ISSN 2348 - 8891

The Study of Customer Perception towards Banking Services of Banks in

Indore Region

*Bhupendra Kaur Saluja **Dr. Vivek Sharma ***Juhi Naik

Abstract:
The banking sector is one of the biggest service sectors in India and now-a-days is in a way to
attract the biggest market of Asia in investment. The banking sector today is focusing on how to
provide efficient services to its customers. The Indian Banking System consists of various financial
institutions whose objective is serving the people for their financial and economic needs. This
paper is a survey of customer perception towards banking services provided by banks in Indore
region. The purpose of this analysis is to measure customers awareness, perception and level of
satisfaction with regard to services offered by Indian banks in Indore city. The attributes like
internet banking, ATM services, timings, attitude of staff towards customer of the bank etc have
been analysed.

Keywords:
Customer Awareness, Banking Services, Service Quality, Customer Perception, Internet Banking.

INTRODUCTION
Banks play an important role in the economic development of a country. It is a financial institution that
accepts deposits and channels those deposits into lending activities either directly or through capital
markets. A bank connects customers which have capital deficits to those customers with capital surpluses.
The banking industry in India is facing certain challenges i.e. challenges of quality service, customer
satisfaction, customer retention, customer loyalty. Quality service plays a major role in achieving customer
satisfaction and creating brand loyalty in banking sector. One of the most momentous of such initiatives
was the substitution of private ownership by public ownership, through the medium of an ordinance of the
largest commercial banks in the private sector on 19 July 1969. This has popularly came to be known as

*Bhupendra Kaur Saluja, Pursuing M.Phil. (Management), IMS (DAVV), Indore

**Dr. Vivek Sharma, SR. FACULTY, IMS (DAVV)
***Juhi Naik, Pursuing M.PHIL (MANAGEMENT), IMS (DAVV), INDORE
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nationalization of these banks without which it would not have been possible to transform the class
banking into mass banking and align bank credit to serve the planned priorities and social needs. Branch
expansion programs formulated by the Reserve Bank of India aimed at making available necessary
banking facilities in all parts of the country specially the unbanked rural and semi urban areas.
Banking system occupies an important place in a nations economy. A banking institution is indispensable
in a modern society. It plays a pivotal role in the economic development of a country. Thus, economic
development of a country depends upon the success of its banking industry and this success is determined
to a large extent by understanding the needs and satisfaction of its customers. In the earlier societies
functions of a bank were done by the corresponding institution dealing with loans and advances.
Britishers brought into India the modern concept of banking by the start of Bank of England in 1694. In
1708, the Bank of England was given the monopoly for the issue of currency notes by an Act. In nineteenth
century various banks started operations, which primarily were receiving money on deposits, lending
money, transferring money from one place to another and bill discounting. India has a well-developed
banking system.
Most of the banks in India were founded by Indian entrepreneurs and visionaries in the pre-independence
era to provide financial assistance to traders, agriculturists and budding Indian industrialists. The origin of
banking in India can be traced back to the last decades of the 18th century. The General Bank of India
and the Bank of Hindustan, which started in 1786 were the first banks in India. Both the banks are now
defunct. The oldest bank in existence in India at the moment is the State Bank of India (SBI). The State
Bank of India came into existence in 1806. At that time it was known as the Bank of Calcutta. SBI is
presently the largest commercial bank in the country.
Banking has come to occupy a crucial position in a nations economy. According to the modern concept,
banking is a business which not only deals with borrowing, lending and remittance of funds, but also an
important instrument for fostering economic growth. Service is an invisible thing which is indispensable
from the person who extends it. An efficient service is one which is extended appropriately by identifying
and understanding the needs of the individual customer from time to time.
The customers at the present juncture are well exposed to unstoppable innovations in communication
technology. He/she is aware of the kind of service level available around the world and thus expects the
best from his/her bank. Customer service is not only a critical function but plays a vital role for the
business. It is next most important business strategy. The improved customer services will definitely
increase profitability. A bank can be said as customer oriented if its various organizational activities like
organizational restructuring, staffing and coordination are geared up to fulfill the needs of the customers.
The Rangarajan Committee Report (1989) was the first path breaking step in this direction, which
highlighted that computerization must be looked upon as a means to improve customer service and
efficiency and that the banks workforce should realize that mechanization would lead to growth and
employment expansion (Bide 1997). Subsequently Narasimhan Committee (1992), while highlighting
the problems faced by Indian public sector banks and as antidote to the identified lacunae, also stressed
the need for greater measure of computerization in banks. The committee observed that modern banking
involves a great deal of processing of mass information and commitment to technology is the only solution
that ensures timeliness, accuracy and resultant in customer service (Bide 1997).
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Current Scenario: Currently, overall banking in India is considered as fairly mature in terms of supply,
product range and availability. Even though reach in rural India still remains a challenge for the private
sector and public sector banks. Well computerized foreign banks are beginning to compete seriously with
the nationalized banks. They aim at a profitable and wealthy part of the market. Almost 80% of the
businesses are still controlled by Public Sector Banks. They are still dominating the commercial banking
system.
The banking system is facing the challenges with stiff competition and advancement of technology, the
services provided by banks have become easy and convenient, the competitive character has been
promoted by facilitating the entry of foreign banks and their ATM stations. Efforts are being put to give
a satisfactory service to customers. Phone banking and net banking are introduced. The entire system
has become more convenient and swift. Time is given more importance than money.
With years, banks are adding services to their customers. The Indian banking industry is passing through
a phase of customers market. The customers have more choices in choosing their banks. A competition
has been established within the banks operating in India.
The new age IT (Information technology) is bringing about sweeping changes in the banking industry,
forcing them to re-engineer many of their basic processes and systems. Few of the technology-driven
electronic banking services being offered are viz. Automated Teller Machine (ATM), Electronic Clearing
Service (ECS), Electronic funds transfer (EFT), Tele-banking, Internet banking etc. New technological
capabilities could be effectively used to create value and to better manage customer relationship.
Due to the advent of e-banking, quality of service has been improved a lot as compared to traditional
banking services. Internet banking, Mobile banking, ATM, Electronic Fund transfer has totally changed
the way of providing services by the banks. Information technology in the form of e-banking plays a
significant role in providing better services at lower cost. Several innovative IT based services such as
ATM, Internet banking, smart cards, credit cards, Mobile banking, phone banking, anywhere anytime
banking have provided number of convenient services to the customer.
So, as the service quality improves, the probability of customer satisfaction increases. Increased satisfaction
in turn increases the mutual understanding, customer retention and a bond of trust between customers
and banks. The banks which are providing these services on a wider scale to customers are more
reputed in the eyes of customers.

REVIEW OF LITERATURE
Today world has become a global hub for business. To sustain and grow in the global market industries
require a strong banking system, which can satisfy the increasing needs of customer. Indian banking
system is now ready for the global market because of the Automation.
The core issues faced by banks today are on the fronts of customers service expectations, cutting
operational costs, and managing competition. Technology can help banks in meeting these objectives.

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Safeena et al (2010) determines the customers perception on internet banking adoption .The study
shows that perceived usefulness, perceived ease of use, consumer awareness & perceives risk are the
important determinants of online banking adoption and have strong and positive effect on customer to
accept online banking system. Santhiyavalli, G. (2011) determined the customers perception of service
quality of the selected branches of SBI and study the major factors responsible for their satisfaction.
Surbhi Singh and Renu Arora (2011) presented a paper on a comparative study of banking services
and customer satisfaction in public, private and foreign banks of Delhi and this study shows that the
customers of nationalized banks were not satisfied with the employee behavior and infrastructure, while
respondents of private and foreign banks were not satisfied with high charges, accessibility and
communication MS Linda Mary Simon (2012). A study on customer perception towards services
provided by Public sector bank and Private sector bank in Coimbatore region reveals that private bank is
providing better services to its customers than the public sector bank. It is evident that public sector
banks have a strong presence in the market, but in recent times they are facing stiff competition from
private sector banks in the range and quality of services offered. M.E. Doddaraju (2013) presented a
study on customer satisfaction towards public and private sector banking services with special reference
to the Anantpur District of Andhra Pradesh concluded that satisfaction level with regard to public sector
units courtesy shown by bank staff at the counter is very low. Therefore, the banks should pay special
attention to Human Resource Development by giving timely training to the employees to conduct
themselves better.

STATEMENT OF THE PROBLEM

Customers are lifeblood for any business and banking industry is highly service oriented business. When
there is service concern, it always deals with the perceptual decision taking of the customer. Here, in this
paper we tried to figure out the reason for the perception of the people residing in Indore city for choosing
the banking service on the basis of cost, convenience, facility and general factors like modernization of
the bank, promptness for attending customer.

OBJECTIVES OF THE STUDY

1. To get suggestions for improvement or changes in the services of banks.
2. To study what do people expect in new era of banking?
3. To know about the customer preferences.
4. To give suggestions for improvement of quality of services in banks.
5. To know in which service quality dimension the bank is performing well and in which dimension it
needs improvement.
6. To understand the customer perception on internet service quality, the various dimension associated
with satisfaction.
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SCOPE OF THE STUDY

The study encompasses banking services quality of all types of banks in Indore region each located at
various regions. The study covers respondent who are the customers of these banks. These customers
belong to various professions, places, of both genders, with varied income groups and varied age groups.

RESEARCH METHODOLOGY
The present study is based on primary data. The information relating to the customer perception towards
services provided by all the banks in INDORE region is collected for the study through survey with the
help of questionnaire .The total sample size of the study is 50.
To meet up with the objectives of study 50 customers were selected as sample unit. So, the questionnaires
were filled by 50 respondents which were structured with questions of demographic profile, services
level and dimension in which derives satisfaction to the customers. To carry out the study in more
accurate convenience random sampling method was selected. We have done personal interviews and
we asked the person in front of us to fill the questionnaire and we were there with the respondents at all
times in order to guide him/her and solved the queries at the time of filling in the responses. In order to
understand the customer perception towards services provided by the banks in Indore region; SPSS
software was used as tool for statistical analysis and to bring interpretations.
Descriptive Research Design: It seeks to determine the answers to who, what, where, when and how
questions. It is based on some previous understanding of the matter. Descriptive Research Design is
used in this study because it will ensure the minimization of bias and maximization of reliability of data
collected. Research has got a very specific objective and clear cut data requirements.
Data Collection Method:
Primary Data: It is first hand data, which is collected by researcher itself. Primary data is collected by
various approaches so as to get a precise, accurate, realistic and relevant data. The main tool in gathering
primary data was questionnaire which was collected from 50 respondents.
Research Hypothesis: In this study customer perception is dependent variable and banking services,
IT enabled services, transaction based services are independent variables.
H0-There is no significant effect of customer perception towards banking services in Indore region
banks.
H1- There is significant effect of customer perception towards banking services in Indore region banks.

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LIMITATIONS
1.

The study is limited to the study of expectations of and perceptions of customers having an account
in banks.

2.

The perception of customers is limited to the time period of the study.

3.

Primary data has its own limitations.

4.

As this study was conducted only in Indore region the finding cannot be generalized for overall
state.

5.

If the sample size could be taken a bit larger, we could have reached to more accurate results.

DATAANALYSIS AND INTERPRETATION

1.

In case of compensation benefit p-value <0.05, null hypothesis is rejected. There is significant
effect of customer perception towards compensation benefit provided by banks.

2.

In case of interest rate on saving and fixed deposits p-value <0.05, null hypothesis is rejected.
There is significant effect of customer perception towards interest rate provide by banks. Most
of the customers claim that interest rate on saving is very low.

3.

In case of credit facilities p -value <0.05, null hypothesis is rejected. There is significant effect of
customer perception towards credit facilities provide by Indore region banks.

4.

In case of bank charges, p-value <0.05, null hypothesis is rejected. There is significant effect of
customer perception towards bank charges like ATM, for SMS facility some bank charge on
Quarterly basis.

5.

In case of maintaining minimum balance in Account, p -value <0.05, null hypothesis is rejected.
There is significant effect of customer perception towards maintaining minimum balance in account.

6.

In case of ATM services in multiple locations, p -value <0.05, null hypothesis is rejected. There
is significant effect of customer perception, sometimes it is seen that ATM machines do not pick
the card or remain out of service for few days. Further these are installed at a location which does
not suit customers. ATM card used mainly for cash withdrawals; nearly all the banks have installed
ATMs to increase their reach to the consumers, accounting for more than 60000 ATMs in India.

7.

In case of e-banking services, p -value <0.05, null hypothesis is rejected. E-banking has adversely
affected the individuals ability to interact with customers. Banks should increase the variety of
services and also employees of the banks should be fully aware about the use of e-channels
because a fully aware employee can effectively guide the customers.

8.

In case of phone account facilities, p -value <0.05, null hypothesis is rejected. Most of the
customers disagree with the statement.

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9.

In case of plastic money facilities, p -value <0.05, null hypothesis is rejected, there is significant
effect of customer perception and the use of plastic money like Debit cards, Credit cards are
popular among youths.

10.

In case of locker facilities, p -value <0.05, null hypothesis is rejected. Most of the banks provide
locker facilities except a few.

11.

In case of staff efficiency, p -value <0.05, null hypothesis is rejected. Most of the bank staff is
unable to handle customers problems efficiently, so it is necessary that staff should be given
proper training on how to handle a large number of customers. Therefore the staff of the bank
should be friendly, polite and trained enough to guide the customer effectively.

12.

In case of convenient location of banks, p -value <0.05, null hypothesis is rejected. There is
significant effect of location of banks on customers.

13.

In case of competitive service charges, p -value <0.05, null hypothesis is rejected. There is
significant effect of customer perception towards competitive service charges of various banks.
On the analysis of customers view, there opinion is that the private bank charges are high as
compared to nationalized banks. Proper description of charges debited from the account should
be made in the account statement.

14.

In case of innovative banking services, p -value >0.05, null hypothesis is accepted. There is no
significant effect of customer perception towards innovative banking services. The reason behind
not informing customers about new service/scheme would be poor communication and customer
service of nationalized banks. No respondent answered positive to be informed by the bank on
introducing any new service or scheme.

15.

In case of customer care facility, p -value <0.05, null hypothesis is rejected. Most of customers
argued that most of the banks do not provide 24 hours customer care facility. It is required that
there should be improved technical infrastructure in the form of uninterrupted internet connectivity
and orderly working of ATMs (24/7).

16.

In case of online shopping facility, p -value <0.05, null hypothesis is rejected. Lack of online
shopping payment facilities, misuse of ATM cards are some problems faced by the customers but
they are given comparatively less consideration.

17.

In case of minimum interest rate on loans and advances, p -value >0.05, null hypothesis is
accepted. Bank should provide loan at the lower interest rate and education loans should be
given with ease without much documentation.

18.

In case of gold investment facility (coins) pvalue>0.05, null hypothesis is accepted. Not many
banks provide gold investment facility. Only some banks mainly nationalized banks provide this
facility.

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19.

In case of timely collection of cheques and demand drafts, p -value <0.05, null hypothesis is
rejected. There is significant effect of customer perception towards timely collection of cheques
and deposits.

SUGGESTIONS

1.

Irrespective of banks, employees who interface the customers directly are ought to be very
empathetic and should be able to understand the customer needs and requirements.

2.

Training the human resource in this regards would help the banks retain their customers and
attract more.

3.

Addressing to the individual customer needs is one crucial aspect to be considered, as the customer
would find himself as a part of the organization. This would build a good relationship between the
bank and the customer.

4.

Publicizing the bank in the right area add value to brand. Banks should utilize the proper media
resource for promoting their services.

5.

Establishing branches in every possible area would be better way to progress. This would really
help banks to create more accounts give more reach to the banks.

6.

Employees should be trained on technical and behavioral aspects, so that banks can deliver
quick and prompt services.

CONCLUSION
Satisfaction level with regard to courtesy shown by bank staff at the counter is very low. Therefore,
banks should pay special attention to HUMAN RESOURCE DEVELOPMENT by giving timely
training to the employees to conduct themselves better. Banks should win customers confidence by
providing them guidance regarding service charges, service tax, interest rate, penalty if any etc at an
early stage. All branches of a bank should provide different facilities like parking, seating arrangement,
drinking water and sanitary facilities. New investment schemes should also be displayed at appropriate
places. Modern technology and innovation are required in every aspect of banking system .To develop
the social banking environment, bank officials should maintain good relationship with the customers.

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REFERENCES

1.

Dr. Manasa Nagabhushnam: A study on customer service quality of banks in India.

2.

Kajal Choudhary and Monika Sharma (2011): Performance of Indian Public sector banks and
Private sector banks: comparative study, vol 2, No.3.

3.

Linda Mary Simon (2012): A study on customer perception towards services provided by
public sector bank and Private sector bank, vol 1, issue 12.

4.

M. E. Doddaraju (2013): A study on customer satisfaction towards public and private sector
banking services (with special reference to Anantpur district of Andhra Pradesh), Global journal
of Management and Business Studies. vol 3, pp.287.

5.

Pallavi A. Shah (2012): A study of Perceptions Of customer towards e-banking services in

Thane city-Maharashtra, India.

6.

Ravi K. Dhar and Silky Vigg Kushwah (2009): Service quality expectations and perceptions of
Public and Private Sector Banks in India: A comparative study.

7.

Safeena et al (2010): the study on consumers perspective on internet banking adoption.

8.

Santhiyavalli, G. (2011) the study of the customer perception of service quality of the selected
branches of SBI.

9.

Shikha Agarwal: Indian Service Sector, A case study Of Banking sector.

10.

Sourabh Sharma and Vishal Vyas: The Influence Of computerization in public and Private Sector
Banks in India: A comparative study

11.

Surabhi Singh and Renu Arora (2011): A comparative study of banking services and customer
satisfaction in Public, Private and Foreign banks.

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ANNEXURE

T-TEST
One-Sample Statistics
N

Mean

Std. Deviation Std. Error Mean

Compensation benefit

50

3.3600

1.22491

.17323

Rate of interest

50

3.6400

1.06445

.15054

Credit facilities

50

3.9400

.95640

.13525

Service charges (ATM, SMS) 50

3.7800

1.09339

.15463

Bank charges for minimum

50
balance in a/c

3.1000

1.37396

.19431

ATM in multiple locations

50

3.9800

1.03982

.14705

E-banking

50

4.1400

.80837

.11432

Phone a/c service

50

3.7400

1.00631

.14231

Plastic money facilities

50

3.9800

.82040

.11602

Locker facility

49

4.0204

.87773

.12539

Efficiently solved customer

50
problem

3.7200

1.03095

.14580

Convenient location

50

4.0600

1.07684

.15229

Competitive service charges

50

3.7000

1.01519

.14357

Innovative banking services

50

3.4000

1.10657

.15649

Customer care facility

50

3.5600

1.07210

.15162

Online
facility

50

3.7200

1.01096

.14297

50

3.1800

1.13731

.16084

50

3.3400

1.06157

.15013

Timely collection of cheques

50
and DD

3.6800

1.01900

.14411

shopping

Interest
on
advances

payment

loans

Gold investment facility

and

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Test Value = 3
Particulars/Factors
t

df

p-Value

Null Hypothesis

Compensation benefit

2.078

49

.043

Rejected

Rate of interest

4.251

49

.000

Rejected

Credit facilities

6.950

49

.000

Rejected

Service charges (ATM, SMS)

5.044

49

.000

Rejected

Bank charges for minimum

.515
balance in a/c

49

.609

Rejected

ATM in multiple locations

6.664

49

.000

Rejected

E-banking

9.972

49

.000

Rejected

Phone a/c service

5.200

49

.000

Rejected

Plastic money facilities

8.447

49

.000

Rejected

Locker facility

8.138

48

.000

Rejected

4.938

49

.000

Rejected

Convenient location

6.960

49

.000

Rejected

Competitive service charges

4.876

49

.000

Rejected

Innovative banking services

2.556

49

.014

Accepted

Customer care facility

3.694

49

.001

Rejected

5.036

49

.000

Rejected

Interest on loans and advances 1.119

49

.269

Accepted

Gold investment facility

2.265

49

.028

Accepted

Timely collection of cheques

4.719
and DD

49

.000

Rejected

Efficiently
problem

Online
facility

solved

shopping

customer

payment

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QUESTIONNAIRE
The Study of Customer Perception towards Banking Services of Banks in Indore Region
Dear customer,
We are the students of M.Phil, IMS, DAVV, Indore. We are carrying out the project entitled The
study of customer perception towards banking services of banks in Indore region. Please fill this
questionnaire to help us in completing our project.
PERSONAL DETAILS:
Gender

Male

Female

Age -

18-30

30-45

45-60

60 & above

Undergraduate

Graduate

Post - graduate

Others

Self -Employed

Professional

Student

Retired

Up to 100,000

100,000 - 2,50,000

2,50,000 - 4,00,000

4,00,000 to above

Public

Private

Education -

Occupation-

Income -

Bank Type -

Type of Account
Demat

Saving

Current

F.D.

Salary

PHONE NO-
E-MAIL ID-

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1.

Does your bank provide any compensation benefit to customers?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

2.

Does your bank provide good interest rate on Saving A/C and FDs?
Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

3.

Does your bank provide good credit facilities?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

4.

Does your bank charge a variety of service charges (SMS/ATM)?

Strongly DisAgree / Disagree / Uncertain / Agree / Strongly Agree

5.

Does your bank charge unnecessarily for not maintaining minimum balance in a/c?
Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

6.

Does your bank provide ATM services in multiple locations?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

7.

Does your bank provide best e-banking services?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

8.

Does your bank provide necessary phone banking facilities?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

9.

Does your bank provide plastic money facilities?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

10.

Does your bank provide locker facility?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

11.

Does your banks staff efficiently solve customer problems ?

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Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

12.

Is your bank conveniently located ?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

13.

Are the service charges of your bank competitive ?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

14.

Does your bank properly advertise about innovative banking services ?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

15.

Does your bank provide 24/7 customer care facility?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

16.

Does your bank provide online shopping facility ?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

17.

Does your bank charge minimum interest rate on loans and advances ?
Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

18.

Does your bank provide gold investment facility (coins) ?

Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

19.

Does your bank provide timely services for collection of cheques and demand draft ?
Strongly Disagree / Disagree / Uncertain / Agree / Strongly Agree

Thanks for your valuable time given to us. We assure you that this information will remain confidential.
Thanks for your co-operation.

Altius Shodh Journal of Management & Commerce