Chapter 1 – Customer Requirements

Chapter 1 – Customer Requirements

Broadly customers are segmented based on their income levels as their need pyramid will vary with the rise in their income levels. Banks develop and market their products based on this segmentation and target the relevant segment for maximum conversion of business. The basic segmentation of customers based on their income levels is given below.

First three segments namely Mass Market, Mass Affluent and Super Affluent are the most important segments for banks with regard to their retail banking initiatives. The products and services will be structured mostly to meet the requirements of the above segments.

Assumptions about customers

For designing retail banking products and services following assumptions are considered which help banks to develop suitable products and services to cater to the need of the customers:

• Customers are different.
• Needs of the customers are different
• Each customer will have different sets of need for financial services.
• The need requirements of customers for financial services will be unique.
• Customers can be broadly grouped together based on their need pyramids.
• Customers can be grouped together based on their income, age, geography, profession, employment, vocation gender and family size.
• Product and services can be developed for a single or a combination of the above elements to satisfy most of the needs

Maslow ‘s need hierarch y and customer requirements

‘Maslow’s Need Hierarchy Theory of Motivation’ indicates how a person is motivated based upon his needs at a particular point of time. The same concept can be applied for understanding customer requirements and to understand how banks structure products to match the different stages of the need pyramid of the customers. Customers buy the products and services of the bank primarily to satisfy their needs and if their needs and banks’ products match and if the benefits promised by the bank to the customer are delivered then there will be absolute satisfaction from the customer end. The requirements of the customers in general can be related with the need hierarchy theory by Abraham Maslow who has defined five needs of individuals in their various stages of life. The needs start from the basic requirements and move up the value chain during the life stage progression. If banks structure products and services to match the different stages in the need spectrum, banks will achieve both objectives of customer satisfaction and business conversion. The Need level and matching products are given below:

Customer Requirements about Service Quality

1. Tangibles: Appearance of physical facilities, equipment, personnel and communication materials
   1. Attractiveness of bank’s facilities
   2. Easy understandability of credit card statement.
2. Reliability: Ability to perform the promised service dependably and accurately
   1. If officer says that the loan sanction in 2 days, does follow up and inform about status to customer
3. Responsiveness: Willingness to help customers and provide prompt service.
   1. Resolving customer’s problems quickly
   2. Recredit of wrongly debited charges properly.
4. Assurance:
   1. Competence – Possession of required skills and knowledge to perform services;
   2. Courtesy – Politeness, respect, consideration and friendliness of the contact personnel;
   3. Credibility – Trustworthiness about the service provider;
   4. Security – Freedom from risk and doubt.
5. Empathy:
   1. Access – Approachability and ease of contact;
   2. Communication – Keeping customers informed in a language that they understand
   3. Understanding the customer – Making an effort to know customers and their needs.

Customers’ Requirement from Banks

Generally, customers require the following from their bank’s for maintaining their accounts/relationship.

• Right product mix to satisfy different customer segments.
• Right channel mix (both direct channels and e channels).
• Structured process time across products and adherence to the time prescriptions.
• Delivery of the promises with regard to products/services and channels.
• Satisfactory service experience from the delivery channels and the service personnel.
• Effective Communication about the different products and services.
• Transparent service charges.
• Good ambience.
• Effective and time bound grievance redressal mechanism.

If the above expectations are met by the banks, customer loyalty will be at its peak and deficiency in the above will result in dissatisfaction and deterioration of loyalty and will trigger customer switching