Professional Documents
Culture Documents
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nationalization of banks in 1969, the public sector banks or the nationalized banks have
acquired a place of prominence and have since then seen tremendous progress. The
need to become highly customer focused has forced the slow-moving public sector banks
to adopt a fast track approach. The unleashing of products and services through the net
has galvanized players at all levels of the banking and financial institutions market grid
to look anew at their existing portfolio offering. Conservative banking practices allowed
Indian banks to be insulated partially from the Asian currency crisis. Indian banks are
now quoting al higher valuation when compared to banks in other Asian countries (viz.
Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non
Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed in
approach and armed with efficient branch networks focus primarily on the high revenue
niche retail segments.
The Indian banking has finally worked up to the competitive dynamics of the new Indian
market and is addressing the relevant issues to take on the multifarious challenges of
globalization. Banks that employ IT solutions are perceived to be futuristic and
proactive players capable of meeting the multifarious requirements of the large
customers base. Private Banks have been fast on the uptake and are reorienting their
strategies using the internet as a medium The Internet has emerged as the new and
challenging frontier of marketing with the conventional physical world tenets being just
as applicable like in any other marketing medium.
The Indian banking has come from a long way from being a sleepy business institution to
a highly proactive and dynamic entity. This transformation has been largely brought
about by the large dose of liberalization and economic reforms that allowed banks to
explore new business opportunities rather than generating revenues from conventional
streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30
banking units contributing to almost 50% of deposits and 60% of advances. Indian
nationalized banks (banks owned by the government) continue to be the major lenders
in the economy due to their sheer size and penetrative networks which assures them
high deposit mobilization.
The Reserve Bank of India acts as a centralized body monitoring any discrepancies and
shortcoming in the system. It is the foremost monitoring body in the Indian financial
sector. The nationalized banks (i.e. government-owned banks) continue to dominate the
Indian banking arena. Industry estimates indicate that out of 274 commercial banks
operating in India, 223 banks are in the public sector and 51 are in the private sector.
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The private sector bank grid also includes 24 foreign banks that have started their
operations here.
The liberalize policy of Government of India permitted entry to private sector in the
banking, the industry has witnessed the entry of nine new generation private banks.
The major differentiating parameter that distinguishes these banks from all the other
banks in the Indian banking is the level of service that is offered to the customer. Their
focus has always around the customer understanding his needs, pre-empting him and
consequently delighting him with various configurations of benefits and a wide portfolio
of products and services. These banks have generally been established by promoters of
repute or by high value domestic financial institutions.
The popularity of these banks can be gauged by the fact that in a short span of time,
these banks have gained considerable customer confidence and consequently have
shown impressive growth rates. Today, the private banks corner almost four per cent
share of the total share of deposits. Most of the banks in this category are concentrated
in the high-growth urban areas in metros (that account for approximately 70% of the
total banking business).
have allowed most of these banks to deliver superlative levels of personalized services.
With the Reserve Bank of India allowing these banks to operate 70% of their businesses
in urban areas, this statutory requirement has translated into lower deposit mobilization
costs and higher margins relative to public sector banks.
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The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an in principle approval from the Reserve Bank of India (RBI) to set up a bank
in the private sector, as part of RBIs liberalisation of the Indian Banking Industry in
1994. The bank was incorporated in August 1994 in the name of HDFC Bank Limited,
with its registered office in Mumbai, India. HDFC Bank commenced operations as a
Scheduled Commercial Bank in January 1995.
HDFC Bank comprises of a dynamic and enthusiastic team determined to accomplish the
vision of becoming a World-class Indian bank. HDFC banks business philosophy is based
on our four core values - Customer Focus, Operational Excellence, Product Leadership
and People. They believe that the ultimate identity and success of their bank will reside
in the exceptional quality of people and their extraordinary efforts. They are committed
to hiring, developing, motivating and retaining the best people in the industry.
Business Focus
HDFC Bank's mission is to be a World Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of
banking services for target retail and wholesale customer segments, and to achieve
healthy growth in profitability, consistent with the banks risk appetite. The bank is
committed to maintain the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance. HDFC Banks business philosophy is
based on five core values: Operational Excellence, Customer Focus, Product Leadership,
People and Sustainability.
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Operational Excellence
Customer Focus
Product Leadership
People
The objective of the HDFC Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-step window for all
his/her requirements. The HDFC Bank plus and the investment advisory services
programs have been designed keeping in mind needs of customers who seeks distinct
financial solutions, information and advice on various investment avenues.
Business Strategy
management
Develop innovative products and services that attract targeted customers and
address inefficiencies in the Indian financial sector
Distribution Network
HDFC Bank is headquartered in Mumbai. As of June 30, 2014, the Bank's distribution
network was at 3,488 branches in 2,231 cities. All branches are linked on an online realtime basis. Customers across India are also serviced through multiple delivery channels
such as Phone Banking, Net Banking, Mobile Banking and SMS based banking. The
Bank's expansion plans take into account the need to have a presence in all major
industrial and commercial centres, where its corporate customers are located, as well as
the need to build a strong retail customer base for both deposits and loan products.
Being a clearing / settlement bank to various leading stock exchanges, the Bank has
branches in centres where the NSE / BSE have a strong and active member base.
The Bank also has a network of 11,426 ATMs across India. HDFC Bank's ATM network
can be accessed by all domestic and international Visa / MasterCard, Visa Electron /
Maestro, Plus / Cirrus and American Express Credit / Charge cardholders.
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Promoter
HDFC is India's premier housing finance company and enjoys an impeccable track record
in India as well as in international markets. Since its inception in 1977, the Corporation
has maintained a consistent and healthy growth in its operations to remain the market
leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling
units. HDFC has developed significant expertise in retail mortgage loans to different
market segments and also has a large corporate client base for its housing related credit
facilities. With its experience in the financial markets, strong market reputation, large
shareholder base and unique consumer franchise, HDFC was ideally positioned to
promote a bank in the Indian environment.
Management
Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with effect from 6th
July 2010. Mr. Vasudev has been a Director of the Bank since October 2006. A retired
IAS officer, Mr. Vasudev has had an illustrious career in the civil services and has held
several key positions in India and overseas, including Finance Secretary, Government of
India, Executive Director, World Bank and Government nominee on the Boards of many
companies in the financial sector.
The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years
and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of
experience in public policy, administration, industry and commercial banking. Senior
executives representing HDFC are also on the Board.
Senior banking professionals with substantial experience in India and abroad head
various businesses and functions and report to the Managing Director. Given the
professional expertise of the management team and the overall focus on recruiting and
retaining the best talent in the industry, the bank believes that its people are a
significant competitive strength.
Capital Structure
As on March 31, 2014 the authorized share capital of the Bank is Rs. 550 crore. The
paid-up capital as on the said date is Rs 479,81,00,870/- ( 2399050435 ) equity shares
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of Rs. 2/- each). The HDFC Group holds 22.64 % of the Bank's equity and about 16.97
% of the equity is held by the ADS / GDR Depositories (in respect of the bank's American
Depository Shares (ADS) and Global Depository Receipts (GDR) Issues). 34.11 % of the
equity is held by Foreign Institutional Investors (FIIs) and the Bank has 4,22,314
shareholders.
The shares are listed on the Bombay Stock Exchange Limited and The National Stock
Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on
the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global
Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No
US40415F2002.
Technology
HDFC Bank operates in a highly automated environment in terms of information
technology
and
communication
systems.
All
the
bank's
branches
have
online
connectivity, which enables the bank to offer speedy funds transfer facilities to its
customers. Multi-branch access is also provided to retail customers through the branch
network and Automated Teller Machines (ATMs).
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The Bank has made substantial efforts and investments in acquiring the best technology
available internationally, to build the infrastructure for a world class bank. In terms of
core banking software, the Corporate Banking business is supported by Flexcube, while
the Retail Banking business by Finware, both from i-flex Solutions Ltd. The systems are
open, scaleable and web-enabled.
The Bank has prioritised its engagement in technology and the internet as one of its key
goals and has already made significant progress in web-enabling its core businesses. In
each of its businesses, the Bank has succeeded in leveraging its market position,
expertise and technology to create a competitive advantage and build market share.
Businesses
HDFC Bank caters to a wide range of banking services covering commercial and
investment banking on the wholesale side and transactional / branch banking on the
retail side. The bank has three key business segments:
Wholesale Banking
The Bank's target market is primarily large, blue-chip manufacturing companies in the
Indian corporate sector and to a lesser extent, small & mid-sized corporates and agribased businesses. For these customers, the Bank provides a wide range of commercial
and transactional banking services, including working capital finance, trade services,
transactional services, cash management, etc. The bank is also a leading provider of
structured solutions, which combine cash management services with vendor and
distributor finance for facilitating superior supply chain management for its corporate
customers. Based on its superior product delivery / service levels and strong customer
orientation, the Bank has made significant inroads into the banking consortia of a
number of leading Indian corporates including multinationals, companies from the
domestic business houses and prime public sector companies. It is recognised as a
leading provider of cash management and transactional banking solutions to corporate
customers, mutual funds, stock exchange members and banks.
Treasury
Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalisation of the financial markets in India, corporates need more sophisticated risk
management information, advice and product structures. These and fine pricing on
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various treasury products are provided through the banks Treasury team. To comply
with statutory reserve requirements, the bank is required to hold 25% of its deposits in
government securities. The Treasury business is responsible for managing the returns
and market risk on this investment portfolio.
Retail Banking
The objective of the Retail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all
his/her banking requirements. The products are backed by world-class service and
delivered to customers through the growing branch network, as well as through
alternative delivery channels like ATMs, Phone Banking, NetBanking and Mobile Banking.
The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus
and the Investment Advisory Services programs have been designed keeping in mind
needs of customers who seek distinct financial solutions, information and advice on
various investment avenues. The Bank also has a wide array of retail loan products
including Auto Loans, Loans against marketable securities, Personal Loans and Loans for
Two-wheelers. It is also a leading provider of Depository Participant (DP) services for
retail customers, providing customers the facility to hold their investments in electronic
form.
HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as
well. The Bank launched its credit card business in late 2001. By March 2013, the bank
had a total card base (debit and credit cards) of over 19.7 million. The Bank is also one
of the leading players in the "merchant acquiring" business with over 270,000 Point-ofsale (POS) terminals for debit / credit cards acceptance at merchant establishments. The
Bank is well positioned as a leader in various net based B2C opportunities including a
wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.
Ratings
Credit Rating
HDFC Bank has its deposit programmes rated by two rating agencies - Credit Analysis &
Research Limited. (CARE) and Fitch Ratings India Private Limited. The bank's Fixed
Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which
represents instruments considered to be "of the best quality, carrying negligible
investment risk".
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CARE has also rated the bank's Certificate of Deposit (CD) programme "PR 1+" which
represents "superior capacity for repayment of short term promissory obligations". Fitch
Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA (ind)"
rating to the bank's deposit programme, with the outlook on the rating as "stable". This
rating indicates "highest credit quality" where "protection factors are very high".
HDFC Bank also has its long term unsecured, subordinated (Tier II) Bonds of Rs.4 billion
rated by CARE and Fitch Ratings India Private Limited. CARE has assigned the rating of
"CARE AAA" for the Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the
rating "AAA (ind)" with the outlook on the rating as "stable". In each of the cases
referred to above, the ratings awarded were the highest assigned by the rating agency
for these instruments.
Quality Policy
Security: The bank provides long term financial security to their policy. The bank
trust.
Innovation: Recognizing the different needs of our customers, the bank offers a
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PEST ANALYSIS
[All the data in this section has been taken from References 7, 8 and 12 mentioned in the Bibliography
Section]
Political/Legal Environment
Government and RBI policies affect the banking sector. Sometimes looking into the
political advantage of a particular party, the Government declares some measures to
their benefits like waiver of short-term agricultural loans, to attract the farmers votes.
By doing so, the profits of the bank get affected. Various banks in the cooperative sector
are open and run by the politicians. They exploit these banks for their benefits.
Sometimes the government appoints various chairmen of the banks. Various policies are
framed by the RBI looking at the present situation of the country for better control over
the banks.
Economic Environment
Banking is as old as authentic history and the modern commercial banking are traceable
to ancient times. In India, banking has existed in one form or the other from time to
time. The present era in banking may be taken to have commenced with establishment
of bank of Bengal in 1809 under the government charter and with government
participation in share capital. Allahabad bank was started in the year 1865 and Punjab
national bank in 1895, and thus, others followed.
Every year RBI declares its 6 monthly policy and accordingly the various measures and
rates are implemented which has an impact on the banking sector. Also the Union budget
affects the banking sector to boost the economy by giving certain concessions or
facilities. If in the Budget savings are encouraged, then more deposits will be attracted
towards the banks and in turn they can lend more money to the agricultural sector and
industrial sector, therefore, booming the economy. If the FDI limits are relaxed, then
more FDI are brought in India through banking channels.
Social Environment
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Before nationalization of the banks, their control was in the hands of the private parties
and only big business houses and the effluent sections of the society were getting
benefits of banking in India. In 1969 government nationalized 14 banks. To adopt the
social development in the banking sector it was necessary for speedy economic progress,
consistent with social justice, in democratic political system, which is free from
domination of law, and in which opportunities are open to all. Accordingly, keeping in
mind both the national and social objectives, bankers were given direction to help
economically weaker section of the society and also provide need-based finance to all the
sectors of the economy with flexible and liberal attitude. Now the banks provide various
types of loans to farmers, working women, professionals, and traders. They also provide
education loan to the students and housing loans, consumer loans, etc.
Banks having big clients or big companies have to provide services like personalized
banking to their clients because these customers do not believe in running about and
waiting in queues for getting their work done. The bankers also have to provide these
customers with special provisions and at times with benefits like food and parties. But
the banks do not mind incurring these costs because of the kind of business these clients
bring for the bank.
Banks have changed the culture of human life in India and have made life much easier
for the people.
Technological Environment
Technology plays a very important role in banks internal control mechanisms as well as
services offered by them. It has in fact given new dimensions to the banks as well as
services that they cater to and the banks are enthusiastically adopting new technological
innovations for devising new products and services.
The latest developments in terms of technology in computer and telecommunication
have encouraged the bankers to change the concept of branch banking to anywhere
banking. The use of ATM and Internet banking has allowed anytime, anywhere banking
facilities. Automatic voice recorders now answer simple queries, currency accounting
machines makes the job easier and self-service counters are now encouraged. Credit
card facility has encouraged an era of cashless society. Today MasterCard and Visa card
are the two most popular cards used world over. The banks have now started issuing
smartcards or debit cards to be used for making payments. These are also called as
electronic purse. Some of the banks have also started home banking through
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Strengths
HDFC bank is the second largest private banking sector in India having 2,201
for HDFC cards to be the most preferred card for shopping and online transactions
HDFC bank has the high degree of customer satisfaction when compared to other
private banks
The attrition rate in HDFC is low and it is one of the best places to work in private
banking sector
HDFC has lots of awards and recognition, it has received Best Bank award from
various financial rating institutions like Dun and Bradstreet, Financial express,
Weaknesses
HDFC bank doesnt have strong presence in Rural areas, where as ICICI bank its
Opportunities
HDFC bank has better asset quality parameters over government banks, hence
the profit growth is likely to increase
Page 14
The companies in large and SME are growing at very fast pace. HDFC has good
Threats
is a slight variation its not a good sign for the financial health of the bank
The non banking financial companies and new age banks are increasing in India
The HDFC is not able to expand its market share as ICICI imposes major threat
The government banks are trying to modernize to compete with private banks
RBI has opened up to 74% for foreign banks to invest in Indian market.
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Product
Price
Place
Promotion
People
Physical Evidence
Process
Product Mix
The product mix of a company includes all different product lines a company offers to its
customers. The product line of a bank might easily include more than 100 different
services. In todays competitive scenario it has become very necessary for a bank to
provide its customers with a wide variety of services and the best technology in order to
Page 16
attract them. Here is an example of some of the products offered by UTI Bank to its
customers.
Page 17
HDFC offers mainly banking services, but there are many financial products which it
offers along with banking. HDFC ergo, HDFC life and HDFC home loans are some of the
products. In total, the financial product portfolio of HDFC is huge. The USP of HDFC is
that it designs competitive products which guarantee great response from the market
and an almost unlimited longevity for business life. In terms of a banking, its product are
its services, like net banking and ATM, and being a major bank, HDFC has planned its
products in proportion with the ever increasing customers needs, demands and
expectations.
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Apart from offering accounts, it has carried forward its namesake of being a housing
finance corporation, and offers large variety of loans for purchasing houses, construction,
re-construction, buying housing land, apartments etc. with maximum loan cover of up to
85%, and maximum repayment period of up to 20 years which is a major propulsion
factor for it as a bank. Being into the services business, the major support for the
product lies in its distribution. Thus, after the product, the place and distribution of HDFC
bank services is most important for the success of HDFC.
Place Mix
The bank has an amazing 3488 branches in 2231 cities across the world. It is
headquartered
in
Mumbai,
India.
HDFC
bank
has
11,426
ATMs across
India.
Furthermore, the banks services are delivered not only through ATMs or branches, but
also through an excellent net banking service, phone banking, mobile banking and SMS
banking. HDFC ensures that it has a presence so that it can concentrate on its huge
commercial clientele along with being present for its retail clients. Banking is an intricate
function as it includes certain confidential and security invoking processes that are to be
carried on a regular basis, and they are done with minimal margin of errors, that cannot
function in an unsafe environment. To make sure that all the daily confidential processes
are duly met, placing these facilities becomes a very thoughtful function in itself, and
HDFC has overcome these challenges by placing its operational premises at some of the
most easily accessible locations across cities and towns, that are made available to its
large number of account holders at strategically planned branches.
Some of the important factors that HDFC have taken into consideration while deciding
the locations for their banking establishments are:
Trade area
Population characteristics
Commercial structure
Proximity to other convenient outlets
Competitive banks
Visibility
Access by customers
Price Mix
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HDFC is known to hold major market share in the banking sector of India, and this is
because of reasonable yet profit invoking price structure for its services, which is
justified to an extent, as every corporation has to sustain inflation and overcome market
hurdles. HDFC bank has premium competitive pricing. When compared with national and
PSU bank, the pricing is premium, because the minimum amount required to open an
account is high. But at the same time, there are many rules, like home load interest,
which are as per RBI guidelines and are competitive in nature. Thus, prices for these
products are in control by the market and not by the corporation. It provides reasonable
loans at maximum repayment tenure and at par interest rates to both old and new
customers. Apart from regular charges, it does not charge anything for miscellaneous
and associated functions such as cheque replacement, advance loan repayment, take
over etc. that justifies a lot. Thus, in some places HDFC is premium priced, whereas in
others it is evenly priced as per competition.
HDFC Bank uses different types of pricing methods for its customers:
Value Pricing: charging a combination of high and low prices depending on the
prices.
Mark-up Pricing: the cost of the service is determined and a small margin is
added to it and then the final price is offered to the customers.
Promotion Mix
From the very beginning, HDFC has planned and executed its promotional activities in a
manner that has suited its service catalogue, and has maintained a 360 degree approach
in planning its commercials, campaigns and marketing activities in general. These
promotional activities include variety of subtle television commercials with a message, a
recent and innovative method of promotion by placing signboards and milestones in the
rural portions of country in local/native language, and placing No Parking boards
outside residential and commercial buildings, that has promoted its connection with the
masses and making prospective client base associated with the name i.e. HDFC. HDFC
uses undifferentiated marketing techniques, wherein it mainly focuses on introducing its
financial products to everyone. Because banking in general, is a mass market product.
However for the HNI customers, well trained relationship managers, wealth managers
are used to retain the HNI clients with HDFC. Thus, this service too is a promotional
product for HDFC. At the end, the promotions are focused on one thing only to spread
the name of HDFC far and wide.
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The HDFC Bank has started using two of the fastest modern tools of communication:
Internet Banking
Mobile Banking
It also uses the conventional modes of promoting and spreading word about its brand
name such as: Public Relation, Personal Selling, Sales Promotion, Word of mouth
promotion, Telemarketing, Mobile Application & SMS services.
People Mix
People in the Banks are the employees that are the service providers. In a banking
sector, the service provider plays a very important and determinant role in rendering the
customers a satisfactory and a good service. It is extremely essential that the service
provider understand what his customers expect from him. In the banking sector, the
customer needs to be guided in a lot of matters, which is possible only with the help of
the service provider.
The position in the eyes of the customer will be perceived by appearance, attitude and
behavior of the customer contact employees. Not only does the customer contact
employee influence the customers perception but also the customer base of the
organization does so.
Process Mix
The process mix constitutes the overall procedure involved in using the services offered
by the bank. It is very necessary that the process is very customer friendly. In other
words a process should be such that the customer is easily able to understand and easy
to follow. Today if particular banks formalities are long and the procedure very
complicated the overall process fails and the customer may not be inclined towards using
that banks services.
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Physical evidence is the overall layout of the place i.e. how the entire bank has been
designed. Physical evidence refers to all those factors that help make the process much
easier and smoother. For example, in case of a bank, the physical evidence would be the
placement of the customer service executives desk, or the location of the place for
depositing cheques. It is very necessary that the place be designed in such a manner so
as to ensure maximum convenience to the customer and cause no confusion to him.
The Banks Centralized Collection and Payment Hub (CCPH) manages the entire collection
and payment activity under the Banks Cash Management Services (CMS) across the
country, handling on an average about Rs.5000 crores per month on the collection front
and aboutRs.1500 crores per month on the payment front.
E.g. The Housing Development and Financing Corporation (HDFC) has decided in
introducing a common uniform for all the employees in all its branches all over India. The
plan is possibly in line with the aggressive retail banking adopted by HDFC. A common
uniform its nothing like a revolutionary change but however this little change makes it
very easy for the customer to identify with his service provider and makes the entire
process very easy for him. The more the bank does to make the service easier and
better the more satisfied will be the customer.
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In the days of intense competition, the banks are no different from any other consumer
marketing company. It has become essential for the service firms in general and banks
in particular to identify what the customer's requirements are and how those customer
requirements can be met effectively. In the days where product and price differences are
blurred, superior service by the service provider is the only differentiator left before the
banks to attract, retain and partner with the customers. Superior service quality enables
a firm to differentiate itself from its competition, gain a sustainable competitive
advantage, and enhance efficiency. The benefits of service quality include increased
customer satisfaction, improved customer retention, positive word of mouth, reduced
staff turnover, decreased operating costs, enlarged market share, increased profitability,
and improved financial performance. The construct of service quality has therefore been
a subject of great interest to service marketing researchers.
Service quality is recognized as a multidimensional construct. While the number of
dimensions often varies from researcher to researcher, there is some consensus that
service quality consists of three primary aspects: outcome quality, interaction quality,
and physical service environment quality. Outcome quality refers to the customer's
assessment of the core service which is the prime motivating factor for obtaining the
services (e.g. money received from ATM). Interaction quality refers to the customer's
assessment of the service delivery process, which is typically rendered via a physical
interface between the service provider, in person, or via technical equipment, and the
customer. It includes, for instance, the consumer's evaluation of the attitude of the
service providing staff. The physical service environment quality dimension refers to the
consumer's evaluation of any tangible aspect associated with the facilities or equipment
that the service is provided in/ with. It includes, for example, the physical conditions of
an ATM machine.
The most popular dimensions of service quality features five dimensions: reliability,
assurance, tangibles, empathy and responsiveness. The tangibles dimension corresponds
to the aforementioned physical environment aspect, the reliability dimension corresponds
to the service outcome aspect, and the remaining three represent aspects of interaction
quality. Both the costs and the revenue of firms are affected by repeat purchases,
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GAP MODEL
Customers compare the service they 'experience' with what they 'expect' and when it
does not match the expectation, a gap arises.
The Service Quality Model, also known as the GAP Model, was developed in 1985. It
highlights the main requirements for delivering a high level of service quality by
identifying five gaps' that can lead to unsuccessful delivery of service.
GAP 1: Gap between consumer expectation and management perception: This gap
arises when the management or service provider does not correctly perceive what the
customer wants or needs. For instance hotel administrators may think guests want
better food or in-house restaurant facilities, but guests may be more concerned with the
responsiveness of the staff or the cleanliness of their rooms. Factors that affect the size
of the knowledge gap include:
Market research: - Before introducing a new product or service into the market, a
company must conduct market research to understand whether there would be any
Page 24
demand for the product, and what features should be incorporated. The better this
process is conducted, the smaller the knowledge gap will be. There are methods of
ensuring that customer desires are taken on board. These include: comprehensive
studies, gauging satisfaction after individual transactions (surveys immediately after a
purchase is made), customer panels and interviews, and through customer complaints.
Communication Channels: - The fewer the layers between management and customer
contact personnel, the more likely that customer preferences will be incorporated into
higher-level decision making on the product.
GAP 2: Gap between management perception and service quality specification: This is
when the management or service provider might correctly perceive what the customer
wants, but may not set a performance standard. An example here would be that hospital
administrators may tell the nurse to respond to a request fast', but may not specify how
fast'.
GAP 3: Gap between service quality specification and service delivery: This gap may
arise in situations pertaining to the service personnel. It could happen due to poor
training, incapability or unwillingness to meet the set service standard. An example
would be when a doctor's office has very specific standards of hygiene communicated
but the hired staff may have been poorly trained on the need to follow these strict
protocols.
GAP 4: Gap between service delivery and external communication: Consumer
expectations are highly influenced by statements made by company representatives and
advertisements. The gap arises when these assumed expectations are not fulfilled at the
time of delivery of the service. For example a hospital printed on its brochure may
have clean and furnished rooms but in reality, it may be poorly maintained in this case
the patient's expectations are not met.
GAP 5: Gap between expected service and experienced service: This gap arises when
the consumer misinterprets the service quality. The physician may keep visiting the
patient to show and ensure care, but the patient may interpret this as an indication that
something is really wrong.
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RATER ANALYSIS
RATER is an instrument that might be used to define and measure banking service
quality and to create useful quality-assessment tools. There are many reasons why a
customer should be given QUALITY SERVICES. The most of them are:
Industry being so competitive that a customer should be given the best services
as they have many competitors (the company) and if even a single customer is
lost in todays JLT world then it very difficult to win back the customer.
Most of the customers do not complain as they just opt out and do get satisfied with
better services elsewhere.
Reliabilit
y
Responsi
veness
Assuranc
e
SERVIC
E
QUALI
TY
Tangibilit
y
Empathy
Reliability: This dimension has a direct positive effect on perceived service quality and
customer satisfaction in banking institutions. Banks must provide error free service and
secure online transactions to make customers feel comfortable.
Assurance: Customer expects that the bank must be secured and the behavior of the
employees must be encouraging.
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Tangibility: This dimension deal with modern looking equipments and visual appeal of
banks.
Empathy: Individual attention, customized service and convenient banking hours are
very much important in todays service.
Responsiveness: Customers expect that the banks must respond their inquiry promptly.
Responsiveness describes how often a bank voluntarily provides services that are
important to its customers. Researchers examining the responsiveness of banking
services have highlighted the importance of perceived service quality and customer
satisfaction.
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Research Objective
customers satisfaction.
To know which service quality dimension of the bank is performing well.
To find out the level of perception of the customers from the service quality
Research Scope
The scope of this research is to understand and study the expected and perceived level
of service quality of HDFC Bank offered and availed by its customers segment. This
research is based on primary data and secondary data. This study only focuses on the
dimensions of service quality i.e. RATER Analysis. It aims to understand the skill of the
company in the area of service quality where it is performing well and showcases those
areas which require improvement. The study was done among HDFC Bank employees
and their customers present and going into the HDFC Bank. The survey was restricted to
the bank customers in Delhi only.
Research Importance
The research study is aimed at enlightening the existing services offered by the HDFC
Bank in terms of perception and the actual service quality delivered by the bank.
Superior service quality enables a firm to differentiate itself from its competition, gain a
sustainable competitive advantage, and enhance efficiency. In the days of intense
competition, superior service is the only differentiator left before the banks to attract,
retain and partner with the customers.
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Research Methodology
Primary Data
The primary data was collected by means of a survey. Questionnaires were prepared and
customers of the banks at two branches were approached to fill up the questionnaires.
The questionnaire contains 20 questions which reflect on the type and quality of services
provided by the banks to the customers. The response of the customers is recorded on a
grade scale of strongly disagree, disagree, uncertain, agree and strongly agree for each
question. The filled up information was later analyzed to obtain the required
interpretation and the findings.
Secondary Data
In order to have a proper understanding of the service quality of bank a depth study was
done from the various sources such as service marketing books. A lot of study and
research at secondary level is also collected from the official websites of the HDFC Bank
and various case studies and research papers available on Google & Yahoo.
Research Sampling
Sample Units
Sampling Technique
Research Instrument
Contact Method
Sample Size
Data
Collection
Mechanism
Strongly Agree)
Table 1: Research Samples Information
The study is only for the HDFC Bank confined to a particular location and a very
small sample of respondents (only 100 out of the huge customer base of HDFC
Bank). Hence the findings cannot be treated as representative of the entire
banking industry.
Respondents may have given biased opinions for certain sets of required
questions responses.
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2.15
0.002
-0.148
0.015
-0.04
TOTAL
AVERAGE
1.979
UNWEIGHTED
SERVQUAL
0.3958
SCORE
Table 2: Determination of Unweighted SERVQUAL score for HDFC Bank
Average
Importance
Weighted
PARAMETER
Dimension
Dimension Score
Unweighted Score
2 of questionnaire
(3) = [(1)*(2)]
(1)
2.15
(2)
12
25.80
Average Reliability
0.002
24
0.048
Average Empathy
-0.148
17
-2.516
Average
0.015
25
0.375
Responsiveness
Average Assurance
-0.04
22
-0.88
Average Tangible
TOTAL
46.827
4.565
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and
are
always
ready
to
help
them.
Overall
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HDFC
Banks
A negative gap score in the Assurance dimension indicates that the HDFC Bank
employees are properly and trained in a systematic planned manner in their initial
employment days with the Bank to instil high level of confidence and trust in their
customers. This is clearly reflected with the score of this dimension which depicts
how confident the customers of HDFC Bank are while transacting with the bank.
Moreover, the courteous and trustworthy behaviour of the HDFC employees have
proved to be a big positive factor for their success in this dimension. The Bank
employees have all the required knowledge and updates to answer the questions
posed by the customers in a real time scenario.
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BIBLIOGRAPHY
1. Service Marketing Gap Model [Online]
Available at: https://www.boundless.com/marketing/textbooks/boundlessmarketing-textbook/services-marketing-6/service-quality-51/the-gapmodel-254-4140/images/the-gap-model/
2. RATER Analysis of HDFC Bank [Online]
Available at: https://www.google.co.in/search?
q=rater+analysis+of+hdfc+bank&oq=rater+analysis+of+hdfc+bank&aq
s=chrome..69i57.8269j0j4&sourceid=chrome&es_sm=122&ie=UTF-8
3. GOOGLE Search Engine. [Online]
Available at: https://www.google.co.in/
4. HDFC Bank. [Online]
Available at: http://www.hdfcbank.com
5. Market Research. [Online]
Available at: http://www.marketreseach.com/
6. Measuring Service Quality using SERVQUAL. [Online]
Available at: http://www.kinesis-cem.com/pdf/ServQual.pdf
7. WIKIPEDIA. [Online]
Available at: http://en.wikipedia.org/
8. YAHOO Search Engine. [Online]
Available at: https://in.yahoo.com/?p=us
9. Kotler, Philip; Keller, Kevin Lane; Koshy, Abraham; Jha, Mithileshwar;, n.d.
Marketing Management. 14e ed. s.l.:Pearson Education.
10.Malhotra, N., n.d. Marketing Research: An Applied Orientation Research
Design. 5th Edition ed. s.l.:Prentice Hall of India.
11.Rampal, M. K., n.d. Service Marketing. s.l.:s.n.
12.Zeithaml, V. A., Bitner, M. J., Gremler, D. D. & Pandit, A., 2013. Services
Marketing Integrating Customer Focus Across the Firm. 6e ed. s.l.:McGraw
Hill Education (India).
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APPENDICES
APPENDIX 1: Questionnaire for Measuring Service Quality
using SERVQUAL
Following are the instructions for using the SERVQUAL questionnaire discussed in the
above sections. It has used HDFC Bank as the company for study, but it can be used for
analysis of any company on its service quality scale
[6]
SERVQUAL INSTRUMENT
PART 1 of Questionnaire
Perceptions (Pn)
Expectations (En)
Gap
possesses
believe
the
following
features.
HDFC
has
the
features
number
that
best
shows
your
7: Strongly Agree
1: Strongly Disagree
E1
Excellent
companies
modern
E2
banking
will
7: Strongly Agree
TANGIBLES
P1
HDFC Bank has modern
have
looking equipment.
looking
equipment.
The physical facilities
P2
be visually appealing.
Employees at excellent
banks
E4
will
appearing.
Materials
be
Banks
facilities
P3
neat
associated
HDFC
visually
appealing.
HDFC Banks reception
desk
P4
are
physical
employees
are
neat appearing.
Materials
associated
as
as
pamphlets
or
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pamphlets
or
Score
=Pn En
statements)
visually
an
will
be
at
bank,
at convenient location
appealing
excellent
present at convenient
location.
Average Tangibles SERVQUAL Score
E5
to
RELIABILITY
P5
When
do
promises
something by a certain
E6
problem,
banks
will
sincere
E7
E8
E9
to
do
something by a certain
P6
show
a
in
will
Bank
in solving it.
P7
service
HDFC
problem,
solving it.
Excellent banks
the
Bank
excellent
interest
perform
HDFC
HDFC
the
P8
Bank
service
performs
right
the
first time.
HDFC Bank provides its
promises to do so.
to do so.
Excellent
banks
will
insist
error
free
on
P9
records
Average Reliability SERVQUAL Score
E10
Excellent
give
E11
E12
E13
banks
will
EMPATHY
P10
HDFC Bank gives you
customers
individual attention.
Excellent banks will
individual attention.
P11
HDFC
Bank
operating
convenient
customers.
Excellent banks
customers.
HDFC
Bank
will
P12
has
hours
to
all
has
employees
give
customers
personal attention.
Excellent banks will
P13
HDFC
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Bank
who
its
has
give
your
banks
understand
P14
will
the
specific needs.
E15
Employees of excellent
banks
will
customers
RESPONSIVENESS
P15
Employees
exactly
performed.
Employees of excellent
performed.
P16
E18
HDFC
tell
in
service to customers.
Employees of excellent
Employees
in
HDFC
service.
Employees
in
HDFC
willing
to help you.
to
help
customers.
Employees of excellent
P18
Employees
are
in
HDFC
Bank
never
too
customers requests.
request.
Average Responsiveness SERVQUAL Score
E19
The
behaviour
E21
ASSURANCE
P19
The
banks
will
instil
in
customers.
Customers of excellent
in
of
employees
HDFC
in you.
P20
transactions.
Employees of excellent
Bank.
Employees
banks
will
P21
be
with customers.
Employees of excellent
in
HDFC
consistently courteous
E22
behaviour
employees in excellent
confidence
E20
of
Employees
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in
HDFC
banks will
have the
knowledge to answer
Bank
knowledge
have
the
to
answer
customers questions.
your questions.
Average Assurance SERVQUAL Score
PART 2 of Questionnaire
Listed below are five features pertaining to banks and the services they offer. We would
like to know how much each of these features is important to the customer. Please
allocate 100 points among the five features according to how important it is to you.
Make sure the points add up to 100.
T1
The appearance of the banks physical facilities, equipment, personnel,
T2
T3
T4
accurately.
The Bank's willingness to help customers and provide prompt service.
The knowledge and courtesy of the bank's employees and their ability
T5
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100
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