Customer Satisfaction In Banking Sector

This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was setup by his name which worked for the liberalisation of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being made to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macro-economics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate

Customer Satisfaction in the Indian Banking Sector

In today’s competitive environment relationship marketing is critical to banking corporate success. Banking is a customer oriented services industry and Indian banks have started realizing that business depends on client service and the satisfaction of the customer. This is compelling them to improve customer service and build relationships with customers.

Banking in the Western world is one of the many service industries where customer satisfaction has been the focus of research (Holliday, 1996). This is mainly because of the fact that the banking sector is increasingly experiencing a high level of competition.

This puts a tremendous amount of pressure on banks to improve their services (File and

Prince, 1992; Goode and Moutinho, 1995; Goode and Moutinho, 1996; Goode et al.,

1996; Levesque and McDougall, 1996). However, a similar argument can be made in connection with the banking sector in many Asian countries including India.

Customers are also increasingly becoming sophisticated as they have access to the latest forms of delivery channels (such as the ATM, internet banking, etc). Consequently, many financial institutions have to focus on increasing customer satisfaction and customer retention through improved quality of their services.

An element that strongly drove customer satisfaction in banking was the warmth factor related to the bank’s features and personnel attributes (Rust and Zahorik, 1993). In another study by Krishnan and Ramaswamy (1998), satisfaction with perceived product quality was suggested as a primary driver of overall customer satisfaction. This finding contradicts the notion of banking being a service with high credence features, making evaluation of core service (technical quality) difficult. However, they also found that other drivers of satisfaction were the financial statements and services provided through different delivery channels. Their study suggests that the impact of service delivery factors differs substantially on customer satisfaction. For instance they found that for customers who trade heavily and have high investment assets, the effect of an automated telephone service is higher than the other drivers of