Analysis of icici bank, branch banking Analysis of ICICI Bank, Branch Banking
Executive Summary This report analyses ICICI Bank Ltd. from the perspective of services mark eting in the area of its branch banking. Most of the situations in the report are from my personal experiences and knowledge when I served the banking industry recently. The banking industry is growing faster in India and the companies are a re as well; despite, here the analyses identifies the ke y areas where the bank is missing out the quality and runs after the volume generations expanding the gaps between the customers' expectations and the performing levels. Finally, using the Gaps model and servicescape recommendations are made to increase the service standards efficiently and planning those within the allocated budget scales.
Introduction Background of ICICI Bank ICICI Bank is India's second-largest bank and largest private sector b ank, with total assets of US $ 77 billion for the quarter ending 30 3 0 June, 2009. Currently, ICICI Bank has ha s a network of approximately 1532 branches and extension counters, along with 4816 ATMs. The bank offers a wide range of banking products and financial services to its retail and corporate customers through a variety of delivery channels and specialized subsidiaries. Its services include investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank, originally promoted in 1994 by ICICI Limited (an Indian financial institution), was the latter's wholly - owned subsidiary. ICICI Ltd merged into ICICI Bank in 2 002. The equity shares of ICICI Bank are listed in India on the Bombay Stock Exchange and the National Stock Exchange of India Limited, and its American Depositary Receipts are listed on the New York Stock Exchange. ICICI Bank set up u p the International Banking Group (IBG) in 2002 to implement a focused strategy for its international banking business. ICICI Bank is cu rrently present in various global locations through subsidiaries in the United Kingdom, Canada and Russia, and branches in Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai. It has representative offices in the United States, China, United Arab Emirates, Bangladesh, Thailand and South Africa. Its UK subsidiary has recently set up a branch in Germany and Belgium.
Background of Industry Total asset size of the Indian banking sector is US$ 270 billion while the total deposits amount to US$ 220 billion with a branch network exceeding 66,000 branches and 17,000 ATMs across the country. Indian banks broadly are classified as nationalized banks, private banks and cooperative banks and foreign banks; currently, country has 88 scheduled commercial banks - 28 public sector banks, 29 private banks and 31 foreign banks. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively. Industry was marked by surplus liquidity, slowly rising interest rates, good credit growth and good returns. Reserve bank of India is the central banks and supreme monetary authority.The growth in the Indian Banking Industry has been more qualitative than quantitative and it is expected to remain the same in the upcoming years.
7 Ps - Service Marketing Mix of ICICI Bank Product ICICI Bank offers wide variety of competitive products to suit customer needs; coupled with convenience of networked branches and other facilities. They are broadly retail banking products, corporate banking, premier banking for HNIs (High Net worth Individuals), investment products, international banking for non - residents, loans, credit cards toned with anywhere banking system. But, the product in service industry is intangible which adds complexity. The perspective of the consumer is of two types, one is the documents, cheque book, card received while opening the account which does not carry most weightage and the other is the expectation of the value added services - the customer service quality has the major impact with the bank.
Price It is one of the most important elements of the marketing mix; the only mix, which generates a turnover for the bank. The remaining mix are the variable cost for the bank.It costs to design, implement and to promote it. Price must support other elements of the mix. ICICI Bank's pricing strategy is challenging as it has to tear the hurdles from the traditional banking prices and must reflecton thorough supply and demandmanagement. Pricing a product too high or too low could mean a loss of sales. Bank should critically consider fixed and variable costs, competition, objectives, positioning and targeting.
Place The bank needs to diversify on how it is going to distribute the service or product offered to the customers. The organization must distribute the product to the customer at the right place and at the right time. It distributes its services through various channels such as branches in c entral locations, field sales force, telephone selling, ATM centers; efficient and e ffective distribution is
important to meet its overall marketing objectives. In case the demand is underestimated, the risk is high that customers cannot purchase a product which directly affects the firm's profitability.
Promotion Success of bank's service means nothing unless the benefit of such a service can be communicated clearly to the targeted audience. ICICI Bank's promotional strategy mainly consists of the following methods. Personal selling are driven in the branch, through field sales and phone banking team. Advertising done through television adverts, radios and newspapers. Public relations involve developing positive relationships with the organization media pu blic; in this case the bank has a challenging role as not only to obtain favorable publicity in media, but also being able to handle successfully the complaints about the servicing issues. Direct mailing is mostly done with the bank statements along with the promotional letters. Direct mailing allows using bank's resources more effectively by allowing them to send publicity material to a named person within their target segment; these personalizing materials increases the response rates thus increasing the chances of business development.
People Essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right candidates and training them appropriately in the delivery of their service is essential for the bank to obtain the form of competitive advantage. Customers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, attitude, and service knowledge to provide the service that bank's customers are paying for.
Process Process refers to the systems used to assist the organization in d elivering the service. Customer walking in with an complaint, who is listened and gets solutes quickly is a process that allowed the customer to obtain an efficient service delivery. For instance, the bank sends out Credit Cards automatically when their customers card gets expired, again requ ire an efficient process to identify expiry dates. An efficient service will foster consumer loyalty and confidence towards the company.
Physical Evidence Physical evidence is the element of the service mix which allows the consumers to easily judge the service levels of an organization while looking the physical appearance. If a customer walks into the bank, the expectations are of a friendly environment, ease of transaction with security for his money. Physical evidence is an essential ingredient of the service mix; consumers will make perceptions based on sight of the service provision which will have an impact on the organization's perceptual plan of the service.
Service Audit of ICICI Bank Auditing the way of service provided in a branch of ICICI Bank gives lot more clarity of the services delivered to their customers. Basically, the service-profit chain establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. The links in the chain (which should be regarded as propositions) are as follows: Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers (Heskett, James L. 1994). The service provided in the branch for this particular bank is numerous on a daily basis due to its vast customer base. The bank experiences around five walk in customers on a regular day; which has various impacts on the customers and the bank. It is strongly believed and identified as the services rendered to customers have the same kind of return impacts as delivered by the service provider. The internal service quality is the key component of services delivered in an organization. As the customers are really sensitive of what they are been served for the premium they pay; valuable for the company as they are six times expensive than acquiring a new customer into the system. But, unfortunately due to the fact that the branch witnesses a large number of customers in a day, the front line staff were not able to potentially serve the customers as per their standards in the market. Research on the relationship between service quality and profits has begun to accumulate, and one thing is clear: The link between service quality and profits is neither straight forward nor simple (Greising 1994; Zahorik and Rust 1992). Employees are also not aware about the concept of internal customers and their advantages to avoid the stress due to extra working hours which is mandatory for every employee. They have the sufficient resources such as infrastructure and line manager support in spite of long working h ours. In connection with the work pressure in particular for the front line staff, the job becomes so complicated in performing their roles. The management does not effectively measures the satisfaction of the employees which directly affects the customer service levels in line. Also, when employees were recruited, they were not informed properly about their working nature; this is due to frequent changes in the operational system. For example, the banking hours from 9 A.M till 4 P.M. has changed to 8 - 8 banking system of 12 hours per day. This was to add value to the customers, but, there are inadequate staff members to handle the extended hours. Internal marketing is proposed as a co - ordinating philosophy because it considers and coordinates "all" activities - including internal and external relationships, networks interactions and collaborations by examining all activities involved in satisfying customers throughout the internal supply chain. (Pervaiz, Mohammed 2003). As the statement gives the effectiveness of the role to be uplifted, various quality activities are encouraged with the rewarding s ystem, but, ICICI Bank encourages the system of quantity to certain levels. Here, the certain level defines the number of the customers acquired newly or the accounts newly opened, which even leads the staff to open multi accounts to same people without considering the quality of accounts opened. The employees' productivity is measured majorly with the quantity of business they do. It is measured to seventy per cent of their PMS (performance management system) and rewarded
accordingly at the end of every financial year. This is the strategy that the bank is focusing on to increase the overall number of accounts. Actually, the bank's initial strategy was to increase the volume of deposits; but, as they well developed their book of accounts, they wanted to spread themselves widely to capture an huge market share in the industry. The employee retention is not really bad when compared to the industry's performance because, they pay reasonably and their main attraction is the country's largest private sector and second largest of all the banks. This benchmark keeps them far away from the employee attrition issues. Customer satisfaction for the services is relatively good in terms of their innovative banking solutions. ICICI Bank's key strategy from the beginning is to provide the cutting edge innovative product services to their customers; this helps them to balance the satisfactory levels of their customers. Having said this, the branch banking and any direct banking system such as phone banking are still major drawbacks in the system. This is because of various reasons; major issues are such as the low understanding level of the product features by the customer, communicational gaps with regards to the sales and service, inadequate staffing. Customer loyalty is viewed as the strength of the relationship between an individual's relative attitude and repeat patronage. The relationship is seen as mediated by social norms and situational factors. Cognitive, affective, and conative antecedents of relative attitude are identified as contributing to loyalty, along with motivational, perceptual, a nd behavioral consequences. (Dick, A., Basu, K. 1994) As rightly mentioned by the authors, customer loyaltyis how the bank has to receive the ultimate reward for the way it interacts with its customers; which will only be improved when they act entirely on quality interface with the customers. Most important for this type of customers is the enhancing relationship management with them effectively. Loyal customers buy more, buy longer and tell more people - that is true customer loyalty. Competitive advantage can be achieved through customer loyalty. This is the way to gain the best pool of customers who would be repeated customers. Repeated customers tend to spend more money and provide the best word - of - mouth advertising as well for the bank. Only way the bank is enhancing is by the leading technological products such as internet banking, mobile banking, phone banking, online trading services make most customers stick to the bank in spite of a reasonable customer service. The profitability from the referrals is comparatively good for the bank again due to its leading innovative and technological advanced products. The referral business is happening by the effect of word of mouth and ICICI Bank promotes gift vouchers for its existing customers referring new customers; the budget allocated for this strategy is relatively low. The customer loyalty from the bank's perspective is almost fully focused on its premier banking and corporate clients and trying to maximize as possible in the other retails banking clients. The budgeting is calculated on the referral business through their promotional activities alone; they do not have a system calculating the word - of - mouth referral customers. Customer are not sincerely followed if they do not return, as they are left behind with couple of mails when the system identifies there is a sudden non - operation with the existing clients.
Blueprint of customer services
A Service blueprint is a picture or map that portrays the service system so that the different people involved in providing it can understand and deal with it objectively, regardless of their roles or their individual point of view. (Zeithaml, V.A. et al.2006). With this description, the authors emphasize the different systemic layers overlapping in a service, from the layer of customer interaction and physical evidence to the layer of internal interaction within the service emerging process.With ICICI Bank, this particular model is blueprinted for the branch service staff or front line staff interacting with the customers; in particular customers who have transactional issue which has to be sorted out. The measures considered here is to show case the real service delivery flow which is happening at the moment in the branches. The scenario which is behind the blue print is about a customer who swiped his debit card for a transaction in merchant establishment. Usually, there is an issue where customers are deb ited twice when swiped in a credit card purchase. It clearly takes place only because of the last paper role which stops rolling out the paper despite the transaction gets approved. Due to lack of knowledge, the merchant swipes for the second time after filling with the paper roll. The customer is also unaware about it in most situations. Only the merchant can realize on the next day when he receives a double credit in his bank account; the customer realizes this when he receives his bank statement. The above blueprint describes the service flow when the mentioned customer raises the dispute against the double transaction seeing his statement of accounts. Firstly, on the line of interaction component is the customer, who begins from the line of interaction / the physical evidence / front stage with the enquiry about the dispute to the line of internal interaction from the emplo yee actions / back stage / invisible. There is a minimum waiting time of fifteen minutes due to the traffic by more customers calling the call center which makes customer to hold the phone for long period - first area of dissatisfaction. After getting connected, as these transactions are directly linked with the VISA / MASTER services, they must be routed to the particular department which processes the merchant payments from VISA / MASTER services. So, the phone banking officer takes a complaint and registers the case with the payments department. As this cannot be sorted out over the phone; need to provide the transaction slip of the purchase with a requisition letter signed, the customer must visit the nearest branch for the same. The customer waits in the queue in the physical evidence for a long time in a busy branch; in spite of its twelve hours banking system which is operating from mornin g eight till evening eight, it has a reasonable crowd between nine in the morning till six in the evening. The branch is not with the space it requires as the crowd grows slightly bigger; the paint is generally dark red and twenty per cent portion is cream color painted, there is no music played in the branch during the banking hours; no drinks provided to the customers. This is the second area of customer dissatisfaction. At once the customer reaches the front line service staff which is o n stage / visible employee auctioning line, the staff greets the customer and offers a seat. But, the customer can feel the originality of service is not expressed from the servicing staff member; this is due to the long working hours and attending more number of customers who walk in to the branch. This is the third are of customer annoyance. If the staff could not address the issue, it has to be verified with the line manager in the line of visibility itself. This often happens as the staff members lack in training and they are not updated on the process flow regularly. Now, the line manager in this case anyway need to address with the operations in charge of the branch, who is
out the visible area / back stage which is the line of internal interaction. Then, the operations manager who in turn routes the case to the back office which is the support processes center in the blueprint. The back office staff will have it interact with the collection department which is again a supporting process for the bank to raise the dispute back at the merchant where the transaction took place and so, the customer is requested to wait for minimum ten working days to get the credit back to the card account. The customer feels that the process is taking too long and questions the front line staff why a credit must take such a long time (in this case the merchant's account is also with the same bank) to transfer between ICICI Bank accounts itself. Actually, the process delay is due to the issue must be addressed to the VISA / MASTER services and a formal request must be sent to the merchant verifying whether the case has occurred, even though the transactions would reveal that the merchant got a double credit irrespective of any other risk arising incidents like there might have been double purchases from the customer itself. Finally, after the verification gets through post ten or ma y even reaches up to twenty working days depending on the delay from the merchant's side, the transfer would happen to the customer's account from the payments department, the support processes. If there is a possible delay of anything more than ten days, the customer used to ring up the branch asking for the particular front office staff and every time he needs to check the account and give reasons for the delay. This is the last area of dissatisfaction from the customer and a huge loss to the bank due to the resource, the front line staff used in a time consuming process of giving blame reasons on the delay caused. Lastly, the customer thinks that the bank is not serving him for the premium he pays and he becomes an annoyed user of the bank service
