“In this age of competition, we will not survive long if we do not provide quality service to our customers.” The recent exhortation of RBI Governor Sanjay Malhotra on customer service while delivering a speech on transforming grievance redressal at the annual conference of the banking Ombudsman is a strong wake up call for the banks and other regulated entities. He further stated, “AI can optimise complaint routing, assist in decision-making, reduce processing time… As we embrace AI, we must remain mindful of ethical considerations. Human oversight, bias mitigation, and data privacy must be integrated into AI systems to ensure transparent and consistent outcomes.” The increase in the number of complaints under RBI’s Integrated Ombudsman Scheme is at a compound annual rate of about 50% over the past two years ended 2023-24 while the number of complaints processed by RBI Ombudsman increased by about 25%, leaving a significant backlog. RBI Governor further highlighted the fact that during 2023-2024 about 95 banks received over 10 million complaints from their customers.
Viewed in the background of the introduction of technologically advanced digital payment system and use of AI in the financial sector, extending quality service in the banking and other financial sector has become more important and inevitable especially in the highly competitive financial ecosystem prevailing in the financial sector. It is an admitted fact by bankers themselves that they are struggling to mobilize deposits which has created a credit deposit mismatch and unless they reorient a new marketing strategy particularly based on customer service by understanding the immediate and inevitable changes that are required in the approaches of the banks to face the challenges of the future especially the challenges of competition, a new dimension and direction in the marketing of the bank services have become a vital necessity for their survival and also for their rapid progress. Future is not going to be made tomorrow; it is being made today, largely by the decisions and actions taken with respect to the tasks of today.
But it does not seem to be happening at the level desired. It is worth noting based on the number of complaints received from the customers that the situation could be worse than the number suggest. Many more customers who may have limited knowledge of banking might not have filed their complaints. It is worth noting that over 70% of the complaints are from urban and metropolitan areas. The observation of RBI Governor is very significant when he said, “Not only large number of complaints getting escalated, but a large proportion – nearly 57% on maintainable complaints last year – required mediation or formal intervention by the RBI Ombudsman. You would agree that this is a highly unsatisfactory situation and needs our urgent attention.” It will become an alarming situation if the banks and financial institutions do not take appropriate corrective action. The objective should not only to resolve the complaints but also to ensure that it does not recur. Yet another important observation made is that Indian scheduled commercial banks indulged in under reporting of complaints and yet together received over 1 crore complaints, but it turned out to be window dressing data and that many complaints were listed as requests, queries, and disputes, which is regulatory violation.
In simpler times, banking-related complaints were mostly about forgery and wrong entry, but complexity has broadened the gamut and complexities of problems. Of late RBI has been faced with other types of banking problems and castigated the banks and other regulated financial institutions on matters of noncompliance of regulatory entities’ mandatory guidelines and notifications, credit-deposit mismatch, concerns about unsecured loans and gold loans and particularly top up loans offered with minimum due diligence.
The latest action initiated in the bank transactions by Supreme Court of India is that they have sought CBI investigation into another old problem which still prevails being the “nexus” between banks and builders due to which lakhs of home buyers are paying EMIs without any hope of getting their house. The Hon’ble Apex Court raised the point to the counsels for banks, “…knowing not a brick has been laid at the site, you released 60%. How can be without quid pro quo?” Banks have much to answer on this question. RBI Governor has sent a warning: “Left unresolved, such issues can erode consumer confidence and tarnish the entire ecosystem.”
RBI has been issuing circulars on customer service and updating them from time to time. But the effectiveness of such circulars can be seen and felt only if it is implemented in their correct perspectives sincerely and honestly and also carried out in letter and spirit. The first impediment is the noncompliance of such mandated guidelines issued by the regulatory entities by the regulated entities of banks and financial institutions as seen from the way the regulated entities are being penalised because of which they have become habitual offenders. Thus, the purpose of such circulars are being defeated.
What is required is a new approach to bank marketing based on the current realities and opportunities to achieve the objectives of creating and exploring new areas and avenues by invention and innovation and by creativity and research so as to bring tomorrow to day, should evolve a new strategy. The innovative marketing should aim at creating new business rather than new product within the already established line. It should aim at new performance capacity rather than improvement. It should strive at creating new concept of what is value rather than satisfying the existing value expectation a little better. The aim of innovating efforts is to make a significant difference. What are significantly different are not technological decisions. It is not the quality of science that makes the difference. It is not how expensive undertaking it is or how hard it is to bring it about. The significant difference lies in the impact on the environment. It is, therefore, attitudes and practices. It is above all, management’s attitudes and practices.
Prosperity and growth come only to the business that systematically finds and exploits its potential. Hence seeking opportunity is an inevitable necessity for the banks. In a highly competitive field, the most important aspect to capture business is the quality of the product and quality of service, pre-sale as well as post sale, which are going to determine the market leader. A rare but effective combination of quality product and quality service can ensure a big chunk of market share even for a new entrant.
It should be noted that even a well-defined defect free customer service and care will not succeed if they do not fit in the customer perception of quality and if appropriate follow up measures and services are not available. Hence, it is necessary to build up a quality image of the bank in the market. Quality program and quality improvement program are to be customer driven and not technology driven or competitor driven. Marketing policy, if it is to be effective, should be based on the customer perception of quality.
Further customer education and customer counseling which are not being given the required importance now especially about the services of the banks of which they are not even aware of, should also be included in the new orientation of marketing. In the ultimate analysis, the bank has to reorient their marketing strategy which matches the habits of the customer , takes decisions to serve the customer with a delightful service and improve upon further on the basis of feedback and through innovation and also by analyzing the influencing factors of the customer, to provide a totally harmonious offering where the service image of the bank match with the self-image of the customer, then the bank can become the leader in the market with a sizable market share which can produce excellent economic results. The perceptions, culture, values, and business ethics of the bank and the perceptions of the customers on quality and products and service are complimentary to each other and if united will not only lead to excellence in business but also ensure an adoring relationship between the bank and the customers.
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