Customer Satisfaction in Indian Banking Products

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  • Topic: Bank, Banking in India, Customer satisfaction
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CUSTOMER SATISFACTION IN INDIAN BANKING SECTOR

By,

Sushanta Chakraborty

PGDM 1st year, SEC B

Roll No. 57

INTODUCTION

Business need to attract and establish a customer market and would need to retain it through satisfaction. That is the key to its business performance (Johnson et al. 2000). In order to attain this goal, a company should have a high satisfaction rate from its clients. The increasing competition, whether for profit and non profit purposes, is forcing the business sectors to pay much and more attention to satisfying customers (Management library, 2008). Indian banking sector have undergone intense competition and a change in customers’ expectations over the last few years (Cheng et al., 1996). Intense competition and endlessly evolving customer demands have led Indian banks to identify drivers of customer satisfaction and loyalty (Lanka et al., 2009).

Customer satisfaction is the key for survival in the market. Cost of acquiring a new customer is much more than the cost of retaining the customers. Customers are giving top priority, and according to their expectation, new product and services are being developed to satisfy them with special focus on service quality. New marketing concept and strategies are paying greater attention to identifying customer need and expectation (Morgan, 1989), and offering high service quality to customers. The interest is largely driven by the realization that high service quality results in customer satisfaction and loyalty with the product or service, greater willingness to recommend someone else, reduction in complaints and improved customer retention (Zeithaml et al., 1996). There is a significant difference in customer and job satisfaction in both private and public sector.

A study should that layoff threats, quick turnover, less welfare schemes, and less scope for vertical growth increase job dissatisfaction (Bajpai and Deepak, 2004). In a study conducted by Mckinsey and company on the Indian banking system, it found out that information technology of some leading Indian banks is better than that of banks abroad. The study also finds the level of customer satisfaction in Indian metros is lower than that in rest of asia (Banknet grp., 2008).

History of the banking sector

Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India which started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in1865 and still functioning today, is the oldest Joint Stock bank in India. It was not the first though. That honour belongs to the Bank of Upper India, which was established in1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Simla.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondichery, then a French colony, followed. HSBC established itself in Bengal in...
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