in India is increasing the scope of Wealth Management

Services.

Bankable households in India are estimated to move up at a CAGR of 28.10% during

2007-2011

Key Players Analyzed

This section covers the key facts about the major players (including Public, Private, and Foreign

sector) in the Indian Banking Industry, including

Bank of Baroda,

State Bank of India,

Canara Bank,

Punjab National Bank,

HDFC Bank,

ICICI Bank,

Kotak Mahindra Bank,

Citibank,

Standard Chartered Bank,

HSBC Bank,

ABN AMRO Bank, and

EXPECTED OUTCOMES FOR THE PROPOSED STUDY:

This study would enrich my knowledge to look into the modalities of operations of

Key products analyzed in this report include:

Indian retail credit scenario

Housing finance

Auto finance

Consumer Durable loan

educational Loan

Other personal loans

Credit Cards &

Banc assurance.

THE STUDY WOULD FURTHER ENABLE ME TO LEARN:

On line service provided by banks

The level of awareness about various products of banks

The satisfactory levels of existing customers

The location advantages to customer

These are the some of the expected outcomes out of these over-all research programs i

will come to that.

LITERATURE REVIEW

Background:

Our perception is an approximation of reality. Our brain attempts to make sense out of the

stimuli to which we are exposed. This works well when we are about to perceive familiar facts.

However, our perception is sometimes “off” when we are not clear about concepts. Perception is

a process by which an individual select, organize & Interpret stimuli in a meaningful picture of

the world Also, we can describe as “how we see the world around us” Perception is the process

of selecting, organizing, & Interpreting or attaching meaning to events happening in environment

The Concept of Perception

Perception is one of the objects studied by the science of consumer behaviour. Analyzing

the works of scientists studying consumer behaviour, it is possible to make a conclusion that

perception is presented as one of personal factors, determining consumer behaviour. Personal

factors mean the closest environment of a human, including everything what is inside the person,

his head and soul, characterizing him as a personality. Using his sensory receptors and being

influenced by external factors, the person receives information, accepts and adapts it, forms his

personal attitude, opinion, and motive, which can be defined as factors that will influence his

further activity and behaviour. Perception within this context is considered as one of the

principal personal factors, conditioning the nature and direction of remaining variables.

Customer Perception

Customer perception is an important component of our relationship with our customers.

Customer satisfaction is a mental state which results from the customer’s comparison of

expectations prior to a purchase with performance perceptions after a purchase. A customer may

make such comparisons for each part of an offer called ‘‘domain-specific satisfaction’’ or for the

offer in total called ‘‘global satisfaction’’.

Moreover, this mental state, which we view as a cognitive judgment, is conceived of as

falling somewhere on a bipolar continuum bounded at the lower end by a low level of

satisfaction where expectations exceed performance perceptions and at the higher end by a high

level of satisfaction where performance perceptions exceed expectations.

Customer Perception on Service:

These characteristics of service also make service unique and different from goods as

Described below

1. Intangibility. Unlike manufactured goods that are tangible, a service is intangible. The

Products from service are purely a performance. The consumer cannot see, taste, smell, hear, feel

or touch the product before it purchased

2. Heterogeneity. A service is difficult to produce consistently and exactly over time. Service

performance varies from producer to producer, from customer to customer, and from time to

time. This characteristic of service makes it difficult to standardize the quality of the service

Inseparability. In service industries, usually the producer performs the service at the time the

consumption of the service takes place. Therefore, it is difficult for the producer to hide mistakes

or quality shortfalls of the service. In comparison the goods producers, have a buffer between

production and customers’ consumption

4. Perishability. Unlike manufactured goods, services cannot be stored for later consumption.

This makes it impossible to have a quality check before the producers send it to the customers.

The service providers then only have one path, to provide service right the first time and every

time.

5. Non-returnable. A service is not returnable, unlike products. On the other hand, in many

services, customers maybe fully refunded if the service is not satisfactory.

6. Needs-match uncertainty. Service attributes are more uncertain than the product. This

Yield to higher variance of making a match between perceived needs and service is greater than

perceived need and product match.

7. Interpersonal. Service tends to be more interpersonal than products. For example, compare

buying a vacuum cleaner to contracting for the cleaning of a carpet. While customers will judge

the quality of the vacuum cleaner by how clean the carpet is, customers will tend to judge the

quality of the carpet cleaning service on both the appearance of the carpet and the attitude of the

technician.

8. Personal. Customers often view services to be more personal than products. For example, a

customer may perceive the service of her car (balancing the tires) as more personal than

purchasing new tires. If the same customer has problems later with the tires, the defect in the

tires would be less personal than if the tires were never balanced.

9. Psychic. Even though the food at a restaurant might not be as delicious as other famous

restaurants., the customers will recognize the restaurant and tend to be satisfactions if the service

of the restaurant is excellent. Another example is when a flight is delayed, and people tend to be

upset with this poor service . However, if the gate agent is very helpful and friendly, people tend

to still be pleased with the service (Groth, & Dye,1999). Like other industries, banking and

financial services companies have reached the conclusion that the relationship with the customer

should not (metaphorically and literally) end at the bank door. Customer access after the

transaction adds value to the transaction.

Features of Banking:

1. Dealing in Money:

The banks accept deposits from the public and advancing them as loans to the needy people. The

deposits may be of different types- Current, Fixed, Savings, etc. accounts. The deposits are

accepted on various terms and conditions.

2. Deposits must be withdrawable:

The deposits (other than fixed deposits) made by the public can be withdrawable by cheques,

draft or otherwise, i.e., the bank issue and pay cheque. The deposits are usually withdrawable on

demand.

3. Dealing with Credit:

The banks are the institutions that can create Credit i.e., creation of additional money for lending.

Thus, ‘Creation of Credit’ is the unique feature of banking.

4. Commercial in Nature:

Since all the banking functions are carried on with the aim of making profit, it is regarded as a

commercial institution.

5. Nature of Agent:

Besides the basic functions of accepting deposit and lending money as loans, banks possess the

character of an agent because of its various agency services.

Measuring Customer Perception in the Banking Industry:

Banking operations are becoming increasingly customer dictated. The demand for

'banking super malls' offering one-stop integrated financial services is well on the rise. The

ability of banks to offer clients access to several markets for different classes of financial

instruments has become a valuable competitive edge. Convergence in the industry to cater to the

changing demographic expectations is now more than evident. Banc assurance and other forms

of cross selling and strategic alliances will soon alter the business dynamics of banks and fuel the

process of consolidation for increased scope of business and revenue. The thrust on farm sector,

health sector and services offers several investment linkages. In short, the domestic economy is

an increasing pie which offers extensive economies of scale that only large banks will be in a

position to tap. With the phenomenal increase in the country's population and the increased

demand for banking services; speed, service quality and customer satisfaction are going to be

key differentiators for each bank's future success. Thus it is imperative for banks to get useful

feedback on their actual response time and customer service quality aspects of retail banking,

which in turn will help them take positive steps to maintain a competitive edge. The working of

the customer's mind is a mystery which is difficult to solve and understanding the nuances of

what perception the customer has to attain satisfaction is, a challenging task.

This exercise in the context of the banking industry will give us an insight into the

parameters of customer satisfaction and their measurement. This vital information will help us to

build satisfaction amongst the customers and customer loyalty in the long run which is an

integral part of any business. The customer's requirements must be translated and quantified into

measurable targets. This provides an easy way to monitor improvements, and deciding upon the

attributes that need to be concentrated on in order to improve customer satisfaction. We can

recognize where we need to make changes to create improvements and determine if these

changes, after implemented, have led to increased customer satisfaction.

The Need to Measure Customer Perception:

Satisfied customers are central to optimal performance and financial returns. In many places

in the world, business organizations have been elevating the role of the customer to that of a key

stakeholder over the past twenty years. Customers are viewed as a group whose satisfaction with

the enterprise must be incorporated in strategic planning efforts. Forward-looking companies are

finding value in directly measuring and tracking customer satisfaction as an important strategic

success indicator. Evidence is mounting that placing a high priority on customer satisfaction is

critical to improved organizational performance in a global marketplace.

With better understanding of customers' perceptions, companies can determine the actions

required to meet the customers' needs. They can identify their own strengths and weaknesses,

where they stand in comparison to their competitors, chart out path future progress and

improvement. Customer satisfaction measurement helps to promote an increased focus on

customer outcomes and stimulate improvements in the work practices and processes used within

the company. When buyers are powerful, the health and strength of the company's relationship

with its customers – its most critical economic asset – is its best predictor of the future.

Assets on the balance sheet – basically assets of production – are good predictors only when

buyers are weak. So it is no wonder that the relationship between those assets and future income

is becoming more and more tenuous. As buyers become empowered, sellers have no choice but

to adapt. Focusing on competition has its place, but with buyer power on the rise, it is more

important to pay attention to the customer. Customer satisfaction is quite a complex issue and

there is a lot of debate and confusion about what exactly is required and how to go about it. This

article is an attempt to review the necessary requirements, and discuss the steps that need to be

taken in order to measure and track customer satisfaction.

Need and Importance of the Study

One of the most important developments in banking sector has been the growth of the

financial industry over the past two decades. The benefits of financial industry can be seen in the

form of large scale industrial development, increased employment opportunities, higher turnover

as well as revenue generation to the government and also increase in export of goods and

services.

Banking industry in India has undergone a process of evolution with the package of time.

To count or to depend on a bank merely by the function it is supposed to perform would be

insufficient in the world that we live today.

Investments play a vital role on the part of the customers. A real investor does not simply

throw his or her money random investment; he or she performs through analysis and commits

capital only when there is a reasonable expectation of profit. Hence they both are interdependent

i.e., it all depends upon the customer. “Customer knows what to expect”. Today banks have a

relationship management approach with their clients. Banks are offering more customized

solutions to their clients. The need of the hour is not only to introduce more value added products

for which the customers are willing to pay here but also to innovate & enter new segments like

small business & periodical finance.

Everything resolves around the customer and banks via with their innovative and quality

products to suit their clients. Today the bottom line for any customer is convenience

understanding and evaluating the customers perception on the service & products of a bank has

without doubt become a need, which propels the body to structure itself for better performance

and service.

Thus delivering high quality service to clients is just as important as delivering

performance that meets or exceeds their expectations. It is in this context that a study is

necessary to know about awareness levels on the services provided by the public and private

sector banks namely, Public Sector Banks : State Bank of India, Indian Bank and Indian

Overseas Bank and Private Sector Banks : ICICI, HDFC and IndusInd Bank and the customer

perception towards the banks.

Objectives

To evaluate the different factors considered by the investors while making investments.

To study the services provided by Private Sector and Public Sector banks and the

performance of it.

To analyze the service facilities those are being effectively utilized by thecustomers.

To ascertain suggestions from the investors for further improvement of the institutions.

Methodology

The data required for this study has been collected from the primary sources. Initially a ‘Pilot

Study’ will be conducted for testing the questionnaires. The pilot survey will help in making

certain improvement in the final questionnaire. A structured questionnaire shall then be prepared

for the respondents in order to collect primary data. The questionnaire is designed based on the

objectives.

Source of Data

The researcher proposed to gather the required data through primary data and secondary data.

Primary data are those which are collected afresh and for the first time, and thus happen to be

original in character. It will be collected through questionnaires method. Secondary data is

collected from the possible records like books, magazines, periodicals and websites.

Universe

The proposed study is to find out the services rendered by the Public and Private Sector Banks to

their Customers. The population is uncountable and is considered as infinite. However, the

proposed sample for the study from Private Sector Banks and Public Sector Banks are 300

respectively.

Sampling Method

The universe of the study is the account holders of Public and Private Sector banks and the

sampling technique adopted will be convenient sampling method.

Statistical Tools and Techniques

The collected data have been analyzed with the help of tools like Gap Analysis and Factor

Analysis

Findings from Factor Analysis:

It is concluded that the respondents’ expectation are significantly more than they

derive on the various aspects relating to facilities in SBI.

It is concluded that the respondents’ expectation are significantly more than they

derive on the various aspects of Indian Overseas bank.

It is concluded that the respondents’ expectation are significantly more than they

derive on the various aspects of Indian bank.

It is concluded that the respondents’ expectation are significantly more than they

derive on the various aspects relating to facilities in ICICI bank.

It is concluded that the respondents’ expectation are significantly more than they

derive on the various aspects relating to facilities in HDFC bank.

It is concluded that the respondents’ expectation are significantly more than they

derive on the various aspects relating to various facilities in Indusind bank.

SUGGESTIONS, DISCUSSIONS AND CONCLUSIONS

The following suggestions are the outcome of the research and applications of these

Every bank should take precautions to keep customers experience safe. It should take

continued efforts to safeguard online banking transactions.

All internet banks should provide close interaction between bank service and web

based e-commerce and even service through direct electronic payments.

The bank should provide more convenient international transactions which means

internet along with general trends.

Elimination of geographical boundaries will help free access of internet banking.

The bank should provide more customer awareness and need of transparency in

their dealings.

All banks should provide digital certification procedure as it helps the customers

data that they receive from the correct system.

The banks should come up with innovative ways of service at their door steps this may be

a costly affair but will surely give positive results in the long run.

The banks should take the initiative of training the advisors about the new schemes from

time to time which also makes the advisors connected to the bank.

The banks should also emphasis on the monitoring of EMI which directly relates

to the returns of a loan amount. The company should come up with proper fixed

deposit plans at this point of time where the market is highly volatile and the

investors become very cautious at this level.

The banks should use brand ambassadors for example the CEO’s of major

Companies where the company allocate the funds. This will probably ensure

proper results.

The banks should focus on the advertising strategy and also the marketing of the

bank product.

The bank doesn’t have enough tax saving plans or appropriate plans for tax so

which they should come up with.

PROGRESS REPORT:

The reliance, reliability and validity to the present study:

Indian retail banking sector which mainly depends upon transactions directly with

consumers savings and lending, registered a decline in share of 5.02 per cent during the first

quarter of FY ’10 as compared to the corresponding period last year as per analyses of thirty

public or private Indian banks by the Assocham Financial Pulse.

The Retail Banking in India covers segments like current account, saving account,

housing loan, auto loan, personal loan, education loan, consumer durable loan, credit card and

debit card etc. The share of retail banking in total income stood at 41.06 per cent during Q1 FY

’10 and was lower than the share of 46.08 per cent in the corresponding period last year. The

total income of banking sector increased about 24.3 per cent during Q1 FY ’10, whereas the

income from retail banking registered a growth of 6.03 per cent during the period.

Due to the global meltdown, Indian government took major steps in monitory policy and

cut the banking interest rate for lending like housing and auto loans which impacted the revenue

of Indian retail banking segment. Other reason behind the decline in retail revenue may be due to

higher collateral charged by the banks for retail loans.The analyses of fifteen private and fifteen

public banks show that the private banks are performing better than the public banks in terms of

their revenue from retail segment. The private and public banks have registered about 54.27 per

cent and 35.47 per cent share in retail banking during Q1 FY ’10 respectively.

In the context of banking sector, the public sector banks registered a growth of 28.96 per

cent in total income and 9.92 per cent in retail banking during the first quarter of FY ’10. While

the share of retail banking in public banks declined 6.14 per cent during the period from 41.61

per cent in Q1 FY ’09 to 35.47 per cent in Q1 FY ’10. However the private banks registered only

13.52 per cent growth in total income during the period and show a minimal decline of 0.16 per

cent in retail banking. The share of retail banking in private banks declined by 7.44 percentage

points during the period from 61.71 per cent in Q1 FY ’09 to 54.27 per cent in Q1 FY ’10.

Public Bank :

The analyses of fifteen public banks shows that State Bank of Hyderabad recorded a

major share in retail banking segment from its total income about 81.84 per cent followed

by Andhra Bank with 42.14 per cent, State Bank of India with 39.81 per cent and Indian

Bank with 38.01 per cent.

State Bank of Hyderabad registered a major share in retail banking from its total income

during Q1 FY ‘10. The total income of the bank stood at Rs. 1724.41 crore during the

period, out of which Rs. 1448.94 crore came from the retail banking. The bank has

involved about 81.84 per cent in retail banking segment during Q1 FY ’10 registered a

minimal decline in share of 2.03 per cent from the last year same period.

Andhra Bank registered about 42.14 per cent share in retail banking from its total income

during the Q1 FY ’10. The total income of the bank during the period stood at Rs.

1742.70 crore and the revenue from retail banking was Rs. 734.44 crore, the bank

registered 1.17 per cent decline in share of retail banking as compared to the last year

same period.

The major wholesale and retail banking operator, State Bank of India (SBI) shows 39.81

per cent share in the retail banking segment from its total income during Q1 FY ’10. The

bank registered a major decline in share of retail segment about 6.23 per cent as

compared to the same period last year. The total income of the bank during the period

stood at Rs. 21041.51 crore and the revenue from retail banking was about Rs. 8377.09

crore.

Indian Bank had a 38.01 per cent share in retail banking from its total income during Q1

FY ’10. The total income of the bank during the period stood at Rs. 2230.39 crore and

revenue from retail banking was Rs. 847.84 crore. The bank registered a minimal decline

of 0.98 per cent in share as compared to the last year same period.

Other banks which present major share in retail banking segment from their total income

were UCO Bank (37.42 per cent), Central Bank of India (34.45 per cent), Canara Bank

(33.42 per cent) and Union bank of India (31.36 per cent).

The banks which registered decline in share of retail banking during Q1 FY ’10 as

compared to the same period last year were Oriental Bank of commerce (33.96 per cent),

Allahabad Bank (10.54 per cent), Corporation Bank (7.81 per cent), Bank of India (7.71

per cent), Indian Overseas Bank (6.64 per cent) and Bank of Baroda (5.88 per cent).

Private Bank :

In the context of fifteen private banks, Ing Vysya Bank Limited shows a major share

(80.20 per cent) of retail banking in its total income, followed by Kotak Mahindra Bank

Limited (75.36 per cent), HDFC Bank of India (74.82 per cent) and ICICI Bank Limited

(53.52 per cent).

Ing Vysya Bank Limited recorded a major share in retail banking from its total income

during Q1 FY ‘10. The total income of the bank stood at Rs. 742.55 crore during the

period, out of which Rs. 595.73 crore came from the retail banking. The bank earned

about 80.2 per cent revenue from retail banking segment during Q1 FY ’10 however

registered a minimal decline in share of 2.22 per cent from the last year same period.

Kotak Mahindra Bank Limited had a share of 75.36 per cent of retail banking in its total

income during the Q1 FY ’10. The total income of the bank during the period stood at

Rs.894.23 crore and the revenue from retail banking was Rs. 673.91 crore, the bank

Registered 3.52 per cent decline in share of retail banking as compared to the same

period last year.

HDFC bank recorded about 74.82 per cent share in retail banking from its total income

during the Q1 FY ’10. The total income of the bank during the period stood at Rs.

5126.75 crore and the revenue from retail banking was Rs. 3843.34 crore, the bank

registered 2.83 per cent decline in share of retail banking as compared to the same period

last year.The major private bank which involved in wholesale and retail banking

operations, State

ICICI Bank Limited shows 53.52 per cent share in the retail banking segment from its

total income during Q1 FY ’10. The bank registered a major decline in share of retail

segment about 10.936 per cent as compared to the last year same period. The total

income of thebank during the period stood at Rs. 9223.32 crore and the revenue comes

from retail banking was about Rs. 4936.18 crore. Development Credit Bank Limited

recorded 52.26 per cent share in retail banking from its total income during Q1 FY ’10.

The total income of the bank during the period stood at Rs. 147.08 crore and revenue

from retail banking was Rs. 76.85 crore, registering a 7.52 per cent growth in share as

compared to the same period last year.

Other banks which recorded major share in retail banking segment from their total

income were Axis Bank (47.16 per cent), South Indian Bank (46.92 per cent), J&K Bank

(45.90 per cent), IDBI Bank (43.45 per cent) and The Bank of Rajasthan Limited (22.91

per cent). The banks which registered decline in share of retail banking during Q1 FY ’10

as compared to the same period last year were The Federal Bank Limited (20.07 per

cent), IndusInd Bank (16.22 per cent), Dhanalakshmi Bank (15.89 per cent) and

Karnataka Bank ( 13.29 per cent),

DATA ANALYSIS

FACTORS INFLUENCING THE RETAIL BANKING:

The respondents were asked to

rank the following factors

according to their preferences

in the extent to which they

influence their purchase

decision.

Majority of the respondents

considered processing time to

be the major influencing factor

for making purchase decision

while interest rate forms a close

second.

Time is the most valuable factor in today’s world of hectic schedules, that’s the reason why

processing time is considered as most valuable factor in consideration list.

In our survey majority of the

respondents had availed

Vehicle loan followed by credit

cards.

In our survey majority of the

respondents belong to the age

group of 25-40 and majority of

them are salaried people. This

is the stage where people try to

bring alive their aspirations of

having their own home and vehicle and hence these loan constitute major chunk of retail

product availed by the respondents.

INFLUENCING FACTORS

35

7

15

6

37

05

10152025303540

Inte

rest

rate

s

Pro

cessin

g

tim

e

Go

od

will

Wo

rd o

f m

ou

th

Ad

vert

isem

en

tFactors

%

Retail Products Availed

Vehicle loan27%Education

loan6%

Personal loan10%

credit cards25%

Others11%

Housing loan21%

BANKS CONSIDERED FOR RETIAL OFFERINGS

Respondents were asked which banks they considered for purchasing a retail offering before

selecting a specific bank. The responses for different retail products were as follows-

Majority of the respondents

considered HDFC and ICICI for

availing housing loan.

25 years of superior service has

helped HDFC in creating

goodwill in the mind of people

and has helped the bank for

consideration.

ICICI has created a place of its

own in the mind of customers by

its heavy advertisement and

superior service in every

category of retail offering.

ICICI forms the major chunk in

the consideration list for vehicle

loan followed by HDFC.

Through aggressive

advertisements and superior

service ICICI has created a major place in the consideration list.

Banks Considered For Vehicle Loans

SBI9%

OTHERS16%

HDFC25%

CITI BANK15%

ICICI35%

Banks Considered For Housing Loan

OTHERS28%

HDFC37%

SBI12%

ICICI23%

Majority of the respondents

considered CITI BANK for

credit cards followed by STAN

CHART and HSBC.

Being the first bank to launch

credit cards and through

aggressive advertisements in the

past CITI BANK has created

awareness amongst the

customers and by providing superior service it CITI BANK still acquire major share in the

consideration list.

SBI and HDFC form the major

chunk for consideration in this

category followed by SBI.

Interest rates being the major

factor for educational loan PSUs

have the competitive edge due to

low interest rate.

Banks Considered For Credit Cards

OTHERS11%

ICICI16%

STAN CHART20%

HSBC18%

CITI BANK35%

Banks Considered For Educational Loan

SBI35%HDFC

22%

OTHERS21%

DENA BANK8%

HSBC9%

CORP ORATION BANK

5%

Banks Considered For Educational Loan

SBI35%HDFC

22%

OTHERS21%

DENA BANK8%

HSBC9%

CORP ORATION BANK

5%

SBI outrages other banks in the consideration list for educational loan.

Low interest rates and an extensive presence in varied locations seem to be the primary reason

for this.

AWARENESS OF BANKS THROUGH VARIOUS ADVERTISING MEDIUMS

ICICI in general has a high

level of awareness among the

people owing to its extensive

advertising.

Among these, awareness

through television is the

highest level followed by

newspapers.

Customer’s awareness of SBI

through various media was

measured.

SBI, being an old and

experienced player, has

immense awareness through

the word of mouth media.

HDFC being a private and an

aggressive player, especially

in the home finance arena,

has taken the print media as

its stalwart for awareness.

Awarness Of SBI Through Various Medium

Radio 3%

Word Of Mouth 26%

Billboards / Hoardings 17%

New spapers & Magazines

35%

Television 19%

Awareness Of ICICI Through Various Mediums

New spapers & Magazines

27%Radio 3%

Billboards / Hoardings

17%

Word Of Mouth 18%

Television 35%

Awareness Of HDFC Through Various Medium

Billboards / Hoardings

22%

Word Of Mouth 21%

New spapers & Magazines

39%

Radio 5%

Television 13%

The reason for the largest pie is that a large chunk of the TG is also an avid reader of

newspapers and magazines.

The graph reveals that close to fifty

percent of the awareness is about

ICICI and HDFC.

Customers do not seem to regard

HSBC as a bank offering car loan

owing to its limited advertising

about this product.

The personal loan market is a

relatively fragmented market

with respect to awareness.

According to our survey HDFC

is the clear market leader in the

awareness paradigm.

This area is also being

aggressively invaded by many

other players owing to the

increased requirement for

homes.

Top Of Mind Awareness For Car Loan

OTHERS10%

HDFC21%

KOTAK 13% HSBC

3%

CITI BANK19%

ICICI24%

SBI10%

Top Of Mind Awareness For Personal LoanOTHERS

13%

CITI BANK13%

GE CAPITAL15%

HDFC14%

HSBC6%

SBI12%

ICICI27%

Top Of Mind Awareness For Housing Loan

OTHERS12%

CITI BANK13%

HDFC31%

SBI20%

ICICI24%

CITIBANK is also perceived to be

a market leader, besides being one.

A quarter share of the awareness

pie of ‘Others’ can be attributed to

a gamut of the recent new launches

as also the varied co-branded credit

cards.

Relation between basic-banking and retail-banking choices:

The survey also tried to study, analyze and correlate respondents’ decision in selecting a bank for

general banking purposes and for availing retail products. The findings revealed that people

generally prefer PSU banks close to their locality to bank with whereas private banks and foreign

banks have higher preference on the retail banking front.

The reason associated with this behavior is the close proximity and long existence of PSU banks

making them safe and trustworthy. Also people have had accounts with the PSU banks as private

banks were non-existent earlier, and hence are reluctant to change their banks. However due to

efficient service, short processing time, competitive rates and a caring attitude people have

started to prefer private banks for meeting their retail needs.

Conclusion

There is a need of constant innovation in retail banking. In bracing for tomorrow, a

paradigm shift in bank financing through innovative products and mechanisms involving

constant upgradation and revalidation of the banks’ internal systems and processes is called for.

Banks now need to use retail as a growth trigger. This requires product development and

Top Of Mind Awareness For Credit Cards

HSBC16%

SBI12%

HDFC8%

CITI BANK24%

OTHERS21% ICICI

19%

differentiation, innovation and business process reengineering, micro-planning, marketing,

prudent pricing, customisation, technological upgradation, home / electronic / mobile banking,

cost reduction and cross-selling.

While retail banking offers phenomenal opportunities for growth, the challenges are

equally daunting. How far the retail banking is able to lead growth of the banking industry in

future would depend upon the capacity building of the banks to meet the challenges and make

use of the opportunities profitably. However, the kind of technology used and the efficiency of

operations would provide the much needed competitive edge for success in retail banking

business. Furthermore, in all these customers’ interest is of paramount importance. The banking

sector in India is demonstrating this and I do hope they would continue to chart in this traded

path.

BIBLOGRAPHY

BOOKS

1) Marketing research by BERRY G.C

2) Marketing Research by Malhotra N.K. , fifth edition

SITES

(http://www.icmrindia.org/free%20resources/casestudies/banking1.htm#b1

www.hdfcbank.com/

www.hsbc.co.in/

www.icicibank.com/

www.yesbank.in/

www.db.com

www.rocw.raifoundation.org/fashion/BAfashion-mktg/brandpositioning/lecture-notes/lecture-

04.pd

References

1. C.Ashokan, Hariharan.G, “Profile and Perception of Retail Consumers – An

Empirical study in Palakkad District”, Indian Journal of Marketing, Vol:

XXXVIII, Number: 2, February 2008, PP – 44

2. Vigg Silky, Mathur Garima, Holani Umesh,“Customer satisfaction in retail

services: A comparative study of public and private sector banks”, The Journal of

Indian Management & Strategy 8M, Volume: 12, Issue: 2, Year: 2007.

3. R.A. Ravi , “User Perception of Retail Banking Services: A Comparative Study of

Public and Private Sector Banks”, The ICFAI Journal of Bank Management, Vol.

12, No. 2, May 2008 , pp. 32-46

QUESTIONNAIRE

1. Which bank(s) do you bank with presently?____________________________________

2. Rank the following factors according to their weightage in your purchase decision.Cost _______ Processing time _______ Goodwill _______ Word of mouth _______ Advertisement ________

3. Which retail banking product have you availed?

Car Loan ڤ Housing Loan ڤ Education Loan ڤPersonal Loan ڤ _________________ Others, Please specify ڤ

4. Which banks did you consider in your decision making before buying this product?

a) _______________________ b) _______________________ c) _______________________ d) _______________________

5. How did you become aware of them? (tick relevant)

Banks => a) b) c) d)TelevisionNewspapers & MagazinesRadioWord of mouthBillboards/Hoardings

6. Which bank did you choose and why?_____________________

Reason:___________________________________________________________________________________________________________________________________________________________________________________

7. Are you satisfied with the bank’s service? Yes No

8. Would you suggest any improvement?____________________________________________________________________________________________________________________________

9. Which bank comes to mind when thinking about car loan____________________________________

10. Which bank comes to mind when thinking about personal loan____________________________________

11. Which bank comes to mind when thinking about housing loan.

12. Are you satisfied with your bank atm services

Yes No

13. Is your bank providing e banking facilities are you satisfied or not

Yes No

14. Which bank is providing good online services.____________________________________

15. Would you recommend your bank to someone else for the same product or any other product that your bank offers?

Yes No