Global banking survey: A new era of customer satisfaction with reference to India - Tài liệu tham khảo | Đại học Hoa Sen

African Journal of Business Management Vol. 7(2), pp. 125-134, 14 January 2013
Available online at http://www.academicjournals.org/AJBM DOI: 10.5897/AJBM12.886
ISSN 1993-8233 ©2013 Academic Journals Full Length Research Paper
Global banking survey: A new era of customer
satisfaction with reference to India
S. Suriyamurthi1*, V. Mahalakshmi2 and M. Arivazhagan1
1Shivani School of Business Management, Naval ur kuttapattu, Trichy-9, India.
2JJ College of Engineering and Technology, Trichy, India. Accepted 9 October, 2012
Banking sector in India is facing a rapidly changing market. 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. The banking system occupies an important place in nation’s economy.
It plays a pivotal role in the economic development of a country and forms the core of the money
market in an advanced country. Banks have to deal with many customers every day and render various
types of services to its customer. It's a well known fact that no business can exist without customers.
“In recent years, the banking industry around the world has been undergoing a rapid transformation. To
address the challenge of retention of customers, there have been active efforts in the banking circles to
switch over to customer-centric business model. The success of such a model depends upon the
approach adopted by banks with respect to customer data management and customer relationship
management. Over the years, Indian banks have expanded to cover a large geographic and functional
area to meet the developmental needs. They have been managing a world of information about
customers - their profiles, location, etc. They have a close relationship with their customers and a good
knowledge of their needs, requirements and cash positions. The main objective of this study is to find
the interrelationships between service quality attributes, customer satisfaction and customer loyalty
banking sector, close relationship.
Key words: Service quality, customer satisfaction, customer loyalty. INTRODUCTION
Indian banking industry is one of the largest in the world.
more and more interaction with customers to build
There has been a great surge in efficient customer
customer relationship banking. But to deliver an improved
services. A highly satisfied and delighted customer is a
and in-depth understanding of customers needs, and fully
very vital non-financial assest for the banks in the emer-
integrated customer management system is required
ging IT era. The curtsey, accuracy an d speed are like a
along with complete transparency.
crown factors for a bank. The liberalization, privatization
In the emerging market scenario, for survival and
and globalization has ushered the customer relationship
growth, it is critical for a bank to align its vision, mission,
management in banks. The process of globalization and
goals and objectives with customer‘s satisfaction.
our move towards global standards changed the
perception of customer service, and the banking endea-
vor to serve the customer better, resulted in innovative Literature review banking services and
products. Banks are looking for
Without a sound and effective banking system in India it
cannot have a healthy economy. The banking system of
India should not only be hassle free but it should be able
*Corresponding author. E-mail: deansuriya@yahoo.com.
to meet new challenges posed by the technology and any 126 Afr. J. Bus. Manage.
other external and internal factors. For the past three
marketing activity (Oliver, 1980; Surprenant and
decades, India's banking system has several outstanding
Churchill, 1982; File and Prince (1992) argued that the
achievements to its credit. The most striking is its
customers who are satisfied tell others about their
extensive reach. It is no longer confined to only metro-
experiences and this increases WOM advertising. In this
politans or cosmopolitans in India. In fact, Indian banking
way, banks can increase customers. Spreng and Mackoy
system has reached even to the remote corners of the
(1996) and Mick and Fournier. (1997) argued that profit
country. This is one of the main reasons of India's growth
and growth are stimulated primarily by customer loyalty
process. The government's regular policy for Indian bank
and loyalty is a direct result of customer satisfaction. In
since 1969 has paid rich dividends with the nationa-
the competitive banking industry, customer satisfaction is
lization of 14 major private banks of India. Not long ago,
considered as the essence of success. Caruana et al
an account holder had to wait for hours at the bank
(2000) developed a meditational model that links the
counters for getting a draft or for withdrawing his own
service quality and service loyalty via customer
money. Today, he has a choice. Gone are days when the
satisfaction and applied this model in the retail banks in
most efficient bank transferred money from one branch to
Malta. The results appear to prove the links between
other in two days. Now it is simple as instant messaging
service quality, customer satisfaction and customer or dials a pizza. Money ha
s become the order of the day.
loyalty. According to Hofstede (2001), most of the Asian
The first bank in India, though conservative, was
cultures (like India, Pakistan) are collectivist [People in
established in 1786. From 1786 till today, the journey of
the collective cultures discriminate in groups (relatives,
Indian banking system can be segregated into three
institutions and organizations) and out-groups]. In this distinct phases.
case, word of mouth (WOM) advertisements are
important for the banks. Prabhakaran and Satya (2003)
mentioned that the customer is the king. High customer
INDIAN BANKING SECTOR IN 2010
satisfaction is important in maintaining a loyal customer
base. To link the service quality, customer satisfaction
The last decade has seen many positive developments in
and customer loyalty is important. Kumar et al. (2009)
the Indian banking sector. The policy makers, which
stated that high quality of service will result in high
comprise the Reserve Bank of India (RBI), Ministry of
customer satisfaction and increases customer loyalty,
Finance and related government and financial sector
and Naeem and Saif (2009) found that customer
regulatory entities, have made several notable efforts to
satisfaction is the outcome of service quality.
improve regulation in the sector. The sector now com-
pares favorably with banking sectors in the region on
metrics like growth, profitability and non-performing CUSTOMER SATISFACTION
assets (NPAs). A few banks have established an out-
standing track record of innovation, growth and value
―Customer satisfaction, a business term, is a measure of
creation. This is reflected in their market valuation. How-
how products and services supplied by a company meet
ever, improved regulations, innovation, growth and value
or surpass customer expectation. It is seen as a key
creation in the sector remain limited to a small part of it.
performance indicator within business and is part of the
The cost of banking intermediation in India is higher and
four of a balanced scorecard. In a competitive market-
bank penetration is far lower than in other markets.
place where businesses compete for customers,
India‘s banking industry must strengthen itself signifi-
customer satisfaction is seen as a key differentiator and
cantly if it has to support the modern and vibrant
increasingly has become a key element of business
economy which India aspires to be. While the onus for
strategy‖. According to Oliver (1980), the customer
this change lies mainly with bank managements, an
satisfaction model explains that when the customers
enabling policy and regulatory framework will also be
compare their perceptions of actual products/services
critical to their success. The failure to respond to
performance with the expectations, then the feelings of
changing market realities has stunted the development of
satisfaction have arisen. Any discrepancies between the
the financial sector in many developing countries. A weak
expectations and the performance create the discon-
banking structure has been unable to fuel continued
firmation. The working of the customer's mind is a
growth, which has harmed the long-term health of their
mystery which is difficult to solve and understanding the
economies. In this ―white paper‖, we emphasize the need
nuances of what customer satisfaction is, a challenging
to act, both decisively addressed, could seriously weaken
task. This exercise in the context of the banking industry
the health of the sector. Further, the inability of bank
will give us an insight into the parameters of customer
managements (with some notable exceptions) to improve
satisfaction and their measurement. This vital information
capital allocation, increase the productivity of their service
will help us to build satisfaction amongst the customers
platforms and improve the performance ethic in their
and customer loyalty in the long run which is an integral
organizations could seriously affect future performance.
part of any business. The customer's requirements must
Customer satisfaction is one of the important outcomes of
be translated and quantified into measurable targets. This Suriyamurthi et al 127
provides an easy way to monitor improvements, and
Service quality and customer satisfaction
deciding upon the attributes that need to be concentrated
on in order to improve customer satisfaction. We can
There is a great deal of discussion and disagreement in
recognize where we need to make changes to create
the literature about the distinction between service quality
improvements and determine if these changes, after
and satisfaction. The service quality school view satis-
implemented, have led to increased customer satis-
faction as an antecedent of service quality - satisfaction
faction. It serves to link processes culminating purchase
with a number of individual transactions "decay" into an
and consumption with post purchase phenomena such as
overall attitude towards service quality. The satisfaction
attitude change, repeat purchase, and brand loyalty
school holds the opposite view that assessments of
(Surprenant and Churchill, 1982). This definition is
service quality lead to an overall attitude towards the
supported by Jamal and Nasser (2003) and Mishra
service that they call satisfaction. There is obviously a (2009).
strong link between customer satisfaction and customer
retention. Customer's perception of service and quality of
"If you cannot measure it, you cannot improve it." - Lord
product will determine the success of the product or
William Thomson Kelvin 1824-1907.
service in the market. If experience of the service greatly
exceeds the expectations clients had of the service then
satisfaction will be high, and vice versa. In the service
quality literature, perceptions of service delivery are
The need to measure customer satisfaction
measured separately from customer expectations, and
the gap between the two provides a measure of service
Satisfied customers are central to optimal performance quality.
and financial returns. In many places in the world,
business organizations have been elevating the role of
the customer to that of a key stakeholder over the past
Expectations and customer satisfaction
twenty years. Customers are viewed as a group whose
satisfaction with the enterprise must be incorporated in
Expectations have a central role in influencing satis-
strategic planning efforts. Forward-looking companies are
faction with services, and these in turn are determined by
finding value in directly measuring and tracking customer
a very wide range of factors; lower expectations will result
satisfaction (CS) as an important strategic success
in higher satisfaction ratings for any given level of service
indicator. Evidence is mounting that placing a high priority
quality. This would seem sensible; for example, poor
on CS is critical to improved organizational performance
previous experience with the service or other similar
in a global marketplace. With better understanding of
services is likely to result in it being easier to pleasantly
customers' perceptions, companies can determine the
surprise customers. However, there are clearly circum-
actions required to meet the customers' needs. They can
stances where negative preconceptions of a service
identify their own strengths and weaknesses, where they
provider will lead to lower expectations, but will also
stand in comparison to their competitors, chart out path
make it harder to achieve high satisfaction ratings – and
future progress and improvement. Customer satisfaction
where positive preconceptions and high expectations
measurement helps to promote an increased focus on
make positive ratings more likely. The expectations
customer outcomes and stimulate improvements in the
theory in much of the literature therefore seems to be an
work practices and processes used within the company. oversimplification.
When buyers are powerful, the health and strength of
the company's relationship with its customers – its most
critical economic asset – is its best predictor of the future. Banking in India
Assets on the balance sheet – basically assets of pro-
duction – are good predictors only when buyers are
Over the last four years, India‘s economy has been on a
weak. So it is no wonder that the relationship between
high growth trajectory, creating unprecedented oppor-
those assets and future income is becoming more and
tunities for its banking sector. Most banks have enjoyed
more tenuous. As buyers become empowered, sellers
high growth and their valuations have appreciated signi-
have no choice but to adapt. Focusing on competition
ficantly during this period. Looking ahead, the most
has its place, but with buyer power on the rise, it is more
pertinent issue is how well the banking sector is
important to pay attention to the customer. Customer
positioned to cater for continued growth. A holistic
satisfaction is quite a complex issue and there is a lot of
assessment of the banking sector is possible only by
debate and confusion about what exactly is required and
looking at the roles and actions of banks, their core
how to go about it. This article is an attempt to review the
capabilities and their ability to meet systemic objectives,
necessary requirements, and discuss the steps that need
which include increasing shareholder value, fostering
to be taken in order to measure and track customer
financial inclusion, contributing to GDP growth, efficiently satisfaction.
managing intermediation cost, and effectively allocating 128 Afr. J. Bus. Manage.
Figure 1. Performance assessment of Indian banking sector.
capital and maintaining system stability (Figure 1). METHODOLOGY
Our survey of 14 leading banks in India shows that
banks have done remarkably well in increasing share- Methods of data collection
holder value, allocating capital effectively, and contri-
In case of data collection, there are two types of data that is primary
buting to GDP growth (Figure 2). However, in comparison data and secondary data.
to international peer‘s, Indian banks could do more to
foster financial inclusion and manage intermediation
Primary data: Information obtained from the original sources by
costs. Our findings also highlight the clear divide between
researcher is called primary data. In this study primary data was
the performance of incumbents, that is, public sector and
collected using a Questionnaire and Interview with experts.
Secondary data: Secondary data was collected from various
old private banks, and attackers that is new private and
reference books, websites and newspaper articles.
foreign banks, a reflection of the underlying shifts in the
Sampling segments: Customers, Bankers, Industry expert. banking sector. Sample size: 100 respondents. Objectives Data collection procedures Sample design
The objective of this research is to analyze what is
relevant in achieving a successful and banking relation-
A sample of 100 customers who are directly associated with the
ship, so that banks can accomplish and maintain
banks in Chennai that is at least having accounts with the banks
customer‘s satisfaction in the new climate.
and operating the same on a regular basis, were selected for the
Identifying and commenting in what we see is the key
purpose of the study. An equal, 50 each, number of respondents
that is persons who are directly associated with banks both from
actions that bank must take to retain and expand their
rural and urban areas were considered. The information has been
customer ease in this challenging and increasingly
collected through structured questionnaire. Since the banks refused sophisticated market.
to provide the list of customers, the questionnaires were got filled
The main objective of this research is on the inter-
up from the customer personally visiting the bank premises (Indian
relationships among service quality, customer satisfaction
Overseas Bank, Indian Bank, State Bank, Icici, Canara Bank, Axis
Bank, Bank of Baroda, Karur Vysya Bank).
and customer loyalty in the banking sector. Therefore, the
The data were collected from the banks during the month of May
sample for this study was selected from the bank
to June 2011. Ten customers who came out of the banks on the customers.
very day were contacted. The purposes of the study were explained Suriyamurthi et al 129
Figure 2. Performance evaluation of banking sector based on five key objectives.
and then the customer was requested to provide his/her responses
and maximum value ranges from 2 to 7. Asurance ranges
with regard to the items of the questionnaire.
from 3.67 to 7 and the mean and standard deviation is
The first part of the questionnaire consists of the general
5.65 and 0.73, respectively. Empathy ranges from 3 to 7
information of the respondent. Service quality attributes were used
and the mean is 5.49 and the standard deviation is 0.86.
in the second part, which is the independent variable of this
research. The third part of the questionnaire explains the
The minimum and maximum value for customer
customer‘s satisfaction and this is the independent/dependent
satisfaction is 3 to 7 and the mean and standard
variable of this research. The final part consists of customer‘s
deviation is 5.64 and 0.90, respectively. Customer loyalty
loyalty and this is the dependent variable of this research. The
ranges from 2 to 7 and the mean and standard deviation
interviewers explained each part of the questionnaire to the
is 5.44 and 1.02, respectively. It has been observed in respondents.
Based on the 100 sample- bank customers, the percentage of
Table 1 that almost all the mean are similar. High
male and female respondents were 77 and 23 respectively, which
standard deviation means that the data are wide spread,
shows the male dominancy of bank customers. In the whole
which means that customers give variety of opinion and
sample, 53% of respondents fell in the age range of 21 to 30, and
the low standard deviation means that customers express
32% fell in the range of 31 to 40. In terms of qualification, the close opinion.
respondents are almost equal and that is, Undergraduate (31%),
Graduate (33%), and Post Graduate (35%). 63% of respondents
are service holder and 43% of respondents earn more. Hypotheses test
DESCRIPTIVE STATISTICS FOR EACH STUDY
Pearson correlation CONSTRUCTS
A correlation coefficient is a very useful way to Descriptive statistics
summarise the relationship between two variables with a
single number that falls between -1 and +1 (Welkowitz et
Tangibility ranges from 2 to 7 with a mean of 5.64 and
al., 2006). Morgan et al. (2004) stated that:
standard deviation of 0.769. Reliability ranges from 3 to 7
and the mean and standard deviation is 5.57 and 0.82,
-1.0 (a perfect negative correlation)
respectively. For responsiveness, mean and standard 0.0 (no correlation)
deviation is 5.31 and 1.03 respectively with the minimum
+1.0(a perfect positive correlation) 130 Afr. J. Bus. Manage.
Table 1. Descriptive statistics. Parameter N Minimum Maximum Mean Std. deviation Customer satisfaction 100 3 7 5.64 .90 Tangibles 100 2 7 5.60 .77 Reliability 100 3 7 5.57 .82 Responsiveness 100 2 7 5.31 1.03 Assurance 100 3.67 7 5.65 .73 Empathy 100 3 7 5.49 .86 Customer loyalty 100 2 7 5.44 1.02 Valid N (listwise) 100
Table 2. Pearson correlation analysis obtained for the three intervals scaled variables. Parameter Variable CS Tangibles Reliability
Responsiveness Assurance CL Pearson correlation 1 .491** .488** .493** .526** .673** Customer Sig. (1-tailed) - .000 .000 .000 .000 .000 satisfaction N 100 100 100 100 100 100 Pearson correlation .491** 1 .632** .560** .500** .560** Tangibles Sig. (1-tailed) .000 - .000 .000 .000 .000 N 100 100 100 100 100 100 Pearson correlation .488** .632** 1 .759** .626** .680** Reliability Sig. (1-tailed) .000 .000 - .000 .000 .000 N 100 100 100 100 100 100 Pearson correlation .493** .560** .759** 1 .566** .660** Responsiveness Sig. (1-tailed) .000 .000 .000 - .000 .000 N 100 100 100 100 100 100 Pearson correlation .526** .500** .626** .566** 1 .439** Assurance Sig. (1-tailed) .000 .000 .000 .000 - .000 N 100 100 100 100 100 100 Pearson correlation .673** .560** .680** .660** .439** 1 Customer loyalty Sig. (1-tailed) .000 .000 .000 .000 .000 - N 100 100 100 100 100 100 Correlation
relationship between tangibles and customer satisfaction in the banking sector.
The Pearson correlation analysis obtained for the three
intervals scaled variables are shown in Table 2. The
sample size (N) is 100 and the significant level is 0.01 Reliability (p˂0.01).
H1ba: There is a positive correlation between reliability
H1a0: There is no correlation between tangibles and
and customer satisfaction in the banking sector.
customer‘s satisfaction in the banking sector.
In Table 2, it can be seen that the correlation (r) of
H1b0: There is no correlation between reliability and
tangibles is 0.491 and the significant level is 0.01 (p˂.01).
customer satisfaction in the banking sector.
Table 2 shows that the p-value is 0.000, which is less
Table 2 shows that the correlation (r) is 0.488 for
than 0.01. We therefore reject the null hypothesis, and
reliability and the p-value is 0.000, which is less than the
concluded that there is a medium positive (r = .491)
significant level (0.01). Therefore, the null hypothesis is Suriyamurthi et al 131
rejected and concluded that reliability and customer
products with their main bank.
satisfaction is positively (medium) related in the banking
Statistic: The average customer holds 3.1 products with sector.
the main bank, compared with a global average of 2.9.
15% of customers hold one product with the main bank, and 20% hold five or more. Responsiveness
H1ca: There is a positive correlation between respon- Reasons for attrition
siveness and customer satisfaction in the banking sector.
Finding: Despite general y high levels of satisfaction with
H1c0: There is no correlation between responsiveness
banks, Indian customers are generally leaving their main
and customer satisfaction in the banking sector bank because of poor service.
It can be observed in Table 2 that the correlation (r) of
Statistic: 48% of customers who decided to leave their
responsiveness is 0.493 and the p-value is 0.000, which
main bank did so because of general levels of service
is less than 0.01. Therefore, the null hypothesis is
quality, while 35% cited product and service offerings.
rejected and it can be concluded that responsiveness is
positively (medium) related to customer satisfaction in the banking sector. Personalized service
Finding: Out of al the countries we surveyed, Indian Assurance
customers are the most satisfied with the level of
personalized attention they receive from their main bank,
H1da: There is a positive correlation between assurance
and the majorities are willing to pay extra for independent and customer‘
s satisfaction in the banking sector. financial advice.
H1d0: There is no correlation between assurance and
Statistic: 80% consider the level of personalized attention
customer satisfaction in the banking sector.
their bank offers to be good or very good. 48% would not
Table 2 shows that there is a large positive correlation
pay for independent financial advice, but 45% would do
between assurance and customer‘ s satisfaction in the
so for high-end investments, and a further 15% would
banking sector where p˂0.01 (p=0.000) and r=0.526. So,
pay for independent advice on all their investments.
the nul hypothesis is rejected. Channel experience Trust and satisfaction
Finding: Customers in India are very satisfied with
Finding: In India, the credit crisis has had minimal impact
branches, internet banking and ATMs, and are more
on customer confidence in the banking industry, and
satisfied than most with mobile banking.
customers‘ confidence in the industry appears to have
Statistic: 85% are satisfied with the branch experience,
grown in the past 12 months. The majority of customers
80% are satisfied with ATMs and 78% are satisfied with
are also very satisfied with the service they get from their
internet banking. 60% are satisfied with mobile banking – banks.
the highest percentage in our survey.
Statistic: 80% say their trust in banks has increased in
the past 12 months, and 20% say their confidence has
not changed. 65% score their bank four or five out of five
Impact of the crisis on trust levels in financial
when asked about their degree of satisfaction. institution
- How has your confidence towards the banking industry Main bank relationship
changed over the past 12 months?
Finding: Indian customers tend to bank with multiple
In India, the credit crisis has had minimal impact on providers.
customer confidence in the banking industry and
Statistic: 90% of Indian customer‘s bank with more than
customer‗s confidence in the industry appears to have
one bank, and 45% bank with three or more providers.
grown in the last 12 months. The majority of the
customers are also very satisfied with the service they get from their banks. Product holdings
Stat: 75% say their trust in banks has increased in the
last 12 months and 17% say their confidence has not
Finding: Indian customers tend to hold a high number of changed. 68% score their ban k four or five out of five 132 Afr. J. Bus. Manage.
when asked about their degree of satisfaction.
banks with strong regional franchises will divest loss-
making divisions and instead focus on their core markets
and customer segments. We anticipate that many Euro-
AGENCIES: TAGS: CUSTOMERS, BANKS INDIAN
pean players may eventual y fall into this category.
BANKS CUSTOMER EXPECTATIONS
Indeed, soundness and solvency, balanced with gene-
rating returns, are the banking industry‘s new impe-
A survey farm global consultancy firm, Ernst and young
ratives. And we believe that most commercial banks in
has found that majority of retail customers is satisfied
developed markets will settle for lower risk and moderate
with the countries banking system and that trust has
growth in their quest to achieve high performance by
increased after its state handling of the 2008 global crisis.
2012. We estimate that at least 30% of the banks‘ cost
Unlike many other countries, India was less affected by
base will be variable by 2012, as successful banks use
the meltdown, mainly an account of conservative banking
alliances, shared services and sourcing to manage
policies followed by the Reserve Bank of India. According
noncore capabilities more competitively. For example,
to the survey, a new era of customer expectation, 75% of
shared services arrangements with telecommunications
the retail banking customers in India said that their trust
companies and energy utilities could improve economies
in banking industry grow in 2010. Indians have the
of scale (for both partners) and lower costs.
highest level of trust and satisfaction in their banking
Product innovations like so-called green mortgages,
industry. The credit crisis has had minimal impact on
which offer discounts for energy-efficient homes, will
customer‘s confidence in the Indian banking industry, the
address consumers‘ growing environmental and social
survey said. It surveyed more than 20500 global retail
concerns; surveys indicate, for instance, that customers
banking customers of which 1000 respondents were from
are prepared to pay a premium for products and services
India. The objective of the survey was to gauge what
that help cut carbon emissions. These and similar
drives customer relationship with this banks.
customer- and community-focused product initiatives will
The banking industry in mature markets has witnessed
not only create new income streams but also provide
a wholesale and ongoing shift in confidence, and never
banks with the opportunity to build and improve customer
before has loyalty management and personal customer relationships.
attention been such an issue for the sector. In contrast,
For example, microfinance (providing financial services
the emerging markets now offer huge opportunities for
to low-income customers and small- and medium-size
banks looking to expand internationally, as most have felt
enterprises, mostly in the developing world) is a low-
less of an impact from the credit crisis and instead have a
volatility lending model with limited risk that more banks
growing middle class of customers looking to diversify
are likely to adopt. Currently, between 50 and 80% of
their bank relationships. Rebuilding trust is a challenge
adults in many developing countries have inadequate
for individual banks and for the industry as a whole, in
access to financial services, along with up to 10% of the
particular across mature markets. Negative customer
population in developed economies, according to The
perceptions of the disruption banks have caused to the
World Bank. So the extension of services to the bottom of
wider economy, through the under-capitalized and over-
the pyramid represents a market with significant growth
leveraged practices that led to the credit crisis continue to potential.
prevail. In recent years, we have seen that being pro-
Another example of an emerging new business: Islamic
fitable is not enough. The role that banks play in
banking, the provision of financial products and services
supporting the wider economy has been highlighted, and
in compliance with Sharia law, which prohibits charging
a wide variety of stakeholders are now demanding a
interest. The Asian Development Bank estimates that the
more responsible banking industry if there is to be a
combined global value of Islamic assets held by
restoration of customer confidence.
governments (including sovereign wealth funds), financial
In evaluating the survey findings, the following are
institutions and individuals is approaching $1 trillion and
three key areas of focus for banks: (1) Rebuilding
growing at an annual rate of 10 to 15% (Table 3).
customer confidence; (2) Preventing customer attrition;
(3) Enhancing the customer experience through service
quality and use of remote channels. Global consolidation
In today's globally competitive and highly regulated
environment, managing risk effectively while satisfying an
By 2012, the world‘s banks will be managing profitability
array of divergent stakeholders is a key goal of banks
and growth under significantly higher capital, risk, liquidity
and securities firms. The Center works to anticipate
and balance sheet constraints (Table 3). They will also be
market trends, identify the implications and develop
competing with some strong emerging-market players—
points of view on relevant industry issues. Ultimately, it
banks from Brazil, Russia, China and India that have helps in meeting one‘ s goals and f or better competing. By
performed better during the current crisis and that will
2012, most banks will be retail and commercial banking
leverage the higher growth of their domestic and regional
institutions serving regional o r local markets. Some big
markets over the next three years to consolidate their Suriyamurthi et al 133
Table 3. Dramatic changes in banking sector between 2008 and 2012. Area 2008 2012 • Lower capital ratio • Higher capital ratio Capital • Low cost of equity • Higher cost of equity • Securitized assets • On-balance sheet assets
• Low market / credit risk premiums • Higher risk premiums Risk
• Basel II Accords, International
• Counter-cyclical provisions
Accounting Standards—pro-cyclical
• Innovation in risk derivatives
• Regulated risk derivatives
• High leverage / rapid expansion • Lower leverage Assets
• Off balance sheet / innovation
• Higher risk premiums / returns • Low yield / ROA • Transparency Liabilities
• Reliance on wholesale funding • Focus on retail deposits
• Low cost of retail deposits
• Wholesale funding costs rising Liquidity • High market liquidity • Higher liquidity reserves • Low average cost of funds • Counter-party risk focus
• Thin capital / high leverage
• Higher capital / lower leverage Return on equity
• High performers (20 - 25%)
• High performers (10 - 15%)
• Reputation and capability based, core Growth model • Leverage based
capabilities substantial y strengthened
Note: Pro-cyclical: The regulatory system magnifies the impact of the business cycle by allowing capital
requirements to fall in periods of economic growth and strong credit quality, and rise when credit quality
deteriorates. Counter-cyclical: The regulatory system requires banks to hold capital or make additional provisions
against default in good times to protect against losses in bad times. Source: Accenture analysis. strengths.
is critical to banking corporate success. Banking is a
To be successful, al players will need to redefine their
customer oriented services industry and Indian banks
business scope—bolstering core businesses and finding
have started realizing that business depends on client
optimal exit strategies for the rest. This will demand
service and the satisfaction of the customer. This is
exceptional post-merger integration skills for the next
compelling them to improve customer service and build three years and beyond.
relationships with customers. It is a well known fact that
Beyond 2012, we foresee a fundamentally reconfigured
no business can exist without customers. In a developed
banking industry: an environment of technology-enabled
country, customer service, like any aspect of business, is
banking ―ecosystems,‖ where non-bank players and peer-
a practiced art that takes time and effort to master. All we
to-peer networks will compete with mainstream providers
need to do to achieve this is to stop and switch roles with
to service the needs of ever more demanding consumers.
the customer. What would you want from your business if
The high performers will be those that can overcome the
you were the client? How would you want to be treated?
immediate challenges and maximize the opportunities
Treat your customers like your friends and they w lil
presented by the dramatically changed banking
always come back. In short, the domestic economy is an landscape of 2012.
increasing pie which offers extensive economies of scale
In the more distant future, the new banking virtues—
that only large banks will be in a position to tap. With the
sustainable profitability, renewed customer-centricity and
phenomenal increase in the country's population and the
a more realistic approach to risk—will be more important
increased demand for banking services; speed, service than ever.
quality and customer satisfaction are going to be key
differentiators for each bank's future success. Thus it is
imperative for banks to get useful feedback on their Conclusion
actual response time and customer service quality
aspects, which in turn wil help them take positive steps
In today‘s competitive environment relationship marketing
to maintain a competitive edge. The competitive land- 134 Afr. J. Bus. Manage.
scape. It is clear from our research that enhancing indivi-
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introductory Statistics: Use and Interpretation Second Edition.
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Lawrence Erlbaum Associates, Publishers:111-124.
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Naeem H, Saif I (2009). Service Quality and its impact on Customer
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