Puneet Sachdeva, 2k72a40 Winter Project

COMPARATIVE STUDY OF CUSTOMER PERCEPTIO
AD
EXPECTATIO OF SERVICE QUALITY OF BAKS
A project submitted towards the partial fulfillment of the
requirement of the two years full time Post-graduate Diploma in
Management
Under the guidance of:
PROF. S. GOSWAMI
Submitted By:
PUEET SACHDEVA
2K72A40
(PGDM, 2007-2009)
Asia Pacific Institute of Management

3 & 4 Institutional Area, Jasola, ew Delhi-110025
Winter Project Asia Pacific Institute of Management 2K72A40 1

DECLARATIO
I hereby declare that the project entitled “Comparative study of
customer perception and expectation of service quality of banks”
submitted by me in partial fulfillment towards the requirement of the
award of PGDM (full time), is my original work and the project has not
been previously used for the award of any degree, associate -ship,
fellowship or any other similar titles.
(Puneet Sachdeva)
Signature:
Place: Delhi
Date:

CERTIFICATE
This is to certify that the project entitled “Comparative study
of customer perception and expectation of service quality of
banks” is the bonafide work carried out by Puneet Sachdeva,
student of PGDM (full time), Asia Pacific Institute of
Management, Delhi, during the year 2007-2009, in partial
fulfillment of the requirements for the award of the PGDM, and
that the project has not formed the basis for the award
previously of any degree, diploma, associateship, fellowship or
any other similar title.
Signature of the Guide:
Place: Delhi
Date:

ACKOWLEDGEMET
In today’s competitive and corporate world, imparting of practical knowledge is of
immense importance and therefore it becomes the essence of our MBA curriculum.
The aspiring student gets a chance to be associated with the organizations that are
making the mark in their respective fields.
In the quest of learning and to get exposure of corporate world, I opt for ICICI Bank
and SBI Bank for seeking the customers’ expectation and perception of the service
quality of the banks.
I would like to acknowledge and extend my heartfelt gratitude to the following
persons who have made the completion of the project possible:
Our Director, Dr. D.K. Banerjee for his vital encouragement and support.
Prof. Subrata Goswami, Professor & Area Chairperson Marketing, Asia-Pacific
Institute of Management. I am grateful to my mentor as he supported, guided and
gave me valuable time in coordinating my project.
All other associated persons whose benign attitude made me to strive for the best. The
ambience during the entire training was very professional. I learnt a lot.
Last but not the least I thank almighty for his kindness, my parents, family members
and friends for their unconditional love and support.
PUEET SACHDEVA
2K72A40
PGDM (2007-09)
Asia Pacific Institute of Management

LIMITATIOS
Time & money constraints as all regions could not be covered.
Samples were obtained from few selected ATM’s across South Delhi as
such whole consumer preferences could not be taken into account.
Relying on secondary data.
Information or Details related to research, revealed by customers, may be
biased or not trustworthy.
The results are generalized up to regional basis.

EXECUTIVE SUMMARY
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 to meet new challenges posed by the technology and any other external and
internal factors.
Not long ago, an account holder had to wait for hours at the bank counters for getting
a draft or for withdrawing his own money. Today, he has a choice. Gone are days
when the most efficient bank transferred money from one branch to other in two days.
Now it is simple as instant messaging or dial a pizza. Money has become the order of
the day.
Delivering quality service consistently gives a competitive edge to service
organizations. It requires an understanding of customer expectations and the types of
expectations.
While evaluating service offered by a bank, customers compare perceived quality of
service with the expected quality of service. Therefore, banks should have knowledge
about customer perceptions and the influence of factors such as service encounter,
service evidence, image of the service organization, and price of the service on
customer perceptions.
Excellent customer service starts by first taking the time to get to know the customer,
his situation, his vision, his frustrations and his goals. Once you have a good handle
on what is on his heart and mind, then you will know how to offer the customer
helpful solutions that are attractive to him because they have value to him.

Banks should also attempt to understand the various types of service encounters like
remote, face-to-face, and phone encounters to be able to understand customer
perceptions. They should examine the factors that influence customer
satisfaction/dissatisfaction, like recovery, adaptability, spontaneity, and innovate
strategies to influence customer perceptions.
In the present situation of world crisis it becomes more important for the banks to
make sure that the customers hold on to them and they have confidence in the present
workings of the bank. Any deviation from the quality service experienced by a
customer can have a very large impact on the working of the bank.
In this project, I have basically focused on the various customer expectations and
perceptions of two banks. ICICI bank, the largest bank in the private sector and SBI,
the largest in the public sector. I have chosen these banks to come up with an
unbiased output.
Both the banks are the leaders in their respective segments. And the project output
will help the banks to stay in the industry & outperform its competitors. It would also
help me to understand the latest & emerging trends in the customer tastes and
expectations.
I have analyzed the banks service with the help of structured questionnaire and
applied hypothesis testing to describe relation between the various variables.
The banks, if work on the output of the project might come up with the best possible
services. This will certainly help the banks to meet customer level of service and
retain them. This further shall help the banks to win Goodwill by word of mouth
because a satisfied customer will spread the good quality service received from banks
to his/her known ones.

COTETS
S. Particulars Page
o. no.
1
Acknowledgement 4
2
Limitations 5
3
Executive Summary 6
4 Chapter 1:
Introduction 9
5 Chapter 2:
Literature Review 21
6 Chapter 3:
Objective of the study 40
7 Chapter 4:
Methodology 42
8 Chapter 5:
Observation, Analysis and Discussion 46
9 Chapter 6:
Summary/Conclusion/Recommendations 61
10
References 67
11
Appendices 69

The issue of quality management within banking services has drawn considerable
attention over the past few years. The move to managed service has increased
demands for outcome-based accountability, cost containment, and attention to
customer-focused quality in order to remain competitive in a rapidly changing
environment. This dual focus on driving down costs while increasing quality has
intensified pressures to understand, measure, and manage quality from a customer
perspective.
Commercial banks form the largest and are the country’s most important group of
financial institutions. With stiffer competition among domestic and foreign banks,
therefore it is important for the commercial banks in India to improve the quality of
their services. Further, increased in consumer preferences toward banking products
choosing the banks that give them the best service quality is a priority. As
globalisation and liberalisation of financial institutions accelerate, competition among
banks in offering products and services becomes more intense. Customers in India
become more educated better informed, more internalized, and as Indian economy
becomes more and more knowledge based, the demand for high quality services
expands with increases in customers’ buying power.
Hence, commercial banking industry in India has to think strategically by providing
high quality products and services to satisfy their customers. In order for these banks
to provide high quality products and services, they need firstly to investigate the level
of customers’ perceptions and expectations to their service quality from their
customers’ perspective. Through that information, they could then strategically adjust
their service quality to fit the local and global markets.

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 to meet new challenges posed by the technology and any other external and
internal factors.
For the past three decades India's banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. It is no longer
confined to only metropolitans or cosmopolitans in India. In fact, Indian banking
system has reached even to the remote corners of the country. This is one of the main
reasons of India's growth process.
The government's regular policy for Indian bank since 1969 has paid rich dividends
with the nationalization of 14 major private banks of India.
Not long ago, an account holder had to wait for hours at the bank counters for getting
a draft or for withdrawing his own money. Today, he has a choice. Gone are days
when the most efficient bank transferred money from one branch to other in two days.
Now it is simple as instant messaging or dial a pizza. Money has become the order of
the day.
The first bank in India, though conservative, was established in 1786. From 1786 till
today, the journey of Indian Banking System can be segregated into three distinct
phases. They are as mentioned below:
• Early phase from 1786 to 1969 of Indian Banks
• Nationalization of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.

• New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.
Phase I
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank
of Bombay (1840) and Bank of Madras (1843) as independent units and called it
Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank
of India was established which started as private shareholders banks, mostly
Europeans shareholders.
In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906
and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian
Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1100 banks, mostly small.
To streamline the functioning and activities of commercial banks, the Government of
India came up with The Banking Companies Act, 1949 which was later changed to
Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).
Reserve Bank of India was vested with extensive powers for the supervision of
banking in India as the Central Banking Authority.
During those days public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to traders.

Phase II
Government took major steps in this Indian Banking Sector Reform after
independence. In 1955, it nationalized Imperial Bank of India with extensive banking
facilities on a large scale especially in rural and semi-urban areas. It formed State
Bank of India to act as the principal agent of RBI and to handle banking transactions
of the Union and State Governments all over the country.
Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on
19th July, 1969, major process of nationalisation was carried out. It was the effort of
the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in
the country were nationalised.
Second phase of nationalisation Indian Banking Sector Reform was carried out in
1980 with seven more banks. This step brought 80% of the banking segment in India
under Government ownership.
The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:
• 1949: Enactment of Banking Regulation Act.
• 1955: Nationalisation of State Bank of India.
• 1959: Nationalisation of SBI subsidiaries.
• 1961: Insurance cover extended to deposits.
• 1969: Nationalisation of 14 major banks.
• 1971: Creation of credit guarantee corporation.
• 1975: Creation of regional rural banks.
• 1980: Nationalisation of seven banks with deposits over 200 crores.

After the nationalisation of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.
Banking in the sunshine of Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.
Phase III
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 set up 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
put 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 macroeconomics shock as other East Asian
Countries suffered. This is all due to a flexible exchange rate regime, the foreign
reserves are high, the capital account is not yet fully convertible, and banks and their
customers have limited foreign exchange exposure.

ICICI BAK PROFILE
ICICI Bank is India's second-largest bank with total assets of Rs. 3,446.58 billion
(US$ 100 billion) at March 31, 2008 and profit after tax of Rs. 31.10 billion for fiscal
2007. ICICI Bank is the most valuable bank in India in terms of market capitalization.
The Bank has a network of about 955 branches and 3687 ATMs in India and presence
in 18 countries. ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customers through a variety of delivery channels and
through its specialized subsidiaries and affiliates in the areas of investment banking,
life and non-life insurance, venture capital and asset management. The Bank currently
has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore,
Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and
representative offices in the United States, United Arab Emirates, China, South
Africa, Bangladesh, Thailand, Malaysia and Indonesia.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).
Recent developments of the Bank
ICICI Bank Board appoints K. V. Kamath as non-executive Chairman and Chanda
Kochhar as Managing Director & CEO effective May 1, 2009
Mr. N. Vaghul, non-executive Chairman of the Board of Directors of ICICI
Bank Limited (NYSE: IBN) would retire from the Board on completion of his
current term on April 30, 2009. The Board has, subject to the approval of Reserve
Bank of India (RBI) and the shareholders, decided to appoint Mr. K. V.

Kamath, presently Managing Director & CEO, as non-executive Chairman of the
Board for a period of five years effective May 1, 2009. Mr. Kamath’s current term
as Managing Director & CEO would end on April 30, 2009 and he has
expressed his desire to lay down his executive responsibilities from that date.
The Board of Directors has, subject to the approval of RBI and the
shareholders, decided to appoint Ms. Chanda D. Kochhar, presently Joint Managing
Director & Chief Financial Officer, as Managing Director & CEO of ICICI
Bank from May 1, 2009 to March 31, 2014. Ms. Chanda Kochhar joined
erstwhile ICICI Limited (ICICI) in 1984 and was elevated to the Board of
Directors of ICICI Bank in 2001. During her career prior to becoming a
member of the Board, she worked and held leadership positions across all key
businesses, including corporate banking, project finance and retail banking. She
was instrumental in establishing ICICI Bank during the 1990s, and subsequently
headed the infrastructure finance and major clients groups in ICICI. In 2000, she
took on the challenge of building the nascent retail business, with strong focus
on technology, innovation, process reengineering and expansion of
distribution and scale. The Bank achieved a leadership position in this business.
She successfully managed the integration of the retail franchises of ICICI and
ICICI Bank, as well as of other acquisitions. During 2006-2007, she
successfully led the Bank’s wholesale and international banking businesses
during a period of heightened activity and global expansion by Indian
companies. Since 2007, she has been heading the Corporate Centre, responsible
for ensuring strategic consistency across the Group.
The Board expressed the view that Mr. Kamath’s experience and expertise
would prove invaluable to the Board in maintaining continuity in strategic

leadership and governance and providing guidance to the executive
management. The Board expressed the view that Ms. Kochhar’ deep
experience across the Bank’s businesses and functions would be invaluable in
providing stability while at the same time charting the Bank’s future strategic course
in the emerging global environment.
Some of the services provided by the bank are as under:
Personal Banking
Personal Banking RI Banking Reach Us
Deposits
Deposits Money Transfer Email
Loans
Loans Bank Accounts
Find ATM/Branch
Cards
Cards Investments
Investments
Insurance/ Insurance Property Solutions Mobile Banking
Demat Services
Demat Services Insurance Internet Banking
Online services
Wealth Management Loans Insta Banking
Wealth Management
Online services
Business Banking
Corporate Net Banking

Cash Management
Trade Services
FXOnline
SME Services
Online Taxes
Custodial Services

STATE BAK OF IDIA
State Bank of India (SBI) is the largest public sector bank in India. It is also,
measured by the number of branch offices and employees, the second largest bank in
the world. The bank was established in 1806 as Bank of Calcutta. It is the oldest
commercial bank in the Indian Subcontinent. The Government of India nationalised
SBI in 1955 with the Reserve Bank of India having a 60% stake.
SBI provides a range of banking products through its vast network in India and
overseas, including products aimed at NRI’s. With an asset base of $126 billion and
its reach, it is a regional banking behemoth. SBI has laid emphasis on reducing the
huge manpower through Golden handshake schemes and computerizing its
operations. The Bank has also been unsuccessfully trying to improve service quality
through a programme called 'Parivartan' or 'Change'.
Recent developments of the Bank
• Inauguration of Sonapur, 11,111th Branch In North Eastern Circle.Sonapur Branch
in Assam, identified as the 11,111th branch of the bank, was inaugurated by Shri
P.Chidambaram, Hon’ble Home Minister Government of India in the presence
of our Chairman. The date of inauguration was scheduled for 2nd January 2009.
• State Bank of India was adjudged the Best Bank of the Year 2008 by London
based ‘The Banker’ magazine of Financial Times Group. This award is decided on
the basis of intensive research and analysis of financials and performance of
prominent Banks, and clearly SBI emerged as the winner & Best Bank in the
country. This year’s Annual Bank of the year 2008 awards presentation was held
at the Ballroom of The Dorchester Hotel, London on 26th of November 2008 in an
impressive ceremony attended by CEOs & Heads of commercial Banks from over
116 countries.

Mr. O. P. Bhatt, Chairman, State Bank of India, received the award from Mr.
Stephen Timewell, Editor-in-Chief of ‘The Banker’. The event was hosted by Mr.
Michael Buerk, eminent journalist & newsreader, BBC.
Some of the services provided by the bank are as under:

State Bank of India offers a wide range of services in the Personal Banking Segment
which are indexed here.
SBI Term Deposits SBI Loan For Pensioners

SBI Recurring Loan Against Mortgage Of
Deposits Property
SBI Housing Loan Loan Against Shares & Debentures
SBI Car Loan Rent Plus Scheme
SBI Educational Loan Medi-Plus Scheme
SBI Personal Loan
CORPORATE BAKIG
SBI is a one shop providing financial products / services of a wide range for large,
medium and small customers both domestic and international.
Working Capital Financing
Assistance extended both as Fund based and Non-Fund based facilities to
Corporates, Partnership firms, Proprietary concerns
Working Capital finance extended to all segments of industries and services
sector such as IT
Term Loans
To support capital expenditures for setting up new ventures as also for
expansion, renovation etc.

Deferred Payment Guarantees
To support purchase of capital equipments.
Corporate Loans
For a variety of business related purposes to corporates.
Export Credit
To Corporates / Non Corporates
SERVICES
Listed below are Services, SBI offers to its customers.
DOMESTIC TREASURY
SBI VISHWA YATRA FOREIGN TRAVEL CARD
BROKING SERVICES
REVISED SERVICE CHARGES
ATM SERVICES
INTERNET BANKING
E-PAY
E-RAIL
RBIEFT
SAFE DEPOSIT LOCKER
GIFT CHEQUES
MICR CODES
FOREIGN INWARD REMITTANCES

Delivering quality service consistently gives a competitive edge to service
organizations. It requires an understanding of customer expectations and the types of
expectations.
In banking industry, banking systems provide the same types of services, but they do
not provide the same quality of services. Furthermore, customers today are more
aware of alternatives and their expectations of service have increased. Service quality
can, therefore, be used as a strategic tool to build a distinctive advantage over
competitors. Banks are striving for zero defection and retaining every customer that
the company can profitably serve in order to achieve service excellence (Reichheld
and Sasser). The achievements of zero defections require continuous efforts to
improve the quality of the service delivery system. Although quality can not be
improved unless it is measured, it can be defined from several perspectives, e.g., the
ability to satisfy the needs and expectations of the customer (Bergman and Klefsjo),
or the totality of features and characteristics of a product or service that bears on it’s
ability to satisfy given needs (Evans and Lindsay). While there is an increasing
recognition of the importance of quality in banking services, its conceptualization and
empirical assessment have remained limited. Quality is still an elusive construct for
many human services organizations. This is due to the difficulty in shifting a
customer-oriented viewpoint (Selber). Since the central tenet of the quality paradigm
is the importance of understanding and utilizing customer data to drive operational
and strategic decisions, defining quality from the outside-in based on customer
information is critical. This shift in defining quality often necessitates a fundamental
change in the way professionals, managers, staff, and policy makers think about and
identify those who "buy" or "use" products and services (Brannen and Streeter). The
"customer" label is not typically associated with those who use banking services.

Instead, organizations in this sector have traditionally referred to service users as
"clients" or "customers." This client vs. customer difference is more than semantic.
The client label suggests a passive voice in the service delivery process, which is
reflected by professionals in the field who question the credibility of client evaluation
of services. On the other hand, customer carries an image of an active participant with
more input in determining choices and decisions.
Clients of human service organizations who follow directions from professionals and
make few demands on the system are labeled as "cooperative." In contrast, customers
in the business sector who are loyal to the service, interact with the staff, and are
willing to show their preferences are viewed as "desirable customer" (Walsh). As
customers do not easily articulate banking service quality, the recipient of the service
can only really assess it, thereby making its measurement more subjective than exact.
Hence, the measurement of banking service quality has to be based on perceived
quality rather than objective quality because services are intangible, heterogeneous
and their consumption and production occur simultaneously. Lewis and Booms
believed that service quality is a measure of how well the service level matches
customers’ expectations. Gronroos perceived service quality as a result of what
customers receive it. Parasuraman et al. defined service quality as perceived by
customers and items from a comparison on their expectations of the services they will
receive with their perceptions of the performance of the service provider.
Expectations are the wants of customers, i.e., what they feel a service provider should
offer, while perceptions refer to the customers’ evaluation of the service provider.

Definition of service quality
Since the 1930s quality has been identified as a factor for competitive advantage, but
it was not until after the Second World War that it became important. In advising
Japanese companies on restructuring after the war North American managers devised
new concepts of quality which began to be accepted as being of universal application.
The important pioneers in this field were W. Edwards Deming, Joseph M. Juran and
Kaoru Ishikawa (Hofman and Worsfold, 1997). Early quality models concentrated on
goods. Defining and modelling the quality of services is generally acknowledged to
be more difficult than modelling the quality of goods due to the intangible nature of
services themselves (Bergman & Klefsjö, 1994). Service quality is a concept that has
aroused considerable interest and debate in the research literature because of the
difficulties in both defining and measuring it with a consensus for both is still missing
(Parasuraman et al., 1985; Lewis and Mitchell, 1990; Dotchin and Oakland, 1994a,
1994b; Gaster, 1995; Asubonteng et al., 1996).
There are a number of different "definitions" as to what is meant by service quality. In
its simplest form service quality is a product of the effort that every member of the
organisation invests in satisfying customers. In its broadest sense service quality is
defined as superiority or excellence as perceived by the customer (Peters and Austin,
1985). More specifically service quality has been defined as:
• The delivery of excellent or superior service relative to customer expectations
(Zeithaml and Bitner, 1996).
• Quality is behaviour - an attitude - that says you will never settle for anything less
that the best in service for your stakeholders, whether they are customers, the

community, your stockholders or colleagues with whom you work every day
(Harvey, 1995).
• When we want to be effective - delivering good quality to the customer - we must
produce services that meet ‘‘as much as possible” the needs of the consumer
(Boomsma, 1991).
• (Quality is) providing a better service than the customer expects (Lewis, 1989).
• Juran (1988) suggested that quality should be seen as "fitness for use".
Another short definition views quality as "conformance to requirements" rather than
"goodness, or luxury, or shininess, or weight" (Crosby, 1979). One that is commonly
used defines service quality as the extent to which a service meets customers' needs or
expectations (Lewis and Mitchell, 1990; Dotchin and Oakland, 1994a; Asubonteng et
al., 1996; Wisniewski and Donnelly, 1996).
While evaluating service offered by a bank, customers compare perceived quality of
service with the expected quality of service. Therefore, banks should have knowledge
about customer perceptions and the influence of factors such as service encounter,
service evidence, image of the service organization, and price of the service on
customer perceptions.
One of the most important customer service skills you can develop is the ability to
understand and effectively respond to the customer’s needs and concerns. For a long
time, sales have been perceived to be mostly about trying to convince the customer
that he needs the product. Excellent customer service starts by first taking the time to
get to know the customer, his situation, his vision, his frustrations and his goals. Once
you have a good handle on what is on his heart and mind, then you will know how to

offer the customer helpful solutions that are attractive to him because they have value
to him.
Thomas J. Peters, an American writer on business management practices, says that
70% of customers hit the road not because of price or product quality issues, but
because they did not like the human side of doing business with the provider of the
product or service. 45% of these customers said they switched to another company
because the attention they did receive was poor in quality.
Customers today are often treated like a nuisance, instead of the reason that a
company is in business at all. Products and services continue to increase in cost.
Customer service, on the other hand, continues to decline. Dealing with surly cashiers
who seem to have more important things to do than ring up your sale are the rule
rather than the exception. Having a product delivered to your home means giving up
hours out of your day to wait. It seems that businesses today have forgotten how
valuable customers actually are. Without customers, no one earns a pay check.
Banks should also attempt to understand the various types of service encounters like
remote, face-to-face, and phone encounters to be able to understand customer
perceptions. They should examine the factors that influence customer
satisfaction/dissatisfaction, like recovery, adaptability, spontaneity, and innovate
strategies to influence customer perceptions.
The Indian banking industry is going through turbulent times. With the lowering of
entry barriers and blurring product lines of banks and non-banks since the financial
sector reforms, banks are functioning increasingly under competitive pressures
emanating from within the banking system, from non-banking institutions, and from

the domestic and international capital markets. In this era of mature and intense
competitive pressures, it is imperative that banks maintain a loyal customer base. In
order to achieve this and improve their market and profit positions, many retail banks
are directing their strategies towards increasing customer satisfaction and loyalty
through improved service quality.
In the present competitive Indian banking context, characterised by rapid change and
increasingly sophisticated customers, it has become very important that banks in India
determine the service quality factors, which are pertinent to the customers’ selection
process. With the advent of international banking, the trend towards larger bank
holding companies, and innovations in the marketplace, the customers have greater
and greater difficulty in selecting one institution from another. Therefore the current
problem for the banking industry in India is to determine the dimensionality of
customer-perceived service quality. This is because if service quality dimensions can
be identified, service managers should be able to improve the delivery of customer
perceived quality during the service process and have greater control over the overall
outcome. Moreover, investigating the influence of the dimensions of service quality
on customers’ behavioural intentions should provide a better understanding of the
drivers of customer satisfaction and also help to specify, measure, control and
improve customer perceived service quality. Hence, to gain and sustain competitive
advantages in the fast changing retail banking industry in India, it is crucial for banks
to understand in-depth what customers perceive to be the key dimensions of service
quality and what impacts the identified dimensions have on customers’ behavioural
intentions.

The statistical analyses of survey responses in studies done before reveal interesting
findings. The studies suggest that customers distinguish four dimensions of service
quality in the case of the retail banking industry in India. These four dimensions of
customer-perceived service quality are: customer-orientedness, competence, tangibles
and convenience. The first factor, customer-orientedness is primarily related to the
attitude and skills of the employees providing the service. The second factor,
competence, is primarily associated with the concept of providing reliable services to
customers. The third factor, tangibles, is primarily associated with the visual appeal of
the banks’ physical facilities and communication materials to the customers. Finally,
the fourth factor, convenience, encompasses items related to the convenience of the
banks’ branch locations and the spread of the banks’ ATM networks. Identifying the
underlying dimensions of the service quality construct in the Indian retail banking
industry is the first step in the definition and hence provision of quality service. The
results of this study also offer strong support for the intuitive notion that improving
service quality can increase favourable behavioural intentions, namely, WOM (Word-
of-Mouth) communications and purchase intentions and decrease unfavourable
intentions, namely, complaining behaviour. Furthermore, the results yielded an
intricate pattern of service quality-behavioural intentions relationship at the level of
the individual dimensions. The service quality factor customer-orientedness was
found to be the most important for influencing WOM about the bank and customers’
complaining behaviour, followed by competence, tangibles and convenience, whereas
in the case of purchase intentions, competence emerged as the most important factor
followed by customer-orientedness, tangibles, and convenience. The results thus
provide evidence of the usefulness of service quality research, since WOM
communications and purchase intentions have been suggested as important

dimensions of the concept of service loyalty. Investigating the influence of the
dimensions of service quality on customers’ behavioural intentions should help to
measure, control and improve customer perceived service quality. Hence, these issues
should be a central concern for retail bank managers as well as service management
academics and practitioners.
In the present situation of world crisis it becomes more important for the banks to
make sure that the customers hold on to them and they have confidence in the present
workings of the bank. Any deviation from the quality service experienced by a
customer can have a very large impact on the working of the bank.
In this project, I have focused on the various customer expectations and perceptions of
two banks. ICICI bank, the largest bank in the private sector and SBI, the largest in
the public sector. I have chosen these banks to come up with an unbiased output.
Both the banks are the leaders in their respective segments. And the project output
will help the banks to stay in the industry & outperform its competitors. It would also
help me to understand the latest & emerging trends in the customer tastes and
expectations.

WHAT COTRIBUTIO WOULD THE PROJECT MAKE?
Quality services always give a competitive advantage to every organization. Further,
the customers expect a certain level of service from the banks which might not be
perceived by the banks at all. The banks might think something different and the
services provided by them might not be liked by the customers. So what this project
shall do is that, it will provide the banks an insight into customer expectations and
perceptions.
Further, knowledge of factors influencing the desired service level, adequate service
level, and zone of tolerance will help the banks consistently meet and exceed service
expectations of customers.
The banks, if work on the output of the project might come up with the best possible
services. This will certainly help the banks to meet customer level of service and
retain them. This further shall help the banks to win Goodwill by word of mouth
because a satisfied customer will spread the good quality service received from banks
to his/her known ones.

In such a type of project, the study of the customer expectation and perception is
generally done with the help of the SERVQUAL model. This model, as the name
suggests deals with quality in services and tells that what the ingredients of a quality
service are. SERVQUAL or RATER is a service quality framework. SERVQUAL
was developed in the mid eighties by Zeithaml, Parasuraman & Berry.
This model has not been used in the project but as the project makes use of the
parameters of this model so it becomes necessary to know as to what is the
importance of the model.
SERVQUAL was originally measured on 10 aspects of service quality: reliability,
responsiveness, competence, access, courtesy, communication, credibility, security,
understanding or knowing the customer and tangibles. It measures the gap between
customer expectations and experience.
By the early nineties the authors had refined the model to the useful acronym
RATER:
• Reliability
• Assurance
• Tangibles
• Empathy, and
• Responsiveness
Further we need to understand as to what are the customers expectations and
perceptions and the gap that arises between the perceived service and the actual
service.

A “GAPS” MODEL OF SERVICE QUALITY
CUSTOMER SERVICE ORGANIZATION
Market Organization’s Service

Information Understanding of Standards
Gap Expectations Gap
Customers’
Service Organization’s
Expectations GAP 1 Service Standards
GAP 2
Service Service
Quality GAP 5 Performance
Gap GAP 3 Gap
GAP 4 Organization’s
Customers’ Service
Service Performance
Perceptions
Organization’s Internal
Communications Communication
to Customers Gap
GAP 1
Customer
Expectations
Key Factors:
• Insufficient marketing research

• Inadequate use of marketing research
• Lack of interaction between
Management and customers
• Insufficient communication between
Employees and managers
Lack of
Management “Upward
Perceptions of
Communication”
Customer Expectations

GAP 2
Management
Perceptions of
Customer Expectations
Key Factors:
• Inadequate management commitment

to service quality
• Absence of formal process for setting
service quality goals
• Inadequate standardization of tasks
• Perception of infeasibility -- that
customer expectations cannot be met
Service
Quality
Specifications

GAP 3
Service
Quality
Specifications
Key Factors:
• Lack of teamwork
• Poor employee - job fit
• Poor technology - job fit
• Lack of perceived control (contact personnel)
• Inappropriate evaluation/compensation system
• Role conflict among contact employees
• Role ambiguity among contact employees
Service
Delivery

GAP 4
Service
Delivery
Key Factors:
• Inadequate communication between

salespeople and operations
• Inadequate communication between
advertising and operations
• Differences in policies and procedures
across branches or departments
• Puffery in advertising & personal selling Lack of
“Horizontal
Communication”
External
Communications
to Customers

Gaps 1 to 4 affect the way in which service is delivered and these four gaps lead to
Gap 5. Therefore, the extent of Gap 5 depends on the size and direction of these four
gaps (Gap 1, Gap 2, Gap 3 and Gap 4).
In the banking industry, the study on service quality has been undertaken for example
by Yavas et. al. (1997), Bahia and Nantel 2000; Lassar et. al., 2000; Duncan and
Elliott, 2002; Jabnoun and Al-Tamimi, 2002; and Arasli et. al., 2005.
In the study of service quality in the banking sector in Turkish banking, Yavas et. al.
(1997), focused on the relationship between service quality on consumer satisfaction,
complaint behaviour and commitment. Their study found that overall service quality
was a significant determinant customer satisfaction, complaint behaviour and
commitment.
Bahia and Nantel (2000) suggested alternative scale for the measurement of perceived
service quality in retail banking. Their study found that when comparing BSQ
(banking service quality) dimensions and SERVQUAL, it seemed that BSQ
dimensions were more reliable than SERVQUAL. On the other hand, Lassar et. al.
(2000) studied service quality using two major service quality constructs,
SERVQUAL and Technical/Functional Quality models to the private banking
industry. They found that Technical/Functional Quality-based model of service
quality is better suited compared to SERVQUAL-based model. Duncan and Elliot
(2002) however explored the relationship between customer service quality and
financial performance in Australian banks and credit unions. They found that there
was significant relationship between financial performance and customer service
quality scores.

Jabnoun and Al-Tamimi (2002) examined service quality at UAE commercial banks
using SERVQUAL model and included thirty items in the five dimensions of
SERVQUAL. When they tested the developed instrument for reliability and validity,
they found that the instrument had only three dimensions.
Finally, Arasli et. al. (2005) studied service quality perceptions of Greek Cypriot bank
customers using SERVQUAL model. They however, extend the study by looking at
the relationship between service quality, customer satisfaction and positive word of
mouth. They found that the expectations of bank customers were not met where the
largest gap was obtained in the responsiveness-empathy dimension. In addition, the
reliability items had the highest effect on customer satisfaction, which in turn had a
statistically significant impact on the positive word of mouth. Tahir & Bakar 330
Contrary to the large number of studies of service quality in the banking industry in
the west, studies are still considered scarce. In India, for example, studies on service
quality were conducted but are very few in number. It is hoped that this study will be
the platform for discussing the issues on service quality and customer satisfaction in
the Indian banking industry.
One of the studies that was devoted to assess the quality in Saudi service industry is
the one by Jannadi and Al-Saqqaf [1]. Their study was applied to the Saudi Electric
Company (SEC). They have concluded that SEC scored high in tangibles dimension
but low in features of responsiveness and reliability. In addition, while the
performance of SEC was acceptable to all customer categories, service quality was
perceived differently by various types of customers, with reinforcement and
commercial customers awarding SEC even lower ratings than other customers did.

A study upon the same has also been undertaken and a brief abstract from that study is
shown below:
Website address: http://www.asiapacific.edu/vol.3_no.2/r_amudha.html
Service Quality in Banking with Special Reference to ICICI Bank Ltd.,
Tiruchirappalli District. A study by R. Amudha and C.Vijaya Banu.
As per the Economic association of Indonesia and India, India has been one of the
fastest growing economies in the world since the early 90s and India is fourth largest
economy of the world after US in terms of purchasing power parity. This is because
of the important role played by the financial sector comprising a large number of well
managed banking services both in public and private sectors. India’s second largest
bank is the ICICI Bank offering a wide range of financial services to its customers
through its delivery channels. To attain this sustainable competitive advantage,
service industries face a unique challenge of meeting the needs of the customers
regularly and continuously. Though mechanized form of activity has its own impact
on service delivery performance, many service industries still remain to be manual
because there exits no equivalent substitute for personal interaction between the
employees of service industry and customers. The optimum mix of technology and
people in the service delivery process decides the competitive advantage of an
organization. Customer satisfaction is taken as a yardstick for measuring the quality
of service and providing excellent customer service decides the effectiveness of
service delivery process. Only through excellent customer service, an organization
can consistently exceed customer expectations. In order to achieve customer
satisfaction, every service organization must understand and improve service delivery
process and implement valid and reliable service performance measures to measure

the same. To assess the degree of customer satisfaction, a SERVQUAL instrument is
administered to study the quality of service and the gaps were identified in the
services offered by ICICI Bank, Tiruchirapalli District in all five dimensions of
service quality, the overall weighted SERVQUAL score being –1.92. The ICICI Bank
Ltd. has to take steps to close the gaps by establishing a service quality information
system.

OBJECTIVES OF STUDY:
PRIMARY OBJECTIVE
To identify the elements that affects the customer expectation and perception
of service quality of public and private sector banks.
To understand the relation between time spent with the bank and the
expectation of services.
Under this objective I tried to identify all the elements that affect customer
expectations and perceptions of service quality of ICICI Bank and SBI Bank. Doing
such a thing shall provide us with an idea as to the gaps that are present in the service
being delivered to public and private sector banks as both the banks are the first in
private sector and public sector respectively.
SECODARY OBJECTIVE
To assess gaps between customer expectations and perceptions of service
quality.

Type of Research design:
The type of research design to be followed is exploratory research design.
Secondary data:
The secondary data collection was done with the help of various websites and journals
and guidelines by my respectable guide.
The data thus collected went through the process of rigorous analysis through the use
of research tools like SPSS (Statistical Package for Social Sciences).
The sample comprised of consumers of different age groups and income categories
who are using banking services.
Primary Data:
100 questionnaires were filled for the information required for this project. The
questionnaires were filled by the people who are the existing customers of
banks. Two Banks were selected. ICICI Bank, India’s largest private sector bank
and SBI Bank, India’s largest public sector bank. These banks are the best in
their respective areas and that is the reason I have chosen these banks as they
shall represent an entire category i.e. private and public sector banks
respectively.
50 questionnaires were filled by customers of ICICI Bank and 50 questionnaires
were filled by customers of SBI Bank. The location selected was the ATM
across various markets in South Delhi and also some branches of both the banks
in the nearby area.

Following is some important information provided:
Non-probability judgmental sampling technique was used since the chance of
selecting the customer was based on my judgment and was taken without any
probability.
The data collected was analyzed using charts and distribution tables and
further conclusions were made.
Personal interviewing as a data collection device had been used.
This device was appropriate because we can be more personalized with the
persons & also able to communicate them what we are trying to ask.
QUESTIOAIRE DESIGIG
A good questionnaire must be concise, focus, easy to understand language.
Questionnaire should be designed as per the objective to get right feedback. A
questionnaire has a mix of following 4 major scales which help us in analyzing the
attitude of the people. The scales are Nominal, Ordinal, Interval and ratio scale.
1. OMIAL SCALE:
This type of scale is mostly used in the opening so that respondents feel easy in
answering. This scale helps in mutually exclusive classification of units i.e. there is no
case of may be in this.
2. ORDIAL SCALE
This type of scale is used for knowing a relativity of a unit as this includes ranking
and it is a type of comparative scale as respondents mainly compare the parameters
and then rank accordingly.

3. ITERVAL SCALE
This type of scale is of non-comparative in nature here respondents mainly rate the
parameters by their individuality and not comparing it with others.
4. COSTAT SUM SCALE
This scale tells us about the degree of preference of one aspect over the other. The
customer is told to give a specific number to all the options that amount to a total and
with the help of this the customer does not give same preference to all options and
thus we are able to find the preference of the customers over different options.

Following are some findings on the basis of survey conducted:
1. WHICH ACCOUT DO YOU MOSTLY USE I BAK?

SBI BAK
ICICI BAK
This question tells us about the accounts offered by the bank which is a core service
provided by any bank and thus is very essential for us to know the perception of
customers. We can clearly see that in both the banks most of the customers prefer
savings account but in ICICI bank there is a preference to current account also.

2. TIME SPET WITH THE BAK
SBI BAK
ICICI BAK
This question tells us about the time spent by the customers with the banks. The more
the time spent, the less is the biasness of the responses and it gives more
authentications to the report. We can clearly see that most of the customers have been
dealing with the bank for over 6 months. So we can say that the responses by the
customers in this report are proper and can be taken for further study, if required.

3. QUALITY SERVICE FROM BAK
SBI BAK
ICICI BAK
This question clearly tells us the perception of quality service from the banks. We can
clearly see that ICICI bank is way ahead of SBI bank when it comes to services. Most
people have given 15 points to SBI bank whereas the average for ICICI bank is 40.
SBI bank has to improve its image in the eyes of its customers as quality service is
one major aspect when it comes to survive in this era of competition.

4. MATCHIG OF SERVICES WITH EXPECTATIOS
When asked about the expectations of service from the banks, all the customers
agreed unanimously that they expected some services from the banks before being
attached to their respective banks. But the expectations are not met as always.
SBI BAK
ICICI BAK
We can clearly see that when it comes to SBI bank, only 38% people feel that the
services match their expectations and this number for ICICI bank is 46%. The
difference is huge for both the banks as majority of the people do not get the expected
level of service from their respective banks. So the banks should go in for an
extensive research that what more can be done by them so that they can provide the
adequate level of services as expected by the customers and reduce this percentage of
dissatisfied customers.

5. ATM SERVICE
SBI BAK
How do you rate the 'ATM Service' provided by the bank?
ICICI BAK
How do you rate the 'ATM Service' provided by the bank?
We can clearly see that when it comes to ATM service, ICICI bank is way ahead of
SBI bank. SBI bank has the largest number of ATM’s in India but it still faces this
problem. This happens because most of the ATM machines installed are not working
properly and most of the times the machines are out of money and people have to wait
in long queues for taking out their own money. Most of the people feel frustrated
when they have to wait for so long for their own money. This result tells us that you
need not have your presence to be felt everywhere but whatever you do, do it in such
a way that your positive experience stays with the customer forever. And this brings
in a positive word of mouth for the bank.

6. TELEPHOE BAKIG SERVICE
SBI BAK
ICICI BAK
From the above graphs we can see that the telephone banking service of SBI bank is
very poor. Whereas the same service provided by ICICI bank is perceived as very
good by the customers of the bank. Such a service is very important for the customers.
There are many times when the customers call the banks and do not get the desired
responses. They are not welcomed properly and after that their queries are not
answered properly. So the entire interaction becomes a very bad experience for the
customers and hence their expectations get hurt.

7. OVERALL SATISFIED WITH QUALITY OF SERVICES PROVIDED
SBI BAK
ICICI BAK
The graph clearly shows that the number of dissatisfied customers for SBI bank are
way ahead than ICICI bank. The customers of SBI bank are very much dissatisfied
with the overall services provided by the bank. So a lot is needed to be done by the
bank for improving its image in the eyes of the customers and making the customers
satisfied with the services provided by the bank.

8. AGE GROUP
SBI BAK
ICICI BAK
This graph tells about the age group of the customers surveyed for this project. We
can clearly see that most of the customers for SBI bank fall in the age group of 20-25
while the same for ICICI bank is 25-30. This difference comes in as most of the
customers for SBI bank were students and young businessman who prefer opening
savings account. Most of the customers for ICICI bank were working professionals
who have been in the market for around 3 to 4 years and that is the reason they open
current account also as they have to manage their daily business.

9. OCCUPATIO
SBI BAK
ICICI BAK
As said in the above question, the number of savings account for SBI bank are more
because most of the customers for them were students and there is a rise in current
account for ICICI bank as most of the customers for them were from the business
class and from the service class.

HYPOTHESES TESTIG
The test that I applied to my research is the test of CHI-SQUARE.
I applied CHI-SQUARE between customers expectation for fulfillment of services
and time spent with the bank.
H0: Customers expectation for fulfillment of services is not dependent with the
time spent with the bank.
H1: Customers expectation for fulfillment of services is dependent with the time
spent with the bank.
ICICI BANK
Did the services

provided match your
expectations?
yes no Total
For how long < 6 months 12 0 12
have you been 6mth - 1yr 11 3 14
dealing with the
bank? 1 yr - 2 yr 0 19 19
2 yrs and above 0 5 5
Total 23 27 50
Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 40.511(a) 3 .000
Likelihood Ratio 54.446 3 .000
Linear-by-Linear
34.273 1 .000
Association
N of Valid Cases
50
Now the value of Chi-Square that we got is 40.511 at 5% level of significance and
with a degree of freedom of 3.

The value in the table at 5% level of significance and with a degree of freedom of 3 is
7.815. So plotting these values in the normal distribution curve, we get:
Critical
H0 region
rejected
40.511
7.815
So we can see that the value calculated falls in the rejection region and therefore H1 is
accepted and H0 is rejected.
SBI BANK
For how long have you been dealing with the bank? * Did the services provided match
your expectations? Crosstabulation
Count
Did the services provided match

your expectations?
yes no Total
For how long have you been < 6 months 11 0 11

dealing with the bank?
6mth - 1yr 8 13 21
1 yr - 2 yr 0 12 12
2 yrs and above 0 6 6
Total 19 31 50

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 28.980(a) 3 .000
Likelihood Ratio 38.496 3 .000
Linear-by-Linear
24.229 1 .000
Association
N of Valid Cases
50
Now the value of Chi-Square that we got is 28.980 at 5% level of significance and
with a degree of freedom of 3.
The value in the table at 5% level of significance and with a degree of freedom of 3 is
7.815. So plotting these values in the normal distribution curve, we get:
Critical
H0 region
rejected
28.980
7.815
So we can see that the value calculated falls in the rejection region and therefore H1 is
accepted and H0 is rejected.
So we can say that the customers’ expectation for fulfillment of services is dependent
with the time spent with the bank. This means that the more the customer spends time
with the bank, the better his/her fulfillment of the services.

The elements that the customers expect and perceive are most important for them with
regards to the service quality of public and private sector banks are as under:
Reliability SBI ICICI
1. Providing services as promised

1. X √
2. Performing services right the first time 2. X X
3. Providing services at the promised time
3. X √
4. Keeping customers informed about when services will be performed
4. X √
Responsiveness
5. X √
5. Prompt service to customers
6. √ √
6. Willingness to help customers
7. Readiness to respond to customers' requests 7. X √
Assurance
8. Employees who instill confidence in customers 8. √ √
9. Making customers feel safe in their transactions 9. √ √

10. Employees who are consistently courteous X √
10.
11. Employees who have the knowledge to answer customer questions
11. √ √
Empathy
12. Giving customers individual attention 12 X √
13. Employees who deal with customers in a caring fashion 13. √ √

14. Having the customer's best interest at heart . √ √
14.
15.Employees who understand the needs of their customers 15. X √
Tangibles
16. Modern equipment 16. √ √

17. Visually appealing facilities 17. X √
18. Employees who have a neat, professional appearance
18. X √
19. Visually appealing materials associated with the service
20. Convenient business hours 19. X √
20. √ √

SCOPE FOR FUTURE RESEARCH
The main limitation of this study, although it may be overcome in future research,
is that all the data were gathered from a single region. It would be interesting to
replicate the study on a national sample. This would provide a better
generalization for the banking sector. Additionally, since India aspires to become
globally competent financial centre, it would be appropriate and relevant to
replicate the study using international samples. This is because when banks in this
country provide services to international customers such as business travellers,
tourists, students and expatriates, in a way, it is just like exporting services to
foreign markets while staying at home. Therefore, the quality and customer
satisfaction issues attached to services are subject to international domains.
Also there is a scope to do a research to find out the degree of satisfaction or
dissatisfaction as a result of high or low service quality level.

COCLUSIOS
From the research conducted, we can conclude that ICICI Bank and SBI Bank
both need to work more on their marketing strategies and make the customers
more satisfied with their services.
The result of Gap 5 analyses showed that customers’ perceptions for banking industry
in India were consistently lower than their expectations. These negative gaps
especially pertaining to “staff giving customers best interest at heart”, “staff
performing services right the first time”, and “staff willingness to help” were
important to consider in terms of making improvement efforts. The bigger the gap,
the serious the level of service quality that need to be improved, from the customers’
point of view.
The customers’ expectation of services depends directly on the time spent with the
bank. We were also able to conclude that the banks need to improve their services
if they have to improve their competitiveness. They have the opportunity of taking
the market share of their competitors if they improve their level of services. The
banks so far have not been able to keep the customers happy as the customers
have not been able to meet their expectations and the perceived quality that they
had from the banks. The following reasons can sum up the causes for the
dissatisfaction level of the customers expectations of services:
• There is lack of marketing research by the banks for the expectations and
services that their customers have from them.
• There is insufficient communication between employees and the managers
working at the bank.
• There is a perception of infeasibility from the bank employees towards the
customers’ expectations.

• There is absence of formal process for setting service quality goals.
• There is role ambiguity among the contact employees.

RECOMMEDATIOS
Quality is not an event, it is an ongoing process. As far as Banks are concerned,
quality is not the responsibility of the quality control department only; rather it is a
matter to be taken care of by the entire banking system.
Given today’s competitive environment, and in response to the quality push and the
aspiration of the country to become a globally competent, at this juncture, I believe it
is appropriate for the management of the banks to seriously examine their corporate
quality programs and customer service system. In addition, they must also consider
that their performance measures now have to place a value on better responsiveness to
customer needs. These measures and changes can be expensive in terms of employee
time and effort, but the management of these banks needs to find ways to overcome
these hurdles, otherwise the increasing competition from international banks can
shrink their market shares.
The following are the recommendations for achieving service quality:
• Make specific programs and schemes for the customers on the basis of time spent
with the banks on yearly basis. This means that the customers who have spent
more time with the bank should be given certain special privileges such as loyalty
schemes and accounts.
• Around 55% customers’ expectation did not match: There has to be a proper
standardization of tasks. Blueprint of services across all branches and

departments. Whatever is the procedure for any process, it should be clearly put
out across all branches so that the customers find it easy to do their transactions.
• As there is role ambiguity among employees: Organize Employee Training
Programs after 6 months. The time period is kept 6 months as such a time period
will make sure that the employees are able to perform according to the desired
manner and also there is regular up gradation of employees behaviour as
customers expectations change very quickly.
• Make senior managers perform customer-contact roles every month. This will
certainly make the senior managers know as to what is required to add on to the
services provided at present. They will understand the need to improve the
services once they themselves get to interact with the customers and listen to the
problems faced by them.
• Time chart with details of time to be taken for resolving a query to be set up at
every branch. The maximum and the minimum time to be taken for a problem that
occurs to the customer should be put up at every branch so that the customer will
know that by what time will his problem get solved and he does not have to
complaint again and again.
• A visionary quality head setting high standards and emphasizing 100% quality to
be present at every branch. Presence of a Visionary leader at the top is a necessary
element for achieving quality. The vision of the leader guides the organizational
effort into achieving high standard of service quality. A visionary leader through

his verbal and symbolic communication shows where the future lies and of-course
his vision has to be shared by each and every employee of the organization.
• 70% in SBI Bank and 38% in ICICI Bank not satisfied: System for monitoring-
Internal performance analysis; customer satisfaction analysis; market research
every year. For such a thing, I recommend the bank to follow the model given
below every year as by doing such a thing, the banks will certainly be able to
locate any loop holes in the services that they provide and satisfy the customers in
a much better way:
Do your customers perceive YES Continue to monitor

your offerings as meeting customers’ expectations
or exceeding their expectations? and perceptions
NO
Do you have an accurate NO Take corrective action

understanding of
customers’ expectations?
YES
Are there specific NO

Take corrective action
standards in place to meet
customers’ expectations?
YES
Do your offerings meet or NO Take corrective action

exceed the standards?
YES
NO
Is the information Take corrective action
communicated to customers
about your offerings accurate?
YES

REFERECES
1. Bahia K & Nantel J (2000). A reliable and valid measurement scale for the
perceived service quality of banks. The International Journal of Bank
Marketing, 18 (2), 84-91.
2. Brown S & Swartz T (1989).A gap analysis of professional service quality.
Journal of Marketing, 53, 92-108.
3. Kotler P (1984). Marketing Management: Analysis, Planning and Control.
Prentice-Hall, Englewood Cliffs, NJ.
4. O. V. Şafakli: Testing Servqual Dimensions on the Commercial Bank Sector
of Northern Cyprus Financial Theory and Practice 31 (2) 185-201 (2007)
5. Hüseyin ARASLI - Salih KATIRCIOĞLU - Salime Mehtap SMADI
Eastern Mediterranean University, TRNC: Customer Perceptions of Bank
Service Quality in a Developing Country: Some Evidence from the Turkish
Republic of Northern Cyprus
6. Christopher Lovelock, Jochen Writz, Jayanta Chatterjee:Services Marketing:
Pages 384-403.
7. Arasli H., Mehtap-Smadi S., and Katircioglu S. T.,, 2005, “Customer Service
Quality in the Greek Cypriot Banking Industry”. Managing Service Quality.
Vol. 15 No. 1. pp 41-576
8. Anderson E. W. and Fornell C., 1994. A Customer Satisfaction Research
Prospectus. In R. T. Rust & R. L. Oliver (Eds.) Service Quality: New Direction
in Theory and Practice, pp. 241-268.

9. Bahia K. and Nantel J. ,2000, “A Reliable and Valid Measurement Scale for the
Perceived Service Quality of Banks”, International Journal of Bank Marketing,
pp. 84-91
10. Lassar W. M., Manolis C., and Winsor R. D., 2000, “Service Quality
Perspectives and Satisfaction in Private Banking”, Journal of Services
Marketing, vol. 14. No. 3 pp. 244-271
11. Yavas U., Bilgin Z. and Shemwell D. J. ,1997, “Service Quality in the
Banking Sector in an Emerging Economy: A Consumer Survey”, International
Journal of Bank Marketing, vol. 15. no. 6 pp. 217-223

Appendix 1: Questionnaire
Dear sir/madam,
I am Puneet Sachdeva doing a brief research to find the factors affecting expectation
and perception of customers towards service quality provided by ICICI /SBI Bank.
The study is being carried out for academic purposes and all information provided
would be treated confidential. I would be grateful if you could please answer the
following questions:
1. Which account do mostly use in the bank?
a) Current a/c b) Savings a/c c) Any other a/c
2. For how long have you been dealing with the bank?
a) Less than 6 months b) 6 months – 1 year
c) 1 year – 2 years d) 2 years and above
3. Divide 100 points to the following reasons that made you to be associated with the
Bank:
a) Less cost __________ b) Safety __________
c) Quality Service__________ d) Less Documentation__________
4. Before opening an account with the bank, did you expect some services from it?
a) Yes b) No
5. Were the services provided by the Bank and matched your expectations?
a) Yes b) No

6. Keeping in mind the services provided by your bank, please rate the following
factors as your preferences on the scale of (1 to 5):
5 = extremely important
4 = very important
3 = somewhat important
2 = not very important
1 = not at all important
Factors to be considered Your Preference
1. Modern looking equipment

2. Visually appealing physical facilities
3. Neat appearing employees
4. Abiding by the time limit
5. Interest in solving your problems/queries
6. Performing correct service 1st time
7. Error free records
8. Telling exactly what service will be performed
9. Behaviour of employees
10. Safety in transactions
11. Employee having knowledge to solve problems
12. Individual attention
13. Convenient operating hours
14. Employers giving prompt service
15. Willingness of employees to help
16. Bank has your best interest at heart
7. How do you rate the following services provided by the bank on a scale of 1 to 5,
where:
5 = Very good, 1= Very Poor

.
1 2 3 4 5
ATM service |-----|-----|-----|-----|-----|
Internet Banking Service |-----|-----|-----|-----|-----|
Telephone Banking Service |-----|-----|-----|-----|-----|

8. Are you overall satisfied with the quality of services provided by your bank?
a) Yes b) No
9. Any comments or recommendations?
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
PERSOAL DETAILS
Name (optional): _______________________________________
Gender: MALE : FEMALE
Age Group: 1. < 20 ( ) 2. 20-25 ( ) 3. 25-30 ( ) 4. 30 > ( )
Contact number (optional): _______________________
Thank you for sparing your valuable time for filling the
questionnaire.

Appendix 2: The Service Profit Chain
The Service Profit Chain
Internal Employee Employee Perceived

Service Satisfaction Retention & Value
Quality Productivity of Service
Profit & Customer Customer

Growth Loyalty Satisfaction
Heskett, J.L., Sasser E.W., Schlesinger, L.A. (1997), The Service Profit Chain:
How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value, Free Press

Appendix 3: Additional Gaps
Source: Auty, S., Long, G. (1999), “Tribal warfare” and gaps affecting internal
service quality, International Journal of Service Industry Management, 10, 1, pp. 7-22

Appendix 4: Relationship between determinants of internal gap 1
and internal gap 3

Puneet Sachdeva, 2k72a40 Winter Project

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COMPARATIVE STUDY OF CUSTOMER PERCEPTIO

A project submitted towards the partial fulfillment of the

requirement of the two years full time Post-graduate Diploma in

Under the guidance of:

Asia Pacific Institute of Management

Winter Project Asia Pacific Institute of Management 2K72A40 1

I hereby declare that the project entitled “Comparative study of

customer perception and expectation of service quality of banks”

submitted by me in partial fulfillment towards the requirement of the

fellowship or any other similar titles.

Winter Project Asia Pacific Institute of Management 2K72A40 2

This is to certify that the project entitled “Comparative study

of customer perception and expectation of service quality of

banks” is the bonafide work carried out by Puneet Sachdeva,

student of PGDM (full time), Asia Pacific Institute of

Management, Delhi, during the year 2007-2009, in partial

fulfillment of the requirements for the award of the PGDM, and

previously of any degree, diploma, associateship, fellowship or

any other similar title.

Signature of the Guide:

Winter Project Asia Pacific Institute of Management 2K72A40 3

In today’s competitive and corporate world, imparting of practical knowledge is of

making the mark in their respective fields.

quality of the banks.

I would like to acknowledge and extend my heartfelt gratitude to the following

persons who have made the completion of the project possible:

Prof. Subrata Goswami, Professor & Area Chairperson Marketing, Asia-Pacific

Institute of Management. I am grateful to my mentor as he supported, guided and

gave me valuable time in coordinating my project.

and friends for their unconditional love and support.

Winter Project Asia Pacific Institute of Management 2K72A40 4

Time & money constraints as all regions could not be covered.

such whole consumer preferences could not be taken into account.

Relying on secondary data.

Information or Details related to research, revealed by customers, may be

biased or not trustworthy.

The results are generalized up to regional basis.

Winter Project Asia Pacific Institute of Management 2K72A40 5

Delivering quality service consistently gives a competitive edge to service

organizations. It requires an understanding of customer expectations and the types of

While evaluating service offered by a bank, customers compare perceived quality of

Winter Project Asia Pacific Institute of Management 2K72A40 6

remote, face-to-face, and phone encounters to be able to understand customer

perceptions. They should examine the factors that influence customer

satisfaction/dissatisfaction, like recovery, adaptability, spontaneity, and innovate

strategies to influence customer perceptions.

applied hypothesis testing to describe relation between the various variables.

to his/her known ones.

Winter Project Asia Pacific Institute of Management 2K72A40 7

Winter Project Asia Pacific Institute of Management 2K72A40 8

demands for outcome-based accountability, cost containment, and attention to

customer-focused quality in order to remain competitive in a rapidly changing

intensified pressures to understand, measure, and manage quality from a customer

their services. Further, increased in consumer preferences toward banking products

globalisation and liberalisation of financial institutions accelerate, competition among

expands with increases in customers’ buying power.

Hence, commercial banking industry in India has to think strategically by providing

of customers’ perceptions and expectations to their service quality from their

their service quality to fit the local and global markets.

Winter Project Asia Pacific Institute of Management 2K72A40 10

confined to only metropolitans or cosmopolitans in India. In fact, Indian banking

reasons of India's growth process.

COMPARATIVE STUDY OF CUSTOMER PERCEPTIO