1 CHAPTER 1: INTRODUCTION

1.1 Company Profile

Genesis

IndusInd Bank derives its name and inspiration from the Indus Valley civilization -a culture described by National Geographic as 'one of the greatest of the ancient world' combining a spirit of innovation with sound business and trade practices.

Mr. Srichand P. Hinduja, a leading Non-Resident Indian businessman and head of the Hinduja Group, conceived the vision of IndusInd Bank -the first of the new-generation private banks in India -and through collective contributions from the NRI community towards India's economic and social development, brought our Bank into being.

The Bank, formally inaugurated in April 1994 by Dr. Manmohan Singh, Honorable Prime Minister of India who was then the countrys Finance Minister, started with a capital base of Rs.1, 000 million (USD 32 million at the prevailing exchange rate), of which Rs.600 million was raised through private placement from Indian Residents while the balance Rs.400 million (USD 13 million) was contributed by NonResident Indians.

A New Era

IndusInd Bank, which commenced its operations in 1994, caters to the needs of both consumer and corporate customers. It has a robust technology platform supporting multi-channel delivery capabilities.

The Bank believes in driving its business through technology. It has multi-lateral tie-ups with other banks providing access to their ATMs for its customers. It enjoys clearing bank status for both major stock exchanges - BSE and NSE - and three major commodity exchanges in the country - MCX, NCDEX, and NMCE. It also offers DP facilities for stock and commodity segments. The Bank has been bestowed with the mandate of being a Settlement Banker for six tea auction centers. In a pioneering initiative in 'Green Banking' project, the Bank opened its first solar-power ATM in Maharashtra.

The Bank received a series of accolades commencing with the prestigious 'Technology Bank of the Year2009' award in the private and foreign bank category from the Indian Banks' Association (IBA). It has also been recognized as the Bank with the Best Performance in Credit Quality at the FE Best Banks Awards. Recently, CRISIL has reaffirmed its P1+ rating of IndusInd Bank's fixed deposits and certificates of deposit program. Credit rating agency ICRA Ltd. has upgraded Lower Tier II Bonds rating of the Bank to LAA- (pronounced L double A minus) rating with stable outlook from LA+ (pronounced L A plus) rating with stable outlook.

1.2 Milestones

With over 16 years of Operating History

2010 2011

Most Improved Bank Performance of the Year awarded by Bloomberg UTV Financial Leadership Awards 2011 Winner of Best Use of technology in training and e-Learning Initiatives awarded by IBA Banking Technology Awards 2010 Runners up of Best Risk Management Initiatives awarded by IBA Banking Technology Awards 2010 Silver winner of Excellence in Business Process Management and Work flow in Australia and Asia Region Global awards by Workflow Management Coalition and BPM.com, USA Talisma User awards for Enterprise Adoption of CRM 2010 Ranked 2nd in the fastest growing Bank (mid-size) category published in Indias Best Banks report by Business World and PWC.

Excellence Award as the 2nd best New Generation Bank in Kerala for the second consecutive year awarded by the State Forum of Bankers Clubs, Kerala

2009 2010

Awarded the "Best Priority Sector Bank" amongst the private sector banks by Duns & Bradstreet

Tier II Issue raised Rs. 4200 million in March 2010 Awarded the Technology Bank of the Year-2009 from IBA Excellence Award, the 2nd best new generation bank in Kerala by the State Forum of Bankers Clubs, Kerala

Recognized for 'Best Performance in Credit Quality' by inancial Express Received the prestigious ISO 27001 certification for IT operations

2008 2009

QIP Issue raised Rs. 4803 million in August 2009 Regulatory clearance for 113 new branches are in place (as of June 30,2010) Appointed as Clearing & Settlement Bank at 6 major Tea Auction centres

(includes 2 which were added in 2010)

Tied up with BONY Mellon for on line remittances from United States to India

2007 2008

GDR Issue - raised Rs 2,222 million; Ratings: ICRA Highest A1+ - CDs, Crisil P1+: CDs, FDs New Launch/Rollout: Mid market Investment Bank, 3rd Party Distribution Platform, Warehouse Receipt Finance Awards/Recognition: The Smart Workplace - Economic Times, Best CSR Practice Company BSE/NASSCOM

Extended microfinance to 300,000+ women by partnering leading MFIs like SKS Microfinance Extensive IT initiatives Became clearing/settlement bank for NSE currency futures exchange New management team headed by Romesh Sobti inducted from ABN AMRO Bank NV

2006 2007

GDR - raised Rs 1,460 million, tied up with Cholamandalam MS for bank assurance Signed an agreement with National Multi Commodity Exchange Ltd as clearing banker

4 2005 2006

Tied-up with Religare Securities for offering 3-in-1 account covering banking, depository & securities trading

Tied up with Aviva Life Insurance for bank assurance

2004 2005

Signed an agreement with NCDEX as clearing banker Opened its second representative office in London

2003 2004

Ashok Leyland Finance Ltd, a leading NBFC merged with the Bank (total 115 branches), opened representative office in Dubai

2002 2003

IndusInd Enterprises & Finance Ltd, a NBFC & one of the promoters of the Bank amalgamated with the Bank

Increased branch network to 53

2001 2002

Tie ups with exchange houses in Middle East and banks in the United States

1994 2000

IPO - raised Rs 1,800 million, became clearing bank to First Commodities Clearing Corporation of India 2000 Became clearing/settlement bank for BSE/NSE Raised Rs 1,000 million through preferential issue of shares Incorporated in 1994; Promoted by a group of Non Resident Indians. Started operations with Rs 1000 Mn Capital

5 1.3 Brand

IndusInd Bank has been aggressive in its brand building program since last year. As a part of the brand building exercise, the bank has taken many initiatives which have helped the brand connect up with the customers & enhance the visibility quotient. IndusInd Bank had launched its first ever mass media campaign in May-June 2009 along with its punch line Makes you feel richer and since then, the bank has been consistent in communication through Television, Radio, and Outdoor & print advertising.

IndusInd Bank understands its customers money is not just money. It is the vehicle to realize their dreams! Hence, the bank aims to ensure that the customers experience with the bank is pleasant and enriching. That they get value for their money, enabling them to lead a richer, fuller, content life... For this, the bank:

Offers a new level of banking better services, better understanding of unique needs and better management of finances Demystifies the banking process and makes it more accessible Apart from fulfilling traditional banking responsibilities, advises customers on how and where to use their money to get the best out of it Projects an image of being a young, energetic, modern bank with values of dynamism, confidence and progression Further, as a banking partner, the bank also aims to help its customers discover how they can do more things with their money.

1.4 IndusInd bank, Defence colony branch

The Bank, formally inaugurated in April 1994 by Dr. Manmohan Singh, Honourable Prime Minister of India who was then the countrys Finance Minister, started with a capital base of Rs.1,000 million (USD 32 million at the prevailing exchange rate), of which Rs.600 million was raised through private placement from Indian Residents while the balance Rs.400 million (USD 13 million) was contributed by NonResident Indians. It caters to the needs of both consumer and corporate customers. It has a robust technology platform supporting multi-channel delivery capabilities.

Since the last year bank has aggressively marketed itself. It has 48 branches in Delhi and it will increase to 100 till December 2011.

Defence Colony is a posh locality situated in South Delhi, India. its central location from most parts of the city of Delhi, IndusInd bank is going to launch one of its branch in defence colony which is under construction from past 6 months and is delayed from its schedule. Though the soft launch of the branch has been done but for the actual launch there is still time. This branch will become the regional office of IndusInd bank. The branch has a target to launch with 500 accounts which has already been achieved but due to the delay in launch the bank has lost a bit of its reputation among the customers as the account opening takes time because at present the bank is opening its accounts from its green park branch, from where later the accounts will be transferred to defence colony branch. The sample size of the research are 100 customers of Defence Colony branch.

7 1.5 customer satisfaction

The definition of customer satisfaction has been widely debated as organizations increasingly attempt to measure it. Customer satisfaction can be experienced in a variety of situations and connected to both goods and services. It is a highly personal assessment that is greatly affected by customer expectations. Satisfaction also is based on the customers experience of both contacts with the organization and personal outcomes. Some researchers define a satisfied customer within the private sector as one who receives significant added value to his/her bottom linea definition that may apply just as well to public services. Customer satisfaction differs depending on the situation and the product or service. A customer may be satisfied with a product or service, an experience, a purchase Decision, a salesperson, store, service provider, or an attribute or any of these.

Some researchers completely avoid satisfaction as a measurement objective because it is too fuzzy an idea to serve as a meaningful benchmark. Instead, they focus on the customers entire experience with an organization or service contact and the detailed assessment of that experience. For example, reporting methods developed for health care patient surveys often ask customers to rate their providers and experiences in response to detailed questions such as, How well did your physicians keep you informed? These surveys provide actionable data that reveal obvious steps for improvement. Customer satisfaction is a highly personal assessment that is greatly influenced by individual expectations. Quality and service alone cant produce recurrent satisfaction. Satisfaction is a distinct and separate issue. It is the customer's entire experience with us that determines his or her declaration of satisfaction. This experience is not objective at all but totally subjective. It is the customer's call. A customer is satisfied only if and when they say they are satisfied. Satisfaction is based upon the customer's perception of the experience. This perception is his/her interpretation of the value received played back against expectations. This declaration does not require any objective evidence. It can be a declaration made with no reason. Our interactions with the customer, the promises made to the customer in these conversations, and the customer's expectations generated in these conversations, and the actions we take that are consistent with those expectations combine to produce a declaration of satisfaction .Therefore it is essential we manage these aspects of our business in a proactive manner to excel at Customer Satisfaction.

8 Why Measure Customer Satisfaction?

Customer satisfaction is tied directly to profitability. If your customers are happy, they tend to be loyal. And if theyre loyal they not only buy more, they refer other customers. Well- established research by Bain & Company found that, for many companies, an increase of 5% in customer retention can increase profits by 25% to 95%. The same study found that it costs six to seven times more to gain a new customer than to keep an existing one.

Moreover, one bad experience can outweigh a whole lot of good experiences. Because of e-mail and instant messaging, that bad experience can quickly be broadcast to dozens, hundreds, or thousands of other customers, magnifying its impact. So if your business is doing something that frustrates customers, you need to know right away.

It is critical to give customers the opportunity to provide feedback about their overall satisfaction level and specific likes and dislikes. It is equally important to consistently measure and monitor that input. Without an effective customer satisfaction research program in place, your company will be losing business, missing opportunities, and putting itself at a competitive disadvantage.

The methods chosen for measuring customer satisfaction depend on customer characteristics, time availability, costs, and the information an organization hopes to gather. Many of the top performing companies identified by the National performance review ( NPR) used sophisticated market research

9 techniques: Feedback was obtained through customer focus groups, customer usage and attitude surveys, supplier and partner surveys, and detailed telephone ,mail, and personal interviews. In one case, thousands of customer surveys were mailed out each week. Another company maintained a detailed database containing all pertinent facts about its customers requirements.65 Common methods of gathering customer satisfaction information in the commercial world include 1-800 numbers, comment cards, telephone surveys, mail-based surveys, focus groups, group interviews, and direct contact between customers and employees.

Recently, online surveysthrough pop-up windows, links, or email invitationshave become popular with many companies. Each method or combination of methods has advantages and disadvantages.

10 CHAPTER 2: REVIEW OF THE LITERATURE

Michael conklin, zoomerang This article tells us that customer satisfaction is tied directly to profitability. If customers are happy they tend to be loyal and if they are loyal they not only buy more but also refer to other people also. The article also tells us that a research by Brain and company(Harvard Business Review,2001) found that, for many companies an increase in 5% of customer retention can increase profits by 25% to 95% .The same study also found that its costs six to seven times more to gain a new customer than to keep an existing one.

Moreover, one bad experience can outweigh a whole lot of good experiences. Because of e-mail and instant messaging, that bad experience can quickly be broadcast to dozens, hundreds, or thousands of other customers, magnifying its impact. So if your business is doing something that frustrates customers, you need to know right away.

It is critical to give customers the opportunity to provide feedback about their overall satisfaction level and specific likes and dislikes. It is equally important to consistently measure and monitor that input. Without an effective customer satisfaction research program in place, your company will be losing business, missing opportunities, and putting itself at a competitive disadvantage.

Anjan Raichaudhuri Customer satisfaction practices have acquired popularity during the last two decades. This is because companies believe that it not only leads to customer loyalty , but also results In better profitability .At present the real life observations indicate that in a number of instances customer satisfaction practices seems to loose their effectiveness. for eg during 2000-01,the highly publicised scores of fiat sienna in the indian market were similar to that of Hyundai Santro , while those of Tata Indica were much lower. However fiat sienna was not a commercial success while santro and indica were.

In simple terms customer satisfaction is a measure of the gap between what customers wants and what he thinks he gets. As competition intensifies, suppliers try to acquire market leadership not only by exceeding them (customer delight).

11 Customer satisfaction survey should therefore, highlight the critical elements in the system-customer expectation, perceived limitations in current purchases ,as well as, sources of delight. Unfortunately, most CSS fall far short of the desired objectives for different reasons:

In many companies CSS started as an outcome of their quality management programme. Rather than being an aid for strategic decisions, companies end up measuring what may cause customer dissatisfaction. The problem is further accentuated by lengthy and complex quantitative questionnaire , which may be useful in improving quality shortfalls but rarely shed light on customer expectations and delight. Since many companies link customer satisfaction index with annual payment of incentives and rewards for executives, CSS has become part of an internal appraisal system rather than an external customer exploration exercise.

Thorsten henning-Thurau and alexander klee (December 1997)

The article proposes a conceptual model that extends the widespread view of a direct and linear relationship between customer satisfaction and customer retention. Three theoretical conclusions can be found regarding the relation between satisfaction and quality:

Quality is equated with the customers appraisal of a concrete product or service experience.
According to this approach there is no significant theoretical difference between satisfaction and quality exists. Customer satisfaction is modelled as an antecedent of quality.

Thus, satisfaction is regarded as a short term emotional state that results from an intrapersonal comparison of the customers expectations with the evaluations of a single product or service. Furthermore, the conducted analysis suggests that the traditional understanding of the customers productor service-related quality perception must be broadened for three aspects:

1. A competition-related perspective must be added. 2. The customers level of involvement has to be considered. 3. The quality construct has to be differentiated on the basis of changes of the customers internal expectation standard.

12 Andreas Herrmann, Lan Xia, Kent B. Monroe, Frank Huber (2007):

The research contributes to the literature on satisfaction by incorporating the role of perceived price fairness. Price has a larger influence on customer satisfaction judgements. It showed that price perceptions directly influence satisfaction judgements as well as indirectly through perceptions of price fairness. The paper links these two important concepts and demonstrated the influence of perceived price fairness on satisfaction judgements empirically. It also implies that sellers should not avoid exploiting their customers potential feelings of being exploited.

Explaining the procedure and offering information to consumers will enhance the transparency of the price and perceived fairness which will lead to customer satisfaction judgements. The price transparency may be particularly relevant when prices are increased or when the price structure is relatively complex. When a seller explains how a price is derived and shows that price increases are due to uncontrollable external factors such as an increase in raw

Material prices, the buyer is more likely to accept the price increase and perceive it fair or at least as less unfair.

Rebekah Bennett, Sharyn Rundle-Thiele (2004):

Customer satisfaction is an important issue for marketing managers, particularly those in service industries. However, it appears that achieving customer satisfaction is often the end goal , as evidenced by the emphasis on customer satisfaction surveys. This paper proposes that this focus is due to the assumption that satisfied customers are loyal customers and thus high levels of satisfaction will lead to increased sales. As a result of this assumption, customer satisfaction is often used as a proxy for loyalty and other outcomes. The authors empirically demonstrate that satisfaction is not the same as attitudinal loyalty and that there are instances where satisfaction and attitudes in setting high risk where a high level of decision making is involved. A sample of 267 businesses was surveyed on their satisfaction and attitudinal loyalty levels towards an advertising service. The results indicate that satisfaction and loyalty in a business services setting are different constructs, and that, while the relationship is positive, high levels of satisfaction do not always yield high levels of loyalty.

13 Rodger Hallowell (February 1996):

The research illustrates the relationship of profitability to intermediate customer related outcomes that managers can influence directly. The findings support that customer satisfaction is related to customer loyalty , which in turn is related to profitability.

Method : OLS regression is used to examine the hypothesized relationships. To increase the internal validity of the results , multiple measures of satisfaction , loyalty ,and profitability were examined whenever possible. Result: The results encourage the inference of relationships between customer satisfaction and customer retention and between customer retention and profitability.

Rust and Zahorik(1991) examine the relationship of customer satisfaction to customer retention in retail banking. Customer satisfaction is related to profit, a bank should try and satisfy every customer .There could be an error in the interpretation. A banks population of customers undoubtedly contains individuals who either cannot be satisfied, given the service levels and pricing the bank is capable of offering, or will never be profitable, given their banking activity (their use of resources relative to the revenue they supply). Any bank would be wise to target and serve only those customers whose needs it can meet better than its competitors in a profitable manner. These are the customers who are most likely to remain with that bank for long periods ,who will purchase multiple products and services, who will recommend the bank to their friends and relations, and who may be the source of superior returns to the banks shareholders.

Gilbert A. Churchill, JR., and Carol Surprenant (November 1982):

Satisfaction is a major outcome of marketing activity and serves to link processes culminating in purchase and consumption with post purchase phenomena such as attitude change, repeat purchase, and brand loyalty.

Conceptually, satisfaction is an outcome of purchase and use resulting from the buyers comparison of the rewards and cost of the purchase in relation to the anticipated consequences.

14 Operationally, satisfaction is similar to attitudes in that it can be assessed as the sum of satisfactions with the various attributes of the product or service. In the research paper author investigates whether it is necessary to include disconfirmation as an intervening variable affecting satisfaction as is commonly argued , or, whether the effect of disconfirmation is adequately captured by expectation and perceived performance. The model in the research paper processes for two types of products , a durable and a nondurable good. The results suggest that effects are different for the two products. For the non-durable good, the relationships are as typically hypothesized. The results for durable goods are different in important respects .finally, the direct performance-satisfaction relationship accounts for most of the variation in satisfaction.

Harkiranpal Singh, Bukit Jalil (May 2006):

The Research summarises few important points on customer satisfaction, customer retention and customer loyalty. It concludes that there are many factors that affect customer satisfaction. According to Hakanson (1995) these factors include friendly employees, courteous employees, knowledgeable employees, helpful employees, accuracy of billing, billing timeliness ,competitive pricing, service quality, good value, billing clarity and retention. It gives strategic imperatives for building a loyal customer base: Focus on key customers Building closer ties with customers Proactively generate high level of customer satisfaction with every interaction. Anticipate customer needs and respond to them before the competition does. Create a value perception.

R.K. Uppal,(October 2010) :

Customer complaints are part of business life of any corporate entity. This is more so for banks because they are service organisations. As a service organisation, customer service and satisfaction should be the prime concern of any bank. The bank believes that providing prompt and efficient service is essential not only to attract new customers, but also to retain existing ones. The paper studies that maximum complaints are in the public sector banks and are continuously increasing, and as such they adversely affect customer satisfaction and performance .The complaints and all the activities performed by the banks are in deposits, credit cards and housing loans.

15 Each and every bank should establish a customer care centre to solve the complaints of the customers .Private sector and foreign banks are taking the lead in making customers happy. Moreover, Indian public sector banks are still not taking the initiative in solving the complaints of their customers. Hence, RBI should insist all the public sector banks to solve the complaints of the customers at the earliest. If the banks will not look into solving the complaints their survival will become difficult.

16 CHAPTER 3: RESEARCH METHODS AND PROCEDURES

3.1 Purpose of the study a) To analyse the importance of various factors, of IndusInd bank for customer satisfaction. b) To analyse the importance of various factors while choosing a bank. c) To find out the awareness of the benefits offered by IndusInd bank.

3.2 Research design The research design will be Descriptive Research. The research is done to analyse the important factors involved in customer satisfaction of the bank. For this a questionnaire has been designed which includes both open ended and closed ended questions. Rank order scale and likert scale has also been used in the questionnaire.

3.3 Participants The participants of the study include the existing customers of Defence colony branch, they also include the new walk- ins that are joining the Defence colony branch as new customers because the branch has done only its soft launch as yet and is in process to launch. The sample size in the study are 100 customers.

3.4 Data collection The data to be collected was primary data. A questionnaire was prepared to collect the data and it was collected by the walk-in clients at the branch and also few personal visits were made to the clients with the relationship manager.

3.5 Instruments use The research instrument used was a questionnaire containing 11 questions. The questionnaire includes open ended as well as close ended questions to analyze the important factors involved in customer satisfaction of the bank.

17 CHAPTER 4: DATA ANALYSIS AND FINDINGS 4.1: Review of the methodology

The survey was intended to receive the answers for the research questions. The sample size of the research was 100 customers and it was collected by questioning the walk in clients at the branch or by personal visits made to them.

4.2: Result of the research questions 1: Occupation of the customer:

Occupation
Student 15%
Service 23% Self Employeed 19%

Business 40%

House wife 3%

Figure 4.1 occupations of customers

Figure 4.1 represents in percentages the occupation of the customers for indusInd bank at Defence colony branch. Business: 40% Service: 23% Self-employed: 19% Student: 15% Housewives: 3%

18 This shows that most of the customers are business owners (40%) followed by service 23%, selfemployed 19%, student 15%, housewives 3%. The customers are more from the business sector because the demographics of the area i.e. Defence colony are such that big business owners live here. It is one of the posh areas in Delhi. This is also one of the biggest advantage for the bank as it helps earning revenue , because it becomes easy to pitch products like current accounts ,business loans, etc. also we are able to provide the customers with facilities like customer credits and over drafts that earns the bank with interest., which leads to revenue maximization.

2: Household income of the customer:

Income
below 2000000 11%

above 1000000 16%

200000-500000 31%

5000001000000 42%

Figure 4.2: household income of the customers Figure 4.2 represents in percentages the household income of the customers for IndusInd bank at Defence colony branch.

Below 2, 00,000: 11% 2, 00,000-5, 00,000: 31% 5, 00,000-10, 00,000: 42% Above 10, 00,000:16%

This shows that most of the customers household income falls between 5,00,000-10,00,000 i.e. 42% followed by 2,00,000-5,00,000 -31% ,above 10,00,000-16%, below 2,00,000 -11%.

19 This is because majority of the people in defence colony lie into high income groups having high standards of living.

3: Time period of account:

more than 5 years 10%

how long have an account with Indusind Bank

2-5 years 34%

0-2 years 56%

Figure 4.3: time period of account

Figure 4.3 shows in number of years, the customers have an account with IndusInd bank. 0-2 years: 56% 2-5years:34% More than 5 years: 10%

IndusInd Bank has been aggressive in its brand building program since last year. As a part of the brand building exercise, the bank has taken many initiatives which have helped the brand to connect up with the customers & enhance the visibility quotient. IndusInd Bank had launched its first ever mass media campaign in May-June 2009 along with its punch line Makes you feel richer and since then, the bank has been consistent in communication through Television, Radio, and Outdoor & print advertising. This is why a larger ratio of people have accounts with IndusInd bank from 0-2 years as only now its presence is felt in the markets also since the branch is new and new customers have joined in so the time period of association is 0-2 years for many of the customers.

20 4: Type of account with the bank:

type of account
0% current 35%

savings 65%

Figure 4.4: type of account

Figure 4.4 shows in percentages the type of accounts the customers of IndusInd bank use.

Savings account: 65% Current account: 35%

65% customers have savings account, this is because the bank at this point of time has enough locker facility and the demand for locker is also high. Therefore, the bank provides locker facility to those who have a saving account with the bank. Also the sale of third party products like insurance, investment needs a saving account with the customer. One reason which adds on to it is that savings account also include the salary accounts of the staff in them, hence it is far more than the current accounts.

21 5: Type of savings account:

savings a/c
indus classic 18%

indus privilege 45% indus multiplier 15% indus privilege plus 2% indus maxima savings 20%

Figure 4.5: type of savings account

Figure 4.5 shows in percentages the type of savings accounts the customers of IndusInd bank use.

Indus classic: 18% Indus privilege: 45% Indus maxima: 20% Indus privilege plus: 2% Indus multiplier: 15%

45% of the bank customers have Indus privilege savings account because it offers more value for money while also giving the power to save and carry out hassle free transactions.

22 6: Type of current account:

Current A/C
Indus blue 13%
Indus EXIM 3% Indus Silver 43% Indus Prestige 13% Indus Gold Plus 28%

Figure 4.6: type of current account

Figure 4.6 shows in percentages the type of current accounts the customers of IndusInd bank use.

Indus blue: 13% Indus silver: 43% Indus gold plus: 28% Indus prestige: 13% Indus EXIM: 3% Indus escrow: 0% Indus freedom: 0%

28% of the customers have Indus gold plus current account because it has all the banking requirements of business into a special offer for value customers. It is a specialized product for retail wholesalers, showroom owners, manufacturers, importers and exporters.

23 7. Awareness of the benefits offered by the bank:

Awareness

ASBA 1%

Sweep in 11%

RTGS/NEFT 42%

lending services 24% International Debit cards 22%

Figure 4.7: awareness of the benefits offered by the bank

Figure 4.7 shows in percentages the awareness of benefits offered by IndusInd bank.

Sweep in: 11% Lending: 24% International debit cards: 22% ASBA: 1% RTGS/NEFT: 42%

42% of the customers are aware of the RTGS/NEFT services offered by the bank followed by lending services i.e. 24%, international debit cards 22%.This is because there are no charges for RTGS/NEFT transactions and also because this is widely used.

24

8: facilities offered by the bank

Loans 10% Investment 8% Insurance 6%

Facilties
Accounts 26%

DMAT 7%

Deposits 15%

Debit Cards 18%

Credit Cards 10%

Figure 4.8: facilities offered

Figure 4.8 shows in percentages the facilities offered by IndusInd bank. Accounts: 26% Deposits: 15% Loans: 10% Debit cards: 18% Investments: 8% Insurance: 6% DMAT: 7% Credit card: 10%

26% of the customers use account facilities provided by the bank which includes saving accounts as well as current accounts. Account facility is the highest because of the various additional benefits given to the customers.

25 9: Point of interaction:

Phone Banking 3% Net Banking 14%

Point of Interaction

ATM 47% Bank Branch 36%

Figure 4.9: point of interaction with the bank

Figure 4.9 shows in percentages the point of interaction with the bank.

Bank branch: 36% ATM: 47% Net banking: 14% Phone banking: 3% Drop box: 0%

47% customers of IndusInd bank use ATM s as a point of interaction with the bank, followed by visits to bank branches i.e. 36%,net banking 14% phone banking 3%. A large number of customers use ATM facilities for IndusInd bank because of the easy availability, easy accessibility and also it provides us the option of choosing the denomination of the notes we require.

Net banking is comparatively less due complexities involved in using as well as less awareness, also people consider net banking and phone banking as risky.

26 Now for the further analysis of the questionnaire (ques10 & 11) we use factor analysis, tool of SPSS software.

FACTOR ANALYSIS:

This part of my project involves identification of significant attributes so that we are able to determine as to what all factors the customers want from the bank. Factor analysis is a very useful method of reducing complexity by reducing the number of variables being studied. Factor analysis is a good way of resolving this confusion and identifying latent or underlying factor from an array of seemingly important variable, as listed below. In a more general way factor analysis is a set of techniques which by analyzing correlation between variables reduce their number into fewer factors which explain much of the original data, more economically. Even though a subjective interpretation can result from a factor analysis output, the procedure often provides an insight into relevant psychographic variables, and result in economical use of data collection effort.

METHOD There are two stages in factor analysis:

Stage 1 can be called the factor extraction process, is a rule of thumb based on the computation of an eigen value, to determine how many factors to extract. The higher the Eigen value of a factor the higher is the amount of variance explained by the factor. What we are attempting to do is to extract the least number of factors possible which will maximize the explained variance. We can have as many factors as there are original variables, but since the objective is to reduce the variables to a fewer number of factors, we retain those with an eigen value of 1 or more.

Stage 2 is called rotation of principal components. This is optional, but important. After the number of factor is decided upon the next task is to name the factors. This is done by the process of identifying which factors are associated with which of the original variables. The factor matrix is used for this purpose. The original factor matrix is unrotated and is part of stage 1. The rotated factor matrix comes in stage 2 where the computer package performs a rotation and gives us a rotated factor matrix. The factor matrix (rotated or unrotated) gives us the loading of each variable on each of the extracted factor. The objective is to find variables which have a high loading on one factor, but low loading on the other factor.

27 If factor 1 is loading highly by variables 3,8 and 10, for example, it is assumed that factor 1 is a liner combination of these three variables, and it is given a suitable name, representing the essence of the original variable, of which it is a combination Now we list all the variables that indicate how a bank is performing better for customer satisfaction and variables important for choosing a bank.

Clean Knowledge Timely actions Satisfaction Lockers Location of ATMS Knowledge of product Quality Word of mouth Advertisement

28 Table 4.1 communalities

Communalities Initial clean knowledge timely satisfactory lockers locationatm knowledgeofproduct quality wordofmouth advertisemnt 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extraction Method: Principal Component Analysis. Extraction .365 .870 .773 .783 .562 .617 .726 .710 .815 .742

Table 4.1communalities The table here explains the amount of variance a variable shares with all the other variables being considered. The table also explains the proportion of variance explained by common factors.

29

Table 4.2
Total Variance Explained Initial Eigenvalues Comp onent 1 2 3 4 5 6 7 8 9 10 Total 3.909 2.048 1.007 .827 .746 .608 .357 .217 .186 .096 % of Variance 39.088 20.476 10.073 8.270 7.461 6.076 3.567 2.173 1.860 .955 Cumulative % 39.088 59.564 69.637 77.907 85.368 91.444 95.011 97.184 99.045 100.000 Extraction Method: Principal Component Analysis. Total 3.909 2.048 1.007 Extraction Sums of Squared Loadings % of Variance 39.088 20.476 10.073 Cumulative % 39.088 59.564 69.637 Total 3.102 2.180 1.681 Rotation Sums of Squared Loadings % of Variance 31.021 21.802 16.814 Cumulative % 31.021 52.823 69.637

Table 4.2 Total variance explained The purpose of principal Component Analysis is to derive a relatively small number of components that can account for the variability found in a relatively large number of measures. This procedure, called Data reduction is typically performed when a researcher does not want to include all the original measures in Analysis but still wants to work with the information that they contain.

30 Table 4.3 Component Matrix Component 1 1)clean 2)knowledge 3)timely 4)satisfactory 5)lockers 6)location tm 7)knowledge of product 8)quality 9)word-of-mouth 10)advertisement -.024 .742 .803 .717 .593 .349 .610 .730 .831 .361 2 .603 -.477 -.356 .273 .449 .420 -.557 -.148 .301 .674 3 -.011 .304 .037 .442 -.099 .565 -.208 -.393 -.184 -.396

Extraction Method: Principal Component Analysis. 3 components extracted. Table 4.3 component matrix In table 4.3 factor extraction has been done. The method used is principal component analysis (PCA).It is used to derive a relatively small number of components that can account for the variability found in a relatively large number of measures. This procedure, called data reduction, and is typically performed when a researcher does not want to include all of the original measures in analyses but still wants to work with the information that they contain.

31

Table 4.4
Rotated Component Matrix
a

Component 1 clean knowledge timely satisfactory lockers locationatm knowledgeofproduct quality wordofmouth advertisemnt -.400 .825 .831 .310 .179 -.080 .846 .703 .465 -.099 2 .413 -.137 .120 .297 .650 .156 .019 .460 .708 .854 3 .186 .414 .260 .774 .329 .766 -.096 -.059 .312 .057

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Table 4.4 related component matrix

Rotated Component Matrix: For any given set of correlations and number of factors there are actually an infinite number of ways that you can define your factors and still account for the same amount of covariance in your measures. By rotating your factors you attempt to find a factor solution that is equal to that obtained in the initial extraction but which has the simplest interpretation. In rotating the factors, we would like each factor to have non zero or significant , loadings or coefficients for only some of the variables. Likewise, we would like each variable to have non zero or significant loadings with only a few factors , if possible with only one. If several factors have high loadings with the same variable, it is difficult to interpret them. Rotation does not affect the communalities and the percentage of total variance explained. However the percentage of variance accounted for by each factor does change .In the following table varimax procedure has been used for rotation of the factors. This is an orthogonal method of rotation that minimizes the number of variables with high loadings on a factor, thereby enhancing the interpretability of the factors.

32 INTERPRETATION OF COMPUTER OUTPUT

The output of the factor analysis is obtained by requesting principal components analysis and specifying a rotation. In table 2, 3 and 4 we have the factor analysis for the problem, the unrotated factor matrix (table 3) the final statistics (table 2) comprising the communality for all 10 variables, and the eigen value of all factor having eigen value of 1 or more than 1. We assume that we are extracting factor of eigen value 1 or more, and have specified this in the request to the computer package while doing factor analysis.

The first step in the interpreting the output is to look at the factor extracted, their eigen value and the cumulative percentage of variance (table 2). We see from cumulative percentage column that the five factors together extracted together account for 69.367 percent of the total variance (information contained in the original 10 variables). This is a good bargain because we are able to economise on the number of variables (from 10 to 3), while we lost about 30 percent of the information content (70% is retained by the 3 factors extracted out of the 10 original variables).

Now the second task which follows is that of interpreting what these 3 extracted factors represent. This we can accomplish by looking at table 3 and 4, the rotated and unrotated factor matrices.

Looking at table 4, the rotated factor matrix, we notice that variable 2,3and 7 have a loading of .825, .831and .846 on factor 1 (we look down the factor 1 column in table 4, and look for high loading close to 1). This suggests that factor 1 is a combination of these three variables. But if we look at table 3 the unrotated factor matrix, a slightly different picture emerges. Here variable 3 also has a high loading on factor 1, along with variables 9. It is left to the researcher which interpretation he wants to use as there is no hard and fast rule. So we go with the rotated factor matrix, the related statement are Knowledge of the teller, Timely and Knowledge of the product. We can combine these 3 variables into a factor called SERVICE AND AWARENESS.

Now we attempt to interpret factor 2. We look at table 4 down the column for factor 2, and find the variable 10 have loading of .854, but again if we look at table 3, the unrotated factor matrix, here none of the variable has a high loading. Again we consider table 4. So we go with the rotated factor matrix, the related statement are advertisement We can combine these variable into a factor called PROMOTION

33 Looking at table 4, the rotated factor matrix, we notice that variable 4 and 6 have a loading of .774 & .766 on factor 3 (we look down the factor 3 columns in table 4, and look for high loading close to 1). This suggests that factor 3 is a combination of these two variables. The unrotated factor matrix tells a different picture but as already discussed it is the choice of the researcher to consider rotated or unrotated factor matrix and we are considering the rotated factor matrix. The related statements are satisfaction, and Location of ATM. We can combine these variables and name them CONVENIENCE.

So here we have our three main factors: Service and awareness Promotion Convenience

34

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS

5.1: Conclusion

40 % of the customers are from the business sector.

The majority of the customers have a household income between 2,00,000- 5,00,000.

Bank has recently started performing aggressively and has added many now branches to it as well new customers have joined so there are more people who have an account with the bank from past 0-2 years.

Saving accounts are 30% more than current account this is because branch is new & the customers are required to take saving account first to use other facilities provided by the bank.

Indus privilege is the most selling saving account as 45% of customers opted for it.

Indus silver is the most selling current account as 43% if customers opted for it.

RTGS/NEFT is the most known services offered by the bank as 42% of the customers are aware of it.

Account facility (savings and current) is the most availed by the customers. ATMS are the most frequent point of interaction for the customers because of its easy accessibility and the new concept of your own choice of notes denomination.

From the factor analysis we conclude that service and awareness, promotion and convenience are the three major factors considered important for customer satisfaction and also for the choice of bank. For providing the customers with the best facilities bank has started new concepts like, IndusInd bank is open for all 365 days, they give us a choice of selecting the denomination of notes at ATMS also it provides us with a 0 balance account upto one year.

35

In the present competitive banking environment, most of the banks offer the same or similar products around the world and quality of services and satisfaction is a vital means to differentiate themselves in the market place. Therefore, to be successful, retail banks must provide service to their customers that meets or exceeds their expectations, and the present study will provide at least some sorts of guidelines to the policy makers of the banks as it give the parameters considered important by the customers.

Consumers will seek only those financial products and suppliers which offer the best value for money and they are educated about it. Thus, if a bank is able to position itself favourably within a specific market, relative to competitors, high profits will be earned as a result. Hence awareness of the products, schemes, benefits is required.

36

5.2 Recommendations

Parking facility: since the bank is located on the main road there is not much space to park the vehicles in front of the bank it causes a lot of disturbances to the on goin traffic also it reduces the number of customer who visit the bank for any work instead it has increased the workload for the bank workforce because the clients call them at their own convenient places instead of bank. For this the bank can have tie-up with the MCD parking nearby so that it becomes easy for the customers and it does not disturb the on-going traffic.

Visitors lounge: depending upon the customer base the bank should have its visitors lounge and defence colony being a posh area the bank should provide enough space for comfortable seatings for the customers so that they can discuss about their savings and investment plans also it becomes easy for the managers to deal with the customers in a relaxed seating.

Lobby managers: there should be a designated post of lobby managers who can clarify with the enquiries of the walk in customers as this helps in making the customer feel important for the bank.

More relationship managers: in the areas like defence colony and Green Park the customers have huge spending power and what they focus on are the quality of services provided to them. They do not mind being charged on it but they require personalise services and it is impossible for 2 relationship managers to manage all the customers themselves so more staff should be kept.

Since it has been too long for the branch to launch it has lost many of its customers also its reputation has come down a bit so in order to gain back the trust of the customers the bank should indulge itself into aggressive promotional activities for at least one month after its launch. for this they can put canopies in the crowded area and create awareness.

Data base management: the branch is new and it does not have a data base of its own so it must arrange it so that personalised calls can be made to the people and make them aware about the services offered by the bank. This can be done by approaching to the defence colony residents welfare association and ask them for the names and numbers of the residents.

37 Internet banking: Recently, banks are advanced in using modern technology and IT. In this case, internet banking has added a new dimension. Customers are using online banking to save time and have prompt services. However, the response from the customers perception is not satisfactory as only 14% customers use it because they fear of its safety. Hence it should be developed so that it becomes convenient for the customers. Number of ATMS should be increased, since it is the most confortable point of interaction of the bank with the customers.(as seen in the analysis). The customers consider service as one of the important factors for customer satisfaction, the bank must start a service of sending a person from the bank to the customers(regular customers or customers with huge balances) for collection of cheques, drafts or delivering the cheque books and the debit card kits. This would save the time of the customers and will aslo be convenient for them, as we have seen convenience is also one of the important factors in choosing a bank for the customers, so may be the customer get attracted to this service. Since there is so much of competition and even retail banking has its competitors around the bank must start with some awareness campaigns which makes the customers of the general public aware of the benefits offerd, the products and the various facilities. The bank should advertise through television and reach the masses.

38 CHAPTER 6: LIMITATIONS OF THE STUDY

Since the branch was under construction and it did not launch by the time of the internship it was difficult to get the questionnaire filled by the walking clients.

Respondents were usually busy and if even free were not willing to fill the questionnaire. There were times when a probable respondent would think of us as a salesman and say not interested or I dont want to buy

People were hesitant to disclose the true facts Since the research is limited only to defence colony branch it cant be used for practical purposes. Since the research is limited only to defence colony branch and the sample size was limited so we cant use the results because as the area changes the total demographics of the respondents also change.

39 References

Andreas Herrmann, Lan Xia, Kent B, Monroe, Frank Huber The influence of price fairness on customer Satisfaction , Journal of product and brand management , volume 16 ,2007, pages 49-58. Anjan Raichaudhuri, why customer satisfaction practices dont satisfy customers,the TMTC journal of management.

Gilbert A .Churchill., Jr, carol suprenant, An Investigation into the Determinants of Customer Satisfaction,(1982:Nov.) p.491 Harkiranpal Singh and Bukit Jalil,Kuala Lumpur, Malaysia ,May 2006 The Importance of Customer Satisfaction in Relation to Customer Loyalty and Retention

Michael Conklin, measuring and tracking customer satisfaction, zoomerang. R.K.Uppal (October 2010),customer complaints in banks: Nature ,extent and strategies to mitigation.; journal of economics and international finance, volume 2(10) pgs 212-220

Rebekah Bennett, Sharyn Rundle-Thiele, (2004) "Customer satisfaction should not be the only goal", Journal of Services Marketing, Vol. 18 Iss: 7, pp.514 552

Roger Hallowell Harvard Business School, Boston, MA, USA, Submitted june 1995,revised February 1996: The relationships of customer satisfaction, customer loyalty, and profitability pg 27-42

Thorsten Hennig-Thurau and Alexander Klee,University of Hanover Vol. 14(8): pg 737 764 (December 1997) The Impact of Customer Satisfaction and Relationship Quality on Customer Retention:A Critical Reassessment and Model Development

40 Websites www.indusind.com www.google.com www.wikipedia.com google.schlor www.zoomerang.com www.tmtctata.com

Books referred Naresh.k .Malhotra Marketing Research (ch 3,9,10,11,19) Phillip Kotler-Marketing Management

41 Annexure

QUESTIONNAIRE

1.) What is your occupation? Service Business Self employed Other: _____________

2.) What is your household income? Below 200000 200000 - 500000 500000 - 1000000 Above 1000000

3.) For how long you have an account with IndusInd bank? 0 - 2 years 2 - 5 years More than 5 years

4.) Your account with IndusInd bank is __________ account? Savings Current Other:

42 5) If savings account, select the type of account you have with the bank? Indus classic(5000 min bal) Indus privilege(10000 min bal) Indus maxima savings (25000 min bal) Indus privilege plus (50000 min bal) Indus multiplier(DMAT+SAVINGS+TRADING ACC)

6) If current account, select the type of account you have with the bank. Indus blue (min bal 10000) Indus silver (min bal 25000) Indus gold plus (min bal 50000) Indus prestige (min bal 100000) Indus EXIM (min bal 500000) Indus escrow Indus freedom

7) From the following benefits which one are you aware of? Sweep-in Lending services International debit cards ASBA RTGS/NEFT

43 8) From the following facilities offered by the bank, which one you avail the most? Accounts Deposits Loans Debit card Investment Insurance DMAT Credit cards

9) What is the most frequent point of interaction for you with IndusInd bank? Bank branch ATM Net banking Phone banking Drop box

44 10) Indicate how your bank is performing for BETTER CUSTOMER SATISFACTION by selecting appropriate number *(5=Excellent, 4=Good, 3=Average, 2= Poor, 1= Very Poor)

PARAMETERS RATING Bank facility is clean and orderly Teller/ bank officer have knowledge of the products and services Your business is handled efficiently and in a timely manner Queries are attended promptly and response is satisfactory Facilities (Loan, Lockers) offered are competitive than other banks

11) Indicate the extent to which each of the following factors are important to you when CHOSSING A BANK by selecting appropriate number *(5=very important, 1= unimportant)

PARAMETERS Location of Branch and ATMs Knowledge of bank products and services General Service Quality Word of mouth (recommended by friends and/or family members) Advertisement and Publicity

RATING