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GAP ANALYSIS
- Dr. Hema Bhalakrishnan
Background
Customer Perception
Definition of Banking
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.
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.
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.
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.
Bancassurance 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.
Assistant Professor, Park Global School of Business Excellence.
Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 5
The Need to Measure Customer Perception:
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.
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.
Objectives
The objectives of the study are:
♦ 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 the
customers.
♦ 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.
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.
Gap Analysis
The gap analysis is carried out between the expected level and derived level of
satisfaction on the various aspects such as
Loan Flexibility;
Easy Access;
Security;
Customer friendly
Latest Facilities (Phone banking, Net banking, etc);
Reasonable Interest rate for Credit card transaction.
Assistant Professor, Park Global School of Business Excellence.
Reach Dr.Hema @ hema_bhalan@yahoo.co.in[Type text] Page 9
This analysis is carried out using t-test based on the average score of the values
obtained for each factors. The significance is assessed using 5% level. The results are
presented in the following tables with suitable interpretations.
Gap Analysis on Expected and Derived Level of Satisfaction – State Bank of India
The table provides mean difference between expected level of satisfaction and the
derived level of satisfaction on the various aspects of customer perception, its t-value and
p-value. The aspects considered are Loan Flexibility, Easy Access, Security, Customer
friendly, Latest Facilities (Phone banking, Net banking, etc), Reasonable Interest rate for
Credit card transaction.
It is concluded that the respondents’ expectation are significantly more than they
derive on the various aspects relating to facilities in SBI.
Loan Flexibility
4
3
Reasonable Interest Rates 2 Easy Access
1
Expected
0
Derived
Customer Friendly
It is found from the table 2 that all the mean difference values are positive
indicating that the expected level of satisfaction is more than the derived level of
satisfaction. Further it is implied that all the aspects are found significant resulting that
It is concluded that the respondents’ expectation are significantly more than they
derive on the various aspects of Indian Overseas bank.
Loan Flexibility
4
3 Easy Access
2
1
Expected
0 Security
Derived
Latest Facilities
The table provides mean difference of Indian Bank between expected level of
satisfaction and the derived level of satisfaction on the various aspects of customer
perception, its t-value and p-value. The aspects considered are loan Flexibility, easy
access, security, customer friendly, latest Facilities (Phone banking, Net banking, etc),
reasonable interest rate for credit card transaction.
It is concluded that the respondents’ expectation are significantly more than they
derive on the various aspects of Indian bank.
Loan Flexibility
4
3
Reasonable Interest Rates 2 Easy Access
1
Expected
0
Derived
Customer Friendly
Loan Flexibility
4
3
Reasonable Interest Rates 2 Easy Access
1
Expected
0
Derived
Customer Friendly
Loan Flexibility
4
3
Reasonable Interest Rates 2 Easy Access
1
Expected
0
Derived
Customer Friendly
It is found from the table 6 that all the mean difference values are positive
indicating that the expected level of satisfaction is more than the derived level of
satisfaction. Further it is implied that all the aspects are found significant resulting that
the expected level of satisfaction is significantly more than the derived level of
satisfaction of the respondents on the reasonable interest rates.
Loan Flexibility
4
3
Reasonable Interest Rates 2 Easy Access
1
Expected
0
Derived
Customer Friendly
Factor Analysis
In this section the factor analysis under extraction method of principal component
analysis is employed to identify the important aspects relating to customer perception on
public sector and private sector banks.
Important factors are identified with extraction value more than 0.7. The results
are presented in table 7. Table 7 describes the extraction values for each aspect relating to
customer perception on public sector and private sector banks.
through principal component analysis.
It is found from the table 7 that among the 21 aspects relating to customer
perception towards public and private sector banks 14 aspects are considered as more
important than other aspects because of their expectation value more than 0.7. Further it
1
0.9
0.8
0.7
0.6
0.5 Series1
0.4
0.3
0.2
0.1
0
Achieving
Everything
Happy with
Secure
Happy with
Met
Go to bank
Straight
Can Relax
Walked out
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.
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.
Conclusion
The last decade has seen many positive developments in the Indian banking
sector. The policy makers, which comprise the Reserve Bank of India (RBI), Ministry of
Finance and related government and financial sector regulatory entities, have made
several notable efforts to improve regulation in the sector. The sector now compares
favourably with banking sectors in the region on metrics like growth, profitability and
non-performing assets (NPAs). A few banks have established an outstanding track record
of innovation, growth and value creation. This is reflected in their market valuation.
However, improved regulations, innovation, growth and value creation in the sector
remain limited to a small part of it. The cost of banking intermediation in India is higher
and bank penetration is far lower than in other markets. India’s banking industry must
strengthen itself significantly if it has to support the modern and vibrant economy which
India aspires to be. While the onus for this change lies mainly with bank managements,
an enabling policy and regulatory framework will also be critical to their success. The
failure to respond to changing market realities has stunted the development of the
financial sector in many developing countries. A weak banking structure has been unable
to fuel continued growth, which has harmed the long-term health of their economies. In
this “white paper”, we emphasise the need to act both decisively and quickly to build an
enabling, rather than a limiting, banking sector in India.