Factors Affecting the Consumers’
Preferences in Choosing
Retail Banking Services
What is Retail Banking?
 Retail banking refers to banking in which banks transact
directly with consumers. It aims to be the one-stop shop for
as many financial services as possible on behalf of retail
clients. Retail banks have their own objectives like increasing
revenue growth, improving customer service, cutting costs
etc.
Growth factors for retail banking in
India:
 Indian economy is growing, the retail banking as an industry
is also growing (CAGR over 35% for the last five years).
 There are many other factors like growing disposable
income, presence of largest youngest population of the
world, increasing literacy levels, improved lifestyles etc,
which are acting as the driving force for the growth of the
retail banking sector.
Opportunities and Challenges:
 One of the major challenges is to increase the customer base. The
main reason for this is the entrance of the new players due to
globalization, consumers having considerable choices in satisfying their
needs etc.
 Retail Banks cannot stop the entry of the new players but they can
certainly satisfy the needs of the consumers to a maximum extent and
increase their consumer base, which will in turn increase the revenue
growth, which is one of the objectives of the retail banks.
 Thus, it becomes crucial for the banks to understand the consumers’
preferences when they choose retail banking services. Understanding
the expectations of the consumers will be helpful in making different
strategies and develop new options from which the customer can
choose from and be HAPPY.
Methodology:
 This study is based on the same i.e. to understand the factors
affecting the consumers’ behavior in choosing the retail banking
services.
 In the study, we designed a questionnaire keeping 28 variables and
it was distributed to the respondents of the age group from 20 to
30, which constitute a quarter of India's earnings.
 After analyzing the responses, 9 factors (augmented facilities,
credit facilities, transaction facilities, availability, e-commerce,
brand image, ambience, operational convenience, personal
attention), which have a major influence on the consumers’
behavior in choosing a retail banking services.
Factors chosen to differentiate
 Factor 1 – Augmented Facilities –Phone banking, call
centre facility, mobile banking.
 Factor 2 – Credit Facilities – Banking charges of a bank,
credit card facility, interest rate and credit allowance, credit
overdraft policy of the bank.
 Factor 3 – Transaction Facilities – The limit on number
of transactions, cheques at par facility, collection of
outstation cheques facility, customized account.
 Factor 4 – Availability – Numbers of branches, number of
ATM centres, presence of bank in other cities and number of
ATM transactions.
Contd..
 Factor 5 – E-Commerce –Anywhere cash deposit facility,
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electronic transfer facility, online banking,
Factor 6 – Brand Image –Minimum balance criteria,
brand image of bank.
Factor 7 – Ambience –Ambience of the bank, promotions
of the bank
Factor 8 – Operational Convenience – Banking hours,
number of ATM TRANSACTIONS
Factor 9 – Personal Attention – Drop and pick facility of
cheques, pleasant interaction with bank employees, and ease
of opening an account.
ANALYSIS AND INFERENCE
 Sent out a total of 200 questionnaires to our sample
population comprising of individual of age group 22 – 27
years.
 Response Rate of the survey – 87.5 % ( 175 out of 200 )
 Error percentage – 14.28% ( 25 out of 175 )
 The remaining 150 questionnaires were used for our further
calculation and analysis. The gender break-up of the sample is
109 males and 41 females.
CONCLUSION
 The main factor which was found to be highly affecting the
choice of bank among our survey sample differentiating a
public sector bank from private sector bank was identified to
be the ambience of the bank and promotion of the brand.
Presence of bank in various cities, service time, number of
branches and number of ATM centers also equally affect the
preference of consumers.
FUTURE SCOPE
Since the model explains 28% of the variance in the factors
observed, it leaves a future scope for identifying all such
other quantifiable and non–quantifiable factors to develop a
more realistic relationship to describe the customer behavior
towards choice of a retail bank in a holistic manner.