Customer loyalty in banks has always remained a challengingtask. With the advent of technology, this challenge has stiffened. The web oftechnology integrated into the delivery mechanism of services and products hasraised the expectations of customers. Andmaintaining these high voltage expectations usually leads to break in circuitof service delivery mechanism. Even an iota of fall in such expectationstriggers customer defection.
So, under the circumstances, retention of customers is oneof the biggest challenges for banks than winning new customers. There is surgein customer grievances/complaints wherein banks are mostly blamed for breachingcommitment and not adhering to fair banking practices.
As far as fair banking practices are concerned, a bank, asan institution, cannot afford to be unfair to its customers as its operationsare driven by banking regulations. However, breaches are there, which happenonly at individual levels. Of course, such breaches in delivery of servicesharm the business of the bank as customers look for alternative channels.
We usually see that customers have a general tendency to gettheir bank-related work done quickly. They don’t bother to make themselvesaware of the essential features and the important terms and conditions of theproduct or service which they are availing. Even the bank staff at theoperation level don’t bothers to educate the customer about the terms andconditions in a transparent manner.
Let me explain. If a customer wants to open a savings bank(S/B) account, he approaches his bank branch, fills up the application form andsubmits it. He complies with the required KYC (know your customer) norms andsubmits the relevant documents. At this stage, firstly, the customer should have normally enquired about hisrights as an accountholder. He should have even looked into terms andconditions governing his account. Secondly, the bank official was duty-boundto apprise himself about the features ofthe account. Even terms and conditions such as minimum balance requirement,penalty for non-maintenance of minimum balance, charges for operations in theaccount, cheque book charges, nomination facility, applicability of taxdeduction at source (TDS) on interest etc. should have been told to thecustomer.
However, neither the customer bothers to know about hisrights and duties as an accountholder, nor the bank officials bother to makehim aware about the guidelines covering his account operations. Very rarely wesee customers seeking information regarding service charges for availingdigital services like debit/ATMcard/credit card, internet banking etc. or getting to know about loanprocessing charges, frequency of change in interest rate on loans, chequecollection or cheque bounce charges. Even the bank officials most of the timesdon’t make the customers aware about such charges to be borne by him/her.
This lack of awareness among customers leads to customergrievances and complaints when banks deduct such charges while providingservices to them. In order to address the issues and make customers as well asbank officials to fall inline with their rights and duties, we have the BankingCodes & Standards Board of India (BCSBI) guidelines in place. The BCSBI wasset up by the Reserve Bank of India (RBI) in February 2006 with the objectiveto promote good and fair banking practices. It sets out minimum benchmarkstandards for banks to act fairly and reasonably in their dealings withcustomers. The codes, which have been issued by BCSBI and adopted by memberbanks, contain these minimum benchmark standards which banks are committed tofollow.
Precisely, the codes lay great emphasis on transparency andproviding full information to the customer before a product or service is sold.This will help the bank customers to take informed decisions based on priorknowledge. The codes contain the rights and duties of the customers. Theserights and duties concern deposit accounts, cheque collection, ATM/debit andcredit cards and lending. Besides, areas of financial inclusion, seniorcitizens and differently-abled persons are also included in the codes.
Current scenario of sticking to the BCSBI guidelines isdismal. Even as BCSBI has a strong membership of 133 banks indicating theircommitment to abide by its Codes and Standards, the ground situation doesn’tmatch the commitment of the banks. Very scant attention is being given to thepublicity of the banks’ commitments under the codes.
The need for the banks is to fully apprise the customersabout their rights and duties as an accountholder. This kind of awareness willautomatically bring customer grievances and complaints down. Thus, customerdefection can be curbed to a large extent.
(The views are of the author and not the institution he works for)