Comparison Of Indian Public And Private Sector

Published Date: 02 Nov 2017

Abstract

Digital generation has upturned norms of communication, engagement, decision-making and transaction in Banking Sector. Marketing practitioners and scholars are under increased pressure to be more accountable for and to show how marketing expenditure adds to customers’ value. Customer experience becomes a differentiating factor for public and private sector banks. Attempt has been made to assess and compare the performance of public and private sector banks in terms of customers’ experience and customers’ satisfaction pertaining to Personnel, Products and Services offered, Facilitating services, Image, Network accessibility, Technological excellence of Banks. It has been found that public sector banks are not behind in providing new innovative services and products, customer centric approach by employees, strengthening image of bank, expanding accessibility, offering more augment services to the customers. It further indicate that private sector banks are losing its experience based core competitive area where they started with that leads to serious strategic challenge for private sector banks.

Dr. Raja M. Rather – Associate Professor, G.H. Patel P.G. Department of Business Management, (MBA Programme), Sardar Patel University, Vallabh Vidyanagar-388120. E-mail: [email protected], (M) 9825271352

Assessment and Comparison of Indian Public and Private Sector Banks through Customers’ Experience and Customer Satisfaction Survey

Introduction

Marketing practitioners and scholars are under increased pressure to be more accountable for and to show how marketing expenditure adds to customers’ value. The perceived lack of accountability has undermined marketing’s credibility, threatened marketing’s standing in the firm, and even threatened marketing’s existence as a distinct capability within the firm. The Marketing Leadership Council reports that 70% of advertising budgets are in decline, compared with 51%, 47%, and 44% for human resources, information technology, and general counsel functions: "Having exhausted cost-saving opportunities in virtually every other function," marketing is "next in the line of fire." There are three challenges to the measurement of marketing productivity. The first challenge is relating marketing activities to long-term effects (Dekimpe and Hanssens 1995). The second challenge is the separation of individual marketing activities from other actions (Bonoma and Clark 1988). Third, the use of purely financial methods has proved inadequate for justifying marketing investments: Nonfinancial metrics are also needed (Clark 1999; Marketing Science Institute 2000). [i] 

Digital generation has overturned long held norms of communication, engagement, decision-making and transaction. The future of banking will be directed by generation young, educated, networked and independent thinking consumers, who want complete control over their decision, including those related to finance. Ensuring a good customer experience at every customer touch point is the cornerstone of a successful growth strategy. A good customer experience will drive customer acquisition and promote customer retention which translates into increased profit. [ii] Because of intense competition there is decline in brand loyalty. The customers are switching over frequently to avail the better facilitates from other banks. Therefore it is very crucial for both Public and Private Sector banks to transforms their marketing strategy with the help of customers’ experience and customers’ satisfaction data. Banks need to use customer’s related data not only to design marketing strategy but also to assess the performance of their marketing efforts. Banks are under paramount pressure to relate their qualitative data with quantitative performance.

Customer Satisfaction from Marketing Productivity Perspective

Customer satisfaction data are among the most frequently collected indicators of market perceptions. They basically important for two reasons first, within organizations, the collections, analysis, and dissemination of these data send a message about the importance of tending to customers and secondly it is ensuring that they have a positive experience with the company’s good and services.

Customer satisfaction can be viewed in terms often number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals. The metrics related to customer satisfaction quantify an important dynamic. When a brand has loyal customers, it gains positive word-of-mouth marketing, which is both free and highly effective. 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. Additionally, in a holistic sense, the hotel might ask about overall satisfaction "with your stay". [iii] 

Although sales or market share can indicate how well a firm is performing currently, satisfaction is perhaps the best indicator of how likely it is that the firm’s customer will make further purchases in the future. Much research has focused on the relationship between customer satisfaction and relation. Studies indicate that the ramifications of satisfaction are most strongly realized at the extremes.

Public V/s Private Sector Banks

The Indian banking can be broadly categorized into nationalized (government owned), privet banks and specialized banking institutions. The reserve bank of India acts a centralized body monitoring any discrepancies and shortcoming in the system. Ever since nationalization of banks took place in 1969, the public sector banks or the nationalized banks have acquired a prominent place and has since then seen tremendous progress. 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 customer base. [iv] 

As competition strengthen with the advent of new private banks with technology advantage in the early 1990s the scenario started changing rapidly from the demand side and experience become key input. Technology enabled products, processes, channel, pricing, service and value propositions created a new situation. Banks in the public sector space successfully upgraded their technology platforms to fight competition and keep the market share intact. The private sector players were able to make a dent one the market share by focusing on customer experience in a holistic way but the penetration levels were always challenged by matching technology up gradation in different dimensions of public sector players. Thus products and services became almost bank neutral and customer experience becomes a differentiating factor. In the view of the aforesaid, it is pertinent to study the customer experience. [v] 

It was found that customers of public sector banks are more satisfied with the service quality, than those of private sector banks in the study conducted by Pooja Mengi. [vi] There seems to be a great amount of variation with respect to the level of service quality offered by the different groups of banks. Identifies the factors that discriminate the three groups of banks. Customers in developing economies seem to keep the "technological factors" of services such as core service and systematization of the service delivery as the yardstick in differentiating good and bad service while the "human factors" seem to play a lesser role in discriminating the different groups of banks. [vii] Â 

Better human, technical and tangible aspects of service quality of the bank branches increase customer satisfaction. Human aspects of service quality were found to influence customer satisfaction more than the technical and tangible aspects. Customer satisfaction furthers customer loyalty. Increase in service quality of the banks can satisfy and retain customers. In the Indian banking sector, human aspects are more important than technical and tangible aspects of service quality that influence customer satisfaction and promote and enhance customer loyalty. [viii] 

In the line of the above studies the present studies attempt to compare the performance of public and private sector banks in terms of customers’ experience and customers’ satisfaction pertaining to Personnel, Products and Services offered, Facilitating services, Image, Network accessibility, Technological excellence of Banks.

Research Methodology

Customers’ Experience and Customers’ Satisfaction survey of 400 customers have been carried out in order to assess and compare the performance of public and private sector banks in terms of various marketing related aspects. It has been conducted in four major cities Bombay, Surat, Baroda and Ahmedabad. Well-structured Questionnaire has been used to collect primary data from customers about service personnel, service offering, facilitating services, accessibility, image and overall customer satisfaction of public and private sector banks. Customers have been asked to responds for their primary banks which they use the most. Customers have been randomly selected at the selected branches of public and private sector banks for their responses. Levene's Test for Equality of Variances, Independent T test for mean, One way Analysis of Variance – F test have been carried out to compare the performance of public and private sector banks for all the aspects.

Discussion of Findings and Marketing Implication

68 percent customers preferred public sector bank as primary bank while 31 percent preferred private sector bank as primary bank. Bank of Baroda is found as the most preferred primary bank among the respondents and second most preferred primary bank is State Bank of India. It indicates those public sector banks have been give first choice by more number of customers.

There is no significance difference regarding customers’ perception about the service personnel of public and private sector banks for the various aspects like knowledge and the skill of personnel, relationship with personnel of bank, ability of personnel to understand the need of customers. However there are very few customers who are fully affirmative in case of both public and private sector banks for these aspects. With the help of independent "T test" and "One Way Analysis of Variance (F)" test that Customers of public sector banks are significantly differ in their level of satisfaction at 0.05 per cent level of significance; Customers of public sector banks are more satisfied than private sector banks for responsiveness of the personnel. It point out that public sector banks are successfully become more professional in their approach.

So far as variety of services offered by bank, cost of services, interest rate, customers of both private and public sector banks have similar view except special products offered by banks. Customers of Public Sector banks are significantly more satisfied than private sector banks for getting special products. In case banks network also, more number of customers of public sector banks believed that network of their banks is expanded significantly.

On overall basis, there is no significance difference found in case of Satisfaction level from the personnel, products & services, image of bank, facilitating services, accessibility and overall satisfaction from all these aspects. It leads to the conclusion that public sector banks are not far behind in providing new innovative services and products, customer centric approach by employees, strengthening image of bank, expanding accessibility, offering more augment services to the customers. So marketing efforts put of public sector banks in terms of introducing innovative products and services, affordable price, wide distribution of services through expanded network and make over of bank’s image through innovative marketing communication; become successful. On other hand private sector banks are also giving tough competition to public sector banks. Private sector banks are not legging behind the public sector banks in any criteria. Therefore, there is absence of any special area where public and private sectors banks have complete competitive edge over each other from customer’s perception point of view there are more less same now. It is a big achievement for private sector banks because within very short time span private sector banks successfully understand the need of customers and avail the innovative services with competitive price and wide excellent technology based network. On other hand public sector banks also significantly change their marketing approach in all most all fronts. It further indicate that private sector banks are losing its experience based core competitive area where they started with that leads to serious strategic challenge for private sector banks. So, in times to come, both public and private sector banks have to think out of box to attract more number of customers. Both should focus more on Customer Convenience, Customer Relationship, Customer Retention, Self Help Technology, Time Saving process, IT and Internet based services.

Young consumers having age below 25 are comparatively more satisfied with private sector banks than other age groups. Customers of Age group of 26 to 35 and 36 to 45 are more or less equally satisfied with public and private sector banks. However age group of above 45 is considerably more satisfied with services of public sector banks. So private sector banks are becoming more popular among young generation customers having the age group below 25. Service Class Customers and Professional group of consumers are more satisfied with public sector banks while Business Class customers and Students are more satisfied with services of private sector banks.

Conclusion

Both Public and Private Sectors banks are striving very hard to win the customers with varieties of innovative services. Though Private Sectors banks are comparatively having less experience in Indian market but they have quickly well understood Indian Consumers. Those Public Sector Banks which have reinvented their marketing approach remained competitive. Customers start perceiving both public and private banks equally in terms of service quality, knowledge of employees and overall marketing approach of banks. Private sector banks successfully woo more number of young customers. So both public and private sector banks will have opportunities and threats generated by initiatives of each other.

Table- 1: Mean Score Comparison of Public and Private Sector Banks

Experience and Satisfaction Statements

Sector

N

Mean

Std. Dev

Std. Error

Lower Bound

Upper Bound

Knowledge and the skill of personnel

Public

273

2.1978

.52622

.03185

2.1351

2.2605

Privet

127

2.1417

.51523

.04572

2.0513

2.2322

Total

400

2.1800

.52276

.02614

2.1286

2.2314

What do you think about the responsiveness of the personnel

Public

273

1.9744

.63252

.03828

1.8990

2.0497

Privet

127

1.7559

.65121

.05779

1.6415

1.8703

Total

400

1.9050

.64577

.03229

1.8415

1.9685

What do you think relationship with personnel of bank

Public

273

1.7326

.73635

.04457

1.6449

1.8203

Privet

127

1.6457

.72951

.06473

1.5176

1.7738

Total

400

1.7050

.73439

.03672

1.6328

1.7772

How often the personnel can understand and satisfy your needs

Public

273

2.0403

.71886

.04351

1.9546

2.1259

Privet

127

1.9134

.63024

.05592

1.8027

2.0241

Total

400

2.0000

.69369

.03468

1.9318

2.0682

What is your opinion about the variety of the offered products and services

Public

273

3.5495

.79424

.04807

3.4548

3.6441

Privet

127

3.5906

.60885

.05403

3.4836

3.6975

Total

400

3.5625

.73991

.03700

3.4898

3.6352

Which is your satisfaction level from the provided interest rates

Public

273

2.0549

.65354

.03955

1.9771

2.1328

Privet

127

1.9606

.65950

.05852

1.8448

2.0764

Total

400

2.0250

.65609

.03280

1.9605

2.0895

Which is your satisfaction level from the cost

Public

273

2.0440

.59863

.03623

1.9726

2.1153

Privet

127

2.0079

.62356

.05533

1.8984

2.1174

Total

400

2.0325

.60610

.03031

1.9729

2.0921

What do you think about bank’s special products

Public

273

1.8901

.64939

.03930

1.8127

1.9675

Privet

127

1.6220

.56244

.04991

1.5233

1.7208

Total

400

1.8050

.63481

.03174

1.7426

1.8674

Which is your opinion about the credibility of your bank

Public

273

2.5421

.54828

.03318

2.4768

2.6075

Privet

127

2.5276

.60194

.05341

2.4219

2.6333

Total

400

2.5375

.56515

.02826

2.4819

2.5931

Do you believe in the technological excellence of your Indian commercial bank

Public

273

.9634

.18820

.01139

.9409

.9858

Privet

127

.9055

.29367

.02606

.8539

.9571

Total

400

.9450

.22827

.01141

.9226

.9674

Do you believe that your Indian commercial bank can satisfy your future needs

Public

273

2.3516

.52244

.03162

2.2894

2.4139

Privet

127

2.2835

.48628

.04315

2.1981

2.3689

Total

400

2.3300

.51162

.02558

2.2797

2.3803

What do you think about the appearance of your Bank

Public

273

2.5751

.58382

.03533

2.5055

2.6447

Privet

127

2.5984

.55291

.04906

2.5013

2.6955

Total

400

2.5825

.57360

.02868

2.5261

2.6389

Which is the average waiting time in your bank?

Public

273

1.9597

.63175

.03824

1.8844

2.0350

Privet

127

2.0394

.60947

.05408

1.9323

2.1464

Total

400

1.9850

.62510

.03126

1.9236

2.0464

Which is your opinion about the service processes in your bank

Public

273

2.4249

.59009

.03571

2.3546

2.4952

Privet

127

2.3307

.57811

.05130

2.2292

2.4322

Total

400

2.3950

.58723

.02936

2.3373

2.4527

The information you receive from the bank

Public

273

2.3077

.58835

.03561

2.2376

2.3778

Privet

127

2.2756

.55887

.04959

2.1775

2.3737

Total

400

2.2975

.57865

.02893

2.2406

2.3544

Which is your opinion about your bank’s network

Public

273

2.5055

.56309

.03408

2.4384

2.5726

Privet

127

2.3701

.60163

.05339

2.2644

2.4757

Total

400

2.4625

.57830

.02891

2.4057

2.5193

How often the service system appears troubles

Public

273

2.4652

.60000

.03631

2.3937

2.5367

Privet

127

2.5118

.64076

.05686

2.3993

2.6243

Total

400

2.4800

.61281

.03064

2.4198

2.5402

Which is your opinion about the location of your Bank

Public

273

2.3443

.55451

.03356

2.2783

2.4104

Privet

127

2.3150

.55921

.04962

2.2168

2.4132

Total

400

2.3350

.55547

.02777

2.2804

2.3896

Overall, which is your satisfaction level from the personnel

Public

273

3.3883

.97174

.05881

3.2725

3.5041

Privet

127

3.2520

.97564

.08657

3.0806

3.4233

Total

400

3.3450

.97383

.04869

3.2493

3.4407

Overall, which is your satisfaction level from the products & services of your bank

Public

273

3.7912

.74533

.04511

3.7024

3.8800

Privet

127

3.7874

.74140

.06579

3.6572

3.9176

Total

400

3.7900

.74316

.03716

3.7170

3.8630

Overall, which is your opinion about the image of your bank

Public

273

2.6484

.53633

.03246

2.5844

2.7123

Privet

127

2.6693

.54997

.04880

2.5727

2.7659

Total

400

2.6550

.54010

.02700

2.6019

2.7081

Overall, which is your satisfaction level from services of your bank

Public

273

3.7985

.75225

.04553

3.7089

3.8882

Privet

127

3.8504

.70236

.06232

3.7271

3.9737

Total

400

3.8150

.73629

.03681

3.7426

3.8874

Overall, which is your satisfaction level from the accessibility provided by your bank

Public

273

3.6300

.73172

.04429

3.5428

3.7172

Privet

127

3.6142

.70201

.06229

3.4909

3.7374

Total

400

3.6250

.72158

.03608

3.5541

3.6959

Overall, taking into all above aspects

Public

273

3.8828

.68129

.04123

3.8016

3.9640

Privet

127

3.9134

.61752

.05480

3.8049

4.0218

Total

400

3.8925

.66109

.03305

3.8275

3.9575

Table – 2: Comparison of Public and Private Sector Banks by Independent T Test

Experience and Satisfaction Aspects

Equal variances

assumed or Not

Levene's Test for Equality of Variances

t-test for Equality of Means

F

SIG.

T

Knowledge and the skill of personnel

Equal variances assumed

1.630

.202

.999

.319

Equal variances not assumed

1.006

.315

Responsiveness of the personnel

Equal variances assumed

7.954

.005

3.185

.002

Equal variances not assumed

3.152

.002

Relationship with personnel of bank

Equal variances assumed

.033

.857

1.102

.271

Equal variances not assumed

1.106

.270

Ability of personnel to understand customers’ need

Equal variances assumed

3.087

.080

1.707

.089

Equal variances not assumed

1.791

.074

Variety of the offered products and services

Equal variances assumed

3.743

.054

-.517

.606

Equal variances not assumed

-.568

.570

Satisfaction level from the provided interest rates

Equal variances assumed

.004

.951

1.340

.181

Equal variances not assumed

1.335

.183

Satisfaction level from the cost

Equal variances assumed

.012

.915

.554

.580

Equal variances not assumed

.546

.586

Experience about bank’s special products

Equal variances assumed

.816

.367

4.005

.000

Equal variances not assumed

4.220

.000

Experience about the credibility of your bank

Equal variances assumed

2.140

.144

.240

.811

Equal variances not assumed

.232

.817

Ability of banks to satisfy future need of customers

Equal variances assumed

6.442

.012

1.242

.215

Equal variances not assumed

1.275

.204

Appearance of Bank

Equal variances assumed

.839

.360

-.378

.705

Equal variances not assumed

-.386

.700

Average waiting time in bank

Equal variances assumed

.322

.571

-1.187

.236

Equal variances not assumed

-1.203

.230

Experience about the service processes in bank

Equal variances assumed

1.600

.207

1.496

.136

Equal variances not assumed

1.507

.133

Accessibility of information in banks

Equal variances assumed

1.608

.205

.516

.606

Equal variances not assumed

.526

.599

Experience about bank’s network

Equal variances assumed

.354

.552

2.190

.029

Equal variances not assumed

2.138

.034

Frequency of service system troubles

Equal variances assumed

.617

.433

-.708

.480

Equal variances not assumed

-.691

.490

Experience about the location convenience of Bank

Equal variances assumed

.102

.750

.492

.623

Equal variances not assumed

.490

.624

Overall, satisfaction level from the personnel

Equal variances assumed

.183

.669

1.304

.193

Equal variances not assumed

1.302

.194

Overall, satisfaction level from the products & services of your bank

Equal variances assumed

.007

.935

.048

.962

Equal variances not assumed

.048

.962

Overall, opinion about the image of your bank

Equal variances assumed

.081

.776

-.361

.719

Equal variances not assumed

-.357

.721

Overall, satisfaction level from services of your bank

Equal variances assumed

2.055

.152

-.655

.513

Equal variances not assumed

-.672

.502

Overall, satisfaction level from the accessibility provided by your bank

Equal variances assumed

.386

.535

.204

.838

Equal variances not assumed

.208

.836

Overall, taking into account all aspects

Equal variances assumed

1.707

.192

-.431

.667

Equal variances not assumed

-.446

.656

Table – 3 Comparisons of Public and Private Sector Banks by One Way ANOVA

Statements

Sum of squares

DF

Mean Square

f

Sig.

Knowledge and the skill of personnel

Between Groups

.272

1

.272

.997

.319

Within Groups

108.768

398

.273

Total

109.040

399

Responsiveness of the personnel

Between Groups

4.136

1

4.136

10.146

.002

Within Groups

162.254

398

.408

Total

166.390

399

Relationship with personnel of bank

Between Groups

.655

1

.655

1.215

.271

Within Groups

214.535

398

.539

Total

215.190

399

Ability of personnel to understand customers’ need

Between Groups

1.396

1

1.396

2.915

.089

Within Groups

190.604

398

.479

Total

192.000

399

Variety of the offered products and services

Between Groups

.146

1

.146

.267

.606

Within Groups

218.291

398

.548

Total

218.438

399

Satisfaction level from the provided interest rates

Between Groups

.771

1

.771

1.795

.181

Within Groups

170.979

398

.430

Total

171.750

399

Satisfaction level from the cost

Between Groups

.113

1

.113

.307

.580

Within Groups

146.465

398

.368

Total

146.578

399

Experience about bank’s special products

Between Groups

6.228

1

6.228

16.038

.000

Within Groups

154.562

398

.388

Total

160.790

399

Experience about the credibility of your bank

Between Groups

.018

1

.018

.057

.811

Within Groups

127.419

398

.320

Total

127.437

399

Ability of banks to satisfy future need of customers

Between Groups

.403

1

.403

1.542

.215

Within Groups

104.037

398

.261

Total

104.440

399

Appearance of Bank

Between Groups

.047

1

.047

.143

.705

Within Groups

131.230

398

.330

Total

131.277

399

Average waiting time in bank

Between Groups

.550

1

.550

1.409

.236

Within Groups

155.360

398

.390

Total

155.910

399

Experience about the service processes in bank

Between Groups

.769

1

.769

2.237

.136

Within Groups

136.821

398

.344

Total

137.590

399

Accessibility of information in banks

Between Groups

.089

1

.089

.266

.606

Within Groups

133.508

398

.335

Total

133.598

399

Experience about bank’s network

Between Groups

1.589

1

1.589

4.798

.029

Within Groups

131.848

398

.331

Total

133.438

399

Frequency of service system troubles

Between Groups

.188

1

.188

.501

.480

Within Groups

149.652

398

.376

Total

149.840

399

Experience about the location convenience of Bank

Between Groups

.075

1

.075

.242

.623

Within Groups

123.035

398

.309

Total

123.110

399

Overall - satisfaction level from the personnel

Between Groups

1.611

1

1.611

1.701

.193

Within Groups

376.779

398

.947

Total

378.390

399

Overall - satisfaction level from the products & services of your bank

Between Groups

.001

1

.001

.002

.962

Within Groups

220.359

398

.554

Total

220.360

399

Overall -opinion about the image of your bank

Between Groups

.038

1

.038

.130

.719

Within Groups

116.352

398

.292

Total

116.390

399

Overall - satisfaction level from services of your bank

Between Groups

.233

1

.233

.429

.513

Within Groups

216.077

398

.543

Total

216.310

399

Overall - satisfaction level from the accessibility provided by your bank

Between Groups

.022

1

.022

.042

.838

Within Groups

207.728

398

.522

Total

207.750

399

Overall- taking into account all above aspects

Between Groups

.081

1

.081

.185

.667

Within Groups

174.296

398

.438

Total

174.378

399

Table – 4 Overall Satisfaction for among different age groups

Age of the Respondents

Sector

Mean

Std. Deviation

N

Below 25

Public sector

3.5417

.73038

72

Privet Sector

3.9600

.61101

25

Total

3.6495

.72228

97

26 to 35

Public sector

4.0438

.57992

137

Privet Sector

3.9740

.62774

77

Total

4.0187

.59704

214

36 to 45

Public sector

3.8800

.68928

50

Privet Sector

3.8000

.52315

20

Total

3.8571

.64349

70

Above 46

Public sector

4.0714

.73005

14

Privet Sector

3.2000

.44721

5

Total

3.8421

.76472

19

Total

Public sector

3.8828

.68129

273

Privet Sector

3.9134

.61752

127

Total

3.8925

.66109

400

Fig.-1

Table – 5 Overall Satisfaction for among different Occupational groups

Occupation

Sector

Mean

Std. Deviation

N

Service

Public sector

3.9448

.64312

145

Privet Sector

3.8289

.61942

76

Total

3.9050

.63606

221

Profession

Public sector

4.1000

.64072

20

Privet Sector

3.8750

.35355

8

Total

4.0357

.57620

28

Business

Public sector

3.8718

.70911

78

Privet Sector

4.0645

.62905

31

Total

3.9266

.68996

109

Other (Mainly Students)

Public sector

3.4667

.68145

30

Privet Sector

4.0833

.66856

12

Total

3.6429

.72655

42

Total

Public sector

3.8828

.68129

273

Privet Sector

3.9134

.61752

127

Total

3.8925

.66109

400

Fig.-2

Note: Other category mainly include students