Driving banking business – a customer’s perspective

Though the banking sector has been performing well year after year, are they meeting the expectations of their audience? Read on for insights from a Xerago survey.

With India experiencing a cycle of growth, the Rs 64 trillion (US$ 1.25 trillion)-Indian Banking industry is poised to grow exponentially as the sector reflects the health of an economy. Indian banks have proved their mettle time and again as their regulations align with international standards, while they remain conventional in their approach. According to the world’s largest rating agency, Standard & Poor (S&P)’s Ratings Services, India’s banking system has a high level of stable, core customer deposits supported by the system’s good franchise, extensive branch networks, and large, yet growing, domestic savings. In fact, the next three decades are highly crucial and opportunity-oriented for the Indian banking industry.

According to the RBI’s ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’, September 2011, Nationalised Banks, as a group, accounted for 52.2 per cent of the aggregate deposits, while State Bank of India (SBI) and its associates accounted for 21.8 per cent. The share of New private sector banks, Old private sector banks, Foreign banks and Regional Rural banks in aggregate deposits was 13.7 per cent, 4.8 per cent, 4.6 per cent and 2.9 per cent, respectively.

Another statement released by the RBI stated that bank deposits grew 13.4 per cent to Rs 60.72 trillion (US$ 1.19 trillion) in the fiscal 2011-12 (the year to March 23, 2011), while loans and advances grew 17.08 per cent to Rs 47.54 trillion (US$ 930 billion).

In line with this Xerago conducted a survey across 4 major cities amongst young professionals to understand the perception people carry about several leading banks. The banks considered for the purpose of the survey were ICICI, State bank, HDFC, Citi Bank and Standard chartered bank. “Customer is the king” has become the mantra of this age.

Customers hence become brand ambassadors as well as long as they feel the comfort factor with the banks they associate with. Almost 25% the respondents had more than one bank account, ICICI and state bank were the ones maximum number of respondents were associated with. With respect to convenience and ease of operating accounts and services with ICICI received the maximum voted by respondents. In addition to convenience, attending to issues that customers may have is a key differentiator in any business and respondents believe ICICI is the best in this as well followed by HDFC bank. Each customer wants them to be treated as the most valuable customer and be given the best offers suited to his/her need. Respondents believe state banks followed by HDFC and then ICICI are leave no stone unturned to ensure each customer is treated special and is given what they need rather than being seen one in many.

The Indian banking sector has come a long way from serving through traditional approach to the online genre. According to a survey by online survey, 57 per cent of Indians prefer to use the Internet for banking and other financial holdings rather than shopping online. Things have been made much easier by eliminating hefty paper processes and introducing customer-friendly online banking facility with robust security features. Such changes have not only facilitated access to several banking products, but have also improved customer loyalty and money transfer mechanism.

Transactions in mobile banking are also on an upsurge as more than 2,800,000 transactions (worth about Rs 196.12 crore [US$ 38.37 million]) were conducted during February 2012. The figure indicated a 300 per cent increase in terms of volume and over 200 per cent increase in terms of value. At present, the RBI has allowed 65 banks to conduct mobile banking out of which 47 banks have commenced offering these services. People need to believe in the banks capability in growing with this trend in order to make banking easier for them. ICICI followed by HDFC bank win in this regard and people feel they are cool and innovative and make working with them easier. State bank is considered by respondents to be low in this.

Customers are powerful brand ambassadors and their word of mouth advertising does a whole world of good. As indicated by all the above mentioned factors the two banks that respondents believe they would recommend to others is HDFC bank though it may have been a close second and not first in responses to factors mentioned above. State bank owing to its years in operation and huge penetration levels is also a bank along with ICICI which respondents believe they would recommend to others.

As published by reports last year HDFC bank is one of the fastest growing banks followed by State bank and ICICI amongst the big banks that have an all India spread. (there are several smaller regional banks that indicate faster growth rates). A correlation can thus be drawn – Focus on Customer centricity, Making operation easier for them and attending to their issues on time and giving the right thing to the right person at the right time has proven beneficial to the banks.

(This article is based on a survey conducted by Xerago across four metros in India with respondents above 30 years of age)

 

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