Bank Selection Criteria Employed by MBA Students in Delhi

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© A Sajeevan Rao and R K Sharma the younger age group. Banks which are planning to cultivate this vibrant market segment must understand how individuals belonging to such segments select their banks. A review of literature also indicates that studies related to bank selection criteria have been mainly conducted in the USA and some European countries (Denton and Chan, 1991). Although such studies have contributed substantially to the literature on bank selection, their findings may not be applicable to other countries, due to differences in cultural, economic and legal environments. A set of determinant factors that have a significant role in bank selection in one nation may prove to be insignificant in another. This article focuses on studying the bank selection criteria being employed by a crucial segment (i.e. MBA students) of potential customers (aged 21-28) in India. In India, the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with the Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority. During those days, public had lesser confidence in the banks. As an aftermath deposit mobilization was slow. Earlier savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to traders. Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI and to handle banking transactions of the Union and State Governments all over the country. Seven banks forming subsidiary of State Bank of India was nationalized in 1960. On 19th July, 1969, major process of nationalization was carried out. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were nationalized. Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership. Major development occurred in 1991, under the chairmanship of M Narasimham Rao, when a committee was set up by his name, which worked for the liberalization of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking were introduced. The entire system became more convenient and swift. Time is given more importance than money. Over the years, banks are also customizing themselves. The Indian banking industry is passing through a phase of customers market. The customers have more choices in choosing their banks. A competition has been established within the banks operating in India. With stiff competition and advancement of technology, the services provided by banks have become more easy and convenient. In this paper, the researchers have tried to study attributes a bank has to provide in Indian banks or in other words try to assess what are the variables that attract a MBA student to choose banking services. 57
Literature Review 58 Journal of Business Studies Quarterly 2010, Vol. 1, No. 2, pp. 56-69 Thomas Foscht, Judith Schloffer, Cesar Maloles III, Swee L. Chia (2009) found the differences among the three age groups contained in Generation Y in terms of their sources of information, financial services used, likelihood of switching, and number of banks utilized. In addition, determinants of satisfaction, loyalty, and behavioral intention are primarily affected by satisfaction with employees and services rendered. There results indicated that as young people reach certain milestones, their needs become more multifaceted. Consequently, the determinants of satisfaction have also changed. A study conducted by Mamunur Rashid, M. Kabir Hassan (2009) in Bangladesh in six full fledged Islamic banks found non-Islamic factors such as Corporal efficiency, Core- Banking Services, Confidence, etc. were given higher weights by majority of the respondents. The report recommends introducing complete E-Banking solution, to increase advanced marketing efforts and to hire experienced human resources for better Islamic Banking activities in Bangladesh. Charles Blankson , Ogenyi Ejye Omar , Julian Ming-Sung Cheng (2009) identified four key factors - convenience, competence, recommendation by parents, and free banking and/or no bank charges - to be consistent across the two economies. The recommendation of the study is that in the context of an open and liberalized market environment, retail bank marketing strategies should be standardized irrespective of the national development stage. It concludes that retail bank managers particularly in developing countries should learn to provide consistent and good customer care. Omar Masood, Jamel E. Chichti, Walid Mansour , Muzafar Iqbal (2009) research attempt is made to assess the degree of customer awareness, satisfaction as well as selection criteria. A sample of 200 respondents took part in this study. The responses where shows a certain degree of satisfaction, there few respondents also have expressed their dissatisfaction with some of the Islamic bank's services. Dominic Celestine Fernandez (2008) conducted a survey and results indicated no attribute obtained was an outright determinant of bank selection choices. This was attributed to the diverse needs of respondents as revealed by this survey. While some determinants such as location was of prime importance when selecting a bank, other factors that emphasize of better social interaction between banker and client, is gaining prominence partly due to the influence of Asian culture. It also revealed the use of the consumer decision making model when selecting bank choices. As a whole, this study was able to achieve its objective in understanding and providing a snapshot of the important determinants in bank selection based on the feedback from survey respondents. How a larger sample over a greater length of time is deemed to provide a better understanding of trends in Malaysia. Charles Blankson, Julian Ming-Sung Cheng, Nancy Spears (2007) study reveals three key dimensions, factors, strategies that are consistent across all three economies. The paper concludes that open and liberalized business climate appear to explain consumers' decisions. This research is based on the college student cohort and thus the results do not represent the public. This poses generalizability questions without further replications and validations. This study did not examine whether there were consumers' switching behaviors involving banks. ©JBSQ 2010
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Bank Selection Criteria Employed by MBA Students in Delhi

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