STUDY OF CONSUMER SATISFACTION IN COMMERCIAL BANKS WITH

SPECIAL REFERANCE TO STATE BANK OF INDIA

1. INTRODUCTION
The banking sector occupies an important place in nation’s economy. It plays a pivotal role in the economic
development of a country. It's a well known fact that no business can exist without customers. Banks have
to deal with many customers every day and render various types of services to their customer. The banking
industry in India has undergone sea changes since independence. The business depends upon client
services and the satisfaction of the customer and hence compelling them to improve customer services
and build up relationship with customers. The banking industry like many other financial service industries
is facing a rapidly changing market, new technologies, economic uncertainties, fierce competition and
more demanding customers and the changing climate has presented an unprecedented set of challenges.
Banking is a customer oriented service industry, therefore, the customer is the focus and customer service
is the differentiating factor. The main driver of this change is changing customer needs and expectations.
Customers in urban India no longer want to wait in long queues and spend hours in banking transactions.
This change in customer attitude has gone hand in hand with the development of ATMs, phone and net
banking along with availability of service right at the customer's doorstep. With the emergence of universal
banking, banks aim to provide all banking product and service offering under one roof and their endeavor
is to be customer centric. With the emergence of economic reforms in world in general and in India in
particular, today‟s banks have come up in a big way with prime emphasis on technical and customer
focused issues. Customer satisfaction, a business term, is a measure of how products and services of a
company meet or surpass customer expectation. It is seen as a key performance indicator within business.
In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a
key differentiator and increasingly has become a key element of business strategy. Customer satisfaction is
an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from
person to person and service to service. The state of satisfaction depends on a number of both
psychological and physical variables. Quality is such an important issue and it is regarded as a strategic
organizational weapon.

Banking in india
Banking in India: originated in the last decades of the 18th century. The first banks were The General
Bank of India, NOW which started in 1786, and Bank of Hindustan , which started in 1790; both are now
defunct. The oldest bank in existence in India is the State Bank of India , which originated in the Bank of
Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three
presidency banks, the other two being the Bank of Bombay and the Bank of Madras , all three of which
were established under charters from the British East India Company. For many years the Presidency banks
acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial
Bank of India , which, upon India's independence, became the State Bank of India in 1955.
HISTORY
Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a
consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still
functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that issues stock and
requires shareholders to be held liable for the company's debt) It was not the first though. That honor
belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it
failed, with some of its assets and liabilities being transferred to the Alliance Bank of Simla.
When the American Civil War stopped the supply of cotton to Lancashire from the Confederate
States, promoters opened banks to finance trading in Indian cotton. With large exposure to speculative
ventures, most of the banks opened in India during that period fey and lost interest in keeping deposits
with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several
decades until the beginning of the 20th century.
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte
de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and
Pondicherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the
most active trading port in India, mainly due to the trade of the British Empire, and so became a banking
center.
The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in
Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has
survived to the present and is now one of the largest banks in India. Around the turn of the 20th Century,
the Indian economy was passing through a relative period of stability. Around five decades had elapsed
since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had
established small banks, most of which served particular ethnic and religious communities.
The presidency banks dominated banking in India but there were also some exchange banks and a
number of Indian joint stock banks. All these banks operated in different segments of the economy. The
exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock
banks were generally under capitalized and lacked the experience and maturity to compete with the
presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it
seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden
bulkheads into separate and cumbersome compartments."
The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi
movement. The Swadeshi movement inspired local businessmen and political figures to found banks of and
for the Indian community. A number of banks established then have survived to the present such as Bank
of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. The
fervour of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi
district which were unified earlier and known by the name South Canara ( South Kanara ) district. Four
nationalised banks started in this district and also a leading private sector bank. Hence undivided Dakshina
Kannada district is known as "Cradle of Indian Banking". During the First World War (1914–1918) through
the end of the Second World War (1939–1945), and two years thereafter until the independence of India
were challenging for Indian banking. The years of the First World War were turbulent, and it took its toll
with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related
economic activities. At least 94 banks in India failed between
State Bank Of India History
The origin of the State Bank of India goes back to the first decade of the nineteenth century with the
establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its
charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first
joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April
1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at
the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January
1921. Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of
the compulsions of imperial finance or by the felt needs of local European commerce and were not
imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however,
shaped by ideas culled from similar developments in Europe and England, and was influenced by changes
occurring in the structure of both the local trading environment and those in the relations of the Indian
economy to the economy of Europe and the global economic framework.

2. LITERATURE REVIEW
Service quality as a factor is extremely difficult to standardize. Parasuraman et al, (1985) define service
quality as the degree of discrepancy between customers’ normative expectations for service and their
perceptions of service performance. Quality has also been defined as ‘the extent to which the service, service
process and the service organisation can satisfy the expectations of the user’,
Smith (1988) defines service quality as meeting the needs and expectations of the customer.
Kotler & Armstrong (1999), defined customer satisfaction as customers’ perception that compares their
pre-purchase expectation with post purchase perception.
Farriss et al (2008) define customer satisfaction as "the number of customers, or percentage of total
customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified
satisfaction goals."
Most studies have indicated that there is a close association between service quality and customer
satisfaction. Cronin Jr. and Taylor (1992), (Gotlieb et al 1994) have in their respective studies concluded
that service quality is an antecedent of customer satisfaction.
Sureshchandran in (2002) specifically studied the relationship between the two and concluded that
although service quality and customer satisfaction are independent they are closely related to each other and
a change in one is likely to lead to a change in the other in the same direction.
Gonu and Boohene (2016) in their study attempted to determine if factors such as customer trust, customer
satisfaction, customer commitment, service quality and switching barriers were antecedents of customer
retention in Ghana Commercial Bank.
Caruana (2002) and Kaura V. & Datta S.K. (2012) in their respective studies determined that service
quality affected customer satisfaction which in turn had an impact on customer loyalty.
Gupta and Aggarwal (2013) conducted a comparative study in Meerut city, India, to evaluate service
quality and resultant customer satisfaction in private banks as compared to public sector ones.
Abduh M. and Alobaad A. (2015) in their study of customers of Islamic Bank in Kuwait evaluated the
impact of perceived service quality on customer satisfaction.
Murugiah L. and Akgam H.A. (2015) in a study attempted to evaluate the impact of three independent
variables - service quality, customer loyalty and security - on customer satisfaction in Libya’s banking
sector.
Although many studies on satisfaction among bank customers have used the SERVQUAL model, there has
not been a clear conclusion as to which of the service quality dimensions most impacts customer
satisfaction.

A study by Brahmbhatt M. and Panelia D. (2008) also used the servqual model to identify the gap between
perception and expectation of the five service quality dimensions of tangibility, reliability, responsiveness
assurance and empathy among customers of public sector, private sector and foreign banks operating in
India.
Swar B.N. (2010) similarly used the servqual model in a comparative study of customer satisfaction &
service quality gaps in private, public & foreign banks.
Khurana S. (2014) in a study involving customers of 10 banks in Haryana, used an instrument based on the
servqual model to study the effect of various dimensions of service quality on customer satisfaction.
In a 2013 study Kaura considered three dimensions of service quality – tangibility, employee behaviour and
information technology of which the last two were found to have a positive impact on satisfaction of private
sector bank customers in India.
Gupta and Dev (2012) found that of the five factors driving customer satisfaction, ‘service quality’ was the
most important.The researcher considered the following five dimensions of SERVQUAL (Parsuraman et al),
while designing the research instrument: 1.Tangibility: includes factors related to the appearance of the
physical facilities, equipment, personnel and communication materials. 2. Reliability: refers to the
confidence that the service will be provided accurately and consistently. 3. Responsiveness: refers to the
speed and willingness to provide service. 4. Assurance: includes factors such as communication, courtesy
and knowledge of employees that make customers confident. 5. Empathy: refers to factors that indicate that
employees are caring, approachable and sensitive to the needs of customers and are fully engaged with them
in every interaction.
Sandip Gosh Hasra and B. L. Srivastava (2009) in their study indicated that the bank should pay attention
to these dimensions of service quality and pay more attention to the dimension of assurance-empathy to
increaseloyalty to a company, willingness to pay, customer commitment and customer trust.
Koushiki Choudhury (2007) in his study suggests that customers perceive four dimensions of service
quality in the case of the retail banking industry in India, namely, attitude, competence, tangibles and
convenience. Identifying the underlying dimensions of the service quality construct in the Indian retail
banking industry is the first step in the definition, and hence, provision of quality service. The paper has
drawn upon the findings of the service quality dimensions to determine the initiatives that bank managers
can take to enhance their employees‟ skills and attitudes and instill a customer-service culture.
Sudesh (2007) revealed that poor service quality in public sector banks ismainly because of deficiencies in
tangibility, lack of responsiveness and empathy. Private sector banks, on theother hand, were found to be
more reformed in this respect. Above all, foreign banks were relatively close to the expectations of their
customers with regard to various dimensions of service quality. Further, the study revealed that there existed
service quality variations across demographic variables and suggested that the management of banks should
pay attention to potential failure points and responsive to customer problems.
Joshua A J and Moli P. Koshi(2005), in their study on „Expectation and perception of service quality in
old and new generation banks‟, observed that the performance of the new generation banks across all the
service quality dimensions are better than those of old generation banks.
Al-Fazwan (2005) in his study found that the bank should concentrate on the accessibility dimension. He
stated that the particular bank should make maximum efforts to raise the level of services to meet the
customer expectations.

OBJECTIVES of the study

1- To analyze the customer satisfaction at different branches of state bank of india.
2- To study the major factors responsible for their satisfaction.
3- To find out the resent level of quality of services and the area for improvement in near future.
Scope of the study

Customer satisfaction
"Customer satisfaction is measured at the individual level, but it is almost always reported at an aggregate
level. It can be, and often is, measured along various dimensions. A hotel, for example, might ask
customers to rate their experience with its front desk and check-in service, with the room, with the
amenities in the room, with the restaurants, and so on.

Customer satisfaction, a term frequently used in marketing, is a measure of how products and services
supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the
number of customers, or percentage of total customers, whose reported experience with a firm, its
products, or its services (ratings) exceeds specified satisfaction goals." In a survey of nearly 200 senior
marketing managers, 71 percent responded that they found a customer satisfaction metric very useful in
managing and monitoring their businesses.

"Customer satisfaction provides a leading indicator of consumer purchase intentions and loyalty.
"Customer satisfaction data are among the most frequently collected indicators of market perceptions.

BANK CUSTOMER SATISFACTION

Banking operations are becoming increasingly customer oriented. The ability of banks to offer clients
access to several markets for different classes of financial instruments has become a valuable competitive
edge.Convergence in the industry to cater to the changing demographic expectations is now more than
evident. Bank assurance and other forms of cross selling and strategic alliances will soon alter the business
dynamics of banks and fuel the process of consolidation for increased scope of business and revenue.Thus,
it is imperative for banks to get useful feedback on their actual response time and customer service
qualityaspects of retail banking, which in turn will help them take positive steps to maintain a competitive
edge.
Satisfaction / Non-satisfaction are an affectional response to the evaluation of the quality of service
consumed. It
has the key elements mentioned as:
• Expectations: Customer's satisfaction seed is planted at the pre-purchase stage when customers receive
"expectations" or beliefs about what they expect from the product or service in which these expectations
aretransferred to the post-purchase stage when they are reactivated at the time of consumption.
• Performance: During consumption, we experience the real product from the standpoints of utilization
andreceiving performance about the dimensions which are important for us.
• Confirmation/non-confirmation: The comparison of the real performance with consumer's expectations
either results in the "confirmation" of consumer's expectation (when expected and real levels are the
same),or "non-confirmation" of the expectations (when the real performance is higher or lower than the
expectedlevel).
• Difference: If performance level is not equal, measuring the difference of the expected and real levels
determines the performance. For negative non- confirmations which are lower than the expected levels,
more differences result in a higher level of non-satisfaction.Therefore customer's satisfaction is obtained
when real levels of performance satisfy the expected levels or arehigher than. That satisfaction is finally
made both with confirmation and positive non- confirmation. Non-satisfaction is obtained when there is a
negative non-confirmation in which the real results are lower than theexpectation levels of the real
performance.

NEED TO MEASURE CUSTOMER SATISFACTION

A customer saved is a customer earned – a saved customer can be worth up to five new Customers.
Customers are viewed as a group whose satisfaction with the enterprise must be incorporated in strategic
planning efforts. Forward-looking companies are finding value in directly measuring and tracking customer
satisfaction as an important strategic success indicator. Evidence is mounting that placing a high priority on
customer satisfaction is critical to improved organizational performance in a global market place. With
better understanding of customers' perceptions, companies can determine the actions required to meet
the customers needs. They can identify their own strengths and weaknesses, where they stand in
comparison to their competitors, chart out the path of future progress and improvement. Customer
satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate
improvements in the work practices and processes used within the company. When buyers are powerful,
the health and strength of the company's relationship with its customers – its most critical economic asset
– is its best predictor of the future. Focusing on competition has its place, but with buyer power on the
rise, it is more important to pay attention to the customer.
Customer satisfaction is quite a complex issue and there is a lot of debate and confusion about what
exactly is required and how to go about it. This article is an attempt to review the necessary requirements,
and discuss the steps that need to be taken in order to measure and track customer satisfaction.

Limitations of study
1.Sample size was limited to 50 only. The sample size may not represent whole market.

2. The study has not been conducted over an extended period of time considering both
market ups and downs. The market state has a significant influence on the satisfaction
level of customers. The study cannot capture such situations.

3. This study is limited to the customers of godbjhaga only. Therefore the inferences
cannot be generalized.
4. A few respondents were not able to understand some of the terms of the questionnaire
which may affect the study to a little extent.

Research methodology

Data analysis

Findings & recmondations

Conclusion

Referance & bibilography