Article first published in The Hindu Business Line across all editions
In the post-liberalisation era, Indian public sector banks (PSBs) are facing a number of challenges in retaining and expanding their customer base. These challenges include finding an economically-viable solution for financial inclusion, innovation, human resource and customer relations.
PSBs seem to realise this and have been quick to bring innovative products to market, undertake rapid and aggressive branch expansion and upgraded technology to stave off competition from private banks. Not surprising, as both the public and private sector understand that India will remain a land of opportunity over the coming decade.
According to a recent industry report, the country has 145 million households outside organised banking, which is the largest worldwide. Out of its 600,000 villages in India, only 140,000 were covered by formal banking as of March 2012. Only two-fifths of the population has a bank account. With an increasing per capita income, favourable demographics, facilitative policy and regulatory environment, India is a fertile ground for banks to prosper.
As PSBs strive to provide world-class banking, the defining differentiator will be customer service delivery.
The new age Indian customer has come to expect a lot more from banks than mere mechanisms to save. Customers are more knowledgeable, demanding, analytical and aware of their rights. Whether through approaching the Reserve Bank of India (RBI), Banking Ombudsman, RTI or Consumer Forums, modern-day customers know their rights are not to be denied.
A survey of 14 leading Indian banks, including seven public sector banks, by a well-known company, showcases this discerning characteristic of an Indian customer. Findings from the survey reveal that customer experience is the biggest driver of value.
A growing mass of young, affluent Indian customers are driving a cultural change within the Indian banking sector, particularly in PSBs.
Take one of the leading nationalised banks in India, Punjab National Bank (PNB), which embarked on a remarkable change that included changing its outlook and evolving a strategy to reinforce its vision to be the ‘people’s bank’. The Bank has embarked on an ambitious organisational restructuring exercise named “PNB Pragati” to take it to a higher growth trajectory and give an edge over its peers and new players. PNB has now embraced a philosophy to provide excellent service to customers at all levels. It plans to do this through a combination of innovation, accountability, external orientation, direction, capability, leadership and motivation.
Leading cultural change
PSB’s strategy clearly shows the importance of manpower assets and the role it plays in building profitability and strengthening customer base.
According to banking experts, human resource management is the main area of focus for public sector banks. Indian banks have historically had access to superior talent but there is a lack of specialist skills and new-age leaders. This problem is acute and crippling for these banks. There is an urgent need to attract, hire, develop and retain the best available talent to ensure sustained long-term growth in the banks. They will have to devise innovative strategies to retain talent.
There is no dearth of talent and public banking sector jobs are still the most coveted. In the last three years, PSBs have hired over 1.72 lakh people and, according to industry estimates, there will be as many as 63,000 jobs up for grabs this financial year. Conventional HR measures are ineffective in the face of the steep challenges faced by the public sector. What is required is streamlining human resources and re-skilling bank employees to ensure excellence in customer service. Realising this, PSBs are now giving special emphasis on improving asset quality. Currently, PSBs have a young breed of bankers joining the ranks through aggressive recruitment drives. Coupled with an aging workforce, what comes to the fore is the importance of inducting talent, skilling new recruits, re-skilling experienced professionals with soft skills and leadership, and most importantly sensitisation to customer requirements.
New customer experience
Given the aggressive marketing push from private players, both in banking products and services, what we have is a fickle consumer. Further, mobile banking, ATMs, Internet banking and numerous other innovations have been incorporated to give customers easy access to banking. But no amount of technology or aggressive push can take away the importance of personal interactions in the banking sector. Whether it is expanding customer base or retaining existing customers, bank employees make a difference. A recent survey on Transforming Indian Banking has a very interesting find — 30 per cent of customers surveyed said they do not feel emotionally attached to the bank and given a chance would not select the same bank again nor would they recommend it to friends and family. The answer to this wariness is obvious — poor customer service.
A trained team can nurture customer relationships and build trust over a series of transactions. The customer will value such a relationship and the bank builds customer loyalty.
Though banks understand customer behaviour and its related economic implications they are yet to fully capitalize customer loyalty. PSBs are starting to realise the importance of creating good customer relations and the part their employees play in unleashing the new customer experience.
PSBs are starting to hire seasoned companies that specialise in soft skills training and trust-building skills. Training companies are now conducting a customer service sensitisation program, for a year or more, based on the requirements to improve the customer service practices across India. For this, the content will be designed in consultation with the bank senior management and programmes will be conducted through instructor-led-training mode, while simultaneously developing appropriate methodologies to monitor impact of the training solutions. This will be done through professional trainers engaging both internal and external customer-facing employees at various levels, including branch managers. Effective training solutions will help bank employees do more than marketing their services and products. Front-line employees working in various customer service branches in the bank need to understand how to communicate better and more effectively with customers. This is where soft-skills training is paramount. Right from the clerical staff to the bank manager, soft skills training should be made compulsory as it forms the basis of effective communications and building a long-term relationship with the customer.
Besides external customer service training, banks also need to put equal emphasis on internal engagement-related training. They need to enhance team bonding between officers, clerical staff and sub-staff. This can help banks put an effective coordination mechanism in place so employees are consistent in maintaining quality and uniform messaging.