A STUDY ON CUSTOMER LOYALTY IN

PUBLIC SECTOR BANKS

IN TIRUCHIRAPPALLI DISTRICT WITH

SPECIAL REFERENCE TO STATE BANK OF INDIA

Abstract of the Thesis submitted to the Bharathidasan University, Tiruchirappalli – 24.

in partial fulfillment of the requirementsfor the award of the Degree of

DOCTOR OF PHILOSOPHY IN COMMERCE

Submitted by

P. SUJATHA, M.Com., M.B.A., M.Phil.,

Under the Guidance of

URUMU DHANALAKSHMI COLLEGE,

TIRUCHIRAPPALLI – 620 019.

Dr.N. RAJAMANNAR, M.Com.,M.B.A.,M.Phil.,M.Ed., SLET.,PGDCA.,Ph.D.,

RESEARCH ADVISOR IN COMMERCE,

POST GRADUATE & RESEARCH DEPARTMENT OF COMMERCE

URUMU DHANALAKSHMI COLLEGE

(Nationally accredited B++ Grade by NAAC)

TIRUCHIRAPPALLI – 620 019.

April 2014

A STUDY ON CUSTOMER LOYALTY IN PUBLIC SECTOR BANKS

IN TIRUCHIRAPPALLI DISTRICT WITH SPECIAL REFERENCE TO

STATE BANK OF INDIA

ABSTRACT

Loyalty is one’s attitude towards an organization or person, supporting

and substantiate the organization or person, bearing some personal losses.

When an organization or a person who provides or serves a little out of

boundary or even sometimes upto the mark, then the beneficiary becomes loyal

to that organization or person.

Statement of the problem

Customer loyalty has been a crucial factor for a long time now with

banks. In the current scenario, sustaining an existing customer is more

important than getting a new one. A bank that has successful customer loyalty

program retains customers for a long period of time, which significantly

increases revenue for the company.

The forces of deregulation, globalization and advancing technology have

increased the competitive pressures in the banking industry. Thus it has become

imperative for banks to focus on customer centric approaches and develop long

term relationship with the customer to get through turbulent times.

Banks are concentrating only on acquiring new customers. They seldom

understand the importance and profitability of creating loyalty and retaining

customers. Banks have to come out with innovation measures to satisfy the

needs of both the present and the potential customers, at the same time adopt

procedures to win back the lost customers.

Hence, the present study entitled as “A study on Customer Loyalty in

Public Sector Banks in Tiruchirappalli District with special reference to State

Bank of India”.

Objectives

To study the existing customer loyalty in Public Sector Banks. To

identify the factors which influence the Customer loyalty in Public Sector

Banks. To examine the perceived service quality and perceived value. To

identify the level of satisfaction, commitment and trust towards the Public

Sector Banks. To provide suggestions to increase customer loyalty in Public

Sector Banks.

Research Methodology

The empirical research will be quantitative in nature. The analysis is

based on primary and secondary data based. To conduct the primary research,

questionnaire was prepared to survey about 600 customers in State Bank of

India in Tiruchirappalli District.

Study Area

The researcher has selected Tiruchirappalli District as the study area and

selected five urban branches based on number of customers, turnover,

commitment, performance and the market place.

Sampling

The stratified random sampling technique has been adopted for

statistical analysis.

Sampling size

The study area has 10 branches containing 60,000 customers. The

researcher has selected five branches out of which 600 customers were

interviewed on the basis of stratified random sampling technique.

Statistical tools

This study is based on descriptive research design using questionnaire as

the key research. For the descriptive statistics Pearson Correlation, Multiple

Regression, Chi-square Test, F-test, T-test, Likert’s Five Point Scale, Likert’s

Seven Point Scale, Cornbach’s Alpha System, Anova Table, KMO and

Bartlett’s Test (Kaiser-Meyer-Olkin) were used.

Causal research design was used to explore the possible linkages

between the variables.

Chapter Scheme

The first chapter deals with introduction of the study. The second

chapter deals with Review of related Literature. The third chapter deals with

profile of selected public sector banks in Tiruchirappalli District. The fourth

chapter deals with analysis and interpretation of customer loyalty in selected

public sector banks in Tiruchirappalli District. The fifth chapter deals with

summary of findings, suggestions and conclusion.

Findings

The following findings are made by the researcher, 50 percent of the

respondents agree that their knowledge about the banking services are up to

date by ample information provided by the bank. 54 percent of the respondents

agree that it seems tidy and well organized in all services towards customers.

46 percent of the respondents are strongly agree that the banks maintain every

transaction confidentially. 59 percent of the respondents are agree to SBI

financial counselling and advisory services. 54 percent of the respondents are

agree to SBI personnel are timely response.

Suggestions

The bank must provide better and quality internet banking services and

mobile banking services. Fund transfer is very difficult to SBI from other

banks. So, the fund transfer system must redesigned in order to enhance the

speed. The bank must provide advisory service in tax saving to the

customers.The proper guidelines should be provided to the customers regarding

investments.

CONCLUSION

The customer loyalty of the public sector banks in Tiruchirappalli

District with special reference to State Bank of India is in satisfactory level.

SCOPE FOR FURTHER STUDY

It is hoped that the findings could stimulate further research in other

parts of the world; especially in the other developing countries. The other

people who are interested in modelling could analyse, find and test more

factors according to other environment. The above points can be categorized

as “the internal loyalty model further researches”.

Dr.N.RAJAMANNAR, M.Com.,M.B.A.,M.Phil.,M.Ed., SLET.,PGDCA.,Ph.D Research Advisor in Commerce,

Urumu Dhanalakshmi College,

Tiruchirappalli – 620 019.

CERTIFICATE

This is to certify that the thesis “A STUDY ON CUSTOMER LOYALTY IN

PUBLIC SECTOR BANKS IN TIRUCHIRAPPALLI DISTRICT WITH

SPECIAL REFERENCE TO STATE BANK OF INDIA” submitted for the award

of degree of Doctor of Philosophy in Commerce to Bharathidasan University,

Tiruchirappalli by P. SUJATHA, is a bonafide record of research work done by her

under my guidance and supervision. This thesis has not previously formed the basis

for the award of any Degree, Diploma, Associateship, Fellowship or any other similar

titles.

Dr.N. RAJAMANNAR,

RESEARCH ADVISOR

DECLARATION BY THE CANDIDATE

I hereby declare that the thesis titled “A STUDY ON CUSTOMER

LOYALTY IN PUBLIC SECTOR BANKS IN TIRUCHIRAPPALLI DISTRICT

WITH SPECIAL REFERENCE TO STATE BANK OF INDIA” is my original

work under the supervision and guidance of Dr.N. RAJAMANNAR, M.Com.,

M.B.A., M.Phil., M.Ed., SLET., PGDCA., Ph.D. This thesis has not previously

formed the basis for the award of any Degree, Diploma, Associateship, Fellowship or

any other similar titles.

Place : Tiruchirappalli

Date : P. SUJATHA

ACKNOWLEDGEMENT

My sincere thanks to the authorities of Bharathidasan University for having

given me permission to peruse this research work.

I am highly indebted to the Management of Urumu Dhanalakshmi College,

Trichy-19, for having granted me permission to do this work and also for their deep

concern and interest in my academic progress.

My sincere thanks are due to Dr. S. SEKAR,M.Com., M.B.A., M.Phil.,

PGDCA., Ph.D., the Principal of Urumu Dhanalakshmi College, Trichy-19, for

according me permission to do this research work.

This study has taken its shape under the able guidance of

Dr. N. RAJAMANNAR, Research Advisor in Commerce, Post Graduate and

Research Department of Commerce, Urumu Dhanalakshmi College, Trichy-19. He

had been immensely helpful to me, with his constructive and intellectual ideas.

My sincere thanks due to Mr. A. RAVINDRAN, Chief Manager, State Bank

of India, Trichy for his spontaneous help in getting information required for this study.

I must thank to Prof.V.S.GUNA and Prof.R.MURALI, Assistant Professors,

MBA Department, OAS College of Engineering and Technology for his valuable help

with statistical tools in completing this research work.

Last but not least, I would like to express my feelings of appreciation and

gratitude to my father, mother, husband, children and my friends Dr.M. YASMIN

Assistant Professor and Mr.S. KUMAR, Assistant Professor, Department of

Commerce, Pavender Bharathidasan College of Arts and Science for their

encouragement, endurance and helps throughout the course of this study and also

thanks to M/s. Students’ Xerox and its team for their cooperation in printing and

binding.

Above all I thank the almighty who is the spring board for all my actions.

P. SUJATHA

CONTENTS

List of Tables

List of Charts

List of Abbreviations

Chapter Title Page No.

I

II

III

IV

V

Introduction

Review of Literature

Profile of study

Analysis of study

Findings, Suggestions and conclusion

Bibliography

Appendix

1

38

74

99

232

LIST OF TABLES

TABLE

NO. NAME OF TABLE

PAGE

NO.

4.1 Gender wise classification of respondents 99

4.2 Age of the Respondents 101

4.3 Marital Status of the respondents 103

4.4 Educational Qualifications of the respondents 105

4.5 Span of Account Holders 107

4.6 Monthly Income of the respondents 109

4.7 Appearance of Bank’s reception desk employees 111

4.8 Appearance of Bank’s physical facilities 113

4.9 Employees are well dressed and appear neat 115

4.10 Understanding of specific needs by the employees 117

4.11 Solving problems of the customer by the employees 119

4.12 Knowledge of bank employees 121

4.13 Error-free records 123

4.14 Satisfaction level on rate of interest deposit

facilities

125

4.15 No. of accounts holding in State Bank of India 127

4.16 Personnel skill 129

4.17 Bank personnel know their job well 131

4.18 Personnel knowledge 133

4.19 Banks seems tidy and well organized 135

4.20 Bank service as a whole is good 137

4.21 Justification of Interest or commission 139

4.22 Friendly atmosphere 141

4.23 Difficulty in Opening an account 143

4.24 Use of ATM Card 145

4.25 Modern technology 147

4.26 Transaction 149

4.27 Interest of Fixed Deposits and Current Deposits 151

4.28 Educational loans 153

4.29 Parking facilities 155

4.30 Global network 157

4.31 Traveller cheques 159

4.32 Errors correction 161

4.33 Account confidentially 163

4.34 Core banking services 165

4.35 Different types of card 167

4.36 Export banking 169

4.37 Customer trust 171

4.38 Personnel behaviour 173

4.39 Financial and advisory services 175

4.40 Timely response 177

4.41 Trust worthy 179

4.42 Comfortable environment 181

4.43 Understand customer needs 183

4.44 Banks security 185

4.45 Bank reputation-Image 187

4.46 Recommend by friends and relatives 189

4.47 Intend to remain as customer of SBI 191

4.48 Role as Finance adviser 193

4.49 Investment decision 195

4.50 ATM PIN code 197

4.51 Sufficient time 199

4.52 Feel of interior comfort 201

4.53 Mobile banking services 203

4.54 Customer detail-Confidence 205

4.55 Reliability Statistics 207

4.56 Correlations (Image and customer loyalty) 209

4.57 Correlations (Commitment and customer loyalty) 210

4.58 Correlations ( Trust and customer loyalty) 211

4.59 Correlations (Customer satisfaction and customer

loyalty)

212

4.60 Correlations (Perceived value and customer loyalty) 213

4.61 Correlations (Perceived service quality and

customer loyalty)

214

4.62 Cross tabulation 215

4.63 KMO and Bartlett’s Test 217

4.64 Rotated Component Matrix 219

4.65 Multiple Regression 225

4.66 Anova 227

4.67 Coefficients 229

LIST OF CHARTS

Chart

NO. NAME OF CHART

PAGE

NO.

4.1 Gender wise classification of respondents 100

4.2 Age of the Respondents 102

4.3 Marital Status of the respondents 104

4.4 Educational Qualifications of the respondents 106

4.5 Span of Account Holders 108

4.6 Monthly Income of the respondents 110

4.7 Appearance of Bank’s reception desk employees 112

4.8 Appearance of Bank’s physical facilities 114

4.9 Employees are well dressed and appear neat 116

4.10 Understanding of specific needs by the employees 118

4.11 Solving problems of the customer by the employees 120

4.12 Knowledge of bank employees 122

4.13 Error-free records 124

4.14 Satisfaction level on rate of interest deposit facilities 126

4.15 No. of accounts holding in State Bank of India 128

4.16 Personnel skill 130

4.17 Bank personnel know their job well 132

4.18 Personnel knowledge 134

4.19 Banks seems tidy and well organized 136

4.20 Bank service as a whole is good 138

4.21 Justification of Interest or commission 140

4.22 Friendly atmosphere 142

4.23 Difficulty in Opening an account 144

4.24 Use of ATM Card 146

4.25 Modern technology 148

4.26 Transaction 150

4.27 Interest of Fixed Deposits and Current Deposits 152

4.28 Educational loans 154

4.29 Parking facilities 156

4.30 Global network 158

4.31 Traveller cheques 160

4.32 Errors correction 162

4.33 Account confidentially 164

4.34 Core banking services 166

4.35 Different types of card 168

4.36 Export banking 170

4.37 Customer trust 172

4.38 Personnel behaviour 174

4.39 Financial and advisory services 176

4.40 Timely response 178

4.41 Trust worthy 180

4.42 Comfortable environment 182

4.43 Understand customer needs 184

4.44 Banks security 186

4.45 Bank reputation-Image 188

4.46 Recommend by friends and relatives 190

4.47 Intend to remain as customer of SBI 192

4.48 Role as Finance adviser 194

4.49 Investment decision 196

4.50 ATM PIN code 198

4.51 Sufficient time 200

4.52 Feel of interior comfort 202

4.53 Mobile banking services 204

4.54 Customer detail-Confidence 206

List of Abbreviation

ACB Audit Committee of the Board

ATM Automatic Teller Machine

BOI Bank of India

BOM Bank of Maharashtra

CLV Customer Lifetime Value

CMS Complaint Management System

CRM Customer Relationship Management

CSR Corporate Social Responsibility

CSS Customer Service Support

CVA Customer Value Analysis

CVM Customer Value Management

ECCB Executive Committee of the Central Board

ECRM Electronic Customer Relationship Management

EDP Entrepreneurial Development Program

EMA Enterprise Marketing Automation

ERP Enterprise Resource Planning

FCNR Foreign-currency Non-Resident

GCC Green Channel Counter

GOI Government of India

IDBI Industrial Development Bank of India Limited

IOB Indian Overseas Bank

IPO Initial Public Offer

IT Information Technology

JIT Just in Time

KYC-AML Know Your Customer – Anti-Money Laundering

MICRS Magnetic Ink Character Recognitions

MODS Multi-Option Deposit Scheme

MRP Material Resource Planning

NPA Non Performing Asset

NPS National Pension System

NRE Non-Resident External

NRIs Non-Resident Indians

NRNR Non-Resident Non-Repatriate

NRO Non-Resident Ordinary

NRSR Non-Resident Special Rupee

OBC Oriental Bank of Commerce

PFM Pension Fund Managers

PNB Punjab National Bank

PRADA Pension Fund Regulatory and Development Authority

PSB Public Sector Banks

RBI Reserve Bank of India

RBIEFT Reserve Bank of India Electronic Fund Transfer System

RBU Rural Business Unit

RFC Regional Financial Centre

RM Relationship Marketing

SBI State Bank of India

SEBI Security Exchange Board of India

SERVPERF Service Preference

SERVQUAL Service Quality

SFA Sales Force Automation

UBI Union Bank of India

UCO United Commercial Bank

1

CHAPTER – I

INTRODUCTION

Banks in India are an integral part of financial system in India. The well-

developed Indian banking system plays an important role in economic

development of our country. The nationalization of banks, establishing of new

banks with better reforms and policies and introduction of the numerous

facilities and amenities of the Indian Banks are significant features of the

banking services of India. Businesses around the world are becoming

increasingly competitive day by day. Therefore in order to generate more

customers and customers‟ loyalty existing ones, banking activities engage in

various forms of activities which are known as “Relationship Marketing”. One

of the most important components of relationship marketing is “Customer

Relationship Marketing”.

Banks play a very important role in the economic development of every

modern state. Banks operate at the heart of the modern economy. Traditionally,

banking had been restricted from private participation in India and public

sector banks had been enjoying complete protection. This scenario has changed

since 1990. The decade of 90‟s witnessed a sea change in the working of

banking in India. Technology made tremendous impact by introducing

“Anywhere Banking” and “Anytime Banking”. The financial sector now

operates in a more competitive environment than before, and involves

relatively large volume of international financial flows. In the wake of greater

financial deregulation and global financial integration, the biggest challenge

before the public sector banks is to match the market requirement rather than

being promoted by Government or regulator.

New private banks have embraced technology right from the inception

of their operations and therefore, they have adopted themselves to the changes

in the technology easily. Deregulation, liberalization, and globalization have

2

produced intense competition in banking industry resulting in declining

margins in traditional businesses, increased cost pressures and greater risks.

Market positioning, cost of intermediation and service delivery are likely to be

determinants of the efficiency of banks with respect to their competitiveness.

In the changed environment, creating new customers and retaining the existing

ones have become difficult tasks for banks. To meet the competition, creating

satisfaction among customers has become primary objective of each bank.

Loyalty in general, is one‟s attitude towards an organization or person,

supporting and substantiate the organization or person, bearing some personal

losses. When an organization or a person who provides or serves a little out of

boundary or even sometimes upto the mark, then the beneficiary becomes loyal

to that organization or person.

The concept of loyalty is rooted in the past, emphasising characteristics

such as commitment, duty, obligation and devotion. It is totally unrealistic for

most commercial businesses to expect their customers to have such feelings

towards them. There are different levels of loyalty, from suspects and prospects

to advocate, partner. It is their degree of positive commitment to the supplier

which characterizes the advocates and partners.

Generally, loyalty has been and continues to be defined as repeat

purchasing frequency or the relative volume of the same-brand purchasing.

Loyal customers not only increase the value of the business, but also enable it

to maintain the cost lower than those associated with attracting new customers.

Customer loyalty means that customers are so delighted with the

banking product or service that they become enthusiastic word-of-mouth

advertisers. Loyalty as the willingness of someone - a customer, an employee, a

friend – to make an investment or personal sacrifice in order to strengthen a

relationship.

The role of loyalty in the brand equity process and specifically noted

that brand loyalty leads to certain advantages, such as reduced marketing costs,

more new customers and greater trade leverage. Loyalty as a deeply held

3

commitment to re-buy or re-patronize a preferred product or service

consistently in the future, thereby causing repetitive same-brand or same-

brand-set purchasing, despite situational influences and marketing efforts have

the potential to cause switching behaviour.

Creating loyal customer has been becoming more and more important.

This is due to the fact that competition is increasing, as never before, which has

a great impact on many banks. To deal with this high concentrated market,

businesses are attempting not only to attract and satisfy customers but also to

create a long-term relationship with these customers.

Businesses around the world are becoming increasingly competitive day

by day. Therefore in order to generate more customers and retain existing ones,

companies engaged in various forms of activities which are known as

“Relationship Marketing”. One of the most important components of

relationship marketing is “Customer Relationship Management”. Customer

Relationship Management (CRM) as a strategic approach that is concerned

with creating improved shareholder value through the development of

appropriate relationship with key customers and customer segments.

By looking at the definition it can be said that CRM is about creating,

maintaining and sustaining relationships with customers. One of the most

commonly used CRM strategies of a company are loyalty programs, which are

designed to give variety of benefits to increase customer loyalty. In present

multi-channel retailing environment, companies seek to provide satisfaction to

customers through various loyalty programs. In many cases, retailers with very

limited amount of products and services would form joint venture of loyalty

program to encourage customers to visit the retail stores which are part of such

loyalty programs. This demonstrates the importance of integrated CRM

strategies within the organization in current business environment.

Nowadays the expectations of the customers have multiplied. The banks

should also be ready to meet the expectations of the customers. For instance,

the completion of transactions should be made time bound. Time limit should

4

be prescribed for depositing money, withdrawing money, for purchasing

demand draft, money transfer, opening new account and number of days for

obtaining debit cards and credit cards. Similarly number of weeks or months

taken for processing applications for education loans, home loans, vehicle loans

and personal loans should also be prescribed and ensure that work is carried on

accordingly. How the employees handle and in touch with the customers and

how far they satisfy the customers determine the quality of service rendered by

the employees. These are not an impossible one. The bank employees should

walk some extra mile for satisfying the customer service.

Customer Relationship Management is often considered as database

marketing primarily linking marketing of the organisation with the database of

the customers. Some theorists have been considering it as an exercise for

customer retention as many theories and studies have been emphasising on the

rationale for keeping the customers. This requires a variety of techniques,

especially post-sale initiatives, to keep the customers for like. This was

believed to be a mechanise to keep the existing customers happy so that they

remain with the organisation and may, if possible, generate positive referral for

the company‟s products and services. It was believed the application of IT can

be an effective tool to develop one-to-one relationship that integrates database

with company‟s base.

Relationship marketing as an integrated effort to identify, maintain and

build up a network with individual consumers and to continuously strengthen

the network for the mutual benefit of both sides, through interactive,

individualised and value-added contacts over a long period of time.

Strategic Orientation in Marketing

Strategic Orientation is argued that organisations need to put the

customer first and shift the role of marketing from manipulating the customer

(telling and selling) to genuine customer involvement (communicating and

sharing the knowledge) for long-term growth of the business. Developing

closer relationship with the newly attracted customers, to turn them into loyal

5

customer category required deep-rooted strategic intent on the part of the

corporate.

An important dimension of CRM study is selecting the profitable

customers. Companies need to understand who is the profitable customers and

accordingly design marketing programme as per the exclusive requirements of

those customers; for example, a multiplex may inform about the new releases

with the show timings to its loyal customers.

Customer satisfaction

Customer satisfaction has been subject of considerable research and has

been defined and measured in many ways. Customer satisfaction is the

customer‟s fulfilment response to a customer experience, or some part thereof.

Dissatisfaction is an unpleasurable fulfilment response. The experience

or some part thereof‟ component of the definition suggests that the satisfaction

evaluation can be directed at any or all elements of the customer‟s experience.

This can include product, service, process and any other components of the

customer experience.

The most common way of quantifying satisfaction is to compare the

customer‟s perception of an experience, or some part of it, with their

expectations. This is known as the expectations-disconfirmation model of

customer satisfaction. This model suggests that if customers perceive their

expectations to be met, they are satisfied. If their expectations are

underperformed, this is negative disconfirmation occurs when perception

exceeds expectation. The customer might be pleasantly surprised or even

delighted. This model assumes that customers have expectations, and that they

are able to judge performances. A customer satisfaction paradox has been

identified by expectations-disconfirmation researches. At times customers‟

expectations must be met but the customer is still not satisfied. This happens

when the customer‟s expectations are low.

6

Many companies research customer requirements and expectations to

find out what is important for customers, and then measure customers‟

perceptions of their performance when compared to the performance of

competitors.

Customer Value

Value creation is a strategic process to manage a product, service or a

business unit‟s growth and competitive share. It is built on a core foundation of

market research applying advanced techniques, called Customer Value

Analysis (CVA).

The literature on both marketing and quality stresses upon the

importance of customer value, Customer Value Management (CVM) is a

proven methodology for addressing critical business issues. It is being used

successfully by leading companies in a variety of industries around the world.

CVM is the product of customer value-added techniques and economic value

comparisons. It allows targeted improvement of customer service where it will

have the greatest business benefit. The customer value-added analysis uses

competitive market research techniques coupled with econometric modelling to

establish direct links for ratings of product and service to market share.

In the recent years, the notions of value creation and value delivery have

become increasingly prominent. At the same time there was a shift from the

4Ps of marketing (product, price, place and promotion) to an emphasis on

relationship, networks, and interaction. This stressed on the development of

trusting attitudes between seller and buyer, together with the reciprocal

satisfaction of expectations and the overall objectives of creating and providing

value for both parties engaged in the exchange process. The concept of

customer value is becoming more and more prominent as a crucial strategic

factor in gaining a competitive advantage. It is also increasingly seems to be

key building block in the development of relationships.

In designing the entire delivery to the customer, the product, service,

image and the person who delivers all forms part of the customer value. At the

7

same time money, time, energy and psychic costs all forms part of the total cost

calculation. These cost and value perspectives need to be taken into

consideration while designing the customer delivery.

Customer Lifetime Value (CLV) in the banking industry

One in five banking executives does not measure CVL. Couple this with

the 22 per cent who do not measure portfolio or wallet share, and it is easy to

see why cross selling is such a challenge for financial service providers. Unless

a banker knows which of customer‟s financial needs are being met, it is

exceedingly difficult to suggest additional service. A robust business

intelligence system can provide a financial services firm with a 360 degrees

view of the customer. Transactions can be consolidated with demographic and

psychographic data, revenue and profit measures, as well as with historical

customer service incidents and queries. With the total picture, the provider can

see the customer from multiple perspectives and craft programmes that will

satisfy a border range of client requirement. Part of this multifaceted view of

the customer is the ability to aggregate multiple customers into a household

perspective. The benefits of this consolidated view are clear and strong.

Customer Relationship Management

All service sector industries have realised that superior customer service

is the key for their survival. Most offers across the industry are difficult to

differentiate on the basis of offering quality, pricing, distribution or promotion

for Customer Relationship Management. They all are saturated on the basis of

certain parameters. The best quality offers with most competitive process and

promotion with the greatest aggression have become the norm. The only point

of differentiation left is the customer service and most of the industries are

using it as a tool for competitive advantage.

Customer Relationship Management is the core business strategy that

integrates internal processes and functions, and external networks, to create and

deliver value to targeted customers at a profit. It is grounded on high quality

customer related data and enabled by information technology. This clearly

8

denotes that CRM is not just about IT. CRM integrates internal processes and

functions. Access to customer related data allows marketing, selling and

service functions, to be aware of each other‟s interactions with customers.

Furthermore, back-office functions such as operations and finance can learn

from and contribute to customer related data. Access to customer related data

allow members of a business‟s external network – suppliers, partners,

distributors – to align their efforts with those of the focal company.

Historically, most companies were located close to the markets they

served, and knew their customers intimately. Very often there would be face-

to-face, even day-to-day interaction with customers where knowledge of

customer requirements and preferences grew. However, as companies have

grown larger they have become more remote from the customer they serve. The

remoteness is not only geographic, it may also be cultural. Even some of the

most widely admired American companies have not always understood the

markets they served. Disney‟s development of a theme park near by the French

capital, Paris, as not an initial success because they failed to deliver to the value

expectations of European customers.

Geographic and cultural remoteness, together with business owner and

management separation from customer contact, means that many, and small,

companies do not have the intuitive knowledge and understanding of their

customer so often found in micro-businesses, such as neighbourhood stores

and hairdressing salons. This has given rise to demand for better customer

related data, a cornerstone of effective Customer Relationship Management. If

not the profit community were to replace the words business, customers and

profit with appropriate equivalents such as organization, clients and objectives,

it would apply equally well in that context.

Customer Relationship Management is a technology enabled approach

to management of the customer interface. Most CRM initiatives expect to

have impact on the cost to serve and revenues streams from customer. The use

of technology also changes the customer‟s experience of transacting and

9

communicating with a supplier. For that reason, the customer‟s perspective on

CRM is an important consideration in the book. CRM influences customer

experience and that is of fundamental strategic significance.

Loyalty

There is no one specify meaning or define of this, since it might be

defined with some quantitative measure such as customer‟s retention or

customers shipping frequency. But again loyalty has a deeper meaning and

that‟s why many researches tried to define it and reach the essence of it.

Loyalty also can be seen as a deeply held commitment to re-patronize a service

or a product in the future, loyalty is both related to consumer‟s attitudes and

behaviours, where they both complete each other in truly measuring loyalty.

Loyalty into four types: sustainable loyalty (high-frequent purchase with high

positive attitude towards the brand), latent loyalty (high attitude towards the

brand but no display of frequent shopping), spurious loyalty (frequent

purchases but not based on loyalty) and no loyalty (less frequent purchases and

negative consumer opinion towards the brand). These types do exist in every

customer base of any organization which helps in deciding which customer is

worth retaining.

Retailers try to maintain relationships with customers to achieve the

highest levels of loyalty but they are still facing the complex issue of switching

behaviour due to many reasons. Therefore many firms started introducing

loyalty schemes or what we know as loyalty programs and its holds many

facilities such as simple points accrual programs, club cards or combined credit

cards, etc.,

Loyalty Program

A Loyalty Program is a system or a scheme that rewards loyal customers

by offering delayed, accumulating economic benefits to consumers who

patronize the brand, offering different offers of discounts, monetary rewards or

other services, based on the amount of money that the customer spent. Some

cards have microchips in them where data is already stored in the system and

10

the card will facilitate the identification of the customer, other only have a

number or an ID of the holder. The concept itself is not new as it started in the

1960s wherein there used to be certain cards where retailers used to place

stamps with every purchase and customer have to keep them until they reach a

certain limit and they will be entitled for a reward.

Now-a-days Loyalty schemes vary in their mechanisms and schemes,

but they all agree on rewards. Loyalty schemes have different aims too where

some may aim for data collection, sales promotion and other strategies. The

advanced technology facilitated the use of these programs and made tracking

customers easier on the business runners as and when customers register in any

loyalty schemes, it is considered to be an unwritten agreement on using their

details to be used and stored in the retailer‟s database and have all their

purchases to be tracked.

Loyalty Programs for customers were found to increase brand loyalty

and minimize the price sensitivity factor, it also encourages the positive word

of mouth in favour of the company, attract more new customers and increase

the sales. Besides these the Customers who are members of a loyalty scheme

were observed to be less sensitive to lower quality of service than other

customers. The easiest loyalty schemes will usually require the consumer‟s

name, email and phone number. Others require more information than this,

depending on the business.

Many direct marketing companies use RFM measures of behavioural

loyalty. The most loyal are those who have high scores on the three behavioural

variables: Recency of purchases (R), Frequency of purchases (F) and Monetary

value of purchases (M). The variables are measured as follows:

R = time elapsed since last purchase

F = number of purchases in a given time period

M = monetary value of purchases in a given time periods.

Attitudinal loyalty if measured by reference to components of attitude

such as beliefs, feelings and purchase intention. Those customers who have a

11

stronger preference for, involvement in, or commitment to a supplier are the

more loyal in attitudinal terms.

Another study found that customer satisfaction in retail banking

correlated highly with branch profitability. Highly satisfied customers had

balances 20 percent higher than satisfied customers, and as satisfaction levels

went up over time, so did account balances. The reverse was also true, as

satisfaction levels fell, so did account balances.

Loyalty Schemes

Most loyalty schemes require new members to complete an application

form when they join the programme. This demographic information is typically

used, together with purchasing data, to help companies become more effective

at customer communication and offer development. Whereas some CRM

implementations are linked to loyalty schemes, not all are. It plays two vital

roles in CRM implementations. First, they generate data that can be used to

guide customer acquisition, retention and development. Secondly, loyalty

schemes may serve as an exit barrier. Customers who have accumulated credits

in a scheme may be reluctant to exit the relationship. The credits accumulated

reflect the value of the investment that the customer has made in the scheme,

and therefore in the relationship.

Banks deal with a large number of individual retail customers. Banks

want Customer Relationship Management for its analytical capability to help

them manage customer defection rates and to enhance cross sell performance.

Data mining techniques can be used to identify which customers are likely to

defect, what can be done to win them back. Which customer are hot prospects

for cross sell offers, and how best to communicate those offers. Banks want to

win a greater share of customer spend on financial service. In terms of

operational CRM, many banks have been transferring service into contact

centres and online in an effort to reduce costs, in the face of considerable

resistance from some customer segments.

12

Customer relationship is the essence of a successful business and that‟s

why many firms started a CRM department which specializes in the sole

purpose of sustaining its customer base in the market. Customer relationship is

a major aspect for a long lasting business, especially in retailing as retaining the

customer could assure a thriving business with the support of the customers.

Retention strategy is not a luxury anymore as competition is not getting any

less. This strategy gives the firm the chance to have the merits of it as it is

cheaper to maintain the existing customers than acquiring new ones and to

enjoy a profitable association, the result of this strategy is loyalty.

Organizations need to understand the dimensions of this word and study

techniques of how it is obtained, as many retailers link the repeated purchase

with loyalty, whereas the difference in major as well as frequent purchase

could be for any other reason such as convenience, lack of choice and

information, or simply inertia.

Relationship

The „R‟ of CRM stands for „Relationship„. But what do we really mean

by the expression „relationship‟. Certainly, most of us would understand what it

means to be in a personal relationship, but what is a relationship between a

customer and supplier. At the very least a relationship involves interaction over

time.

Relationship quality

The discussion of trust and commitment suggests that some relationship

can be thought to be of better quality than others. Research into relationship

quality generally cites trust and commitment as core attributes of a high quality

relationship. However, a number of other attributes have also been identified,

including relationship satisfaction, mutual goals and cooperative norms.

Relationship satisfaction is not the same as commitment. Commitment

to a supplier comes as investments are made in the relationship, and

investments are only made if the committed party is satisfied with their

13

transactional history. In other words, investments are made in relationships

which are satisfactory. Mutual goals are present when the parties share

objectives that can only be achieved through joint action and relationship

continuity. Cooperative norms are seen when relational parties work together

constructively and interdependently to resolve problems.

Customer Relationship Management implementations are often designed

to build closer, more value-laden relationship with customers, it makes sense

for managers to be aware of the quality of the relationship they have with

customers.

Customer satisfaction, loyalty and business performance

An important rationale for Customer Relationship Management is that it

improves business performance by enhancing customer satisfaction and driving

up customer loyalty. There is a compelling logic to the model, which has been

dubbed that „satisfaction-profit chain‟. Satisfaction increases because customer

insight allows companies to understand their customers better and create

improved customer value propositions and better customer experiences.

As customer satisfaction rises, so does customer intention to repurchase. This

in turn influences actual purchasing behaviour, which has an impact on

business performance.

Customer loyalty

The term customer loyalty is used to describe the behaviour of repeat

customers, as well as those that offer good ratings, reviews or testimonials.

Some customers do a particular company a great service by offering favourable

word-of-mouth publicity regarding a product, telling friends and family, thus

adding them to the number of loyal customers. However, customer loyalty

includes much more. It is a process, a program or a group of programs geared

toward keeping a client happy so he or she will provide more business.

Customer loyalty can achieve in some cases by offering a quality

product with a firm guarantee. Customer loyalty is also achieved through free

14

offers, coupons, low interest rates on the part of the economy concerned with

providing basic government services. The composition of the public sector

varies by country, but in most countries the public sector includes such services

as the police, military, public roads, public transit, primary education and

healthcare for the poor. The public sector might provide services that non-payer

cannot be excluded from services which benefit all of society rather than just

the individual who uses the service and services that encourage equal

opportunity.

Customer loyalty may be a one-time program or incentive or an ongoing

group of programs to entice consumers. Buy-one get-one-free are very popular,

as `purchases that come with rebates or free gifts. Another good incentive for

achieving customer loyalty is offering a risk trial period for a product or service

also known as brand name loyalty, these types of incentives are meant to

ensure that customers will return, not only to buy the same product again and

again, but also to try other products or services offered by the company.

Excellent Customer service is another key element in gaining customers

loyalty, if a client has a problem, the company should do whatever it takes to

make things right, if a product is faulty, it should be replace or the customer‟s

money should be refunded. This should be standard procedure for any

reputable business, but those who wish to develop customer loyalty on the

large-scale basis may also go above and beyond the standard. They may offer

even more by way of free gifts or discounts to appease the customer.

Features of customer loyalty

The financial services sector has undergone drastic changes, resulting in

a market place which is characterized by intense competition, little growth in

primary demand and increased deregulation. In the new market place, the

occurrence of committed and often inherited relationship between a customer

and his or her bank is becoming increasingly scarce. Several strategies have

been attempting to retain customer loyalty, many bank have introduced

innovation products and services. However, as such innovations are frequently

15

followed by similar charges. It has been argued that a more viable approach for

banks is to focus on less tangible and less easy to imitate determination of

customer loyalty such as customer evaluative judgements like services quality

and satisfaction.

Customer loyalty in banking

The development of customer loyalty is one of the most important issues

today. To deal with this high concentrated market, business is attempting not

only to attract and satisfy customers but also to create a long-term relationship

with these customers. A bank has to create the customer relationship that

delivers value beyond the provided by the core product. This involves added

tangible and intangible elements to the core products, thus creating and

enhancing the product surrounding.

Factors influencing customer loyalty

Perceived Service Quality

Core offering

Satisfaction

Perceived value

Elasticity level

Market place

Demographics

Share of wallet

Image

Trust

Commitment

Perceived Service Quality (PSQ)

Introduced a service oriented approach to quality with the concept of

Perceived Service Quality and model of total Perceived Service Quality. This

approach is based on research into consumer behaviour and the effects of

expectations concerning goods performance on post consumption evaluations.

16

The consumers judge the overall excellence or superiority. The quality consists

of two primary elements, the first one is, to what degree a product or service

meets the needs of the consumers and second is, to what degree a product or

service is free from deficiencies.

Core Offering

The banks that boost the highest level of fiercely loyal customers have

built loyalty not on card programmes or gimmicks, but on a solid, dependable,

core offering that appeals to their customers. These banks have focused intently

on what they appeal to the type of customers they want to attract and have

determined and concentrated on delivering what is expected every time. This

built loyalty by understanding its customer‟s needs and then empowering its

employees to deliver those needs consistently.

Satisfaction

Customer satisfaction in banking industry means that the product or

service which is offered to the customer makes him or her satisfied and meets

his or her expectations. This means that the customer feel good to have the

service from that bank another time. In the competitive environment which the

competitors are trying to have the other‟s customers, this antecedent can be

vital. Customer satisfaction is therefore based on an evaluation of multiple

interactions and is considered as a combination of overall customer attitudes

towards the bank that incorporates a number of measures like meeting of

expectations and service quality.

Perceived Value

There is a multi-facet meanings of value which vary according to

different functional context – economics – (utility and monetary costs), social

science (human values), industrial settings (process and costs), and marketing

(consumer‟s perspective on trade off between benefits and sacrifices or costs).

The meaning is not limited to these functional definitions but also include

17

cognitive and affective aspects of value such as social, emotional and epistemic

value.

Elasticity Level

Elasticity expresses the importance of a purchasing decision-effectively

the level of involvement or indifference. This applies on both the customer and

the business.

Market Place

It is a key factor in the development of loyalty. If the number of

competing suppliers is high and little effort is required to switch, switching is

clearly more likely. This is the opposite of case of switching. Most banks enjoy

a high level of inertia loyalty simply because it‟s often so difficult and time-

consuming to change to a new bank and transfer direct debits and standing

orders.

Demographics

The developers of the conversion model, more affluent and better

educated customers and less likely to be committed to a specific brand. They

say that the commitment of less affluent consumers to the brands they use of

often unusually strong-possibly because they cannot afford to take the risk of

trying a brand that might not suit them as well. They also suggest that younger

consumers are less committed to brands than older consumers.

Share of Wallet

As market become saturated and customers have so much more to

choose from share of wallet which becomes increasingly important. It is

cheaper and more profitable to increase the share of what the customer spends

in the sector, than to acquire new customers.

Image

Image has been defined as the perceptions of an organization reflected

in the associations held in consumer memory. This is similar to corporate

18

image which is assumed to influence the customer‟s choice of service, when it

is difficult to distinguish between service attributes. Corporate image is

established or developed in the consumer‟s mind through communication and

experience.

Commitment

Customer commitment is important factor that affect loyalty. It is a

deeply held commitment to re-buy and re-patronize a preferred product or

service consistently in the future, thereby causing repetitive same-brand

purchasing despite situational influences and marketing efforts having the

potential to cause switching behaviour.

Trust

Investment manager polar capital plans to launch a fixed-life trust to

invest in global banks and financial stocks. Bank said the financial sector has

been deeply out of favour with investors since the financial crisis began, but the

return of dividend payments in particular could be a catalyst for a re-rating.

State Bank of India Macquarie Infrastructure Trust is an unlisted fund with

INR 11,871 million of committed capital.

Customer Relationship Management

Developing close, cooperative relationship with customers is more

important in the current era of intense competition and demanding customers

that it has been ever before. Many scholars are interested in strategies and

processes for customer classification and selectivity, one-to-one relationship

with individual customers, key account management and customer business

development processes, frequency marketing, loyalty programmes, cross-

selling and up-selling opportunities and various forms of partnering with

customers including co-branding, joint marketing, co-development and

strategic alliances. A majority of these promises are to individualise and

personalise customer relationship by providing vital information at every point

of customer interface.

19

Customer Relationship Management is an enterprise-wide activity; it is

not just confined to the marketing department of the organisation. The

objective of CRM is acquisition, retention and partnering with the customers.

There has to be segmentation of the customers for whom CRM is designed.

Factors responsible for growth of CRM

The recent growth of Customer Relationship Management can be

attributed to various factors. These include the reduced role of intermediaries,

especially with the advent of sophisticated computer and telecommunication

technologies. This growth in technology again allowed the producers to

directly communicate and get in touch with the customers at a very low cost.

This success of doing without intermediaries is also an account of the growth

of service economy. Since services are produced and delivered at the same

time, the role of intermediary gets lessened. Since the customers transact

directly with the service provider, he develops greater relational bonding with

the company and its people. This leads to greater need of maintaining and

enhancing the relationships which provides greater fruits.

The factor which has been responsible for the increased need and use of

Customer Relationship Management is enhanced emphasis that companies lay

on adopting total quality management as an essential component of modern

business. This increased use of total quality in all functions of the management

by the companies has forced them to involve the suppliers and the customers

across the value chain. The application of various supply chain initiative such

as Just in Time (JIT), Material Resource Planning (MRP) and Enterprise

Resource Planning(ERP) is not possible unless the company works in close

relationship with all the stakeholders.

Changing role of CRM

The explosion of new channels and new media, web in particular, has

caused organisations to look at ways to exploit their benefits. Customers want

the flexibility of being able to chosen when and how they make contact

whether via phone, web, e-mail, fax or by any other means. The challenge for

20

organisations is to look for low-cost solutions that will ease the development

and deployment of new and existing applications over new channels. Web

enablement is not enough: organisations also need solutions that have been

building from the ground up to the web-centric one.

Before beginning the task of implementing Customer Relationship

Management across enterprises, the organisation must first redefine the

enterprise, putting the customer into focus. Most organisations are structured

by functional specialisations (marketing, sales and customer service) in which

each department has a unique relationship with the customer. In this model,

there is no comprehensive view of the customer and no broad strategy for the

relationship. The enterprise typically does not also understand the existing or

potential profitability of that customer.

On the other hand, an end-to-end Customer Relationship Management

strategy focuses on the complete customer value chain. In this model, lines of

business collaborate around the customer, focusing on enhancing the customer

experience and increasing customer lifetime value.

Customer Relationship Management system alone does not help the

organisation deliver this type of experience to the customers. The importance

of customer experience is become more “customer-centric”.

Building and managing customer loyalty.

Creating a single window for the customer.

Managing or improving the customer experience.

Banking and financial sector

Today‟s banking rarely requires seeing the bank branch. Even if the

customer is required to visit the bank branch, it is no more a workplace ghetto.

There is a top class ambience to boot, centrally air-conditioned lounges. Coffee

and water dispensers of fridge stocked with goodies and chocolates. Even

minute things such as layout, furnishings and colour schemes for interiors,

signboards and brochure holder are planned out in detail to convey the bank‟s

21

changing facade. The entry of foreign banks and the emergence of new private

banks have changed the rule of the game. The customers are now welcomed

with a coffee or dosa or lunch at free of cost.

Recent customer service initiatives in banking industry

Today, most of the private banks operate from 8 a.m. to 8 p.m. Even

public sector banks have increased their working hours. Allahabad Bank which

earlier operated from 10 a.m. to 2 p.m. has opened regular banking activity till

3.30 p.m. These physical changes have been in addition to providing

technology-based support of anywhere anytime banking, introduction of the

facility of ATMs, net banking, phone banking, etc. There have been marked

shift in the way the branches have been appearing. Air-conditioning, wonderful

lighting, prominent locations, and other modern facilities are something that

does not surprise people by any means. Even the public sector behemoth State

Bank of India has planned for a uniform design, structure, seat placement and

wall colour painting across the country.

The branch managers in most of the private banks do not sit behind

closed doors, infact most of the cases they do not have a door at all. This is

deliberately designed to give people a feel that anyone can access the manager

without hesitation. ABN-Amro bank plans each if its branches to have a coffee

parlour. Bank Muscat‟s life manages books the ticket for his client, offers to

walk his dog to the nearest lamp-post and, if need be, even delivers grocery for

the week from the nearest departmental store. ABN-Amro bank‟s branch offers

unlimited Barista coffee from 7.30 p.m. to 11.00 p.m.

Customer Involvement in Banking

The bank‟s aim is to engage customers at the branch. The customer can

choose his time and the banks in turn create the right environment. Bandra

branch of SBI offers coffee to its customers. The bank wants to be homely and

interesting. So, it has started hosting programmer such as Dandia Week, Parsi

New Year, Women‟s Day and Diwali. Recently, it even allowed selling

vegetable cakes at the branch, The branch is reaping rich dividends also getting

22

700 customers a day. The concept behind offering a little bit extra encompasses

the ethic of offering the best service to customers according to their need and at

the same time ensuring the comfort of accessibility of its branches as well as

ambiance that makes banking a pleasure rather than a chore, Bandra has

tastefully done lounges, a smart art gallery to showcase local talent, a Barista

outlet to catch-up a quick cup of coffee and, of course, the impeccable front

office standards all for a lasting satisfaction.

Retail banking initiative in public sector

Realising the importance of customer service in the growth of banking

industry, even public sector banks have started designing their offers with a

new watch word for the customer‟s delight. Quite a few public sector banks

have carved out a separate branch to cater to retail customers. Personal

Banking Branches of SBI, Signature Bank of Punjab National Bank, Retail

Loan Factory of Bank of Baroda and Retail Boutique of Allahabad Bank are

few such branches. These branches are clearly no workplace ghettos. There are

a top class ambience to boot, centrally air-conditioned lounges, and amenities

such as free photocopier, fax and phone, tea or coffee and water dispensers and

fridge stocked with foodies also being proposed.

Approaches to CRM

Customer Relationship Management is a team for the software and other

methods with which a business manages its customer in the company may

access this database, to match customer needs with new product offerings and

other such services. CRM has gained a lot of importance for running a

successful business in the last few years. It has undoubtedly generated value,

implement new CRM initiatives to keep their customers happy and run a

successful business.

23

Different approaches to CRM:

o Operational CRM

Operational Customer Relationship Management renders automated

support for business that have a direct interaction with their customers.

1. Sales Force Automation (SFA)

Tracking customer preferences

Maintaining a lead tracker

Demographics

Contract management

Performance management

Tracking customer transactions

Many organisations set up call centres to maintain customer informative.

These call centres help customers with their queries about the organisation.

Several software companies offer CRM applications that allow an organisation

in efficient tracking and maintenance of customer.

2. Customer service and support (CSS)

Customer service and support automates, processes that are related

to service. This could include service requests, customer

communications.

3. Enterprise Marketing Automation (EMA)

Enterprise Marketing Automation applications automate

marketing tasks used for contact and lead generation. Enterprise

market in the relevant customer advertisement forms, the basis of

an effective EMA application.

o Analytical CRM:

For an effective and successful CRM strategy, it is necessary to

thoroughly analyse and understand customer behaviour. Analytical is used to

retain customers before they switch to a competitor. The more, the information

24

available to the software for these analyse is used to cross-sell product to

customers.

o Collaborative CRM:

Collaborative Customer Relationship Management is an approach where

the various departments of an organization share customer information among

themselves. For example, the information obtained through customer feedback

in the customer service, technical support, etc. Collaborative CRM also

facilitates a better communication between an organization and its customer

across different communication, online services are also provided to the

customer in an attempt to cut service costs.

A good collaborative CRM

Increases efficiency

Improves Customer satisfaction

Improves Customer service

Improves Customer relationship.

Thus a good CRM solution can not only help to make a customer happy,

but also benefit an organization in more ways than one.

Benefits of CRM

A Customer Relationship Management system may be chosen because it

is thought to provide the following advantages

Quality and efficiency

Decrease in overall costs

Decision support

Enterprise ability

Customer attention

Increase profitability

25

Challenges

Successful development, implementation, use and support of Customer

Relationship Management systems can provide a significant advantage to the

user, but often there are obstacles that obstruct the user from using the system

to its full potential. Instances of a Customer Relationship Management

attempting to contain a large, complex group of data can become cumbersome

and difficult to understand for ill-trained users. An interface that is difficult to

navigate or understand can hinder the CRM‟s effectiveness, causing users to

pick and choose which areas of the system to be used, while other may be

pushed aside. This fragmented implementation can cause inherent challenges,

as only certain parts are used and the system is not fully functional. The

increased use of customer relationship management software has also led to an

industry-wide shift in evaluating the role of the developer in designing and

maintaining its software. Companies are urged to consider the overall impact of

a viable CRM software suite and the potential for good or bad in its use.

Complexity

Tools and workflows can be complex, especially for large businesses.

Previously these tools were generally limited to simple Customer Relationship

Management solution which focused on monitoring and recording inter actions

and communications. Software solutions then expanded to embrace deal

tracking, territories, opportunities, and the sales pipeline itself. Next came, the

advent of tools for other client-interface business functions. These tools have

been, and still are, offered as on-premises software that companies purchase

and run on their own Information Technology infrastructure.

Poor usability

One of the largest challenges that Customer Relationship Management

systems face is poor usability. With a difficult interface for a user to navigate,

implementation can be fragmented or not entirely complete. The importance of

usability in a system has developed over time. Customers are likely not as

patient to work through malfunctions or gaps in user safety, and there is an

26

expectation that the usability of systems should be somewhat intuitive. An

intuitive design can prove most effective in developing the content and layout

of a Customer Relationship Management system.

Fragmentation

Often, poor usability can lead to implementations that are fragmented-

isolated initiatives by individual departments to address their own needs.

Systems that start disunited usually stay that way, and decision processes

frequently lead to separate and incompatible system, and dysfunctional

processes. A fragmented implementation can negate any financial benefit

associated with a customer relationship management system, as companies

choose not to use all the associated features factored when justifying the

investment.

Business reputation

Building and maintaining of a strong business reputation has become

increasingly challenging. The outcome of internal fragmentation that is

observed and commented upon by customers is now visible to the rest of the

world in the era of the social customer, in the past, only employees or partners

were aware of it. Addressing the fragmentation requires a shift in philosophy

and mindset in an organization so that everyone considers the impact to the

customer of policy decisions and actions. Some developments and shifts have

made companies more conscious of the life-cycle of a Customer Relationship

Management system. Companies now consider the possibility of brand loyalty

and persistence of its users to purchase updates, upgrades and future editions of

software. Additionally, Customer Relationship Management systems face the

challenge of producing viable financial profits. Poor usability and low usage

rates lead many companies to indicate that it was difficult to justify investment

in the software without the potential for more tangible gains.

27

Security concerns

A large challenge faced by developers and users is found in striking a

balance between ease of use in the Customer Relationship Management

interface and suitability and acceptability of security measures and its features.

Corporations investing in CRM software do so expecting a relative ease of use

while also requiring that customer and other sensitive data remain secure. This

balance can be difficult, as many believe that improvements in security come at

the expense of system usability.

Technical writers can play a large role in developing Customer

Relationship Management systems that are secure and easy to use. Customer

Relationship Management systems need to be more open to flexibility of

technical writers, allowing these professionals to become content builders.

These professionals can gather information and use it at their preference,

developing a system that allows users to easily access desired information and

is secure and trusted by its users.

Not only sales activities but also those for marketing, customer service,

and technical support the overall goals are of find, attract, and win new clients,

nurture and retain those the company already has, entice former clients back in

to the fold, and reduce the costs of marketing and client service. Customers

Relationship Management describes a company-wide business strategy

including customer-interface departments as well as other departments.

Measuring and valuing customer relationship is critical to implementing this

strategy.

Public Sector Banks (PSBs)

In India, as in many developing countries, the public sector bank has

been the dominant element in the country‟s financial system. This sector has

preformed the key functions of providing liquidity and payment services to the

real sector and has accounted for the bulk of the process of intermediation

process. Besides institutionalizing savings, the banking sector has contributed

to the process of economic development by serving as a major source of credit

28

to households, government, business and to weaker sectors of the economy like

village and small scale industries and agriculture.

An important landmark in the development of banking sector in recent

years has been the initiation of reforms following the recommendations of the

first Narasimham Committee on Financial System. In reviewing the strengths

and weaknesses of these banks, the committee suggested several measures to

transform the Indian banking sector from a highly regulated to a more market

oriented system and to enable it to compete effectively in an increasingly

globalised environment. Many of the recommendations of the committee

especially those pertaining to interest rate, an institution of prudential

regulation and transparent accounting norms were in line with banking policy

reforms implemented by a host of developing countries since 1970. Public

sector banks are banks where a majority stake (more than 50%) is held by a

government. The shares of these banks are listed on stock exchanges. There are

a total of 26 PSBs in India.

Emergence of Public Sector Banks:

The Central Government entered the banking business with the

nationalisation of the Imperial Bank of India in 1955. A 60% stake was taken

by the Reserve bank of India and the new bank was named as the State bank of

India. The seven other state banks became the subsidiaries of the new bank

when nationalised on 19th

July 1960. The next major nationalisation of banks

took place in 1969 when the government of India, under Prime Minister Indira

Gandhi, nationalised an additional 14 major banks. The total deposits in the

banks nationalised in 1969 amounted to 50 Crores . This move increased the

presence of nationalised banks in India, with 84% of the total branches coming

under government control.

The next round of nationalisation took place in April 1980. The

government nationalised six banks. The total deposits of these banks amounted

to around 200 Crores. This move led to a further increase in the number of

29

branches in the market, increasing to 91% of the total branch network of the

country. The objectives behind nationalisation where:

To break the ownership and control of banks by a few business

families.

To prevent the accumulation of wealth and economic power.

To mobilize savings from masses from all parts of the country.

To cater the needs of the priority sectors.

Public sector banks before the economic liberalisation:

The share of the banking sector held by the public banks continued to

grow through the 1980s, and by 1991 the public sector banks accounted for

90% of the banking sector. A year later, in March, 1992, the combined total of

branches held by public sector banks was 60,464 across India, and deposits

accounted for Rs. 1,10,000/- Crores. The majority of these banks were

profitable, with only one out of the 27 public sector banks reporting a loss.

Public sector banks after the reforms:

After the reforms in the early 1990s, the nationalised banks saw a

change in fortunes: in 1992-93, 12 of the nationalised banks reported losses,

and the other seven nationalised banks reported marginal profit. 1995-96 saw a

similar problem, with nationalised banks reporting a combined loss of

Rs 1160 Crores. However, the early 2000 saw a reversal of this trend, such that

in 2002-03 a profit of Rs.7,780 Crores by the public sector banks, a trend that

continued throughout the decade, with Rs.16,856 Crore profit in 2008-09.

Role of Public Sector Banks

A proper financial sector is of special importance for the economic

growth of developing and underdeveloped countries. The public banking sector

which forms one of the backbones of the financial sector should be well

organized and efficient for the growth dynamics of a growing economy. No

underdeveloped country can progress without setting up a sound system of

30

commercial banking. The following systems are important for a public sector

banking in a developing country.

Capital Formation:

The rate of saving is generally low in an underdeveloped economy due

to the existence of deep rooted poverty among the people. Even the potential

savings of the country cannot be realized due to lack of adequate banking

facilities in the country. To mobilize dormant savings and to make them

available the entrepreneurs for productive purpose, the development of a sound

system of public sector banking is essential for a developing economy.

Monetization:

An underdeveloped economy is characterized by the existence of a large

non-monetized sector, particularly in the backward and inaccessible areas of

the country. The existence of this non-monetized sector is a hindrance to the

economic development of the country. The banks, by opening branches in rural

and backward areas, can promote the process of monetization in the economy.

Innovations:

Innovations are an essential prerequisite for economic progress. These

innovations are mostly financed by bank credit in the developed countries. But

the entrepreneurs in undeveloped countries cannot bring about these

innovations for lack of bank credit in an adequate measure. The banks should,

therefore, pay special attention to the financing of business innovations by

providing cheap credit to entrepreneurs.

Finance for priority sectors:

The commercial banks in underdeveloped countries generally hesitate in

extending financial accommodation to priority sectors such as agriculture and

small scale industries on account of the risks involved there in. They mostly

extend credit to trade and commerce where the risk involved is far less. But for

the development of these countries it is essential that the banks take risk in

extending credit facilities to the priority sectors.

31

Provision for medium and long term finance:

The commercial banks in underdeveloped countries invariably give

loans and advances for a short period of time. They generally hesitate to extend

medium and long term loans to businessmen. It is well known business need,

medium and long term loans for their proper establishment.

Cheap money policy:

The public sector banks in underdeveloped economy should follow

cheap money policy to stimulate economic activity or to meet the threat of

business recession. In fact, cheap money policy is the only policy which can

help to promote the economic growth of an underdeveloped country. It is

heartening to note that recently the public sector banks have reduced their

lending rates considerably.

TOP PUBLIC SECTOR BANKS IN INDIA:

State Bank of India

The Imperial Bank of India (IBI) was the oldest and the largest

commercial bank of the Indian subcontinent. The Government of India

nationalised the Imperial Bank of India in 1955 with Reserve Bank of India

taking a 60% stake and was subsequently transformed in to State Banks of

India.

The State Banks of India is 29th

most reputable bank in the world

according to Forbes Global 2000. The subsidiaries of SBI are

State Bank of Bikaner & Jaipur

State Bank of Hyderbad

State Bank of Mysore

State Bank of Patiala

State Bank of Travancore

State Bank of Saurashtra merged with SBI on 13th

August 2008.

State Bank of Indore merged with SBI on 19th

June 2009

32

Punjab National Bank

Punjab National Bank (PNB) was registered on May 23, 1894 under the

Indian Companies Act. The Bank is the second largest Government – owned

commercial bank in India. Punjab National Bank was ranked 1243 in the

Forbes Global 2000.

Bank of Baroda

Maharajah of Baroda Sir Sayajirao Gaekwad III founded the bank in

1908. Bank of Baroda is the third largest Public Sector Bank in India

nationalised by the Government of India in 1969.

Bank of India

Bank of India was established in 1906, Government-owned since

nationalization in 1969, BOI is a founder member of Society for Worldwide

Inter Bank Financial Telecommunications.

Union Bank of India

Union Bank of India was inaugurated by Mahatma Gandhi. The Bank

started its operations in 1920. UBI was ranked 1350 on Forbes Global 2000

list.

Canara Bank

Canara Bank was established in 1906. The Government of India

nationalised Canara Bank in 1969. It was ranked at 1299 in the Forbes Global

2000.

Oriental Bank of Commerce

Oriental Bank of Commerce was established in 1943. OBC was

nationalized in 1980.

Indian Overseas Bank

Indian Overseas Bank was established in 1937. The Government of

India nationalized IOB in 1967 in 2000, IOB engaged in an initial public

33

offering (IPO) that brought the government‟s share in the bank‟s equity down

to 75%.

Syndicate Bank

Syndicate Bank was established in 1925. SB was nationalised by

Government of India in 1967.

UCO Bank

United Commercial Bank was established in 1943. After nationalized in

1967 it is called as UCO Bank.

Vijaya Bank

Vijaya Bank was founded in 1931. The bank became a scheduled bank

in 1958 the bank was nationalised in 1980.

Allahabad Bank

Allahabad Bank began operations in 1865 the Government of India

nationalized Allahabad Bank in 1969. In 2002, the bank came out with Initial

Public Offer (IPO) which reduced the Government‟s shareholding to 71%.

Bank of Maharashtra

Bank of Maharashtra was Registered in 1935, the Government of India

nationalized BOM in 1969. The Bank has the largest network of branches by

any Public Sector Bank in the state of Maharashtra.

Dena Bank

Dena Bank Ltd when it was incorporated as a Public Company in 1939

it was nationalised in 1969 along with 14 other banks in India.

Indian Bank

Indian Bank was established in 1907 and was nationalised in 1969, it

has its head quarters in Chennai.

34

United Bank of India

United Bank of India was formed in 1950 with the amalgamation of four

banks viz. Comilla Banking Corporation Ltd. (1914), Bengal Central Bank Ltd.

(1918), Comilla Union Bank Ltd. (1922) and Hooghly Bank Ltd. (1932) and in

1969 the Government of India nationalized UBI.

Statement of the problem

Customer loyalty has been a crucial factor for a long time now with

banks. In the current scenario, sustaining an existing customer is more

important than getting a new one. With institutions going through cost cutting

measures due to financial pressures it becomes more important to closely

monitor customer experience. Banks are laying many new ways to keep

customers coming. A bank that has successful customer loyalty program

retains customers for a long period of time, which significantly increases

revenue for the company.

Banks can turn customer relationship into a key competitive advantage

through strategic developments across a broad spectrum. The purpose of the

present study with the observation that all over the world there is a growing

concern towards attracting and maintaining long term relationships with

customers, as an important corporate strategy for success and survival. The

forces of deregulation, globalization and advancing technology have increased

the competitive pressures in the banking industry. Thus it has become

imperative for banks to focus on customer centric approaches and develop long

term relationship with the customer to get through turbulent times.

Banks are concentrating only on acquiring new customers. They seldom

understand the importance and profitability of creating loyalty and retaining

customers. For the last decade most banks have been so absorbed in their own

internal issues, particularly merger drives, cost-cutting and re-engineering,

those customer and their relationship often received short shrift. Banks have to

come out with innovation measures to satisfy the needs of both the present and

35

the potential customers, at the same time adopt procedures to win back the lost

customers.

Hence, the present study entitled as “A study on Customer Loyalty in

Public Sector Banks in Tiruchirappalli District with special reference to State

Bank of India”.

Objectives

1. To study the existing customer loyalty in Public Sector Banks.

2. To identify the factors which influence the Customer loyalty in Public

Sector Banks.

3. To examine the perceived service quality and perceived value.

4. To identify the level of satisfaction, commitment and trust towards the

Public Sector Banks.

5. To provide suggestions to increase customer loyalty in Public Sector

Banks.

Research Methodology

The empirical research will be quantitative in nature. The primary and

secondary objectives will be explained by means of statistically analysing the

primary data obtained from a self developed survey. This questionnaire

combined questions, definitions and insights from numerous sources on each

and every factor. The analysis is based on primary and secondary data based.

To conduct the primary research, questionnaire was prepared to survey about

600 customers in State Bank of India in Tiruchirappalli District.

Apart from the primary research and secondary research in the form of

journals, newspapers, books, reports, articles and websites about State Bank of

India.

Study Area

The researcher has selected Tiruchirappalli District as the study area and

selected five urban branches based on number of customers, turnover,

commitment, performance and the market place. The five branches are (i)

36

State Bank of India, Trichy Main, Near Central Bus Stand, Trichy (ii) State

Bank of India, Chinthamani Branch (iii) State Bank of India, Srirangam

Branch, (iv) State Bank of India, Kailash Nagar Branch, Thiruverumbur

(v) State Bank of India, Training Centre Branch, Kailasapuram.

Sampling

The present study is mainly based both primary and secondary data. The

stratified random sampling technique has been adopted for statistical analysis.

Sampling size

The study area has 10 branches containing 60,000 customers. The

researcher has selected five branches out of which 600 customers were

interviewed on the basis of stratified random sampling technique.

Statistical tools

This study is based on descriptive research design using questionnaire as

the key research. For the descriptive statistics Pearson Correlation, Multiple

Regression, Chi-square Test, F-test, T-test, Likert‟s Five Point Scale, Likert‟s

Seven Point Scale, Cornbach‟s Alpha System, Anova Table, KMO and

Bartlett‟s Test (Kaiser-Meyer-Olkin) were used.

Causal research design was used to explore the possible linkages

between the variables (independent and dependent) and to demonstrate their

contribution in the performance of the growth of the banks in terms of benefits

achieved by implementing the tools by applying parametric statistics (F-test,

correlation and regression) and non-parametric statistics (Chi-square).

Hypotheses

H1: There is no relationship between Image and Customer loyalty.

H2: There is no relationship between Commitment and Customer loyalty.

H3: There is no relationship between Trust and Customer loyalty.

37

H4: There is no relationship between Customer satisfaction and Customer

loyalty.

H5: There is no relationship between Perceived value and Customer loyalty.

Limitations

The study limited to State Bank of India in Tiruchirappalli District.

The study restricted to five urban branches.

The numbers of respondents are limited to 600.

Chapter Scheme

Chapter – I The first chapter deals with introduction of the study,

statement of the problem, objectives of the study,

methodology, sampling techniques, hypothesis, tools of

the study, limitations and chapter scheme.

Chapter – II The second chapter deals with Review of related

Literature.

Chapter – III The third chapter deals with profile of selected public

sector banks in Tiruchirappalli District.

Chapter – IV The fourth chapter deals with analysis and interpretation

of customer loyalty in selected public sector banks in

Tiruchirappalli District.

Chapter – V The fifth chapter deals with summary of findings,

suggestions and conclusion.

38

CHAPTER – II

REVIEW OF LITERATURE

Customer satisfaction is the valued outcome of a good business practice.

According to Drucker (1954), the principle purpose of a business is to create

satisfied customer. According to this model, satisfaction or dissatisfaction is

determined by the difference between the customers‟ expectations (E) of a

particular product or service and their perceptions of the actual performance (P)

of this product or service. If the customers‟ expectations are fulfilled, the result

is satisfaction; if not, dissatisfaction occurs. The customers‟ satisfaction (S) can

thus be expressed in mathematical terms as the difference between expectation

and performance.

Jacoby and Chesnut (1978) have interpreted loyalty as patterns of repeat

purchase of product or service. Loyalty to a bank can be explained as

continuing patronage over time.

Service quality represents the difference between customer expectations

of what a firm should provide (i.e. expectations) and perceived service

performance. Past research establishes relationships between service quality

and costs (Crosby, 1979)

Early concepts of satisfaction research have defined satisfaction as a

post choice evaluation judgement concerning a specific purchase decision

(Oliver, 1980). Most researchers agree that satisfaction is an attitude or

evaluation that is formed by the customer comparing their pre-purchase

expectations of what they would receive from the product to their subjective

perceptions of the performance they actually did receive.

Customer satisfaction refers to an attitude or evaluation formed by a

customer comparing pre-purchase expectations, they would receive from the

product or service to their subjective perceptions of the performance they

actually did receive. Customer satisfaction is a fundamental determinant of

long-term consumer behaviour (Oliver, 1980).

39

In marketing literature (Oliver 1980) as well as in recent information

system studies the disconfirmation emerges as the primary foundation for

satisfaction models. According to this theory, satisfaction is determined by the

discrepancy between perceived performance and cognitive standards such as

expectation and desires. Oliver (1980) described the process by which

satisfaction judgments are reached in the expectancy disconfirmation

framework.

Relationship marketing thus aims at increasing customer profitability

while providing between services for customers. Several studies have

empirically demonstrated a positive association between RM strategies and

business performance. Within a banks context, found that German banks in

contrast to American banks, managed to maintain a stable market position

during the 1980s as a consequence of relationship oriented banking strategies.

Relationship marketing emerged in the 1980s as an alternative to the

prevailing view of marketing as a series of transactions, because it was

recognised that many exchange, particularly in the serviced industry, were

relational by nature.

Churchill and Surprenant (1982) believe that what is needed is a more

comprehensive theory that specifies when disconfirmation will influence

satisfaction. Satisfaction research has begun to identify some of the conditions

under which expectations disconfirmation is likely to influence satisfaction.

Type of product has been shown to influence the effect of disconfirmation on

satisfaction.

Churchil and Suprenant (1982) defined customer satisfaction as a

comparison of the rewards and costs associated with the use or purchase of a

goods or service in relation to the anticipated consequences of the use or

purchase. They likened customer satisfaction to an attitude. In addition, they

suggest that satisfaction is related to the size and direction of the

disconfirmation of expectations experience.

40

Churchill and Suprenant (1982), in particular, the latter author argued

that the different definitions of expectations and the difficulties with

measurement operationalisation have undermined these models which used

expectation concept. Thus, there was no consistency in operationalising the

expectation part of customer satisfaction in the literature. Some authors have

considered that neither disconfirmation nor expectation had any effect on

customer satisfaction.

The concept of „Relationship Marketing‟ has emerged within the field

of Services Marketing and Industrial Marketing in the last years of the

twentieth century. One of the most important contributions was proposal,

which established that the fundamental element in marketing is the

management of interactions, although a decade earlier Berry (1983) had

already proposed a formal definition of Relationship Marketing as a strategy to

attract, maintain and enhance customer relationships.

In this arena that term Customer Relationship Management has emerged

and being introduced by Berry (1983) in several literature is defined as a

combination of business process and technology that seeks to understand a

company‟s customer from the perspective of who they are, what they do, and

what they are like.

Relationship marketing emerged in an alternative to the prevailing view

of marketing as a series of transactions, because it was recognised that many

exchange, particularly in the serviced industry, were relational by nature

(Berry, 1983).

Research showed that there were differences in what managers thought

their customers valued and what customers said they valued. Such differences

created the potential for mistakes in the efforts of an organisation of deliver

value of customers (Parasuraman et al., 1985).

According to Berry and Gresham (1986) Relationship retailing can be

attained by establishing and maintaining long-term bonds with customers,

rather than acting as if each sales transaction is a completely new encounter. It

41

compels customers to implement some specific strategies that not only

differentiate their offer in ways that are relevant to their target market, but also

difficult for competitors to duplicate.

Cadotte et al., (1987) utilized a set a standard called experience-based

norms that “reflect desired performance in meeting needs/wants”. These new

standards were tested in the service domain and the authors found that these

measures were better at explaining satisfaction than was disconfirmation based

on expectations. The few consumer studies on debit cards have likewise

focused on usage rates.

Perceived performance is defined as customer‟s perception of how

product performance fulfils their needs, wants and desire (Cadotteet et al.,

1987). Perceived quality is a customer‟s judgment about an entity‟s overall

excellence or superiority. Expectations are viewed as predictions made by

consumers about what is likely to happen during impending transaction or

exchange (Zeithaml, 1988).

Parsuraman, Zeithaml, and Berry (1988) attempted to develop

SERVQUAL to assess perception to customer about service quality in service

organization. They came up with five dimensions namely tangibles, reliability,

responsiveness, assurance and empathy.

The model developed by Parsuraman et al., (1988) was used and tested

in which five gaps involving marketing information gap, standard gap, service

performance gap, communication gap, and service quality gap were studied.

Old customers also pay less attention to competing brands and advertising, are

less price sensitive and create favourable word-of-mouth (Desai and Mahajan,

1988). Service quality represents the difference between customer expectations

of what a firm should provide (i.e. expectations) and perceived service

performance (Parasuraman et al., 1988).

Retaining old customers also costs less than acquiring new ones. The

company knows the customers and what they want, and the initial costs of

42

attracting the customers have already been expended (Davidow and Uttal,

1989).

Consumer satisfaction is a central element in the marketing exchange

process, because it undoubtedly contributes to service providers‟ success the

higher the probability that consumers will repeat purchase establishment and

repurchase highlight the importance of identifying and explaining the

conditions under which satisfaction develops. The two key elements stand out

in the literature of relationship marketing: customer loyalty and word-of-mouth

and loyalty is one of the primary phases of relationship marketing especially in

relation to profitability from a theoretical and empirical approach [Reichheld

and Earl Sasser, 1990].

In broad terms, “satisfaction” can be understood as an individual‟s

attitude towards various aspects of his or her life – for example, the person‟s

own job or a service received from a company (Wilkie, 1990). An individual

can thus have varying degrees of satisfaction at any given time; for example, a

person might be satisfied with the way in which he or she has been treated by

the employees of a bank, while simultaneously being dissatisfied with the

opening times of same bank.

With the increasing important of relationship marketing in recent years,

particularly in the service industries, the emphasis now is on customer loyalty.

Several authors emphasize the positive relationship existing between customer

loyalty and business performance (Reichheld and Sesser, 1990).

Parsuraman, et al., (1991) investigated the impact of organizational

barriers to deliver high quality service performance with the help of customer

perceptions and expectations. A high level of bank customer‟s satisfaction was

directly related to the location and accessibility of Automatic Teller Machines.

The respondents‟ evaluation of ATM services indicated a surprising

willingness to accept the incorporation of new functions and services provided

to them through ATMs (i.e. loan request, credit card payments and transfer of

funds). In their study, the Euclidean distance attached to the withdrawing of

43

money from ATMs has indicated that bank customers seemed to be only

moderately satisfied with this provision of service. This result may be because

of either the recognition of a routinized behaviour or occasional errors detected

in bank statements. A low level of satisfaction was attached by bank customers

to the factor associated with their experience of having to queue when using an

ATM. These authors also draw attention to the important role of ATMs in

conditioning customers‟ perceptions of the services offered by banks. The

move away from proprietary network offers banks a way of sharing the high

cost of installing ATMs and providing better availability and convenience.

Further, it would seem that customers are favourably inclined towards the use

of ATMs for conducting other business with banks. However, that bank

customers emphasized the breakdown in ATMs as an important source of

service dissatisfaction. Technological definition of CRM was given as the

market place of the future is undergoing a technology-driven metamorphosis

[Berry and Parasuraman, 1991].

Customer satisfaction of services consists of two elements: service

encounter satisfaction and overall service satisfaction. They suggested that a

cumulative positively satisfying service encounter creates a more global feeling

of satisfaction. High levels of customer satisfactions has been linked to

behavioural intentions including attitude change (Bolton and Drew, 1991),

repeat purchase intentions, and customer loyalty.

The examples of a narrow approach include electronic marketing

(Blattberg and Deighton, 1991) and after marketing (Vavra, 1992). Electronic

marketing encompasses all marketing efforts supported by information

technology while after marketing efforts focus on customer bonding after the

sale is made. Early concepts of satisfaction research have defined satisfaction

as a post choice evaluation judgement concerning a specific purchase decision

(Churchill and Sauprenant, 1992).

In an automated banking service context, customer satisfaction is

positively related to financial performance. Satisfaction often plays a mediating

44

role between customer perception of service quality and the creation of

behavioural intentions (Cronin and Taylor, 1992). In effect, IM is the process,

which operates, in this view, across the interface between staff and

management, and between departments in order to maximize the internal and

external customer satisfaction. Past research establishes relationships between

service quality and costs with profitability, customer satisfaction, (Cronin and

Taylor, 1992) and word-of-mouth marketing.

Customer satisfaction of services consists to two elements: service

encounter satisfaction and overall service satisfaction. They suggested that a

cumulative positively satisfying service encounter creates a more global feeling

of satisfaction. High levels of customer satisfactions has been linked to

behavioural intentions including attitude change, repeat purchase intentions and

customer loyalty (Boulding et al., 1993).

The concept of „Relationship Marketing‟ has emerged within the field of

Services Marketing and Industrial Marketing in the last years of the twentieth

century. One of the most important contributions was Hunt‟s (1993) proposal,

which established that the fundamental element in marketing is the

management of interactions, although a decade earlier had already proposed a

formal definition of Relationship Marketing as a strategy to attract, maintain

and enhance customer relationships.

The rate of adoption of innovations for different countries varies

according to the characteristics of these countries. Absent regulatory

conditions, rapid acceptance of the innovation may be seen as increasing

satisfaction with the product (Rust and Zehorik, 1993). Conversely, a slow rate

of adoption may be a signal that the product has not been effectively

communicated to the target population. Worse still, it may be a sign that the

product does not meet the needs of the target market.

Technological definition of Customer Relationship Management was

given as the market place of the future is undergoing a technology-driven

metamorphosis. Berry stressed that the attraction of new customers should be

45

viewed only as intermediate step in the marketing process. While undertaking a

study on the field of customer retention and corporate profitability, Reichheld

(1993)

With the increasing important of relationship marketing in recent years,

particularly in the service industries, the emphasis now is on customer loyalty.

Several authors emphasize the positive relationship existing between customer

loyalty and business performance (Reichheld, 1993).

Customer service loyalty can lower costs and increase profitability. The

cost of retention of a customer is cheaper than to recruit a new customer

(Barsky, 1994). Service loyalty is a behavioural aspect. Behaviour of a

customer depends on the availability of the services and their quality. The

demand for the purchase of product or service depends on the quality of the

service available to the customers. Morgan and Hunt (1994) have added

reliability and integrity are also important elements for trust on partner. Morgan

and Hunt, 1994. Commitment is defined as a desire to maintain a relationship.

They have observed in their studies that customers resist to changes the

organisation.

Relationship marketing emerged in an alternative to the prevailing view

of marketing as a series of transactions, because it was recognised that many

exchange, particularly in the serviced industry, were relational by nature

(Gronroos, 1994).

Gronroos (1994) defines Relationship Marketing (RM) as marketing is

to establish, maintain and enhance and, when necessary, terminate establish

with customers and other stakeholders, at a profit so that the objectives of all

parties involved are met; and this is done by mutual exchange and fulfilment of

promises, within the network of relationship and acknowledging a stable

customer base. There has been some confusion regarding the difference

between service quality and customer satisfaction. Conceptual and empirical

overlap between the two concepts has been debated among serviced quality

46

researchers (Rust and Oliver, 1994) but the literature is consistent about the

unique nature of each concept (Liljander and Strandvik,. 1994).

Building strong customer relationship has never been more in the

current scenario. Changes in the marketing environment comprise of fierce

competition, emergence of e-commerce, complex multi-channel strategies, and

a volatile consumer buying behaviour. These factors have placed more

emphasis than ever on the importance of customer loyalty. Dick and Basu

(1994) describe customer loyalty as “biased repeat purchase behaviour” that is

a key driver for nurturing a sustainable competitive advantage, especially

during tough economic times. Increasing satisfaction leads to higher future

profitable (Anderson et al., 1994), and lower costs related to defective goods

and services.

Potter-Brotman (1994) describes how service affects retention and

brings up the value of teaching all employees to be service providers, with the

ability to enhance relationships with customers rather than endanger them. The

author suggests that companies must concentrate on hearing customers‟ unique

voices in order to find out what kind of service they consider to be exceptional.

Many empirical studies in the literature have found a positive

relationship between customer satisfaction and financial performance

(Anderson et al., 1994). Some researchers demonstrated a direct link between

actual performance and satisfaction levels. However, to avoid the debate

surrounding the nature of the expectation concept in measuring customer

satisfaction, this research has followed an alternative approach, which initially

depended on customers‟ actual evaluations of satisfaction, rather than on the

gap between perception and expectation (Cronin and Taylor; Teas, 1994).

Many studies have demonstrated a positive relationship between

customer satisfaction and Bank Image – in terms of both a faithful attitude

towards the company and loyal consumer behaviour. It is therefore

unsurprising that other studies have demonstrated a positive relationship

47

between customer satisfaction and financial performance (Anderson et al.,

1994).

It is therefore unsurprising that other studies have demonstrated a

positive relationships between customer satisfaction and financial performance

(Anderson et al., 1994). Customer Relations Management has been a part of

marketing literature since more than a decade. Interestingly, there is still much

debate over what exactly constitutes CRM (Nevin, 1995). There are few

empirical works which have explored the motivations and benefits consumers

get from keeping a long-term relationship with a specific bank [Sheth and

Parvatiyar, 1995] even though it is obvious that, in practice, such benefits are

interpreted as advantages by consumers in terms of their satisfaction and their

analysis may render more efficient competitive strategies.

According to Gremler and Brown, (1995) it is interpersonal bonds

which is defined as the degree to which customers perceive having a personal,

sociable relationship with service provider employees or organization,

including customer friendship, feelings of familiarity, trust and comfort.

Customer Relationship Management as database marketing (Peppers and

Rogers, 1995) emphasizing promotional aspects of marketing by leveraging

customer databases. Services are performance where the employees play a

major role in shaping he service experience [Bitner, 1995].

Technological definition of Customer Relationship Management was

given as the market place of the future is undergoing a technology-driven

metamorphosis. Berry stressed that the attraction of new customers should be

viewed only as intermediate step in the marketing process. While undertaking a

study on the field of customer retention and corporate profitability, stated that

the role of customers is essential for corporate performance, so that when

relationships with customers endure, profits rise [Sheth and Parvatiyar, 1995].

Spreng et al., (1995) examine the importance of service recovery in

determining overall satisfaction, arguing that a company is more likely to retain

a customer by encouraging complaints and then address them, than by

48

assuming that the customer is satisfied. Satisfied and properly served customers

are more likely to return to an organisation than are dissatisfied customers who

could choose simply to go elsewhere (Ovenden, 1995).

Ovenden (1995) argues that organisations must be aware of how well or

badly its customers are treated. Customers rarely complain, and when someone

does, it might be too late to retain that customer. One important component in

the concept of satisfaction is complaint management.

Consumers, even though satisfied, may suddenly decide to switch

service providers. A satisfied customer may or may not intend to return to a

company, which is the reason satisfaction does not necessarily lead to

retention. Customer satisfaction can even increase in a company while

retention levels remain unchanged (Lowenstein, 1995). Achieving customer

satisfaction is a vital target for most service firms today (Jones and Sasser,

1995) as it leads to improved profits, word-of-mouth and less marketing

expenditure.

Customer retention also brings benefits such as employee retention and

satisfaction, better service, lower costs (Reichheld, 1995), lower price

sensitivity, positive word-of-mouth, higher market share, higher efficiency and

higher productivity. Employees must be motivated and trained to recognize the

external customer by “thinking backwards” from customer needs to the

required actions. In effect, IM is the process, which operates, in this view,

across the interface between staff and management (Varey, 1995) and between

departments in order to maximize the internal and external customer

satisfaction.

With the increasing important of relationship marketing in recent years,

particularly in the service industries, the emphasis now is on customer loyalty.

Several authors emphasize the positive relationship existing between customer

loyalty and business performance (Sheth and Parvatiyar, 1995).

The constructs are highly correlated and sometimes difficult to separate

in transactional interactions, but even more so from a relationship perspective

49

(Dabholkar, 1995). In long-term relationships perceived quality and satisfaction

are likely to merge into an overall evaluation of relationship satisfaction.

Relationship marketing will not automatically lead to stronger customer

relationships; rather, customer will exhibit different levels of relationship

closeness and strength (Berry, 1995; Liljander and Standvik 1995).

Increasing satisfaction leads to higher future profitable, and lower costs

related to defective goods and services. Higher satisfaction increases

willingness of buyers to pay price premiums, provide referrals, and use more of

the product. (Reichheld, 1996).

The concept of „Relationship Marketing‟ has emerged within the field of

Services Marketing and Industrial Marketing in the last years of the twentieth

century. One of the most important contributions was proposal, which

established that the fundamental element in marketing is the management of

interactions, although a decade earlier had already proposed a formal definition

of Relationship Marketing as a strategy to attract, maintain and enhance

customer relationships (Beatty et al., 1996).

Customer satisfaction is important, it is not equally important to the

company. There are many customers whose satisfaction is less important, such

as those a company cannot serve or who are unprofitable; on the other hand,

there are customers whose satisfaction is crucial to a company‟s survival, and

the goal should always be to satisfy those customers. Hallowell (1996) argues

that customer satisfaction on its own cannot produce lifetime customers even

though satisfaction can result in retention. Indicate that satisfaction is merely a

step towards the goal of customer retentions, and that retention effects increase

with the degree of satisfaction. Customers not wanted by the company,

i.e. those who are unprofitable or whose needs cannot be met by the company,

should, however, not be retained (Reichheld 1996).

Customers could defect at a rate of 10-30 per cent per year (Reichheld,

1996). A decrease of only five per cent in customer defection can increase

profits up to 95 per cent, depending in the industry. In banks, the increase in

50

usually 85 per cent (Reichheld, 1996), and Reichheld and Kenny argue that this

is because of longevity effects. Another advantage is that while customer

acquisition strategies are easily copied by competitors, retention strategies are

not. Achieving customer satisfaction is a vital target for most service firms

today as it leads to improved profits, word-of-mouth, and less marketing

expenditure (Reichheld, 1996).

Customer value is, “the consumer‟s overall assessment of the utility of a

product based on perceptions of what is received and what is given”. Customer

value is, therefore, a trade-off between what the customer received- for

example, quality, benefits, worth, or utilities – and what he gave up to acquire

and use a product – such as price or sacrifices (Woodruff, 1997). Woodruff

(1997) expanded on this definition to ensure that his definition clearly adopted

the perspective of the customer on value. It incorporated both desired and

received value and emphasized that value stems from the learned perceptions,

preferences, and evaluations of customers. Consumer loyalty is considered an

important key to organizational success and profit (Oliver, 1997).

Research showed that there were differences in what managers thought

their customers valued and what customers said they valued. Such differences

created the potential for mistakes in the efforts of an organisation of deliver

value of customers (Woodruff, 1997).Increasing satisfaction leads to higher

future profitable, and lower costs related to defective goods and services

(Anderson et al., 1997).The two key elements stand out in the literature of

relationship marketing: customer loyalty and word-of-mouth and loyalty is one

of the primary phases of relationship marketing especially in relation to

profitability from a theoretical and empirical approach [Payne and Rickard,

1997] The two key elements stand out in the literature of relationship

marketing: customer loyalty and word-of-mouth and loyalty is one of the

primary phases of relationship marketing especially in relation to profitability

from a theoretical and empirical approach.

51

General model of satisfaction contained a third variable that is not

mentioned in the confirmation or disconfirmation model (Vavra, 1997). This

third variable is the importance (I) of the service or product attribute under

consideration. This variable is relevant because not all attributes are equally

important to customers; for example, a bank customer is likely to rate financial

success as being of greater importance to satisfaction than, say, the friendliness

of staff members.

Bejou et al., (1998) propose that customer satisfaction can be enhanced

through relationships, provided they are developed and managed to the

customer‟s satisfaction. There are few empirical works which have explored

the motivations and benefits consumers get from keeping a long-term

relationship with a specific bank [Gwinner et al., 1998] even though it is

obvious that, in practice, such benefits are interpreted as advantages by

consumers in terms of their satisfaction and their analysis may render more

efficient competitive strategies (Gwinner et al., 1998).Increasing loyalty further

increases future revenue and reduces the cost of future transactions. (Srivastava

et al., 1998).

Consumer satisfaction is a central element in the marketing exchange

process, because it undoubtedly contributes to service providers‟ success the

higher the probability that consumers will repeat purchase establishment and

repurchase highlight the importance of identifying and explaining the

conditions under which satisfaction develops [Bejou et al., 1998].

Selling oriented sales people were considered to prioritise the

achievement of an immediate sale at the expense of customer needs.

Subsequent research has shown that the degree of customer orientation indeed

has an effect on a firm‟s relationships with its customers. In a study of financial

services, Bejou et al., (1998) found that customer oriented employees had a

positive impact, while sales employees had a negative impact, on customers‟

relationship satisfactions.

52

Desai and Mahajan (1998) look at the concepts of acquiring, developing

and retaining customers form a cognitive and affective perspective. They

provide examples of how cognition and affects are used to increase retention,

and use frequent-flyer programs as an example of an effective way of building

loyalty. The authors suggest that in order to retain customers, companies must

continually develop their products and services so as to meet the evolving

needs of customers. Their research also assumes that retained customers are in

fact satisfied, and not retained simply because of habit, indifference or inertia.

Included in retention strategies are the development of new products and

services to meet and satisfy the evolving needs of the customers; thus

satisfaction is the components of retention.

Many studies have demonstrated a positive relationship between

customer satisfaction and Bank Image – in terms of both a faithful attitude

towards the company and loyal consumer behaviour. It is therefore

unsurprising that other studies have demonstrated a positive relationship

between customer satisfaction and financial performance (Rucci et al., 1998).

With a growing focus on offering excellent services and meeting the needs of

customer, banks needs to have a good understanding of their customer

behaviour so that appropriate marketing strategies directed towards relationship

building and retention can be developed. Past research on loyalty in the

banking sector has been limited, and has tended to focus on retail banking, with

an emphasis on the positive effects of customer satisfaction (Loveman, 1998).

Most researchers agreed that customer satisfaction refers to an attitude

or evaluation formed by a customer comparing pre-purchase expectations of

what they would receive from the product or service to their subjective

perceptions of the performance they actually did receive (cited Drake et al.,

1998).

General model of satisfaction contained a third variable that is not

mentioned in the confirmation or disconfirmation model (Davis and Heineke,

1998). This third variable is the importance (I) of the service/product attribute

53

under consideration. This variable is relevant because not all attributes are

equally important to customers; for example, a bank customer is likely to rate

financial success as being of greater importance to satisfaction than, say, the

friendliness of staff members.

Appiah-Adu (1998) finds that the most critical elements in retaining

customers are the company‟s customer philosophy. He also stresses that there

is a difference between satisfaction and complete satisfaction, and that the goal

should be to achieve the latter.

The two key elements stand out in the literature of relationship

marketing: customer loyalty and word-of-mouth and loyalty is one of the

primary phases of relationship marketing especially in relation to profitability

from a theoretical and empirical approach [Oliver, 1999].The two key elements

stand out in the literature of relationship marketing: customer loyalty and word-

of-mouth and loyalty is one of the primary phases of relationship marketing

especially in relation to profitability from a theoretical and empirical

approach[Oliver, 1999].

Angur, Natarajan and Jahera (1999) studied various measures of service

quality in a developing country, specifically the performance of alternative

measure proposed by Cronin and Taylor (1999), expectation, performance, and

importance statements were used. The results have shown that SERVPERF

measure and SERVQUAL measure have same convergent validity.

SERVQUAL gaps show greater variability across banks and greater diagnostic

information than SERVPERF scale. But SERVPERF has higher discriminating

validity, and SERVPERF explains more variance in overall service quality than

SERVQUAL. But at the same time average difference in variance explained is

so small that is negligible.

Appiah-Adu (1999) finds that the most critical element in retaining

customers is the company‟s customer philosophy, implying that companies

ought to strive for complete satisfaction rather than just satisfaction among its

customers.

54

Loyalty customers not only increase the value of the business, but also

enable it to maintain costs lower than those associated with attracting new

customers (Barroso and Martin, 1999). Moreover, loyalty rather than

satisfaction is becoming the number one strategic goal in today‟s competitive

business environment (Oliver, 1999).

Most researchers agree that satisfaction is an attitude or evaluation that

is formed by the customer comparing their pre-purchase expectations of what

they would receive from the product to their subjective perceptions of the

performance they actually did receive. Further, “Satisfaction is a person‟s

feelings of pleasure or disappointment resulting from comparing a product‟s

perceived performance (or outcome) in relation to his or her expectation”

(Kotler, 2000).

However, the authors found no studies pertaining specifically to

financial institutions. Accordingly, this study will also contribute to knowledge

by investigating this relationship within the automated service quality and

banking context. In an automated banking service context, customer

satisfaction is positively related to financial performance. Satisfaction often

plays a mediating role between customer perception of service quality and the

creation of behavioural intentions (Cronin et al., 2000)

Relationship marketing emerged in an alternative to the prevailing view

of marketing as a series of transactions, because it was recognised that many

exchange, particularly in the serviced industry, were relational by nature (Sheth

and Parvatiyar, 2000). Relationship marketing will not automatically lead to

stronger customer relationships; rather, customer will exhibit different levels of

relationship closeness and strength. In order to be attractive, RM strategies

should enhance customers‟ perceived benefit of engaging in relationships

(O‟Malley and Tynan, 2000).

Retention can be defined as “a commitment to continue to do business

or exchange with a particular company on an ongoing basis” (Zineldin, 2000).

Customer satisfaction brings many benefits. Satisfied customers are fewer

55

prices sensitive, buy additional products, are less influenced by competitors and

stay loyal longer (Zineldin, 2000).

Satisfaction is an “overall customer attitude towards a service provider”,

or an emotional reaction to the difference between what customer anticipate

and what they receive (Zineldin, 2000).

The concept of „Relationship Marketing‟ has emerged within the field of

Services Marketing and Industrial Marketing in the last years of the twentieth

century. One of the most important contributions was proposal, which

established that the fundamental element in marketing is the management of

interactions, although a decade earlier had already proposed a formal definition

of Relationship Marketing as a strategy to attract, maintain and enhance

customer relationships defines Relationship Marketing (RM) as Marketing is to

establish, maintain and enhance and, when necessary, terminate establish with

customers and other stakeholders, at a profit so that the objectives of all parties

involved are met; and this is done by mutual exchange and fulfilment of

promises, within the network of relationship [Gummeson, 2000] and

acknowledging a stable customer base.

Increasing satisfaction leads to higher future profitable, and lower costs

related to defective goods and services. Higher satisfaction increases

willingness of buyers to pay price premiums, provide referrals, and use more of

the product (Anderson and Mittal, 2000), and finally results into higher levels

of customer retention and loyalty. Increasing loyalty further increases future

revenue and reduces the cost of future transactions. A firm‟s future profitability

depends on satisfying customers in the present and retained customers are

viewed as revenue producing asses for the firm. Improved customer

satisfaction need not entail higher costs. In fact, improved customer satisfaction

may lower costs due to a reduction in defective goods, product re-work, etc.

Customer satisfaction and retention that re-bought through price promotions,

rebates, switching barriers, and other such means are unlikely to have the same

long-run impact on profitability as, when such attitudes and behaviours and

56

won through superior products and services (Anderson and Mittal, 2000). A

review of the existing literature indicates a wide variance in the definitions of

satisfaction. The lack of a consensus definition limits the contribution of

consumer satisfaction research. Customer may explain their satisfaction with a

product or service in terms of specific aspects such as the product attributes,

price, customer service, or a combination of these different features.

In general, service quality is seen as a critical factors for profitability,

and thereby a firm‟s success. Two underlying processes generally explain the

contribution of service quality to profitability. First, service quality is regarded

as one of the few means for service differentiation and competitive advantage

that attracts new customers and contributes to the market share (Venetis and

Ghauri, 2000).

Second, service quality enhances customers‟ inclination to buy again, to

buy more, to buy other services, to become less price-sensitive and to tell

others about their favourable experience (Venetis and Ghauri, 2000).

Satisfaction increases customer retention, and customer retention

depends on the substance of the relationship between parties (Eriksson and

Lofmarck Vaghult, 2000). Examine the importance of service recovery in

determining overall satisfaction, arguing that a company is more likely to retain

a customer by encouraging complaints and then address them, than by

assuming that the customer is satisfied. Satisfied and properly served customers

are more likely to return to an organisation than are dissatisfied customers who

could choose simply to go elsewhere. Consumers, even though satisfied,

may suddenly decide to switch service providers. A satisfied customer may or

may not intend to return to a company, which is the reason satisfaction does not

necessarily lead to retention. Customer satisfaction can even increase in a

company while retention levels remain unchanged. Not all retained customers

are satisfied; they may stay with a provider only because of lack of alternative

(Eriksson and Lofmarck Veghult, 2000).

57

A great deal of research attention has focused on the identification of

effective methods of actively enhancing loyalty, including loyalty programs

such as point reward schemes (Lach, 2000). Nyer (2000) has investigated the

relation between consumer complaints and consumer satisfaction. The author

found that encouraging consumers to complain increased their satisfaction, and

this was especially the case for the most dissatisfied customers. Research has

also found that the more intensely a customer complaint the greater the

increases in satisfaction. It is therefore unsurprising that other studies have

demonstrated the positive relationships between customer satisfaction and

financial performance (Bernhardt et al., 2000).

Athanassopoulos (2000) discusses satisfaction as an antecedent of

customer retention. The author examined customer satisfaction cues in retail

banking services in Greece. The results of his study indicate that product

innovativeness, staff service, price, convenience and business profile are

dimension of customer satisfaction. The author also states that customers do

not consider switching banks until they have encountered a series of negative

effects.

Eriksson and Lofmarck Vaghult (2000) argues that customer retention is

central to the development of business relationships, and that these

relationships depend on satisfaction. Stauss (2001) studies the retention effects

produced by customer clubs. Their results reveal that customers who are

satisfied with the customer club are likely to be more satisfied with the

relationship with the service provider, which, in turn, affects customer

retention. The authors describe customer retention as the goal of customer

clubs.

Customer retention also brings benefits such as employee retention and

satisfaction, better service, lower costs, lower price sensitivity, positive word-

of-mouth, higher market share, higher efficiency and higher productivity

(Zienldine, 2000). Customers not wanted by the company, i.e. those who are

58

unprofitable or whose needs cannot be met by the company, should, however,

not be retained.

In broad terms, “satisfaction” can be understood as an individual‟s

attitude towards various aspects of his or her life – for example, the person‟s

own job (Judge et al., 2001) or a service received from a company (Szymanki

and Henard, 2001) . An individual can thus have varying degrees of satisfaction

at any given time; for example, a person might be satisfied with the way in

which he or she has been treated by the employees of a bank, while

simultaneously being dissatisfied with the opening times of same bank.

Research conducted by Athanssopoulos (2001) indicates that product

innovations, staff service, price, convenience and business profile are all

determinants of customer satisfaction.

Many studies have demonstrated a positive relationship between

customer satisfaction and Bank Image – in terms of both a faithful attitude

towards the company and loyal consumer behaviour (Athanassopoulos et al.,

2001). Szymanski and Hise (2000) examine satisfaction assessments rather

than customer service or fulfilment in the context of online convenience,

merchandising, site design and financial security.

With a growing focus on offering excellent services and meeting the

needs of customer, banks needs to have a good understanding of their customer

behaviour so that appropriate marketing strategies directed towards relationship

building and retention can be developed. Past research on loyalty in the

banking sector has been limited, and has tended to focus on retail banking, with

an emphasis on the positive effects of customer satisfaction. (Colgate and

Hedge, 2001)

A similar definition is provided by Gerpott et al., (2001) who propose

that satisfaction is based on a customer‟s estimated experience of the extent to

which a provider‟s services fulfil his or her expectations. Yli-Renko et al.,

[2001] have focused the customer relationship of new technology-based firms.

The magnitude of loyalty can be measuring by tracking customer accounts over

59

defined time periods and noting the magnitude of continuity in patronage.

Under new horizon of the banking sphere relation between customer and bank

has got new definition (Lee et al., 2001).

Consumer satisfaction is a central element in the marketing exchange

process, because it undoubtedly contributes to service providers‟ success

[Darian et al., 2001].Customer Relationship Management has been a part of

marketing literature since more than a decade. Interestingly, there is still much

debate over what exactly constitutes CRM. Argues that customer satisfaction

on its own cannot produce lifetime customers even though satisfaction can

result in retention. Stauss et al., (2001) indicate that satisfaction is merely a

step towards the goal of customer retentions, and that retention effects increase

with the degree of satisfaction.

According to Peppers and Roggers Group where they argued that be

utilizing customer relationship management business practices, companies can

affordably weather the storms of a down economy by providing cheap growth

opportunities fresh strategic capabilities and incremental process changes,

mean while, implementation of CRM in banking sector was considered by

[Mihelis et al., 2001].

Even though Johnson (2001) has shown that the relationship between

customer satisfaction and retention is very weak, an understanding of the two

concepts cannot always be achieved by isolating them from each other, but

rather by examining the relationship between them. Gerpott et al., (2001)

suggest that customer retention and customer satisfaction should be treated as

distinct, but causally inter-linked constructs. According to them, “customer

satisfaction is a direct determining factor in customer loyalty, which, in turn, is

a central determinant of customer retention” (Gerpott et al., 2001). Rust and

Subramaniyan link quality to customer satisfaction and argue that this has a

direct effect on customer retention and market share.

60

A similar definition is provided by Gerpott et al., (2001) who propose

that satisfaction is based on a customer‟s estimated experience of the extent to

which a provider‟s services fulfill his or her expectations.

Loyalty of customer is considered to be a function of satisfaction and

loyal customer contribute to bank profitability by spending more on bank

products and services, via, repeat purchasing, and by recommending the

organization to other consumers. Since customer value dealt with customer

perspectives, it therefore, eventually concerned a subjective notion of an

individual customer‟s judgment of the value of a product (Huber et al., 2001).

On a broader level, Customer Relationship Management may mean

customer retention or partnering. In order to develop a comprehensive list of

CRM practices, it is essential to identity the key constructs of CRM. In this

direction, CRM comprises the following four constructs: key customer focus,

CRM organization, knowledge management and Technology-based CRM.

Research has also found that the more intensely a customer complains

the greater the increased in satisfaction. Johnston (2001) claims that complaint

management not only results in customer satisfaction, but also leads to

operational improvement and improved financial performance.

A more elaborated definition is to define retention as the customers‟

liking, identification, commitment, trust, willingness to recommend, and

repurchase intentions, with the first four being emotional-cognitive constructs,

and the last two being behavioural intentions (Stauss et al., 2001). (Yoo and

Donthu (2001), Zeithaml et al., 2002) and develop a four-item SITEQUAL

scale focusing mainly on web site characteristics including ease of use,

aesthetic design, processing speed and security.

There are few empirical works which have explored the motivations and

benefits consumers get from keeping a long-term relationship with a specific

bank [Henning-Thurau et al., 2002], even though it is obvious that, in practice,

such benefits are interpreted as advantages by consumers in terms of their

satisfaction and their analysis may render more efficient competitive strategies.

61

Customer satisfaction is another antecedent of customer loyalty. In the

highly competitive business world of today, customer satisfaction can be seen

as the substantial of success, as customer satisfaction can lead to customer

retention and thereof to profitability for an organization (Jamal and Kamal,

2002). Satisfaction is a consumer‟s post-purchase evaluation and affective

response to the overall product or service experience. It is considered a strong

predictor for behaviour variables such as repurchase intentions, word-of-mouth

recommendations and loyalty. Jamal et al., (2002) described customer

satisfaction generally as the full meeting of one‟s expectations. Furthermore,

Jamal and Kamal (2002) describes customer satisfaction as a feeling or attitude

of a customer towards a product or service after it has been used.

A positive relationship between service quality and satisfaction has been

well established in the banking sector (Jamal and Naser, 2002). Customer

Relationship Management is a managerial philosophy that seeks to build long

term relationship with customers. CRM can be defined as the development and

maintenance of mutually beneficial long-term relationships with strategically

significant customers (Buttle, 2002). Customer Relationship Management is the

establishment, development, maintenance and optimization of long-term

mutually valuable relationship between consumers and the organizations.

With a growing focus on offering excellent services and meeting the

needs of customer, banks needs to have a good understanding of their customer

behaviour so that appropriate marketing strategies directed towards relationship

building and retention can be developed. Past research on loyalty in the

banking sector has been limited, and has tended to focus on retail banking, with

an emphasis on the positive effects of customer satisfaction (Jamal and Naser,

2002).

General model of satisfaction contained a third variable that is not

mentioned in the confirmation or disconfirmation model. This third variable is

the importance (I) of the service or product attribute under consideration

(Matzler and Bailom, 2002). This variable is relevant because not all attributes

62

are equally important to customers; for example, a bank customer is likely to

rate financial success as being of greater importance to satisfaction than, say,

the friendliness of staff members.

Consumer satisfaction is a central element in the marketing exchange

process, because it undoubtedly contributes to service providers‟ success, the

higher the probability that consumers will repeat purchase establishment and

repurchase highlight the importance of identifying and explaining the

conditions under which satisfaction develops. The two key elements stand out

in the literature of relationship marketing: customer loyalty and word-of-mouth

[Henning-Thurau et al., 2002].

Bose [2002] points out that the analytical function may be fulfilled by

separate systems, such as decision support system and expert system. These

systems are part of an enterprise-wide integration of technologies working

together such as data warehouse, web site, intranet or extranet, phone support

systems, accounting, sales, marketing and production. Past research establishes

relationships between service quality and costs, profitability, customer

satisfaction, and word-of-mouth marketing (Caruana, 2002). In addition, the

level of service quality influences post-purchase behaviour and an individual‟s

future decisions.

In marketing literature as well as in recent information system studies

(McKinney et al., 2002), the disconfirmation hey emerges as the primary

foundation for satisfaction models. According to this theory, satisfaction is

determined by the discrepancy between perceived performance and cognitive

standards such as expectation and desires. Although, it must be emphasized

that CRM does not necessarily involve IT technology (Rowely, 2002).

Chen and Hitt (2002) establish that system quality, product line breadth

and product line quality impact upon consumer switching behaviour and

retention. Customer expectation can be defined as customer‟s per-trial beliefs

about a product (McKinney et al., 2002). Disconfirmation is defined as

63

customer‟s subjective judgement resulting from comparing their expectations

and their perceptions of performance received (McKinney et al., 2002).

Customer satisfaction is generally defined as a feeling or judgment by

customers towards products or services after they have used them (Jamal and

Naser, 2003). This emphasis on the role of technological service facilitators

contrasts in traditional service quality research which emphasises the human

elements of service delivery (Jabnoun and A1-Tamimi, 2003).

Many studies have demonstrated a positive relationship between

customer satisfaction and Bank Image – in terms of both a faithful attitude

towards the company and loyal consumer behaviour (Keiningham et al., 2003).

Past research establishes relationships between service quality and costs,

profitability (Santos, 2003), customer satisfaction, and word-of-mouth

marketing. (In addition, the level of service quality influences post-purchase

behaviour and an individual‟s future decisions (Jabnoun and A1-Tamimi,

2003).

Customer evaluation measures should reflect the type of exchange that

is being evaluated, i.e. transactional or relational. Often used measures in a

relationship context are relationship quality (Lang and Colgate, 2003), and

relationship satisfaction.

Lin (2003) defines customer satisfaction as the outcome a cognitive and

effective evaluation of the comparison between expected and actually

perceived performance, which is based on how customers appraise delivery of

goods or services. A perceived performance, which is less than the expected,

leads to an unsatisfied customer. Perceived performance that exceeds

expectations, on the other hand, leads to a satisfied customer. The expectations

of a customer are built from past buying experience, advice from friends and

counterparts, marketers‟ and competitors‟ information and promises.

The higher the probability that consumers will repeat purchase

establishment [Wong and Sohal, 2003]. Loyalty is one of the primary phases

of relationship marketing especially in relation to profitability from a

64

theoretical and empirical approach. The core of Relationship Marketing is

customer relationships. Although, it must be emphasized that CRM does not

necessarily involve IT technology [Park and Kim, 2003].

However, greater transaction efficiency through reducing employee

numbers and physical facilities in favour of web-based service delivery

infrastructure may negatively impact customer perception of service quality die

to reductions in human interaction in service exchanges (Jabnoun and A1-

Tamimi, 2003).

Authors described the process by which satisfaction judgments are

reached in the expectancy disconfirmation framework. Buyers form

expectations of the specific product or service before purchase and the

perceived quality level influences their expectations (Khalifa and Liu, 2003).

Other research investigating electronic delivery channels (including

internet banking, ATMs and telephone banking) confirms banking success and

profitability as being dependent upon service quality ( Santos, 2003).

Lang and Colgate (2003) further propose that both Information

Technology and non-Information Technology mediums [i.e. human interaction]

can be used as an approach towards relationship development. In this arena that

term Customer Relationship Management has emerged and being in several

literatures are defined as a combination of business process and technology that

seeks to understand a company‟s customer from the perspective of who they

are, what they do, and what they are like. Technological definition of CRM was

given as the market place of the future is undergoing a technology-driven

metamorphosis. Berry stressed that the attraction of new customers should be

viewed only as intermediate step in the marketing process. While undertaking a

study on the field of customer retention and corporate profitability, stated that

the role of customers is essential for corporate performance, so that when

relationships with customers endure, profits rise.

Sureshchandar, Rajendran and Anantharaman (2003) conceptualized

service quality as a multidimensional construct having five dimensions namely,

65

core service (content of the Service), service delivery (human elements such as

reliability, responsiveness, assurance, empathy moment of truth and critical

incident and recovery), non-human elements (process, procedures, systems and

technology), tangibles (equipment, machinery, signage, and employee

appearance, and social responsibility (well being of society). The results have

shown significant difference between service quality offered by public, private

and foreign banks in terms all the five factors of service quality. Technological

factor was found to be contributing more than human elements.

The rise of internet-based services has changed the way that firms and

consumers interact. e-service is conceptualised as an interactive information

service providing a mechanism for firms to differentiate their service offering

and build competitive advantage (Santos, 2003).

Furthermore, the notion of a mediating relationship presumes the

existence of a third variable between the independent and dependent variable

(Chumpitaz and Paparoidamis, 2004). But in terms of customer satisfaction in

the relationship between service quality and bank financial performance, this is

still not clear.

The concept of „Relationship Marketing‟ has emerged within the field of

Services Marketing and Industrial Marketing in the last years of the twentieth

century. One of the most important contributions was proposal, which

established that the fundamental element in marketing is the management of

interactions, although a decade earlier had already proposed a formal definition

of Relationship Marketing as a strategy to attract, maintain and enhance

customer relationships defines Relationship Marketing as marketing is to

establish, maintain and enhance and, when necessary, terminate establish with

customers and other stakeholders, at a profit so that the objectives of all parties

involved are met; and this is done by mutual exchange and fulfilment of

promises, (Egan, 2004), within the network of relationship and acknowledging

a stable customer base (Rowely, 2004).

66

Bolton [2004] refers to a bank‟s Customer Relationship Management

system by suggesting that maintaining the processing of checks, withdrawals,

transfers, etc. is well established. According to Greenberg [2004],

implementation of CRM is technique of capture, storage, extraction, processing

interpretation, and reporting of customer data to a user.

Beerli, Martin and Quintana, (2004) the factors which have influenced

the customer loyalty in banking industry have been selected which are

perceived quality, satisfaction and switching cost and choosing.

Service quality has a positive effect on the bottom-line performance of a

firm and thereby on the competitive advantages that could be gained from an

improvement in the quality of service offering, so the perceived service

exceeds the service level desired by customers. (Chumpitaz, 2004).

Jayawardhena (2004) determines that customers place importance upon

downloading speed, navigatability and search feature efficiency, and concludes

that banks should focus on building trust through ensuring the security and

privacy of customer information.

All customers do not want to engage in relationships and, in fact, it has

been suggested that close customer relationship in banking are rare, and that

they are being further weakened by the increase in self-service technologies.

An alternative is to look upon new technologies as relationship facilitators and

to use them strategically in customer relationship management (Payne and

Frow, 2005).

Lindgreen and Antioco [2005] suggest that Customer Relationship

Management frequently employs it technology as a means to attract, develop,

and retain customers. Capizzi and Ferguson (2005) commented, “The latest

technologies that are used to create and design these programs will be also used

to collect data without directly asking the customer”. Technology adds speed

and quality to the whole process. Loyalty programs will progress dramatically

in the future as the value of databases are increasing where the value of the

customer‟s information is an asset.

67

Previous e-service quality research has attracted criticism for adopting

traditional SERVQUAL dimensions in online environment, developing scales

without sufficient empirical validation, focusing on the evaluation of web site

quality rather than entire service quality dimensions, and excluding the

assessment of the consumer buying process (Kim et al., 2005; parasuramen et

al., 2005).

Aydin and Ozer (2005) assumed service quality to be “the consumer‟s

judgement about the overall excellence or superiority of a service”. In order to

have a better understanding about service quality, they also mentioned that the

attributes of service quality are as follow: services are intangible; services are

heterogeneous, meaning their performance often varies with respect to the

provider the customer.

Chakrabarty (2006) identified four factors that determined overall

customer satisfaction amongst more than 12,000 UK retail banking customers.

Key themes within the e-service quality literature include the dimensions and

measurement of e-service, elements of the web experience and the relationship

between the web-experience, trust, customer satisfaction, intention to purchase,

and loyalty (Rowley, 2006).

A1-Hawari and Ward (2006) indicate, a significant relationship

between internet service quality and consumer satisfaction is yet to be

established, and this gap provides the impetus for an examination of how

important attributes of online delivery such as web site content, information

accuracy, security, timeliness, of information and website aesthetics are to

consumers. Hence, this research is positioned within the specific context of

internet banking exclusively, to avoid biasing influences of multiple e-channel

distribution methods.

Smith [2006] states that analysis of customer data is a key part of

Customer Relationship Management. A solid analysis will provide companies

with a clear picture of who their customers are and what their needs are. This

information comprises patterns and trends in consumer behaviour, customer

68

preferences, migratory tendencies, life style, and personal habits that will be

used to predict and develop future business opportunities. The rise of internet-

based services has changed the way that firms and consumers interact. e-

service is conceptualised as an interactive information service (Rowley, 2006)

providing a mechanism for firms to differentiate their service offering and

build competitive advantage.

Advances in technology impact service delivery options and approaches

within service industries, leading to the active pursuit of e-retailing as a key

method of service provision. This is particularly so within the financial services

sectors in Australia and the UK, where banks actively encourage customers

towards using online sites (A1-Hawari and Ward, 2006). According to (Jay

B.Sinha and S.S Iyenagar) Customer loyalty is one of the major conceptual

analyses in CRM. According to Agarwel et al., [2006] by strategically linking

discrete CRM system, companies can routinely pass valuable sales or service

data to the right person – whoever can offer what the customer needs.

Although banks attempt to mitigate consumer concerns through

providing online accounts that typically attract reduced fees and higher interest,

managing the ongoing tension between efficiency and human interaction

represent a challenge to banking institutions wishing to encourage ongoing

consumer loyalty and retentions. Current research suggests that customers

place great importance on the value and convenience offered by banks (Lewis

and Soureli, 2006) and that customer satisfaction (which is influenced by

service quality perceptions) is a key antecedent of consumer loyalty towards

banking institutions.

Numbers of strategies have been introduced to retain customers. In

order to attract and retain existing customers and increase loyalty, many banks

have introduced innovative product and services. (Alam and Khokhar, 2006).

According to Peppers and Roggers Group [2006] where they argued that be

utilizing customer relationship management business practices, companies can

affordably weather the storms of a down economy by providing cheap growth

69

opportunities fresh strategic capabilities and incremental process changes,

mean while, implementation of Customer Relationship Management in banking

sector.

Other research investigating electronic delivery channels (including

internet banking, ATMs and telephone banking) confirms banking success and

profitability as being dependent upon service quality (A1-Hawari and Ward,

2006; Santos)

Most researchers agree that customer satisfaction refers to an attitude or

evaluation formed by a customer comparing pre-purchase expectations of what

they would receive from the product or service to their subjective perceptions

of the performance they actually did receive. Measures of overall customer

satisfaction typically capture consumer expectations towards the service

provided, as well as how far the provided service is form their ideal

(Soderlund, 2006).

In the contemporary global and highly competitive economy the

organizations need to produce products and services of very good quality that

yield satisfied and loyal customer. For many years customer satisfaction has

been a major goal of business organizations, since it has been deemed to affect

customer retention and companies market share. Traditionally, satisfied

customer have been though of as less price sensitive, less influenced by

competitors, buying additional products or services and staying loyal longer.

According to Smith [2006], building an IT infrastructure for CRM is

like building a bride; it takes comprehension of a need, engineering, reviewing,

building, and re-building. According to Charkrabarty (2006), the drivers of

customer satisfaction for retail banking may differ from the drivers identified

for other services. Retail banking service researchers (Chakrabarty, 2006;

Manrai and Manrai, 2007) seeking to understand these drivers have identified

common initiatives, all of which were focused on providing direct retail

customer benefits. However, the impact of these customer-centric initiatives on

satisfaction varies.

70

Vigg Silky, Mathur Granma and Holani Umesh (2007) stated that

Innovative services, Network, Access, Technicalities, Behaviour, Comfort and

Image are some of the factors responsible for customer satisfaction. Results

have also revealed that there is no significant difference in the customer

satisfaction of public sector banks. Customer satisfaction is a fundamental

determinant of long-term consumer behaviour. Some interesting facts brought

forward by Kotler and Keller (2008) towards customer retention reveal that

acquiring new customers can cost up to five times more, than satisfying and

existing customers. The renowned 20-80 rule, states that eighty percent of a

company earnings is produced by twenty percent of its core customers. Based

on these findings, many of the most successful retailers have shifted their focus

towards CRM strategies which largely embrace the use of loyalty schemes. The

goal of such programs is to establish higher level of customer retention in

profitable segments by providing increased satisfaction and value to certain

customers (Egan, 2008).

Rai (2009) identified tangibility (seating, lighting, signage, and parking),

competence (knowledge and ability), responsiveness (willingness and

adherence), safety (confidence), communication (content and quality), and

understanding customers (approach towards customer) as important dimensions

of service quality.

Pal and Choudhury (2009) found out four dimensions of service quality

namely customer – orientedness (prompt service, courteousness, knowledge,

operating hours, personal attention, ability to understand) competence

(responsiveness, right service, dependability, service timing, safety), tangibles

(physical facilities and materials) and convenience (branch location and ATM

location).

Hazra and Srivastava (2009) four factors involving assurance: empathy,

reliability, tangibles and security. Customer commitment, satisfaction, and trust

have been identified as separate factors. Empathy as found to be the most

valued dimension of service quality and impacting customer loyalty to a

71

company, willingness to pay, customer commitment and customer trust.

According to Bilal et al., (2010), commitment is defined as a desire to maintain

a relationship. They have observed in their studies that customers resist to

change the organisation.

This implies that a customer could end up staying with a service

provider, even if extremely dissatisfied, because re-purchasing is easier and

more cost effective than searching for a new provider or trying a new provider.

Cross-selling is also a tool banks use frequently in order to try and improve

loyalty and retention. The more products a customer has at a specific company

the less likely he or she will be to leave. (Ghazizadeh et al., 2010)

According to Berman and Evans (2010), relationship retailing can be

attained by establishing and maintaining long-term bonds with customers,

rather than acting as if each sales transaction is a completely new encounter. It

compels customers to implement some specific strategies that not only

differentiate their offer in ways that are relevant to their target market, but also

difficult for competitors to duplicate.

From the retail perspective, value is typically described using the “value

chain” concept, which encompasses the entire cluster of benefits – including all

the activities, processes, and intangible attributes – offered to clients

throughout the distribution channel (Berman and Evans, 2010). Many would

argue that customer service and customer satisfaction go together. One of the

core elements of a successful retail store is determined by the amount of

satisfaction they provide to the customer. To become a successful entity in the

long run, it is important for a company to maintain the customer satisfaction at

a substantial level.

Berman and Evans (2010) explain that customer satisfaction occurs

when customer expectations have been met or exceed by the retailer in terms of

value and customer service provided. Hence, customer service needs to be

aligned with the overall value provided by the product to satisfy customer.

Customer and developing customer relations over time can be very challenging

72

for any business. Measuring customer satisfaction is therefore one of the major

factors in building Customer Relationship Management strategies.

Kumar, Kee and Charles (2010) undertook a study involving related to

expectations and perceptions of the customer. The analysis has shown service

quality consisted of four dimensions involving tangibility, reliability,

convenience and competence. Competence and convenience were found to be

dominating factor as compared to tangibility and reliability.

Monica Bedi (2010) indicated difference in customer perception of

service quality in public sector banks. In majority of the factors, public sector

banks were perceived to have high service quality. Product convenience,

assurance, reliability, responsiveness, and product availability were identified

as predictors of customer satisfaction in public sector banks, whereas

responsiveness, product convenience, assurance, reliability and empathy were

found as significant predictors in public sector banks.

Oztaysi et al., (2011) explain that in order to develop Customer

Relationship Management strategies one of the first steps that a bank takes is

assess its satisfaction level among its customers. Customer satisfaction also

helps in building healthy relationships with customers.

Ethical behaviour is evident that the level of ethical behaviour upheld by

a bank will determine a clients decisions whether to consolidate their financial

relationships with the bank and consequently have a knock-on effect on

retention. (Rootman, 2011). The concept of fees is straight forward. Every

product or service has an associate price attached to it. From a banking

perspective, fees therefore include interest income (cost to the customer

associated with interest), as well as non-interest income (cost to the customer

associated with charges).

Kajal Chaudhard and Monika Sharma (2011) attempted to analyze how

efficiently public sector banks have been managing NPA. The study

recommended that the bank staff involved in sanctioning and advances should

be trained about the proper documentation and charge of securities and

73

motivated to take measures in preventing advances truing into NPA. Public

banks must pay attention on their functioning in order to complete private

banks. Surabhi Singh and Renu Arora (2011) research results indicated that the

customers of nationalized banks were not satisfied with the employee

behaviour, ambience, and infrastructure, while respondents of private and

foreign banks were not satisfied with high charges, accessibility, and

communication. The study suggested that training on stress management and

public dealing should be imparted to the employees of nationalized banks

The objectives of relationship marketing as to indentify and establish,

maintain and enhance, and, when necessary, terminate relationship with

consumers and other stakeholders at a profits so that the objectives o all parties

involved have been met. This process is conducted through the mutual

exchange and fulfilment or promises. (Rootman, 2011).

Key Notes

Drucker, P.F. (1954). The Practice of Management, New York: Harper & Row.

Jacoby, J. And Chestnut, R. (1978), “Brand loyalty vs repeat purchasing behaviour”,

Journal of Marketing Research, Vol. 10, February, pp. 1-19.

Crosby, P.(1979), Quality is Free, McGraw-Hill, New York, Ny,.

Oliver, R.L., (1980). A Cognitive Model of the “Antecedents and Consequences of

Satisfaction Decision”. Journal of Marketing Research, 17(11).

Churchill, G., Supernant, C. (1982), An investigation into the determinants of

customer satisfaction”, Journal of Marketing Research, Vol. 20 pp.491-504.

Berry, LL. 1983. Emerging perspectives in service marketing, American Marketing

Association, Chicago, Vol.II pp 25-28.

Parasuraman, A., (1985), “A conceptual model of service quality and its implications

for future research”, Journal of Marketing, Vol. 49 pp.41-50.

Berry, L.L. & Gersham, L.G. (1986). Relationship Retailing; Transforming Customers

into Clients. Business Horizons, Noverber/December, 29(6),pp43-47.

Cadotte, E.R., Woodruff, R.B.., Jenkins, R.L., (1987), Expectations and norms in

models of consumer satisfaction. Journal of Marketing Research. 24(3)

305-314.

Parasuraman, A., Zeithaml, V.A.& Berry, L.L. (1988). SERVQUAL: A Multiple-Item

Scale for Measuring Consumer Perceptions of Service Quality. Journal of

Retailing, 64(1),pp.12-40.

Desai, K.K., Mahajan, V. (1998), “Strategic role of affect-based attitudes in the

acquisition, development and retention of customers”, Journal of Business

Research, Vol.42 pp.309-324.

Devidow, W.H., Uttal, B. (1989), Total Customer Service: The Ultimate Weapon,

Harper and Row, New York, NY,

Reichheld, F.F. and Earu Sasser W. Jr. 1990. Zero defections: quality comes to

services, Harvard Business Review, Vol. 68, September-October, pp. 105-11.

Wilkie, K.E.(1990), Customer Behaviour, Wiley, New York, NY,.

Reichheld, F.F. and Earl Sasser , W. Jr. 1990 Zero defections: quality comes to

services, Harvard Business Review, Vol. 68, September-October, pp.105-111.

Parasuraman, A., Zeithaml, V.A., & Berry, L.L. (1991). Understanding Customer

Expectations of Service. Sloan Management Review, 32, pp. 1-25.

Bolton, R.N.., Drew, J.H. (1991), “A multistage model of customer’s assessment of

service quality and value”, Journal of Consumer research, Vol. 17 No.4.

pp.365-384.

Parasuraman, A. 1991. Marketing services-competing through quality. New York:

Free Press.

Churchill,G.A..,& Surprenant, C., (1992). An Investigation into the “Determinant of

Customer Satisfaction”, Journal of Marketing Research, 19, pp. 491-504.

Cronin, J.J. Jr., & Taylor, S. (1992). Measuring Service Quality: A Re-examination

and Extension, Journal of Marketing, 56(3), pp.55-68.

Boulding, W., Kalra, A., Staelin, R. And Zeithaml, V.A. (1993), “A dynamic process

model of service quality: from expectations to behavioural intentions”, Journal

of Marketing Research, Vol. 30 February, pp.7-27.

Hunt, S.D. 1993. General theories and the fundamental esplanade of marketing,

Journal of Marketing, Vol.47, fall, pp. 9-17.

Rust, R.T. and Zohorik, A.J. (1993), “Customer satisfaction, customer retention and

market share”, Journal of Retailing, Vol.69,pp.193-215.

Reichheld, F.F. 1993. Loyalty based management. Harvard Business Review, Vol.71

No.4, pp.64-73.

Morgan, R., Hunt, S. (1994), “The commitment – trust theory of relationship

marketing”, Journal of Marketing, Vol: 58 pp.20-38.

Groonroos, C.. 1994. Relationship approach to marketing in service context: the

marketing and organizational behaviour interface, Journal of Business

Research, Vol. 20, January, pp.3-11.

Rust, R., Oliver, R. (1994), “Service quality: insights and managerial implications

from frontier”,in rust, R., Oliver, R. (Eds),Service Quality. New Directors in

Theory and Practice, Sage, London.

Liljander, V., Strandvik, T. (1994), “The relation between service quality, satisfaction

and intentions”, in Kunst, P., Lemmink, J. (Eds), Quality Management in

Service II, Van Gorcum, Assen,

Dick, A.S., & Basu, K. (1994). Customer Loyalty: Towards and integrated Conceptual

Framework. Journal of the Academy of Marketing Science,22(2), pp.99-113.

Anderson, E.W.,Fornell,,C.& Lehmann, D.R. (1994). Customer satisfaction, Market

Share, and Profitability: Findings from Sweden. Journal of Marketing, 58(3),

pp. 53-66.

Potter-Brotman, J. (1994) , “The new role of service in customer retention”, Managing

Service Quality, Vol. 4No.4, pp43-56.

Cronin, J.J. Jr., & Taylor, S. (1994). “SERVPERF versus SERVQUAL: reconciling

performance-based and performance-minus-expectations measurement of

service quality”, Journal of Marketing, Vol.58 No.1.

Sheth, J.N. and Parvetiyar, A. 1995. Relationship marketing in consumer markets:

antecedents and consequences, Journal of the Academy of Marketing Science,

Vol.23 No.4, pp. 255-71.

Bitner, M.J., 1995 Building service relationship: It’s All about promises. Journal of

the Academy of Marketing Science Vol.23, No-4 pp 246-51

Spreng, R.A. (1995), “ Service recovery: impact on satisfaction and intentions”,

Journal of Services Marketing. Vol. 9 No.1, pp.15-23.

Ovenden, A. (1995), “Keep your customers happy and your competition will slowly

fade away”, The TQM Magazine, Vol.7 No.1, pp.46-49.

Lowenstein, M.W. (1995), Customer Retention, ASQC Quality Press, Milwaukee,

WI.,.

Reichheld, F.F. (1995), Loyalty and the renaissance of marketing”, Marketing

Management, Vol.2 No.4, pp.10-21.

Berry ,L.L.. 1995 Relationship marketing of services-growing interest, emerging

perspectives, Journal of the Academy of Marketing Science, Vol. 23 No.4

pp 236-45.

Reichheld, F.F. 1996. The loyalty effect, Harvard Business Review, Cambridge, MA.

Beatty, S.E.,Mayerm M., Coleman, J.E. Reynolds, K.E. and Lee ,J 1996. Customer

sales associate , International, Journal of Bank Marketing , Vol 72 No.3,

pp 223-47

Hallowell, R. (1996), “The relationships of customers satisfaction, customer loyalty

and profitability; an empirical study”, International Journal of Service Industry

Management, Vol. 7 No.4,pp.27-42.

Woodruff, R.B. (1997),. Customer Value: The Next Source for Competitive

Advantage, Journal of the Academy of Marketing Science, 25(2),pp. 139-153.

Anderson, (1997), Customer Satisfaction, Productivity, and Profitability: Differences

between Goods and Services. Marketing Science, 16(2).

Payne, A. And Rickard, J. 1997 ,Relationship marketing, customer retention and firm

profitability, Working Paper, Cranfield School of Management.

Vavra, T.G. (1997), Improving Your Measurement of Customer Satisfaction, ASQS

Quality Press, Milwaukee, WI,.

Bejou, D., Ennew C.T. and Palmer A,1998 Trust, ethics and relationship satisfaction,

International Journal of Bank Marketing. Vol. 16 No.4, pp 170-5.

Gwinner, K.P., Gremler, D.D and Bitner, M.J. 1998. Relational benefits in services

industries: the customer’s perspective, Journal of the Academy of Marketing

Science, Vol. 26 No. 2, pp. 101-14.

Srivastava, Rakendra K., Shervani, Tasadduq A. & Fahey, Liam (1998). Market-

Based Assets and Shareholder Value: A Framework for Analysis, Journal of

Marketing 62(1).

Desai, K.K., Mahajan, V. (1998), “Strategic role of affect-based attitudes in the

acquisition, development and retention of customers”, Journal of Business

Research, Vol. 42 pp.309-24.

Loveman, G.W. (1998), Employee satisfaction, Customer loyalty and financial

performance: an empirical examination of the service profit chain in retail

banking”, Journal of Service Research, Vol.1 pp 18-31.

Drake, C. (1998), “Barclays Life customer satisfaction and loyalty tracking survey: a

demonstration of customer loyalty research in practice”, International Journal

of Bank Marketing, Vol.16 pp.287-292.

Appiah-Adu, K.(1998), “Market orientation and performance: empirical test in a

transition economy”, Journal of Strategic marketing, Vol.6pp.665-79.

Angur, M.G., Natarajan, R., & Jahera, J.S. (1999). Service Quality in the Banking

Industry: An assessment in a Developing Economy, International Journal of

Bank Marketing, 17(3),pp.116-23.

Appiah-Adu, K. (1999), “Marketing effectiveness and customer retention in the

service sector”, The Service Industry Journal, Vol. 19No.3,pp.26-41.

Oliver, R.L. (1999), “Whence consumer loyalty?”, Journal of Marketing, Vol.63 No.4,

pp.33-44.

Kolter,P. (2000), Marketing Management, International Edition, Prentice-Hall,

Englewood Cliffs, NJ.

Cronin, J., Brady, M., Hult, G. (2000), Assessing the effect of quality, value and

customer satisfaction on consumer behaviour intentions in service

environments”, Journal of Retailing, Vol.76 No.2,pp. 193-218.

Zineldin, M.,(2000), TRM, Student literature, Lund, Sweden.

O’Malley, L. (2000), “Can loyalty schemes really build loyalty?”, Marketing

Intelligence and Planning, Vol. 16 No.1, pp.47-55.

Gummesson E. (2000). “Qualitative methods in management research”, Sage

Publications, Thousand Oaks, CA.

Venetis, K.A., Ghauri. P.N. (2000), “The important of service quality on customer

retention: an imporical study of business service relationships”, Proceedings of

the Marketing in a Global Economy Conference, Buenos Aires, June 28-July 1,

pp. 215-224.

Anderson, E.W., & Mittal, V. (2000).Strengthening the Satisfaction-Profit Chain.

Journal of Service Research, 3(2),pp. 107-120.

Eriksson, K., Lofmarck Vaghult, A. (2000),“Customer retention, purchasing

behaviour and relationship substance in professional services”, Industrial

Marketing Mangement, Vol.29 No.4, pp.363-72.

Nyer, P.U(2000), “An investigation into whether complaining can cause increased

consumer satisfaction”, Journal of Consumer Marketing, Vol. 17No.1.pp.9-19.

Yoo, B., Donthu, N. (2001), “Developing a scale to measure the perceived quality of

an internet shopping site (SITEQUAL)”, Quarterly Journal of Electronic

Commerce, Vol. 2 No.1, pp.31-45.

Bernhardt, K.L., Donthu, N., Kennett, P.A. (2000), “A longitudinal analysis of

satisfaction and profitability” Zhu, F., Chen,I. (2002), “IT-based services and

service quality in consumer banking”, International Journal of Service Industry

Management, Vol. 13 No.1, pp.69-90.

Szymanski, D.M., Henard, D.H. (2001), “Customer satisfaction: a meta-analysis of the

empirical evidence”, Journal of Academy of Marketing Science, Vol.29

pp.16-35.

Anthanassopoulos, A.D. (2001), “Customer satisfaction cues to support market

segmentation and explain switching behaviour”, Journal of Business Research,

Vol. 47 No.3,pp.191-207.

Colgate, M., Hedge, R. (2001), “An investigation into switching process in retail

banking service”, International Journal of Bank Marketing, Vol.19

No.5,pp.201-12.

Yli-Renko, H., Sapienza, H.J., Hay, M. 2001. The role of contractual governance

flexibility in realizing the outcomes of key customer relationships, Journal of

Business Venturing, Vol. 16, 529-555.

Lee, J. (2001), “The impact of switching costs on the customer satisfaction loyalty

link: mobile phone service in France”, Journal of Services Marketing, Vol.15

No.1, pp.35-48.

Darian, J.C.,Tucci, L.A., and Wiman, A.R. 2001. Perceived salesperson service

attributes and retail patronage intentions, International Journal of Retail and

Distribution Management, Vol.29 No. 4/5,pp. 205-13.

Stauss, B., Chojnacki, K., Decker, A.,Hoffman, F. (2001), “Retention effects of a

customer club”, International Journal of Service Industry Management, Vol.12

No.1, pp. 7-19.

Mihelis, G., (2001), Customer satisfaction measurement in the public sector bank,

European Journal of Operational Research, 347-360.

Johnston, R. (2001),“Linking complaint management to profit”, International Journal

of Service Industry Management”, Vol. 12 No.1, pp.60-9.

Gerpott, T.J., Rams, w., Schindler, A. (2001),“Customer retention, loyalty, and

satisfaction in the German mobile cellular telecommunications market”,

Telecommunications Policy, Vol. 25 No.4, pp.249-69.

Huber, F., Herman, A., Morgan, R.E. (2001), “Gaining competitive advantage through

customer value oriented management”, Journal of Consumer Marketing,

Vol. 18 pp. 41-53.

Henning-Thurau, T., Gwinner, K.P. and Gremler, D.D. 2002. Understanding

relationship marketing outcomes: an integration of relationship benefits and

relationship quality, Journal of Service Research, Vol.4, No. 3, pp. 230-47.

Buttle, A. (2002), “SYSTRA-SQ: a new measure of banks service quality”,

International Journal of Service Industry Management, Vol. 13 No.4,

pp. 362-81.

Jamal, A., Kamal, N., (2002), “Customer satisfaction and retail banking : an

assessment of some of the key antecedents of customer satisfaction in retail

banking”, International Journal of Bank Marketing, Vol.20. No.4,pp.146-160.

Jamal, A., Naser, K. (2003), “ Factors influencing customer satisfaction in the retail

banking sector Pakistan”, International Journal of Commerce and Management,

Vol.13 No.2, pp. 29-53.

Matzler, K., Bailom, F. (2002), “Measuring von Kundenzufriedenheit”, in

Hinterhuber, H.H., matzler, K. (Eds),Kundenorietierte Unternehmensfuhrung,

Gabler, Wiesbaden, pp.215-44.

Bose, R. 2002. Customer relationship management: key component for IT success,

Industrial Management and data System, Vol., 102 No2 pp 89-97.

Caruana, A. (2002), “Service loyalty: the effect of service quality and the mediating

role of customer satisfaction”, European Journal of Marketing, Vol. 36 No. 7/8,

pp.811-28.

Mckinney, V., (2002), “The measurement of web-customer satisfaction: an

expectation and disconfirmation approach”, Information System Research,

Vol. 13 p.296-315.

Rowley J.E. 2002. Reflections on customer knowledge management in e-business,

Qualitative Market Research: An International Journal, Vol.5 No.4,pp.268-280.

Chen, P., Hitt, L. (2002). “Measuring switching costs and the determinants of

customer retention in internet-enabled businesses: a study of the online

brokerage industry”, Information Systems Research, Vol. 13 No.3,pp.255-48.

Jabhoun, N., AI-Tamimi, H.A. (2003), “Measuring perceived service quality at UAE

commercial banks”, International Journal of Quality and reliability

Management , Vol.20 No.4,pp.458-72.

Keiningham, T.L. (2003),“The impact of customer satisfaction on share-of-wallet in a

business-to-business environment”, Journal of service Research, Vol.6

pp. 37-50.

Santos, J. (2003), “E-service quality: a model of virtual service quality dimensions”,

Managing Service Quality, Vol.13 No.3,pp.233-46.

Lang, B., Colgate, M. (2003), “Relationship quality, on-line banking and the

information technology gap”, International Journal of Bank Marketing, Vol.21

No.1, pp.29-37.

Lin, Ch., (2003), “A critical appraisal of customer satisfaction and e-commerce”,

Managerial Auditing Journal, Vol.18, No.3. pp.202-212.

Wong, A., & Sohal, A. (2002). Customers’ Perspective on Service Quality and

Relationship quality and Relationship Quality in Retail Outlets. Managing

Service Quality, 12 (6) pp.424-433.

Park C.H. and Kim Y.G. 2003. A framework of dynamic CRM: linking marketing

with information strategy, Business Process Management Journal, Vol. 9 No.5,

pp 652-671.

Khalifa, M. And Liu, V. (2003). Determinant of satisfaction at different adoption

stages of internet – based services. Journal of the association for information

systems, 4(5), pp. 206-232.

Sureshchandar, G., Rajendran, C., Anantharaman, R. (2003), “The relationship

between service quality and customer satisfaction – a factor specific approach”,

Journal of Service Marketing, Vol. 16 No.4, pp.363-79.

Chumpitaz, R., Papariodamis, N. (2004), “Service quality and marketing performance

in business markets: exploring the mediating role of client satisfaction”,

Managing Service quality, Vol.14 No.2/3. Pp.235-48.

Egan J. 2004. Relationship marketing: exploring relational strategies in marketing

(2nd

Ed.) Financial Times Prentice Hall, Harlow.

Rowley J. 2004. Partnering paradigms? Knowledge management and relationship

marketing, Industrial Management & Data Systems, Vol. No. 2,pp.149-157.

Bolton M. 2004. Customer centric business processing, International Journal of

Productivity and Performance Management, Vol.,53 No.1 pp. 44-51.

Beerli, A., Martin J.D., Quintana A., (2004), “A model of customer loyalty in the

retail banking market”, European Journal of Marketing, Vol.38 No.1/2, pp.253-

275.

Chumpitaz R (2004), “Service quality and marketing performance in business-to-

business markets; existing the mediating role of client satisfaction managing

service quality”, Vol.14, No.2/3, pp. 235-248.

Jayawardhena, C. (2004), “Measurement of service quality in internet banking the

development of an instrument”, Journal of Marketing Management, Vol.20

pp.185-207.

Payne, A., & Frow,P. (2005). A Strategic Framework to Customer Relationship

Management. Journal of Marketing, 69(4),pp. 167-176.

Payne, A.F.T. and Frow, P. 2005. A strategic framework for customer relationship

management. Journal of Marketing, Vol. 69, No.4.

Peppers & Roggers. 2006. CRM in a down economy revisited-weathering the

economic storm through Customers Relationship Strategies, White Paper.

Lindergreen, A. Antioco, M. 2005. Customer relationship management: the case of

European bank, Marketing Intelligence & Planning, Vol. 23, No.2,

pp. 136-154.

Capizzi, M.T. and Ferguson, R. (2005), “Loyalty trends for the twenty-first century”,

Journal of Consumer Marketing, Vol.22 No.2, pp.72-80, ISSN 0736-3761.

Kim, M., Parasuraman, A., (2005), “Online service attributes available on apparel

retail web sites: an E-S-QUAL approach”, Managing Service Quality, Vol.16

No.1,pp.51-77.

Aydin, S., Ozer, G., (2005), “The analysis of antecedents of customer loyalty in the

Turkish mobile telecommunication market”, European Journal of Marketing,

Vol. 39, No7/8, pp.910-925.

Chakrabarty, A. (2006), “Barking up the wrong tree – factors influencing customer

satisfaction in retail banking in the UK”, International Journal of Applied

Marketing available at: www.managementjournals.com/journal/marketing/

index.htm (accessed May), Vol.I No.1.,

AI-Harwari, M., Ward, T. (2006), “SYSTRA-SQ: a new measure of banks service

quality, International Journal of Service Industry Management, Vol.13 No.4,

pp.362-81.

Smith A. 2006. CRM and customer service: Strategic asset or corporate overhead?,

Handbook of Business Strategy, Vol.7 No.1,pp. 87-93.

Jay B. Sinha. S.S. Iyengar. 2006. Fuzzy data mining for customer loyalty analysis,

ICIT, 9th

International Conference on Information Technology (ICIT’06).

Pp.245-246

Agarwal Anupam, Peitrazek Wayne E. And Singer Marc. 2006. Connecting CRM

System for better customer Service, Mc-Kinsey and co.

Lewis, B., Soureli, M. (2006),“The antecedents of consumer loyalty in retail banking”,

Journal of Consumer Behaviour, Vol. 5pp.15-31.

Alam, M., Khokhar, R., (2006), “Impact of Internet on Customer Loyalty in Swedish

Banks”, Journal of Economic Psychology, Vol. 16,pp.311-29.

Peppers & Roggers. 2006. CRM in a down economy revisited-weathering the

economy storm through Customers Relationship Strategies, white Paper.

Soderlund, M. (2006), “Measuring customer loyalty with multi-item scales: a case for

caution”, International Journal of Service Industry Management, Vol. 17 No.1,

pp.76-98.

Silky, V., Mathur, G. & Holani, U. (2007). Customer Satisfaction in Retail Services:

A Compartative Study of Public and Private Sector Banks. The Journal of

Indian Management & Strategy, 12 (2).

Kotler, P., & Keller, K.L. (2008). Marketing Management (13th

ed.). NJ: Prentice

Hall.

Egan, J. (2008). Relationship Marketing: Exploring Relational Strategies in Marketing

(3rd

ed.). Prentice Hall. pp.54-61.

Rai, R. (2009). Service quality gap analysis in Indian bank: An empirical study,

Paradigm, 13(2), pp.29-35.

Pal, M.M., & Choudhury, K. (2009), Exploring the Dimensionality of Service

Quality: An Application of TOPSIS in the Indian Banking Industry. Asia-

Pacific Journal of Operational Research, 20(1), pp. 115-133.

Hazra, S.G. & Srivastava, K.B.L (2009). Impact of service quality on customer

loyalty, commitment and trust in the Indian banking sector. ICFAI Journal of

Marketing Management, 3 (3&4), pp. 75-95.

Berman, B., & Evans, J.R. (2010). Retail Management, A strategic approach.

(11th

Ed.). New Jersey, USA: Prentice-Hall International.

Ghazizadeh, M., (2010), Assessing of bank customer retention and loyalty: a case

study of state-owned banks in Tehran. European Journal of Social Sciences,

17(2):274-287.

Kumar, M., Kee, F.T.& Charles, V. (2010). Comparative Evaluation of Critical

Factors in Delivering Service Quality of Banks: An application of dominance

analysis in modified SERVQUAL model. International Journal of quality and

Reliability Management, 27 (3), 351-377.

Bedi, M.(2010). An Integrated Framework for service Quality, Customer Satisfaction

and Behavioural Responses in Indian Banking Industry- A Comparison of

public and private sector banks. Journal of Services Research, 10(1),

pp 157-172.

Oztaysi, B., Sezgin, S., & Ozok, Z. (2011). A Measurement Tool for Customer

Relationship Management Processes. Industrial Management and Data

Systems, 111(6),pp.943-960.

Rootman, C. 2011. An international comparative study on the relationship marketing

and customer retention of retail banks: lesson for South Africa. Port Elizabeth:

NNMU. (Dissertation – D. Phil)472p.

74

CHAPTER – III

PROFILE OF STATE BANK OF INDIA

Origin

The State Bank of India goes back to the first decade of the nineteenth

century with the establishment of the Bank of Calcutta in Calcutta on 2nd

June

1806. Three years later the bank received its charter and was re-designed as

Bank of Bengal (2nd

January 1809). A unique institution, it was the first joint-

stock bank of British India sponsored by the Government of Bengal. The Bank

of Bombay (15th

April 1840) and the Bank of Madras (1st

July 1843) followed

the Bank of Bengal. These three banks remained at the apex of modern banking

in India till their amalgamation as Imperial Bank of India on 27th

January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into

existence either as result of the compulsions of imperial finance or by the felt

needs of local European commerce and were not imposed from outside in an

arbitrary manner to modernise India‟s economy. Their evolution was, however,

shaped by ideas culled from similar developments in Europe and England, and

was influenced by changes occurring in the structure of both the local trading

environment and those in the relations of the Indian economy to the economy

of Europe and the global economic framework.

Establishment

The establishment of the Bank of Bengal marked the advent of limited

liability, joint-stock banking in India. So was the associated innovation in

banking, Viz. the decision to allow the Bank of Bengal to issue notes, which

would be accepted for payment of public revenues within a restricted

geographical area. This right of note issue was very valuable not only for the

Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It

meant an accretion to the capital of the banks, a capital on which the

proprietors did not have to pay any interest. The concept of deposit banking

was also an innovation because the practice of accepting money for

75

safekeeping (and in some cases, even investment on behalf of the clients) by

the indigenous banks had not spread as a general habit in most part of India.

But, for the long time, and especially up to the time that the three presidency

banks had a right that not to issue bank notes and government balances mode

up the bulk of the investible resources of the banks.

The three banks were governed by royal charters, which were revised

from time to time. Each charter provided for a share capital, four-fifth of which

were privately subscribed and the rest owned by the provincial government.

The members of the board of directors, which managed the affairs of each

bank, were mostly proprietary directors representing the large European

managing agency houses at India. The rest were government nominees,

invariable civil servants, one of whom was elected as the president of the

board.

Business

The business of the banks was initially confined to discounting of bills

of exchange or other negotiable private securities, keeping cash accounts and

receiving deposits and issuing and circulating cash notes. Loans were restricted

to Rupees One Lakh and the period of accommodation confined to three

months only. The security for such loans were public securities, commonly

called Company‟s paper, bullion, treasure, plate, jewels, or goods „not of a

perishable nature‟ and no interest could be charged beyond a rate of twelve per

cent. Loans against goods like silk goods were also granted but such finance by

way of cash credits gained momentum only from the third decade of the

nineteenth century. All commodities, including tea, sugar and jute, which

began to be financed later, were either pledged or hypothecated to the bank.

Demand promissory notes were signed by the borrower in favour of the

guarantor, which was in turn endorsed by the bank. Lending against shares of

the banks or on the mortgage of houses, land or other real property was,

however, forbidden. Indians were the principal borrowers against deposit of

Company‟s paper, while the business of discounts on private as well as salary

76

bill was almost the exclusive monopoly of individuals, Europeans and their

partnership firms. But the main function of the three banks, as far as the

government was concerned, was to help the latter loans from time to time and

also provide a degree of stability to the prices of government securities.

Major changes

A major change in the conditions of operation of the Banks of Bengal,

Bombay and Madras occurred after 1860. With the passing of the Paper

Currency Act of 1861, the right of note issue of the presidency banks was

abolished and the Government of India assumed from 1st March 1862 the sole

power of issuing paper currency within British India. The task of management

and circulation of the new currency notes was conferred on the presidency

banks and the Government undertook to transfer the Treasury balances to the

banks had till then any branches (except the sole attempt and that to a short-

lived one by the Bank of Bengal at Mirzapore in 1839) although the charters

had given them such authority. But as soon as the three presidency banks were

assured of the free use of government Treasury balances at places where they

would open branches, they embarked on ranch expansion at a rapid pace. By

1876, the branches, agencies and sub-agencies of the three presidency banks

covered most of the major parts and many of the inland trade centres in India.

While the Bank of Bengal had eighteen branches including its head office,

seasonal branches and sub-agencies, the Banks of Bombay and Madras had

fifteen each.

Presidency Bank Act

The Presidency Banks Act, which came into operation on 1st May 1876,

brought the three Presidency banks under a common statute with similar

restrictions on business. The proprietary connection of the Government was,

however, terminated, though the banks continued to hold charge of the public

debt offices in the three presidency towns, and the custody of a part of the

government balances. The Act also stipulated the creation of Reserve

Treasuries at Calcutta, Bombay and Madras into which sums above the

77

specified minimum balances promised to the presidency banks at only their

head offices were to be lodged. The Government could lend to the presidency

banks from such Reserve Treasuries but the latter could look upon them more

as a favour than as a right. The decision of the Government to keep the surplus

balances in Reserve Treasuries outside the normal control of the presidency

banks and the connected decision not to guarantee minimum government

balances at new places where branches were to be opened effectively checked

the growth of new branches after 1876. The place of expansion witnessed in the

previous decade fell sharply although, in the case of the Bank of Madras, it

continued on the modest scale as the profits of that bank were mainly derived

from trade dispersed among a number of port towns and inland centres of the

presidency.

India witnessed rapid commercialization in the last quarter of the

nineteenth century as its railway network expanded to cover all the major

regions of the country. New irrigation networks in Madras, Punjab and Sind

accelerated the process of conversion of subsistence crops into cash crops, a

portion of which found its way into the foreign markets. Tea and coffee

plantations transformed into large areas of the Eastern Terais, the hills of

Assam, the Nilgiris into regions of estate agriculture par excellence. All these

resulted in the expansion of India‟s international trade more than six-fold. The

three presidency banks were both beneficiaries and promoters of this

commercialisation process as they became involved in the financing of

practically every trading, manufacturing and mining activity in the sub-

continent. While the Banks of Bengal and Bombay were engaged in the

financing of large modern manufacturing industries, the Bank of Madras went

through the financing of large modern manufacturing industries; the Bank of

Madras modified the financing of small-scale industries in a way which had no

parallel elsewhere. But the three banks were rigorously excluded from any

business involving foreign exchange. Not only such business were considered

risky for these banks, which held government deposits, it was also feared that

these banks enjoying government patronage would offer unfair competition to

78

the exchange banks which had by then arrived in India. This exclusion

continued till the creation of the Reserve Bank of India in 1935.

The presidency Banks of Bengal, Bombay and Madras with their 70

branches were merged in 1921 to form the Imperial Bank of India. The triad

had been transformed into a monolith and a giant among Indian commercial

banks had emerged. The new bank took on the triple role of a commercial

bank, a banker‟s bank and a banker to the government.

But this creation was preceded by years of deliberations on the need for

the „State Bank of India‟. What eventually emerged was a „half-way house‟

combining the functions of a commercial bank and a quasi-central bank.

The establishment of the Reserve Bank of India as the central bank of

the country in 1935 ended the quasi-central banking role of the Imperial Bank.

The latter ceased to be bankers to the Government of India and instead became

agent of the Reserve Bank for the transaction of government business at centres

at which the central bank was not established. But it continued to maintain

currency chests and small coin deposits and operate the remittance facilities

scheme for other banks and the public on terms stipulated by the Reserve Bank.

It also acted as a banker‟s bank by holding their surplus cash and granting them

advances against authorised securities. The management of the bank clearing

houses also continued with it at many places where the Reserve Bank did not

have offices. The bank was also the biggest tendered at the Treasury bill

auctions conducted by the Reserve Bank on behalf of the Government.

The establishment of the Reserve Bank simultaneously was important

amendments being made to the constitution of the Imperial Bank converting it

into a purely commercial bank. The earlier restrictions on its business were

removed and the bank was permitted to undertake foreign exchange business

and executor and trustee business for the first time.

79

Imperial Bank

The Imperial Bank during the three and a half decades of its existence

recorded an impressive growth in terms of offices, reserves, deposits,

investment and advances, the increases in some cases amounting to more than

six-fold. The financial status and security inherited from its forerunners no

doubt provided a firm and durable platform. But the lofty traditions of banking

which the Imperial Bank consistently maintained and the high standard of

integrity it observed in its operations inspired confidence in its depositors that

no other bank in India could perhaps than equal. All these enabled the Imperial

Bank to acquire a pre-eminent position in the Indian banking industry and also

secure a vital place in the country‟s economic life.

When India attained freedom, the Imperial Bank had a capital base

(including reserves) of Rs.11.85 Crores, deposits and advances of

Rs.275.14 Crores and Rs.72.94 Crores respectively and a network of 172

branches and more than 200 sub-offices extending all over the country.

State Bank of India

State Bank of India is the successor to Imperial Bank of India. The latter

was established in 1921 with the amalgamation of three Presidency Banks of

Bombay, Bengal and Madras. State Bank of India came into being on 1st July,

1955 through the State Bank group as subsidiaries under the State Bank of

India (Subsidiary Banks) Act 1959. Over the years, the Bank has expanded

rapidly. The State Bank of India has been, over the years, the flagship of Indian

banking. The State Bank of India is the largest bank in India in terms of profits,

assets, deposits, branches and employees. As of 31st March, 2000, the Bank

possesses total assets worth Rs.2,615,049 million [US$59,951 million] and

total deposits worth Rs.1,968,211 million [US$45,122 million]. With a network

of over 9,000 branches in India and 51 foreign offices in 32 countries, the Bank

commands about one-fifth of the total deposits and loans in all scheduled

commercial banks in the country.

80

COMPANY PROFILE

STATE BANK OF INDIA

Type Public

Traded as NSE: SBIN

BSE: 500112

LSE: SBID

BSE SENSEX Constituent

Industry Banking, Financial Services

Founded 1 July 1955

Headquarters Mumbai, Maharashtra, India

Area served Worldwide

Key people Pratip Chaudhuri (Chairman)

Products Credit Cards, Consumer Banking, Corporate

Banking, Finance and Insurance, Investment

Banking, Mortgage Loans, Private Banking,

Wealth Management.

Revenue US$ 36.950 billion (2012)

Profit US$ 3.202 billion (2012)

Total assets US$ 359.237 billion (2012)

81

Total equity US$ 20.854 billion (2012)

Owner(s) Government of India

Employees 292,215 (2012)

Website www.sbi.co.in

ESTABLISHMENT

The evolution of State Bank of India can be traced back to the first

decade of the 19th

century. It began with the establishment of the Bank of

Calcutta in Calcutta, on 2nd

June 1806. The bank was redesigned as the Bank of

Bengal, three years later, on 2nd

January 1809. It was the first ever joint-stock

bank of the British India, established under the sponsorship of the Government

of Bengal. Subsequently, the Bank of Bombay (established on 15th

April 1840)

and the Bank of Madras (established on 1st July 1843) followed the Bank of

Bengal. These three banks dominated the modern banking scenario in India,

until when they were amalgamated to form the Imperial Bank of India, on

27th

January 1921.

An important turning point in the history of State Bank of India is the

launch of the first Five Year Plan of independent India, in 1951. The plan

aimed at serving the Indian economy in general and the rural sector of the

country, in particular. Until the Plan, the commercial banks of the country,

including the Imperial Bank of India, confined their services to the urban

sector. Moreover, they were not equipped to respond to the growing needs of

the economic revival taking shape in the rural areas of the country. Therefore,

in order to serve the economy as a whole and rural sector in particular, the All

India Rural Credit Survey Committee recommended the formation of a state-

partnered and state-sponsored bank.

82

BRANCHES

Banking Sector plays an important role in economic development of a

country. The banking system of India is featured by a large network of bank

branches, serving many kinds of financial services of the people.

The State Bank of India, popularly known as SBI and it is one of the

leading bank of public sector in India. SBI has 14 Local Head Offices and

57 Zonal Offices located at important cities throughout the country. It also has

around 130 branches out of the country.

The state Bank group, with over 16,000 branches a wide range of

banking products through its vast network of branches in India and overseas,

including products aimed at Non-Resident Indians (NIRs)

SUBSIDIARIES (State Bank of India Group)

The State Bank Group includes a network of eight banking subsidiaries

and several non-banking subsidiaries. Though the establishment, it offers

various services including merchant banking services, fund management,

factoring services, primary dealership in government securities, credit cards

and insurance.

The eight banking subsidiaries are,

State Bank of Bikaner and Jaipur (SBBJ)

The state Bank of Hyderabad (SBH)

The state Bank of India(SBI)

The state Bank of Indore(SBIR)

The state Bank of Mysore(SBM)

The state Bank of Patiala(SBP)

The state Bank of Saurashtra(SBS)

The state Bank of Travancore(SBT)

FOREIGN BANKING SUBSIDIARIES

SBI (Mauritius) Ltd.

State Bank of India (Canada)

83

State Banks of India (California)

Commercial Bank of India LLC, Moscow

PT Bank SBI Indonesia

Nepal SBI Bank Ltd.

DOMESTIC NON-BANKING SUBSIDIARIES

SBI Capital Markets Ltd.

SBI DFHI Ltd.

SBI Mutual Funds Trustee Company Pvt. Ltd.

SBI CAP Securities Ltd.

SBI CAPS Ventures Ltd.

SBI CAP Trustees Company Ltd.

SBI Cards and Payments Services Pvt. Ltd.

SBI Funds Management Pvt. Ltd.

SBI Life Insurance Company Ltd.

SBI Pension Funds Pvt. Ltd.

SBI – SG Global Securities Services Pvt. Ltd.

SBI Global Factors Ltd.

SBI General Insurance Company Ltd.

SBI Payment Services Pvt. Ltd.

FOREIGN NON-BANKING SUPSIDIARIES

SBICAP (UK) Ltd.

SBI Funds Management (International) Pvt.LTD.

SBICAP (Singapore) Ltd

84

BOARD OF DIRECTORS OF THE COMPANY

Sl.NO NAME DESIGNATION

1. Mr. Pratip Chaudhuri Chairman

2. Mr. D Sundaram Director

3. Mr. Parthasarathy Iyengar Director

4. Mr.J B Mohapatra Director

5. Mr. Rajiv Takru Director

6. Mr. Urjit R Patel Director

7. Mr. S Venkatachalam Director

8. Mr. Deepak Ishwarbhai Amin Director

9. Mr. Harichandra Bahadur Singh Director

10. Mr. S K Mudherjee Employee Director

11. Mr. S Visvanathan Managing Director

12. Mr. Hemant G Contractor Managing Director

13. Mr. Diwakar Gupta Managing Director

14. Mr. A Krishna Kumar Managing director

15. Dr. Rajiv Kumar Part Time Non Official Director

Executive Committee of the Central Board

The Executive Committee of the Central Board (ECCB) is constituted in

terms of section 30 of the State Bank of India Act, 1955. The State Bank of India

General Regulations (46 & 47) provides that subject to the general or special

directions of the Central Board, ECCB may deal with any matter within the

competence of the Central Board. ECCB consists of the Chairman, the Managing

85

Directors, the director nominated under section 19(f) of the SBI Act (Reserve

Bank of India nominee), and all or any of the other Directors who are normally

residents or may for the time being be present at any place within India where the

meeting is held. The ECCB meetings are held once every week. The details of

attendance of ECCB meetings during the year 2011-12 are as under:

Attendance of Directors at ECCB Meetings during 2011-12

Sl.

No Directors

No. of

meetings

attended

1 Shir Pratip Chaudhuri, Chairman 52

2 Shir R.Sridharan, MD & GE(A&S) (upto 30.6.2011) 12

3 Shir Hemant G. Contractor, MD & GE (IB) 48

4 ShirDiwakar Gupta, MD & CFO 41

5 Shir A. Krishna Kumar, MD & GE (NB) 44

6 Dr. Ashok jhunjhunwala (upto 23.06.2011) 05

7 Shir Dileep C. Choksi 03

8 Shir S. Venkatachalam 51

9 Shir D. Sundaram 28

10 Shir Parthasarathy Iyengar (w.e.f. 25.06.2011) 09

11 Shir Jyoti B. Mohapatra (w.e.f. 21.11.2011) 05

12 Shir G.D. Nadaf 21

13 Shir Rajiv Kumar (upto 07.09.2011) 01

14 Shir Rashpal Malhotra (w.e.f. 10.05.2011) 10

15 Shir Deepak I. Amin (w.e.f. 24.01.2012) 02

16 Shir Shashi Kant Sharma, Govt. Nominee (upto 02.08.2012) -

86

17 Shir Shyamala Gopinath, RBI Nominee (upto20.06.2011) 03

18 Shir D.K. Mittal, Govt. Nominee (w.e.f. 03.08.2011) 01

19 Dr. Subir V. Gokarn, RBI Nominee (w.e.f. 04.08.2011) 04

Other Board Level Committees

In term of the provisions of SBI Act and General Regulations, 1955 and

Govt or RBI or SEBI guidelines, the Central Board has constituted seven board

level committees. Audit Committees, Risk Management Committee,

Shareholders‟or Investors‟ Grievance Committee, Special Committee of the

Board for monitoring of large value frauds (Rs.1crore and above), Customer

Service Committee, IT Strategy Committee and Remuneration Committee of

the Board.

These committees provide effective professional support in the conduct of

board level business in key areas like audit and account, risk management

resolution of shareholders‟ or investors‟ grievances, fraud review and control,

review of customer service and redressal of customer grievances, technology

management and payment of incentives to executive directors.

While the Remuneration Committee approves, once in a year, payment of

incentives of whole time directors, based on Government of India guidelines, the

other committees meet periodically, one in a quarter generally, to deliberate on

policy issues and review domain performance, as per the calendar of reviews

approved by the Central Board. The committees also call external specialists,

besides drawing upon the services of top executives from the bank, as and when

needed. The minutes and proceedings containing brief reports on the discussions

held at the meetings of the committees are placed before the Central Board.

Audit Committee of the Board

The audit committee of the board was constituted on 27th

July 1994 and

last re-constituted on the 1st July 2011. The ACB functions as per RBI guidelines

87

and complies with the provisions of Clause 49 of the listing agreement to the

extent that they do not violate the directive and guidelines issued by RBI.

Function of ACB

ACB provides direction as also oversees the operation of the total audit

function in the bank. Total audit function implies the organisation,

operationalisation and quality control of internal audit and inspection within the

bank, and follow-up on the statutory and external audit, compliance of RBI

inspection. It also appoints statutory auditors of the bank and reviews their

performance from time to time.

ACB reviews the bank‟s financial, risk management IS audit policies and

accounting policies and systems of the bank to ensure greater transparency.

ACB reviews the internal inspection and audit plan and functions in the

bank – the system, its quality and effectiveness in terms of follow-up. It also

especially focuses on the follow up of:

KYC-AML Guidelines.

Major areas of housekeeping.

Compliance of Clause 49 and other guidelines issued by SEBI from

time to time.

Status of implementation of Ghosh and Jilani Committee

Recommendations.

It obtains and reviews reports from the compliance department in the

bank. ACB follows up on all the issues raised in RBI‟s annual financial

inspection reports under Section 35 of Banking Regulation Act, 1949 and long

form audit reports of the statutory auditors and other internal audit reports. It

interacts with the external auditors before the finalisation of the annual or

quarterly financial accounts and reports.

A formal “Audit Charter” or Terms of Reference” lay down by the Central

Board is in place and updated periodically, the last revision effected from

06.03.2011.

88

Composition and Attendance during 2011-12

The ACB has seven members of the board of directors, including two

whole time directors, two official directors (nominees of GOI and RBI) and three

non-official, non-executive directors. Meetings of the ACB are chaired by a non-

executive director. The constitution and quorum requirements, as per SBI

guidelines, are complied with meticulously. During the year, nine meetings of

ACB were held to review the various matters connected with the internal control,

system and procedures and other aspects as required in terms of the audit charter.

HISTORY

1806: The Bank of Calcutta is established as the first Western-type bank.

1809: The bank receives a charter from the imperial government and changes its

name to Bank of Bengal.

1840: A sister bank, Bank of Bombay, is formed.

1843: Another sister bank is formed: Bank of Madras, which, together with bank

of Bengal and Bank of Bombay become known as the Presidency Banks,

which has the right to issue currency in their regions.

1861: The Presidency Bank Act takes away currency issuing privileges but

offers incentives to begin rapid expansion, and the three banks open

nearly 50 branches among them by the mid-1870s.

1876: The creation of Central Treasuries ends the expansion phase of the

Presidency Banks.

1921: The Presidency Banks are merged to form a single entity, Imperial Bank

of India.

1955: The nationalization of Imperial Bank of India results in the formation of

the State Bank of India, which then becomes a primary factor behind the

country‟s industrial, agricultural, and rural development.

1969: The Indian Government establishes a monopoly over the banking sector.

1972: SBI begins offering merchant banking services.

89

1986: SBI Capital Market is created.

1995: SBI Commercial and International Bank Ltd. was launched as part of

SBI‟s stepped-up international banking operations.

1998: SBI launches Credit Cards in partnership with GE Capital.

2002: SBI networks 3,000 branches in the massive technology implementation.

2004: A networking effort reaches 4,000 branches.

2005: SBI opens MICRS cheque processing center. SBI rolls out new loan

scheme.

2006: The State Bank of India (SBI) has informed that Shri. Yogesh Agarwal

has been appointed as Managing Director on the Board of Bank with

effect from October 10, 2006 to the June 30, 2010.

2007: The State Bank of India (SBI) has become the first foreign bank to set up

a branch in the Israel‟s diamond exchange. Besides diamonds, they also

see huge potential in the telecommunications, hi-tech, chemicals, textiles,

agriculture and water management, food processing, pharma and health

care.

2008: The Company has issued right in the ratio of 1:5 at a premium of

Rs.1580/-Per Share.

2009: State Bank of India entered into an agreement with the government of

Gujarat to create a fund of Rs. 5,000 Crores for investing in equity of

infrastructure projects.

2010: State Bank of India, with a Debit Card base of over70 million, comprising

SBI Cash Plus, SBI Gold Debit Card and SBI Yuva Card, has added Chip

and Pin-based Platinum Debit Card to its bouquet on March 26.

2011: P Choudhury has been appointed as the new Chairman of State Bank of

India after getting clearance from government.

2012: SBI launched Virtual Debit Cards to check online fraud and promote

ecommerce.

90

2013: India‟s leading Public Sector lender the State Bank of India (SBI) is

stepping up efforts to expand its presence in the world‟s second biggest

economy with the lender set to launch its second branch in China.

PRODUCT AND SERVICES

State Bank of India retail products and services include Gold Deposit, SBI

MODS (Mullti-Option Deposit Scheme), and SBI Card. International Banking

Services include foreign exchange, letters of credit, guarantees, remittances,

acceptances and collections, forex market maker in India and rupee market

abroad, correspondent banking, project export finance and shipping finance.

State Bank of India NRI Products and Services offer a wide range of

financial choices with extensive branch network which includes a large number

of NRI and NRI Intensive branches. It includes FCNR, NRNR, NRE, RFC,

NRO, NRSR and HOUSING FANANCE for NRIs.

Personal Banking

SBI Term Deposits

SBI Loan For Pensioners

SBI Recurring Deposits

Loan Against Mortgage of Property

SBI Housing Loan against Shares & Debentures

SBI Car Loan

Rent Plus Scheme

SBI Educational Loan

Medi-Plus Scheme

Other Services

Agriculture/Rural Banking

NRI Services

ATM Services

DEMAT Services

91

Corporate Banking

Internet Banking

Mobile Banking

Safe Deposit Locker

RBIEFT

e-Pay

SBI Vishwa Yatra Foreign Travel Card

Broking Services

Gift Cheques

COMPETITOR IN THE 21st CENTURY

State Bank of India was allowed to dominate the Indian banking sector

for more than two decades. In the early 1990s, the Indian government kicked

off a series of reforms at deregulating the banking and financial industries.

SBI was now forced to brace itself for the arrival of a new wave of competitors

eager to enter the fast-growing Indian economy‟s commercial banking sector.

Yet years as a government-run institution had left bloated, the civil servant

status of its employees had encouraged its payroll to swell to more than

2,30,000. The bureaucratic nature of the bank‟s management left little room

for personal initiative, non-incentive for controlling costs.

The bank also had been encouraged to increase its branch network, with

little concern for profitability. As former Chairman Dipankar Baku told the

Banker in the early 1990s: “In the aftermath of bank nationalisation everyone

lost sight of the fact that banks had to be profitable. Banking was more to do

with social policy and perhaps that was relevant at the time. For the last two

decades the emphasis was on physical expansion”.

State Bank of India began retooling for the new competitive

environment. In 1994, the bank hired consulting group McKinsey & Co. to

help it restructure its operations. McKinsey then led SBI through a massive

restructuring effort that lasted through much of the decade into the beginning of

the next, an effort that helped SBI develop a new corporate culture focused

92

more on profitability than on social and political policy. SBI also stepped up its

international trade operations, such as foreign exchange trading, as well as

corporate finance, export credit, and international banking.

SBI had long been present overseas, operating some 50 offices in

34 countries, including full-fledged subsidiaries in the United Kingdom, the

United States and elsewhere. In 1995 the banks setup a new subsidiary,

SBI Commercial and International Bank Ltd., to back its corporate and

international banking services. The bank also extended its international

network into new markets such as Russia, China, and South Africa.

Back home, in the meantime, SBI began addressing the technology gap

that existed between it and its foreign-backed competitors. Into the 1990s,

SBI had yet to establish an automated teller network: indeed, it had not even

automated its information system. SBI responded by launching an ambitious

technology drive, rolling out its own ATM network, then teaming up with

GE Capital to issue its own credit card. In the early 2000s, the bank began

cross-linking its banking network with its ATM network and Internet and

telephone access, rolling out “Anytime, Anywhere” banking access. By 2002,

the bank has succeeded in networking its 3,000 most profitability branches.

The implementation of new technology helped the bank to achieve the

strong profit gains into the early years of the new century. SBI also adopted

new human resources and retirement policies, helping trim its payroll by some

20,000, almost entirely through voluntary retirement in a country where

joblessness remaining a decided problem.

By the beginning of 2004, SBI appeared to be well on its way to

meeting the challenges offered by the deregulated Indian banking sector. In a

twist, the bank had become an aggressor into new territories, launching its own

line of bancassurance product, and also initiating securities brokering services.

In the meantime, SBI continued its technology rollout, boosting the number of

networked branches to more than 4,000 at the end of 2003. SBI promised to

remain a central figure in the Indian banking sector as it entered its third

century.

93

PRINCIPAL COMPETITORS

ICICI Bank; Bank of Baroda; Canara Bank; Punjab National Bank;

Bank of India; Union Bank of India; Central Bank of India; HDFC Bank;

Oriental Bank of Commerce.

State Bank wins Golden Peacock Award for Corporate Social

Responsibility-2012

The Year 2011-12 saw the CSR activities of the bank scaling new

heights of achievement and glory with our bank winning the prestigious

Golden Peacock Award for corporate social responsibility in 2012.

As per the Reserve Bank of India instructions, SBI bank earmarks 1% of

previous year‟s net profit, as CSR spend budget for the year. In terms of CSR

policy of the bank, CSR donations are given to only those organizations that

enjoy IT exemption under Section 80. This ensures that the bank‟s support is

extended to deserving cases only.

The comparative chart of CSR spends for the last three years is as under:

(Rs. in Crores )

2009-10

Actual

2010-11

Actual

2011-12

Actual

National Donations (To provide succour to

victims of natural calamities) 5.15 2.00 5.50

Normal Donations and other direct activities 14.57 22.44 65.68

Total CST spend 19.72 24.44 71.18

Source: Secondary Data

For the first time in the last decade, the budget for CSR spend (normal

donations and other direct activities) has been surpassed even though the

allocation was much higher than the previous years.

94

Sector wise Development

The breakup of sectoral deployment of our CST spends during the year

has been as under:

Amount (in Crores)

National Donations 5.50

Supporting Education 38.33

Supporting Healthcare 15.03

Assistance to underprivileged 5.37

Research and Development 3.75

Supporting Culture 1.15

Environment Protection 0.67

Other projects 1.38

Total 71.18

Source: Secondary Data

Supporting Education

To support education and to bring happiness to millions of school

children specially the underprivileged children, bank provided 1,20,000 electric

fans to 12,000 schools across India.

During the year, the bank also provided large number of buses and vans

to needy schools. Preference has been given to schools for physically and

mentally challenged children, and children belonging to economically weaker

sections, etc. SBI also assisted them with computer, furniture and other

accessories.

To transform and upgrade the efficacy of education in schools run by

Municipal Corporation of Greater Mumbai, SBI extending funding support.

95

Supporting Healthcare

The focus of the bank has been to help provide the basic infrastructure

support to ameliorate the condition of the common man. Ambulances, medical

vans to enable medical camps in remote areas and mobile blood collection vans

and host of other medical equipments were donated to needy organization and

hospitals by our 14 circles for speedy transportation of critical patients as well

as to provide medical services to the remotest parts of the country.

The bank has donated 95 such vehicles with an expenditure of

Rs.7.40 Crores during the year. Medical equipments costing Rs.6.10 Crores

were donated to needy hospitals and healthcare institutions. Healthcare to

children providing safe drinking water as always been a challenge for schools.

Recently SBI took up the project, and installed 13,600 water purifiers in as

many schools, ensuring clean and safe drinking water to millions of children in

schools.

HOME LOANS

“THE MOST PREFERRED HOME LOAN PROVIDER” voted in

AWAAZ Consumer Awards along with the MOST PREFERRED BANK

AWARD in a survey conducted by TV 18 in association with AC Nielsen-

ORG Marg in 21 cities across India. SBI HOME LOANS now offers Interest

Rates concession on GREEN HOMES in accordance with SBI‟s commitment

to Environment protection. SBI Home Loans come to you on the solid

foundation of trust and transparency built in the tradition of State Bank of

India.

State Bank of India Current scenario

Nationalized banks such as State Bank of India though pygmies in the

international banking market are banking behemoths of India. They have

branches spread over the entire length and breadth of the country. SBI in

particular is all-pervasive enjoying a sprawling network of 9000 branches. Its

blue and white shingle is visible to the smallest hamlet. It has assets understood

to be worth about Rs. 222,500 Crores [$52 billion]. SBI has a very conservative

approach to accounting particularly when it comes to declaration of its assets.

96

Probably modesty does not permit the bank to exhibit its strengths. In

particular, it has real estate properties some of which are heritage sites all over

the country. These are estimated to collectively command a value of

Rs. 30,000 Crores. This is believed that it does not get reflected in its book of

accounts.

State Bank of India enjoys a monopoly of the government business. The

Reserve Bank of India owns about 60% of the bank‟s equity. To its credit,

SBI mobilized $4.2 billion through the Resurgent India Bonds [RIB] issue in

just 3 months down the Post-Pokhran sanction period. This was the difficult

time when the international credit rating agencies had downgraded the country.

SBI, time and again, does a rescue act in the forex market to contain any

volatility of the rupee.

State Bank of India was formed under the SBI Act in 1955 with the

takeover of Imperial Bank and amalgamation of Bank of Bengal, Bank of

Bombay, and Bank of Madras. The Government mopped up around 93% of the

equity, leaving 7% to private ownership. By this act the equity of RBI cannot

be reduced below 55%.

State Bank of India enjoys a pool of best managerial talent, assured

government business, a countrywide network of branches and a strong brand

credibility in the Indian market.

Profile of Tiruchirappalli District

Tiruchirappalli is one of the major cities in Tamil Nadu, situated in

junction of many National Highways. Tiruchirappalli is always considered as a

central part of Tamil Nadu. The National Highways connecting Chennai and

Kanyakumari, Nagappattinam and Mysore, Chennai and Rameshwaram are

passing through Tiruchirappalli only. Tiruchirappalli being a district

headquarter, has 4,40,383 Hectares of district jurisdiction.

Tiruchirappalli District has an area of 11.075 Km2. It is bounded on the

north by Sales District, on the northeast by Perambalur Disrict, on the east by

Thanjavur District, on the southeast by Pudukkottai District, on the south by

97

Sivaganga and Madurai districts, on the southeast by Dindigul District, on the

west by Karur District, and on the northwest by Namakkal District.

According to 2001 census, Tiruchirappalli city has a population of

7,46,062, In this male population is 3,73,541 and female population is 3,72,521.

The number of literates in Tiruchirappalli city is 6,16,798 in which male literates

are 3,17,369 and female literates are 2,99,429. Tiruchirappalli city has a mean

temperature of low degree humidity. The hottest period is from April to June.

The temperature ranges from 25.10C to 41

0C. The average rainfall per year is

867.8 mm.

Tiruchirappalli depends on the Tiruchirappalli Electricity Distribution

Circle for its power supply. It is covered with fairly developed roads and rails

connecting all important business centers.

Tiruchirappalli Junction is one of the important Railway Junction in India.

During the British rule, this was operated as a headquarter of Southern Railways.

From Tiruchirappalli Junction we can avail train services to almost all the places

in India.

Tiruchirappalli has an Aerodram at Sembattu. From here, many domestic

and International Air services are operated every day. International flight

services are operated to Sirlanka. Saudi Arabia, Singapore and domestic flight

services are operated to Chennai, Cochin, Madurai, Trivandrum and Bangalore.

Tiruchirappalli is situated on the southern bank of River Cauvery. For

Tiruchirappalli District Cauvery is the main source of water both for drinking

and irrigation purposes.

Many large scale and small-scale industries are located in and around

Tiruchirappalli. There are four industrial estates located in Tiruchirappalli. They

are Ariyamangalam, Thiruverumbur, Thuvakudi and Mathur. Bharat Heavy

Electricals Limited [BHEL] is an important Public Sector Industry, which

provides employment to many people. Apart from these, there are a large number

98

of small-scale industries like synthetic diamond, beedi (kind of tobacco) making

and textiles, which had greater employment potentialities.

The educational institutions in Tiruchirappalli contribute to the

discriminating lines of interest to its people. It has all kinds of business places,

temples, churches, mosques, government offices, modern hospitals, five star and

three star hotels, banking and financial institutions.

99

CHAPTER - IV

DATA ANALYSIS AND INTERPRETATION

FREQUENCY TABLE

Table – 4.1

Gender-wise classification of respondents

Gender Frequency Percentage

Male 145 48

Female 155 52

Total 300 100

Source: primary data

Interpretation:

The table 4.1 shows that gender of the respondents with respect to

customers of State Bank of India in Tiruchirappalli District. 48 percent of

respondents are male and 52 percent are female. Hence, majority of the

respondents are female.

100

Chart – 4.1

Gender-wise classification of respondents

48%

52%

MALE

FEMALE

101

Table – 4.2

Age of the respondents

AGE Frequency Percentage

Below 31 98 33.0

31-35 96 32.0

36-40 56 19.0

41-45 26 9.0

46-50 11 3.0

Above 50 13 4.0

Total 300 100.0

Source: primary data

Interpretation:

The table 4.2 demonstrates that the age group of respondents with

respect to customers of State Bank of India in Tiruchirappalli District, 33

percent of the respondents are below 31 years of age and 32 percent of the

respondents in the age group of 31-32 years. Hence majority of the respondents

belongs to the age group below 31 years.

102

Chart – 4.2

Age of the respondents

AGE GROUP

P

E

R

C

E

N

T

A

G

E

103

Table – 4.3

Marital Status of the respondents

Marital status Frequency Percentage

Unmarried 192 64.0

Married 108 36.0

Total 300 100.0

Source: primary data

Interpretation:

The table 4.3 reveals that marital status of the respondents with respect

to State Bank of India in Tiruchirappalli District. 64 percent of the respondents

are unmarried, 36 percent of the respondents are married. Therefore, most of

the respondents are unmarried.

104

Chart – 4.3

Marital Status of the respondents

64%

36%

UNMARRIED

MARRIED

105

Table – 4.4

Educational Qualification of the respondents

Educational Qualification Frequency Percentage

Schooling 20 7.0

UG 80 27.0

PG 85 28.0

Professional 52 17.0

Diploma 34 12.0

Others 29 9.0

Total 300 100.0

Source: primary data

Interpretation:

The table 4.4 shows that educational qualification of the respondents

with respect to State Bank of India in Tiruchirappali District. 12 percent

respondents are diploma holders and 28 percent respondents are PG degree

holders. Hence, most of the respondents are post graduate operating the

SBI account.

106

Chart – 4.4

Educational Qualification of the respondents

QUALIFICATION

P

E

R

C

E

N

T

A

G

E

107

Table – 4.5

Span of Account Holders

Account Holders Frequency Percentage

Less than 1 Year 12 4.0

2-3 Years 91 30.0

4-5 Years 54 18.0

Above 5 Years 143 48.0

Total 300 100.0

Source: primary data

Interpretation:

The table 4.5 explains that the span of the account holders of State Bank

India in Tiruchirappali district. 18 percent respondents are 4-5 years and

48 percent respondents are above 5 years. Therefore, most of the respondents

are above 5 years as account holders of SBI account.

108

Chart – 4.5

Span of Account Holders

SPAN

P

E

R

C

E

N

T

A

G

E

109

Table – 4.6

Monthly Income of the respondents

Monthly Income Frequency Percentage

Upto Rs.10000 12 4.0

10001-20000 91 30.0

20001-30000 52 17.0

30001-40000 143 48.0

Above 40000 2 0.7

Total 300 100.0

Source: primary data

Interpretation:

The table 4.6 proves that monthly income of the State Bank India in

Tiruchirappali district, 30 percent respondents are Rs.10,000 – Rs.20,000

monthly income group and 48 percent customers are Rs.30,001 – Rs.40,000

monthly income group. Therefore, majority of the respondents‟ monthly

income list between Rs.30,001 and Rs.40,000.

110

Chart – 4.6

Monthly Income of the respondents

INCOME GROUP

P

E

R

C

E

N

T

A

G

E

111

Table – 4.7

Appearance of Bank's Reception Desk Employees

OPINION FREQUENCY PERCENTAGE

Disagree 2 1

Moderate 23 8

Agree 152 50

Strongly Agree 123 41

Total 300 100

Source: primary data

Interpretation:

The table 4.7 shows that reception desk employees of the State Bank of

India in Tiruchirappalli District. 41 percent respondents are strongly agree and

50 percent respondents are agree that SBI employee are neat in appearance.

Therefore, most of the respondent are agree that SBI employees are neat in

appearance due to their educational and occupational status.

112

Chart – 4.7

Appearance of Bank's Reception Desk Employees

0

5

10

15

20

25

30

35

40

45

50

DISAGREEMODERATE

AGREESTRONGLY

AGREE

1%

8%

50%

41%

Series1

Appearance

P

E

R

C

E

N

T

A

G

E

113

Table – 4.8

Appearance of Bank’s physical facilities

OPINION FREQUENCY PERCENTAGE

Disagree 3 1

Moderate 51 17

Agree 132 44

Strongly Agree 114 38

Total 300 100

Source: primary data

Interpretation:

The table 4.8 confirms that bank‟s appearance of physical facilities of

the State Bank of India in Tiruchirappalli District. 38 percent respondents are

strongly agree and 44 percent respondents are agree. Hence most of the

respondent are agree to the SBI‟s physical facilities are visually appealing.

114

Chart – 4.8

Appearance of Bank’s physical facilities

0

5

10

15

20

25

30

35

40

45

DISAGREE MODERATE AGREE STRONGLY AGREE

1%

17%

44%

38%

Series1

Appearance

P

E

R

C

E

N

T

A

G

E

115

Table- 4.9

Employees are well dressed and appear neat

OPINION FREQUENCY PERCENTAGE

Disagree 4 1

Moderate 46 15

Agree 100 33

Strongly Agree 149 50

Total 300 100

Source: primary data

Interpretation:

The table 4.9 shows that employees are well dressed and have a neat

appearance of State Bank of India in Tiruchirappalli District. 33 percent

respondents are agree and 50 percent respondents are strongly agree. Hence

most of the respondents are strongly agree to SBI employee dress code and

neat appearance.

116

Chart – 4.9

Employees are well dressed and appear neat

1%

15%

33%

50%

0

10

20

30

40

50

60

DISAGREE MODERATE AGREE STRONGLY AGREE

Series1

Appearance of the Staff

P

E

R

C

E

N

T

A

G

E

117

Table – 4.10

Understanding of specific needs by the employees

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 1 0

Disagree 1 0

Moderate 59 20

Agree 123 41

Strongly Agree 116 39

Total 300 100

Source: primary data

Interpretation:

The table 4.10 reveals that the understanding of respondents‟ specific

needs by the employees of the State Bank of India in Tiruchirappalli District.

39 percent respondents are strongly agree and 41 percent respondents are agree.

Therefore most of the respondent agree to SBI employees understand

customer‟s specific needs.

118

Chart – 4.10

Understanding of specific needs by the employees

0 0

20%

41%39%

0

5

10

15

20

25

30

35

40

45

STRONGLY DISAGREE

DISAGREE MODERATE AGREE STRONGLY AGREE

Series1

Understanding specific needs

P

E

R

C

E

N

T

A

G

E

119

Table- 4.11

Solving problems of the customer by the employees

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 2 1

Disagree 21 7

Moderate 78 26

Agree 106 35

Strongly Agree 93 31

Total 300 100

Source: primary data

Interpretation:

The table 4.11 shows that the level of solving the problems of the

respondents by the employees of State Bank of India in Tiruchirappalli District.

31 percent respondents are strongly agree and 35 percent respondents are

strongly agree. Hence most of the respondent are agree that SBI employees

solve problems in order to satisfy customers inquiries and needs.

120

Chart – 4.11

Solving problems of the customer by the employees

0

5

10

15

20

25

30

35

STRONGLY DISAGREE

DISAGREE MODERATE AGREE STRONGLY AGREE

1%

7%

26%

35%

31%

Series1

Understanding specific needs

P

E

R

C

E

N

T

A

G

E

121

Table- 4.12

Knowledge of the bank employees

OPINION FREQUENCY PERCENTAGE

Disagree 5 2

Moderate 54 18

Agree 135 45

Strongly Agree 106 35

Total 300 100

Source: primary data

Interpretation:

The table 4.12 proves that employees of the State Bank of India in

Tiruchirappalli District have the necessary knowledge to serve promptly.

35 percent respondents are strongly agree and 45 percent respondents are agree.

Therefore, most of the respondent are agree the SBI employee have the

necessary knowledge to serve promptly.

122

Chart – 4.12

Knowledge of bank employees

2%

18%

45%

35%

0

5

10

15

20

25

30

35

40

45

50

DISAGREE MODERATE AGREE STRONGLY AGREE

Series1

Understanding specific needs

P

E

R

C

E

N

T

A

G

E

123

Table- 4.13

Error-free records

OPINION FREQUENCY PERCENTAGE

Disagree 29 10

Moderate 74 24

Agree 121 40

Strongly Agree 76 26

Total 300 100

Source: primary data

Interpretation:

The table 4.13 reveals that bank employee insists on error free records

of State Bank of India in Tiruchirappalli District. 26 percent respondents are

strongly agree and 40 percent respondents are agree. Hence most of the

respondent agree to SBI employee insists on error-free records to maintain

good transaction as well as to let the respondents know that there is no

malpractice from the inside the bank.

124

Chart – 4.13

Error-free records

0

5

10

15

20

25

30

35

40

DISAGREE MODERATE AGREE STRONGLY AGREE

10%

24%

40%

26%

Series1

Understanding specific needs

P

E

R

C

E

N

T

A

G

E

125

Table- 4.14

Satisfaction level on rate of interest on deposit facilities

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 4 1

Disagree 4 1

Moderate 57 19

Agree 152 51

Strongly Agree 83 28

Total 300 100

Source: primary data

Interpretation:

The table 4.14 displays that satisfied rate of interest deposit facilities of

the State Bank of India in Tiruchirappalli district. 19 percent respondents are

moderate and 51 percent respondents are agree. Therefore, most of the

respondent are agree that SBI rate of interest deposit facilities are high and

moderate.

126

Chart – 4.14

Satisfaction level on rate of interest on deposit facilities

0

10

20

30

40

50

60

STRONGLY DISAGREE

DISAGREE MODERATE AGREE STRONGLY AGREE

1% 1%

19%

51%

28%

Series1

Satisfaction level on rate of interest

P

E

R

C

E

N

T

A

G

E

127

Table- 4.15

No. of Accounts holding in State bank of India

OPINION FREQUENCY PERCENT

One 151 50

Two 93 31

Three 44 15

More than three 12 4

Total 300 100

Source: primary data

Interpretation:

The table 4.15 demonstrates that respondents operating number of

accounts in State Bank of India in Tiruchirappalli District. 15 percent

respondents are operating three types of account and 50 percent respondents

are operating only one account. Hence, most of the respondents are operating

only one account.

128

Chart – 4.15

No. of Accounts holding in State bank of India

50%

31%

15%

4%

0

10

20

30

40

50

60

ONE TWO THREE MORE THAN THREE

Series1

No. of Accounts holding

P

E

R

C

E

N

T

A

G

E

129

Table- 4.16

Personnel skill

OPINION FREQUENCY PERCENTAGE

Moderate 39 13

Agree 150 50

Strongly Agree 111 37

Total 300 100

Source: primary data

Interpretation:

The table 4.16 expresses that the bank personnel knowledge is up to date

in State Bank of India in Tiruchirappalli District. 37 percent respondents are

strongly agree and 50 percent respondents are agree. Therefore, most of the

respondent are agree that their personnel knowledge is up to date by ample

information provided by bank.

130

Chart – 4.16

Personnel skill

13%

50%

37%

0

10

20

30

40

50

60

MODERATE AGREE STRONGLY AGREE

Series1

Personnel Skill Level

P

E

R

C

E

N

T

A

G

E

131

Table- 4.17

Bank personnel know their job well

OPINION Frequency Percentage

Strongly Disagree 1 0

Disagree 6 2

Moderate 40 13

Agree 143 48

Strongly Agree 110 37

Total 300 100

Source: primary data

Interpretation:

The table 4.17 shows that the bank personnel know their job well in

State Bank of India in Tiruchirappalli district. 37 percent respondents are

strongly agree and 48 percent respondents are agree. Hence, most of the

respondents agree that SBI personnel know their job well.

132

Chart – 4.17

Bank personnel know their job well

0%

13%

48%

37%

0

10

20

30

40

50

60

STRONGLY DISAGREE

DISAGREE MODERATE AGREE STRONGLY AGREE

Series1

Personnel know their job well

P

E

R

C

E

N

T

A

G

E

133

Table- 4.18

Personnel knowledge

OPINION FREQUENCY PERCENTAGE

Disagree 7 2

Moderate 35 12

Agree 147 49

Strongly Agree 111 37

Total 300 100

Source: primary data

Interpretation:

The table 4.18 confirms that the bank employee have the knowledge of

all services offered in State Bank of India in Tiruchirappalli district. 37 percent

respondents are strongly agree and 49 percent respondents are agree. Hence,

most of the respondent are agree that SBI employee have the knowledge of all

services offered by the entity.

134

Chart – 4.18

Personnel knowledge

0

5

10

15

20

25

30

35

40

45

50

DISAGREE MODERATE AGREE STRONGLY AGREE

2%

12%

49%

37%

Series1

PERSONNEL KNOWLEDGE

P

E

R

C

E

N

T

A

G

E

135

Table- 4.19

Bank seems tidy and well organized

OPINION FREQUENCY PERCENTAGE

Disagree 1 0

Moderate 48 16

Agree 162 54

Strongly Agree 89 30

Total 300 100

Source: primary data

Interpretation:

The table 4.18 confirms that the bank seems tidy and well organized in

State Bank of India in Tiruchirappalli District. 30 percent respondents are agree

and 54 percent respondents are strongly agree. Therefore, most of the

respondent are agree that SBI seems tidy and well organized in all service

towards customers and their activities.

136

Chart – 4.19

Bank seems tidy and well organized

0

10

20

30

40

50

60

DISAGREE MODERATE AGREE STRONGLY AGREE

0

16%

54%

30%

Series1

Level of tidy and organised

P

E

R

C

E

N

T

A

G

E

137

Table- 4.20

Bank service as a whole is good

OPINION FREQUENCY PERCENTAGE

Disagree 3 1

Moderate 43 14

Agree 119 40

Strongly Agree 135 45

Total 300 100

Source: primary data

Interpretation

The table 4.20 indicates that the bank services as a whole is goods in

State Bank of India in Tiruchirappalli District. 40 percent customers are agree

and 45 percent respondents are strongly agree. Hence, most of the respondent

are strongly agree that SBI whole services is excellence are does almost

satisfaction of the customers.

138

Chart – 4.20

Bank service as a whole is good

0

5

10

15

20

25

30

35

40

45

DISAGREE MODERATE AGREE STRONGLY AGREE

1%

14%

40%

45%

Series1

Level of Bank Services as whole

P

E

R

C

E

N

T

A

G

E

139

Table- 4.21

Justification of Interest or commission

OPINION FREQUENCY PERCENTAGE

Strongly disagree 1 0

Disagree 6 2

Moderate 112 37

Agree 101 34

Strongly agree 80 27

Total 300 100

Source: primary data

Interpretation

The table 4.21 proves that the bank rate of interest or commission is

fully justified in State Bank of India in Tiruchirappalli District. 27 percent

respondents are strongly agree and 34 percent respondents are agree. Hence,

majority of the respondent are strongly agree that SBI rate of interest or

commission is fully justified.

140

Chart – 4.21

Justification of Interest or commission

02%

37%

34%

27%

0

5

10

15

20

25

30

35

40

STRONGLY DISAGREE

DISAGREE MODERATE AGREE STRONGLY AGREE

Series1

Level of Interest or Commission

P

E

R

C

E

N

T

A

G

E

141

Table- 4.22

Friendly atmosphere

OPINION Frequency Percentage

Disagree 9 3

Moderate 81 27

Agree 114 38

Strongly Agree 96 32

Total 300 100

Source: primary data

Interpretation:

The table 4.22 shows that the bank personnel provide a friendly

atmosphere in State Banks of India in Tiruchirappalli District. 32 percent

respondents are strongly agree and 38 percent respondents are agree. Hence,

most of the respondent are agree that SBI personnel provide a friendly

atmosphere.

142

Chart – 4.22

Friendly atmosphere

0

5

10

15

20

25

30

35

40

DISAGREE MODERATE AGREE STRONGLY AGREE

3%

27%

38%

32%

Series1

Level of Friendly atmosphere

P

E

R

C

E

N

T

A

G

E

143

Table- 4.23

Difficulty in Opening an account

OPINION FREQUENCY PERCENTAGE

Strongly disagree 15 5

Disagree 90 30

Moderate 116 39

Agree 69 23

Strongly Agree 10 3

Total 300 100

Source: primary data

Interpretation:

The table 4.23 reveals that the difficulty in opening an account of State

Bank of India in Tiruchirappalli District. 30 percent respondents are disagree

and 39 percent respondents are moderate. Hence, majority of the respondents

are moderate opinion in SBI any difficulty in opening an account.

144

Chart – 4.23

Difficultly in opening an account

0

5

10

15

20

25

30

35

40

STRONGLY DISAGREE

DISAGREE MODERATE AGREE STRONGLY AGREE

5%

30%

39%

23%

3%

Series1

Level of difficulty in opening an account

P

E

R

C

E

N

T

A

G

E

145

Table- 4.24

Use of ATM card

OPINION FREQUENCY PERCENT

Disagree 7 2

Moderate 50 17

Agree 111 37

Strongly Agree 132 44

Total 300 100

Source: primary data

Interpretation:

The table 4.24 shows that the respondents experience and satisfied in

State Bank of India in Tiruchirappalli District. 37 percent respondents are agree

and 44 percent respondents are strongly agree. Therefore, most of the

respondent are strongly agree on using ATM card.

146

Chart – 4.24

Use of ATM Card

0

5

10

15

20

25

30

35

40

45

1

2

17

37

44

DISAGREE

MODERATE

AGREE

STRONGLY AGREE

Use of ATM Card

P

E

R

C

E

N

T

A

G

E

147

Table- 4.25

Modern technology

OPINION FREQUENCY PERCENTAGE

Strongly disagree 2 1

Disagree 3 1

Moderate 31 10

Agree 167 56

Strongly Agree 97 32

Total 300 100

Source: primary data

Interpretation:

The table 4.25 reveals that the respondents satisfied in modern

technology used in State Bank of India in Tiruchirappalli District. 32 percent

respondents are strongly agree and 56 percent respondents are agree. Hence,

most of the respondent are agree to SBI‟s modern technology.

148

Chart – 4.25

Modern technology

0

10

20

30

40

50

60

STRONGLY DISAGREE

DISAGREE MODERATE AGREE STRONGLY AGREE

1% 1%

10%

56%

32%

Series1

Level of Modern Technology Used

P

E

R

C

E

N

T

A

G

E

149

Table- 4.26

Transaction

OPINION FREQUENCY PERCENTAGE

Disagree 4 1

Moderate 82 27

Agree 111 37

Strongly Agree 103 35

Total 300 100

Source: primary data

Interpretation:

The table 4.26 confirms that the respondents are satisfied with the

transaction in State Bank of India in Tiruchirappalli District. 34 percent

respondents are strongly agree and 37 percent of respondents are agree.

Therefore, most of the respondent are agree with the transaction.

150

Chart – 4.26

Transaction

0

5

10

15

20

25

30

35

40

DISAGREE MODERATE AGREE STRONGLY AGREE

1%

27%

37%35%

Series1

Satisfaction Level of Transaction

P

E

R

C

E

N

T

A

G

E

151

Table- 4.27

Interest on Fixed Deposits and Current Deposits

OPINION FREQUENCY PERCENTAGE

Disagree 14 5

Moderate 72 24

Agree 124 41

Strongly Agree 90 30

Total 300 100

Source: primary data

Interpretation:

The table 4.21 explains that rate interest on Fixed Deposit and Current

Deposit in State Bank of India in Tiruchirappalli district. 30 percent

respondents are strongly agree and 41 percent respondent agree. Hence, most

of the respondents are agree to SBI rate of interest policy.

152

Chart – 4.27

Interest on Fixed Deposits and Current Deposits

5%

24%

41%

30%

0

5

10

15

20

25

30

35

40

45

DISAGREE MODERATE AGREE STRONGLY AGREE

Series1

Satisfaction Level of Transaction

P

E

R

C

E

N

T

A

G

E

153

Table- 4.28

Educational loans

OPINION Frequency Percent

Disagree 4 1

Moderate 54 18

Agree 126 42

Strongly Agree 116 39

Total 300 100

Source: primary data

Interpretation:

The table 4.28 shows that the respondents are satisfied with education

loan in State Bank of India in Thiruchirappalli District. 39 percent respondents

are strongly agree and 42 percent respondents are agree. Hence, most of the

respondents are satisfied with SBI educational loan services compare to other

banking sector.

154

Chart – 4.28

Educational loans

0

5

10

15

20

25

30

35

40

45

DISAGREE MODERATE AGREE STRONGLY AGREE

1%

18%

42%

39%

Series1

Satisfaction Level on Educational Loans

P

E

R

C

E

N

T

A

G

E

155

Table- 4.29

Parking facilities

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 11 4

Disagree 1 0

Moderate 86 29

Agree 117 39

Strongly Agree 85 28

Total 300 100

Source: primary data

Interpretation:

The table 4.29 shows that the parking facilities in State Bank of India in

Tiruchirappalli District. 29 percent respondents are moderate and 39 percent

respondents are agree. Therefore, most of the respondents are agree with the

SBI parking facilities.

156

Chart – 4.29

Parking facilities

0

5

10

15

20

25

30

35

40

4%

0

29%

39%

28%

Series1

Satisfaction Level on Parking Facilities

P

E

R

C

E

N

T

A

G

E

157

Table- 4.30

Global Network

OPINION Frequency Percentage

Disagree 4 1

Moderate 54 18

Agree 126 42

Strongly Agree 116 39

Total 300 100

Source: primary data

Interpretation:

The table 4.30 demonstrates that the global network (e-mail, Mobile

banking) services in State Bank of India in Tiruchirappalli District. 39 percent

respondents are strongly agree and 42 percent respondents are agree. Hence,

most of the respondent are agree with the SBI global network in modern

technology.

158

Chart – 4.30

Global network

0

5

10

15

20

25

30

35

40

45

DISAGREE MODERATE AGREE STRONGLY AGREE

1%

18%

42%

39%

Series1

Satisfaction Level on Global Network

P

E

R

C

E

N

T

A

G

E

159

Table- 4.31

Traveller cheques

OPINION FREQUENCY PERCENTAGE

Disagree 12 4

Neutral 183 61

Agree 94 31

Strongly Agree 11 4

Total 300 100

Source: primary data

Interpretation:

The table 4.31 shows that the respondents convenience of traveller

cheques of State Bank of India in Tiruchirappalli District. 31 percent

respondents are agree and 61 percent respondents are neutral. Hence, most of

the respondents are neutral in traveller cheques of SBI.

160

Chart – 4.31

Traveller cheques

4

61

31

4

0

10

20

30

40

50

60

70

DISAGREE NEUTRAL AGREE STRONGLY AGREE

Series1

Satisfaction Level on Travellers Cheques

P

E

R

C

E

N

T

A

G

E

161

Table- 4.32

Errors Correction

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 39 13

Disagree 122 41

Neutral 81 27

Agree 35 12

Strongly Agree 23 7

Total 300 100

Source: primary data

Interpretation:

The table 4.32 reveals that the correction or omission on pass book in

State Bank of India in Tiruchirappalli District. 27 percent respondents are

neutral and 41 percent respondents are disagree. Therefore, majority of the

respondent disagree to correction or omission on customer‟s pass book.

162

Chart – 4.32

Errors correction

0

5

10

15

20

25

30

35

40

45

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

13%

41%

27%

12%

7%

Series1

Satisfaction Level on Error Correction

P

E

R

C

E

N

T

A

G

E

163

Table- 4.33

Account confidentiality

OPINION FREQUENCY PERCENTAGE

Disagree 13 4

Neutral 39 13

Agree 110 37

Strongly agree 138 46

Total 300 100

Source: primary data

Interpretation:

The table 4.33 shows that the bank treats an honest way in very

transaction of the State Bank of India in Tiruchirappalli District. 37 percent

respondents are agree and 46 percent respondents are strongly agree.

Therefore, most of the respondent strongly agree to bank acting in an honest

way in each and every transaction.

164

Chart – 4.33

Account confidentiality

0

5

10

15

20

25

30

35

40

45

50

DISAGREE NEUTRAL AGREE STRONGLY AGREE

4%

13%

37%

46%

Series1

Satisfaction Level on Account confidentiality

P

E

R

C

E

N

T

A

G

E

165

Table- 4.34

Core banking services

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 13 4

Disagree 14 5

Neutral 38 12

Agree 125 42

Strongly Agree 110 37

Total 300 100

Source: primary data

Interpretation:

The table 4.34 indicates that the core banking ATM services in State

Bank of India in Tiruchirappalli District. 37 percent respondents are strongly

agree and 42 percent respondents are agree. Hence, most of the respondent are

agree to SBI core banking services.

166

Chart – 4.34

Core banking services

4%5%

12%

42%

37%

0

5

10

15

20

25

30

35

40

45

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

Series1

Satisfaction Level on Core banking services

P

E

R

C

E

N

T

A

G

E

167

Table- 4.35

Different types of card

OPINION FREQUENCY PERCENT

Disagree 4 1

Neutral 40 13

Agree 158 53

Strongly Agree 98 33

Total 300 100

Source: primary data

Interpretation:

The table 4.35 displays that the different types of card (green card,

master card, debit card, credit card) offered by State Bank of India in

Tiruchirappalli District. 33 percent respondents are strongly agree and

53 percent respondents are agree. Hence, most of the respondent are demand

different types of card.

168

Chart – 4.35

Different types of card

0

10

20

30

40

50

60

DISAGREE NEUTRAL AGREE STRONGLY AGREE

1%

13%

53%

33%

Series1

Satisfaction Level on Types of cards

P

E

R

C

E

N

T

A

G

E

169

Table- 4.36

Export Banking

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 16 5

Disagree 9 3

Neutral 51 17

Agree 140 47

Strongly Agree 84 28

Total 300 100

Source: primary data

Interpretation:

The table 4.36 appears that the customer using export banking in State

Bank of India in Tiruchirappalli District. 28 percent respondents are strongly

agree and 47 percent respondents are agree. Therefore, most of the respondent

are agree to SBI export banking dealing is better than comparing to other

banking services.

170

Chart – 4.36

Export banking

0

5

10

15

20

25

30

35

40

45

50

5%3%

17%

47%

28%

Series1

Satisfaction Level on Export Banking

P

E

R

C

E

N

T

A

G

E

171

Table- 4.37

Customer trust

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 1 0

Disagree 5 2

Neutral 37 12

Agree 129 43

Strongly Agree 128 43

Total 300 100

Source: primary data

Interpretation:

The table 4.37 shows that the csomplete trust in State Bank of India in

Tiruchirappalli District. 43 percent respondents are agree and strongly agree

and 12 percent respondents are neutral. Hence, most of the respondent are

agree to complete trust in SBI.

172

Chart – 4.37

Customer trust

0

5

10

15

20

25

30

35

40

45

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

02%

12%

43% 43%

Series1

Satisfaction Level on Customer Trust

P

E

R

C

E

N

T

A

G

E

173

Table- 4.38

Personnel behaviour

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 14 5

Disagree 5 1

Neutral 36 12

Agree 167 56

Strongly Agree 78 26

Total 300 100

Source: primary data

Interpretation:

The table 4.38 shows that the very friendly behaviour in personnel of

State Bank of India Tiruchirappalli District. 26 percent respondents are

strongly agree and 56 percent respondents are agree. Therefore, most of the

respondents are agree to a very friendly behaviour of SBI personnel.

174

Chart – 4.38

Personnel behaviour

0

10

20

30

40

50

60

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

5

1

12

56

26Series1

Satisfaction Level on Personnel Behaviour

P

E

R

C

E

N

T

A

G

E

175

Table- 4.39

Financial and advisory services

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 1 0

Disagree 2 1

Neutral 62 21

Agree 177 59

Strongly Agree 58 19

Total 300 100

Source: primary data

Interpretation:

The table 4.39 demonstrates that the financial counselling and advisory

services of the State Bank of India in Tiruchirappalli District. 19 percent

respondents are strongly agree and 59 percent respondents are agree. Hence,

most of the respondent are agree to SBI financial counselling and advisory

services.

176

Chart – 4.39

Financial and advisory services

0 1%

21%

59%

19%

0

10

20

30

40

50

60

70

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

Series1

Satisfaction Level on Financial and Advisory Services

P

E

R

C

E

N

T

A

G

E

177

Table- 4.40

Timely response

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 2 1

Disagree 6 2

Neutral 41 14

Agree 163 54

Strongly Agree 88 29

Total 300 100

Source: primary data

Interpretation:

The table 4.40 shows that bank employees are timely response in State

Bank of India in Tiruchirappalli District. 29 percent respondents are strongly

agree and 54 percent respondents are agree. Hence, majority of the respondents

are agree that the bank employee are timely responding to correspondences.

178

Chart – 4.40

Timely response

0

10

20

30

40

50

60

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

1% 2%

14%

54%

29%

Series1

Satisfaction Level on Timely response

P

E

R

C

E

N

T

A

G

E

179

Table- 4.41

Trust worthy

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 1 0

Disagree 15 5

Neutral 57 20

Agree 157 52

Strongly Agree 70 23

Total 300 100

Source: primary data

Interpretation:

The table 4.41 explains that the bank employees are trustworthy in State

Bank of India in Tiruchirappalli District. 20 percent respondents are neutral and

52 percent respondents are agree. Therefore, most of the respondent are agree

that SBI employees are trustworthy.

180

Chart – 4.41

Trustworthy

0

10

20

30

40

50

60

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

0

5%

20%

52%

23% Series1

Satisfaction Level on Trustworthy

P

E

R

C

E

N

T

A

G

E

181

Table- 4.42

Comfortable environment

OPINION FREQUENCY PERCENTAGE

Disagree 1 0

Neutral 39 13

Agree 119 40

Strongly Agree 141 47

Total 300 100

Source: primary data

Interpretation:

The table 4.42 confirms that the bank provides a comfortable

environment to do business in State Bank of India in Tiruchirappalli District.

40 percent respondents are agree and 47 percent respondents are strongly agree.

Therefore, most of the respondent are strongly agree that SBI bank provides a

comfort able environment to do business people.

182

Chart – 4.42

Comfortable environment

0

5

10

15

20

25

30

35

40

45

50

DISAGREE NEUTRAL AGREE STRONGLY AGREE

0

13%

40%

47%

Series1

Satisfaction Level on Comfortable Environment

P

E

R

C

E

N

T

A

G

E

183

Table- 4.43

Understand customer needs

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 1 0

Disagree 1 1

Neutral 36 12

Agree 165 55

Strongly Agree 97 32

Total 300 100

Source: primary data

Interpretation:

The table 4.43 reveals that the bank employees are understand customer

needs in State Bank of India in Tiruchirappalli District. 33 percent respondents

are strongly agree and 55 percent respondents are agree. Hence, most of the

respondents are agree to SBI that employees know their respondent and

understand their needs.

184

Chart – 4.43

Understand customer needs

0

10

20

30

40

50

60

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

0 1%

12%

55%

32%

Series1

Satisfaction Level on Understanding Customer Needs

P

E

R

C

E

N

T

A

G

E

185

Table- 4.44

Bank security

OPINION FREQUENCY PERCENTAGE

Disagree 2 1

Neutral 58 19

Agree 135 45

Strongly Agree 105 35

Total 300 100

Source: primary data

Interpretation:

The table 4.44 shows that security arrangements in State Bank of India

in Tiruchirappalli District. 35 percent respondents are strongly agree and

45 percent respondents are agree. Hence, majority of the respondent are agree

to SBI is a secured bank.

186

Chart – 4.44

Bank security

1%

19%

45%

35%

0

5

10

15

20

25

30

35

40

45

50

DISAGREE NEUTRAL AGREE STRONGLY AGREE

Series1

Satisfaction Level on Bank Security

P

E

R

C

E

N

T

A

G

E

187

Table- 4.45

Bank reputation-Image

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 0 0

Disagree 6 1

Neutral 38 13

Agree 137 46

Strongly Agree 119 40

Total 300 100

Source: primary data

Interpretation:

The table 4.45 confirms that the Bank‟s reputation-image in State Bank

of India in Tiruchirappalli district. 40 percent respondents are strongly agree

and 46 percent respondents are agree. Therefore, most of the respondent are

agree to SBI is reputed bank with image and goodwill.

188

Chart – 4.45

Bank reputation-Image

0

5

10

15

20

25

30

35

40

45

50

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

01%

13%

46%

40%

Series1

Satisfaction Level on Bank’s reputation - image

P

E

R

C

E

N

T

A

G

E

189

Table- 4.46

Recommendation by friends and relatives

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 1 0

Disagree 8 3

Neutral 55 18

Agree 147 49

Strongly Agree 89 30

Total 300 100

Source: primary data

Interpretation:

The table 4.46 shows that recommendation from close friends and

relatives on the services of State Bank of India in Tiruchirappalli District.

30 percent respondents are strongly agree and 49 percent respondents are agree.

Hence, most of the respondents are satisfied with the recommendation provide

by the friends and relatives.

190

Chart – 4.46

Recommendation by friends and relatives

0

5

10

15

20

25

30

35

40

45

50

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

0

3%

18%

49%

30%

Series1

Satisfaction Level on Recommendation by Friends

P

E

R

C

E

N

T

A

G

E

191

Table- 4.47

Intend to remain as customer of SBI

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 1 0

Disagree 1 0

Neutral 42 14

Agree 78 26

Strongly Agree 178 59

Total 300 100

Source: primary data

Interpretation:

The table 4.47 displays that they intend to remain as customer of the

State Bank of India in Tiruchirappalli District. 26 percent customers are agree

and 59 percent respondents are strongly agree. Hence most of the respondents

strongly agree to remain as customers of the SBI.

192

Chart – 4.47

Intend to remain as customer of SBI

0

10

20

30

40

50

60

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

0 0

14%

26%

59%

Series1

Satisfaction Level on remain as a customer

P

E

R

C

E

N

T

A

G

E

193

Table- 4.48

Role as Financial adviser

OPINION FREQUENCY PERCENTAGE

Disagree 2 1

Neutral 53 18

Agree 182 61

Strongly Agree 63 21

Total 300 100

Source: primary data

Interpretation:

The table 4.48 explains that the customers feel on availability of

financial advice in State Bank of India in Tiruchirappalli District. 21 percent

respondents are strongly agree and 61 percent respondents are agree. Hence,

most of the respondents are agree to SBI‟s role in financial adviser to the

customers.

194

Chart – 4.48

Role as Financial adviser

0

10

20

30

40

50

60

70

DISAGREE NEUTRAL AGREE STRONGLY AGREE

1%

18%

61%

21%

Series1

Satisfaction Level on Financial Advicer

P

E

R

C

E

N

T

A

G

E

195

Table- 4.49

Investment decision

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 2 1

Disagree 4 1

Neutral 102 34

Agree 123 41

Strongly Agree 69 23

Total 300 100

Source: primary data

Interpretation:

The table 4.49 shows the guideline of investment decision of the State

Bank of India in Tiruchirappalli District. 23 percent respondents are strongly

agree and 41 percent respondents are agree. Therefore, most of the respondents

agree to SBI is acting as a guide for investors.

196

Chart – 4.49

Investment decision

1% 1%

34%

41%

23%

0

5

10

15

20

25

30

35

40

45

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

Series1

Satisfaction Level on Investment Decision

P

E

R

C

E

N

T

A

G

E

197

Table- 4.50

ATM PIN code

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 1 0

Disagree 1 0

Neutral 61 20

Agree 140 47

Strongly Agree 97 33

Total 300 100

Source: primary data

Interpretation:

The table 4.50 shows that the customers have good regard on ATM pin

code in State Bank of India in Tiruchirappalli District. 33 percent respondents

are strongly agree and 57 percent respondents are agree. Hence, most of the

respondents are agree that they are having good regard on ATM pin code in

SBI.

198

Chart – 4.50

ATM PIN code

0

10

20

30

40

50

60

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

0 0

20%

57%

33%

Series1

Satisfaction Level on ATM PIN Code

P

E

R

C

E

N

T

A

G

E

199

Table- 4.51

Sufficient time

OPINION Frequency Percentage

Disagree 0 0

Neutral 66 22

Agree 166 55

Strongly Agree 68 23

Total 300 100

Source: primary data

Interpretation:

The table 4.51 confirms that sufficient time for transaction in State Bank

of India in Tiruchirappalli District. 23 percent respondents are strongly agree

and 55 percent respondents are agree. Therefore, most of the respondent are

agree that sufficient time for transaction in SBI employees.

200

Chart – 4.51

Sufficient time

0

10

20

30

40

50

60

DISAGREE NEUTRAL AGREE STRONGLY AGREE

0

22%

55%

23% Series1

Satisfaction Level on sufficient time

P

E

R

C

E

N

T

A

G

E

201

Table- 4.52

Feel of interior comfort

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 0 0

Disagree 6 2

Neutral 68 23

Agree 166 55

Strongly Agree 60 20

Total 300 100

Source: primary data

Interpretation:

The table 4.52 explains that the customers‟ feel of interior comfort in

State Bank of India in Tiruchirappalli District. 20 percent respondents are

strongly agree and 55 percent respondents are agree. Hence, most of the

respondents are agree with the feel of interior comfort of SBI is good.

202

Chart – 4.52

Feel of interior comfort

0

10

20

30

40

50

60

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

02%

23%

55%

20%

Series1

Satisfaction Level on feel of interior comfort

P

E

R

C

E

N

T

A

G

E

203

Table- 4.53

Mobile banking services

OPINION Frequency Percentage

Disagree 4 1

Neutral 69 23

Agree 177 59

Strongly Agree 50 17

Total 300 100

Source: primary data

Interpretation:

The table 4.53 proves that the customer mobile banking services in State

Bank of India in Tiruchirappalli District. 17 percent respondents are strongly

agree and 59 percent respondents are agree. Therefore, most of the respondent

are agree that the SBI mobile banking services are convenient.

204

Chart – 4.53

Mobile banking services

0

10

20

30

40

50

60

DISAGREE NEUTRAL AGREE STRONGLY AGREE

1%

23%

59%

17%

Series1

Satisfaction Level on Mobile banking services

P

E

R

C

E

N

T

A

G

E

205

Table- 4.54

Customer detail – Confidence

OPINION FREQUENCY PERCENTAGE

Strongly Disagree 1 0

Disagree 2 1

Neutral 51 17

Agree 202 67

Strongly Agree 44 15

Total 300 100

Source: primary data

Interpretation:

The table 4.54 shows that bank will keep customers account very

secretly and confidentially in State Bank of India in Tiruchirappalli District.

15 percent respondents are strongly agree and 67 percent respondents are agree.

Therefore, most of the respondents are agree to SBI will keep customers

account secretly and confidentially.

206

Chart – 4.54

Customer details-confidence

0 1%

17%

67%

15%

0

10

20

30

40

50

60

70

80

STRONGLY DISAGREE

DISAGREE NEUTRAL AGREE STRONGLY AGREE

Series1

Satisfaction Level on Customer details-confidence

P

E

R

C

E

N

T

A

G

E

207

RELIABILITY STATISTICS

Table- 4.55

Reliability Statistics

Cronbach's Alpha No. of Items

.928 38

The alpha values were calculated to assess the internal consistency

reliability of the Questionnaire. For variables, the value of 0.928 indicated

adequate reliability.

Cronbach's α (alpha) is the statistics used in this study. It is commonly

used as a measure of the internal consistency or reliability of a psychometric

test score for a sample of examinees. Cronbach‟s alpha will generally increase

as the inter correlations among test items increase, and thus known as an

internal consistency estimate of reliability of test scores, because inter

correlations among test items are maximized when all items measure the same

construct, Cronbach's alpha is widely believed to indirectly indicate the degree

to which a set of items measures a single uni-dimensional latent construct.

208

CORRELATION

The correlation coefficient gives a mathematical value for measuring the

strength of linear relationship between two variables. It can have values from -

1 to 1 with:

a. +1 representing absolute positive linear relationship (as x increases,

y increases).

b. 0 representing no linear relationship (x and y have no pattern).

c. -1 representing absolute inverse relationship (as x increases,

y decreases)

The following correlation table displays Pearson correlation coefficients,

significance values and the number of cases with non-missing values. Pearson

correlation coefficients assume the data are normally distributed.

The Pearson correlation coefficient is a measure of linear association

between two variables. The values of the correlation coefficient range from -1

to 1. The sign of the correlation coefficient indicates the direction of the

relationship (positive or negative). The absolute value of the correlation

coefficient indicates the strength, with larger absolute values indicating

stronger relationships. The correlation coefficients on the main diagonal are

always 1.0, because each variable has a perfect positive linear relationship with

itself. Correlations above the main diagonal are a mirror image of those below.

209

Table- 4.56

To find out the correlation between Image and

Customer Loyalty

CUSTOMER

LOYALTY IMAGE

CUSTOMER

LOYALTY

Pearson

Correlation 1 .641(**)

Sig. (2-tailed) .000

N 300 300

IMAGE Pearson

Correlation .641(**) 1

Sig. (2-tailed) .000

N 300 300

** Correlation is significant at the 0.01 level (2-tailed).

HYPOTHESIS :

HO: There is no relationship between Image and Customer Loyalty

H1: There is relationship between Image and Customer Loyalty

INFERENCE:

Hence, it is concluded that the absolute value (r=0.641) of the

correlation coefficient indicates positive stronger relationship between Image

and Customer loyalty at 0.01 level (2-tailed) statistically significant at

P-value 0.000.

210

Table- 4.57

To find out the correlation between and Commitment and

Customer Loyalty

CUSTOMER

LOYALTY COMMITMENT

CUSTOMER

LOYALTY

Pearson

Correlation 1 .584(**)

Sig. (2-tailed) .000

N 300 300

COMMITMENT Pearson

Correlation .584(**) 1

Sig. (2-tailed) .000

N 300 300

** Correlation is significant at the 0.01 level (2-tailed).

HYPOTHESIS :

HO: There is no relationship between Commitment and Customer Loyalty

H1: There is relationship between Commitment and Customer Loyalty

INFERENCE:

Hence, it is concluded that the absolute value (r=0.584) of the

correlation coefficient indicates positive stronger relationship between

Commitment and Customer loyalty at 0.01 level (2-tailed) statistically

significant at P-value 0.000.

211

Table- 4.58

To find out the correlation between Trust and

Customer Loyalty Correlations

CUSTOMER

LOYALTY TRUST

CUSTOMER

LOYALTY

Pearson

Correlation 1 .570(**)

Sig. (2-tailed) .000

N 300 300

TRUST Pearson

Correlation .570(**) 1

Sig. (2-tailed) .000

N 300 300

** Correlation is significant at the 0.01 level (2-tailed).

HYPOTHESIS :

HO: There is no relationship between Trust and Customer Loyalty

H1: There is relationship between Trust and Customer Loyalty

INFERENCE:

Hence, it is concluded that the absolute value (r=.0.570) of the

correlation coefficient indicates positive stronger relationship between Trust

and Customer loyalty at 0.01 level (2-tailed) statistically significant at

P-value 0.000.

212

Table- 4.59

To find out the correlation between Customer Satisfaction and Customer

Loyalty Correlations

CUSTOMER

LOYALTY

CUSTOMER

SATISFACTION

CUSTOMER

LOYALTY

Pearson

Correlation 1 .534(**)

Sig. (2-tailed) .000

N 300 300

CUSTOMER

SATISFACTION

Pearson

Correlation .534(**) 1

Sig. (2-tailed) .000

N 300 300

** Correlation is significant at the 0.01 level (2-tailed).

HYPOTHESIS:

HO: There is no relationship between Customer satisfaction and Customer

Loyalty

H1: There is relationship between Customer satisfaction and Customer Loyalty

INFERENCE:

Hence, it is concluded that the absolute value (r=.0.534) of the

correlation coefficient indicates positive stronger relationship between

Customer Satisfaction and Customer loyalty at 0.01 level (2-tailed) statistically

significant at P-value 0.000.

213

Table- 4.60

To find out the correlation between Perceived Value and

Customer Loyalty Correlations

CUSTOMER

LOYALTY

PERCEIVED

VALUE

CUSTOMER

LOYALTY

Pearson

Correlation 1 .599(**)

Sig. (2-tailed) .000

N 300 300

PERCEIVED

VALUE

Pearson

Correlation .599(**) 1

Sig. (2-tailed) .000

N 300 300

** Correlation is significant at the 0.01 level (2-tailed).

HYPOTHESIS:

HO: There is no relationship between Perceived Value and Customer Loyalty

H1: There is relationship between Perceived Value and Customer Loyalty

INFERENCE:

Hence, it is concluded that the absolute value (r=.0.599) of the

correlation coefficient indicates positive stronger relationship between

Perceived value and Customer loyalty at 0.01 level (2-tailed) statistically

significant at P-value is 0.000.

214

Table- 4.61

To find out the correlation between Perceived Service Quality and

Customer Loyalty

CUSTOMER

LOYALTY

PERCEIVED

SERVICE

QUALITY

CUSTOMER

LOYALTY

Pearson

Correlation 1 .627(**)

Sig. (2-tailed) .000

N 300 300

PERCEIVED

SERVICE

QUALITY

Pearson

Correlation .627(**) 1

Sig. (2-tailed) .000

N 300 300

** Correlation is significant at the 0.01 level (2-tailed).

HYPOTHESIS:

HO: There is no relationship between Perceived Service Quality and Customer

Loyalty

H1: There is relationship between Perceived Service Quality and Customer

Loyalty

INFERENCE:

Hence, it is concluded that the absolute value (r=.0.584) of the

correlation coefficient indicates positive stronger relationship between

Perceived service Quality and Customer loyalty at 0.01 level (2-tailed)

statistically significant at P-value 0.000.

215

CHI SQUARE TEST

Testing the relationship between Length of time with the bank and

recommending the bank to the known persons.

Hypotheses:

H0: There is no significant relationship between Account holders of this bank

and recommending the bank to the known persons.

H1: There is a significant relationship between Account holders of this bank

and recommending the bank to the known persons.

Table- 4.62

Cross tabulation

I will recommend the bank

I have chosen to persons

I know.

Total

DIS

-A

GR

EE

NE

UT

RA

L

AG

RE

E

ST

RO

NG

LY

AG

RE

E

ACCOUNT

HOLDERS

OF THIS

BANK

LESS THAN 1

YEAR 0 4 8 0 12

2-3 YEARS 0 29 40 22 91

4-5 0 14 31 9 54

ABOVE 5

YEARS 1 19 87 36 143

Total 1 66 166 67 300

216

Chi-Square Tests

Value df Asymp. Sig.

(2-sided)

Pearson

Chi-Square

18.484(a) 9 .030

Likelihood Ratio 21.930 9 .009

Linear-by-Linear

Association 7.075 1 .008

N of Valid Cases 300

6 cells (37.5%) have expected count less than 5. The minimum expected count

is .04.

INFERENCE

From the above table it is inferred that the calculated P value (0.030)

which is less than the expected value of (0.05), hence we reject the null

hypothesis. The length of time with the bank is having significant relationship

with recommending the bank to the known persons.

FACTOR ANALYSIS

Factor Analysis (FA) and Principal Component Analysis (PCA) are

techniques used when the researcher is interested in identifying a smaller

number of factors underlying a large number of observed variables. Variables

that have a high correlation between them, and are largely independent of other

subsets of variable, are combined into factors. A common usage of PCA and

FA is in developing objective instrument for measuring constructs which are

not directly observable in real life.

217

Factors are produced by FA, while components are produced by PCA.

Both FA and PCA essentially are reduction techniques. Mathematically, the

difference is the variance of the observed variable is analyzed. In PCA, all the

variance in the observed variable are analyzed whereas in FA, only shared

variance is analyzed. Even though PCA is different from other techniques of

FA, at many places it is treated as one of the FA techniques. For this reason, we

will use the word component and factors inter-changeably in this chapter.

KMO and Bartlett's Test

Bartlett‟s test of sphericity indicates that whether the correlation matrix

is an identity matrix which would indicate that the variables are unrelated.

Table- 4.63

Kaiser-Meyer-Olkin Measure of Sampling

Adequacy. .887

Bartlett's Test of

Sphericity Approx. Chi-Square 6527.889

Df 780

Sig. .000

INFERENCE

The significance level (.000) gives the result of the test. The Kaiser-

Meyer-Olkin Measures of sampling adequacy of 0.825 shows that the variables

and the sample size of 300 were viable and feasible to run a factor analysis.

218

Total Variance Explained

Component Rotation Sums of Squared Loadings

Total % of Variance Cumulative %

1 4.550 11.376 11.376

2 4.491 11.227 22.603

3 3.758 9.396 31.999

4 3.217 8.042 40.041

5 3.132 7.831 47.872

6 2.300 5.749 53.621

7 2.042 5.105 58.726

8 1.355 3.387 62.113

9 1.240 3.100 65.213

Extraction Method: Principal Component Analysis.

INFERENCE

Rotation of factors is transferred through rotation into a simpler one that

is easier to interpret. It does not affect the percentage of the total variance

explained. However, the variance explained by the individual factors is

redistributed by rotation. The most commonly used method is Varimax rotation

procedure. This procedure maximizes the variance of the loadings on each

factor, thus minimizing the complexity of the factors.

The 09 factors accounted for 65.213 percent of the variance in the

original 38 items. The first factor contributes 11.376 percent variance in the

total variance; the second factor contributes 11.227 percent variance in the

total variance; the third factor contributes 9.396 percent variance in the total

variance; the fourth factor contributes 8.042 percent variance in the

219

total variance; the fifth factor contributes 7.831 percent variance in the total

variance; the sixth factor contributes 5.749 percent variance in

the total variance; the seventh factor contributes 5.105 percent variance in the

total variance; The eighth factor contributes 3.387 percent variance in the

total variance; The ninth factor contributes 3.100 percent variance in the total

variance;

Table- 4.64

Rotated Component Matrix(a)

Component

1 2 3 4 5 6 7 8 9

This bank's reception desk

employees are neat in

appearance.

.592

Bank‟s physical facilities are

visually appealing. .577

Employees of the bank are

well dressed and appear neat. .627

The employees of the bank

understand your specific

needs.

Not to visit bank many times

to solve a particular problem. .652

Banks employees have the

necessary knowledge to

serve you promptly.

.662

220

The bank insists on error-

free records. .682

Satisfied with the deposit

facilities. .568

The personnel knowledge is

up to date .528

The personnel know their

job well

The personnel have the

knowledge of all services

offered by the entity.

.782

It seems tidy and well

organized .641

The service as a whole is

good

The payment of interest or

commission is fully justified .742

The personnel provide a

friendly atmosphere .683

The bank satisfies with the

green card.

Bank providing full details

of your transaction. .696

Satisfied with the deposit

interest rate of the bank.

.661

221

Receive intimation regarding

maturity of FD and CD .783

Bank providing enough

parking facilities.

Bank provide strong global

network. .770

Bank provide core banking

ATM service. .782

The bank will keep my own

account secretly and

confidentially.

.595

Bank involves in providing

lower service charges. .769

Bank personnel behaviour

friendliness.

Bank giving financial

counselling and advisory

services.

.586

Employee‟s timely response

to the bank correspondence. .694

The bank and its employees

are trustworthy.

The bank provides a comfortable

environment to do business. .774

Employees know their

customers and understand

their needs.

.636

222

There is security in the bank. .521

Bank promises for its clients. .568

Bank reputation and its

image. .596

Like to patronize the bank. .646

Bank guide you on

investment decision.

Bank gives sufficient time

for transaction. .570

Do you recommend the bank

to friends and relatives. .526

Intend to remain a customer

of the bank. .621

Feel comfort in confidence

in bank management. .519

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

A Rotation converged in 10 iterations.

223

Rotated Component Matrix

This table (called the pattern matrix for oblique rotation) reports the

factor loading for each variable on the component or factor after rotation. Each

number represents the partial correlation between the item and the rotated

factor. These correlations can help us to formulate an interpretation of the

factor or components.

This is done by looking for a common thread among the variable that

have the large loading for the particular factor. Hence we conclude with the

following extracted factor namely

FACTOR 1

Satisfied with the deposit interest rate of the bank.

The bank provides strong global network.

The bank will not let other people know my account balance.

It is difficult to change my trust of services provided by this bank.

Employee‟s timely response to the bank correspondence.

Bank gives sufficient time for transaction.

FACTOR 2.

Bank's reception desk employees are neat in appearance.

Bank‟s physical facilities are visually appealing.

Employee of the bank is well dressed and appears neat.

The personnel knowledge is up to date

It seems tidy and well organized

Bank giving proper intimation regarding maturity of FD and CD

The personnel provide a friendly atmosphere

224

FACTOR 3

Banks employees have the necessary knowledge to serve you promptly.

The bank insists on error-free records.

Bank giving counselling and advisory services.

In future also likes to patronize the bank.

Recommend the bank to friends and relatives.

FACTOR 4

The personnel have the knowledge of all services offered by the entity.

The bank will keep my own account secretly confidentially.

Employees know their customers and understand their needs.

FACTOR 5

The payment of interest or commission is fully justified

You are satisfied rate on deposit facilities.

Bank has its reputation and image.

FACTOR 6

The bank provides a comfortable environment to do business.

There is security in the bank.

FACTOR 7

Bank providing full details of transaction.

FACTOR 8

Do you intimation regarding maturity of your FD/CD

FACTOR 9

Not to visit bank many times to solve a particular problem.

225

MULTIPLE REGRESSION

Regression analysis is used to assess the relationship between one

dependent variable (DV) and several independent variables (IVs). This is the

most commonly used technique in much of the social science researches.

Contribution of service quality variables towards State Bank of India in

Tiruchirappalli district

Dependent variable: customer loyalty towards SBI in Tiruchirappalli district

Table- 4.65

Model Summary (p)

Model R R

Square

Adjusted

R Square

Std. Error

of the

Estimate

Durbin-

Watson

1 .727(a) .529 .527 .316

2 .875(b) .766 .765 .223

3 .921(c) .849 .848 .179

4 .957(d) .916 .915 .134

5 .978(e) .957 .956 .096

6 .981(f) .963 .962 .090

7 .982(g) .965 .964 .087

8 .983(h) .966 .965 .086

9 .984(i) .968 .967 .084

10 .984(j) .969 .967 .083

11 .984(k) .969 .968 .082

12 .985(l) .970 .969 .081

226

o Predictors: (Constant), Intend to remain a customer of the bank. Feel comfort

in confidence in bank management. The bank is giving sufficient time for

transaction. Like to patronize the bank. Good regard of ATM PIN code.

Employees know their customers and understand their needs. Bank satisfies

with the modern technology. Satisfied with interest towards FD and CD. The

personnel have the knowledge of all services offered by the entity. Not to visit

bank many times to solve a particular problem. The bank will not let other

people know my account balance. The bank will keep my own account secretly

and confidentially. The personnel knowledge is up to date. The bank and its

employees are trustworthy. Satisfied with deposit facilities.

‘p’ Dependent Variable: CUSTOMER LOYALTY

INFERENCE

The above model summary table shows R-Square for this model is .972.

This means that 97.2 percent of the variation in overall operational productivity

(dependent variable) can be explained from the nine independent variables.

The table also shows the adjusted R-square for the model as .971.

Any time another independent variable is added to a multiple regression

model, the R-square will increase (even if only slightly). Consequently, it

becomes difficult to determine variable. The adjusted R-Square does just what

its name implies. It adjusts the R-square by the number of predictor variables

in the model. This adjustment allows the easy comparison of the explanatory

power of models with different numbers of predictor‟s variable. It also helps

us to decide how many variables to include in our regression model.

13 .985(m) .971 .970 .080

14 .986(n) .971 .970 .080

15 .986(o) .972 .971 .079 1.485

227

Table- 4.66

ANOVA(p)

Model Sum of

Squares Df

Mean

Square F Sig.

Total 63.127 299

15 Regression 61.362 15 4.091 658.165 .000(o)

Residual 1.765 284 .006

Total 63.127 299

o Predictors: (Constant), Intend to remain a customer of the bank. Feel comfort

in confidence in bank management. The bank is giving sufficient time for

transaction. Like to patronize the bank. Good regard of ATM PIN code.

Employees know their customers and understand their needs. Bank satisfies

with the modern technology. Satisfied with interest towards FD and CD. The

personnel have the knowledge of all services offered by the entity. Not to visit

bank many times to solve a particular problem. The bank will not let other

people know my account balance. The bank will keep my own account secretly

and confidentially. The personnel knowledge is up to date. The bank and its

employees are trustworthy. Satisfied with deposit facilities.

„p‟ Dependent Variable: CUSTOMER LOYALTY

228

INFERENCE

The ANOVA table, as displayed in the above table shows the F ratio for

the regression model that indicates the statistical significance of the overall

regression model. The larger F ratio will be more variance in the dependent

variable that is associated with the independent variable. The F ratio=658.165.

The statistical significance is .000-the “Sig”. There is a relationship between

the independent and dependent variables.

229

Table- 4.67

Coefficients(a)

Model Unstandardized

Coefficients

Standardized

Coefficients t Sig.

B Std.

Error Beta

15 (Constant) .068 .044 1.543 .124

Intend to remain a

customer of the bank. .140 .010 .202 14.010 .000

Feel comfort and

confidence in bank

management.

.183 .007 .297 24.574 .000

The bank is giving

sufficient time for

transaction.

.198 .009 .263 21.210 .000

like to patronize the

bank. .192 .008 .313 23.157 .000

Good regard over

ATM PIN code. .158 .009 .233 17.911 .000

Employees know

their customers and

understand their

needs.

.020 .009 .033 2.384 .018

Bank satisfies with

modern technology.

(Mobile banking, net

banking)

.017 .007 .031 2.484 .014

Satisfied with interest

towards FD and CD. .036 .007 .074 5.325 .000

230

The personnel have

the knowledge of all

services offered by

the entity.

.029 .008 .046 3.530 .000

Not to visit your bank

many times to solve a

particular problem.

-.012 .006 -.024 -2.105 .036

The bank will not let

other people know my

account balance.

-.018 .006 -.041 -2.964 .003

The bank will keep

my own account

confidentially.

.027 .008 .045 3.552 .000

The personnel

knowledge is up to

date

-.033 .011 -.048 -3.160 .002

The bank and its

employees are

trustworthy.

.026 .010 .040 2.618 .009

Satisfied with the

deposit facilities. .016 .007 .028 2.456 .015

a Dependent Variable: CUSTOMER LOYALTY

INFERENCE

To determine if one or more of the independent variables are strong and

significant predictors of customer loyalty, we examine the information in the

coefficient table. From the above fifteen independent variables, five

231

independent variables were statistically significant. The standardized

coefficient beta column reveals, Intend to remain a customer of the bank,

The customers chosen (0.202), which is significant (.000), A positive emotional

relation with the bank (0.297), which is significant (.000), keep on using this

bank as long as it offers the best interest rates and it has a beta coefficient

(0.263) which is significant (.000), In the future, like to patronize the bank has

a beta coefficient 0.313, which is significant (.000). Recommend the bank to

friends and relatives. (0.233),

The above variables are the significant predictors of customer loyalty

towards State Bank of India in Tiruchirappalli District.

232

Chapter – V

FINDINGS, SUGGETIONS AND CONCLUSION

41 percent of the respondents agree that the employees of the bank

understand their specific needs.

35 percent of the respondents agree that the employees help to solve

their account related problems.

50 percent of the respondents agree that their knowledge about the

banking services are up to date by ample information provided by the

bank.

54 percent of the respondents agree that it seems tidy and well

organized in all services towards customers.

37 percent of the respondents are having moderate opinion about the

interest or commission provided by the bank.

42 percent of the respondents agree that the bank provide global

network in modern technology.

46 percent of the respondents are strongly agree that the banks

maintain every transaction confidentially.

47 percent of the respondents agree that export dealing is good when

compared to other banking services.

43 percent of the respondents have complete trust with the bank.

46 percent of the respondents agree that the personnel behaviour in

the bank is more friendly.

The study indicates positive strongly relationship between image and

customer loyalty.

The study indicates positive strongly relationship between trust and

customer loyalty.

The study indicates positive strongly relationship between customer

satisfaction and customer loyalty.

233

The study indicates positive strongly relationship between

commitment and customer loyalty.

The study indicates positive strongly relationship between perceived

value and customer loyalty.

50 percent of the respondents agree that the banks reception desk

employees are neat in appearance.

44 percent of the respondents agree that the SBI physical facilities are

visually appealing.

40 percent of the respondents agree that the SBI employee insists on

error-free records to maintain good transaction by the bank.

51 percent of the respondents agree that the SBI rate of interest

deposit facilities provided by the bank.

50 percent of the respondents are operating only one account.

48 percent of the respondents are agree that the SBI personnel know

their job well

49 percent of the respondents are agree that the employee having the

knowledge of all services offered by the entity.

45 percent of the respondents are strongly agree that SBI whole

services is excellence are does almost satisfaction of the customers.

38 percent of the respondents are agree that bank personnel provide a

friendly atmosphere.

39 percent of the respondents are having moderate opinion about the

any difficulty in opining an account.

44 percent of the respondents are strongly agree ATM card facilities

provided by the bank.

37 percent of the respondents are agree bank’s services and

transactions is good.

41 percent of the respondents are agree to SBI rate of interest policy.

42 percent of the respondents are agree to satisfied in SBI Educational

Loan facilities.

39 percent of the respondents are agree to SBI parking facilities.

234

61 percent of the respondents are neutral to SBI traveller cheques

facilities.

41 percent of the respondents are disagree to SBI correction or

omission of customer’s pass book.

42 percent of the respondents are agree to SBI core banking services.

53 percent of the respondents are agree to SBI issue different types of

card.

59 percent of the respondents are agree to SBI financial counselling

and advisory services.

54 percent of the respondents are agree to SBI personnel are timely

response.

47 percent of the respondents are strongly agree that SBI provides a

comfortable environment to do business people.

55 percent of the respondents are agree to SBI employees know their

customers and understand their needs.

45 percent of the respondents are agree to SBI is security bank.

46 percent of the respondents are agree to SBI is reputation of our

image and goodwill.

49 percent of the respondents are agree that recommend the bank our

friends and relatives.

59 percent of the respondents are strongly agree to remain a

customers of the SBI (FD/CD)

41 percent of the respondents are agree to SBI is acting guideline for

our investors.

57 percent of the respondents are agree to good regard on ATM PIN

code in SBI.

61 percent of the respondents agree to SBI is acting for one of the role

financial advice of our customers.

55 percent of the respondents are agree to feel interior comfort to SBI.

55 percent of the respondents are agree to sufficient times for

transaction in SBI employees.

235

59 percent of the respondents are agree to very convenient in SBI

mobile banking services.

67 percent of the respondents are agree to SBI will keep customers

account secretly and confidentially.

ATM facilities are not fully developed. It is not accept to the

customers.

The investors are not fully eligible to loan borrowing. In such case,

relaxations to the customers loan borrowing.

Normally, the banks provide the transaction facilities to the all type of

customers. But it is neglect the tide responsibilities to all.

State Bank of India to support school education and to bring

happiness to millions of school children specially the underprivileged

children, bank provided 1,20,000 electric fans to 12,000 schools

across India.

State Bank of India to care about Healthcare and also providing safe

drinking water facilities for children. State Bank of India water

purifiers in many schools, ensuring clean and safe drinking water to

millions of children in schools.

State Bank of India branches undertake various other social welfare

activities like blood donation camps, medical camps, tree plantations,

adult literacy classes, importing skills to local community.

State Bank of India focus areas for corporate social responsibility

activities are:

Supporting Education

Supporting Healthcare

Supporting Girl Children and Child development

Assistance to poor and underprivileged

Environment protection

Clean Energy

Entrepreneur development programme

Help in National calamities

236

SUGGESTIONS

The bank must provide better and quality internet banking services and

mobile banking services.

The employee in the bank should maintain friendly relationship with

the customers.

Many new policies should be implemented by the bank in order to

attract more customers.

The proper guidelines should be provided to the customers regarding

investments.

The bank must provide better financial counselling and advisory

services to the customers.

Fund transfer is very difficult to SBI from other banks. So, the fund

transfer system must redesigned in order to enhance the speed.

The bank has to provide low interest on deposits and should have

special care about rate of interest and commission.

The banks should improve over export dealings in more efficient way.

The bank must provide advisory service in tax saving to the customers.

Before, checking the customer’s repayment capacity, the housing loan

sets norms that define the customer’s eligibility for the loan amount.

Banks provide safe deposit lockers facilities only for deposit holders. It

keeps valuable back home peacefully.

State Bank of India introducing “GREEN CHENNEL COUNTER”

The bank to support School Education and to bring happiness to

millions of school children specially the under privileged children.

Corporate Social Responsibility has always been a part of the State

Bank of India covering various social, environmental and welfare

activities.

The bank also provided large number of buses and vans to need

schools, preferences has been given to schools for physically and

mentally challenged children, and children belonging to economically

weaker computers, furniture and other accessories.

237

State Bank of India is the largest deployer of solar ATMs in the world.

Saving more than 2000 tons of CO2 per year.

State Bank of India youth for India Fellowship-Bank has granted

fellowship to educated youth and deployed them to rural areas to

undertake problems of rural poor.

The State Bank of India launched a new scheme for short term deposits

for 7 days to less than 1 year with an attractive feature of waiver of

prepayment penalty. unfixed Deposit is very essential for waiver.

State Bank of India provide “THIRD PARTY E-TAX” facilities, a new

product enables all our branches to pay taxes online, on behalf of all

customers or non customer who either do not have access to Internet

Banking or are not comfortable using it.

State Bank of India special focus has been given for creation of

efficient warehouses and Cold storages in line with GOL’s policy for

augmenting storage capacity for formers.

The bank has to provide Rural Business Unit (RBU), it is totally AGRI

Business, State Bank of India take special care about formers.

State Bank of India provides WEB based Complaint Management

System (CMS). It accepts all type of complaint (Toll Free Number).

The bank also has a mobile and web based service for customer

grievance. It is very useful for customer as well as banker.

The client can modify his own limits his own limits of right and state of

the registered account in the personal e-bank, such as modifying his

own login password, freezing or deleting some cards and so on.

The client can modify the login password, information of the Credit

Card and the client information in e-bank on net.

The bank has to make adjustment about the time they spend in

delivering services at the counter.

The bank has to take the customer complaints serious and rectify the

corrections for effective and efficient delivery of services.

238

Procedure of applying loan should be made simple and information

regarding new investment schemes should also be displayed at

appropriate places.

All branches of these banks must concentrate immediately to provide

the quality facilities like parking, seating arrangements, drinking water

and proper sanitary facilities.

The new technologies and sound environment communications are

necessary for these banks to win over customer needs.

State Bank of India Pension Funds Private Limited is one of the three

Public Sector Pension Fund Managers (PFM) appointed by

Pension Fund Regulatory and Development Authority(PFRDA) for

management of Pension fund under the National Pension System (NPS)

for central Government (except Armed Force) and State Government.

Likewise State Bank of India should also concentrate on management

of asset based Hedge Funds.

State Bank of India should appoint a product review committee with

representation from marketing, planning and credit wings.

State Bank of India given best opportunities to entrepreneurs, Bank’s

venture, the EDPs consist of one month’s intensive training in

behavioural science, management aspects, field training. During the

training period, the entire cost boarding and lodging is borne by the

bank. Initiation phase for creating awareness about entrepreneurial

opportunities. Development phase through training programmes in

developing motivation and managerial skills. Support phase

counselling, encouragement and infrastructural support for establishing

and running enterprises.

239

CONCLUSION

Banks are increasingly paying more attention to the number of accounts

they are losing and thus emphasising customer satisfaction and customer

loyalty.

Today customers expect better service delivery and more value for

money. It is also becoming considerably easier to switch to competitors than

ever before. Especially, since most products and services between different

banks are mostly undifferentiated.

This research determine antecedents that lead to the customer loyalty,

factors influences on customer loyalty were tested of which only six factors

found to have a significantly positive influence on customer loyalty.

Customer loyalty and customer satisfaction are all extremely important

measures and need to be managed and measured appropriately. Together with

these perceived service quality, perceived value, customer satisfaction, trust,

commitment, image and relationship marketing all have a positive and

significant influence on either customer satisfaction or customer loyalty.

Banks are easy to pass and generate the money. In traditional years the

bank should engage the all business function. In generally bank is safety and

secure to the public funds (money).

Customer loyalty was significantly affected by their satisfaction. The

more satisfied customers not only will use the services again, but also will

suggest the services to other potential customers. Increasing the level of service

quality will lead to enhancement of the perceived value and satisfaction and

these finally end in loyalty.

The current affairs bank is nearly closed in our life. Banks is passed

away to our future. Customer loyalty and customer satisfaction is build in to

bank. Bank is exact define to bankers bank. Bank is co-ordinate to function of

business and develop in to money value.

240

The study reveals a clear opportunity for banks to increase the

sophistication of their offers and communications to customers around

recognizing and rewarding loyalty. The size of the prize of increased product

holdings per customer, longer tenures and customer advocacy is substantial. In

most banks, many of the people, process and technology ingredients to support

this already exist or are under development. The challenge is about integrating

customer strategies and capabilities across the broad and complex organization

structures of 21st

century banks to drive effective execution at the front line

between banks their customers. The customer loyalty of the public sector

banks in Tiruchirappalli District with special reference to State Bank of India is

in satisfactory level.

241

SCOPE FOR FURTHER STUDY

These days the loyalty concept has great important and its different

aspects can be studied in different situations.

This research tries to investigate more factors which have links with the

customer satisfaction and customer loyalty in banking industry in comparison

to the previous researches. Also different relations were found during this

study.

It is hoped that the findings could stimulate further research in other

parts of the world; especially in the other developing countries. If this happens,

the model can be presented in a wider area not only in SBI.

The other people who are interested in modelling could analyse, find

and test more factors according to other environment and also the same factors

in other banking sectors or any other industry.

The above points can be categorized as “the internal loyalty model

further researches”. Also a research which is about the factors that influence

the “loyalty model” can also be done in order to find the external points which

could differ from one environment to another.

Customer loyalty and customer satisfaction are all extremely important

measures and need to be managed and measured appropriately. Together with

these perceived service quality, perceived value, customer satisfaction, trust,

commitment, image and relationship marketing all have a positive and

significant influence on either customer satisfaction or customer loyalty. To

measure the further study of electronic CRM (eCRM) to using the

Telecommunication industry, Sugar industry etc.

BIBLIOGRAPHY

Agarwal Anupam, Peitraszek Wayne E. and Singer Marc. 2006. Connecting

CRM system for better customer Service, Mc-Kinsey and co.

Bendapudi. N. and Berry, L.L. 1997. Customer motivations for maintaining

relationships with service providers, Journal of retailing, Vol. 73 No.1,

pp.15-37.

Berry,LL. 1983. Emerging perspectives in service marketing, American

Marketing Association, Chicago, Vol.II pp 25-28.

Bose , R. 2002. Customer relationship management: key component for It

success, Industrial Management and Data System, Vol.102, No 2,

pp.89-97.

Don Peppers, 2011, Customer Relations, John Wiley & Sons, 2nd

Edition.

Frederick F. Reichheld and Thomas Teal, 2001, The Loyalty Effect, Harward

Business Press

Gummesson E. 2000. Qualitative methods in management research, Sage

Publications, Thousand Oaks, CA.

Harvard Management Update. 2000. A crash course in customer relationship

management, pp.5

Kotler, P., Wong, V Saunders, J.& Armstrong, G. 2005. Principles of

marketing. Edinburgh: Pearson Education Limited.

Kristin Anderson and Carolkerr,2001, Customer Relationship Management,

McGraw Hill Professional Publishers.

Moris B. Holbrook, 2002, Consumer Value: A Framework for Analysis and

Research, Roultage Publishers

Peppers & Roggers. 2006. CRM in a down economy revisited-weathering the

economic storm through Customers Relationship Strategies, White

Paper.

Reichheld, F.F. 1993. Loyalty-based management, Harvard Business Review,

March April, 64-73.

Reichheld, F.F. 1996. The loyalty effect, Harvard Business Review,

Cambridge, MA.

Rogen, et al,, 2011. Customer relationship management. Printed in India.

Akash press.

Report

Annual Report of State Bank of India for the period 2011-2012.

Journals

HRD Times

Indian Journal of Commerce

Websites

www.google.com

lexicon.ft.com/Term and customer loyalty.htm

www.sbi.co.in

http://en.m.wikipedia.org /wiki/customer relationship management

http://m.wisegeek.come/what is customer loyalty.htm

http://www.dart-europ.eu/basic-search.php

http//www.ndltd.org/resources/find/etds/loyalty

A STUDY ON CUSTOMER LOYALTY IN PUBLIC SECTOR BANKS IN

TIRUCHIRAPPALLI TOWN WITH SPECIAL REFERENCE TO

STATE BANK OF INDIA

PERSONAL PROFILES:

Name (Optional)

Gender : Male Female

Age (in Years) : Below 30 31-35 36-40

41-45 46-50 Above 50

Marital Status : Married Unmarried

Educational Qualification : Schooling UG PG

Professional Diploma Others

Monthly Income Below Rs.10,000 Rs.11000 to 20000

Rs.20000 to 30000 Rs.31000-40000

Above Rs.40000

How long have you been an

Account holder in this bank? : Less than a Year 2 -3 Years

4 -5 Years Above 5 Years

Type of Bank products

Operating Deposit Loan ATM

Foreign Exchange Investment

Payment the Utilities Money Transfer

Nature of Accounts Fixed Deposit Saving Deposit

Current Deposit Recurring Deposit

Others

PERCEIVED SERVICE QUALITY

1. This bank’s reception desk employees are neat in appearance

Disagree Moderate agree Strongly agree

2. This bank physical facilities are visually appealing

Disagree Moderate agree Strongly agree

3. Employee of the bank are well dressed and appear neat

Disagree Moderate agree Strongly agree

4. The employees of this bank understand your specific needs

Strongly disagree Disagree Moderate agree Strongly agree

5. You do not have to visit your bank many times to solve a particular problem

Strongly disagree Disagree Moderate agree Strongly agree

6. Banks employee have the necessary knowledge to serve you promptly.

Disagree Moderate agree Strongly agree

7. Does your bank insists on error-free records

Disagree Moderate agree Strongly agree

8. Are you satisfied rate of interest deposit facilities

Strongly disagree Disagree Moderate agree Strongly agree

9. How many accounts do you hold in this bank?

One Two Three More than three

PERCEIVED VALUE

10. The personnel knowledge is up to date

Moderate agree Strongly agree

11. The personnel know their job well

Strongly disagree Disagree Moderate agree Strongly agree

12. The personnel have the knowledge of all services offered by the entity

Disagree Moderate agree Strongly agree

13. It seems tidy and well organized

Disagree Moderate agree Strongly agree

14. The service as a whole is good?

Disagree Moderate agree Strongly agree

15. The payment of interest or commission is fully justified

Strongly disagree Disagree Moderate agree Strongly agree

16. The personnel provide a friendly atmosphere

Disagree Moderate agree Strongly agree

17. Did you have any difficulty in Opening an account

Strongly disagree Disagree Moderate agree Strongly agree

CUSTOMER SATISFACTION

18. Does the bank satisfy you with ATM card?

Disagree Moderate agree Strongly agree

19. Does the bank satisfy you with Green card?

Strongly disagree Disagree Moderate agree Strongly agree

20. Does the bank satisfy you with the modern technology (Mobile phone, Net banking)

Strongly disagree Disagree Moderate agree Strongly agree

21. Is your bank providing full details of your transaction?

Disagree Moderate agree Strongly agree

22. Is your bank giving proper intimation regarding maturity of our FD/CD?

Strongly disagree Disagree Moderate agree Strongly agree

23. Are you satisfied with interest towards FD/CD and other loans?

Disagree Moderate agree Strongly agree

24. Is your bank facilitating with satisfied educational loan?

Disagree Moderate agree Strongly agree

25. Does the bank provide Electricity charges, Customer Rent, Telephone Billing and

Aadhaar Card?

Strongly disagree Disagree Moderate agree Strongly agree

26. Does your bank provide enough parking facilities?

Strongly disagree Disagree Moderate agree Strongly agree

27. Are you fully satisfied with facilities of bank providing to you?

Strongly disagree Disagree Moderate agree Strongly agree

TRUST

28. How does the bank provide strong global network? (E-mail, Mobil banking).

Disagree Moderate agree Strongly agree

29. Do you wholly believe on Traveller cheques?

Disagree Neutral agree Strongly agree

30. Do you have prompt in correcting errors?

Strongly disagree Disagree Neutral agree Strongly agree

31. The Bank keeps my own account confidentially

Disagree Neutral agree Strongly agree

32. How do you feel an average decent return?

Strongly disagree Disagree Moderate agree Strongly agree

33. How do you feel an accurate billing?

Strongly disagree Disagree Moderate agree Strongly agree

34. Does the bank provide Core Banking ATM services?

Strongly disagree Disagree Neutral agree Strongly agree

35. How does an Green cards, master card, debit card and credit card help you?

Disagree Neutral agree Strongly agree

36. Does the bank help you relative in case of Exporter Banking?

Strongly disagree Disagree Neutral agree Strongly agree

37. Overall I have complete trust in my bank.

Strongly disagree Disagree Neutral agree Strongly agree

COMMITMENT

38. Does the bank personnel behaviour friendliness?

Strongly disagree Disagree Neutral agree Strongly agree

39. Does the bank involve in providing lower service charges?

Strongly disagree Disagree Moderate agree Strongly agree

40. Is your bank giving financial counselling and advisory services?

Strongly disagree Disagree Neutral agree Strongly agree

41. Does employee’s timely respond to the bank correspondence?

Strongly disagree Disagree Neutral agree Strongly agree

42. How do you feel bank fees charges and efficient services?

Strongly disagree Disagree Moderate agree Strongly agree

IMAGE

43. The bank and its employees are trustworthy

Strongly disagree Disagree Neutral agree Strongly agree

44. The bank provides a comfortable environment to do business.

Disagree Neutral agree Strongly agree

45. Employees know their customers and understand their needs.

Strongly disagree Disagree Neutral agree Strongly agree

46. There is security in the bank.

Disagree Neutral agree Strongly agree

47. I believe the bank does what it promises for its client.

Strongly disagree Disagree Moderate agree Strongly agree

48. How do you feel interior comfort of the bank?

Strongly disagree Disagree Moderate agree Strongly agree

49. Bank reputation and its image.

Strongly disagree Disagree Neutral agree Strongly agree

50. Do you recommend the bank to friends and relatives?

Strongly disagree Disagree Neutral agree Strongly agree

CUSTOMER LOYALTY

51. Do would like to patronize the bank that you have chosen

Strongly disagree Disagree Moderate agree Strongly agree

52. I intend to remain a customer of the bank I have chosen.

Strongly disagree Disagree Neutral agree Strongly agree

53. What do you feel on availability of financial advice?

Disagree Neutral agree Strongly agree

54. How do you feel on experienced management team?

Strongly disagree Disagree Moderate agree Strongly agree

55. Does the bank guide you on investment decision?

Strongly disagree Disagree Neutral agree Strongly agree

56. Have you been correctly instructed on management understanding and its policies?

Strongly disagree Disagree Moderate agree Strongly agree

57. Do you have good regard our ATM pin code?

Strongly disagree Disagree Neutral agree Strongly agree

58. Does the bank give sufficient time for transaction?

Disagree Neutral agree Strongly agree

59. How do you feel comfort on mobile banking services?

Disagree Neutral agree Strongly agree

60. Do you feel comfort in confidence in bank management?

Strongly disagree Disagree Neutral agree Strongly agree