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An Empirical Analysis of Customer Satisfaction of Indian Public Sector Banks –Dinesh D. Harsolekar*, Svetlana Tatuskar** AbstrAct The banking landscape in India has become very competitive. In order to be successful in such a competitive setting, banks would have to differentiate themselves on various parameters, leverage on latest and updated technological advancements and deliver realistic, convenient and flawless services
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   An Empirical Analysis of Customer Satisfaction of Indian Public Sector Banks  –Dinesh D. Harsolekar*, Svetlana Tatuskar** A BSTRACT The banking landscape in India has become very competitive. In order to be successful in such a competitive setting, banks would have to differentiate themselves on various parameters, leverage on latest and updated technological advancements and deliver realistic, convenient and  awless services to customers.  Banking industry is a service industry, hence the quality of service provided and the extent of customer’s satisfaction plays a pivotal role in retaining customers and thereby generating and enhancing the banks revenue. Customers requirement of providing them with better and improved customer services is on the rise, hence every bank should recognize the various dimensions of customer satisfaction as it is an important determinant of service quality. This paper identies the various factors that lead to customer satisfaction in public sector banks in India. This is an exploratory study. The ndings of the paper are based on a detailed analysis of data obtained by questionnaires, observation and interviews. Data was collected from 150 respondents who used the banking services of selected public sector banks in the city of Mumbai. The responses have been converted into SPSS convertible data for analysis. Tools such as frequency analysis, factor analysis were used to identify the most signicant factors that contribute to enhanced customer satisfaction in Indian Public sector banks. An Opportunity Matrix developed by the professors at Harvard Business School, was drawn to reveal those services that customers consider important to enhance their level of satisfaction. *Director, IES Management College and Research Centre, Mumbai, Maharashtra, India. Email: dharsolekar@ies.edu**Assistant Professor, Finance, IES Management College and Research Centre, Mumbai, Maharashtra, India. Email: statuskar@gmail.com   Drishtikon: A Management Journal Volume 5 Issue 2 March 2014-September 2014 57 The research highlights that customer satisfaction is dependent on ve diverse factors. This research paper will assist the public sector bank management and banking regulators to perk up the overall level of satisfaction of customers and further strengthen the tie between the bank and its customers. Keywords:  Indian Public sector bank, Customer satisfaction, Service quality, Banking sector. INTRODUCTION Globalization, technological developments and inconsistent stock markets have created an unmatched competitive setting for organizations across the world especially banks. However it is a well known truth that over time the banking sector in India has reached a fair amount of maturity in terms of services provided, product range and more so over quality of services. The demand for banking services, especially retail banking, corporate  banking, mortgages and investment portfolio services are expected to  be strong in India. This puts a lot of stress on Indian Banks to deliver  prompt and efcient services. This is because there is a strong relationship  between quality of services provided by banks and customer satisfaction and thereby customer retention.The public sector banks are receiving tough competition due to increased number foreign banks and private banks. Apart from this most of the nancial products that were otherwise permitted to be offered only  by banks are also offered by non-banking nancial institutions too. This shows that public sector banks are functioning under tough pressure to retain and increase customers. In order to survive this competition and increase the revenue base many public sectors banks are focusing on improvising their services so as to have satised and happy customers. Thus every bank constantly needs to keep in touch with their customers, understand their need and offer such quality of services that completely matches their expectations. Today public sectors banks have completely understood that surviving in this global banking platform calls for revolutionizing many of its conventional banking services with the use of latest and updated technology.   An Empirical Analysis of Customer Satisfaction of Indian Public Sector Banks  58 RATIONALE OF THE STUDY  Banking industry is a service industry. Top level Management staff of the service sectors are under tough pressure to exhibit that, their services are customer-centric and that continual performance improvement in their service is being offered. With liberalization, privatization and globalization setting in, the Indian banking arena has undergone radical changes. Indian  banks are constantly focusing on improvising their products and offering  prompt services to customers in order to retain the old customers and attract new ones. The focus of the study is to offer information to the public sector banking management authorities on a few important factors that lead to satised customers. This study would also enable the public sectors  banks to devise its current growth and development strategies keeping in mind the factors that enhance customers satisfaction, since the number of loyal banking customers largely depend on customer satisfaction. LITERATURE REVIEW Several research studies have been conducted highlighting the relationship  between quality of service provided and customer satisfaction in service sector and the banking industry as per Hossain & Leo (2009) is no exception. Hazlina et al., (2011) identied service quality as an important tool to measure customer satisfaction. Siddiqi (2010) clearly pointed out that in today’s global competitive banking scenario, customer satisfaction is fundamental for the success of any bank. According to McIlroy and Barnett (2000), an important factor to be considered when developing a customer reliability model is customer satisfaction. He identied customer satisfaction as a decisive scale of how well customer’s demands are met and how likely the customer is bound to make repeat purchases and engage in relationship activities. According to File and Prince (1992), customers who are satised tell others about their experience and thereby increase word of mouth advertising.Parasuraman et al (1985) conceptualized the basic service quality model and identied key determinants of service quality that is recognized  by the provider of the service and the user of the service, this was captured in a service quality model called as SERQUAL, later the model was further adapted to identify 5 major determinants (Responsiveness,   Drishtikon: A Management Journal Volume 5 Issue 2 March 2014-September 2014 59 Assurance, Tangibility, Empathy and Reliability) of service quality called RATER. Trivedi and Agrawal (2009) discussed ve major determinants to measure customer satisfaction towards bank, viz., tangibility, assurance, responsiveness, empathy, and reliability. A study conducted Geetika et.al. (2008) on Internet banking, highlighted that customers gave the highest rating to quality of service provided whilst selecting banking service  provider. Chandra et al., (2003), studied the factors that were critical to determine service quality in banks of a developing Indian economy. In order to investigate, he studied three groups of banks in India and concluded that there is a wide difference in the service quality provided  by each of the three groups of Banks, i.e. private Banks, Public banks and Foreign Banks. Dawar (2013) conducted a study to evaluate the factors that affect customer satisfaction in banks. Her study suggested that staff commitment,  behavior and responsiveness, internet banking, Banking Pricing policy and e-channel management & support system are important determinants of customer satisfaction. According to Jamal and Anastasiadou, (2009), reliability, tangibility and empathy are positively related with customer satisfaction. In another study by Jham and Khan, (2008), on customer satisfaction with banking services, signicant factors of customer satisfaction identied were conventional banking facilities, convenience, behavior of employees, and the environment of bank. The conclusive results of Ravichandran et al., (2010) indicate responsiveness as the only signicant dimension of service quality that affects customer satisfaction. Thus it can be concluded that customer satisfaction in banking sectors has varied facets as per Jamal & Naser, (2002). OBJECTIVE OF THE STUDY  The objectives of the study are: ∑  To study the relationship between service quality and customer satisfaction in Public Sector Banks.  ∑  To identify the various factors of customer satisfaction regarding the services provided by the Public Sector Banks.  ∑  To identify the services provided by Public sector banks that needs improvement.
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