1.         INTRODUCTION :

The process of liberlisation of the financial sector set in motion in 1991 has changed the Indian banking scenario.  Since then, several mutual funds and other  non-banking institutions have come into being.  These organizations, unencumbered by tradition or history, have been adopting consumer-oriented marketing techniques to mobilize the savings of the society. Further, several new debt instruments like commercial paper are now available for corporate to mobilize the required resources.  The banks are thus required to meet the increasing competition not only among themselves but with other segments of the financial system.  The banks have, therefore, started paying to the customer the attention he deserved and the splendid isolationism which characterized the traditional Indian banking system is set to disappear.

2.         NEED FOR STUDY OF CUSTOMER

            PSYCHOLOGY IN BANKS

Human psychology may broadly be defined as a study of human behaviour and of the mental and physiological processes associated with it.  The psychological researches and their use by banks will provide the most suitable ways for the selection, training and placement of personnel and in establishment of a harmonious relationship with the customer. It enables the banks to gain new marketing data about its customers, educates customers about bank's services, educates the staff in customer psychology and generally builds goodwill for the bank.  However, the managements of the banks must come to accept what the famous psychologist, Kurt Lewin said, "No action without research, no research without action".

3.         MARKETING OF BANKING SERVICES :

1. Traditionally banks had been stodgy and conservative in their marketing techniques. The publicity was through occasional short and unimaginative advertisements in magazines and newspapers.  But now, the marketing strategies have been revamped and it is no longer uncommon to see imaginative advertising spots on the television during prime times, announcing the easy availability of various banking and ancillary services. Now-a-days, some banks offer home-banking facilities, computerized banking services and offer credit cards to non-customers.
2. Under the new customer-oriented philosophy, the banks can no longer see them selves as mere dealers in money. Instead of waiting for the customers approaching them, they have to approach the customers.  The banks now need to constantly

study the psychology of their customers to devise new services and approaches for retaining the present customers and attracting new ones.  For this, they may have to have separate marketing departments or engage the services of professionals.

4. METHODOLOGY FOR STUDYING
CUSTOMER PSYCHOLOGY

• A bank wishing to have a customer survey done has to decide first, with the help of a research firm experienced in banking, what information it has to get. After this, the survey organization should be asked to explain the techniques they would be adopting.

The survey method selected should deliver fairly sure results.  Generally, the survey comprises of open-ended and structured interviews of samples of customers present and prospective.

• One of the first tasks for th survey is to categories the present customer in terms of age, sex, location, size of the account, type of industry/activity/profession, services used and potential for additional business.  Similar details in respect of non-customers in the area of operation should also be collected.  For success of the interviews with the present and prospective clientele, the following preparations/precautions have to be taken:

1. A list of relevant questions to be asked will have to be prepared.  The sources of these questions could be the hunches of the management/staff, comments of the customer of observation of the competitors' activities.
2. The physical conditions/infrastructural arrangements must be conducive for a free and frank discussion.
3. Proper arrangements must be made for recording the responses of the customers.
4. The research should bring out the unfulfilled needs of different classes of customers and define the nature of actions that would appeal to each segment of the population in the area of the bank.

• Based on the responses of the customers, inferences may be drawn relating to their wants, socio-psychological needs, emotional thrusts and the level of attention they desire.

5.         SOCIO-PSYCHOLOGICAL NEEDS OF A CUSTOMER:

Although these are not linked to the survival of the customer's physical being. their deprivation may seriously affect his psychological state and his behaviour.  Some of these needs are:

(i)         The need for recognition and social company:

Every individual has an innate desire to be recognised on his own, and being a social animal, has a strong urge to maintain lasting social relations with others.  But unfortunately the retail customers in bigger banks are often equated with their account numbers.  Customers desire to have a personal relationship with their banks, but banks are not often personable.  Considering that most banks offer similar services, it is necessary for the banks to offer personalized services to their retail customers as well. The cashiers/tellers and deposit/advances counter clerks, who are the main contact persons for these retail customers have a major role in gaining the loyalty of the customers.

(ii)        The need for security:

Apart from his physical security, every customer would like to have economic security.  The bank has, therefore, to project an atmosphere of stability, dependability, security and comfort.  It should learn about the type of financial problems it clientele need to solve and offer services to fulfill these needs.  This will project the image of an institution that is people-oriented and dedicated to the welfare of its clientele.

(iii)       Need for mutual trust:

Generally, banker expects the client to trust him with his monies but is unwilling to reciprocate the feeling.  This is more prominent in the case of sanctioning of loans and advances.  The clients are often looked upon with skepticism and mistrust since the loan officer realizes his responsibility for recovery of the monies lent.  The professional ethic is proffered as a ready justification for maintaining a frigid relationship with the clients.  Although a certain amount of detachment is necessary, a sympathetic listening to the view-points of the borrower and offering of constructive suggestions would instill confidence in the customer towards the bank.

(iv)       The need for information:

With the increase in levels of literacy and expansion of the bank branch network, the public expectations from the bank have also grown considerably.  The customer today demands more and more information from the banks.

(v)        The need for prompt service:

The systems and procedures in banks are generally developed to safeguard the bank's interest and the promotion of customer satisfaction is given only a secondary status.  The often results in inordinate delays in providing prompt customer service. These delays sometimes give rise to unpleasant situations in banks.

(vi)      Interdependent relationship:

Researches have shown that customers perceive the relationship between a banker and a customer as one of inter-dependence.  While the banker is viewed as a friend in need and an expert in financial services, the bank too needs loyal customers to improve its business and profitability.  It should, ideally, be both a business and personal relationship.

(vii)     Borrower's psychology:

Typically, psychological threat is most likely to occur in a borrowing situation due to the feelings of financial weakness and fear of psychological rejection on the part of the customer. Any refusal of loan is likely to be constructed as an inconsiderate ego-deflating treatment.  The banks should, therefore, educate their customers about their schemes, procedures and other requirements to enable them to anticipate how much money they can expect from the bank when needed and on what terms.

6.         HUMAN RESOURCES DEVELOPMENT IN BANKS:

However, much the need for a personalized customer service, it is well nigh impossible for any banker to maintain a person-to-person liason with each customer.  But it is necessary for the officials at the bank to be exposed to the basics of human psychology so that they cater to the needs of different segments of bank's clientele.  The bank has, therefore, to train its personnel in these aspects and communication techniques, and place the people with the right attitudes and skills on desks dealing with public.

7.         CONCLUSION:

A customer chooses his bank not merely on economic or psychological considerations, but also due to influences through 'word of mouth' by his own circle of friends and associates.  It is, therefore, advisable for banks to work on their present clients to secure new ones through personal recommendations.  It should be the constant endeavour of the banks to study the needs of the population in their areas and devise appropriate schemes to cater to them.  They have to be courteous and appreciative of customers' aspirations and view-points.  They have to build-up goodwill for the banks.  In short, there is need for a humanised banking system.

Prepared by Shri C S Murthy, Member of Faculty, CAB (1996)

Read and recommended for retention by Shri Arnab Kumar Chowdhury. Member of Faculty, CAB, Pune (April 2007)