A STUDY ON CUSTOMER RETENTION MANAGEMENT PRACTICES IN

BANKING SECTOR WITH SPECIAL REFERENCE TO SBI (MPL)

*N. GUNASEKHAR REDDY

**Dr. K.V. GEETHA DEV Ph.D.
ABSTRACT:

India is the second most populated country in the world. India has a different country
when it compared to the other nations with its social, geographical and economic characteristics.
India is a developing country and its people are needed for banking services. In a developing
country there is scope for the big boom in the banking services, when we attract the customers
and retain them with long term. We can make the business very profitably and also in a large
scale. So we need to maintain a very satisfactory service to the customers to retain them and also
with the entry of the private sector and foreign banks the services of banks are scaled to a
different level and also they compete with the national level. SBI is the government sector in the
India . In the British era 1921, there were the presidency banks in India one is bank of Bombay
and bank of Calcutta and bank of madras. In 1921 by the amalgamation of these three banks the
imperial bank of India was established. In 1955 the government of India and a countries central
bank, the reserve bank of India assumed joint ownership of IBI, which was renamed as the state
bank of India by the SBI act. The SBI has the extensive branch network, with over 24000
branches in India and over 190 offices in 35 other countries across the world. and also 59000
ATM’s in India. All the banks are provide the same core services, so all the banks trying to
provide the better quality of services to the customers to retain them

*MBA, MITS College, Angallu,7901023654,mail id: [email protected]

**Assistant professor, MITS College.

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1.1: INTRODUCTION:

A bank is a financial institution doing the financial activities like receiving the deposits
and lending services for needy people. Banks are providing the different services like cheque
payments, discounting of bills of exchange, collecting &payments of the credit instruments and
consultancy services and wealth management.
Before 1991 only government is maintaining other banks and there is no competition. But
after the 1991 when the country faces the economic emergency, at that time the country at the
bankrupt stage, at that time the government formed a committee to give the suggestions to
overcome the present situation and outcome from the present economic crisis Narasimhan
committee had formed under the M.Narasimhan who is the 13 th governor of the RBI. The
committee suggests that the government has to change the policies in the banking sector. It
recommends the three tier banking structure three large banks with international presence, 8to 10
national banks and a large number of regional and local banks. At that time the government
reduces the rules and regulations in banking sector here many private sector banks are came into
the industry and also many NBFC’s also had played a role in the financial sector.

1.2: REVIEW OF LITURATURE

1: Nesrin ozatac, Tulen saner, Zeynep Suzmen sen,

The aim of the study is to know the determinants of customer satisfaction in the banking
sector in north Cyprus. All the banks are giving the same services to the customers so it has to
give the superior services to its customers. The services are intangible, perishable. The basic
assumption of measurement was that customers can evaluate a firm services by comparing their
perceptions by the expectations. There are 10 service quality determinants are there like
reliability, responsiveness, competence, access, courtesy, communication, knowing the customer
and credibility. People are expecting the practical solutions, personal attention, and special
treatment from the bank employees. The employer in the banking sector can work like sales
person and agent between the bank and the customer. Some old customers are don’t care about
the looks of the staff they only look about how they are treated by the bank.
2: Christine T.Ennew and Martin R. Binks school of management and finance, university of
Nottingham, UK. (1996)
The service quality is the major factor in the customer retention. We can improve the
organization performance by attracting and retaining the satisfied customers. Customer retention
is more benifitial than the acquiring the new one. Employee satisfaction is the key in achieving
the customer retention because the employers are the main in the delivering banking services to
the customers. They are satisfied in the job they can work more willingly and maintain a long
term relationship with customers and familiarity with them. Customer retention is a behavioural
construct. The customers can be retained due to the switching cost, lack of perceived difference
and local constraints.
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3: Norizan mohd kassim, assistant professor in the Qatar university
Nizar souiden Assistant professor at lava university, Canada
The customer satisfaction is not only the factor retaining the customer also maintaining a
strong sense of image and creating a strong corporate identity is important for banking. Image is
value of firm that can be build in the minds of the people and its stakeholders. The customer
retention is important because acquiring a new customer is costs higher than retaining the new
one. If a customer is retain in a bank for a long time they can increase their activities through the
bank can lead to the profitability of the bank. The customer satisfaction can be measured by the
perceived level of service over expected level of services. The management of the bank can train
its employees to give the best level services to the customers for satisfying them.
4: sefer gumus , Serpil Gumus beykent university , istambul, turkey.
There is a fierce competition in the banking sector. To retain the customers the bankers have to
provide different services to the customers innovatively. ATM’s are introduced at first to easily
withdraw and deposit the money in the bank accounts of the customers at any place without going to
the bank. This saves a lot of time and efforts to the customers and also relieves from the carrying the
cash to travel and they can easily withdraw money. The customers are also seeking that from the
bankers end is to orientation to the services to the customers about how to use the newly introduced
technology. and gives a responsive services about the service.
5: Dr p. sashikala associate professor in iBS, IFHE university shankerapally, Hyderabad.
After the globalization the banking sector changed dramatically. There are no of private
and foreign banks are also came into the banking sector. There is a great competition among
them to retain the customers, because the cost to acquire a new customer is more than retain one.
The profitability and the existence of the bank is depends upon that how many customers are
regularly using the bank services at what extent. All the core bank services are same here we
have to give the customized services to the customers to attract them and also separate us from
other service providers. We also have to build a brand image in the customers so that they can
give us the preference over our competitors. The following factors are affecting the customer
loyalty to a large extent are include satisfaction, trustworthiness, image and relationship.

6: Puspalatha Mahapatra, Namitha rath, Nishikanta Mishra,

After the 1991 new economic reforms, the Indian banking industry changed a lot. Before
that there is only public sector banks are there in the banking sector. After 1991 reforms the
Indian government liberalizes the laws so there are many banks are came in to the existence. The
introduction of the foreign banks also raises the service level in the whole banking sector here
the existed banks also faces a lot of competition due to that the customer is have the many
choices he can choose according to his needs, so the banks are maintain a good relation with the
customers to retain them in their bank and make them as a loyal customer. Inter personal
relationships are important to maintain the good relation with customer. The customers are feel
like that they are gain the attention from the bank. That can make them to retain to the bank.

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7:Dr. Shraddha mayuresh bhome department of b.com (Accounting and Finance)
The Indian banking sector is still unfolding with growth in the Indian economy. The
major part of the India population lives in the rural and urban areas in the country. They are need
the banking services to maintain the financial matters and also planning their money for future.
The competition in the banking sector is very high due to the very large no of service provides
and also all of them are want to maintain a good relation with people because only satisfied
customer can stay with bank for s long period of time and also done the lot of transactions so the
bankers also get the benefits of making business. So the customer relationship management is the
main in maintaining the good and healthy relationship with its customers.
8: Mehdi moghadam Faculty of social science, Islamic Azad university
Customer orientation plays a key role in the customer satisfaction, satisfaction,
commitment and retention. Employees training play a major role in the customer satisfaction
level. If we want to maintain long term and good relations with the customer we must train our
employees to deliver the services with the satisfy level to the customers. The management of the
banks are have to do research on the customer services and needs and give the proper training to
the bank employees to deliver the services to the customers. The satisfaction level of the
customer can determine the services quality of the banks and also the retention level of the
customers to the Banks. Generally satisfaction refers to the pleasant and fulfilled feeling of the
customer while he is utilizing the service.
9: Bolanle Odunlami Ajayi crowther university, Nigeria.
Customers are the most valuable assets to the company. They are the sources of the profit
of the company. In the service sector the satisfaction of the customers can only decides the
existence of the bank in the banking sector. The customer satisfaction has the main role in the
present day dynamic business environment. The customers also have the no of choices in the
sector. So the banks have to maintain a very good relation with the customers to satisfy them.

10: K Ganeshamurthy, alagappa university, Tamil nadu.

In this present globalized economic world the companies are facing the very much
competition among them and also they are looking about how to retain the customers. They are
all follow the customer retention practices but they don’t know about how much about the
customers are satisfied about that and also what are the customers wants. The customer
relationship management magnifies the impact of the services and the customer satisfaction
about the bank services. Through the customer CRM practices the customer feels that he is
getting the personal attention from the bank and also personalized preferences about the services
this makes him the more satisfied and also stay loyal to the customer.

NEED FOR THE STUDY:

The existence and profitability of the bank is depends upon no.of customers a company
have and their involvement in the continuous banking transactions. After the 1991 new economic
policies the rules and regulations are reduced. Many banks are come into the existence, now the
real problem started for the banks to retain the customers. All the banks are providing the same
core services. The private and foreign banks are providing a world class services to the The
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existence and profitability of the bank is depends upon no.of customers a company have and
their involvement in the continuous banking transactions. After the 1991 new economic policies
the rules and regulations are reduced. Many banks are come into the existence, now the real
problem started for the banks to retain the customers. All the banks are providing the same core
services. The private and foreign banks are providing a world class services to the.

1.3: STATEMENT OF PROBLEM:

The banking sector is facing a heavy competition in the present competitive world
because of there are many no of public, private &foreign banks in the banking sector. the SBI is
also facing the problem of defection of the customers due to many reasons like easy availability
of credit in the online apps also with too paper work and processes .we have to know what are
the customer satisfaction level about the services of the SBI, and the customer needs also.
6: OBJECTIVES:

 To know the customer perceived satisfaction level by the banking services.

 To know the customer satisfaction level about E-banking services
 To know new financial trends that are supported by the banks

7: SCOPE

 The study is done in the madanapalle area in the Annamayya district.

 The sample size is only 109.
 The study is done in the time period of nov-feb 2023

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2.1: RESEARCH MEATHODOLOGY
Data collection method:
1) Primary data: primary data is used to know the satisfaction level about services of the
banks. A structured questionnaire is distributed among the people in madanapalle region
for the primary research purpose. It helped in collecting the customer attitude about the
customer satisfaction level about the customer services in banks. And also the
questionnaire collects about the demographics information such as age, gender, income
levels and their living area. The respondents can rate the various services of the banks on
a scale of 1to 5. A five point Likert scale with horizontal format is used for most of the
questions, where 1 represents strongly agree and 5 represents strongly disagree. This data
is collected in online format a google form is circulated through online mode. It gives the
convenience of the data collection. the data can be categorized into this form

Table 2.1
Factor 1 Factor 2 Factor 3 Factor 4
Customer services Product benefits Convenience Reliability
Helpful staff Proper services Sufficient no of Quality of services
branches
Well trained staff Sufficient info Convenient location Well known In
about its products public
&services

Policies Quiet Competitive interest Convenient working Complaint handling

satisfactory Rates hours
Latest e banking Responsive staff On time services
services
Use of technology Bank caters to the Memorable
customer needs advertisements
Bank premises

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 2.2: DATA ANALYSIS TECHNIQUE:

To fulfill the objectives of the study, descriptive statistics were used to analysis the data.
A structured questionnaire was distributed among to bank customers to know their satisfaction
level about the banking services. The questionnaire contains about the 20 questions related to the
services of the bank which are broadly divided into four groups i.e. tangible, reliable,
responsiveness, assurance and empathy factors. The data was collected from 100 respondents in
the annamaya region
SAMPLE DESCRIPTION:

The research targets a sample population drawn from the madanapalle region in
the annamayya district who had a bank account in the SBI. The sample size is 109.
Table 2.2
Gender No. of respondents Percentage

Female 41 37.6

Male 68 62.4

Total 109 100

QUALIFICATIONS

Qualification No. of persons Percentage

Under Graduation 23 21.1
Graduation 47 43.1
Post-Graduation 39 35.8
Total 109 100

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3.1: DATA ANALYSIS:
Table No: 2.3
Descriptive statistics about customer satisfaction level
Factors Percentage Mean S. S.D Skew
S.A A N D S.D E. M Ness
Customer services
Helpful staff 19.4% 14% 36% 27% 10% 2.92 .119 1.23 .23
Well trained 17.6% 22.2% 33.3% 13.9% 13% 2.82 .120 1.25 .19
Policies 13% 19.4% 37% 21.3% 9.3% 2.94 .110 1.14 -0.4
E-Banking 15.7% 25% 26.9% 20.4% 12% 2.88 .120 1.25 .11
Technology 13% 22.2% 33.3% 21.3% 10.2% 2.94 .113 1.17 .02
responsive 14% 26.9% 29.6% 16.7% 13.9% 2.92 .119 1.23 .17
staff
Product benefits
Proper 13% 26.9% 29.6% 16.7% 13.9% 2.92 .11 1.23 .192
services
Information of 12% 26.9% 33.3% 17.6% 10.2% 2.87 .11 1.15 .18
services
Interest rates 10.2% 25% 33.3% 16.7% 14.8% 3.01 .115 1.19 .49
Bank premises 12% 15.7% 34.3% 23.1% 14.8% 3.13 .116 1.20 -.15
Customer 12% 28.7% 31.5% 15.7% 12% 2.87 .11 1.18 .25
needs
Convenience factors
No of 10% 33.3% 27.8% 18.5% 11.1% 3.01 .12 1.25 .15
branches
Convenient 9.3% 33.3% 27.8% 18.5% 11.1% 2.89 .11 1.15 .29
Location

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 Working 14% 25.9% 27.8% 18.5% 14.8% 2.96 .12 1.25 .12
hours
On time 10% 22.2% 37% 21.3% 10.2% 3.01 .106 .024 .23
services
Memorable 14% 26.9% 32.4% 17.6% 10.2% 2.85 .112 1.16 .18
advertisements
Reliability factors
Quality of 9.3% 28.7% 33.3% 14.8% 13.9% 2.95 .113 1.17 .26
services
Public image 13.9 % 22.2% 27.8% 16.7% 19.4% 3.06 .127 1.31 .04
Complaint 13% 21.3% 29.6% 21.3% 15.7% 3.07 .120 1.24 -.02
handling

S.A –strongly agree, A- agree, N-neutral, D-disagree, S.D- strongly disagree,

S.E.M-Standard Error of Mean, S.D- standard deviation.
Bar Graph 2.1

E Banking & Technological

40 Services 3
35
4
30 2 2
25 2 6 7
2 2
20 2 1
1 0
15 1 1
5 1
3 2
10 0
5
0
strongly agreeagreeneutealdisagreestrongly disagree

technology E
usage banking

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Interpretation:

From the above Bar Chart it is observed that the respondent customers are only up to
40% are quite satisfy about the technologies used in the banking processes and E-
Banking services. And 35% of the respondents are uncertain about the E-Banking and
technological services in banking services. Here the banks have to do a orientation
program about how to use the new technologies in the banking processes and Digital
Banking services. So the customers are also known how to use the new systems of
payment methods and banking service
3.2: FINDINGS:

 Most of the Respondent customers between the age of 20 -30 years

 The monthly income levels of the respondent customers are below 1 lakh
 Most people are lived in the rural areas
 In the respondent customers 64% are students and 36% are employees
 The 38% of customers are uncertain with the bank policies, if any bank come with the
best policies they can also switch to the other bank
 Only 38% of respondent customers are satisfy with the bank service quality and 28%are
having the dissatisfaction
 Only 40% of respondent customers are aware about the bank advertisements
 30% of the respondents are agree that the bank has providing the services within the time
and 30%are not satisfied with the time punctuality of the bank
 The bank staff is needed some training, 26% are disagreed with their performance
 Only 33% of respondents are feel that the staff is helpful and responsive and 37% of the
respondents are not satisfied with the bank staff performance

 Only 46% of the respondent customers agree with the bank had at convenient location
and 28% of respondents are dissatisfied with the location of the customer
 The bank has to communicate about its products and services.27% of respondents are not
satisfied with the bank communication about its products
 Nearly 72% of the respondents are feel that the bank charges appropriately for its services

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3.3: SUGGESITIONS:

1: It is suggested the staff of the bank has to be well trained and responsive to customer
2: It is suggested that to maintain the time punctuality in services
3: It is suggested to improve service Quality
4: It is suggested to improve technological service
5.It is suggested improve the interact more with customers
3.4 CONCLUSION:

In the present high competition situations it is become important to retain the existing
customer to succeed in the market. Because acquiring the new customers is costs more than the
retaining existing one. The bank has to maintain the customer centric approach to retain the
customers because customer centric organizations more focus on providing the quality services
and also delivering the services within the given time. Banks have to build a quality relation with
the customers to make them loyal to the organization. Service providers also have to put the
barriers to stop the customer switching from the bank. Customer satisfaction should be given the
major importance as if it plays a major role in the customer retention. It is true that the customer
retention costs are less than the acquiring the new one. The customer satisfaction followed by the
quality services, convenience, reliability on the bank and etc. with the rise of the competition, all
the banks have the similar services and even also costs. In this kind of scenario, the bank has to
show the difference from others on the basic of customer service is the best way to succeed in the
banking sector. and also the banks has to focus on the advertisements of its services because how
well known the bank it shouldn’t done its advertising then the other banks have a chance to
replace its place by making the advertising campaigns and attracting the customers towards
them.

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4.References:

1: Nesrin Ozatac, Tulen Saner, Zenyep Suzmen Sen (2016) customer satisfaction in the banking
sector: the case of north Cyprus
2: Christine T.Ennew and Martin R.Binks (1996) The Impact of service quality and service
characteristics on customer retention: small businesses and their banks in the UK.
3: Norizan Mohd Kassim, Nizar souiden (2007) Customer retention measurement in the UAE
banking sector
4: Serpil Gumus, sudi Apak (2015) Ultimate point in the service provided by the banks to their
customer: customer satisfaction in the common use of ATM’s
5: Dr P Sashikala (2015) Customer Retention in the Indian banking sector –managing tge
customer churn
6: Pushpalatha Mahapatra , Namitha Rath, Nishikanta Mishra (2020) Determining key driving
factors for the successful retention of customers of Indian banks: An Empirical Contemplate
7: Dr Shraddha Mayuresh Bhome (2018) a study on customer retention as a effective tool of
CRM in co-operative banks of thane city
8: Mehdi Moghadam (2013) Determinants of customer retention: Offering a model to banking
industry
9: Ibojo, Bolane Odunalami (2015) Impact of Customer satisfaction on customer retention: A
case study of a reputable bank in oyo, oyo state, Nigeria
10: K. Ganesamurthy (2013) Customer Retention practices of banks: Evidence from sivagangai
district of Tamilnadu

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