A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

CHAPTER 1. INTRODUCTION

1.1 Introduction

Banking in India originated in the first decade of 18th century with the General Bank of
India coming into existence in 1786. This was followed by Bank of Hindustan. Both these
banks are now defunct. After this, the Indian government established three presidency
banks in India. The first of the three was the Bank of Bengal in 1809, the other two
presidency bank, viz., the Bank of Bombay and the Bank of Madras, were established in
1840 and 1843, respectively. The three presidency banks were subsequently amalgamated
into the Imperial Bank of India (IBI) under the Imperial Bank of India Act, 1920 which
is now the State Bank of India (SBI).

A couple of decades later, foreign banks like Credit Lyonnais started their Calcutta
operations in the 1850s. That time, Calcutta was the most active trading port, mainly due
to the trade of the British Empire and due to which banking activity took roots there and
prospered. The first fully Indian owned bank is the Allahabad Bank, which was
established in 1865.

By the 1900s, the market expanded with the establishment of banks such as Punjab
National Bank (PNB), in 1895 in Lahore and Bank of India (BOI), in 1906 in Mumbai,
both of which were founded under private ownership. The Reserve Bank of India (RBI)
formally took on the responsibility of regulating the Indian banking sector from 1935.
After India’s independence in 1947, RBI was nationalized and given broader powers.

As the banking institutions expand and become increasingly complex under the impact
of deregulation, innovation and technological upgradation, it is crucial to maintain a
balance between efficiency and stability. During the last 40 years since nationalization
tremendous changes have taken place in the financial markets, as well as in the banking
industry due to the financial sector reforms. The banks have shed their traditional
functions and have been innovating, improving and coming out with new types of services
to cater emerging needs of their existing and new customers. Banks have been given
greater freedom to frame their own product policies. Rapid advancement of technology
has contributed to significant reduction in transactional costs, facilitated greater
diversification of portfolio and improvements in credit delivery of banks. Prudential

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

norms, in line with international standards, have been put in place for promoting and
enhancing the efficiency of banks.

Despite this commendable progress, serious problem have emerged reflecting in a decline
in productivity and efficiency and erosion of the profitability of the banking sector. There
has been decline in the quality of loan portfolio which, in turn, has come in the way of
bank’s income generation and enhancement of their capital funds. Inadequacy of capital
has been accompanied by inadequacy of loan loss provisions resulting into the adverse
impact on the depositors’ and investors’ loyalty. The Government, therefore, set up
Narasimhan Committee to look into the problems and recommend measures to improve
our financial system, this has resulted into the transformation of our banking industry.

The banking industry is entering a new phase, where there is increasing competition from
non-banks, not only in the domestic market but also in the international markets. The
operational structure of banking in India is expected to undergo a deep change during the
next decade. With the upcoming new private sector banks, the private banking sector has
become enriched and diversified with focus on wholesale as well as retail banking. The
existing banks have wide branch network and geographic spread, whereas the new private
sector banks have massive capital, lean personnel component, the perfection in
developing good financial products.

The banking system in India is prospering also due to the combined efforts of cooperative
banks and regional rural banks (RRBs), which are expected to provide an adequate
number of effective retail outlets to meet the socio-economic challenges in next two
decades.

The electronic age has also affected the banking system, leading to an increase in the
number of electronic transactions. However, the development of electronic banking has
also led to new areas of risk such as data security and reliability, requiring new techniques
of risk management.

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

HDFC Bank:

HDFC Bank, incorporated in 1994 as part of India's economic liberalization, emerged

under the sponsorship of Housing Development Finance Corporation (HDFC), a leading
housing finance company. The bank swiftly gained prominence by prioritizing retail
banking and adopting a robust customer-centric approach.

HDFC Bank stands as one of India's largest private sector banks, consistently earning
recognition for its stellar financial performance. It has strategically positioned itself as a
leader in retail banking, offering a comprehensive array of products and services. This
includes savings accounts, loans, credit cards, and wealth management. The bank's
emphasis on technology and digital banking has been instrumental in establishing its
extensive reach and. ensuring high levels of customer satisfaction.

Customer-Centric Approach: HDFC Bank has cultivated a strong reputation for

prioritizing customer needs. Its approach involves delivering personalized services and
innovative solutions to cater to the diverse requirements of its customer base.

Digital Banking: The bank has been a pioneer in embracing technology, making
significant investments in digital infrastructure. This proactive stance has allowed HDFC
Bank to provide a seamless and convenient banking experience through online and mobile
platforms.

Cross-Selling: HDFC Bank has excelled in cross-selling financial products, leveraging its
extensive customer base to offer a comprehensive suite of banking and financial services.

ICICI Bank:

ICICI Bank resulting from the 1994 merger of ICICI Ltd. and ICICI Bank, played a
pivotal role in India's financial sector development. It was among the first entities to
receive approval from the Reserve Bank of India (RBI) to establish a private sector bank.

ICICI Bank has evolved into one of India's premier private sector banks, offering a diverse
range of financial products and services. With a substantial presence in both retail and
corporate banking, the bank caters to a broad and varied customer base.

International Presence: ICICI Bank boasts a strong international presence, maintaining

subsidiaries and branches in various countries. This global footprint contributes
significantly to its status as a leading Indian multinational bank.

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Innovation and Technology: Similar to HDFC Bank, ICICI Bank has been an early
adopter of technology. The bank has made substantial investments in digital banking
solutions, enabling customers to access services conveniently and efficiently.

Focus on Corporate and Retail Banking: ICICI Bank has successfully balanced its focus
on both corporate and retail banking segments. This diversified approach has been a key
factor contributing to the bank's overall growth and stability in the competitive banking
landscape.

Customer Retention:

Customer retention is a cornerstone for the success of banks in the competitive financial
industry. HDFC Bank and ICICI Bank recognize the importance of understanding what
their customers value and prefer in banking services. By gaining insights into customer
preferences, these banks can tailor their offerings to meet specific expectations. This
personalized approach enhances customer satisfaction and loyalty, reducing the
likelihood of customers switching to competitors. In a landscape where attracting new
customers is challenging, retaining existing ones through tailored services becomes a
strategic imperative.

Customized Products and Services:

The ability to offer customized financial products and services is a key differentiator for
banks. HDFC Bank and ICICI Bank leverage their understanding of customer preferences
to develop and provide tailored solutions. This level of customization ensures that
banking experiences align closely with individual needs. Whether it's designing
personalized investment portfolios, crafting unique loan structures, or offering
specialized savings accounts, these banks create a more relevant and valuable experience
for their customers, ultimately strengthening their position in the market.

Enhanced Customer Experience:

A superior customer experience is a driving force behind customer satisfaction and

loyalty. HDFC Bank and ICICI Bank go beyond the transactional aspects of banking by
aligning their services with customer preferences. This understanding extends to both
digital interfaces and in-person interactions. By optimizing the usability of digital
platforms and ensuring that in-person interactions reflect customer expectations, these
banks foster a positive relationship. This, in turn, results in increased customer

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engagement and a holistic banking experience that goes beyond the mere execution of
financial transactions.

Innovation and Adaptation:

The banking industry operates in a dynamic environment where customer preferences

evolve over time. HDFC Bank and ICICI Bank stay at the forefront of innovation by
continuously monitoring and adapting to these changes. Recognizing that customer
preferences are not static, these banks invest in technologies and strategies that anticipate
and respond to shifting trends. This adaptability is crucial for maintaining
competitiveness in the ever-evolving banking landscape, allowing these institutions to
lead in innovation rather than merely reacting to market changes.

Effective Marketing Strategies:

Understanding customer preferences provides a solid foundation for crafting effective

marketing strategies. HDFC Bank and ICICI Bank leverage their insights to create
targeted campaigns tailored to specific customer segments. By aligning messages with
the preferences of these segments, these banks maximize the effectiveness of their
marketing efforts. This targeted approach not only helps in retaining existing customers
but also attracts a more significant number of potential customers who resonate with the
personalized and relevant services being offered.

1.1.1Definition

Investopedia:

Banking services encompass a wide range of financial activities provided by banks to

individuals, businesses, and governments. These services include but are not limited to
deposit accounts, loans, credit cards, and investment products.

World Bank:

Banking services refer to the suite of financial products and transactions offered by banks,
such as savings and checking accounts, loans, and electronic payment services. These
services play a crucial role in fostering economic development and financial inclusion.

Federal Reserve Bank of San Francisco:

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Banking services are the various financial products and functions provided by banks,
including accepting deposits, lending money, facilitating transactions, and managing
risks. These services are essential for the efficient functioning of an economy.

International Monetary Fund (IMF):

Banking services encompass the range of activities conducted by banks to meet the
financial needs of individuals and businesses. These services play a pivotal role in the
mobilization and allocation of financial resources in an economy.

European Banking Authority (EBA):

Banking services represent the diverse set of financial activities offered by banks to meet
the demands of customers, including deposit-taking, lending, and payment services. The
regulatory framework ensures the stability and integrity of these services in the financial
system.

John A. Caspari (Author of 'The World of Money and Banking'):Banking services are the
means by which financial institutions facilitate economic transactions and the movement
of money. These services include providing a safe place for deposits, extending credit,
and enabling the efficient transfer of funds."

Raghuram G. Rajan (Economist and Former Governor of the Reserve Bank of India):

Banking services are the backbone of a modern economy, serving as intermediaries that
connect savers with borrowers. These services contribute to economic growth by
efficiently allocating capital and managing financial risks.

Customer Preference: This refers to the choices, inclinations, and tendencies of customers
regarding the products and services offered by a company. Analysing customer
preferences involves understanding what factors influence customers in choosing one
bank over another and what features or services they prioritize.

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1.1.2 About Customer Preference Towards Banking Services

Service Quality:

Customers in India place a high value on efficient and prompt service from their banks.
Swift and hassle-free transactions, whether related to deposits, withdrawals, or fund
transfers, are essential expectations. The accessibility and availability of banking services
are equally critical. This encompasses not only physical branch access but also the
responsiveness of customer support services. The quality of service is often a determining
factor in customer satisfaction and loyalty.

Convenience:

The convenience of banking services is a paramount consideration for Indian customers.

With the increasing reliance on technology, there is a strong preference for banks that
offer user-friendly online and mobile banking platforms. Additionally, the availability of
ATMs, ease of access to physical branches, and convenient banking hours contribute
significantly to the overall customer experience. As technology evolves, the role of
convenience in banking services continues to grow in importance.

Digitalization:

India is experiencing a rapid digital transformation in the banking sector, and customers
appreciate banks that stay at the forefront of this trend. Offering a comprehensive suite of
digital services, including online account management, mobile banking apps, and digital
wallets, is crucial for attracting and retaining customers. Security and privacy concerns
are paramount, making robust cybersecurity measures a key factor in digital service
adoption.

Product Offerings:

Customers in India are attracted to banks that provide diversified and customized product
offerings. This includes a wide range of savings and investment products, loans, credit
cards, and insurance services. Tailoring products to suit the diverse needs of different
customer segments is vital for gaining preference in a competitive market.

Trust and Reputation:

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Trust is a cornerstone in the banking sector, and Indian customers tend to choose banks
with solid reputations for financial stability, ethical practices, and transparency. Positive
reviews, word-of-mouth recommendations, and the overall standing of a bank in the
industry contribute significantly to building and maintaining trust among customers.

Customer Satisfaction:

Customer satisfaction is a reflection of the overall banking experience. Resolving issues

promptly, providing personalized service, and engaging in proactive communication are
essential components of ensuring high customer satisfaction. Regular surveys and
feedback mechanisms play a crucial role in helping banks understand customer needs and
concerns, enabling continuous improvement in service delivery.

Financial Inclusion:

Given the diversity of India's population, banks that actively contribute to financial
inclusion initiatives are well-regarded. This involves providing accessible and affordable
banking services to underbanked and rural communities, contributing to a positive
customer sentiment and societal impact.

Regulatory Compliance:

Adherence to regulatory standards and compliance with government guidelines are non-
negotiable for customers in India. Banks that operate within the legal framework,
ensuring the safety of deposits and investments, are more likely to gain and retain
customer trust.

Innovations and Technology Adoption:

Banks that embrace innovative technologies, such as artificial intelligence, machine

learning, and blockchain, for improved services and security are favored by tech-savvy
customers. Staying at the forefront of technological advancements is a key differentiator
in a competitive market.

Educational Initiatives:

Banks that focus on customer education about financial literacy and effective use of
banking services tend to build stronger relationships with their clients. Educational
initiatives contribute not only to customer empowerment but also to a more informed and
engaged customer base.

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1.1.2.1 Popular Banking Services

HDFC BANK

1. Retail Banking:

Savings Accounts: HDFC Bank provides a variety of savings accounts tailored to meet
the diverse needs of its customers. These accounts may include regular savings accounts,
salary accounts, and specialized accounts for children or senior citizens. Features often
include competitive interest rates, personalized debit cards, and online banking facilities.

Current Accounts: HDFC Bank offers current accounts for both individuals and
businesses. Current accounts are designed to facilitate daily transactions, and they often
come with benefits such as overdraft facilities, internet banking, and customized account
statements.

Fixed Deposits: HDFC Bank's fixed deposit offerings allow customers to invest their
money for a fixed tenure at attractive interest rates. The bank offers flexibility in terms of
deposit tenure, ranging from a few days to several years. Customers can choose from
various types of fixed deposits, including regular fixed deposits and tax-saving fixed
deposits.

Loans and Mortgages: HDFC Bank provides a wide range of loan products, including
personal loans, home loans, car loans, and education loans. These loans come with
competitive interest rates, flexible repayment options, and quick approval processes. The
bank's mortgage services are particularly popular, with a variety of home loan products
catering to different customer needs.

2. Digital Banking:

Online Banking Services: HDFC Bank's online banking platform enables customers to
perform a range of banking activities from the convenience of their homes. This includes
fund transfers, bill payments, account management, and access to e-statements. The
platform is designed to be user-friendly and secure.

Mobile Banking Applications: HDFC Bank offers mobile banking applications

compatible with various devices. These apps provide a seamless and secure way for
customers to manage their accounts, transfer funds, pay bills, and even invest in financial
products on the go.

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Digital Wallets and Payment Solutions: The bank provides digital wallet services and
various payment solutions. These include options for mobile-based payments, UPI
(Unified Payments Interface), and contactless card transactions. HDFC Bank actively
participates in the evolving digital payment ecosystem, providing customers with
convenient and secure payment options.

3. Investment and Wealth Management:

Mutual Funds: HDFC Bank offers a platform for customers to invest in a range of mutual
funds. The bank provides research insights, investment advice, and a user-friendly
interface for customers to manage their mutual fund portfolios.

Insurance Products: HDFC Bank provides a suite of insurance products, including life
insurance, health insurance, and general insurance. These products are often offered in
collaboration with leading insurance providers to ensure comprehensive coverage for
customers.

Investment Advisory Services: For customers seeking personalized investment strategies,

HDFC Bank offers investment advisory services. This includes financial planning,
portfolio management, and advice on wealth creation based on individual financial goals.

4. Corporate Banking:

Business Accounts: HDFC Bank caters to the banking needs of businesses with a range
of business accounts. These accounts come with features such as internet banking, bulk
payment facilities, and specialized services to support the financial management of
businesses.

Trade Finance: HDFC Bank assists businesses in facilitating international trade through
various trade finance services. This includes services like letters of credit, export
financing, and other trade-related financial instruments.

Corporate Loans and Credit Facilities: HDFC Bank provides corporate loans and credit
facilities to meet the financing requirements of businesses. This includes term loans,
working capital loans, and other credit products designed to support the growth and
expansion of corporate clients.

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ICICI BANK

1.Retail Banking

Savings Accounts: ICICI Bank recognizes the diverse financial needs of its customers
and offers a comprehensive range of savings accounts. These accounts come with
competitive interest rates, providing customers with a lucrative opportunity to grow their
savings. Moreover, account holders benefit from personalized debit cards that cater to
their unique preferences. The extensive network of ICICI Bank ATMs ensures convenient
access to funds. Some savings accounts go beyond the conventional offerings, providing
additional benefits such as reward points, exclusive discounts, and cashback on
transactions. These perks enhance the overall banking experience for customers, making
ICICI Bank an attractive choice for those seeking more than just a standard savings
account.

Current Accounts: For businesses and individuals with higher transaction volumes, ICICI
Bank offers tailored current accounts. These accounts come with features designed to
streamline financial operations, including overdraft facilities that provide flexibility in
managing funds. Customized account statements offer a detailed overview of
transactions, promoting efficient financial management. In the realm of business current
accounts, ICICI Bank goes further to provide services specifically crafted for trade and
cash management. This strategic approach ensures that businesses can not only manage
their finances effectively but also optimize their cash flow and trade-related activities.

Fixed Deposits: ICICI Bank's fixed deposit schemes provide customers with a secure and
rewarding investment option. Customers can invest a lump sum for a fixed tenure,
benefiting from competitive interest rates. The flexibility of choosing from various FD
options, such as regular fixed deposits, tax-saving FDs, and senior citizen FDs, caters to
the diverse financial goals of customers. Customers further have the freedom to decide
the interest payout frequency, be it monthly, quarterly, or annually. This customization
adds an extra layer of convenience, allowing individuals to align their investment strategy
with their unique preferences and financial objectives.

2. Loans and Credit Services

Personal Loans: Understanding that financial needs vary, ICICI Bank provides personal
loans to address a range of purposes such as travel, medical expenses, or debt

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consolidation. The streamlined application process ensures quick approval, and

borrowers benefit from flexible repayment options. Competitive interest rates enhance
the affordability of these loans, making them an accessible solution for customers. To
simplify the borrowing experience, ICICI Bank may extend pre-approved personal loan
offers to eligible customers, providing them with a hassle-free way to meet their
immediate financial requirements.

Home Loans: ICICI Bank supports customers in realizing their dream of homeownership
by offering tailored home loan solutions. These loans come with attractive interest rates,
providing a cost-effective way to purchase or refinance residential properties. The bank's
commitment to customer convenience is evident through doorstep services, ensuring a
smooth and personalized home loan experience. Additional services, such as balance
transfer facilities and online tools for EMI calculations, empower customers to make
informed decisions about their home financing, enhancing their overall homeownership
journey.

Credit Cards: ICICI Bank's range of credit cards caters to diverse customer preferences,
offering features such as travel rewards, cashback, and lifestyle benefits. Cardholders
enjoy exclusive discounts on dining, shopping, and entertainment, enhancing their
lifestyle. In addition to these perks, ICICI Bank prioritizes the security of online
transactions, providing cardholders with a safe and secure platform. Additional benefits,
such as airport lounge access, further contribute to a premium credit card experience.

3.Digital Banking

Internet Banking: ICICI Bank's internet banking platform empowers customers to

manage their accounts seamlessly. The platform encompasses features such as fund
transfers, bill payments, account statements, and online shopping. The inclusion of robust
security measures, including two-factor authentication, ensures a secure online banking
experience for users.

Mobile Banking: The mobile banking app offered by ICICI Bank transforms smartphones
into powerful banking tools. Users can perform various banking activities, including
mobile fund transfers, bill payments, account management, and personalized alerts. The
app extends its utility by offering additional services such as mobile recharges and ticket
bookings.

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ATMs and Cash Deposit Machines: ICICI Bank boasts an extensive network of ATMs,
providing customers with convenient access to cash withdrawal services. To facilitate
hassle-free transactions, the bank has introduced Cash Deposit Machines (CDMs),
allowing customers to deposit cash into their accounts without visiting a branch.
Advanced features, such as cardless cash withdrawal, further enhance the convenience at
select ATMs.

4.Investment and Wealth Management

Mutual Funds: Recognizing the importance of wealth creation, ICICI Bank offers a
diverse range of mutual fund products, including equity, debt, and hybrid funds. The bank
provides systematic investment plans (SIPs) and systematic withdrawal plans (SWPs),
offering customers convenient options for investing and redeeming their investments.

Insurance Products: ICICI Bank addresses the insurance needs of its customers through
various products, including life insurance, health insurance, and general insurance.
Customers can choose from a range of policies with different coverage options and
premium amounts, ensuring that their insurance needs align with their individual
circumstances.

Wealth Management Services: For high-net-worth individuals seeking personalized

financial strategies, ICICI Bank offers comprehensive wealth management services.
These services encompass portfolio management, investment advisory, and estate
planning. With the guidance of wealth management professionals, clients can navigate
complex financial landscapes and work toward achieving their long-term financial goals.

5.Corporate Banking

Business Loans: ICICI Bank is committed to supporting the financial needs of businesses
by providing tailored business loans. These loans cater to various purposes, including
expansion, working capital, and equipment purchase. The bank's approach includes
offering customized loan solutions designed to meet the specific requirements of different
industries.

Corporate Accounts: In the realm of corporate banking, ICICI Bank extends solutions that
include corporate accounts and cash management services. These offerings are crafted to
address the unique financial needs of businesses, providing corporate account holders
with access to specialized services that optimize their financial operations.

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Trade Finance: Recognizing the importance of facilitating international and domestic

trade, ICICI Bank offers trade finance services. These services may include letters of
credit, bank guarantees, and export-import financing. By providing comprehensive
support for trade-related financial activities, ICICI Bank empowers businesses to navigate
the complexities of the global marketplace effectively.

This comprehensive overview showcases how ICICI Bank's retail banking, loans and
credit services, digital banking, investment and wealth management, and corporate
banking collectively contribute to a diverse and customer-centric banking experience. The
bank's commitment to customization, convenience, and innovation positions it as a trusted
financial partner for individuals and businesses alike.

1.2 Background of Study

1.2.1 History of banking services

The history of banking is a fascinating journey that stretches back millennia, intertwined
with the rise and fall of civilizations, the evolution of trade, and the constant human
need for secure storage and management of wealth. From the early grain loans of
ancient Mesopotamia to the complex digital banking systems of today, let's delve into
the key milestones that shaped the world of banking services

Early Beginnings (2000 BC - 476 AD):

Seeds of Banking: The earliest traces of banking practices can be found in ancient
civilizations like Mesopotamia (around 2000 BC), India, and China. Merchants acted as
proto-bankers, offering grain loans to farmers and traders, and temples served as safe
havens for storing valuables.

Rise of Coinage and Money Lending: The invention of coinage in the 7th century BC
revolutionized finance, enabling standardized and easier exchange of goods and services.
Greek and Roman temples became centers of money lending, accepting deposits and
offering loans at interest.

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Fall of the Roman Empire and the Dark Ages: With the fall of the Roman Empire in 476
AD, centralized banking systems declined, and the focus shifted to local money lenders
and barter systems.

Medieval and Renaissance Europe (476 AD - 1500s):

Reemergence of Banking: The revival of trade in medieval Europe saw the re-
emergence of banking activities. Money changers and goldsmiths in Italy, particularly
in cities like Florence and Venice, began offering safekeeping of valuables, money
exchanging, and loan services.

Birth of Merchant Banks: Wealthy merchant families like the Medicis and Fuggers
established powerful merchant banks, financing major trade ventures, issuing bills of
exchange, and even advising governments on financial matters.

The Rise of State Banks: The 15th and 16th centuries saw the establishment of the first
state banks, such as the Bank of Venice (1401) and the Bank of England (1694). These
banks played a crucial role in managing government finances, issuing currency, and
promoting economic stability.

The Modern Era (1600s - Present):

Development of New Banking Products and Services: The 17th and 18th centuries
witnessed the introduction of innovative banking products like cheques, overdrafts, and
clearinghouses, facilitating more efficient and secure financial transactions.

Industrial Revolution and Commercial Banks: The Industrial Revolution spurred the
growth of commercial banks, providing loans and other financial services to businesses
to fuel economic expansion.

1.2.2 Journey of Indian Banking Industry

The first bank of India, thought conservative, was established in 1786. From then till
today, the journey of Indian banking system can be classified into three distinct phases

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Phase 1: Early phase from 1786 to 1969 of Indian banks.

Phase 2: Nationalisation of Indian banks up to 1991 prior to the Indian banking sector
reforms.

Phase 3: New phase of Indian banking system with the advent of Indian Financial and
Banking Sector Reform after 1991.

Brief discussions of these phases are here under.

Phase I

The General Bank of India was set up in 1786. Next came the Bank of Hindustan and
Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of
Bombay (1840) and Bank of Madras (1843) as independent units and called them
President’s Banks. These three banks were amalgamated in 1920 and named the Imperial
Bank of India, which started as private shareholder bank, and was established with mostly
European shareholders. In 1865, the Allahabad Bank was established, and for the first
time exclusively by Indians. Punjab National Bank Ltd was set up in 1894 with
headquarters at Lahore. Between 1906 and 1913 Bank of India, Central Bank of India,
Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. The
Reserve Bank of India (RBI) was established in 1935. During the first phase, 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 the banks, the Government of India came up with the Banking Companies
Act, 1949 which was later changed to Banking Regulation Act, 1949. As per the Banking
Regulation (Amendment) Act of 1965 (Act No. 23 of 1965), RBI was vested with
extensive power for the supervision of banking in India and is the central Banking
Authority. During those days, the public confidence in banks was somewhat low and, so,
deposit mobilization was slow. Abreast of it the savings bank facility provided by the
postal department was comparatively safer. Moreover, funds were largely given to traders.

Phase II

The government took major steps in the Indian banking sector reforms after
independence. In 1955, it nationalized the Imperial Bank of India by the State Bank of
India Act with extensive banking facilities on a large scale, especially in rural and semi-
urban areas as the first phase of nationalization. It formed the State Bank of India (SBI)

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to act as the principal agent of RBI and to handle banking transaction of the Union and
the State Government of the country.

Phase II The government took major steps in the Indian banking sector reforms after
independence. In 1955, it nationalized the Imperial Bank of India by the State Bank of
India Act with extensive banking facilities on a large scale, especially in rural and semi-
urban areas as the first phase of nationalization. It formed the State Bank of India (SBI)
to act as the principal agent of RBI and to handle banking transaction of the Union and
the State Government of the country.

1. Central Bank of India 2. Bank of Maharashtra

3. Dena Bank 4. Punjab National Bank
5. Syndicate Bank 6. Canara Bank
7. Indian Bank 8. Indian Overseas Bank
9. Bank of Baroda 10. Union Bank
11. Allahabad Bank 12. United Bank
13. UCO Bank 14. Bank of India

The second phase of nationalisation of Indian banks was carried out in 1980, with seven
more banks. This step brought 80 per cent of the banking segment in India under
government ownership.

The Government of India has taken the following steps to regulate banking institutions
in the country:

1949: Enactment of the Banking Regulation Act.

1955: Nationalisation of State Bank of India.

1959: Nationalisation of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalisation of 14 major banks.

1971: Creation of Credit Guarantee Corporation.

1975: Creation of regional rural banks.

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1980: Nationalisation of seven more banks with deposits over Rs200 crore.

After the nationalisation of banks, the branches of the public sector banks in India rose to
approximately 800 per cent in deposits, and advance took a huge

jump by 11,000 per cent.

Government ownership gave the public implicit faith and immense confidence in the
sustainability of public sector banks.

Phase III

The third phase of development of Indian banking introduced many products and facilities
in the banking sector as its reform measures. In 1991, under the chairmanship of M.
Narasimhan, a committee was set up under his name, which worked for the liberalization
of banking practices.

Post the implementation of this committee’s recommendations the country is flooded with
foreign banks and their ATM stations. Efforts are being put in to give a satisfactory service
to customers. Phone banking and net banking have been introduced. The entire system
has become more convenient and swifter. Today, time is given more importance than
money. The financial system of India has shown a great deal of resilience. It is shielded
from any crisis triggered by any external macroeconomic shocks as other East Asian
countries suffered.

This is all due to a flexible exchange rate regime, high foreign reserve, the not yet fully
convertible capital account, and limited foreign exchange exposure to banks and their
customers.

State Bank of Indore, popularly Known as Indore Banks in Malwa Region, originally
known as Bank of Indore Ltd. was incorporated under a special charter of His Highness
Maharaja Tukojirao Holker-III, the then ruler of this region.

In terms of State Bank of India (Subsidiary Banks) Act, 1959 the Bank of Indore Ltd.
become a subsidiary of State Bank of India w. e. f. Ist of January 1960 and was renamed
as State Bank of Indore. The Bank acquired business of the Bank of Dewas Ltd. in 1962
and the Dewas Senior Bank Ltd. in 1965 and was upgraded to class ‘A’ category bank in
1971. Ever since then the bank has been making steady progress and during the year 2006-
2007 the business turnover crossed Rs. 35000 crores.

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Banking in India is not the same which was about two decades ago. As a matter of fact,
history of banking in this country has gone through many modes of changes and phase of
developments. When India got freedom there were private as well as public sector banks.
Private sector banks were mainly interested in their own profit and wealth maximization.

India was in need of huge finances for industrialization and big projects. In 1969 the banks
were nationalized. New set of responsibilities and roles were given to banks. Their role
shifted from commercial to developmental. IDBI was established with the sole purpose
of promoting agricultural sector. The banking from 1969-1992 was the dawn of
globalization, liberalization and privatisation in India. But the nationalized banks have
missed in one thing that is - caring for the customers.

The economy was captive and nationalized banks almost enjoyed the monopoly.

The Govt. of India supported creation of private banks. IDBI that was a govt. India
enterprise, specific purpose became a private bank. Many other private banks appeared
on the scene of Indian economy such as ICICI, HDFC

There is reversal in the trend also which is marginal. IDBI which was a public sector bank
was privatized and later on it again become a public sector bank, today they take pride in
advertising that they are a public sector bank but the service are like those of private, that
means dominating role of private banks in realm of service is well established and
recognized. No doubt banks are becoming more customer friendly day by day. It is a good
sign for them as well as customer.

1.2.3 Structure of Indian Banking Industry

The banking system plays very important role to develop an economy by enabling it to
be competitive and strong enough to face the financial crises and hence forms the core
of money market. The banking structure of every economy is going to change with the
changing environment. In Indian context, there were two phases of nationalization,
introduction of RRBs, entry of private sector banks and foreign banks and now
ebanking are some major changes that affect the structure as well as functioning of the
banks from time to time. Indian banking too has proved many changes in response to
the world economy where liberalization, privatization, technology introduction, that is,
computerization are the major effects of globalization. Computerization in banking
industry has become very important in recent years. Indian banking industry today is in

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the midst of an IT revolution. A combination of regulatory and competitive forces has

led to increasing importance of total banking automation in the Indian banking industry.
Hence, there is a paradigm shift in banking in India as they started to realize the need to
be ‘Customer focused’ which is imperative for the survival and growth. Many aspects
of information technology, that is, ATMs, tele-banking, mobile banking, internet
banking along with consumer durable loans, home loans, personal loan, business loan,
insurance, demat services, etc. have started taking place, especially after the entry of
private and foreign banks which had advantage of the latest technology. That is why
banking has become more competitive in today’s world market.

In India though the money market is still characterized by the existence of both the
organized and the unorganized segments, institutions in the organized money market have
grown significantly and are playing an increasingly important role. Amongst the
institutions in the organized sector of the money market, commercial banks and
commercial co-operative banks have been in existence for the past several decades. The
Regional Rural Banks (RRBs) came in to existence since the middle of seventies. Thus,
with the phenomenal geographical expansion of the commercial banks and the setting up
of the RRBs during the recent past, the organized sector of money market has penetrated
into the rural areas as well. Besides the aforesaid institutions which mainly served sources
of short-term credit to industry, trade, commerce and agriculture, a variety of specialized
financial institutions have been set up in the country to accommodate the specific needs
of industry, agriculture and foreign trade. On the basis of Reserve Bank of India Act,
1934.

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A. Scheduled Commercial Banks: According to RBI Act 1934, “a scheduled bank is

that bank which has been included in the second schedule of the Reserve Bank of India.”
To be eligible for this concession a bank must satisfy the following three conditions:

It must have a paid-up capital and reserves of an aggregate value of at least Rs.5 lakhs.

It must satisfy the RBI that its affairs are not conducted in a manner detrimental to the
interests of its depositors.

It must be a corporation and not a partnership or a single owner firm.

RBI gives these banks number of facilities like credit, rediscount etc. These banks have
to deposit fixed proportion of their demand and time deposits with RBI.

a. Commercial banks are financial institutions that provide a wide range of services to
individuals and businesses. They are the most common type of bank, and you probably
have an account at one. Some of the key things that commercial banks do include

Accepting deposits: This is where you keep your money in checking and savings
accounts. The bank then uses this money to make loans.

Making loans: This is how commercial banks make money. They lend money to
individuals and businesses for things like cars, homes, and businesses. The interest that
borrowers pay on their loans is the bank's main source of income.

Offering other financial services: Commercial banks also offer a variety of other services,
such as checking and savings accounts, credit cards, investment products, and insurance.

1. Public Sector banks: Public sector banks (PSBs) are financial institutions in India
where the majority of the shares are owned by the government. They play a crucial role
in the country's financial system, contributing significantly to economic development and
financial inclusion.

Government ownership: As mentioned, the majority of shares (at least 50%) are held by
the government, typically through the Ministry of Finance. This gives them certain
advantages like access to capital and deposit insurance guarantees.

Wider branch network: PSBs boast a vast network of branches, particularly in rural areas,
reaching unbanked populations and promoting financial access.

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Focus on priority sectors: They are directed to lend a certain portion of their funds to
priority sectors like agriculture, small-scale industries, and other under-banked segments.

Lower interest rates: PSBs generally offer lower interest rates on loans compared to
private banks due to their lower cost of funds and social obligations.

Challenges: PSBs have faced some challenges including higher non-performing assets
(NPAs), bureaucratic inefficiencies, and competition from private banks. However,
efforts are underway to improve their efficiency and governance.

2. Private Sector banks: financial institutions owned and operated by private individuals
or corporations, rather than the government. They play a crucial role in the financial
ecosystem of a country by:

Mobilizing savings: Private banks attract deposits from individuals and businesses
through various savings accounts and fixed deposit schemes, offering competitive interest
rates and flexible terms.

Channelling funds: These deposits are then used to provide loans to businesses and
individuals for various purposes, such as working capital, investment, or personal needs.
This helps fuel economic growth and development.

Driving innovation: Private banks are often at the forefront of financial innovation,
developing new products and services to meet the evolving needs of their customers. They
leverage technology and digital platforms to offer convenient and efficient banking
solutions.

Promoting competition: The presence of private banks creates healthy competition in the
banking sector, leading to better interest rates, lower fees, and a wider range of products
and services for consumers.

characteristics of private sector banks:

Profit-driven: Unlike government-owned banks, private banks are driven by the goal of
maximizing profits for their shareholders. This incentivizes them to be efficient,
customer-centric, and innovative.

Stronger capital base: Private banks typically have higher capital adequacy ratios
compared to public sector banks, making them more financially stable and resilient to
economic shocks.

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Focus on niche markets: Many private banks cater to specific niche markets, such as high-
net-worth individuals, small and medium-sized businesses, or particular industries. This
allows them to offer specialized products and services tailored to the needs of their target
clientele.

Higher interest rates: Private banks often offer higher interest rates on deposits and lower
interest rates on loans compared to public sector banks. This is because they have lower
operating costs and are not subject to the same social obligations as government-owned
banks.

More stringent eligibility criteria: Due to their focus on profitability and risk
management, private banks may have stricter eligibility criteria for loan applications
compared to public sector banks.

3. Foreign Sector Bank: A banking institution that is headquartered in one country but
has branches or subsidiaries operating in another country. For example, HSBC, a British
multinational banking and financial services company, has branches in India. These
branches would be considered foreign sector banks in India.

Increase competition and innovation: By introducing new products and services, foreign
banks can stimulate competition and drive innovation in the local banking sector.

Mobilize savings and provide credit: Foreign banks can attract deposits from local
residents and offer loans to businesses and individuals, thereby contributing to economic
growth.

Facilitate international trade and investment: Foreign banks can connect local businesses
with international markets and provide financing for cross-border trade and investment.

4. Regional Rural Banks (RRBs): A network of government-owned, scheduled

commercial banks that operate at the regional level in different states of India. They cater
primarily to the financial needs of rural and agricultural communities, providing banking
services in areas often underserved by larger commercial banks.

Established under the Regional Rural Banks Act, 1976.

Owned by a consortium of the Central Government, a sponsoring commercial bank, and

the concerned State Government.

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Focus on providing credit facilities to small and marginal farmers, agricultural laborers,
artisans, and other underprivileged sections in rural areas.

Offer a range of banking services, including deposit accounts, loans, remittance facilities,
and insurance products.

Present in almost all states of India with over 21,000 branches.

b. Cooperative Bank: A cooperative bank is a unique type of financial institution that

operates on the principles of cooperation and mutual benefit, rather than solely for-profit
maximization. Here's a breakdown of their key features:

Members, not shareholders: Unlike traditional banks owned by corporations or

individuals, cooperative banks are owned by their members, who are also their customers.
This means each member has a say in the bank's operations and profits.

Democratic governance: Members typically elect a board of directors from among

themselves, ensuring decisions are made in the best interests of the members, not just a
few wealthy shareholders.

Community-oriented: Cooperative banks often serve specific communities or niches,

catering to their unique needs. This could be farmers in rural areas, small businesses, or
specific occupational groups.

Basic banking services: While some larger cooperatives offer a wider range of products,
most focus on core banking services like savings accounts, current accounts, loans
(personal, housing, agricultural), and basic investment options.

Competitive rates: They frequently offer competitive interest rates on deposits and loans
compared to traditional banks, as they aim to benefit their members directly.

Regulatory Framework: Dual oversight Most cooperative banks are regulated by both
banking regulations and cooperative societies' acts, ensuring financial stability and
adherence to cooperative principles.

Member-centric approach: The focus on members' needs leads to personalized service

and fair pricing.

Local commitment: They play a vital role in supporting local economies and development
by providing financial services to underserved communities.

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Social responsibility: Cooperative banks often prioritize ethical practices and sustainable
development activities.

B. Unscheduled Banks: Unscheduled banks are financial institutions that are not
included in the second schedule of the RBI Act, 1934. They don't meet all the criteria
outlined in clause 42 of the Act for becoming a scheduled bank. However, they still
operate under the rules and regulations laid down by the Reserve Bank of India (RBI).

Smaller capital base: Their authorized share capital typically falls below the minimum
threshold set by the RBI for scheduled banks (currently at ₹5 crore).

Limited geographic reach: They mainly operate in specific regions or cater to niche
markets, unlike scheduled banks which have wider networks.

Fewer financial services: They might offer a more limited range of services compared to
scheduled banks, focusing on basic deposit and loan activities.

No access to certain privileges: Unlike scheduled banks, they cannot directly borrow from
the RBI for normal banking purposes, except under exceptional circumstances.

Lower level of regulatory scrutiny: They are subject to less stringent supervision and
inspection compared to scheduled banks, though they still need to comply with RBI
regulations.

1.3 Statement of Problem

In the dynamic landscape of banking services, customer preferences play a pivotal role in
shaping the success of financial institutions. This research aims to conduct a
comprehensive comparative analysis on customers' preferences towards HDFC and ICICI
banking services. Understanding the nuanced differences in customer preferences
between HDFC and ICICI will provide valuable insights for both institutions to enhance
their offerings and better cater to the evolving demands of the market. Therefore, the
primary question this research seeks to address. What are the key factors influencing
customers' preferences in choosing between HDFC and ICICI banking services, and how
do these preferences impact their overall satisfaction and loyalty?

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1.4 Objective of Study

 To identifying Key Factors Influencing Customer Preference

 To compare service, charges and maintenance fees.
 To identifying Brand Image and Understanding customer perceptions of each bank's
brand values, reputation, and overall trustworthiness.

1.5 Conceptual Framework

1.5.1 Types of Consumer Preference Towards Banking Services

A. Pricing and Fee Structures:

Interest Rates: Customers prioritize high interest rates on savings accounts and
competitive rates on loans, mortgages, and investments. Different segments may
prioritize specific types of interest-bearing accounts.

Transaction Fees: Low ATM charges, free fund transfers, and minimal maintenance fees
are generally preferred. Some individuals prioritize specific fee waivers based on account
types or activity levels.

Account Maintenance Fees: Free accounts with convenient eligibility criteria are highly
desirable. Some customers value bundled services within fee structures.

B. Technological Advancements:

Online Banking: User-friendly interface, ease of navigation, access to comprehensive

features, and robust security are key preferences. Some may prioritize specific
functionality like bill pay, budgeting tools, or investment platforms.

Mobile Banking Apps: Intuitive design, convenient money transfers, account

management features, and seamless integration with other financial tools are desired.
Features like instant loan options, travel booking, or real-time notifications may be
important for others.

ATMs and Cash Deposit Machines: Wide network accessibility, easy operation, and 24/7
availability are key factors. Some customers may prioritize deposit limits, specific
locations, or integration with loyalty programs.

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C. Customer Service:

Responsiveness: Prompt and efficient resolution of queries across multiple channels

(phone, email, chat, in-person) is crucial. Proactive communication and personalized
support might be valued by some.

Communication Channels: Convenience and accessibility of preferred contact methods

(e.g., social media, video chat) are important. Some may value dedicated relationship
managers or multilingual support.

Problem Resolution: Effective and timely resolution of issues, clear communication

throughout the process, and proactive follow-up are highly desired. Some customers
might prioritize escalation options for complex problems.

D. Branch Accessibility and Convenience:

Geographic Presence: A wide network of branches, especially in areas frequented by the

customer, is generally preferred. Rural customers might prioritize local presence, while
urban ones might value proximity to workplaces or residences.

Operating Hours: Extended banking hours, particularly evenings or weekends, are

desirable. Some customers might prioritize Saturday banking or late-night options for
specific needs.

Queue Management: Efficient systems for reducing wait times, such as online
appointment booking or token systems, are important. Some customers might value
dedicated priority banking lanes or express queues for specific transactions.

E. Trust and Reputation:

Brand Image: A stable, reliable, and trustworthy brand image with a positive reputation
in the community is important. Some customers might prefer innovative and tech-savvy
brands, while others prioritize traditional and established institutions.

Customer Reviews and Ratings: Positive online reviews and high ratings can influence
customer confidence. Some customers might rely on personal recommendations or trust
third-party review platforms.

F. Product and Service Range:

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Loans and Credit Facilities: Competitive rates, diverse loan options (e.g., personal loans,
mortgages, education loans), and convenient application processes are key preferences.
Some customers might prioritize instant loan approvals, specific loan features, or flexible
repayment options.

Investment Products: A wide range of investment options (e.g., mutual funds, stocks,
bonds), expert advice, and user-friendly investment platforms are desired. Some
customers might prioritize rob-advisory services, thematic investments, or tax-efficient
options.

Insurance Products: Comprehensive coverage options, competitive premiums, and easy

claim settlement processes are important. Some customers might prioritize specific types
of insurance (e.g., life, health, travel) or bundled insurance packages.

1.5.2 Need of Comparative Analysis of Consumer Preference Towards Banking

Services of HDFC Bank and ICICI Bank

A comparative analysis of customer preferences towards banking services of HDFC and

ICICI Bank is crucial for various reasons, primarily due to the intense competition
between these two leading private banks in India.

Understanding customer choices and driving strategic decisions: Analyzing customer

preferences across both banks reveals which services are valued most, identifying areas
of strength and weakness for each. This enables both banks to refine their offerings, focus
on features customers prioritize, and potentially introduce new services that address
unmet needs, ultimately attracting and retaining customers.

Gaining competitive advantage: By understanding how customers weigh the pros and
cons of each bank's services, the analysis can uncover areas where one bank excels over
the other. This valuable insight allows both banks to tailor their marketing strategies,
highlighting their unique selling points and differentiating themselves from their
competitor.

Improving customer experience: Analysing customer dissatisfaction with specific

services or interactions pinpoints areas for improvement. Both banks can leverage this
knowledge to enhance their offerings, streamline processes, and invest in better customer
service training, ultimately leading to higher customer satisfaction and loyalty.

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Informing product development: The analysis can reveal gaps in the market, unmet
customer needs, and emerging trends. Both banks can utilize this information to develop
innovative products and services that cater to specific customer segments, potentially
gaining a first-mover advantage in the market.

Benchmarking performance: Comparing customer preferences across both banks sets

internal benchmarks for performance. This allows each bank to track their progress over
time, measure the effectiveness of their strategies, and identify areas where they need to
catch up with their competitor.

1.5.3 Importance of Comparing Customer Preferences Towards Banking

Services of HDFC Bank and ICICI Bank

Understanding your audience:

Identify customer priorities: What features and services do customers value most? Are
there key differentiators that attract customers to one bank over the other? Knowing these
preferences allows both banks to refine their offerings and target specific customer
segments with relevant products and services.

Uncover pain points: Where are customers dissatisfied? Are there common issues with
specific services or interactions? Addressing these pain points can significantly improve
customer experience and loyalty.

Discover unmet needs: Is there a gap in the market that one bank could potentially fill?
By understanding unmet needs, both banks can innovate and develop new products and
services that cater to specific customer segments and gain a competitive edge.

Staying ahead in a competitive market:

Benchmarking performance: Comparing customer preferences sets internal benchmarks

for each bank. This allows them to track their progress, measure the effectiveness of their
strategies, and identify areas where they need to improve to be more competitive.

Differentiate your offerings: Highlighting areas where your bank excels in comparison to
your competitor allows you to attract customers seeking those specific features and
benefits.

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Adapt to changing trends: Customer preferences are not static. By continuously

monitoring and analysing these preferences, both banks can stay ahead of the curve and
adapt their offerings to meet the evolving needs of the market.

Improve customer experience: By understanding what customers value and addressing

their pain points, both banks can create a more satisfying and rewarding experience for
their customers, leading to increased loyalty and retention.

Drive innovation: By identifying unmet needs and emerging trends, both banks can be at
the forefront of developing new products and services that cater to the evolving demands
of the market.

Strengthen the Indian banking sector: By continuously improving their offerings and
services based on customer preferences, both HDFC and ICICI Bank can contribute
competitive and customer-centric landscape in the Indian banking sector.

1.5.4 Advantages of Comparing Customer Preferences Towards Banking

Services of HDFC Bank and ICICI Bank

For customers:

Wider range of choices: A competitive banking landscape driven by customer preferences

leads to a greater variety of products and services offered by both banks. This empowers
customers to choose the bank and services that best align with their individual needs and
financial goals.

Improved service quality: As banks strive to differentiate themselves and attract

customers, the pressure to improve service quality rises. This translates to shorter waiting
times, more efficient processes, better customer support for all bank users.

Fairer pricing and competitive offers: Competition for customer loyalty often leads to
more competitive interest rates, lower fees, and attractive cashback or reward programs.
By comparing preferences, customers can ensure they are getting the best value for their
money.

Increased innovation: The drive to stay ahead in the competition fosters a culture of
innovation within both banks. This translates to more user-friendly mobile apps, cutting-
edge financial products, and personalized banking experiences that cater to evolving
customer needs

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CHAPTER 2. LITERATURE REVIEW

In the previous chapter, the research scholar has defined the topic " A Comparative
Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI
Bank ". The given chapter is on review of the literature. This chapter covers 20 reviews
of research done in the past from various journals, magazines, papers, etc.

A literature review in a research paper is like gathering information about what others
have already studied about the same topic. It helps us understand what's already known
and what questions still need answering. By looking at different studies and articles, we
figure out what's missing or what new ideas we can explore. It also helps us decide how
we should do our own research, like what methods to use. Throughout the paper, we use
the literature review to support our ideas and show where our research fits in with what's
been done before. So, it's like building on what others have already learned to make new
discoveries.

1.Book Pandey, Pramod Kumar, and A. Saikumar. (2023): The banking industry is
important to a country's economic growth. With a large network of branches and a diverse
range of financial services, India's banking system is large. Anyway, its commitment in
giving credits and advances, giving value, redesigning, offering input help, showcasing,
and so on, to lkittle ventures and minuscule organizations is unimaginably large. The
same full assistance bank inside the nation will contend with it.

2.KUMAR, R. N., & SRINIVAS, G. (2022): In today's world, shelter is an essential

asset and a fertile investment. Housing is one of the basic needs, along with food and
clothing. It is the dream of every person on earth to have their own home. Majority of the
customers from these three banks avail Housing loan for Construction of their Houses. It
shows a growth in real estate business of the valley and there is neck-to-neck competition
in the banking industry for home loans.

3.KT, S. (2021): The banking sector plays a significant role in the development of the
economy, as it mobilizes deposits and provides credit to various sectors across business
including individuals. The purpose of this study is to understand the customer preference
of selecting banking services among public and private sector banks. This study is based
on primary data obtained from customers of Public and Private sectors banks in Mandya
district. The study reveals that public sector banks have a greater number of branches and

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private sector banks have good and innovative products and customer friendly
environment at branches.

4.Sharma, Devinder. (2021): Bank is an institution which deals with the hard earned
money of the public and provides them credit and other financial services in such a
manner, so that they can also make profit from the difference between the interest paid
and charged by them Public sector banks have been perceived with highest number of
grievances as compared to the other categories of institutions and the complaints are with
regard to non-cooperation of the bank staff, delays in settlement of payments of claim
cases, undue procedural compliances, cumbersome procedure and customer not taken in
priority of services.

5.MRJ Kamalam, PS Nagarajan (2020): The SST in banking has opened a new avenue
to exploit and to make a distinction between banks and deliver a superior service
compared to competitors. There is no significant difference among the customers in SBI
and NBs as noticed in the level of service quality gap in ATM banking. Hence the banks
are advised to deliver the modern banking services according to the level of expectation
of their customers.

6.Gupta, A. K., Maheshwari, M., & Sharma, S. (2020): The performance of an

organization in terms of Customer's experiences with the value created by them is
measured through Customer Perspective of Balanced Scorecard. Customer Perspective is
one of the leading perspectives of Bank's Balanced Scorecard. The performance of for a
smooth, prompt and quality services to banks on this perspective is positively related to
customers, efficient and organised knowledge based financial outcomes as satisfied
customers' leads to solutions should be provided by the trained frontline more business
for the bank thus leads to high profits. staff so that bank can gain the confidence of
customers who are retained by the banks for the long- and retain them for long-term. term,
who purchase multiple products & services, who A right mix of physical and digital
channels should be recommends their bank to their friends and relatives are adopted by
the banks as both are required by different helpful in providing superior returns to bank's
types of customers.

7.Agarwal, Manoj Kumar (2019): There are various private/non-public banks working
in India for giving services to their customer. Some of them are ICICI Bank, HDFC Bank,
ABN AMRO Bank, Kotak Bank, YES Bank, IndusInd Bank etc. All the services ICICI

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Bank offers to its customers revolve round. Many Private Banks exist in the market but
majority of the persons have a great faith and trust with ICICI. The ICICI Bank must try
to maintain the trust of customers.

8. Singh, Satyendra P,Tanu Jain (2019): Banks are the lifeblood of an economy.
Structure and strength of banking industry of a country has a direct bearing on its
economic growth. Banks offer a large gamut of financial products and services to retail
customers such as savings account, deposits, loans, ATMs, debit and credit cards, cheque
and draft facility, locker facility, universal banking, internet banking, and mobile banking
etc. and it is really difficult to imagine the life of individuals without these services in
today world. As banks offer more or less similar types of products and services, it takes
strategic thinking and lot of efforts on the part of a bank and its employees to carve a
niche for itself and make its customers really satisfied.

9.Choudhury, Shovona. (2018): In terms of marketing, the product or offering will be

successful if it delivers value and preference to the target buyer. It has been analyzed that
though several self-service technology are provided by banks, only ATMs preferred most
by the customers. Preference of other modes of Self-service technology like internet
banking or telebanking has to be focused. While details about the findings with respect to
factors influencing consumer preferences towards self-service technology have been
discussed in previous sections, the most significant findings and comparison of those with
that of the existing literatures are highlighted in this section.

10.Das, J., Jain, P. K. (2018): Job Satisfaction is a concept that has been explored the
most in course of managing human resources in all sectors globally. Employees are the
assets of any organization and the management needs to make a massive investment to
satisfy and preserve these assets in the organization for a longer duration. Strategic growth
of any organization depends on efficient employees. Banking sector being a service
industry must strive more to provide greater satisfaction to its employees as this sector is
customer centric, target oriented and highly competitive wherein greater satisfaction of
the employees is essential for maximum output both at employees as well as
organizational level.

11.Kashappa, Laxmappa, and C. S. Basavaraj. (2017): Private sector banks are

becoming increasingly dominant in size, customer base, quality of service, and customer
choice and preference. The present study compares the performance of two private sector

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banks namely, the HDFC bank and the ICICI bank he ICICI bank and the HDFC bank
are the two premiere private sector banks, in India. The study has shown that both these
banks have a good track record of performance during the study period.

12.S Visalakshi, R Kasilingam (2016): In today’s competitive environment, customer

satisfaction has become a cornerstone for gauging bank performance and profitability.
The banking environment is becoming more and more competitive and banks are striving
to bring about a competitive edge in their marketing efforts to surge ahead in competition.
The customer has become an important source of business and profits for the banks. In
order to remain competitive and profitable, banks are making efforts to increase their
customer base by developing strong relationships with their customers and by offering
efficient services. Business processes are important because they have a great impact on
customer satisfaction.

13.Kaur, R., Chaudhary, K., Kumar, A., & Jaggi, S. K. A (2014): Every human being
wants their own house. House is a profitable and useful in the future and furnishes
propulsion to economic development. But in today’s scenario buying the home is a
challenging chore, because it is a major expenditure. The present study concludes that
there are various satisfactory factors which affect the satisfaction level of customers of
housing loan. On the basis of collected data, it is being concluded that customers are
satisfied by S.B.I. bank because the interest rate is lower in S.B.I. as compare to H.D.F.C.
Bank and the trust level that customer have with these banks is very high in comparison
to H.D.F.C. Bank.

14.Sharma, Neetu (2013): The underlying aim of the live project is to do a comparative
study of the satisfaction of customer about the E-Banking services provided by HDFC
and ICICI Bank In 114 futures, the availability of technology to ensure safety and privacy
of e-transactions and the RBI guide lines on various aspects of internet banking will
definitely help in rapid growth of internet banking in India.

15.Sharma, Swati (2013): Customer Relationship Management (CRM) is the

establishment, development, maintenance and optimization of long-term mutually
valuable relationships between consumers and the organizations. T It was also found that
preference towards updated e-banking facilities does not get affected by the education
level of customers. That means a customer education level does not play a significant role
in choosing a bank which have an updated e-banking facilities.

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

16.Srinivas, K. A. M. A. T. A. M., and L. Saroja (2013): Aimed to analyse and compare

the Financial Performance of HDFC and ICICI Bank and offer suggestions for the
improvement of efficiency in select banks. From the CAMELS’ analysis it clears that
there is no significance difference between the ICICI and HDFC bank’s financial
performance but we conclude that the ICICI bank performance is slightly less compared
with HDFC bank.

17.Rani, Shalu (2012): A home loan is a long-term commitment of 15–20 years, several
factors like expertise, quality of service, in-depth domain knowledge and the company's
level of commitment and transparency right through, the loan procedures, the fine print,
quality of services offered and safe retrieval of the title deed are critical. There are lot
many banks and financial institutions through which one can easily avail of a home loan
at reasonable rate of interest. From the last decade, the Government of India has been
continuously trying to strengthen the housing sector by introducing various housing loan
schemes for rural and urban population.

18.Tandon, D., Ojha, S., & Tandon, N. (2012): The Indian Banks do not have an option
apart from learning and actively responding to the customer's needs and requirements.
Banks in turn have had to re – orient their strategies and become more customers – centric.
Their intent now has been to attract and retain more profitable customers and high net
worth (HNI) individuals. With the growth of private sector banks in India, public sector
banks are also striving hard to render myriads of services to their existing customers and
attracting new clients

19.Jayanthi, M., & Umarani, R. (2012): Internet banking uses the Internet as the
delivery channel by which to conduct banking activity, for example, transferring funds,
paying bills, viewing current and savings account balances, paying mortgages and
purchasing financial instruments and certificates of deposit. The study aims to “plug” the
gap between the perceived experiences and level of satisfaction of customers towards
Internet Banking facilities offered by the three private sector banks namely HDFC bank,
Axis bank and ICICI bank. The study by, revealed eight composite dimensions of
electronic service quality, including Login feature, Information on the site, Linking
feature, Service feature, Customer care, Security system, Service usage, and Unique
feature.

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20.Chand, Subhash, Mr Rohit Kumar, and Ms Shiwali (2012): The present study has
been carried out with an objective to analyse the satisfaction level of customers in public
and private sector banks. From the above analysis it is clear that private sector banks have
been successful in attracting young and qualified customers from higher income groups.
Customers of private sector banks are more satisfied with the customer care services &
other parameters of satisfaction which is posing a challenge to the public sector banks.

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CHAPTER 3: RESEARCH METHODOLOGY

3.1 Research Methodology

The methods or techniques used to classify, choose, process, and interpret knowledge
about a subject are referred to as research methodology. The methodology portion of a
research paper helps the reader to objectively assess the study's overall validity and
reliability. A research methodology describes the techniques and procedures used to
identify and analyse information regarding a specific research topic. It is a process by
which researchers design their study so that they can achieve their objectives using the
selected research instruments. It includes all the important aspects of research, including
research design, data collection methods, data analysis methods, and the overall
framework within which the research is conducted.

3.2 Significance of The Study

1. (Significance to Bank) This research helps areas where customer satisfaction may be
lacking, guiding resource allocation for targeted improvements. Banks stay relevant by
identifying changing customer preferences and adapting services accordingly.

2. (Significance to Academic Contribution) The research adds to the understanding of

customer satisfaction trends in the banking sector, specifically for HDFC and ICICI
banks. Serves as a benchmark for measuring customer satisfaction, helping establish
standards for other financial institutions.

3. (Significance to Policy Implications) The research insights from the study may
influence industry policies and regulations, promoting a customer-centric approach.

3.3 Research Design:

Type of research:

There are various types of research, but the study will use descriptive or exploratory
which will be quantitative and qualitative.

Sampling techniques:

The given research paper will be done using simple random sampling to collect data. The
researcher will collect data from 102 respondents as a sample size.

The research paper will use the universe of customers of HDFC and ICICI bank

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Methods of collection of data:

Primary data:

1. Survey: The data will be collected through a questionnaire.

2. Close ended questions: The questionnaire will contain close ended questions containing
options of agree to disagree.

3. Open ended questions: The questionnaire will contain open ended questions containing
suggestions from the customers.

Secondary data:

1. Bank Reports and Publications, Annual reports, quarterly reports, investor

presentations, press releases from both HDFC and ICICI Bank provide insights into

their financial performance, customer base, product offerings, and strategic initiatives.

2. Market Research Reports from independent research firms analysing the Indian

banking industry, customer trends, and competitive landscape.

3.4 Hypothesis

Hypothesis on Overall Customer Preference:

H0: There is no significant difference in the overall preference of customers towards

banking service of HDFC and ICICI bank.

H1: There is a significant difference in the overall preference of customers towards

banking services of HDFC and ICICI bank.

3.5 Scope of The Study

1. The study will compare various services provided by HDFC and ICICI, including but
not limited to savings accounts, loans, credit cards, and online banking facilities.

2. The research will explore the levels of satisfaction among customers of HDFC and
ICICI by analysing factors such as customer service, accessibility, and the quality of
financial products.

3. The study will investigate the integration of technology in banking services, such as
the usability and efficiency of mobile banking apps and online platform

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4. The research will consider demographic factors like, income levels, and occupation to
understand if there are variations in preferences among different customer segments.

3.6 Chapter Formation

1 Introduction

2 Review of Literature

3 Research Methodology

4 Data Analysis and Interpretation

5 Conclusion and Recommendation

3.7 Limitations of Study

1. The study will be limited to a specific geographical area or region due to logistical

constraints. This may impact the generalizability of the findings to a broader

population.

2. The research will be conducted within a specified time frame, and changes in customer
preferences over time may not be fully captured.

3. The study's results may be influenced by the sampling method used, and there may be
biases in the selection of participants.

4. Economic and regulatory changes during the study period could affect customers'

preferences and satisfaction levels independently of the banks' services.

5. The survey responses may be vague and not accurate.

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

CHAPTER 4: DATA ANALYSIS AND INTERPRETATION

4.1 Data Analysis and Interpretation

In this chapter, we aim to delve into the analysis and interpretation of data obtained
through a Likert scale questionnaire regarding customer preferences towards HDFC and
ICICI banking services. Our primary objective is to gain insights into the comparative
perceptions and preferences of customers regarding these two prominent banking
institutions. We will employ a mix of quantitative and qualitative methods to thoroughly
examine the collected data. Quantitative analysis will entail statistical techniques to
measure central tendencies, variations, and relationships between variables. Additionally,
qualitative analysis will involve exploring open-ended responses to extract nuanced
insights.

The data collection process involved distributing a structured Likert scale questionnaire
to a diverse sample of banking customers. The questionnaire was disseminated through
various channels, including online platforms, email surveys, and physical copies
distributed at banking branches. The sample size comprised 102 respondents, ensuring
representation across different demographics, including age, gender, income, and
geographic location.

Upon collection, the data underwent meticulous preparation to ensure accuracy and
consistency in subsequent analysis. This involved several steps, starting with data
cleaning to rectify any errors, inconsistencies, or missing values. Responses were the
Likert scale, assigning numerical values to each level of agreement or preference.
Following this, the data were organized into a structured format suitable for statistical
analysis, facilitating easy interpretation and comparison between responses. Descriptive
statistics were computed for each question in the questionnaire to provide a
comprehensive overview of the data. Measures such as mean, median, mode, and were
calculated to assess central tendencies and variability within the responses. Frequency
distributions were also generated to visualize the distribution of responses across different
categories. These statistics were presented using tables, charts, and graphs, offering a
clear and concise representation of customer preferences towards HDFC and ICICI
banking services.

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1 Age of the respondents

Table No. 1.1

Sr.no Age group (in Number of Respondents in

years) Respondents Percentage

1 15-20 11 10.8%

2 20-25 25 24.5%

3 25-30 34 33.3%

4 30-40 24 23.5%

5 Above 40 8 7.8%

Table No. 1.1.1

Age

Mean 1.960784314
Median 2
Mode 1
Standard Deviation 0.855055654
Sample Variance 0.731120171
Range 2
Minimum 1
Maximum 3
Sum 200
Count 102

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Graph No. 1.1

Interpretation:

From the above table no.1.1 and graph no.1.1, we can see that there are majority of
respondents Among the age categories, the highest representation comes from individuals
aged 25-30, constituting 33.3% of the total respondents, followed closely by the 20-25
age group, comprising 24.5%. This suggests a significant presence of young adults in the
surveyed population. Those aged 30-35 and 15-20 represent relatively similar
proportions, at 23.5% and 10.8% respectively. Interestingly, respondents above 40 years
old form the smallest cohort, comprising only 7.8% of the total.

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2 Gender of the respondents

Table No.2.1

Sr.no Gender Number of Respondents in

Respondents Percentage
1 Male 26 25.55%
2 Female 76 74.4%
3 Prefer not to say 0 0

Table No.2.1.1

Gender
Mean 1.254901961
Median 1
Mode 1
Standard 0.437958235
Deviation
Sample Variance 0.191807416
Range 1
Minimum 1
Maximum 2
Sum 128
Count 102

Interpretation:

From the above table no.2.1 and graphs no. 2.1, the majority identify as female,
comprising 74.4% of the total. In contrast, male respondents represent a smaller
proportion, constituting 25.55%. Notably, there are no respondents who preferred not to
disclose their gender.

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3 Employment status of the respondents

Table No.3.1

Sr.no Gender Number of Respondents in

Respondents Percentage
1 Male 26 25.55%
2 Female 76 74.4%
3 Prefer not to say 0 0

Table No.3.1.1

Employment Status
Mean 1.960784314
Median 2
Mode 1
Standard Deviation 0.855055654
Sample Variance 0.731120171
Range 2
Minimum 1
Maximum 3
Sum 200
Count 102

Graph No.3

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Interpretation:

From the above table no. 3.1 and graph no. 3.1Among the respondents, the largest group
consists of individuals who are employed, comprising 38.2% of the total. Following
closely behind are respondents who are self-employed, representing 34.3%. Meanwhile,
those who are unemployed make up the smallest but still substantial portion, at 27.5%.
This distribution suggests a fairly balanced representation across different employment
statuses among the surveyed population.

4 Income Level of Respondents

Table No. 4.1

Sr.no Income Level Number of Respondents Respondents in

Percentage
1 0-100000 40 39.2%

2 100000-300000 23 22.5%

3 300000-1000000 28 27.5%
4 More than 1000000 11 10.8%

Table No. 4.1.1

Income
Mean 2.117647
Median 2
Mode 1
Standard 1.04639
Deviation
Sample 1.094933
Variance
Range 3
Minimum 1
Maximum 4
Sum 216
Count 102

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Graph No.4.1

Interpretation:

From the above table no. 4.1 and graph no. 4.1 Among the respondents, the largest group
falls within the income bracket of 0-100000, constituting 39.2% of the total. Following
closely behind are respondents with incomes ranging from 100000 to 300000,
representing 22.5% of the sample. Additionally, 27.5% of respondents reported incomes
within the range of 300000 to 1000000, indicating a substantial portion of the surveyed
population falls within this middle-income bracket. Conversely, individuals with incomes
exceeding 1000000 comprise the smallest proportion.

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5 Respondent currently a customer of Bank?

Table No. 5.1

Sr.no Customer Using Bank Number of Respondents

Respondents in Percentage
1 HDFC BANK 38 38.2%

2 ICICI BANK 26 25.5%

3 SBI 9 8.8%

4 Bank of Maharashtra 6 6.9%

5 Bank of Baroda 8 7.8%

6 Kotak Mahindra Bank 4 3.9%

7 Punjab national bank 2 2%

8 Bank of India 1 1%

9 Axis bank 4 3.9%

10 Canara bank 2 2%

Table No. 5.1.1

Which bank
are you
currently a
customer of?
Mean 2.82353
Median 2
Mode 1
Standard
2.33955
Deviation
Sample
5.4735
Variance
Range 9
Minimum 1
Maximum 10
Sum 288
Count 102

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Graph No.5.2

Interpretation:

From the above table no.5.1 and graph no.5.1 and graph no.5.2 , we can see that the
Income Level status of respondents. Interpreting this data, Among the surveyed
population, HDFC Bank emerges as the most preferred choice, with 38.2% of respondents
utilizing its services. Following closely behind is ICICI Bank, which captures the business
of 25.5% of respondents. SBI, Bank of Maharashtra, and Bank of Baroda also maintain
notable customer bases, with 8.8%, 6.9%, and 7.8% of respondents respectively. Other
banks such as Kotak Mahindra Bank, Punjab National Bank, Bank of India, Axis Bank,
and Canara Bank have comparatively smaller customer bases, each constituting less than
5% of the surveyed population.

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6 Please rate the importance of the following factors in influencing your preference
for a bank:

Variety of banking products and service Customer service quality

Convenience of banking transactions Trustworthiness and reliability

Competitive interest rates and fees Branch location

Table No.6.1

Sr.no Rate importance factors in Number of Respondents

influencing preference for a Respondents in
bank Percentage

1 Not Important 4 4%

2 Somewhat Important 19 18.6%

3 Important 37 36.3%

4 Very Important 26 25.5%

5 Extremely Important 16 15.7%

Table No.6.1.1

Rate importance factors in

influencing preference bank
Mean 3.401961
Median 3
Mode 3
Standard Deviation 1.171103
Sample Variance 1.371481
Range 4
Minimum 1
Maximum 5
Sum 347
Count 102

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Graph No. 6.1

Interpretation:

From the above table no.6 and graph no.6.1 and graph no.6.2, Among the surveyed
population, the majority of respondents consider bank selection criteria to be significant,
with 36.3% indicating that these factors are "Important," while 25.5% deem them "Very
Important." Additionally, 15.7% of respondents rate these factors as "Extremely
Important." This collective emphasis on importance suggests that individuals place
weight on specific attributes when choosing a bank. Meanwhile, 18.6% of respondents
find these factors to be "Somewhat Important," indicating a moderate level of influence,
while only 4% perceive them as "Not Important.

7 What types of banking services do you primarily use?

Table No.7.1

Sr.no Customer primarily uses Number of Respondents

banking services Respondents in Percentage
1 Saving accounts 81 80%
2 Current accounts 55 54%
3 Loan products 29 36.3%
4 Credit cards 24 28.4%
5 Investment products 24 23.5%
6 Online banking 31 23.5%
7 Branch services 19 18.6%

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Graph No.7.1

Interpretation:

From the above table no.7.1 and graph no.7.1, Saving accounts emerge as the most
commonly used banking service, with 80% of respondents indicating their use. Following
closely behind are current accounts, utilized by 54% of respondents. Loan products are
also popular, with 36.3% of respondents availing themselves of such services.
Additionally, a significant portion of respondents utilizes credit cards (28.4%) and
investment products (23.5%). Notably, online banking is a preferred channel for 23.5%
of respondents, reflecting the increasing trend towards digital banking services. However,
traditional branch services still maintain relevance, with 18.6% of respondents indicating
their usage.

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8 Do you consider the charges and fees at your primary bank to be competitive
compared to other banks?

Table No 8.1

Sr.no Charges and fees at primary Number of Respondents

bank to be competitive Respondents in
compared to other banks? Percentage
1 Yes, very competitive 29 28.4%
2 Somewhat competitive 22 21.6%

3 Neutral 40 39.2%

4 Not very competitive 8 7.8%

5 Not competitive at all 3 3%

Table No 8.1.1

Charges and fees at primary bank to

be competitive compared to other
banks?
Mean 2.352941
Median 2.5
Mode 3
Standard Deviation 1.068422
Sample Variance 1.141526
Range 4
Minimum 1
Maximum 5
Sum 240
Count 102

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Graph No.8.1

Interpretation:

From the above table no.8.1 and graph no.8.1, we can see that the income level status of
respondents. interpreting this data, we can see that the majority of respondents give
response that their charges and fees at primary bank to be competitive compared to other
banks response is neutral is 39.2%. 28.4% said yes, very competitive, around 21.6% said
that their bank is somewhat competitive. Around 8% said not very competitive. and
around 3% said that their bank is not competitive at all.

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9 Rate your satisfaction with the overall customer service at your primary bank

Table No 9.1

Sr.no Rate satisfaction with Number of Respondents

the overall customer Respondents in
service at your Percentage
primary bank
1 1 4 4%
2 2 3 2.9%
3 3 19 18.6%
4 4 55 53.9%
5 5 21 20.6%

Table No 9.1.1

Rate your satisfaction with the overall customer

service at your primary bank

Mean 3.843137
Median 4
Mode 4
Standard Deviation 0.92002
Sample Variance 0.846438
Range 4
Minimum 1
Maximum 5
Sum 392
Count 102

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Graph No.9.1

Interpretation:

From the above table no.9.1 and graph no. 9.1, A majority of respondents, constituting
53.9%, rated their satisfaction level as "4," indicating a relatively high level of satisfaction
with the customer service provided. Additionally, 20.6% of respondents rated their
satisfaction as "5," suggesting an even higher level of contentment. Meanwhile, 18.6% of
respondents rated their satisfaction as "3," representing a moderate level of satisfaction.
On the lower end of the spectrum, 4% of respondents rated their satisfaction as "1," while
2.9% rated it as "2," indicating a smaller proportion of respondents who are less satisfied
with the overall customer service at their primary bank.

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10 Rate HDFC Bank's brand values, reputation, and overall trustworthiness?

Table No.10.1

Sr.no Rate HDFC Bank's Number of Respondents

brand values, reputation, Respondents in
and overall Percentage
trustworthiness
1 Good 34 33.3%
2 Fair 2 2%
3 Excellent 25 24.5%
4 Very Good 40 39.2%
5 Poor 1 1%

Table No.10.1.1

How would you rate HDFC

Bank's brand values, reputation,
and overall trustworthiness?
Mean 2.72549
Median 3
Mode 4
Standard Deviation 1.313727
Sample Variance 1.725878
Range 4
Minimum 1
Maximum 5
Sum 278
Count 102

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Graph No.10.1

Interpretation:

From the above table no..10.1 and graph no.10.1, Majority of respondents, A survey found
that a majority of respondents (39.2%) rated HDFC Bank's brand values and reputation
as "Very Good". Additionally, 33.3% of respondents rated HDFC Bank as "Good" and
24.5% considered it to be "Excellent". Only a small proportion of respondents (2% and
1% respectively) rated the bank as "Fair" or "Poor". This suggests that HDFC Bank enjoys
a positive reputation and is trusted by a large portion of the population.

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11 Rate ICICI Bank's brand values, reputation, and overall trustworthiness?

Table No.11.1

Sr.n Rate ICICI Bank’s brand Number of Respondents Respondents in

o values, reputation, and Percentage
overall trustworthiness
1 Good 39 38.2%
2 Fair 3 3%
3 Excellent 30 29.4%
4 Very Good 30 29.4%

Table No.11.1.1

How would you rate ICICI Bank's

brand values, reputation, and
overall trustworthiness?
Mean 2.5
Median 3
Mode 1
Standard Deviation 1.272325
Sample Variance 1.618812
Range 3
Minimum 1
Maximum 4
Sum 255
Count 102

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Graph No. 11.1

Interpretation:

From the above table no. 11.1 and graph no.11.1, The majority of respondents,
constituting 38.2%, rated ICICI Bank's brand values and reputation as "Good," indicating
a positive view of the bank's image and trustworthiness. Additionally, an equal percentage
of respondents, 29.4%, considered ICICI Bank's brand values and reputation to be both
"Excellent" and "Very Good," reflecting a strong level of esteem and trust among the
surveyed population. A smaller portion of respondents, accounting for 3%, rated ICICI
Bank as "Fair," suggesting a relatively neutral perception of the bank's brand values and
reputation. Notably, there were no respondents who rated ICICI Bank's brand values and
reputation as "Poor,

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

12 Rate the Interest rates on savings accounts and deposits of HDFC Bank and
ICICI Bank?

Table No.12.1

Sr.no Rate the Interest rates on Number of Respondents

savings accounts and Respondents in
deposits of HDFC Bank Percentage
and ICICI Bank?
1 1 4 4%
2 2 3 2.9%
3 3 19 18.6%
4 4 55 53.9%
5 5 21 20.6%

Table No.12.1.1

How would you rate the

Interest rates on savings
accounts and deposits of
HDFC Bank and ICICI Bank?
Mean 3.683168
Median 4
Mode 4
Standard Deviation 0.893652
Sample Variance 0.798614
Range 4
Minimum 1
Maximum 5
Sum 372
Count 101

Graph No. 12.1

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Interpretation:

From the above table no.12.1 and graph no.12.1 A significant majority of respondents,
comprising 53.9%, rated the interest rates of both banks as "4," indicating a relatively
positive perception of the competitiveness of these rates. Additionally, 20.6% of
respondents rated the interest rates as "5," suggesting an even higher level of satisfaction.
Meanwhile, 18.6% of respondents rated the interest rates as "3," representing a moderate
level of satisfaction. On the lower end of the scale, 4% of respondents rated the interest
rates as "1," while 2.9% rated them as "2," indicating a smaller proportion of respondents
who are less satisfied with the interest rates offered by HDFC Bank and ICICI Bank.

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13 which bank offers innovative banking technology and services.

Table No.13.1

Sr.no Bank offers innovative banking Number of Respondents

technology and services. Respondents in Percentage
1 HDFC BANK 59 57.8%

2 ICICI BANK 33 32.4%

3 SBI 3 3%

4 Bank of Maharashtra 1 1%
5 Bank of Baroda 1 1%
6 Kotak Mahindra Bank 1 1%
7 Punjab national bank 1 1%
8 Bank of India 1 1%

9 AU Bank 1 1%
10 Union bank 1 1%

Table No.13.1.1

which bank offers innovative

banking technology and services.
Mean 1.637255
Median 1
Mode 1
Standard Deviation 1.002859
Sample Variance 1.005727
Range 4
Minimum 1
Maximum 5
Sum 167
Count 102

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Graph No. 13.1

Interpretation:

From the above table no.13.1 and graph no.13.1we can see that the majority of
respondents give response that evident that HDFC Bank stands out prominently in
offering innovative banking technology and services, with 59 respondents, constituting
approximately 57.8% of the total respondents. Following HDFC Bank, ICICI Bank also
garnered notable recognition, securing 32 respondents, equivalent to 33.4%.

However, the remaining banks, including SBI, Bank of Maharashtra, Bank of Baroda,
Kotak Mahindra Bank, Punjab National Bank, Bank of India, AU Bank, and Union
Bank, each received minimal recognition, with only one respondent each, accounting
for approximately 1% each.

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14 Which banks, in your opinion, offers more transparent and understandable

information about their charges and fees?

Table No. 14.1

Sr.no Bank offers more Number of Respondents

transparent about their Respondents in
charges and fees? Percentage
1 HDFC BANK 59 57.8%
2 ICICI BANK 33 33.4%
3 SBI 3 3%
4 Bank of Maharashtra 3 3%
5 Bank of Baroda 1 1%
6 Kotak Mahindra Bank 1 1%
7 Punjab national bank 1 1%
8 Bank of India 1 1%
9 AU Bank 1 1%
10 Union bank 1 1%
Table No. 14.1.1

Which bank, in your opinion, offers more transparent

and understandable information charges and fees?
Mean 1.607843
Standard Error 0.090467
Median 1
Mode 1
Standard Deviation 0.913668
Sample Variance 0.834789
Kurtosis 4.680693
Skewness 2.056876
Range 4
Minimum 1
Maximum 5
Sum 164
Count 102

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Graph No. 14.1

Interpretation:

From the above table no.14.1 and graph no. 14.1 we can see that the majority of
respondents give response that Based on the provided data, it is evident that HDFC Bank
is perceived as the most transparent among the listed banks regarding their charges and
fees, with 59 respondents, constituting approximately 57.8% of the total respondents.
Following HDFC Bank, ICICI Bank also garnered significant recognition, with 33
respondents, equivalent to 33.4%.

The remaining banks—SBI, Bank of Maharashtra, Bank of Baroda, Kotak Mahindra

Bank, Punjab National Bank, Bank of India, AU Bank, and Union Bank—each received
minimal recognition, with only one respondent each, accounting for approximately 1%
each.

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15 Considering your specific banking needs and preferences, which bank seems
like a better fit for you?

Table No. 15.1

Sr.no Considering specific Number of Respondents Respondents

banking needs and in
preferences, which bank Percentage
seems like a better fit for
customer
1 HDFC BANK 42 41.2%

2 ICICI BANK 28 27.5%

3 SBI 12 11.8%

4 Bank of Maharashtra 6 6%

5 Bank of Baroda 3 4%

6 Kotak Mahindra Bank 3 3%

7 Punjab national bank 1 1%

8 Yes Bank 1 1%

9 Indian Post Payment Bank 1 1%

10 Union bank 1 1%

11 Bandhan Bank 1 1%

12 Axis Bank 2 2%

13 Canara Bank 2 2%

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Table No. 15.1.1

Considering your specific banking needs and

preferences, which bank seems like a better
fit for you?
Mean 2.313725
Median 2
Mode 1
Standard Deviation 1.495739
Sample Variance 2.237235
Range 4
Minimum 1
Maximum 5
Sum 236
Count 102

Graph No. 15.1

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Interpretation:

From the above table no.15.1 and graph no.15.1 we can see that the majority of
respondents give response that Based on the provided data, when considering specific
banking needs and preferences, HDFC Bank appears to be the most preferred choice
among respondents, with 42 respondents selecting it, representing approximately 41.2%
of the total respondents. Following HDFC Bank is ICICI Bank, with 28 respondents,
accounting for 27.5% of the total.

SBI also garnered notable recognition, securing 12 respondents, equivalent to 11.8%,

indicating its relevance for certain customer segments. Other banks such as Bank of
Maharashtra, Bank of Baroda, Kotak Mahindra Bank, Punjab National Bank, Yes Bank,
Indian Post Payment Bank, Union Bank, Bandhan Bank, Axis Bank, and Canara Bank
received varying degrees of recognition, ranging from 1% to 6%.

16 Assuming both banks offered the same products and pricing, what other factors
would influence your choice between HDFC Bank and ICICI Bank?

Graph No. 16.1

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 A Comparative Analysis on Customer Preference Towards Banking Services of HDFC Bank and ICICI Bank

Interpretation:

From the above graph no.16.1, we can see that the majority of respondents give response
that Based on the provided data,

The most frequently mentioned factors include Customer Service, highlighted by

approximately 22.5% of respondents, Interest Rates on Deposits and Loans, cited by
roughly 18% of participants, and Transparency, mentioned by around 13.5% of
respondents.

Branch Location is also a significant consideration, with approximately 8% of

respondents emphasizing its importance. Additionally, Government Bank Status is
mentioned by about 5.5% of respondents, indicating a preference for banks owned by the
government.

Other factors such as Digital Banking Services, Minimum Balance Requirements, and
Credit Card Services are mentioned but with lesser frequency.

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4.2 Research Findings

1.The research findings indicate that the majority of respondents are young adults, with
the highest representation in the 25-30 age group (33.3%), followed by the 20-25 age
group (24.5%). Those aged 30-35 and 15-20 make up similar proportions, while
respondents above 40 are the smallest cohort at 7.8%.

2. The research findings indicate that the majority of respondents identify as female,
comprising 74.4% of the total, while male respondents make up 25.55%. No respondents
preferred not to disclose their gender.

3. The research findings indicate a fairly balanced representation across different

employment statuses among the surveyed population. The largest group consists of
employed individuals (38.2%), followed by self-employed respondents (34.3%), and
those who are unemployed (27.5%).

4. The research findings indicate that the largest proportion of respondents have incomes
in the range of 0-100000 (39.2%), followed by 100000-300000 (22.5%). Additionally,
27.5% fall within the income bracket of 300000-1000000. Those with incomes exceeding
1000000 make up the smallest proportion.

5. The research findings indicate that HDFC Bank is the most preferred choice among
respondents, with 38.2% utilizing its services, followed by ICICI Bank at 25.5%. SBI,
Bank of Maharashtra, and Bank of Baroda also have notable customer bases, while other
banks have comparatively smaller customer bases.

6. The research findings indicate that the majority of respondents consider bank selection
criteria to be significant, with 36.3% rating them as "Important," 25.5% as "Very
Important," and 15.7% as "Extremely Important." Only 4% perceive these factors as "Not
Important," suggesting that individuals place considerable weight on specific attributes
when choosing a bank.

7. The research findings indicate that saving accounts are the most commonly used
banking service, utilized by 80% of respondents, followed by current accounts (54%).
Loan products, credit cards, and investment products are also popular, with 36.3%,
28.4%, and 23.5% of respondents respectively. Additionally, online banking is preferred
by 23.5% of respondents, reflecting the increasing trend towards digital banking services,

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while traditional branch services are still relevant, with 18.6% of respondents indicating
their usage.

8. The research findings indicate that the majority of respondents (39.2%) have a neutral
perception regarding the competitiveness of charges and fees at their primary bank
compared to other banks. 28.4% perceive their bank's charges and fees to be very
competitive, while 21.6% consider them somewhat competitive. Around 8% believe their
bank is not very competitive, and approximately 3% think their bank is not competitive
at all.

9. The research findings show that a majority of respondents (53.9%) rated their
satisfaction level with customer service at their primary bank as "4," indicating a
relatively high level of satisfaction. Additionally, 20.6% rated their satisfaction as "5,"
suggesting an even higher level of contentment. About 18.6% rated their satisfaction as
"3," representing a moderate level of satisfaction. A smaller proportion of respondents
(4% and 2.9%) rated their satisfaction as "1" and "2" respectively, indicating lower
satisfaction levels with customer service.

10. The research findings indicate that the majority of respondents (39.2%) rated HDFC
Bank's brand values and reputation as "Very Good," showing a strong level of trust and
positive perception. Additionally, 33.3% rated it as "Good," reinforcing the favourable
view of the bank. About 24.5% considered HDFC Bank's brand values and reputation to
be "Excellent," indicating an even higher level of esteem. A smaller proportion of
respondents rated it as "Fair" or "Poor" (2% and 1% respectively).

11. The research findings reveal that the majority of respondents (38.2%) rated ICICI
Bank's brand values and reputation as "Good," indicating a positive view of the bank's
image and trustworthiness. Additionally, 29.4% considered ICICI Bank's brand values
and reputation to be both "Excellent" and "Very Good," reflecting a strong level of esteem
and trust among the surveyed population. A smaller portion of respondents (3%) rated
ICICI Bank as "Fair," suggesting a relatively neutral perception. Notably, no respondents
rated ICICI Bank's brand values and reputation as "Poor."

12. The research findings show that a significant majority of respondents (53.9%) rated
the interest rates of both HDFC Bank and ICICI Bank positively, with a rating of "4."
Additionally, 20.6% rated the interest rates as "5," indicating higher satisfaction. About
18.6% rated them as "3," representing a moderate level of satisfaction. A smaller

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proportion of respondents (4% and 2.9%) expressed lower satisfaction levels with ratings
of "1" and "2" respectively.

13. The research findings indicate that HDFC Bank stands out prominently in offering
innovative banking technology and services, with approximately 57.8% of respondents
recognizing it. ICICI Bank also garnered notable recognition, with around 33.4% of
respondents. Other banks received minimal recognition, with approximately 1% each.

14. HDFC Bank is perceived as the most transparent among the listed banks regarding
their charges and fees, with approximately 57.8% of respondents recognizing it. ICICI
Bank also garnered significant recognition, with around 33.4% of respondents. The
remaining banks received minimal recognition, with approximately 1% each.

15. HDFC Bank appears to be the most preferred choice among respondents for specific
banking needs and preferences, with approximately 41.2% of respondents selecting it.
ICICI Bank follows closely behind, with around 27.5% of respondents. SBI also garnered
notable recognition, representing approximately 11.8% of respondents. Other banks
received varying degrees of recognition, ranging from 1% to 6%.

16. The most frequently mentioned factors influencing respondents' banking preferences
include Customer Service, highlighted by approximately 22.5% of respondents, followed
by Interest Rates on Deposits and Loans, cited by roughly 18% of participants, and
Transparency, mentioned by around 13.5% of respondents. Branch Location is also a
significant consideration, with approximately 8% of respondents emphasizing its
importance. Additionally, Government Bank Status is mentioned by about 5.5% of
respondents, indicating a preference for banks owned by the government. Other factors
such as Digital Banking Services, Minimum Balance Requirements, and Credit Card
Services are mentioned but with lesser frequency.

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CHAPTER 5: CONCLUSIONS AND SUGGESTIONS

5.1 Conclusions

The comparative analysis between HDFC Bank and ICICI Bank has provided valuable
insights into customer preferences within the banking sector. Through a comprehensive
examination of various factors including service quality, product offerings, convenience,
technological advancements, and customer satisfaction, several key findings have
emerged.

Both HDFC Bank and ICICI Bank have demonstrated strong competitive capabilities in
terms of their service quality and product offerings. However, specific preferences among
customers may vary depending on factors such as demographics, location, and individual
banking needs. Technological advancements have emerged as a critical differentiator in
the modern banking landscape. The adoption of innovative digital solutions such as
mobile banking apps, internet banking platforms, and digital payment systems has
become increasingly vital in attracting and retaining customers. HDFC Bank and ICICI
Bank have been proactive in leveraging technology to enhance customer experience,
although there may be opportunities for further advancements to stay ahead in the digital
era.

The research findings highlight several key factors that influence customer preference,
including customer service, interest rates on deposits and loans, transparency, branch
location, government bank status, digital banking services, minimum balance
requirements, and credit card services. These factors play a significant role in shaping
customers' perceptions and decisions regarding their preferred banking services.

The research reveals that HDFC Bank and ICICI Bank are both prominent players in the
banking industry, with HDFC Bank being slightly more preferred among respondents.
Both banks offer a range of services, with saving accounts being the most commonly used
service. However, HDFC Bank stands out in terms of innovative banking technology and
services, as well as perceived transparency regarding charges and fees. Further analysis
of specific charges and fees would provide deeper insights into the competitiveness of
each bank in this aspect.

The research findings highlight the importance of brand image and customer perceptions
in influencing preferences between HDFC Bank and ICICI Bank. HDFC Bank is

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perceived more positively in terms of brand values, reputation, and overall

trustworthiness compared to ICICI Bank. Factors such as innovative banking technology
and services, as well as transparency in charges and fees, contribute to HDFC Bank's
strong brand image.

HDFC Bank enjoys a strong brand image and reputation among respondents, with a
significant majority rating its brand values and reputation positively. ICICI Bank also
fares well in this regard, although slightly lower than HDFC Bank. These positive
perceptions contribute to customers' trust and loyalty towards these banks, influencing
their overall preference.

The hypothesis testing indicates that there is indeed a significant difference in the overall
preference of customers towards HDFC and ICICI banking services. While both banks
have their strengths and areas of improvement, HDFC Bank emerges as the slightly
preferred choice among respondents, particularly in terms of brand image, innovative
banking technology, and perceived transparency.

Based on the research findings, it is recommended that HDFC Bank and ICICI Bank
continue to focus on enhancing customer service, offering competitive interest rates,
ensuring transparency in charges and fees, and leveraging innovative banking technology
to meet evolving customer needs and preferences. Additionally, both banks should
prioritize building and maintaining a positive brand image to strengthen customer trust
and loyalty.

In conclusion, the comparative analysis provides valuable insights into the factors driving
customer preference towards HDFC Bank and ICICI Bank services. By understanding
these factors and addressing areas of improvement, both banks can enhance their
competitiveness and better serve their customers in the dynamic banking industry
landscape.

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5.2 Suggestions and Recommendations

1. Conduct further analysis to delve deeper into the specific aspects of customer service that
are most valued by respondents. Involve qualitative research methods such as interview
focus groups to gain deeper insights into customer preferences.
2. Explore the reasons behind the importance of interest rates on deposits and loans for
customers. Are customers primarily looking for higher returns on their savings or lower
interest rates on loans? Understanding this can help banks tailor their offerings
accordingly.
3. Investigate the factors driving transparency in banking services. Is it related to clear
communication of fees and charges, or does it extend to overall transparency in operations
and decision-making?
4. Conduct a detailed analysis of the service offerings, charges, and maintenance fees of
both HDFC Bank and ICICI Bank to identify any significant differences.
5. Compare the benefits and drawbacks of each bank's fee structure and service offerings
from the perspective of customer value. Are there areas where one bank excels over the
other?
6. Consider conducting a survey or focus group discussion specifically focused on fees and
charges to gauge customer perceptions and preferences in this area.
7. Consider conducting a comparative analysis of customer reviews and feedback for both
banks to identify areas of strength and areas needing improvement in their brand
perception.
8. Utilize the research findings to develop targeted marketing strategies and service
enhancements that cater to the key factors influencing customer preference identified in
the study.
9. Consider leveraging digital channels and technology to improve transparency in banking
services, streamline fee structures, Enhance overall customer experience.
10. Continuously monitor and evaluate customer feedback and market trends to stay
responsive to changing customer preferences and maintain a competitive edge in the
banking industry.
11. Consider expanding the scope of the research to include additional banks or financial
institutions for a more comprehensive analysis of customer preferences and industry
trends. This could provide valuable insights for benchmarking and strategic decision-
making.

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REFERENCE

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2. KUMAR, R. N., & SRINIVAS, G. (2022). A Comparative Study of Home Loans in

Banking Industry.

3. KT, S. (2021). A Study on Customer Preference towards Financial Services of Public

and Private Sector Banks-A Comparative Study. International Journal of Engineering
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4. Sharma, D. QUALITY OF SERVICES OF BANKS IN HIMACHAL PRADESH: THE

PERSPECTIVE OF EMPLOYEES UNDERSTANDING CUSTOMERS’NEEDS.

5. MRJ Kamalam, PS Nagarajan (2020) A Study on Comparative Analysis of HDFC Bank

and ICICI Bank on the Basis of Capital Market Performance.

6. Gupta, A. K., Maheshwari, M., & Sharma, S. (2020). Customer perspective of balanced
scorecard: an empirical view of company’s performance from customer outlook (an inter-
bank and inter-sector comparison of public and private sector banks in India). Pacific
Business Review International, 12(10), 80-88.

7. Agarwal, M. K., Jain, V., Mehra, A., Chawla, C., & Arya, S. (2019). A Comparative
Analysis of Customer Satisfaction with the policies and services of the private sector
banks–with reference to ICICI Bank in Moradabad region.

8. Singh, S. P., & Jain, T. (2019). Consumer Satisfaction Index: A Comparative Analysis
of ICICI Bank, HDFC Bank and Axis Bank in Gwalior. Journal of Applied Management-
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9. Choudhury, Shovona. Preference Of Retail Self-Service Customers Towards Self-

Service Technology In Indian Banking Sector: A Comparative Study Of Selected Public
And Private Sector Banks In Jharkhand. Diss. Icfai University Jharkhand, 2018.

10. Das, J., & Jain, P. K. (2018). Level of job satisfaction in private sector banks: A
comparative study of various private sector banks of Guwahati. SUMEDHA Journal of
Management, 7(3), 29-39

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11. Kashappa, L., & Basavaraj, C. S. (2017). Comparative performance analysis of the
ICICI bank and the HDFC bank. T INDIAN JOURNAL HE OF COMMERCE, 70(2).

12. Visalakshi, S., & Kasilingam, R. (2016). A Comparative Analysis of Performance of

Select Ten Banks Based on CAMEL Model. Dias Technology Review, 13(1).

13. Kaur, R., Chaudhary, K., Kumar, A., & Jaggi, S. K. A COMPARATIVE STUDY OF
HOME LOANS OF STATE BANK OF INDIA (SBI) AND HOUSING
DEVELOPMENT FINANCE CORPORATION (HDFC) BANKS: AN EMPERICAL
STUDY OF BATHINDA, PUNJAB.

14. Sharma, N. (2013). Analysis of Customer Satisfaction from E-Banking Services. A

comparative study of HDFC and ICICI bank.

15. Sharma, Swati, et al. "CRM as an Imperative Approach for e-banking: Perception of
Customers towards SBI, PNB, ICICI & HDFC of Roorkee, Uttarakhand."

16. Srinivas, K. A. M. A. T. A. M., & Saroja, L. (2013). Comparative financial

performance of HDFC Bank and ICICI Bank. International Refereed Multidisciplinary
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Asian Journal of Research in Banking and Finance, 2(3), 47-59.

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of Research in Business Economics and Management, 2(3), 1-28.

19. Jayanthi, M., & Umarani, R. (2012). Customers’ perception and satisfaction towards
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20. Chand, S., Kumar, M. R., & Shiwali, M. CUSTOMER SATISFACTION IN

BANKING SECTOR: A COMPARATIVE STUDY OF PUBLIC VS PRIVATE SECTOR
BANKS.

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ANNXURE (Questionnaire)

1. Name

2.Age

 15-20
 20-25
 25-30
 30-40
 Above 40

3. Gender

 Male
 Female
 Prefer not to say

4. Employment Status

 Employed
 Unemployed
 Self Employed

5. Income

 0-100000
 100000-300000
 300000-1000000
 More than 1000000

6. Which bank are you currently a customer of?

 HDFC BANK
 ICICI BANK
 Other

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7. Please rate the importance of the following factors in influencing your preference
for a bank:

Variety of banking products and services

Customer service quality

Convenience of banking transactions

Trustworthiness and reliability

Competitive interest rates and fees

Branch location

 Not Important
 Somewhat Important
 Important
 Very Important
 Extremely Important

8. What types of banking services do you primarily use?

 Savings accounts
 Current accounts
 Loan products
 Credit cards
 Investment products
 Online banking
 Branch services

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9. Considering the charges & fees at your primary ban be competitive compared to
other banks?

 Yes, very competitive

 Somewhat competitive
 Neutral
 Not very competitive
 Not competitive at all

10. Rate your satisfaction with the overall customer service at your primary bank

 1
 2
 3
 4
 5

11. How would you rate HDFC Bank's brand values, reputation, and overall
trustworthiness?

 Excellent
 Very good
 Good
 Fair
 Poor

12. How would you rate ICICI Bank's brand values, reputation, and overall
trustworthiness?

 Excellent
 Very good
 Good
 Fair
 Poor

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13. how would you rate the Interest rates on savings accounts and deposits of HDFC
Bank and ICICI Bank?

 1
 2
 3
 4
 5

14. which bank offers innovative banking technology and services.

 HDFC BANK
 ICICI BANK
 Other

15. Which bank, in your opinion, offers more transparent and understandable
information about their charges and fees?

 ICICI Bank
 HDFC Bank
 Other

16. Considering your specific banking needs and preferences, which bank seems like
a better fit for you?

 HDFC BANK
 ICICI BANK
 Other

17. Assuming both banks offered the same products and pricing, what other factors
would influence your choice between HDFC Bank and ICICI Bank?

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