C.P.PATEL & F.H.SHAH

COMMERCE COLLEGEANAND

Name :- Dharmesh R. Sankharva Roll No. :- 06

Class :- Fourth YR BBA(ITM)

Subject :- Consumer Behavior & Brand Management

Topic :- As a manager of City Bank, Bank’s online Banking Division, How would to apply the

concepts of customer satisfaction and customer retention to

designing and marketing effective online banking.

Submission Year :- 2008-2009

WHAT IS E-BANKING?

First, What is Bank?A financial institution that accepts deposits and channels the money into lending activities. In this deliverable, the terms BANK and FINANCIAL ENTITY will be used indistinctly.

What is Service?Financial product offered by a bank or services that does not require a contract, like a bank transfer order.

What is E?E means Electronics, Electronics that means Online, Internet, Mobile, etc… all these are Electronic devices.

So, E-Banking means all the transaction/task related to bank are done through the Internet, Online, Mobile Transaction like Deposit, Withdraw, Payment, etc… that all transaction done by Internet or Mobile or Online that banking is called E-Banking.

Penalty due to non-payment of bill is not new to anyone of us.And quite obviously, who likes the long procedure of writing acheque, standing in a long queue and then ensuring that the particular amount is available in your bank account? Similarly,Mr. Sharma, who is on business tour for at least 25 days a month,finds it difficult to clear his dues on time because of his busy schedule.

He, like many of us, was possibly not aware of the online services,banks are offering these days. With just a click, all his dueswould have been cleared long back. However, it's never too lateto mend.

To get started, all you need is a computer with a modem or other dial-up device, a checking account with a bank that offers online service and the patience to complete about a one-page application--which can usually be done online. You can avail the following services

Indian banks are trying to make your life easier. Not just bill payment,you can make investments, shop or buy tickets and plan a holiday atyour fingertips. In fact, sources from CITY Bank tell us, "Our Internetbanking base has been growing at an exponential pace over the lastfew years. Currently around 78 per cent of the bank's customer baseis registered for Internet banking.”

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Bill payment serviceFund transferCredit card customers Railway passInvesting through Internet banking Recharging your prepaid phoneShopping at your fingertips Security Precautions Internet banking versus traditional method

CUSTOMER SATISFACTION

Customer satisfaction is the individual’s perception of the performance of the product or service in relation to his or her expectation.Customer satisfaction is a key metric for banks to assess how effectively the web furthers their objectives of customer acquisition, retention and increased share of wallet. To assess the role of the online channel in meeting the needs and exceeding the expectations of customers.

As banks have aggressively pursued multi-channel strategies, the online channel is growing in importance and adoption. According to Forrester Research, the number of U.S. householdsbanking online has more than doubled since 2000.

Banks have a window of opportunity to figure out how to maximize the impact of their websites to increase loyalty and share of wallet among existing customers while reaching out to new ones.

Since our first survey in Summer 2003, the overall customer satisfaction of online banking customers has increased by 5.5%, This upswing in satisfaction is significant because satisfaction is highly correlated to the purchase of additional goods and services.

customers who pay bills online are more satisfied than those who don’t, providing banks an opportunity to increase satisfaction and loyalty by converting online bankers to online bill payers. According to our survey, banks have been effective in increasing usage of online bill payment, which is up 26% among our survey respondents since the summer of 2003.

This year, we delved deeper into the variances and similarities in customer satisfaction among online customers of three types of financial institutions: large banks, community banks andcredit unions. While scores for all three are strong, credit unions outperform both types of banks in terms of satisfaction and usage of most online banking features.

Key findings from our measurement of customer satisfaction with the online banking experience include:

Online banking satisfaction has surpassed satisfaction with the overall banking experience. The satisfaction score for people who bank online has increased 5.5% to 77, This indicates online banking is beginning to fulfill its promise as a convenient and cost-effective channel to serve customers while increasing customer satisfaction, loyalty and share of wallet. The increase in satisfaction corresponds with increases in customer behaviors tied to loyalty.

Highly satisfied online bankers are nearly 39% more likely to purchase additional products and services from their bank than are very dissatisfied online banking customers.

Converting online bankers to online bill payers is a huge opportunity for banks, as customers who pay bills online cite higher levels of satisfaction and loyalty. Online bill pay customers are 17% more likely to purchase more products and services, increasing share of wallet, and 34% more likely to recommend their bank’s website, which fosters greater online banking and bill payment adoption.

Use of more online features drives satisfaction. Online bankers who use six or more online features are 15% more satisfied and 23% more likely to purchase other products and services from the bank that those who use only one or two online features.

Credit unions outperform large banks and community banks when it comes to satisfying online bankers. In addition, credit unions have higher levels of adoption of their institution’s online services, except online bill payment. As financial institutions battle for greater share of wallet, credit unions find themselves well positioned to capitalize on higher levels of satisfaction to increase adoption of online bill payment.

Offline bank channels are the leading source of information about online banking.

To reach online customers and prospects outside of bank channels, online news sites are the preferred source of business news and information.

One view of their total financial picture including anytime, anywhere access to account summaries and details, simplified tracking and progress toward achieving specific goals that they can establish, and the ability to make any type of payment from any account they choose on the date of their choosing.

Tools, training and support to assist with both short and long-range goals like savings strategies, debt reduction and money management, as well as access to others’ opinions and experiences, that help them make intelligent choices and alerts and reminders that keep them on track.

A financial partner and advisor who helps their customers achieve their financial goals and who proactively advises them on how to improve their financial situation.

What do consumers want from online interactions?Consumers want a personalized, integrated online channel that caters to their many financial management needs, including:

Making the online channel personal and profitable Increasing the cross / upsell of bank products Monetizing visits and generating fees from online services

Attracting and growing deposits while lowering the cost to acquire Lowering the cost to serve Driving customer interactions with online financial tools Choosing the right partner for online channel optimization

Concise, relevant communication that is specific and personal to their needs, and not just “one-size-fits-all” information that every customer at the bank receives

“Our objective of creating a universal bank providing end-to-endfinancial services, clearly required solutions which were based onnew-generation technology, offered end-to-end functionality and werehighly flexible and scalable. Financial offered all this and much more.”

CUSTOMER RETENTION

The overall objectives of providing value to customers continuously and more effectively than the competition is to have and to retain highly satisfied customers; this strategy of CUSTOMR RETENTION makes it in the best interests of customers to stay with the company rather than switch to another firm.

Studies show that small reductions in customer defections produce significant increases in profits because (1) Loyal customers buy more products.(2) Loyal customers are less price sensitive and pay less attention

to competitors advertising.(3) Servicing existing customers. Who are familiar with the firm’s

offerings and processes, is cheaper.(4) Loyal customers spread positive word of mouth and refer other

customers.

Marketer who designate increasing customer retention rates as a strategic corporate goal must also recognize that all customers are not equal. Sophisticated marketers build selective relationship with customers, based on where customers rank in terms of profitability, rather than merely strive “to retain customers”. A customer retention-savvy company closely monitors its customers.

Bank’s less profitable customers who, say make little use of their credit cards or maintain the minimum balance needed to receive free checking should not have penalties waived for bounced balance needed to payments.

During the BANK-FINANCE-SYSTEMS exhibition, the company will also be presenting successful projects on the basis of the credit services chip card. The emphases are on: successful customer retention concepts such as "Fan-Banking" and "CityCards", E-Ticketing by chip card and intelligent pass solutions.

1. Retaining the current customer base is key. The reason is that the cost of acquiring new customers is high, but the probability that they stay is quite low. New customers who are acquired at the margin are quite likely to be “switches”. They will eventually switch to a better offer. Or as Reichheld puts it: “In many businesses, the customers most likely to sign on are precisely the worst customers you could possibly find.”

2. Customer satisfaction is the prerequisite for customer retention. More than two-thirds of the customers who are “delighted” with their bank say they will not switch to another provider. Quite the contrary: they consider buying other products from the same provider, and will even recommend them to others. By contrast, almost three-quarters of dissatisfied customers say they will switch their financial institution.

3. Online banking users are lesslikely to leave their banks. Onlinebanking appears to be the retailchannel that is especiallypromising in cultivating customerloyalty: online banking users areless likely to switch theirchecking account provider thantheir offline counterparts. Only 4per cent of Canadian onlinehouseholds say they are likely orvery likely to switch theirprovider. The correspondingfigure for offline households istwice as high (8 per cent). Whilethese results come from NorthAmerican customers they arelikely to also apply in theEuropean context.

4. Online banking households are more challenging customers, though. They are better informed and more actively involved in their financial affairs than online households that do not use their bank’s website. This is the result of studies conducted in the United States. Online banking households use websites to gather information and shop around. They also prefer to make their financial decisions on their own.

5. Complexity of online banking sites may turn customers away. A startling 92.6 percent of German internet users regularly abort their visits to bank websites according to an Emnid survey. The top reason for aborting is that they cannot find the information they are looking for because it is hidden or not available.

6. A good website retains customers. A study conducted in Canada finds that a good website causes more online customers to stay with their banks than lower fees, financial advice or a broader product selection. This calls for more attention to be payed to the user-friendliness of online banking services.

7. Online customer retention is worth the effort, because keeping online customers increases a bank’s profitability. Online customers are often assumed to be more profitable than offline customers, because they are better educated and earn higher incomes. Still, a study controlling for this self-selection bias shows that the internet channel alone increases a customer’s profitability to the bank by impressive 4 percent.

8. Banks should therefore convince more of their customers to go online. Of those offline customers who are interested in online banking, almost 90% find a security guarantee crucial. A well-known offline brand and relatively cheaper fees are also considered very important. Surprisingly enough, only 29% find a broad selection of financial services important in this context.

THANK YOU